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Full text of "Review of the U.S. Forest Service firefighting aircraft program : hearing before the Subcommittee on Specialty Crops and Natural Resources of the Committee on Agriculture, House of Representatives, One Hundred Third Congress, first session, August 5, 1993"

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REVIEW OF THE U.S. FOREST SERVICE 
HREHGHTING AIRCRAFT PROGRAM 






njuARING 



BEFORE THE 



SUBCOMMITTEE OX SPECULTY CROPS 
AND NATURAL RESOURCES 

OF THE 

COMMITTEE ON AGRICULTURE 
HOUSE OP REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 
FIRST SESSION 



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AUGUST 5, 1993 

Serial No. 103-40 



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Printed for the use of the Committee on Agriculture 



76-251 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1994 



For sale by the U.S. Government Printing Office 
Superintendent of Document.s, Congressional Sales Office. Washington. DC 20402 
ISBN 0-16-043986-8 



)P REVIEW OF THE U.S. FOREST SERVICE 
nREHGHTING AIRCRAFT PROGRAM 






HiuARING 



BEFORE THE 



SrBC0:\OIITTEE ox SPECULTY CROPS 
AND NATURAL RESOURCES 

OF THE 

CO.AOIITTEE ON AGRICULTURE 
HOUSE OF REPRESENTATR^S 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 






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AUGUST 5, 1993 



Serial No. 103-40 



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m 2 i 1994 



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76-251 



Printed for the use of the Committee on Agriculture 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1994 



For sale by the U.S. Government Printing Office 
Superintendent of Documents. Congressional Sales Office. Washington. DC 20402 
ISBN 0-16-043986-8 



COMMITTEE ON AGRICULTURE 



E (KIKA) DE L.^ GARZA, Texas, Chairman 



GEORGE E. BROWN, Jr., California, 

Vice Chairman 
CHARLIE ROSE, North Carolina 
GLENN ENGLISH, Oklahoma 
DAN GLICKMAN, Kansas 
CHARLES W. STENHOLM, Texas 
HAROLD L. VOLKMER, Missouri 
TIMOTHY' J. PENNY, Minnesota 
TIM JOHNSON, South Dakota 
BILL SARPALIUS, Texas 
JILL L. LONG, Indiana 
GARY A. CONDIT, California 
COLLIN C. PETERSON, Minnesota 
CALVIN M. DOOLEY, California 
EVA M. CLAYTON, North Carolina 
DAVID MINGE, Minnesota 
EARL F. HILLURD, Alabama 
JAY INSLEE, Washington 
THOMAS J. BARLOW III, Kentucky 
EARL POMEROY, North Dakota 
TIM HOLDEN, Pennsylvania 
CYNTHIA A. McKINNEY, Georgia 
SCOTTY BAESLER, Kentucky 
KAREN L. THURMAN, Florida 
SANFORD D. BISHOP, Jr., Georgia 
BENNIE G. THOMPSON, Mississippi 
SAM FARR, California 
PAT WILLIAMS, Montana 
BLANCHE M. LAMBERT, Arkansas 



PAT ROBERTS, Kansas, 

Ranking Minority Member 
BILL EMERSON, Missouri 
STEVE GUNDERSON, Wisconsin 
TOM LEWIS, Florida 
ROBERT F. (BOB) SMITH, Oregon 
LARRY COMBEST, Texas 
WAYNE ALLARD, Colorado 
BILL BARRETT, Nebraska 
JIM NUSSLE, Iowa 
JOHN A. BOEHNER, Ohio 
THOMAS W. EWING, Ilhnois 
JOHN T. DOOLITTLE, California 
JACK KINGSTON, Georgia 
BOB GOODLATTE, Virginia 
JAY DICKEY, Arkansas 
RICHARD W. POMBO, California 
CHARLES T. CANADY, Florida 
NICK SMITH, Michigan 
TERRY EVERETT, Alabama 



J^ 



\ 



Professional Staff 

DiANNE f OWELL, Staff Director 

Vernie Hubert, Chief Counsel and Legislative Director 

Gary R. Mitchell, Minority Staff Director 

James A. Davis, Press Secretary 



Subcommittee on Specialty Crops and Natural Resources 



CHARLIE :&OSE, 

SCOTTY. BAESLER, Kentu'cky, ■ ' ' 

Vice Chairman: 
3ANFORD D. BISHOP, Jr., Georgia 
GEORGE E. BROWTNJ, Jr., CaUfornia 
GARY A. CONDIT, California 
EVA M. CLAYTON, North Carolina 
KAREN L. THURMAN, Florida 
DAVID MINGE, Minnesota 
JAY INSLEE, Washington 
EARL POMEROY, North Dakota 
GLENN ENGLISH, Oklahoma 
CHARLES W. STENHOLM, Texas 
COLLIN C. PETERSON, Minnesota 
SAM FARR, CaUfornia 
HAROLD L. VOLKMER, Missouri 



North Carolina, Chairman 

TOM LEWIS, Florida 
BILL EMERSON, Missouri 
JOHN T. DOOLITTLE, California 
JACK KINGSTON, Georgia 
BOB GOODLATTE, Virginia 
JAY DICKEY, Arkansas 
RICHARD W. POMBO, CaUfornia 
TERRY EVERETT, Alabama 



(II) 



CONTENTS 



Page 

Bishop, Hon. Sanford D., Jr., a Representative in Congress from the State 
of Georgia, prepared statement 89 

Rose, Hon. Charlie, a Representative in Congress from the State of North 

Carohna, opening statement 1 

The Oregonian, newspaper article, August 4, 1993 9 

Witnesses 

Ebbitt, James R., Assistant Inspector General, Audit, U.S. Department of 

Agriculture 2 

Prepared statement 92 

Eitel, Gary R., professional pilot and aviation consultant, Northwest Express 

Ltd., Silverdale, WA 19 

Prepared statement 103 

Lyons, James R., Assistant Secretary, Environment and Natural Resources, 

U.S. Department of Agriculture 87 

Prepared statement 131 

Robertson, F. Dale, Chief, U.S. Forest Service, U.S. Department of Agri- 
culture, prepared statement 118 



(III) 



REVIEW OF THE U.S. FOREST SERVICE 
FIREFIGHTING AIRCRAFT PROGRAM 



THURSDAY, AUGUST 5, 1993 

House of Representatives, 
Subcommittee on Specialty Crops 

AND Natural Resources, 
Committee on Agriculture, 

Washington, DC. 
The subcommittee met, pursuant to call, at 10:25 a.m., in room 
1300, Longworth House Office Building, Hon. Charlie Rose (chair- 
man of the subcommittee) presiding. 

Present: Representatives Bishop, Pomeroy, English, Volkmer, 
Lewis, and Goodlatte. 

Staff present: John E. Hogan, minority counsel; Glenda L. Tem- 
ple, clerk; Keith Pitts, Alex Buell, James A. Davis, and Stacy 
Steinitz. 

OPENING STATEMENT OF HON. CHARLIE ROSE, A REP- 
RESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 
CAROLINA 

Mr. Rose. The Specialty Crops and Natural Resources Sub- 
committee of the House Agriculture Committee will now come to 
order. 

The purpose of today's hearing is to review the U.S. Forest Serv- 
ice firefighting aircraft program. I want to thank everyone for at- 
tending today's meeting. 

What the Office of Inspector General told this subcommittee has 
a great many concerned in this country. It has revealed a horren- 
dously mismanaged Government-sponsored program that operated 
illegally and in contradiction with the interests of the American 
people. 

We will learn, as best we can today, how an apparently benign 
and well-intentioned program at the Department of Defense, a his- 
toric aircraft exchange program for museums, was illegally manip- 
ulated by Government officials, one broker named Roy Reagan, and 
a handful of handpicked companies to bilk the Federal Government 
of aircraft worth millions of dollars. 

Not only did these companies receive these aircraft free of charge 
from the Government, but in many instances those companies 
passed incidental brokerage fees, a charge by Roy Reagan, on to 
the Federal Government through their lucrative firefighting con- 
tracts with the Forest Service. In many instances, acquired aircraft 
were stripped for parts or sold on the market beyond the scope of 
firefighting. 

(1) 



As a whole, this situation stinks to high heaven. Once again, the 
Reagan revolution comes back to haunt the American people. 

It is my hope, and my expectation, that today's hearing will re- 
sult in a firm commitment by the Clinton administration to take 
measures to correct administrative and leadership problems with 
involved Federal agencies and to work with the Congress to ensure 
the air tanker fleet program operates on a fair, efficient, and com- 
petitive basis and, ultimately, in the interest of the American peo- 
ple. I believe the program must be completely overhauled with ade- 
quate safeguards to ensure that aircraft solely operate for firefight- 
ing purposes. 

Finally, no guarantee exists now for a competitive program. I 
strongly believe that these companies that acquire title to Federal 
Government aircraft through the Forest Service must relinquish 
title to the Federal Government and also accept the terms and con- 
ditions of the reformed air tanker program. If any such contractor 
cannot abide by these remedial actions, I suggest they be perma- 
nently disbarred from future participation in all Federal Govern- 
ment programs. 

Our first witness today is Mr. James Ebbitt, the Assistant In- 
spector General for Audit, U.S. Department of Agriculture, Wash- 
ington, DC. 

Mr. Ebbitt, the floor is yours. 

STATEMENT OF JAMES R. EBBITT, ASSISTANT INSPECTOR 
GENERAL, AUDIT, U.S. DEPARTMENT OF AGRICULTURE, AC- 
COMPANIED BY CRAIG L. BEAUCHAMP, ASSISTANT INSPEC- 
TOR GENERAL, INVESTIGATIONS 

Mr. Ebbitt. Thank you, Mr. Chairman. I am pleased to be here 
this morning. With me this morning is Craig Beauchamp, the As- 
sistant Inspector General for Investigations. 

We have prepared a statement, Mr. Chairman, that I would like 
to submit for the record but will summarize now if that is all right. 

Mr. Rose. Certainly that is all right. Go ahead. 

Mr. Ebbitt. Thank you. 

We are pleased to be here today before the subcommittee to dis- 
cuss our audit of Forest Service aircraft activities. Based upon our 
audit work, we also initiated an investigation to determine if there 
was any criminal wrongdoing involved in this matter. We have fur- 
nished a report of the investigation to the Department of Justice 
for their review. Because the matter is still ongoing, we cannot 
really get into a lot of specifics on the investigation today. How- 
ever, we would, of course, like to thoroughly discuss the audit proc- 
ess. 

Just for background, Mr. Chairman, the Forest Service owns and 
operates 45 aircraft and 1 helicopter and contracts for the services 
of additional aircraft for the purpose of fighting fires. Forest Serv- 
ice-owned aircraft primarily assist the agency's incident com- 
mander in the management of a fire, including targeting air tank- 
ers to the points where retardant needs to be dropped. 

The Forest Service contracts right now with six private firms for 
the services of 29 air tankers at an estimated cost of about $16 mil- 
lion a year. The Forest Service also has cooperative agreements 
with the Department of Interior and several State agencies for the 



use of another 40 air tankers and can call on the National Guard 
if they need to in the event of serious fires. 

Just a little background about the exchange program itself. Air 
tankers were first used in the Forest Service firefighting mission 
in 1954 under a Government-owned and operated program. Begin- 
ning in the early 1960's, the Forest Service contracted out the air 
tanker operations. The air tanker fleet has historically been made 
up of mainly post-World War II piston-engined military aircraft 
like C-119's. The planes were obtained by contractors through ex- 
changes with the Department of Defense or were purchased as sur- 
plus. 

In October 1987, the Interagency Air Tanker Board suspended 
the use of the C-119's primarily because of some bad accidents due 
to structural defects. Two companies, whose fleets were composed 
primarily of C-119's were most affected by the suspension. An indi- 
vidual with a background in the industry approached the two com- 
panies with an offer to arrange for an aircraft exchange with the 
Department of Defense. DOD was not interested in that exchange 
program, primarily because of previous misuse of some of its 
planes. 

The individual then approached the Forest Service and requested 
their assistance. The Forest Service agreed to help, and the Forest 
Service thought they could use the historic exchange program to fa- 
cilitate the exchange process. 

However, the historic exchange provisions of the Federal prop- 
erty regulations clearly establish the requirements for transferring 
ownership of Federal property to outside parties. The exchange pro- 
visions were designed to facilitate Federal museums' ability to ac- 
quire historic items from the public for preservation and display. 
According to the regulations, both the item received and the item 
exchanged must be historic. 

The Forest Service's justification for the exchange program was 
that it was needed to avoid the substantial increases in contract 
costs that would arise if private operators had to purchase commer- 
cial aircraft. Under the program, DOD transferred ownership of ex- 
cess C-130A and P-3A military aircraft to the Forest Service. The 
Forest Service then transferred the aircraft to contractors in ex- 
change for planes to be placed in Federal museums. 

Between 1988 and 1991, the Forest Service received 35 aircraft 
from the Department of Defense which it then provided to air tank- 
er contractors. Title passed actually on 28 of the aircraft. The For- 
est Service retains title on the seven other aircraft today. 

There were some problems with the exchange concept. In 1989 — 
late 1989 — the Department's Office of General Counsel had ruled 
that the Forest Service did not have authority to exchange the Gov- 
ernment-owned aircraft under the exchange program. 

GSA and DOD officials informed us that the aircraft were pro- 
vided with the understanding that the aircraft were to remain Gov- 
ernment-owned property and furnished to the contractors for their 
use. Forest Service officials involved in the process thought that 
they had received verbal authorization from those agencies for the 
ownership transfer. 

Mr. Rose. Wait a minute. Verbal authorization for what they did 
with Federal Government airplanes? 



Mr. Ebbitt. Yes, sir. Mr. Chairman, we couldn't find any written 
evidence to document that GSA or Defense had approved the pas- 
sage of the title. Second, all the officials that we talked to at those 
agencies told us that it was clearly their understanding that the 
Forest Service, the Government would retain title. 

Mr. Rose. I have a copy of the exchange agreements covering 
these aircraft. 

It is mutually agreed by and between the USDA Forest Service, 
hereinafter referred to as the Forest Service, and the Hemet Valley 
Flying Service, Hemet Valley, California, hereinafter referred to as 
the Exchanger, as follows: And then there is a contract with Haw- 
kins & Powers Aviation, GreybuU, Wyoming. And there is a con- 
tract with T.B.M. Incorporated, Tulare, California, hereinafter re- 
ferred to as the Exchanger. Then I have a contract here between 
the Forest Service and T&G/Douglas County Aviation, Chandler, 
Arizona, hereinafter referred to as the Exchanger. 

In all of these contracts the second paragraph is the same: "The 
Forest Service will provide the following aircraft to the Exchanger 
for use as firefighting air tankers, and they may only be flown in 
support of forest brush or rangeland protection." 

Are you familiar with these agreements? 

Mr. Ebbitt. Yes, sir. 

Mr. Rose. Is that not what it says? 

Mr. Ebbitt. Yes, sir; it does. 

Mr. Rose. Now, how does an agency of the Federal Government 
modify that contract with these people? Is this part of the Govern- 
ment's way to do foreign policy, through the U.S. Department of 
Agriculture, just like we saw in arming Iraq? 

I know you don't know the answer to that, but I am very sus- 
picious. And I would ask you how many of these airplanes — the C- 
130's mainly — the P03's were basically useful only as firefighting — 
but the C-130A could be used for many other purposes. I am told 
that only 3 C-130's out of 22 that were actually sold under these 
agreements ever got used for firefighting, and that today you can't 
tell me where the others are. 

We know some are in Saudi Arabia. We know some are in 
France. We know some were stripped for parts. Do you know where 
the other C-130's are, Mr. Ebbitt? 

Mr. Ebbitt. Mr. Chairman, we have gone out to the field and ac- 
tually seen each one of these aircraft. They are here in the United 
States. They are located with the contractors that are doing busi- 
ness with the Forest Service. I have here in my file the exact sta- 
tus of each of those aircraft and where they are located and what 
they are being used for. 

Mr. Rose. Didn't you find some of them — do you know that some 
of them have not been used for support of forest, brush, and range- 
land protection? 

Mr. Ebbitt. Yes, Mr. Chairman. 

Mr. Rose. How many of them were used for forest, brush, and 
rangeland protection and nothing else? 

Mr. Ebbitt. There is a total of 11 that are currently being used 
for firefighting operations. 

We are also aware — early in the program we had two of the C— 
130's that were used overseas in the Persian Gulf operation. 



Mr. Rose. The Persian Gulf operation by whom? 

Mr. Ebbitt. One of the contractors had them overseas hauHng 
cargo during that operation. 

Mr. Rose. Was that permitted by this contract? 

Mr. Ebbitt. No, sir; it was not. That is one of the problems that 
we discovered during the audit process. 

