C-17 Warnings Ignored, Panel Told : Defense: Ex-colonel testifies that Air Force general said McDonnell Douglas’ real problem was that its lobbyists were in the wrong country clubs.

A three-star Air Force general dismissed warnings that McDonnell Douglas was facing a financial crisis on its C-17 cargo jet program and instead suggested that the aerospace company’s real problem was that its Washington lobbyists did not belong to the right country clubs, Congress was told Tuesday.

Kenneth Tollefson, chief of the Pentagon’s office that oversaw the C-17 program in Long Beach, said he repeatedly warned that McDonnell would fail to execute its contract, but his concerns were dismissed by senior Pentagon officials and McDonnell executives.

The country club issue marked one of many occasions in which top military and industry officials failed to address long-term problems on the C-17 program until they had become full-blown crises, Tollefson said.

Since then, the program has fallen four years behind schedule and grown $1.2 billion over budget. The House Armed Services Committee called the hearing Tuesday as part of an effort to address problems with the program.

After the hearing, committee Chairman Rep. Ronald Dellums (D-Berkeley) said that some type of major change or restructuring of the C-17 program is necessary.

Potential changes could include slowing production, reducing the Pentagon’s future purchase of C-17s, renegotiating McDonnell’s contract or some type of financial aid, said Rep. Norman Sisisky (D-Va.), chairman of the oversight and investigations subcommittee.

Tollefson, a retired Air Force colonel, said the C-17 program remains seriously troubled. Because McDonnell is unwilling to spend an adequate amount of money for production, it will have extreme difficulty meeting future schedules, he said. If the program falls further behind schedule, the cost of the C-17, which now averages $350 million per plane, will rise.

Moreover, McDonnell has failed to complete the C-17 design, as required by the time the fifth plane was built. As a result, each subsequent aircraft will be different, a shortcoming that will also drive up future costs, Tollefson said.

The House committee did not ask Tollefson to identify by name the general who raised the country club issue. But he identified the official by title as the Air Force’s program executive officer for the C-17 in June, 1990, a clear reference to Lt. Gen. Edward Barry Jr.

An Air Force spokesman had no comment about Tollefson’s statements regarding Barry, now commander of the Space and Missile Systems Center in Los Angeles. Two senior Air Force officials are scheduled to testify about the C-17 today before the same House panel.

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The remark about the country clubs came at a meeting in June, 1990, at a conference attended by government and company executives. Tollefson told Barry that McDonnell would fail to meet its production schedules and that the firm was facing a financial crisis.

Barry said he did not believe that anybody could predict that McDonnell would miss its schedule or that the firm faced a financial crisis, Tollefson testified. Then Barry instructed McDonnell officials that they needed to make sure their lobbyists belonged to certain Washington country clubs frequented by influential politicians and their staffs, according to Tollefson. His testimony indicated that Barry did not intend the remark as a joke.

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Although Tollefson testified for about two hours, the disclosure about the country club seemed to jerk a number of committee members to attention. Several members said during the hearing that they worry the public may believe such perks are customary in the Washington decision-making process.

“I don’t belong to a country club,” Sisisky said in an interview. “I don’t even play golf. Unfortunately, the perception of the public is just that.”

During his testimony, Tollefson described a number of other key power players who rebuffed his direct warnings, including former Air Force Chief of Staff Larry Welch and McDonnell Chairman John McDonnell.

On June 8, 1990, Tollefson said, McDonnell President Jerry Johnston assured him that the company would meet the C-17 schedule. “I said: ‘Sir, I don’t understand. Here are your cost performance charts,’ and I pushed them across the table toward him. Without looking at them, he pushed them back,” Tollefson recalled.

Air Force officials said they had no comment on Tollefson’s testimony, although two senior officers are scheduled to testify on the C-17 today before the same House panel, which has responsibility for the Pentagon budget.