Defense contractors wary of a ‘Chairman’ John McCain
McCain makes no apologies for his oversight approach. | Getty
By JEREMY HERB | 6/26/14 5:05 AM EDT Updated: 6/26/14 11:59 AM EDT
There’s at least one reason some in the defense industry are rooting for Democrats to keep control of the Senate: the prospect of Chairman John McCain.
Should Republicans take back the upper chamber in this fall’s midterm elections, McCain is in line to lead the Senate Armed Services Committee, a worrisome notion for many contractors who feel he unfairly targets them.
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The Arizona Republican has gained a reputation as a stubborn bulldog, unwilling to let go of an issue once he sinks his teeth into it and deeply suspicious of many of the companies who sell to the military.
Even McCain himself says defense contractors should be worried.
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“I’m sure that many of them are very nervous,” he told POLITICO. “If I were them, I would be.”
McCain makes no apologies for his oversight approach, saying he operates with “zeal” to eliminate cost overruns and stop the “outrageous waste of the taxpayers’ dollars.”
Even so, defense contractors and their supporters are on guard, concerned that a McCain chairmanship would mean more program investigations and legislative measures opposed by the defense industry.
“I’ve heard several defense lobbyists and companies say under their breath they hope that the Senate doesn’t flip just to avoid a McCain chairmanship,” said one defense lobbyist, who like many others quoted in this story, requested anonymity to offer a candid assessment.
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“Jack Reed or John McCain — there’s no contest on who the defense industry would rather see in the chairman’s seat,” the lobbyist added, referring to the Rhode Island Democrat likely to succeed retiring Chairman Carl Levin (D-Mich.) next year if Democrats retain the majority.
Reed, a former Army Ranger, is steeped in defense policy. But unlike McCain, Reed mostly keeps his head down, working more behind the scenes than in front of the cameras.
He’s also the clear favorite of industry, at least according to campaign contributions from defense contractors. Their political action committees have given Reed more than $115,000 this election cycle, according to Federal Election Commission filings, compared with just $9,000 to McCain.
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McCain’s reputation is long-standing. He led a crusade against a 2001 Air Force deal to lease 100 Boeing tankers, helping to uncover emails in an investigation that sent an Air Force acquisition official and Boeing’s chief financial officer to prison. Boeing’s chief executive at the time resigned in the fallout.
More recently, he’s taken aim at some of the Pentagon’s biggest weapons programs, from the Air Force’s F-35 and F-22 fighters to the Navy’s Littoral Combat Ship. His latest target has been the Evolved Expendable Launch Vehicle program, which awarded a sole-source contract to United Launch Alliance, a Lockheed Martin-Boeing joint venture.
McCain is known for taking to the Senate floor to deliver lengthy speeches slamming programs that have gone over budget. He’s called the F-22 a “hangar queen” and the F-35 “a scandal and a tragedy.” He regularly references former President Dwight D. Eisenhower’s “military-industrial complex” quote, often calling it the “military-industrial-congressional complex.”
Defense industry officials say they respect McCain’s opposition to cost overruns but argue he paints industry as the boogeyman, accusing the companies of trying to defraud taxpayers and ignoring government decisions that often drive up costs.
“There’s a difference between the search for truth and a quest for humiliation,” said another defense lobbyist. “Where McCain is for a strong national defense, he’s just not seen as a friend of the defense industry. We’ll actually see him as somebody who wants to hurt us.”
McCain also has defenders in the industry, who say he provides needed oversight.
“I don’t see Sen. McCain as being anti-industry or being against industry. I see him dealing with us in a straightforward and upfront manner, as he does with every issue he deals with,” said Arnold Punaro, a retired major general and former Armed Services staff director who chairs the National Defense Industrial Association, an industry group.
Punaro, who first met McCain as a junior staffer when McCain was a Navy congressional liaison, said the senator is willing to take on causes without support and eventually convince others.
“When you’ve got 90 percent of people on the other side, you kind of have to dig in a little bit,” he said. “There are some areas where he sinks his teeth in them because the facts don’t warrant letting go.”
Mackenzie Eaglen, a defense analyst with the conservative American Enterprise Institute and former congressional staffer, said many other lawmakers are not focused enough on oversight.
“Too often, members think their job is to help determine spending priorities and policy priorities for the Pentagon, when in reality they have an equally important job at holding the Defense Department’s feet to the fire,” she said.
From 2007 to 2013, McCain was ranking member of the Armed Services panel. But as chairman, he would have much more ability to shape the committee’s annual defense authorization bill and set hearings to target programs that provoke him.
Industry officials say they worry McCain would include in the defense bill provisions like requiring all DOD contracts to be fixed-price or that he might slash major programs. He’s also likely to launch more investigations.
“There could be a far more active congressional committee,” said an industry official who formerly worked on the Hill. “And that’s a big deal. Investigations, in some respect, are as big — if not bigger — than particular programs that he does like or he doesn’t like.”
Loren Thompson, a defense consultant who works with multiple contractors, said defense executives know their companies will be subject to continuous scrutiny if McCain becomes chairman.
“They don’t like it, but they have come to respect his persistence,” Thompson said. “They just hope he will apportion blame for screw-ups fairly, and recognize how often the government makes things worse than they need to be with excessive regulations and requirements.”
Several defense industry officials said contractors frequently try to stay out of McCain’s sight because once he makes up his mind about a program, it can be nearly impossible to change it.
“There’s a feeling that there’s two sides to every story, and there’s not always a willingness to hear the other side of it,” said one industry official.
McCain has the support of his peers in the Senate.
“He’s a fair man and he’d treat people in front of him fairly,” said Levin, noting he prefers Democrats keep the Senate and Reed picks up the Armed Services gavel.
“I think a little tension would be good,” Sen. Lindsey Graham (R-S.C.) said of McCain as chairman. “The Defense Department couldn’t have a better ally in terms of replacing sequestration, but there will never be a stronger watchdog.”
McCain is not the top Republican on the Armed Services panel after being term-limited two years ago, but the Republican Conference’s seniority rules would allow him to become chairman if Republicans win the Senate. The ranking member, Sen. Jim Inhofe (R-Okla.), is expected to take over the Environment and Public Works Committee and not challenge McCain.
McCain said he maintains a solid relationship with industry leaders, who know he’s one of the Senate’s strongest advocates for increased military spending.
“They know where I’m coming from,” McCain said. “The CEO of Lockheed was in my office just a week ago; the CEO of Boeing was in my office a couple of weeks ago. I would argue that I make ’em nervous, but they respect me.”