Mr. Rose. All right. Now, I believe that the FAA attempted to 
modify this contract when it issued a general license for flying 
these planes, is that correct? 

Mr. Ebbitt. FAA issues a type certificate for the airplanes to be 
used. The original type certificate said in effect that the planes 
could be used for firefighting purposes and also cargo hauling oper- 
ations. 

Mr. Rose. But that doesn't read like the original contract be- 
tween the Forest Service and each of these contractors, does it? 

Mr. Ebbitt. No, sir; it does not. The exchange agreement con- 
tract that you are reading from was the instrument that the Forest 
Service used with each contractor. The Forest Service attempted to 
use that to tie the operations down to clearly firefighting only. But 
with the FAA's certificate it didn't prevent, obviously, this one con- 
tractor from taking the planes out of the country. 

Mr. Rose. Well, have you made all of that available to the Jus- 
tice Department? 

Mr. Ebbitt. All of that information is included either in the audit 
or the investigation, that is correct, sir. 

Mr. Rose. You haven't highlighted it, I don't guess, have you? 

Mr. Ebbitt. Oh, I think we have. 

Mr. Rose. All right. Now, can you give us a further summary of 
your statement? 

Mr. Ebbitt. Yes, sir. 

Now, as far as the planes that we got in exchange under the pro- 
gram, the U.S. Air Force museum personnel told us that contrac- 
tors' aircraft were not of sufficient historic or monetary value to ex- 
change for the C-130 aircraft. Information from industry sources 
told us that the commercial value of the C-130A ranged from about 
$1.75 million to as much as $3.5 million. Parts on the C-130 can 
sell for as much as $1 million. Therefore, the value ranges from 
$28 million to as much as $67 million for the aircraft that the (jov- 
ernment provided. 

Now, we have talked a little bit about problems with how the 
planes were used. Part of that deals with the exchange agreement 
we have just mentioned. 

The Forest Service had not structured that agreement to be sure 
that aircraft would be used only for the purposes intended. While 
the exchange agreement signed by the agency and the contractors 
did require usage of the planes as firefighting air tankers, the 
agreements did not require the firms convert the planes to air 
tankers nor did it contain any restrictions to prevent contractors 
from selling, transferring, or giving away the aircraft or their 
parts. 

Mr. Rose. Now, who said that? 

Mr. Ebbitt. The exchange agreement required the planes to be 
only used for firefighting operations. 

Mr. Rose. Yes. 



Mr. Ebbitt. One of the flaws in the agreement was that it didn't 
further limit 

Mr. Rose. Wait a minute. If it says it is supposed to be only used 
in support of forest, brush, and rangeland protection, it didn't need 
to say what else it couldn't be used for. All it said was what it 
could be used for. So you are saying a flaw in the contract was it 
didn't go far enough because it didn't spell out what it couldn't be 
used for? That is not real clever, Mr. Ebbitt. 

Mr. Ebbitt. I understand what you are saying, Mr. Chairman. 
I agree that the agreement says use this plane for firefighting pur- 
poses. 

Mr. Rose. Exactly. 

Mr. Ebbitt. That is correct. 

Mr. Rose. And if it is not done that way and if it has been used 
in any other way, that amounts to criminal fraud against the Unit- 
ed States of America in my opinion. And I am going to write the 
Justice Department this afternoon and tell them that I believe that 
they should look at that very carefully. 

Mr. Ebbitt. All of those issues, in fact, Mr. Chairman, are part 
of what we were looking at in both the audit process and the inves- 
tigation process. 

Mr. Rose. Have you talked to the representatives from the Lock- 
heed Corporation? 

Mr. Ebbitt. I don't believe we have talked directly to Lockheed. 

Mr. Rose. Well, Lockheed has sent me information that they 
have found in an Italian newspaper, an advertisement with an Ital- 
ian company's phone number, for selling two C- ISO's and that they 
have discovered that they are included in these agreements. Are 
you aware of that, Mr. Ebbitt? 

Mr. Ebbitt. You are saying that there is an advertisement? 

Mr. Rose. An advertisement in an Italian newspaper, use them 
for firefighting or cargo. 

Mr. Ebbitt. Yes, sir. We are aware that one of the contractors 
has been attempting to sell two of the C- ISO's. 

Mr. Rose. Does the Justice Department know about that? 

Mr. Ebbitt. Yes, sir; they do. 

Mr. Rose. Have they taken any legal action to bring those planes 
back? To get a court order or an injunction against that owner of 
that plane to stop attempting to sell U.S. Government property in 
Italy? 

Mr. Ebbitt. I don't know that the Justice Department has taken 
any action directly. I do know that no sale has been consummated 
as far as those two planes are concerned. And, in fact, those planes, 
as I understand it, have recently been repossessed by a finance 
company that had an interest in financing those planes. 

Mr. Rose. Go ahead and tell me what else is wrong with the 
agreement. 

Mr. Ebbitt. Mr. Chairman, we also have — on those two planes 
in particular, we do have litigation that the Department's general 
counsel is working on as far as those two planes are concerned. 

We talked about problems with how the planes were used. We 
have one contractor we have just discussed that did use two planes 
overseas to carry cargo in the Persian Gulf. We understood that he 



received in compensation or was to receive approximately $925,000 
of compensation for that deal. 

We have another contractor that used the P-3A to test engines 
for a private manufacturer, and we know that one other contractor 
sold over $1 million in parts from aircraft. 

Mr. Chairman, I would like to talk a little bit about the exchange 
broker that you mentioned earlier. The exchanges between the For- 
est Service and the air tanker contractors were brokered by a pri- 
vate individual whose contractor clients received 25 of the 28 air- 
craft eventually transferred. Only 5 of the approximately 15 air 
tanker contractors in the industry received aircraft. 

Four of the five contractors receiving aircraft were clients of this 
broker. For his services, the broker received four of the C-130A air- 
craft from the contractors, which he then sold back to them for a 
little over $1 million. 

Mr. Chairman, as part of the total package there were 35 aircraft 
we are dealing with. I mentioned 28 they actually transferred title 
on. The Forest Service had seven other aircraft where title had not 
transferred, at the time the general counsel issued the opinion in 
late 1989, that this exchange program was not the way to proceed. 

The Forest Service stopped transferring title to these planes at 
that time. However, the planes had, in fact, been delivered to the 
contractors, and they are out there either being used for parts or 
being stored by the contractors at this time. 

Mr. Rose. Let me ask you a question. 

Yesterday's Portland Oregonian, which is called The Oregonian, 
August 4, according to your audit or some copies of your audit that 
they must have or think they have, the reason was that the Forest 
Service had been embarrassed in the past by misuse of military 
aircraft transferred to other parties through museums. 

The reference wasn't explained, but Larry Sail, director of the 
document collection on the CIA's proprietary airlines at the Univer- 
sity of Texas at Dallas, said he had heard of museums being used 
to launder planes for the CIA. When the CL^ established Inter- 
mountain Aviation near Davis-Monthan boneyard in the 1960's, the 
Pentagon knowingly sold the planes for $1 apiece and the Forest 
Service provided firefighting contracts as commercial cover. 

The Forest Service also channeled dozens of its smokejumpers 
into the CIA, and Forest Service employees became top executives 
of Intermountain. Under congressional pressure this was changed 
and so forth. Was that in your audit? 

Mr. Ebbitt. No, sir, that is not in our audit. 

Mr. Rose. Are you aware of those statements? 

Mr. Ebbitt. I read the Oregonian this morning. I am familiar 
with some of the testimony going back to 1976 that talked about 
that, but that is my only familiarity, from reading those docu- 
ments. 

Mr. Rose. Well, do you suspect that the Forest Service was being 
used to funnel aircraft into the CIA's proprietary airline program? 

Mr. Ebbitt. We have absolutely no evidence of that, Mr. Chair- 
man. 

Mr. Rose. But this certainly talks about it in the Oregonian, 
does it not? 

Mr. Ebbitt. Yes, it does. 



8 

Mr. Rose. Have you investigated any of those allegations? 

Mr. Ebbitt. All throughout the audit process we attempted to de- 
termine all the players that were involved, and we had no indica- 
tions that there was any CIA involvement or connection at all. 

Mr. Rose. Don't you agree that the Forest Service should be con- 
cerned about getting as much firefighting power as it can for the 
lowest possible dollar for the U.S. Forest Service? 

Mr. Ebbitt. Yes, sir. 

Mr. Rose. Isn't that the main reason we have been dealing with 
this — these old airplanes — is to get the Government to give us 
items that can help cut down on taxes that we have to pay for run- 
ning the Forest Service? 

Mr. Ebbitt. That is correct, sir. The whole idea of this program 
was to get these needed C-130's out there and — with the concept 
being that, since we provided them the airplane — the Government 
provided the airplane — the contract costs in turn would be reduced. 

Mr. Rose. Is it fair to say that this arrangement stinks the way 
it has turned out? 

Mr. Ebbitt. Mr. Chairman, it has clearly been operated against 
Federal regulations. There is no doubt about that. And it is clear 
that the Forest Service oversight needed to be much stronger in 
this area than it was. 

Mr. Rose. Thank you, sir. 

[The article follows:] 



S(}C C^rcipioman 

Portland, Oregon 
Story that appeared on pi, The Oregonian, Wednesday, Aug. 4, 1993 

By JAMES LONG 

of The Oregonian Staff 

A senior inembGr of CongresE eays he suspects CIA involverrient 
in the U.S. Forest Service's controversial exchange of 28 surplus 
military airplanes for obsolete firofighting craft owned by five 
private companies. 

"It has all the markings of a covert action in the making," 
Rep. Charlie Rose, D-N.C, said Tuesday. "This sort of thing was 
supposed to have stopped in 1976." 

Rose has scheduled a hearing Thuraaay to try to got to the 
bottom of the story. He ie chairman of the House Agriculture 
Committee's subcommittee on specialty crops end natural 
resources, which oversees the Forest Service, a branch of the 
Agriculture Department. 

The plane swap was put together in 1988-89 by Roy D. Reagan, 
now 53, a Medford aircraft consultant. 

In October, the Agriculture Department inspector general's 
office issued an audit report saying the Forest Service had no 
authority to trade the government planes to private parties. The 
Forest Service had obtained the mothballod planes _ 22 Air Force 
C-130A cargo planes and six Navy P-3A patrol bombers _ from the 
Defence Department, 

The planes were worth about $56 million, but auditors said- 
the Forest Service swapped the.Ti to contractors for outmoded 
planes that were basically junk. 

The Forest Service contended that the swap would save the 
taxpayers up to $148 million annually in fire tanker contract 
billings by making it unnecessary for operators to buy expensive 
new equipment . 

[NOTE-->jumps about here{FL}< — NOTE] 

But when investigators went looking, only 14 of the 28 planes 
had been converted to airborne tankers . Nine had been 
cannibalized for parts, four were doing nonair tanker work or 
w^e being sold and one had crashed. ^^^M^^am ^'^nssff^^j^WJ^s^^f^^ — ^ 
f^^^^S^Further-more, only seven of the 14 converted planes we re^^gc:^) 
ra under contract to the Forest Service, the report said. Of these, ^^ 
LX four P-3Ae had been substituted for existing DC-4 air tankers at OL 
\jj^ore than double the rate the Forest Service had been paying .fJ^^^ia^ 
After he arranged the swap, Reagan went to work on another 
deal to get the Defense Departn-.ent to transfer two tank-fighting 
A-lOA Warthog fighter-bombers to the Forest Service. Reagan 
worked for Erickson Air Crane Co. of Central Point, which hoped 
to get a Forest Service contract for converting the warplanes 
into experimental air tankers. 



10 



Rop . Bob Smith, R-Or© . , and then-Rep, Lee AuCoin, D-Or©., 
inserted a line in a defense appropriations bill authorl2in9 t^® 
Air Force to release the A-10b to the Forest Service. But as 
detoilB of the C-130A and P-3A swaps began leaking out, the 
Defense Department abruptly canceled the transfer. 

Rep. Rose said Tuesday that the transactions reminded him of 
the secret Cold War partnership between the Forest Service and 
the CIA, in which the forest agency provided cover, recruitment 
and money for the spy agency's air operations. 

"It was a systematic plan worked out with the cooperation of 
numerous people over a number of years," Rose said. 

The inspector general's report did not mention the CIA, but 
it did lay out the story of how the Forest Service grew to depend 
on private contractors to help fight fires. 

Since the mid-19506, the military has made surplus aircraft 
available to the air-tanker companies as a way of providing 
heavy-lifting capability at low cost. 

Accidents draw attention 
The swap that drew Rose's attention had its beginnings in a 
series of accidents during the 1980s involving military-surplus 
C-119 twin-engine cargo planes. 

When Hawkins & Powers Aviation of Greybull, Kont., sent one 
of its Korean War vintage c-1198 to drop retardant on a fire in 
the Shasta-Trinity National Forest on Sept. 16, 1987, both wings 
fell off. It crashed, killing the crew. 

Use of that model of plane was banned, leaving Hawkins and 
another major Forest Service contractor, Hemet Valley Flying 
Service, with a fleet of uselesB planes. 

One man who understood the problem was consultant Reagan, a 
former Air Force officer who flew everything from air tankers to 
gliders . 

If Hawkins & Powers and Hemet Valley had to replace their 
dozen C-1196 with civilian planes, they would have to negotiate 
new contracts with the Forest Service at much higher rates. 

Reagan went to the Air Force in December 1987 and proposed a 
deal. He suggested that the Air Force give the contractors C-130A 
turboprop transports in exchange for the grounded C-1198. 

According to the audit, it was a one-sided deal. 

It said the contractor's grounded airplanes were worth 
approximately their weight in scrap aluminum, about §15,000, 
while one propeller assembly alone on a C-130A could bring 
$100,000. 

And each of the C-130A'e four engines was worth $250,000 
more than all the old airplanes combined. 

There was, of course, a different way of looking at it. The 
C-130AS were doing nothing for the taxpayers but shading 
rattlesnakoB at the Aerospace Maintenance and Regeneration 
Center, otherwise known as the "bone yard, " at Davis-Monthan Air 
Force Base in Tucson, Ariz. 



11 



To balance the books on the trade, Reagan suggested that the 
Air Force accept the contractors ' old airplaneo as valuable 
museum pieces, trading them Btraight-acroes for the C-130A8. 

The Air Force turned Reagan down. 

Using mueeumB for laundry? 
According to the audit, the reason was that the service had 
been embarrassed in the past by "misuse" of military aircraft 
transferred to other parties through museums. 

The reference wasn't explained; but Larry Sail, director of 
the document collection on the CIA's proprietary airlines at the 
University of Texas at Dallas, said he'd heard of museums being 
used to launder planes for the agency. 

When the CIA eetoblished Intermountain Aviation Inc. near 
the Davis-Monthan bone yard in the 1960e, the Pentagon knowingly 
sold it planes for a dollar apiece, and the Forest Service 
provided firefightlng contracts as commercial cover. The Forest 
Service also channeled dozens of its smoke jumpers into the CIA, 
and Forest Service employees became top executives of 
Intermountain . 

Under congressional pressure, ;he CIA in the 1970b sold 
Intermountain' 6 assets to Evergreen International Aviation Inc. 
of KcMinnvllle and Rosenbalm Aviation Inc. of Kedford. George A. 
Doole, now deceased, the CIA executive who had set up the CIA'« 
world network of proprietary airlines, went on Evergreen's board 
of directors, and Charles Botsford, an Air Force Intelligence 
colonel from Portland who had shared a civilian office with 
Doole, became Evergreen's Washington lobbyist. 

After the Air Force turned down his pitch for a trade with 
the contractors/ Reagan went to the Forest Service, whore he got 
Q friendlier hearing. 

The Forest Service had a direct stake In seeing that its 
contractors got cheap used planes instead of expensive new ones. 
The Forest Service was spending about $10 million a year on air 
tankers for its 191-inillion-acre national forest system. It 
didn't want the cost to soar, and it agreed in February 1988 to 
help get the C-lSOAs. 

The Forest Service would use its position as a government 
agency to draw the 22 surplus cargo planes from the Air Force; 
then it would turn around and swap them to the contractors for 
their old airplanes. The "historic aircraft" would then be 
donated to the national Air Force Museum at Wright-Patterson Air 
Force Base in Dayton, Ohio, 

Or BO the plan went. 

C-119s not exactly historic 
The Air Force Museum, a branch of the Air Force, supervises 
the display of about 1,350 historic military planes at U.S. and 
friendly foreign military bases around the world, including 28 
basfts in the United States. It also lends approximately 325 
planes to 103 civilian muoeums, such as the Smithsonian 
Institution and the Museum of Flight in Seattle. 



12 



The Air Force Museum wasn't enthusiastic about getting a 
flock of decrepit C-119e. 

"The difficulty in finding federal museums to display the 
aircraft brings into question the value of the acquired aircraft 
as historic," the audit said. 

