Hillary: See Chuck and Kirsten About Obama’s Helicopters

Hillary Clinton may not be allowed to push for a plan to build a controversial and pricey fleet of presidential helicopters for Barack Obama anymore, but Chuck Schumer and Kirsten Gillibrand are picking up the slack.

At a private party last week, Clinton said she did everything in her power as senator to make sure that the manufacture of the helicopters in upstate New York went forward, and that any concerns about the future of the project, now endangered by President Obama's publicly expressed doubts and a Pentagon review of its soaring costs, should be addressed to Chuck Schumer and Kirsten Gillibrand.

Clinton said in a conversation at a private gala on March 11 in Washington that she had done "everything she could" to get the contract, according to one attendee.

 

"Now you can't also ask me to build the helicopters," the attendee recalled her saying. "Now you've got to speak with the current senators. It's their turn now."

 

Clinton's office declined to comment about her remarks at the party.

 

The helicopter program has put New York's senators in the position of fighting for a contract benefiting an American-European consortium against advocates for an alternative model made by an American company.

 

The multibillion dollar contract, awarded in 2005 to Lockheed Martin and a British-Italian manufacturer owned by the giant Italian military holding company Finmeccanica S.p.A., was championed by Clinton and Schumer because much of the construction would take place in Owego, bringing roughly 800 jobs to the economically challenged upstate region.

 

Since Clinton left the Senate, and the economy went into a free fall, the fleet of nearly 30 helicopters to transport the new president and his staff has become politically explosive.

The estimated cost for the research, development and production of the so-called Marine One helicopters has inflated from $6.2 billion to $13 billion, attracting the ire of critics who have called it a symbol of the government's flagrant spending. The Italian imprimatur has also led at least one member of Congress to criticize the outsourcing of the president's aircraft.

But New York's senators are still four-square behind the project.

"In the age of shoulder-fired missiles, it is critical that the President and other high ranking executive officials travel in vehicles equipped with the latest safety, security, and deterrent technology," said Josh Vlasto, a spokesman for Schumer. "But we must reduce the cost as much as possible."

"Senator Gillibrand's top priority is creating good-paying jobs here in New York and this project affects hundreds of jobs in our state," said Matt Canter, a spokesman for Gillibrand. "While the Senator believes we must be mindful of the necessity to protect taxpayer dollars with oversight and accountability, the Senator is making it clear to the Administration that it is essential that we keep these jobs in Upstate New York."

 

Clinton's comments about the helicopters came at a dinner billed as a "Neighborhood Celebration" which was thrown in her honor at the Italian embassy by neighbor and architect Leo Daly III, who designed the embassy, and the Italian Ambassador Giovanni Castellaneta, who happens to be a non-voting member on the board of Finmeccanica.

"He's on the board of Finmeccanica but he has a very special role in the sense that he can't vote on the board because he has only a representative role," said Roberto Alatri, a spokesman for Finmeccanica.

(Castellaneta, a veteran foreign policy adviser to conservative Prime Minister Silvio Berlusconi, is also a familiar target in the liberal blogosphere, some corners of which have accused him of playing a central role in passing to the Bush administration forged documents suggesting that Iraq was trafficking in uranium from Niger in the lead up to the war in Iraq.)

Even for such an esteemed honoree as the secretary of state, the guest list for Clinton's party was impressive. It included the ambassadors of Saudi Arabia, the United Arab Emirates, Singapore, New Zealand and Colombia; Obama administration colleagues Valerie Jarrett, Greg Craig and Energy Secretary Steven Chu; former Bush administration officials Michael Chertoff and Christopher Hill; the future Archbishop of New York, Timothy Dolan; Hollywood power couple Michael Douglas and Catherine Zeta-Jones; and business moguls and Clinton donors Eli Broad and Lady Lynn Forrester de Rothschild.

But also in attendance, was Simone Bemporad, the CEO for Finmeccanica North America.

 

After Clinton's remarks that the responsibility for the helicopter project now belonged to Schumer and Gillibrand, Bemporad, according to one source at the party, said, "We're working on them."

Asked about the company's lobbying effort, Mr. Alatri, the Finmeccanica spokesman, said, "Honestly, I don't know in which way Finmeccanica is working to push the contracts."

 

Neither Schumer or Gillibrand's offices said they had been contacted, as far as they knew, by the Italians.

 

Guiseppe Orsi, the chief executive officer of AgustaWestland, the U.K. subsidiary of Finmeccanica that is building the helicopters, said that his company had "not directly' lobbied the senators, but added that "Lockheed Martin is leading the team in the United States, so they are the ones doing the necessary lobbying."

But the New York senators are not the officials that need to be lobbied in this case.

