The Air Force’s surprise decision to give Boeing a multi-billion dollar contract for new airborne refueling tankers capped a years-long fight between Boeing and EADS North America that was notable for the ferocity of the two companies’ lobbying efforts and the vast sums of money they were willing to spend along the way.
Both companies are veterans of Washington’s influence game, where large firms hire armies of lobbyists to press their case on Capitol Hill and donate significant sums of money to lawmakers who sit on key panels like the Senate Armed Services Committee or the House Appropriations Committee.
Defense firms are particularly skilled and aggressive players, and Boeing and EADS appear to have pulled out all of the stops in their fight to win the tanker contract, which could eventually be worth more than $100 billion.
Last year, Boeing spent more than $17.8 million on lobbying expenditures, the most of any firm in the defense aerospace industry, according to data from the Center for Responsive Politics. EADS spent just $3.2 million in 2010, according to the center.
The Air Force has been trying to award the contract since 2001, but a surreal mix of outright criminality, corruption, and government incompetence derailed the two prior attempts to finalize a deal to replace the military’s aging fleet of tankers, which are used to refuel jets, bombers, and other planes in mid-flight.
The fight to determine which company would make the next-generation tanker has been one of Washington's longest-running—and most contentious—lobbying wars. Both companies have bought large quantities of ads on the Washington Metro and in publications that target Capitol Hill. In its public messaging and private lobbying, Boeing has made the case that EADS enjoys an unfair advantage because it receives large subsidies from European governments. EADS had countered by arguing that it makes a superior plane that could carry more fuel than Boeing’s model.
The decision to give Boeing the tanker contract was made in the halls of the Pentagon, not on Capitol Hill, so Boeing’s extensive political contributions don’t mean that the company was able to somehow buy the contract. But the donations could pay clear dividends in the coming weeks as the tanker fight shifts to Congress, which will have to sign off on the Boeing contract, as well as on any follow-on deals to purchase additional planes from the firm.
The statistics from the Center for Responsive Politics provide vivid evidence of how the two firms began to sharply increase their lobbying expenditures in 2007, when the Air Force opened the troubled program to new bids. The contract was initially awarded to a joint bid from EADS and Northrop Grumman in 2008, but Boeing successfully appealed the decision to the Government Accountability Office, setting off nearly three more years of heated—and expensive—debate on Capitol Hill.
Boeing, for instance, saw its political expenses jump from $10.6 million in 2007 to more than $17.5 million in 2008, while EADS increased its own spending from $2.48 million in 2007 to more than $4.52 million in 2008, according to the center.
Much of the money has gone to a veritable who’s who of well-connected retired lawmakers. EADS employs former Senate Majority Leader Trent Lott, R-Miss. and former House Appropriations Chairman Bob Livingston, R-La. Boeing’s lobbyists include former House Minority Leader Dick Gephardt, D-Mo., and Tony Podesta, whose brother John helped run the Obama administration’s transition effort and maintains close ties to the White House.
Boeing and EADS have also worked to steer money to individual lawmakers from the states that stood to gain the most jobs depending on which firm won the massive tanker contract. In the run-up to Thursday’s decision, Boeing had promised to create thousands of new jobs in California, Washington state, and Kansas, while EADS said it would build a sprawling new factory in Alabama that would provide a much-needed economic jolt to areas still struggling to recover from Hurricane Katrina.
In the last election cycle, Boeing’s political action committee spent more than $2.9 million, mainly in support of candidates for federal office, while EADS spent just under $300,000, according to data from the Center for Responsive Politics.
The money was carefully targeted. Much of EADS’ money went to lawmakers from Alabama like Republican Rep. Jo Bonner ($10,000) and Democratic Rep. Bobby Bright ($3,000), who was defeated. Alabama lawmakers have long been EADS’ strongest allies on Capitol Hill because of the company’s promise to build a new plant in the state.
Boeing, for its part, has shunted money to lawmakers from Kansas, Washington, and California. Sen. Patty Murray, D-Wash., who released a statement shortly after the decision was announced praising Boeing’s successful fight against an “illegally subsidized foreign competitor,” has received $103,560 from people and PACs associated with the company, according to the Center for Responsive Politics. Sen. Pat Roberts, R-Kan., who preempted the Pentagon’s announcement on Thursday by releasing an early press release celebrating Boeing’s win, received $19,750 from PACs associated with Boeing over the same time period, according to the Center.
The military’s decade-long push to replace its tankers will now move to Capitol Hill, where lawmakers will have to decide whether to ratify Boeing’s award, rescind it, or divide it between the two companies. EADS is also considering whether to formally appeal the Air Force decision.
The uncertainty means that the tanker fight is far from over—and that the two companies are likely to continue flooding Capitol Hill with both money and lobbyists.