The audit Baid only 12 of an eventual 32 exchange planes 
ended up in federal displays ■ 

Although the "Historic Aircraft Exchange Program" supposedly 
had less to do with culture than with saving the taxpayers money, 
auditors said it didn't save any money, either. 

Besides not having legal authority to transfer the planes, 
auditors said, the Forest Service neglected to write the exchange 
agreements in such a way as to require the contractors to 
actually use the planes as air tankers or prevent their re-sale 
or dismemberment for parte. 

In fact, the Forest Service didn't write the aircraft 
exchange agreement at all, according to sources familiar with the 
case. These sources say Reagan was the author. The Forest 
Service's aviation office took his draft and turned it into a 
government document. 

Some of the plane registrations didn't restrict the aircraft 
to firefightlng use. 

Auditors found that one contractor. Aero Union, used one of 
its surplus Navy P-3A planes for a $189,000 contract to test a 
new engine for a manufacturer and also sold $252,000 worth of 
cannibalized parts. 

When the auditors went to check one C^130A, they found it bo 
completely gutted that they couldn't even prove it had been a 
government airplane, 

"All identifying markings and identification plates hod also 
been removed or obliterated, " the audit said, "to the point that 
we could not determine if the remains were from the exchanged 
aircraft. " 

Word gets out 
There had not even been a requirement that the contractors 
trade planes they already owned. 

"One air tanker company purchased an aircraft from the 
company president to exchange with the Forest Service," the audit 
said, "The aircraft was purchased for $85,000 and then 
refurbished at an additional cost of $63,000. Consequently, the 
contractor capitalized the (exchange) P-3A at $148,000." 

Aero Union was the only company that got P-3As. 

Dale P. Newton, president of Aero Union, called the audit 
report "distorted, " but said "we are not in a position to talk to 
any of the media," and declined further comment, 

Reagan got his consulting fees mainly through contracts with 
Hemet Valley, T.B.M. and Hawkins & Powers entitling him to one- 
third of the airplanes they received from the government. The 
problem with this arrangement, auditors said, was that Reagan 
wasn't on air tanker operator. 



13 



Reagan ultimately received four C-130Ae and eold them for 
$1.1 million to two air tanker companies. 

As word about the aircraft exchange program leaked out, the 
Forest Service found iteelf contending with a gold rush of other 
aviation companiee wanting eimilar deals. 

On© would prove to be the program '8 undoing. 

William W, "Woody" Grantham, en owner of TSG Aviation of 
Chandler, Ariz., and one of the old-timere in the air tanker 
bueineee, heard about th© C-130A swap and demanded to get in on 
it. 

The Foreet Service refused, and Grantham went to Sen. Joh.-. 
McCain, R-Ariz., and raised hell. 

The Forest Service traded C-130AB to Grantham on Sept, 30, 
1989. He bought two others from Reagan. 

What blew the Forest Service exchange program out of the 
water was a commercial cargo job Grantham accepted during the 
Persian Gulf War in March 1991. He used two planes to fly 
firefighting equipment to the Persian Gulf and was spotted by a 
rival . 

Litigation eats up profits 
Grantham said Southern Air Transport had complained that his 
planes were supposed to be restricted to firefighting, even 
though the State Department had asked for the planes and th© FAA 
had approved . 

Grantham's company made close to $1 million on the Gulf Job, 
but it cost him more than that to fight the subsequent 
investigation . 

Until the 19706, Southern Air Transport had been owned lock, 
stock and barrel by the CIA, which subsequently eold It to the - - 
people who ran it. 

Southern was making a fortune flying cargo for the Gulf war. 
Its workhorse was a fleet of L-lOOs, a civilian version of the C- 
130. 

Grantham's Forest Service contracts dried up overnight. He 
couldn't fly the C-130Ab domestically, and he couldn't sell them 
overseas because the plane is still on th© U.S. munitions list 
and the government wouldn't grant him an export waiver, 

Grantham blames Southern and its CIA and Bush-adir.inistration 
connections . 

Pacific Harbor Capital Co., a Portland subsidiary of 
PacifiCorp, which had financed two of th© planes, repossessed 
them. They are still for sale. 

One of Grantham's former lawyers in San Francisco said he 
thought the real story inside the Forest Service air tanker story 
did have to do with the CIA, but not in the way most people would 
think. 

"I don't think it's about the CIA trying to build a secret 
air force," said the lawyer, who asked not to be named. "But it's 
about the CIA, or people very close to the CIA, using their 
Washington connections to squash a competitor. That's the story." 



14 



Judy Schneeman, corporate communications manager for 
Southern Air; eaid that eimply wasn't true. She said Southern Air 
waB no longer connected to the CIA and that it had properly 
expresoed concerns about the legality of Grantham's flights and 
the eafoty of the C-130AB. 

"They have no maintenance program," Bhe eaid, "They are not 
certificated by the FAA or anyone elBQ to be airworthy." 

Reagan, meanwhile, was hard to reach for comment. Messages 
left with a family member resulted in a returned telephone call 
that ended up in voice-moil . 

"According to my knowledge," Reagan eaid, "the historic 
aircraft exchange program, I think it's really a good program. 
It's the way the air tanker industry has been getting new 
aircraft for use in the firefightlng business for in excess of 20 
years . " 



15 

Mr. Ebbitt. If I could conclude, Mr. Chairman, about the rec- 
ommendation we made in the audit report and where we stand on 
these issues today. 

The Forest Service has taken some strong action in dealing with 
the issues since we issued our audit report. We recommended that 
they obtain a legal opinion on whether the aircraft transferred to 
contractors could be recovered. We recommended that they 
strengthen the exchange agreements to preclude improper use or 
disposition. We recommended that they disallow over $2 million 
charged by the contractors for the value of the aircraft they t/aded 
in and any costs paid to the broker for the four C-130's that he 
obtained. 

The Forest Service has taken action to obtain and tighten the 
FAA certificate issued for the planes. Specifically, the aircraft use 
was limited solely to firefighting. 

The agency took action to get those two planes back from the 
Persian Gulf when they became aware of the situation. The Forest 
Service agreed to develop written procedures and make organiza- 
tional realignments as far as who was going to handle the contract 
process for these planes within the organization of the Forest Serv- 
ice. They agreed to disallow costs associated with the broker's pay- 
ment and the contract costs. 

How to deal with the future. The Department established the 
task force to resolve the ownership issues involving the C-130's 
and P-3A and what would be the future role of the Forest Service 
in providing these aircraft to the contractors. We participated with 
the Forest Service, along with the General Counsel's Office and the 
Office of Operations, the contracting agency at the Department. 

A number of recommendations have been developed by the task 
force and are under consideration by the Department at this time. 
We believe that, obviously, you have to have Defense as a partner 
in this — whatever agreement is reached since they are their air- 
craft. General Services Administration, the Government property 
experts, Department of Interior which has firefighting contracts, 
they all need to be involved in the final decision process. 

Our recommendations to the Forest Service for future operations 
came directly out of the task force options. There were six options 
developed. Two of them, we felt, were reasonable options. One, of 
course, is Government-furnished property operated by the contrac- 
tors. The second was an option whereby a competitive sales 
process 

Mr. Rose. Well, thank you for your suggestions, but I think, 
clearly, more is needed than just policy review, i think this sub- 
committee needs to consider, in conjunction, hopefully, with the De- 
partment of Agriculture, some legislation to spell this out so no- 
body misunderstands in the future. I think the Justice Department 
has to conduct a very thorough investigation into possible criminal 
fraud involved here. I certainly am interested in how the Forest 
Service was used to carry out foreign policy for our Government, 
and I think everybody should know that. 

And you have given us good testimony, but I would now like to 
yield to my colleagues who may have some questions. 

Mr. Ebbitt. Thank you. 



16 

[The prepared statement of Mr. Ebbitt appears at the conclusion 
of the hearing.] 

Mr. Rose. Any questions? 

Mr. VOLKMER. Yes, I have questions. 

First, I would like to know the name of the broker. 

Mr. Ebbitt. The name of the broker the chairman mentioned 
earlier in the discussion — his name is Roy Reagan. 

Mr. VOLKMER. That is actually his name? 

Mr. Ebbitt. Yes, sir. 

Mr. VOLKMER. Not a pseudonym? 

Mr. Ebbitt. Not to my knowledge. 

Mr. VOLKMER. OK. You have found that these C-130's — how 
many of them were actually used for firefighting? 

Mr. Ebbitt. Mr. Volkmer, I believe the numbers are 11 have ac- 
tually been used for firefighting. Others are being used for parts 
to keep those 11 operational. 

Mr. Volkmer. So you have had 11 actually converted? 

Mr. Ebbitt. Yes, sir. 

Mr. Volkmer. Out of the total. 

Mr. Rose. Would the gentleman from Missouri yield and let me 
ask him one question? 

Mr. Volkmer. Yes. 

Mr. Rose. You might inquire for both of us what happened to 
Roy Reagan's financial situation as a result of these arrangements? 
Is he a poor broken cowboy today or is he very wealthy? 

Mr. Ebbitt. I don't know the answer to that question. I do know 
that he received about $1 million for the brokering of the operation. 

Mr. Volkmer. Well, didn't he get a couple aircraft, too? 

Mr. Ebbitt. Well, that is correct. He got four airplanes, and he 
sold them back to the contractors. That combined with another 
payment that he got from one contractor totals about $1 million. 

Mr. Volkmer. Do you know who his contacts were within USDA? 

Mr. Ebbitt. He had primary contact with one of the Forest Serv- 
ice employees that is the subject of the audit and the investigation 
at the present time. 

Mr. Volkmer. Are you free to divulge that person's name? 

Mr. Ebbitt. Mr. Volkmer, since the investigation is still being 
discussed with the Department of Justice and administrative ac- 
tions are being considered by the Department, I would prefer not 
to. 

Mr. Volkmer. I will bet you just about everybody else knows his 
name. How do you do something like this without knowing? 

Mr. Ebbitt. It is a question, Mr. Volkmer, that perhaps you want 
to ask the Forest Service when they testify. 

Mr. Volkmer. You had mentioned in here the C-119's value 
around $10,000? 

Mr. Ebbitt. The planes that were being given back to the Gov- 
ernment to complete the exchange were roughly valued between 
$10,000 and $15,000. That is correct. 

Mr. Volkmer. Do you know anybody else that wants to exchange 
stuff like this? I bet you I have a lot of people out here that would 
like to do this. You don't have to comment on that. 

But how many air tankers do you know — does the Forest Service 
actually — I have no further questions, Mr. Chairman. 



17 

Oh, I do, too. Where is Roy Reagan from? 

Mr. Ebbitt. I beheve he is from Oregon. 

Mr. VOLKMER. Do you know what part of Oregon? 

Mr. Ebbitt. I think it is in the Medford-Eugene area. 

Mr. VOLKMER. What is his occupation? 

Mr. Ebbitt. I don't really know the answer to that question. I do 
know that he has been involved with the air tanker industry for 
many years in various capacities. At some point, he has v/orked for 
some of the contractors. In fact, in the 1990-91 period, he was di- 
rectly employed by one of the contractors. 

Mr. VoLKMER. Do you know what his political affiliation is? 

Mr. Ebbitt. No, sir; I don't. 

Mr. VOLKMER. You ought to check any official EEC reports to see 
if he has made any contributions to any political parties during 
this timeframe. 

Mr. Ebbitt. Not during the audit process we did not. 

Mr. VoLKMER. Thank you, Mr. Chairman. 

Mr. Rose. Thank you, sir. 

Mr. GOODLATTE. Mr. Chairman. 

Mr. Rose. Go ahead. 

Mr. GoODLATTE. Thank you, Mr. Chairman. 

Mr. Ebbitt, I noticed in your testimony that you initially indi- 
cated that the Department of Defense was not interested in partici- 
pating in this. What was it about the Forest Service getting in- 
volved that caused them to change their mind and participate with 
the Forest Service? 

Mr. Ebbitt. Two things, I think. One, everybody recognizes the 
need for the air tankers. There isn't any doubt that they are need- 
ed out there in the firefighting operations. 

Two, as it was explained to us by Forest Service management of- 
ficials, they believed that they had understandings with the De- 
partment of Defense and GSA as to how this program would oper- 
ate and that the exchange program was, in fact, an OK program 
to use. They had been told this by a mid-level employee of the For- 
est Service, and they apparently accepted his word on that. 

Mr. GoODLATTE. Do we have anywhere in this material a list of 
the planes that were exchanged for these planes that Federal mu- 
seums received? 

Mr. Ebbitt. We have that information. It is in the audit report, 
and I can provide that to your offiice if you would like that. 

Mr. GOODLATTE. Has an assessment been made of the value of 
those planes received? 

Mr. Ebbitt. Yes, sir. The value of those planes — for each plane — 
is in the area of $10,000 to $15,000 on average. The contractors ac- 
tually had to go out and purchase airplanes to complete the ex- 
change. Many of the planes were planes that the museums didn't 
want, didn't have a real need for in the first place. Essentially, 
they agreed that they were not really historic — of historic value. 

Mr. GOODLATTE. Did they take them nonetheless or did they pro- 
test or what did they do on that? 

Mr. Ebbitt. In some cases, the Federal air museums have taken 
some of these planes. I believe there is a private museum in Ari- 
zona that has taken some planes. I believe now all of the planes 
have actually been placed. 



18 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. Rose. Thank you, sir. 

Let me ask a couple of questions. 

Mr. Ebbitt, I have a letter here from the Air Carrier Association 
Incorporated — National Air Carrier Association Incorporated — 
which says we subsequently learned that some of the aircraft made 
available for firefighting purposes had been transferred in 1991 to 
the Middle East and were being used by the Bechtel Corporation 
for transfer of cargo between various points and Kuwait. Is that 
substantially what you found? 

Mr. Ebbitt. Yes, sir. 

Mr. Rose. Bechtel was using the T&G Aviation C-13'Os that it 
got from Roy Reagen, is that correct? 

Mr. Ebbitt. One of the aircraft was obtained from Roy Reagan 
and one was obtained directly from the Forest Service. 

Mr. Rose. Now, how many contractors are you aware of who 
charged their brokerage fees that Roy Reagan charged them back 
to the Forest Service by including it in their contracts with the For- 
est Service? 

Mr. Ebbitt. Mr. Chairman, all of the contractors that paid a fee 
of some sort to Roy Reagan, the plan was to charge that back. 
When we brought that to the attention of the Forest Service, the 
Forest Service agreed to disallow that cost in the contract process, 
so I suspect that none of those costs have actually been paid. 

Mr. Rose. All right, but you said the plan was to let them charge 
it back. That wasn't your plan? You stopped it when you found it, 
is that correct? 

Mr. Ebbitt. That is correct, sir. 

Mr. Rose. But you believe that there was a plan at the Forest 
Service to allow the brokerage fees for the illegal sale of these air- 
planes to actually wind up in the Forest Service's contract for fire- 
fighting? 

Mr. Ebbitt. I don't think that the Forest Service had made a 
conscious decision to do that, Mr. Chairman. 

Mr. Rose. Why did you say there was a plan? 

Mr. Ebbitt. The plan really on the part of the contractors was 
to submit those costs as part of their overall costs which would 
eventually end up being paid under the contract. 

Mr. Rose. Don't you think these contractors were rather bold in 
the way they were working with the Forest Service? 

Mr. Ebbitt. Yes, sir; I do. And it was clearly, in our minds, not 
an allowable cost to charge. 

Mr. Rose. Did you ever have any suspicion? Wouldn't this lead 
reasonable people to assume that these bold contractors doing 
things like this with the Forest Service might feel that they had 
some permission from places higher up in the Federal Gk)vernment 
such as the CIA, the White House, or the State Department to do 
something like that? Did that thought ever pass through your 
mind, Mr. Ebbitt? 

Mr. Ebbitt. Well, we clearly asked those kinds of questions of 
the Forest Service, and we didn't have any indication that that was 
the plan. 



19 

Mr. Rose. I understand. I doubt that anybody would admit to 
that. But, clearly, the planes were misused from their original legal 
purpose, is that correct? 

Mr. Ebbitt. Some of the planes were, that is correct. 

Mr. Rose. How many is some? 

Mr. Ebbitt. Well, quite a few of the planes were used for parts 
by the contractors who didn't really have the authorization to do 
that. We know about the planes in the Persian Gulf. We know 
about the plane that was used to test engines. 

Mr. Rose. We won't pin you down to numbers, but you say the 
Justice Department knows all of this? 

Mr. Ebbitt. That is correct, sir. 

Mr. Rose. Are any additional audits being done right now by you 
to get more information? 

Mr. Ebbitt. Yes, sir. In fact, we have been participating with the 
rest of the IG community in a general audit of aircraft use, inven- 
tories and that sort of thing. 