During a presidential economic forum on Feb. 23, Sen. John McCain of Arizona raised the issue of the helicopters as an example of unchecked and unnecessary government spending.

"Your helicopter is now going to cost as much as Air Force One," McCain told Obama at the forum. "I don't think there is any more graphic demonstration of how good ideas have cost taxpayers enormous amounts of money."

Obama did not push back.

"The helicopter I have now seems perfectly adequate to me," Obama said. "Of course, I've never had a helicopter before. Maybe I've been deprived and I didn't know it. But I think it is in example of the procurement process gone amok. And we're going to have to fix it."

Opponents of the helicopter contract have seized on doubts about the project to redouble their efforts to kill the current contract.

"Lockheed has never built a helicopter from the ground up. What I have heard is we're looking at stuff that is being built overseas and not here," said Representative Rosa DeLauro of Connecticut, which, not coincidentally, is the home of Sakorsky Aircraft, the longtime builder of presidential helicopters and a losing bidder in the 2005 contract process. "I believe they needed to put an American face on it, so they put Lockheed Martin ahead of it, but again Lockheed doesn't build helicopters. It's essentially a European consortium, the Europeans and the Italians."

On March 18, DeLauro once again raised the prospect of seeking alternative contracts in the House's budget committee.

 

The issue isn't a new one for members of congress.

In January 2005, John Young, the Bush administration's assistant secretary of the Navy for research, development and acquisition first announced the awarding of a $1.7 billion initial contract to Lockheed Martin and AgustaWestland, which is owned by Finmeccanica.

"The Holding is Finmeccanica, and Finmeccanica controls a lot of companies. AgustaWestland is 100 percent of Finmeccanica. It is entirely controlled by Finmeccanica," said Alatri.

Lockheed had never built helicopters before, raising immediate protests from the Connecticut delegation. Senator Chris Dodd of Connecticut went so far as to try and kill the deal, behind Schumer and Clinton's back, on the Senate floor in 2005. But the government apparently believed that an experienced foreign partner like AgustaWestland, which had a record of building medium-lift helicopters, would compensate for that inexperience.

The contract envisioned an initial fleet of five helicopters with equipment equal too or better than the president's current fleet, and then a second wave of helicopters with vastly improved technology.

"We believe the cost to go in development is about $3.5 billion," Young said at the time. "We've already spent some funds on the program, as was noted. And then the cost to go in procurement is about $3.6 billion—in development—$2.5 billion in procurement for a total cost to go to develop the helicopter system and deliver the 23 airframes and fully modified at about $6.1 billion."

But that ended up being a lowball figure.

According to the Pentagon, unanticipated delays in the production of the 28 new helicopters has caused the original price tag of $6.1 billion to balloon to $13 billion, an average per copter cost of more than $470 million when including research and development and Navy management costs. That's more expensive than an F-22 fighter jet.

 

The more than twofold increase in cost for the fleet has forced the Obama administration to reevaluate the contracts under the Nunn-McCurdy Act, which requires a review of whether defense contracts that so exceed their estimated costs are in fact necessary for national security interests.

On March 11, the same day as Clinton's party, Finmeccanica Chief Executive Pier Francesco Guarguaglini told financial analysts in London that the company had fulfilled the requirements of the first phase of the contract, in which a total of nine helicopters, four for testing and five operational units, would be delivered to the Navy.

 

He also expressed confidence that Finmeccanica would reach an agreement with the United States Navy on the second phase of the contract, now frozen pending Pentagon review, to deliver the remaining 18 or 19 helicopters, but with less ambitious technology to keep the price down to an additional $4 billion. The total cost would then be in the ballpark of the original $6.1 billion estimate.

According to Orsi, the AgustaWestland CEO, the last of the five helicopters, all produced on an assembly line in the United Kingdom with American engines and other American parts, will be delivered to Lockheed Martin in Owego in April, where New York workers will outfit the basic aircraft with the improved technology.

"Seventy-five percent to 80 percent of the program is manufactured in the United States," said Orsi. "The money flow would go to Lockheed Martin and then there would be a part for Finmeccanica. The Finmeccanica part of it is a minimum one."

But critics like DeLauro are not satisfied.

"Since 1951, Sakorsky has been building the helicopters," said DeLauro. "And every change has been on time and on budget."

 

She reiterated her belief that the contract that the New York senators so enthusiastically supported was an unfortunate artifact dating back to the launching of the war in Iraq.

 

"It was a reward to Finmeccanica and AgustaWestland because they were participants in the Iraq war," she said. "This is a contract that should have gone to Sakorsky Aircraft, an American company."


Hillary: See Chuck and Kirsten About Obama’s Helicopters