CBO Slams Boeing Tanker Lease

CBO Slams Boeing Tanker Lease

National Security,
Aug 26, 2003  | 2 min read | Print Article

Washington, D.C. – The following is a written statement by Keith Ashdown, Vice-President of Policy at Taxpayers for Common Sense on the Congressional Budget Office Boeing Tanker report:

The Congressional Budget Office (CBO) study further confirms that the Air Force tanker lease with Boeing will cost taxpayers billions more than an outright purchase. This lease leaves taxpayers with a bad case of sticker shock.

According to the report, the real cost to lease and purchase tankers will be $5.7 billion more than the advertised price. Additional training, maintenance and other associated program costs increase the total price tag to $29.8 billion, an increase of nearly $9 billion over the six years.

Additionally, the report says that the Air Force has broken numerous federal budgetary and leasing rules to make this lease a reality. The CBO concluded that the tanker deal is really a purchase masquerading in lease clothes. It violates 4 out of 6 principles of federal leasing – one of which being that present value of the lease should not exceed 90% of the fair market value of the tankers.

The report concluded that instead of offering a financial benefit to the Air Force, leasing tankers would cost the government far more and create a cash crunch at the end of the lease period. For example, when the lease comes to term, the Air Force will be in the heart of Joint Strike Fighter (JSF) Acquisition. This current lease defies logic — no fiscally responsible person would enter a deal that would end up costing far more to lease than to buy. It seems the Air Force is more concerned with Boeing’s profits than the taxpayers’ pocket book.

The report also concluded that if the federal government doesn’t procure more than 100 tankers that Boeing would have to close its 767 production line in 2011. This fiscally irresponsible deal only delays the inevitable – a corporation that is failing in the private market can’t be bailed out by the public sector.

Contact: Keith Ashdown
(202) 546-8500 x110