One of the things we are looking at right now is — putting aside 
the C-130 and this exchange program for just a minute — we are 
looking at the general contract and all the costs being charged by 
contractors under the program to the Forest Service: Operating 
costs, flying hours, all that and all the expenses that go into that 
base for reimbursement. And that audit is underway. We should 
have it completed within the next several months. 

Mr. Rose. Thank you all very much. 

Mr. Ebbitt. Thank you, sir. 

Mr. Rose. We will excuse you at this time and call Mr. Gary 
Eitel, Northwest Express Limited, from Silverdale, Washington, to 
come forward. 

Mr. Eitel, I believe you have — basically, your statement would be 
the letter that you sent me, is that correct? 

Mr. Eitel. Yes, Mr. Chairman. 

Mr. Rose. Why don't you go through that? 

I want to thank you very much. You have done a great public 
service, sir. You have done a great public service by writing this 
subcommittee and giving us actual copies of these agreements. I 
really thank you very much. You have done the country a great 
service. I want to applaud you for being willing to stick your neck 
out and give that to us. 

I would tell the subcommittee that we only got this letter early 
this morning. And after I saw what was in it, I don't blame you 
for giving it this morning, you understand. So if you will proceed, 
we will be glad to hear from you any details we haven't already 
covered. 

STATEMENT OF GARY R. EITEL, PROFESSIONAL PILOT AND 
AVIATION CONSULTANT, NORTHWEST EXPRESS LTD., 
SILVERDALE, WA 

Mr. Eitel. Mr. Chairman, with your permission, I will read my 
statement into the record. 

You are applauded for your initiative and this hearing to inves- 
tigate the U.S. Forest Service program pertaining to forestry fire- 
fighting aircraft, the Lockheed C-130 and A- 10 Warthog jet air- 
craft. The issue of mismanagement or misconduct on the part of 



20 

the Forest Service concerning their aviation program is an under- 
statement. At play is unreasonable restraints upon and monopo- 
lization of trade and exclusive dealing, all of which are prohibited 
under the Sherman Antitrust Act and the Clayton Act. 

My point of view in this matter was influenced by the statements 
contained within the final report by Senator Frank Church, chair- 
man of the Senate Select Committee to Study Governmental Oper- 
ations with Respect to Intelligence Activities, and the widely pub- 
licized newspaper articles concerning the Central Intelligence 
Agency, CIA, 1976 to current date. 

My aviation background furthered my understanding of the is- 
sues. I am a professional pilot and former military aviator. I am 
a military combat pilot from the Vietnam era. My military service 
spanned 1960 through 1979. As a professional pilot and aviation 
consultant, I hold the senior ratings of the profession, to include 
airline transport with jet aircraft ratings. I have logged just under 
11,000 hours pilot flight time. 

The U.S. Forest Service is mired in controversy concerning the 
C-130 and A- 10 aircraft program. The conduct of the Forest Serv- 
ice has raised serious questions of CIA involvement. This should 
not be a surprise or something out of the ordinary. Both agencies 
have had a longstanding hand-in-glove relationship as admitted in 
the Church report and extensive news articles, to include that of 
the Oregonian in 1988 by James Long and Lauren Cowen in a 
nine-series article. 

In 1991, numerous clients of mine became interested in Govern- 
ment contract opportunities. In furtherance of business interests, I 
began looking at opportunities involving the U.S. Forest Service, 
the U.S. Postal Service, and the Military Air Logistics Command. 
It became apparent and clear there were a select few doing busi- 
ness of major importance with these agencies and that these select 
few had extensive CIA involvement in their background. 

Questions began to percolate to the surface concerning the 
amount of CIA influence in the trade and marketplace. The U.S. 
Forest Service and the U.S. Postal Service kept a secret agenda 
concerning these issues. This has been revealed to a certain degree 
by agency audits, investigations, and Government committee hear- 
ings. 

Again, in 1991, business interests brought me in contact with the 
U.S. Forest Service concerning aviation contract opportunities. I 
had read an August 1991, aviation magazine article concerning a 
new program just implemented by the Forest Service involving 
former mihtary C-130 aircraft, that being four-engine turbine pow- 
ered. 

On the surface, using C-130 aircraft as a firefighting water tank- 
er seemed appropriate with the times and available technology. In- 
quiries to the Forest Service were initially stonewalled, with misin- 
formation or no information at all. 

Industry sources revealed two separate programs involving 

Mr. Rose. Let me stop you there. Inquiries to the Forest Service 
were initially stonewalled. Did you ever ask the people at the For- 
est Service about this? And did they tell you the truth or not? In 
writing or orally? 

Mr. ElTEL. I did on both. 



21 

Mr. Rose. You did both, write them letters about this program 
and orally talk to them? 

Mr. ElTEL. I did. 

Mr. Rose. Did they tell you the truth? 

Mr. ElTEL. Not in all things. 

Mr. Rose. OK. Go ahead and finish your statement. 

Mr. ElTEL. Industry sources revealed two separate programs in- 
volving C-130 and A- 10 fighter aircraft. I was initially told the A- 
10 program involved a military experiment that would convert A- 
10 fighter planes to civilian water tankers, an unlikely concept be- 
cause of the dangers involved using a former military jet that, in 
addition, could be radioactive because of its munitions, spent ura- 
nium ammunition. 

In 1991, I was told and believed the C-130 program was being 
managed by the U.S. Forest Service and the A-10 program was 
handled by the military under the direction of an aeronautical en- 
gineer named Roy Reagan. 

Initial contacts with the Forest Service in 1991 amounted to 
their statements there were only three C- ISO's involved in the pro- 
gram, and, considering its infancy, that being 1991, the program 
was closed to anyone other than those already participating with 
the three aircraft. 

For verification of these statements, I contacted 

Mr. Rose. Wait a minute. Let me stop you there. With these 
three types of aircraft, don't you mean? 

Mr. ElTEL. No, three C-130's. 

Mr. Rose. Now, how many A-lO's had you ever heard in the pro- 
gram — and we will ask Mr. Robertson that in just a moment — but 
do you have any idea how many A-lO's were ever involved? 

Mr. EiTEL. At least 2, with 25 to follow. 

Mr. Rose. So you think there might have been as many as 27 
A-lO's? 

Mr. ElTEL. There could have been. 

Mr. Rose. And that is a jet fighter aircraft? 

Mr. ElTEL. Yes. It was the one that was heroically used in the 
Desert Storm war, I guess of 1990, 1991. 

Mr. Rose. Do you know of an A-10 being used to fight forest 
fires? 

Mr. EiTEL. No, sir. It is not practical. 

Mr. Rose. Thank you, sir. Go ahead. 

Mr. ElTEL. For verification of these statements I contacted the 
General Services Administration legal counsel and was surprised to 
learn there were more than 28 four-engine turbine-powered aircraft 
involved in the program, 22 C-130's and 6 P-3A's. 

GSA's legal counsel further explained the program was in trouble 
because several C- ISO's had been caught operating in Kuwait, ap- 
parently without authority to do so. I was told the Forest Service 
had requested GSA to issue a position paper exonerating the Forest 
Service of any wrongdoing in the affair. GSA was reluctant to do 
so, and this reluctancy, among other reasons, had put the C-130 
program on temporary hold. 

In early 1992, I became incensed with the Forest Service's efforts 
to circle the wagons. In hopes of clearing up the underlying facts, 
I began numerous inquiries to the Forest Service under the Free- 



22 

dom of Information Act. Their responses were untimely, irregular, 
and, in certain matters, untrue. I intentionally drew a line in the 
sand between the Forest Service and myself concerning their mis- 
behavior. 

At the same time, I had a business associate in the aviation in- 
dustry contact me, explaining his extreme concern because he was 
associated with the C-130's that were caught operating in Kuwait. 
This associate revealed the framework of a covert military oper- 
ation involving Southern Air Transport and Evergreen Airlines, 
both of which have admitted former military and CIA ties. I be- 
came personally concerned that I had inadvertently stepped into a 
covert CIA operation involving C-130 and A-10 fighter aircraft. 

In late 1991, I mistakenly believed a C-130 program was merely 
mismanaged by the Forest Service. It appeared millions of dollars 
were being unnecessarily wasted — taxpayers money. A potentially 
feasible C-130 program appeared to have jumped the tracks, and 
the Forest Service was neither candid nor truthful when asked 
about the C-130 program. 

As a former law enforcement officer, I was concerned there was 
criminal wrongdoing at play, and I filed a complaint with the De- 
partment of Agriculture's Office of Inspector General in Washing- 
ton, DC. 

Later on, in 1992, I learned my initial complaint to the OIG had 
instigated a full-blown audit of the C-130 program. 

When contacted by the OIG's office, I agreed to cooperate in any 
way possible. The OIG asked questions concerning Roy Reagan and 
Del Rio Flying Service. I was shocked to learn there were CIA foot- 
prints everywhere. 

To my surprise, the Government believed Roy Reagan was a key 
player in the C-130 program and had little or no knowledge of a 
blossoming military program involving Roy Reagan and A-10 fight- 
er planes to be used by the Forest Service in the same program as 
the C-130 aircraft were to have been used. 

In late 1992, the Office of Inspector General issued audit report 
No. 08097-2-At pertaining to the Forest Service's mismanagement 
of the C-130 and P-3A program. I was surprised and at the same 
time amused at the report's contents. There was no mention what- 
soever of Roy Reagan and the A-10 fighter plane program that was 
also associated in some way with the U.S. Forest Service C-130 
program. I quickly realized the OIG's audit was merely the tip of 
the iceberg of a growing political scandal raising questions of CIA 
involvement with the U.S. Forest Service programs. 

Also in late 1992, the business associate who had spoken with 
me earlier and explained his part in the C-130's that were caught 
in Kuwait was suddenly killed. This was a sad note in the whole 
sordid affair. The individual was truly a fine gentleman and the 
John Wayne of aviation. 

In early 1993, I was put in contact with the criminal division of 
the Office of Inspector General for the Department of Agriculture. 
I learned the OIG audit was indeed merely the tip of the iceberg. 
I cooperated fully with the OIG's criminal division. I, too, have be- 
come weary of the corruption in Government and certainly of the 
CIA's misguided agenda. 



23 

The truth concerning the C-130 and A-10 program is far from 
being told. Hopefully, this honorable subcommittee can get to the 
bottom of all that is at play. The result could be beneficial for ev- 
eryone concerned. 

There are legitimate needs for both the U.S. Forest Service and 
the CIA. The question arises whether these needs go hand in hand. 
I, for one, do not believe so. What I have seen and heard convinces 
me hundreds of millions of dollars of taxpayers' money has been 
wasted for programs that were unneeded or misguided. The avia- 
tion industry has suffered tremendously because of CIA involve- 
ment in the marketplace. 

As one who has formerly worked with the CIA in one form or an- 
other, I support their existence. I simply question the reasonable- 
ness of commingling intelligence affairs with the affairs of the U.S. 
Forest Service or, for that matter, with the affairs of the U.S. Post- 
al Service or other legitimate Government agencies. 

Mr. Chairman, I hope my appearance before this subcommittee 
has been helpful. There is a lot more work to be done before there 
can be a turnaround in programs that are surely heading down the 
path of doom. 

[The prepared statement of Mr. Eitel appears at the conclusion 
of the hearing.] 

Mr. Rose. Mr. Eitel, I thank you again. This is a great public 
service that you have done for us. 

I would like Mr. Ebbitt, if he will come back and sit right beside 
you at that other microphone. 

Mr. Ebbitt, why was there never a report about the A-10 pro- 
gram? Did you know about the A-10 program? 

Mr. Ebbitt. Yes, Mr. Chairman. We were aware of the A-10 pro- 
gram. We became aware of that as we were working on the C-130, 
and we had some discussions with the Forest Service. 

In fact, I would have to go back and do a record search to fully 
recall, but the Forest Service had — there had been some discus- 
sions about a contract to convert the A-lO's to test to fmd out 
whether they could operate as air tankers or not. 

Mr. Rose. How many of them were involved? 

Mr. Ebbitt. I don't know that. 

Mr. Rose. Well, Mr. Eitel says there were maybe as many as, 
say, 25 or more? 

Mr. Ebbitt. That is very possible. There was discussion 

Mr. Rose. You say that is very possible. Why would you say that 
unless you had some knowledge about the program? 

Mr. Ebbitt. Well, only because I am very aware that there was 
discussion to determine if it made sense to use A-lO's in firefight- 
ing operations. I don't know how many they might have been talk- 
ing about, but that discussion was on the table. 

Mr. Rose. You heard Mr. Eitel say that he thought, from his ex- 
perience, that an A-10 was very inappropriate for fighting fires. 
Have you heard anybody else say that? 

Mr. Ebbitt. Yes, I have heard people in the Forest Service say 
that very same thing. 

And, in fact, the contract — the proposed contract or if it was con- 
summated — is not being carried out at the present time. It is my 
understanding that the Forest Service has made the decision that 



24 

the A-10 is not feasible to use in firefighting operations and that 
program is dead. It is not going anywhere. 

Mr. Rose. Right. But it might have gone from 25 to 27 planes 
before it died. You don't know? 

Mr. Ebbitt. I don't know that. 

Mr. Rose. Thank you, sir. 

Any questions by any other members of the subcommittee? 

Thank you all. 

Mr. Eitel, is there an3^hing else you want to tell us based on 
what you have heard here today or any other comments? 

Mr. ElTEL. Yes, Mr. Chairman. 

I have been in aviation all of my adult life. I began as a military 
pilot, I served in Vietnam in 1968 and 1969, I have worked with 
the CIA, and I have no problem with the concept of the CIA's mis- 
sion. 

When I saw for the first time the C-130 opportunity in 1991, I 
had an illusion that the program just started in 1991. I was sur- 
prised, to say the least, after the freedom of information responses 
that I received in 1992 that Mr. Fuchs and Mr. Dale Robertson of 
the Forest Service had told me untruthful statements. 

Mr. Rose. What did they tell you that you thought were untruth- 
ful? 

Mr. Eitel. In the latter part of 1991 Mr. Fuchs assured me there 
was only three C-130's in the air tanker program period. 

Mr. Rose. Who is Mr. Fuchs? 

Mr. Eitel. He was a manager in the Forest Service Aviation Di- 
vision. 

When GSA's legal counsel said, no, there are 22 C-130's, I 
thought maybe GSA counsel was incorrect. I tried to reconfirm that 
with Mr. Fuchs' office, and it was still three aircraft. 

As a courtesy not to falsely accuse Mr. Fuchs, I went after that 
very same information under the Freedom of Information Act. In 
January of 1992 — January 2, I believe it was — I wanted to know 
everything there was to know about a C-130 program. Nearly 30 
days later, the Forest Service said 

Mr. Rose. In writing? 

Mr. Eitel. In writing in response to that Freedom of Information 
Act, that the Saline statement — we don't have any control over 
those aircraft. They belong to somebody else. And I am thinking 
that can't be so. 

My business associate who explained his affairs, that he was in 
Kuwait, in position, possibly, for CIA work if they needed him, 
gave me more insight — additional insight to the C-130 overall pro- 
gram. I didn't feel the Forest Service was being truthful in even 
the freedom of information response. 

I then appealed that, and I took it up to the level of Mr. Robert- 
son personally. He referred in December of 1992 back to the very 
first freedom of information response to me from the Forest Serv- 
ice, eluding and specifically stating in writing that I knew from the 
enclosures to the first freedom of information response the big pic- 
ture, the overall story. I went back and read that. 

And the big picture in the first freedom of information response, 
we gave them away and have no control over them, but then their 
second response in February of 1992, at my persistence, says, we 



25 

have specific control. They cannot be used for anything less than 
air tankers and only in support, not of firefighting per se, but 
brush, forest, and rangeland protection which even further wired it 
down. 

When that issue was previously talked about with Mr. Fuchs in 
1991, he inquired what my agenda was if the program opened up 
and more than three aircraft were let loose. I said I would go along 
with whatever restrictions. Now, in 1991 I didn't have the privilege 
of the exchange agreements, and I didn't know the overall param- 
eters of those agreements. 

Mr. Rose. Can you submit those to us for the record? 

Mr. ElTEL. I can, sir. 

Mr. Rose. Thank you. 

[The hearing continues on page 79; the requested material fol- 
lows:! 



26 



National Air Carrier Association, Inc. 



1 730 M Street, N.W., Suite 806. Washington. DC. 20036-4573 
(202) 833-8200 FAX: (202) 659-9479 



Edward J- Dnscoll 
President 



July 28, 1993 



The Hon. Charlie Rose 

Chairman 

Subcommittee on Specialty Crops and 

Natural Resources 
Committee on Agriculture 
2230 Rayburn House Office Building 
Washington, D.C. 

Dear Mr. Chairman: 

In connection with your Hearings to commence on August 5, 1993 
concerning the U.S. Department of Agriculture's Forest Service 
transfer of C-130 aircraft, we were requested by your Committee 
Staff to provide an input of our activity in connection with the 
C-130's. 

NACA is a Trade Association representing U.S. airlines, certifi- 
cated to perform both passenger and cargo service on a scheduled 
and/or charter basis domestically as well as on a world-wide basis. 
One of our carriers, Southern Air Transport, operates L-lOO 
aircraft, in addition to others, the commercial version of the 
C-130. That carrier in addition to providing cargo service on a 
world-wide basis has, from time-to-time provided support service to 
the Forest Service. Another member. Evergreen who operates world- 
wide service, both scheduled and charter for the movement of cargo, 
has in the past served the Forest Service by providing aircraft and 
crews for firefighting purposes. 

When NACA first learned of the proposed transfer from DOD to the 
Forest Service of C-130 aircraft, we contacted Mr. Fred Fuchs to 
learn how they intended to employ the aircraft and by whom. We 
were advised at that time that they intended to let bids and 
provide C-130 aircraft as government furnish equipment and would 
award to the successful bidder a contract to provide fire fighting 
services utilizing the C-130 's. We requested that we be added as 
an addressee on any request for bids so that we would be cognizant 
of their requirement and keep our members advised. 

We later contacted Mr. Fuchs and arranged an appointment to find 
out what had happened because we had learned the aircraft had been 
transferred to specified operators for fire fighting purposes. 
During that conference '..e learned that carriers had been selected. 
However, we were unable to determine the basis of the selection and 
learned that they had not only made C-13 aircraft available, but 



Members; Airborne Express ■*■ American Trans Air •>■ Emery Worldwide + Evergreen International Airlines ■*■ 
Miami Air International + Southern Air Transport + Tower Air + World Airways •>■ 



27 



The Hon. Charlie Rose 
July 28, 1993 
Page 2 . 

had transferred title to those aircraft to specific operators. We 
questioned what legal authority was used and were told that trans- 
fer was under GSA rules and regulations. We were told that addi- 
tional aircraft would probably become available at which time they 
certainly would consider anyone that wanted to be involved. 
Mr. Chairman, I am attaching hereto a chronology of correspondence 
we have had between the Department of Agriculture, the Forrest 
Service and NACA as well as others with regard to these aircraft. 
I am also appending hereto copies of that correspondence. In that 
correspondence we questioned the legal authority used for the 
transfer or these airplanes. We did not receive a response to that 
letter until March 1990 even though we had made several follow-ups. 
The Department in its response defended the transfer, claimed that 
it was legal and that all interested carriers had been afforded an 
opportunity to participate. We subsequently learned that some of 
these aircraft made available for firefighting purposes had been 
transferred in 1991 to the Middle East and were being used by 
BECHTEL Corporation for transfer of cargo between various points 
and Kuwait. At that time we queried the Forest Service as to how 
those airplanes were removed from the United States since an export 
license was required. The Forest Service stated that it had not 
been cleared by them, that this was something handled by the State 
Department. We therefore sent a letter to the Secretary of Agri- 
culture and to the FAA and the Department of State, requesting that 
these aircraft be returned to the United States. Several months 
passed and we sent another letter to the Secretary of Agriculture 
requesting that they reclaim these airplanes and institute action 
against the operator for utilizing the aircraft for other than fire 
fighting purposes in violation of the FAR's of the Federal Aviation 
Administration. At that time TiG was directed to return the air- 
craft to the United States and they did return the aircraft . 

Subsequently, upon the issuance of the Inspector General's Report, 
we noted that the Inspector General questioned the legal authority 
used for transfer and made tentative findings that they had been 
transferred illegally and recommended that action be initiated to 
recover these airplanes. We therefore, dispatched a letter to the 
Secretary in November of 1992 requesting the Forest Service to 
recover the aircraft and any funds gained from the use or sale in 
view of the fact they were not legally transferred. We made 
follow-up's and were told that the answer could only be given when 
a new Secretary of Agriculture was aboard. To date no reply has 
been received. 

I am sure you are aware T&G is presently in bankruptcy and they are 
contemplating the sale of two of the C-130's to Aeropostal of 
Mexico . 

Mr. Chairman, the C-130's are restricted category aircraft and use 
for other than restricted category purposes under the FAR' s is 



28 



The Hon. Charlie Rose 
July 28, 1993 
Page 3 . 

illegal. To transfer the aircraft outside of the United States 
requires an export license from the Department of State. The 
Department has on several occasions issued export licenses. The 
latest of which is for Multitrade Corporation, to export an 
aircraft that has been in Brazzaville for over three years and they 
authorized a dry lease of that aircraft to the United Nations. 

The C-130 as a non-certificated aircraft and obtained free or for 
very few dollars from the United States Government poses a real 
threat when used illegally for commercial operations for 
compensation or hire to the operators of commercial aircraft who 
have to pay millions of dollars for civil certificated aircraft 
only to find that they are competing with a sub-standard aircraft 
from the military and cannot compete against some of the rates that 
are being quoted because of little or no capital investment by the 
operator of the C-130. 

If the Inspector General is correct that C-130 aircraft were 
illegally transferred, these should be recovered as we requested 
in our letter of November 1992 and if they are to remain available 
for firefighting purposes than they should be made available on an 
industry-wide basis with the low bidder receiving the aircraft as 
government furnished equipment . 

We wish you success in your Hearings and trust that these will 
result in the U.S. Government initiating necessary controls to 
ensure that non-certificated aircraft are not used for commercial 
operations for compensation and hire. 



'EdWard/j. Driscoll 
President and 
Chief/ Executive 
// 
EJD:cs 




<. 



29 



NATIONAL AIR CARRIER ASSOCIATION (NACA) 

Chronology of Correspondence on C-130A 

With 

Department of Agriculture (DOA) 
U.S. Forest Service (FS) 



1989 

- September 21. NACA sends letter to Secretary of 
Agriculture (SECAG) asking seven questions about the exchange 
program and highlighted the fact that industry was not given an 
opportunity to participate. 

- October 20. NACA sends follow-up letter, when no reply 
received from SECAG 

1990 

- January. Exchange program halted by DOA/GC 

- March 12. SECAG finally responds to NACA letter of Sep 89 

— Emphasizes industry's opportunity to participate 

— Emphasizes limitations of use of aircraft, and 
indicates FS will use legal action to enforce 
provisions of the exchange agreement 



1991 



- February. N130RR, originally transferred by FS to Roy 

Reagan, is transferred to T & G Aviation and re- 
registered as N117TG 

- February 17. Department of State and Federal Aviation 

Administration permit N117TG to go to Middle East. 

- March 1. FS directs Grantham to return aircraft to U.S. 

- March 27. NACA letter to Mr. Fred Fuchs, FS, pointing out 

that N117TG had left the U.S. and requesting review of 
utilization agreement. 

- March 28. Three C-130s (N116TG, N117TG, and N118TG) are 

offered for sale by HRH Prince Ala, a mid-East broker. 

- April 5. NACA letter to SECAG, with copies to DOT, FAA, 

DOS, and DOD, requesting investigation into the 
program. 



30 



1991 (Continued) 

- May. Bechtol Corp. admits using a C-130 owned by T&G in 

Dubai. It was contracted through Kuwait Air. 

- May 3. NACA letter to FAA requesting certificate action 

against T& G. 

- May 8. NACA letter to SECAG requesting he take action 

against T & G to preculde commercial service. 

- May 9. FS writes FAA requesting review of FAA 

classification actions on T & G aircraft. 

- May 9. FS writes letter to Woody Grantham requesting he 

return the aircraft to U.S. (second letter) 

- May 15. T&G agrees to return the aircraft to U.S. 

- June 3. FS gives telephone update to NACA on May letter 

to SECAG. 

- June 10. SECAG sends NACA reply which says it won't 

happen again. 

1992 

- October. DOA/IG critices FS handling of the C-130s, 

recommends legal review. 

- November 20. NACA letter to SECAG requesting FS recover 

the aircraft and any funds gained from their use or 
sale. 

1993 

- January 11. NACA follow-up to SECAG 

- February 2 . FS gives interim response that the action 

must wait for new SECAG 

- June 24. T&G bankruptcy proceedings indicate C-130s are 

again up for sale. This time to Aeropostal de Mexico. 

- To date, no response from SECAG on NACA's November 1992 
letter. 



31 



Srptejr.bFr 21, 198y 



The Hon. Clayton Yeutter 
Secretary cf Agriculture 
Administration Building 
12th St. k Jfffcrscn Dr., S.K. 
Washington, D.C. 20250 



Dear Mr. St-ctttsry: 

Vic understand that the D'-p^rtirent through its Forest 
Service has a progrsa for the exchange cf surplus 
irilitcry alrcreft to consaercial opt-rators for fitt- 
fighting purposes. We understand the authority for 
th(- exchange of such aircraft, i.e., C-130, C-11&, is 
predicr.ted upon an exchange of "historic items" and 
that such unccztokin? is pursuant to GSA regulations, 
specifically. Subpart 101-46.203. 

Thf Uational Air Cattitr Association represents United 
etcites air carriers engaged in charter as well as 
scheduled service. Thc-se carriers operate a variety 
of aircraft, both large and small, with several having 
aircraft that can b« uspd for fireflghting purposes as 
well as spraying operations, etc. 

The particular program of exchange of aircraft with 
civil carriers for fireflghting purposes is of natural 
interest to u& and wt have the following questions 
which we trust you will have one of your senior 
officials respond to. These qupstiors are: 

1. What is the basic legal authority tor 
engaging in tht transfer of aircraft ob- 
tained froa. the Departtnc-nt of Defense by 
the U.S. Forest Service to a U.S. air 
carrier in exchange for another aircraft? 

2. How ie title convoyed under such a transfer 
and what are the requirements under the trans- 
fer for maintenance of the aircraft and/or 
incorporating improvements therein? 




32 



The Hon. Clayton Yeuttcr 
September 21, 1989 
Page 2. 



3, DoeB the Forest Service have the right tc 
reclaim aircraft should the air carrier 
recf-iving it atter.pt to uee it for purposes 
other than as b firefighting air tanker? 

4, H3ve any revisiooE to the liiritations In the 
Exchange Agreement been granted? 

5, How ere recipients of such an exchange prograrri 
selected? Is there a cortipetitive undertaking 
or is it on a sole source oasis? If the lat- 
ter, what legal authority exists for sole 
source selection? 

6, Is this a continuirig progrart and if so, what 
plans does the Department have for additional 
transfers and hew will tiiC recipients be 
selected or identified? 

7, What is the rationale for furnishing govern- 
ment aircraft for firefighting purposes rather 
than utilizing certificated aircraft for 

this purpose? 

As you can see, Mr. Secretary, v;e are concerned as we 
had no knowledge that these aircraft (C-130's) were to 
be transferred to particular air carriers. In fact, 
when we first learned about the transfer of seven 
C-130'e froiri the Depar tmont of Defense to the Forest 
Service we were advised, upon inquiry, by the Forest 
Service that they intended to operate these aircraft 
by contract with air carriers for the furnishing of 
crews and support activities. This, however, was 
never linpleirented and Instead a specific transfer was 
effected without apparently giving the industry an 
opportunity to particip«.te in such undertaking. Wc 
would hope that any future progrnnr^s wculd be undc-rtak- 
en only after the entire industry is wade aware of the 
specific requirements of the Forest Service and given 
an opportunity to indicate their interest in being 
considered for the operation of the aircraft or to be 
considered under an exchange program. 



• • • / • 



33 



Th^ Hon. Clayton Yeutter 
Scpteniber 21, 1989 
Pago 3. 



Wt thcink you in aovcnct for your cons ide rat i on of our 
request and trust thr infornation rtquccted will be 
furnished uc on on expediteo b?si6. 



Sincerely, 



Er.werc J. Dtiscoll 
President and 
Chief Executive 



EJD: ra 






34 



October 20, 15S9 



The- Hon. Clayton Yeutter 
Secretary of Agriculture 
AUfT.inistroLion Building 
1 2 1 h 5.; t . i J £ f f c r 3 o n Dc , , S . . i . 
Ha.shincjton, D.C. 202 50 

D'-v^r Mr. SccTCtary: 

Raffer'_nce is mad-?- to my letter of Soptc;rnb«:r 21, 1939, 
concc-rning the Department's program for the exchange 
of surplus military aircraft to coT::r.orci al opf^rators 
for f ire-Cighting purposes. 

V<"c woulo appce^ciatf your advising when wc can expect 
to receive a reply to our letter. 

Sincerely, 



Edward J. Driscoll 
President ar.o 
Chief Executive 



LJDirc; 



-f^-. S^uf /(^^^- y^/^x /tf/?^/^^,/^ 



35 




DEPARTMENT OF AGRICULTURE 

Office Of Tm£ SCCOCTART 

WASHINGTON. C 20250 



Uarob i 2 1990 



Mr. Edward J. Drlscoll 
President and Chief Executive 
National Air Carrier Association, Inc. 
1730 M Street, N.W., Suite 710 
Washington, D.C. 20036 

Dear Kr. Driscoll: 

Thank you for your Interest In the Forest Service and Its flreflghtlng 
airtanker prograa. We will attempt to address your questions as thoroughly as 
possible. 

Section 205 of the Departaent of Agriculture Organic Act of ig'^'*, as anended 
(16 use 579a), Is the ba^lc authority by which the Forest Service "by contract 
or otherwise nay provide for procurement and operation of aerial facilities 
and services for the protection and i\anagenient of the national forests. . . ." 
Several subsequent laws have expanded on our coauBltment to protect public 
lands fro* wildfires. Part lOI-US of the Federal Property Management 
Regulations, 41 CFR, has been used for those exchanges. Many of the World War 

11 B-17's, A-20's, IBM's, FTF's, and PBY's In (suseums today were once 
flreflghtlng alrtankers. Aircraft not used as alrtankers such as B-2'4'3, 
B-25's, and B-29'3 were scrapped, cut-up, and disappeared, with few remaining 
for historical purposes. 

The titles are transferred at the completion of the exchange which Is 
explained in detail In the copy of an exchange agreement the Forest Service 
provided to you in April 1989. The exchange Itself does not specify 
maintenance or nodlficatlon requirements as those requirements are specified 
In the contract for airtanker services, which Includes FAA certification under 
ia CFR 21.25 for the C-I3OA. 

/ If an operator were to use an aircraft for purposes outside the Intent of an 
exchange, the Forest Service would Initiate legal action to enforce the 
provisions of the excharge agreeaent. No revisions to the limitations as 
explained to you on March 29 when you met with the Forest Service and as 
stated In the saaple exchange have been Issued. The exchange Is for the 

I protection of forest, brash, and rangelands. 

Selection of recipients for the exchanges Is based on Forest Service needs, 
individual operator requests, Individual operator capabilities, and the 
availability of allltary aircraft. '</hen the first C-IBOA's became available 
in June 1988, a letter waa sent to all contractors that have recently been or 
are currently providing alrtankers under contract. During the last 10 years, 

12 coBpanles have bid on Forest Service contracts for 30 alrtankers, and 8 of 
those companies currently hold airtanker contracts with the Forest Service. 
The airtanker contract l3 advertised in the Commerce Business Dally so the 
entire industry is given the opportunity to offer and compete. The 
competition for airtanker contracts has been strong. 



36 



Mr. Edward J. Drlscoll 



The alrtanker prograa Itself, however, Is Halted; only about 50 large 
alrtankers are contracted for each year by all Federal and State rireflghtlng 
agencies with a need for 15 aircraft as large as the C-13OA. 

The rationale for using excess allltary aircraft Is to keep contractor costs 
down and thus alrtanker service affordable. A large number of alrtanker 
aircraft have been obtained through both historic exchange and Military 
surplus sales over the last 35 years. The difference In cost to the 
CkDvermsent of upgrading the alrtanker fleet with excess as opposed to 
commercially purchased alrcraft--ased or new--l3 rather dramatic. (See 
enclosure.) The current alrtanker contract costs about U percent of the 
Forest Service flreflghtlng budget; an unnecessary Increase of 325 percent to 
2000 percent would be unacceptable. 



Sincerely, 




Enclosure 







37 



0^^ - VK.^ -^^- ^^-"^ 



a-ss/cs 




United States Department of State 
Wcuhington, DC. 20520 

February 17, 1991 



o 
etJV 



TO: 



FAA - Mr. Thomas Accardi, Acting Director, 
Fli 3hfc Standards Division 

STATE/0E:;/0LP - Robert Blumberg^ V^ 



FROM: 

SUBJECT: Public Si-rvice Aircraft Classification 



The State Dep.;i rtment has received a request from a US firm 
(Martech)^ which lis; working for the Saudi government in 
providing assistance in cleaning up the Persian Gulf oil spill. 
Martech has requesited the Department's help in obtaining FAA 
approval to reclasiify four aircraft from "private aircraft" 
under Part 91 cf F.^A regulations to "public service aircraft," 
due to the nature of their mission. The aircraft would carry 
urgently needed cl ianup equipment to Saudi Arabia or Bahrain. 

The aircraft in question are two C-130s and two DC-7s. 
They have been chartered from TG Aviation, 22000 S. Prize Rd., 
Memorial Field, Ch-ndler, AZ . Martech would like to initiate 
the flights either l:oday or tomorrow. 

The State Depai:i.ment endorses this request, especially 
inasmuch as the GuJ.t oil slick currently threatens drinking 
water supplies for the US forces in the Gulf region. The 
equipment being tre isported will also facilitate US efforts to 
assist the Saudis in containing the oil slick, which threatens 
serious environment.il consequences. 



drafted: TFKU-1 - iVSFord 

cleared: NEA - Mr. Mack 

EB - Mr. Hrcklinger (by phone) 




cc: FAA - Mr. Gary :;och. Manager, 

Phoenix-Scoi tsdale Flight Standards Office 



38 



'er:r-,:arv '. 7 , 1591 



FAX .".ESSAGi '::::: T & G Avicncn, Chandlc: 
At-sr.tion: Jacx Ch:.3u.~ 



Phona reesoag.: rsceived 10:30 our tine (12:30 EST) frcin: 

Ten v.cCarrv , , crz.-g C irecror. riiqnt S tandards in v.' jshir.cton ■ 2^ 
Quote: 

We ha..? the ccol:.c use situation squared away and 
approv.; L for T&G Aviation tc operate under the auspice:i 
of cne 3audi and J. S. Governments for the oceracionj 
you reciested this norrirg. There is no problem; but 
if yc. need to contact r.e I will be at home at '71} 3) 
931-36: 5; or you can contact me on beeper through tn.: 
Coxsun: zacicns Center at '202) 863-3100. 

Unquote. 



Note: This is FAA's approval to operate the C-130 as a public use 
aircraft in the Persian Gulf. 



39 



United States 
Department of 
Agriculture 



Forest 
Service 



Washington I'Jth & Independence SW 
Office P.O. Box 96O9O 

Washington, DC 2OO9O-609O 



Reply To: 5700 

Date: March 1, 199I 



Mr. Woody Grantham 
T&G Aviation, Inc. 
22000 South Price Road 
Chandler, Arizona 85248 

Dear Mr. Grantham: 

It has come to our attention that your compainy has placed a C-I3OA acquired 
through an exchange with the Forest Service into service in Kuwait. Although 
this activity is in support of oil well fires or spills, it is in violation of 
the exchange agreement you signed. The agreement signed by you September 20, 
1989. clearly states "...use as firefighting airtankers, and they may only be 
flown in support of forest, brush, or rangeland protection." 

This violation of the agreement must be corrected by returning the aircraft to 
its intended use. 



Sincerely, 
FRED A. FUCKS 



L. A. AMICARELLA, Director 
Fire and Aviation Management 



40 



■ CD .. 1 •-"^ J*-" ■ 




Embassy oj the i'"it€<i iitaitToj Amei\ca 

JVbu Dhaoi, Dnxted A.rab Emirates 
March 19, 1991 



Mr. IIOID C. Accardi 

Acting Director 

Plight Stan-iliijrd service 

ADA- 30 

Fed«cal Aviai:i,on Adninisttation 

Washington, li'v 

Ref: Al Aw4<i Pcoject 
Lockhecc: C-130 
Aircralit Regiatration: 
N117T0, N118TG, N119TG, N120TG, N3226B 



Dear Mr, Accjifdi: 

The u,£i. Embassy in Abu Dhabi, United Arab Emirates 
hereby reqa«ii:s that the following paragraph be added to the 
authorization of TO Aviation Inc., 2200O South Price Road, ' 
Chandler, Arizona 85243 to operate as a public service aircr«ift 
for purposes ;:f carrying materials, supplies, construction 
equipment, et:. for the reconstruction of Kuwait and the 
extir.guishinc of oil fires which are threatening the Gulf 
enviconmerit. 



Sincerely, 




M<^ 



Brian J. Mohler 
Depaty'Chief of Mission 



:ET22T^e00 issfHa naw ASSt>aK3w» saisa ;6.- zz yt>u 



41 



National Air Carrier Association, Inc. 



1 730 M Street N W , Suite 806 

Washington. D C 20036-4573 

(202)833-8200 

FAX (202)659-9479 

OHice ol ttie President 
Edward J Driscoll 



March 27, 1991 



yy 



^- 



Mr. Fred Fuchs 

National Aviation Officer 

U.S. Forest Service 

Auditors Bldg. 

201 14th & Independence, S.W. 

2nd Floor - SW Wing 

P.O. Box 96090 

Washington, D.C. 20090-6090 

Dear Fred: 

I thought you would be interested in the Chain of 
Title Report compiled from FAA records. 

Registration Number 117TG is in Abu Dhabi and was the 

aircraft originally scheduled to go to the Gulf. The 

second airplane. Registration No. 130RR, is the 
aircraft located outside of London. 

As you will note, both of these airplanes belong to T 
& G Aviation and both of them came through the Forest 
Service. While 130RR originally went from the Forest 
Service to TBM, TBM transferred it to Roy Reagan who 
in turn transferred it to William Grantham who 
subsequently transferred it to T & G Aviation on 7 
February 1991. 

As we understand it, both of these airplanes have been 
removed from the United States without your permission 
which would appear to violate the Transfer Agreement 
between the Department of Agriculture, U.S. Forest 
Service, and T & G Aviation. 

If you determine that T & G Aviation has violated the 
provisions of the Transfer Agreement, then we assume 
you will proceed in accordance with the representa- 
tions contained in the Secretary of Agriculture's 
letter dated 12 March 1990. 



Members: Airtjome Express ■>■ American Trans Air •♦■ Emery Worldwide ■*■ Evergreen International Airlines ■>■ 
Florida West Airlines -f Key Airlines •)• Southern Air Transport -f Sun Country Airlines ■»■ Tower Air + 
World Airways ■)- 



42 



Mr. Fred A. Fuchs 
March 27, 1991 
Page 2. 



We would appreciate being advised of your findings and 
what action you intend taking. 



Sincerely, 




Edwir^ J'J Driscoll 
President and 
Chief Executive 



EJD:ra 
Enclosure 



43 



AIRCRAFT CHAIN OF TITLE REPORT FROM FAA RECORDS 

f0H gy Acct. 107482 



Southern Air Tranaport 
Box 52-4093 
Miami, FL 33152 



HBl 



ktfured AkcnA TWe Senfoe bK. 



OKLAMOMA City. OKLAHOMA 73144 



Re. 



N/A 



Attn; Mike Oldham 
rv< T^enl Avution Atcflcy RecArdi OuJD of Tirte Sennit r«v«A)«d ch« foUowlflj i*farmitio« oa dw vatnSi kcTcui deaoibed: 
Rfgumiion N 117TG Lockheed Uo<i<i C-130A SwlH aa. 

Tide co«*f>«* by 



54-1631 



To: 
Addres 



Dtled 

Recorded FAA Doc No. 

GSA Property Management Division Dept. of tr>e Air Force 
Room 703 Crystal Mall No. 4, Crystal City, VA 20406 



TrUe convryaj by Transfer Order-Excess Personal Property 

Recodtd* 



To: 

AddRM 



USDA Forest Service 

P.O. Box 96090, Washington, DC 20090-6090 



Tilk conv^al by Bill Of Sale 

R«oid«il(>-13-89 
To: T 4 G Aviation, Inc.** 
Addrat 22000 S. Price Rd., Chandler, Arizona 85245 



Tillc OMiTeyed by 

To: 
AddRU 



TilU coAwvyad by 



To: 

Addim 



TitM conveyed by 

To: 
Addrm 



D>int 7-26-89 

PAA Doc. No. * 



Diud 9-27-89 

FAA Doc. No. S85366 



Diiad 

FAA Doc. No. 



Oatal 

FAA Doc No. 



Diled 

FAA Doc. No. 



* Accepted in lieu of recordable doCLinents. 

** This is tha present record owner as of the date of this report. 

Chain or Tilk S 50.00 

)tushcht/t< S 

txxxt time cAf. S 

Phoiw chuje } 

PR£>AJD I < ) 



TOTAi-DUI I 50.00 



BB/t3 



D«u 2-20-91 Time 8:00 a.m. CST 

INSLIR££) AIRCRAFT TTTLE SERVICE, INC 

TiUt EiuniiS 



IATS-COT-105 



44 



AIRCRAFT CHAIN OF TITLE REPORT FROM FAA RECORDS 



FOR 



Southern Air Transport 
BOX 52-4093 
Miami, ET. 33152 



m 



m 



BYAcct. #07482 

BlktfwdAro^r<leSeivicehic 



IB;. 

N/A 



. O Boil»27 |<06I MI-MO 
OKUkMOMA CITV .OKLAHOMA 73144 

ro<.irn££ pxonctoad'i im 



Attn: MiKe Oldham 

I*. F«l.rJ A^uoi. Aff^cy RMri. OiM o«TitkSc«<Ji re«ital Hk fono«ui« iefomitjon oa *. iirclmft l«mn dMoibed: 

R^pmao-N 130RR Lockheed Modd C-130A s«iHno. 



56-537* 



Tillt coo»«ye<) by 



To; 
Addnw 



Dated 

Itacoftlid FAA Doc. No, 

GSA Property Management Division, Department of the Air Force 
Room 703 Crystal Mall No. 4, Crystal City, VA 20406 



TW. eonwyoi br Transfer Order-Excess Personal Property 

To; USDA Forest Service 

Add™. P.O. Box 96090, Washington, DC 20090-6090 



TW. con..7«i by Bill of Sale 



Recontod 8-18-89 



D.ini 4-2S-89 

PAX Doc. No, ** 



D.t«i 4-26-89 

FAA Doc No. XI 10383 



To; 

AddKU 



T.B.M. , Inc. 

P.O. Box 338, Redmond, OR 97756 



THk coB»cy«i by Bill Of Sale 



To: 
Addrat 



Roy D. Reagan 

1400 Yucca street, Medfocd, OR 97504 



Diled 6-2-89 

Recoibd 8-18-89 FAA Doc. No. X110384 

M53TrK 



Title coaveyed by 

To: 
Addlta 



Bill of Sale 

Recanted 12-31-90 

William W. Grantham 

2200 South Price Road, Chandler, AZ 85224 



11-12-90 
FAA Doc. No. KK13746 



TII>o eonoyal by Bill o£ Sale 



To: 
AdditM 

Chiui of Title S 

I Ruth ChXTfC i 

txut tunc cnf. I 

Phone chufi } 

FREPAID t ( 



o.i«i 12-24-90 

Reco>d«d 12-31-90 FAA Doc No. KK13747 

Pacific Harbor Capital, Inc. 

Ill S.W. Fifth Ave., Suite #2800, Box 1531, Portland, OR 97207 
SEE PAGE 2 EX» ADDITIONAL INFORMATION. 
50.00 



D... 2-20-91 Tto- 

INSURfD AIRCRAFT TITLE SERVICE, INC 



8:00 a.m. CST 



TOTAL Dt;E S 50.00 



BB/ts 



Tlll« Cxunl^ 



; 



lATS-COT-lOS 



45 



D»t« 

N 



2 

2-20-91 

130RR 



Lockheed 

Title conveyed by Bill of Sale 



To: 
Addjeu 



Title convtywJ by 



Recanted 2-7-91 

T 4 G Aviation, Inc.*** 

22000 South Price Road, Chandler, AZ 95248 



To: 

Addicu 



Title conveyed by 

To: 
Addreu 



Title conveyed by 



To; 
Addieis 



Title conveyed by 



To: 
Addieu 



Title conveyed by 



To: 
Addnu 



Title conveyed by: 

To: 
Addieu 



Title conveyed by 



Recorded 



To: 
Addicu 



Dated 1-22-91 

FAADoc.No. U51730 



Dated 

FaA Doc. No. 



D<l«> 

FAA Doc. No. 



Dated 

FAA Doc. No. 



Diltd 

FAA Doc. No. 



Dated 

FAA Doc. No. 



Dated 

FAA Doc. No. 



Dated 

FAA Doc. No. 



* United States Air Force Serial Nuntjer 

** Accepted in lieu of recordable documents. 

*** Thi3 is the present record owner as of the date of this report. 

Ttiis search is subject to the filings reflected on the index of collateral 
provided by the FAA and Insured Aircraft Title Service, Inc. assvjnes 
no responsibility eis to the accuracy of said source, and does not guarantee, 
inaure or warrant that said FAA index is free of error. 



COT-3 



46 



Potomac International, Inc. 

39CI Mount eagU ZXw; Jxftr iia, TeUptunu COS) 96O-940t 

AJmoart^i^ yirglnU 23J0X PaafmUt aOi) 960-94»7 

UnlUd Slant ofAmtrlc^ 

Facsimile Transmission 

M»rch 28, 1991 ^ Total of Nine Payea 



To Sout^•m Air Transpcrt, Inc. 305-871-6329 

Att/i . Mr. WlHlaa Umgton F? FT/T-'T- >•- 

Ccpy HW Prince Ala F. Al-SenLBl f/,)o .j 



Vfaraglng Director 'ck 



fVctt *. Wayne Beall S0iJ7'- 



Grouping of Thre« C-130A Aircra.ft 




Dear Kr 

"\_^-^- — " 

It was my pleasux-* to meet you via the telephone.. . Blwln hiia told me a 
lot about your op«raticns. There oay te wevaral a'v^noaa open far possible 
business deve 1 opma.it , I Jock forwarl to receiving your corporate infcnmtion 
pacxaga. 

As you know, we have been ciaked by our client to sssiat In Uie 
dev-loprent of a <jjallfied and interested buyer far Uiese alrcrait, we of 
ctwrse would expect that if you have any interest or wish acUjtiotkil ciata that 
you would channel your iftjuiry via thig oKice. 

&iclo««d Is the infcraation en tr*»e aiixraft Xilch was InltlsUy 
3u;^lled by HRH Princo Al9 F. Al-SeriiSi . It is our understanai ng the Pr1nr» 
Ala can facilitate requests far ^Jrtl^gr Inforoation aa well afl Initial 
purchase neootlatlone. I would reijjeat that acknowledge receipt of this 
InfwTatlon as well as your aasurances trat you will conduct any invBgtigaticn 
or purcfiaee activity via iur office*. 

Thank you fer >-our call and I lock forwartl to workinB with you in the 
fUCur«. 




Beau 

flng Du-«ctcr 

ns 

E.r.Rusoo.Ebq. 




47 



^»»«t< 






TT 



jxr 



VAUI£ «WltSI$ . J AIRCMfT 

lOCKMEco e.not "Hpcum* 



i»i*/i y&Oi 



^U K V t Y ft t >-0 >I 

CD>CI>*1 INFWHATION 

ThMt »<r€r»ft if* eurrently eertlfUitid In «eCordlf>:# «Uh SMCUl 
AlPworth1n«s» e«rt1fle»M, lM«i»1 n^jht ParfliU. 1« iceordanei with 
rM 11.27, far turk<ne-po*«ri« Ilrer»ft c» eurftnt dll4|rt. 

Th»»» direrift is orl9<i\in> dellviri4 ird/or Bcdlflcd, inttt tbi 
r«<iu1r«^ti, or »r» (xMpt fT<w eiftl1« pr«v(|1oni of F« tl Cirtl. 
ficitlofl Prcctdurti • •T>p« Cirt«f<e»t«, lurplul Mpcrift of thi Araitf 
furcil", 21.l7(b)(e)(d) t (f) for larflt tyrfeln* •ftg<n« p<-«f«d itf. 
^ItKM iMeptid for op«r»t<onit ut« prt#r to Oct I, 1M», ««< M«t«f»9 
thi r«^u<i'tni»flti of C« 0.*!b) il of i Oct 1959. 

5P£CIPlCAT10h$. 

A^rerift confljuritlcn, ipec<f1cat5oni, tfse). iqulpatPti ind rtlshtl 

•ra notid al«-tiar» <« thU roport Indlvldjally for atCh Hreraft. 

FAA 1/H Spec<f1ctt1«ni that My t,t applleabla ar«i 

A(rcr»ft . L6<kh»ed Also Jiv H • « A«9 »« 

t.a<nl| . An^|cn E-2M Bav U • H «ar 1964 

r'opJ* tri . H« ton Stardard P-MI RtV J - 4 0«e IW 

CEHTtMCATlCN >ASI$. (AppHeib^lUy for St«M»H ind/of »Htf1«t»4 Clta 

« 

CAft 1 . AnendRent M thru l-» 



CAK »a - (» 

CAK 



,... 461 thru U 

CM 4b, 144, .311. and .(40 

FAR II 

FAR tl. 93(b) I .11 . Chang* <n Typa Duljn 
FAK }S.l(d)U} 

FAA t\ • e»rt<fUit1»« Precadgrii 

fAA fl.tS • UtitrlCtai Category 

FAA l\.i1 • Aircraft of tia Ar»ad fortes 

fAA tl.JJ • suttxem Of Cenfomtty 



48 



rsaai 



■<!irt£ 



TOT 



?S£U 



VALUC AMALYSIt • t AIRCRAfr 
LOCHHIfO CO30A "HERCULES" 



lE 



|ln>H >001- 



IKS^CCTIOW SUHMAHy 

TM (nflnii utIIUtd 9n tht Uckhted C-llOA ilrcrift «r« AUtsoA 
j(i-turftfntit H»4t1 T>S8>». with aqu1vi1int-lhlft«hor>tpo«ir (Eshp) 
ef 9,750 {tikl-«ff), Ifl4 }|)6I («tx. eontlnuoui), 

Thil IkOitI msfnt tNtI lU ri^utr'taeatt for turbln^ 4tik 1itU|r1|y 

4r.d retsi* b1«dt csrUliv^antt tnd deii not re^u^'** txterril imorlng, 
llf(>l{(i1t« tlt4b11t^»d far ftrlt<e«1 C««pontntt irt pub11lM< 1A 
AUIlsfl 5ir»k« Ltttir CSl-lOOl. ind C(S No. 72-1019. 

Tht T1n«>|iti««tn'Cvtnhau1i (TIO) ipprcvitf by the USAP irii 

, Ctfipreitor i (,000 hn, 

3»if |9X / Tor^eneUr i (,0O0 hrt, 
Turb1n« I •,000 hn, 



Tht preplUiri vtHUtd on eieh ef thi AllUon mslntt (A) <niu11(4 
Ort the C'tSOA in HanlUon SUn^ird, Medll |4H60>}1. They ti"! fOur< 
biMed diisinun illdyi wfth i «te«1 hub. tni tf* hytfriu1ieill> eontreli 
lbl«i conitii^t-spttli rir1lb1e-p1tsh, fulNfMtMrln;, riverttbit 
Xytt, wtljhlnj epprbKlmetel/ l.ooc ibt. eich. Htnllten Sttndai-d 
eorotint i^«td pUcA (tntriUi and tlectric dfieing iqulprint are 

The T1«-(ttwirfOverhiu1i (Teo) ipprtvtd by the fAA for thil 

equlpMnt til 4,430 hcurl, (Kef* AC 12MA AcMndU t • Pert 

Btgt 10 of it • "rrflptUeri* 
ATA ChepUr tl.) 

ThMI pr«p«1l4ri «i>e ctrtif (cited In iccordence Mith Tjrp« CertlfUiti 
tmt liiuld Jw^y 1)S(. lAd revliid through ftevlilen 17, liiuid 1)84. 



49 






-BW 



•vr 



IIHI 



VALUE ANALYSIS • ) AlRCKAFr 
LOCKHCtO C-130A 'HEACUllS' 






t«y»t1 >601 






JL 



12 n 



Alr^rtfH H. 11670 

Ef«1n# Sirlll No. 
Tia* to So (hrs.) 

Pr«p«11«r Serlil No. 
Tim to le (nn.T' 

A<ft>-iftt N-117Ttt 

£n9ln# lerlil No, 
Tfm« t9 So (hr«,) 

>rep«n«r S«r1i1 No. 
TtM to t» (hr(.} 

fnwf*fti H-uirg 

Englni SerUI No. 
Tim* t« 69 (hrl.) 

Prcpollti* StrU) No. 
Tfmi to 1J« (hri.) 



100507 

23507) 
1.484 



1009S6 
4,341 

1.840 



looeoo 

»23S31 

4.210 



101434 
I.12S 

13623ft 

z.ieft 



1004«I 

i.eoi 

221001 

9.)ea 



10031S 
S.620 

t3)»o; 

2,ftd0 



100342 
1,102 

}1I2(S 

3,)») 



100043 
1,4)0 

223$t» 

4,010 



lOOSlt 
l,S9$ 

2212«2 
I.ISS 



GRODHO TUftBIM COHgUSSOO ttHlU. XyMBEfti Ai<8 IWI% 

A1rcr«ft 
W-lim H-1W T> H.H9T0 



teDll Nuntivr notiiitii 42P890I 27ri$ss 

TIM Unci Ovirhiul («r.) U8 10 1«7 



JL 



101331 
4.»f« 

23SIII 

i.in 



1014)1 

t<ise7 

4,372 



lOOtU 
S.I90 

tmu 

1.141 



50 




•wr 



TTvJ" 



VALUE ArtAlYStS . S AIRCRAfT 
LOCKHtM C-IJOA •HERCULU* 



Mt*t 



i«H<* 9oo; 



AVIONICS A HP EHCTR0M.1CS 
Itch IftdWIdgil Krerift, th«P«by rtkinq thwt Jiljfttleilly e*mpt«4 



UKf Tr»rt»C«tv»r 




Cat lint 


tlAl 


VHF TrinJc«1v«rl 




ColMn* 


«ll Ift, 


W Tr«rijct1v«r$ 




e«U1ri 


611 Tl 


VOft/ 6,$. R«C«1virt 




C9U1IM 


AM ion 


H.e. Ricctvir 




Cfl^Hni 


AAN It 


Trif\ipond«f 




CoUlfll 


APX 7t 


R|di> 




Celllnt 


ApQ iitn 


nijht Oipictor 




$p«pr/ 


4066 


A.e.r. 




ColHfll 


Df'lO) 


6.».I. 




csniM 


fFC-71 


RidIO AUimitir* 




CoUlM 


ICR.718 


Lerin 




EDO 


AW-»0 


CoJi^ptsa Sytt«m 




JD«rry 


C-» 


Auto Mlet 




Jp«rr> 


e«ii 


flight Rtcordir 




none 1r»ti11ea 


Volet ft«cord(r 




nofil InitilUd 


nf 0««fl» (Prtmify) 


1 


Col lint 


»OJ/MA.J» 



Intlillo^ It rtuwlrtd. 



51 









^IH*** 


-to;-' 


— BTr- 


■ :;3 


A 


<:•>♦« i»S- 






VALUE AKAlVfJS . | AlfcCMFT 
LOCWtEO CIJOA "HSKCUL£$" 


M«<|l. 


«*»t>«« 






ii»»i 9001 



fill , 
MLL- 



AlftCHAFT SOOUPIhft 

Thirj in thrf (3) CIJOA i<rcr»ft 1« tMl in}<ip, Th«/ «»> M 
jroufii t»j8th«p riipMtl'H «qulpt«M, tUctronlci. e«nf ^^u^lt^ol^, 

The/ B»^ !«f>«r»ted by »«•. tot»i t«m4 tn t«nfUi, Vt* »»re« o»ip« 



Key. Ko. Dttt Hfi... 



Totil T<wt 



N-iUTI 



Junt I9SB 
Ount liS7 
Hir !):» 



U.Oje hrt. 
1},7»0 hri. 
1J,9»5 hn. 



l,SM hri. 
t,7(0 hn. 
l,0(t hn. 



CMspUtt epicJtloft ana m4lntin»ne» rMQril, k«pt » i CiH/ 
Rtpurtlni ram biHi fo' •«'> »l*er»ft, ir« inured In I Knt«f 
Rtcsrd C«1«n<!ir it Chlndlir, Ap<ioA|, 4nd ill dirtetlvo een- 
Cirfllfig 9p»ritl0fi» ind «l1nttna«e« in forffiu1it«d »n4 tr«nl»1tUd 
frort ChindUr to tlrtrift in^ er««j, IrrMptetlvi «f sillsiwent* 
baisl iwiy feoff Ko/M-titti 

AlftCTA^T wnSHlMi. 



N.ima 



Pib 1981 
Kir 1991 



17, m Ui. «,«!/ Ibi. 
67,209 Ibt, 70,(«t Ibt. 
e4.«lS Ui. M.A6) \tt. 



52 



It; 



f. . n't 



(■I;,- 



jt 



P'4f'*$ 






-CJT 



* I I riif i»i>p- 



.r'vl »1 



VALUt AHALYSIS . } MKCKAFT 



llttax ftOOl" 



IHDt<_ Of CCNOITIOH 

A hrUf IndtM Of Condftlon fcf lach ilrcrtft inspKttd foUowi. 
NuiMrleil coding vilull Ittlsntd irii 

• Atei^t Avtriji 

• Av«r«9i 

• ttlCM Avtrijt 

■ Poor 



itw tniptctid 



iisrfi 



una 



nsTfi 



Appllcibll SpAclflCfttlons 1 

Exttrnti r<n1sh • 

lljAi/ Plietr<st/ »iit»i 4 

' Uel9ht» 4 

InMrljr Arrwjtwnt 4 

N4tAt«nine« md Mpili* S 

lnter-chanse«b01t/ S 

td«nt1f«it1on/ Mtrktrtf 4 

Extre«< 7««ptr(tur«, fte^hlitiiinti S 

StkAdlfd Pirti 4 

C9w(pni«At loitillitlon i 

Cargo Proyiiuni ■ | 

A{r Cen4U1en(ng/ H«tt 4 



53 



I- 



i 

i 



t 



1 ViaawM 


■•■• 


u'V 


rwll»| 


0*t\*t 






""' VALUE ANAlYSli - 3 AIRCRAFT 
lOCRHEED C-IJOA "MEKULIS' 


W#«^ 


1 






Mj*,, 9001 •: 


t 

I 


t h D I X OF C H B 1 T 1 N 


' 


* Alr«rif» f;»Bl»tr«t1on 


UM ir«5p«cu4 ntra nrra nira 




6, Cr«jturl2iHM « 4 4 




e, M(n9 «roup ! $ > 




7, T»n Sroup + J B 1 




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54 



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55 



^JP 



SaUTHERM AIR TRANSPORT 

April 1, 1991 



Mr. Edward J. Driscoll 

Chief Executive Officer 

National Air Carrier Association 

Suite 806 

1730 M Street, N.W. 

Washington, DC 20036 

VIA FAX: 1-202-659-9479 

Re: Illegal Sale of C130 Aircraft 

Dear Ed: 

Your attention is invited to the following solicitation received 
from an organization purporting to be able to sell us C130 
aircraft. 

It appears that these aircraft are currently "N" registered and 
in the fleet of T & G Aviation. 

Although T & G is not explicitly named, by going through the 
documents it appears the three aircraft being offered are: 

p.S. Reaistration Lockheed Serial USAF Serial Owner 

N116TG 3086 56-0478 T & G Aviation 

N117TG 3018 54-1631 T i G Aviation 

N118TG 3219 57-0512 T & G Aviation 

The aircraft are supposedly being sold for $4.2MM EACH, or a 
total in excess of $12MM for the package. Supposedly Middle- 
Eastern brokers are involved. 

Some credence must be placed in the latter statement, because at 
least one of the aircraft (NH7TG) was spotted a short while ago 
in Abu Dhabi. 



P.O. Box 52-4093, Miami, Florida 33152 • Telephone (305) 071-3171 • Telex 51-8856 • SITA MIAOOSI 



56 






SaUTHERIM AIR TRAIMSPORT 



Of particular concern is that all three of the aircraft were 
acquired from the U.S. Department of Agriculture, Forest Service, 
through an exchange agreement. In essence, these were provided 
to T & G on a gratis basis. It would seem to me that we should 
bring this to the attention of the Forest Service as perhaps a 
violation of the exchange agreement may be occurring. 



sincerely, 





Charles C. Carson II 
Senior Vice President 
Sales & Marketing 



CCC/bh 



cc: W. Langton 



P.O. Box 52-4093, Miami, Florida 33152 • Telephone (305) 871-5171 • Telex: 51-8856 • SITA. MIAOOSJ 



57 

April 5, 1991 



The Fion. Edward Madlgnn 
Secretary of Agriculture 
U.S. DepartT.cnt of Agriculture 
Washington, D.C. 20250 

Dear Mr. Secretary: 

Your attention is incited to the attached docuinenta- 
ticn which concerns three aircraft, C-130 type, 
transferred from the Department of Defense to the 
U.S. Forest Service for use as forest firefiqhting 
aircraft . 

As you are probably aware, we have had correspondence 
with your department concerning the 1 iir.i tat ions on the 
use of such aircraft. I arv attaching hereto n copy of 
a letter froip your predecessor, Clayton Yeutter. As 
you will note, Secretary Yeutter was very specific 
that these aircraft could not be used for purposes 
other than those covered in the Exchange Agreenrient and 
that any viiolation would result in legal action by 
the Depar trrent . 

As you will see from the docurrent s t i on , the T & n 
aircraft which vjere received frcn-f the U.S. Forest 
Service are now being offered for sale by ? broker in 
the Middle East at $4.2 rrillion per aircraft. 

I arr sure it was never the intention of the U.*^. De- 
pa rtrrent of Agriculture to provide aircraft to a 
coTTTiercial concern for use in comiiiercial operations 
nor to enable an operator to make a fast buck by 
selling these aircraft to oth'^rs. As you are no doubt 
aware, this is a restricted category aircraft es far 
as the FAA is concerned and is on the rrunitions list 
as far as export is concerned because of the military 
capability inliercnt in this aircraft. 

I air sure you will v.'ant to have this irat+er investi- 
gated and take whatever action is approrriate to 
ensure that the U.S. Forest Service prograir, of making 
aircraft available for forest firefightinc purposes is 
not undermined by such actions. 



58 



The Hon, Edwc?.rd Kadiqan 
April 5, 1991 
Page ?. 




In rccFnt testirrony brfcre the- Aviation Subcon^ir i 1 1 ee 
of the House Public V'orks and Transportation Cormittrc 
V7e rcaursted the Ccn gross involve itself in the 
disposition cind use of C-1?0 airrraft. As a result cf 
that, ChsirTTian Oberstar rcquestc-d Assistant Secretary 
Shane of th'^ Department of Transportation when he. 
appe.-red before the Coa-mittee to serve r.s the focal 
point vithin the AdT.lnistra t ion on the C-1?0 issue. 
He asJc^d ?ecr.-^tary Shane to brine together representa- 
tives of each agency involved with C-130's for a 
:rc<:tinr with iroTibers of the Subcorrrr i t tee to review 
control r. or lack of controls govrrninq this aircraft. 

As you knew, the agencies involved are Department of 
Defense, Department of State, your departnr'ent (Agri- 
culture), U.?. Custcn-s Service, DOT/FAA and Departircnt 
of Corrrr-er ce . I avp sure your office will be hearing 
frcrr: Secretary Shane in this regard. 

v: e k n o v; that y o i; will i m> e d i a t e 1 y undertake an 
investigation in*:o this offer of sale of aircraft 



59 



The Hon. Edward Madigan 
April 5, 1991 
Paap ?, . 



obtained through the U.S. Forest Sc-rvice fcr forest 
firefighting purposes. I would hope that you would 
keep us advised of your progress and results. 



Sincerely, 



Edward J. Driscoli 
President and 
Chief Executive 



EJD: ra 
AttachiTients 



cc: The- Hon. Jarr^cs L. Oberstar 

The Hon. Jeffrey N. Shane - DOT 

The Hon. Ja^es P. Busey, IV - FAIS 

The Hen. Richard/). Clarke - DOS 

The Hon. Eugene J. McAllister - C'OS 

The Hon. Diane y.oraleG - DOD 



60 



Unlt«4 Stat** Tortmt W«ahin«ton l4th 4 IMap«nd*nce SW ^,_-,\ 

D*j>«rt»*nt of Sarvle* Offlc* P.O. Box 9&O90 CZ-\/ID 

Acr<cultur« Wuhinctoo, DC 20090-6090 

Raply To: 5700 

Data: May 9. 1991 



The Honorable Jamas Buaoy . ^zjMy^J^-^ 

AAalriiBtrator 

Federal Aviation Adminietration 

Rood 1010, 800 Indepenaanca Avenue. S.W. 

Washington. D.C. 20591 

Dear Adniral Busey: 



/t.^<y«.rK/ll^^ 



An urgent Bltuacioo has arisen concaralng the u«e of Raatrictad category 
aircraft in the Pertian Gulf area In possible violation of Paderal Aviation 
Regulatlona. This 6lt\iatlon la of great concern to the USDA Forest Service 
becaua* the aircraft in queation waa traneferrasj to the private aoctor by the 
Poreat Service under conditiona designed to preclude such uae. 

I refer you to & letter from Mr. Edward Drigcoll, President of the .Vational 
Air Carrier Aasociation, to Mr. Anthony J. Brodericli of your organization 
(enclosure 1). The aircraft diacussed, N13CRR (now registered ajs NII9TO) , was 
transferred under the Historic Aircraft Bxchange proviglona of the Federal 
Property Manasooent Regulation* (GSA Regulation 101-46.203) to an alrtanker 
operator. It waa licensed In the P^atrlcted category for fireflghting 
purposes only and the type certificate retained by the Forest Service. This 
was done epecifically to prevent alrtaaker operators froa uaing exchanged 
aircraft for other purpoaea in eonpatitlon with private industry. 

During the Persian Oulf ectivitiaa, TW Aviation was apparently re<iueated to 
provide aircraft aervice, including sciae eoaoerclal type cargo operations, by 
agents of the DapartEent of State (enclosure 2). They provided this service 
with several aircraft, including at least three that were licensed in the 
Restricted category, under the Forest Service type certificate. The President 
of TtG Aviation fflalntains that the FAA has approved this operation in response 
to the Departaent of State request (enclosures 3 and ^) . 

I would lilte to know if your agency reclassified these aircraft for public use 
and. If so, which Govemaent agency is responsible for providing direct 
operating control. In furnishing these aircraft to Industry, it was our 
intent to have these aircraft operate under the control of land nanagecent 
agencies as fireflghting aircraft. Any reclassification must be coordinated 
with the Forest Service, which was not done In this case. 



"~- ~ """- --°-cx .e -e. .30 



61 



Th» Ronorkbl* Jans« BuAoy 2 

It la urcant that w« cerract tha currant sltuatloA rafardlrvc U)e uaa of tbaaa 
aircraft. Secondly, I want to work out a lagal prooaaa by whicb »« can daal 
with any futur* situation. 

Consa<iuantly, I have aaWad Oaputy Chief Allan Watt to repraaent tha Foraat 
Service on this Isau*. Ha trill be contactlnf your office tha week of Nay 13 
to arrange for a saetlng. 

Sincerely. 

/a/ T. Dale Robertaon 

F. DALB ROBERTSON 
Chlaf 

Bncloeuraa 



WVO ♦ : o I I e c T 



62 



,'^ 



United States 
Department of 
Agriculture 



Forest 
ervice 



Washington l4th & Independence SW 
Office .0. Box 9609O 

Washington, DC 2OO9O-6O9O 



Reply To: 5700 

Date: MAY 9 1991 



Woody Grantham, President 
T & G Aviation, Inc. 
22000 South Price Road 
Chandler, Arizona 95248 

Dear Mr. Grantham: 

It has recently come to my attention that you are operating aircraft number 
NII9TG (formerly NI3ORR) in Kuwait. It appears that the Department of State 
and the Federal Aviation Administration (FAA) may have endorsed this use. 

This aircraft was obtained from the military by the Forest Service and 
transferred to the airtanker industry under an agreement that stipulates 
that the aircraft will be used as "firefighting airtankers, and they may only 
be flown in support of forest, brush, or rangeland protection." In addition, 
the Type Certificate Data Sheet specifies that "aircraft approved under this 
type certificate may only be used as firefighting aircraft." 

This violation of the agreement must be corrected immediately by either 
returning the aircraft to its intended use or obtaining legal approval to 
operate it for purposes other than wildland fire protection. As the type 
certificate wording states that the terms of the exchange agreement must 
remain in effect regardless of who has title to the exchanged aircraft. 

In the future, any use of this or other exchanged aircraft which is not 
strictly in compliance with the type certification and exchange agreement must 
have prior written approval by the Chief of the Forest Service. 

Sincerely, 



7-/^ ^^^^^^^z^ 



F. DALE ROBERTSON 
Chief 



Caring lor the Land and Serving People 



FS620a28l>(4/8«l 



63 



United States 
Department of 
Agriculture 



Forest 
Service 



Washington iflth I Independence SW 
Office P.O. Box 96090 

Washington, DC 2OO9O-6O9O 



Reply to: 5700 



Date: May 15. 1991 



Subject: TtG Aviation 



To: Director. Fire and Aviation Management 



A telephone conversation took place between Woody Grantham (T&G Aviation) and 
Fred Fuchs Wednesday, May 15. 1991. at 2:10 p.m. 

Mr. Grantham stated that in response to the Forest Service May 9 letter 
the flight crew of the C-I3O N119TG had been instructed to return the 
aircraft to the TtG Aviation facility in Chandler. Arizona. The aircraft 
was not being flown and had not flown much while in the Persian Gulf. The 
flight crew is obtaining the necessary permits for over-flying the various 
countries and will depart when the necessary permits are issued. The 
aircraft should be in Chandler, Arizona, within 5 or 6 days. 




FRED A. FUCHS, Assistant Director 
Fire and Aviation ManageoenC 



C«Hnfl tor Om Und and Serving P«opt« 



FS^ZSt-ZSM^tft 



64 



NATIONAL AIR CARRIER ASSOCIATION 
MEMORANDUM 

TO: See below. DATE: June 3, 1991 

FROM: E. J. Driscoll 
SUBJECT: T&G AVIATION - C-13Cs 



John Eckert, U.S. Forest Service, called to advise me that they 
are attempting to get a reply to me on my last letter to the 
Secretary concerning the illegal use by T&G of Forest Service 
ai rcraf t . 

}\e indicated they were apparently having difficulty satisfying 
their Secretary as he jokingly said they were on their nine- 
teenth draft. He did, however, provide me the following update: 

1. Forest Service joined FAA in an inspection and investi- 
gation of T&G at its base in Chandler, Oklahoma. 

2. He stated the investigation lasted only one day but 
apparently FAA picked up enough information to warrant 
action against T&G. 

3. Although he did not want to be quoted, he suggested 
that he believes it v;ill involve certificate action. 

I queried him as to where the Forest Service stood with regard to 
T&G. He stated that the Assistant Secretary of Agriculture had 
directed the General Counsel to advise him of what legal action 
might be taken against T&G in view of the use of Forest Service 
aircraft furnished for firefighting purposes and used for 
commercial operations. He thought they should have an answer 
from the General Counsel shortly and would proceed in accordance 
with whatever action he felt they could legally sustain. 

I am meeting v;ith Doug Leister at noon today to receive his 
report on discussions with State Department officials. 

I will furnish a report to you on this. 

EJD:ra 

TO: James H. Bastian 

William G. Langton 
Charles C. Carson, II 
William E. Overacker 
John Pslo 



65 




DEPARTMENT OF AGRICULTURE 

OFFICE OF THE SECRETARY 
WASHINGTON. D.C. 20200 



C-rw i u 



1991 



Mr. Edward J. Driscoll 
President £ind Chief Executive 
National Air Carrier Association, Inc. 
1730 M Street. N.W., Suite 8O6 
Washington, D.C. 20036 

Dear Mr. Driscoll: 

Thank you for your letters of April 5 and May 5. 1991. concerning the misuse of 
aircraft exchanged through the Forest Service. I apologize for this late reply 
but the complexity of this matter required additional background research. In 
the meantime I understand that the Forest Service has kept you up to date on 
developments . 

The Forest Service contacted T&G Aviation in reference to the three C-130's 
being offered for sale. Mr. Grantham, President of T&G Aviation, wrote to the 
Forest Service stating that the aircraft are not for sale and the only purpose 
of these aircraft is government use. In addition, Mr. Grantham wrote to a 
company named Potomac International, stating that the aircraft are not for sale 
and have never been for sale. I have enclosed copies of these two letters. 

You indicated that one or two of these aircraft had been removed from the 
United States for services in the Gulf Area. Following verification, demand 
letters were sent to T&G Aviation, one dated March 1 and the second May 9 
(copies enclosed). Both aircraft are now back in the United States. T&G 
Aviation removed these aircraft without prior approval of the Forest Service 
and operated them apparently with a clearance from the FAA and without a 
required export license issued by the Department of State. Investigations by 
those agencies are currently being undertaken. When the investigations are 
completed, we will decide what legal action against T&G may be appropriate. 

The first aircraft you notified the Forest Service about apparently went to the 
Persian Gulf at the request of Martech USA, Inc.. a private company. The 
Department of State endorsed Martech 's request to use T&G Aviation aircraft and 
forwarded this request to the Federal Aviation Administration, who approved 
"Public Use" for the operation in a FAX message to T&G Aviation. The second 
aircraft you notified the Forest Service about apparently went to the Persian 
Gulf at the request of the U.S. Embassy in Abu Dhabi. United Arab Emirates. 
Copies of the above documents are enclosed. The details of these actions for 
both aircraft will be documented in the course of the current investigations. 

I have directed the Forest Service to review its procedures relating to the 
transfer of excess military aircraft to airtanker operators. I have been 
advised by the Forest Service that exchanges were halted as of September 27, 
1989. while new procedures are being reviewed. In addition, all exchange 
aircraft recipients have been advised to review the terms of their exchange 
agreements to insure that the intent, scope, and restrictions are understood 
and followed. 



AN EQUAL OPP.ORTUNITV EMPLOVEP 



66 



Mr. Edward J. Driscoll 



Assistant Secretary for Natural Resources Jim Moseley and the Forest Service 
have met with the Federal Aviation Administration to improve coordination and 
prevent future misuse of exchanged aircraft. This will result in some FAA 
procedural changes. 

I fully expect the Forest Service not only to redeem its responsibility for 
using the excess aircraft in their firefighting program but to exercise the 
control necessary so that this situation will not happen again. 

Sincerely, 

Edward Madigan 
Secretary 

Enclosures 



67 



Natural Resot ^es and Environn^nt 



Forest Service (FS) 



The FS manages natural resources on over 191 million 
acres of the National Forest System, conducts a State 
and private forestry program, has assumed a growing 
role in international forestry, and is responsible for 
national leadership in forest and range conservation 
practices. For FY 1992, the FS appropriation was about 
$3.3 billion, and timber sales and other receipts were 
estimated at about $1 .4 billion. 

FS Exchanges of Excess Military Aircraft Were 
Mismanaged 

The FS contracts with airtanker operators to help 
suppress wildfires. In 1987, some contractor operations 
were impaired due to the grounding of their C-1 19 
piston-engine aircraft for safety reasons. In an attempt 
to solve this problem, an airtanker industry representa- 
tive approached the Department of Defense (DOD) with 
a proposal to exchange the C-1 19's for excess C-130A 
and P-3A turbine-powered aircraft. DOD refused the 
offer because the C-1 19's had little historic or monetary 
value to the Air Force. Also, prior abuses by private 



firms flying military aircraft had been disclosed. One 
company and the industry consultant, who had a 
prearranged agreement with several contractors to 
receive one-third of all planes obtained from DOD, then 
approached the FS for support. The FS, working 
through the General Services Administration, obtained 
28 excess aircraft from DOD with a value of at least 
$28 million, and subsequently conveyed both the title 
and the planes to the airtanker contractors. FS officials 
justified the exchanges on the basis that they would 
obtain historic aircraft from the contractors, simulta- 
neously reduce airtanker contract costs and improve 
safety. 

We found that the exchanges were not in compliance 
with Federal property regulations. These regulations 
permit exchanges of historic aircraft on the records of 
Federal agencies in a museum property account. The 
FS had not owned the planes and has no such account. 
In addition, assets obtained by one Federal agency from 
another must be for official use and not for the purpose 
of exchange or sale. Further, the conveyance of title 
with the aircraft was not in conformity with requirements 
governing excess Federal property. 













P-3A turbine-powered aircraft were among those exchanged by the Forest Service. OIG photo. 



25 



68 



We also questioned the method of exchange. FS 
officials cooperated with the consultant which led 
contractors to believe they needed to work through the 
consultant to obtain aircraft. As a result, the 
consultant's clients were the primary beneficiaries of the 
exchanges, receiving 25 of the 28 aircraft. In return for 
his services, the consultant received four C-130A 
aircraft from the contractors, although he was not an 
ainanker contractor. The program was hatted, following 
an Office of the General Counsel (OGC) opinion in 
January 1990. Providing aircraft to only a select 
number of companies, one with no current FS contract 
obligations, had the potential effect of excluding some 
contractors from consideration on future contracts. 

Although the exchanges were to be at no cost to the 
Government, the contractors incurred $2.2 million in 
costs by buying back the four C-130A aircraft they had 
provided to the consultant and by refurbishing the 
"historic" aircraft they traded in. To recover these costs, 
the contractors may attempt to charge the Government 
in the form of higher contract fee rates. 

In addition to these problems, we found that initially 
some contractors registered the aircraft with the Federal 
Aviation Administration (FAA) under the consultant's 
type certificate, and some under their own FAA certifi- 
cates. The "type certificate" describes the purposes for 
which aircraft can be used. The FS obtained the 
consultant's type certificate from him and had it 
amended by FAA to provide for additional restrictions, 
f^ost contractors voluntarily registered their C-130A 
aircraft under the revised type certificate. Our review 
disclosed that one airtanker contractor attempted to sell 
the aircraft for nonfirefighting purposes, another sold 
aircraft parts for profit, and two contractors used the 
aircraft for purposes unrelated to firefighting. For 
example, one contractor improperly used aircraft to 
transport cargo in the Persian Gulf. (The FS, upon 
being made aware of this activity, successfully took 
action to have the aircraft returned to this country.) 
However, one contractor is currently attempting to sell 
C-130A aircraft to a foreign country for a substantial 
profit. 

The FS also stored seven additional excess military 
aircraft on contractors' facilities after being notified by 
the OGC that the exchanges were not legal. Although 
the FS still owns and has title to the seven aircraft, the 
contractors have improperly taken parts from four 



aircraft to use on their private aircraft and converted one 
Government-owned P-3A aircraft into an airtanker. The 
four aircraft have an estimated value of at least 
$5 million as parts. 

In summary, FS efforts to use excess military aircraft for 
firefighting resulted In unintended profits for private 
individuals and the possibility of increased costs on 
future airtanker contracts. We recommended that the 
FS seek an OGC opinion to recover the aircraft Improp- 
erly conveyed to the contractors, Implement additional 
controls over the Government-owned aircraft, and 
disallow the contractors from charging the questioned 
$2.2 million against future airtanker contracts. 

The FS generally agreed with our recommendations but 
disputed the valuation of the aircraft in the audit report. 
FS officials stated that the C-130A aircraft had no 
commercial sale-market value and could not be used for 
domestic commercial purposes because their use is 
now essentially restricted to conservation (firefighting, 
agricultural spraying, etc.) missions. They also stated 
that export of such aircraft requires a special permit 
from the U.S. Department of State. The FS agreed to 
consider all costs related to these transactions during 
current contract negotiations. We are working with the 
FS to reach management decision. 



26 



69 



November 20, 19 92 



The Honorable Edward R. Madlgan 

Secretary of Agriculture 

U.S. Department of Agriculture 

12th Street and Jt-fferson Drive 

Rooir 200A 

Washington, D.C. 20250 

Dear Mr. Secretary: 

I have had the opportunity to reviov; the Department of 
Agriculture Inspector General's report on "Forest 
Service, Historic Aircraft Exchange Program" Audit 
Report No. 08097-2-At October 1992. 

The thoroughness of the Report and its findings are 
impressive; and the Insp'jctor General is indeed to be 
congratulated for the in-depth analysis. NACA 
supports and concurs in the reconw.endations sot forth. 

Quite frankly, hov^ever, we are extremely disturbed 
over the findings that the Forest Service acted 
without requisite legal authority in the transfer of 
23 aircraft to selected commercial entities and in 
some cases after the Forest Service had been advised 
that it lacked the legal authority to transfer these 
aircraft . 

Since these aircraft were transferred illegally, title 
did not pass legally dnd we trust that the Department 
and the Forest Service will expeditiously recover 
these aircraft to be used as a pool of government 
furnished equipment available to all bidders who may 
wish to perform fire-fighting service. 

Inasmuch as some of the aircraft transferred have been 
sold and some cannibalized, it would appear to us that 
legally the monies received by certain entities for 
the sale of the equipment or the parts should be 
recoverable by the United States Government. VJe feel 
confident that the Department of Justice would assist 

• • • / • 



70 



The Honorable Edward R. Mocigan 
November 20, 19 92 
rage 2. 



your depart. Tient and the Forest Sf. rvice in this 
activitiy. In fact, given the findings by the 
Inspector General, a copy of his report should be 
forwarded to the Deportment of Justice for its review 
and consideration to determine whether that department 
wishes to initiate any action. 

V.'itn regard to future procurements, including the 
pending procurement for fire-fighting services, our 
recOiT-mcndation , since two or our members are vitally 
interested in this and have previously advised the 
Forest Service of their interest, is that such 
procurements should be opened to the entire industry 
rather than continuing to deal only with the operators 
who received the aircraft illegally. In other words, 
those that were selected to receive the aircraft 
because they used a specific consultant according to 
the findings, should not continue their favored 
position in submitting proposals for firefighting 
service. 

I would hope that you could assure me that these 
aircraft will be recovered and made available as 
government furnished equipment to any and all prospec- 
tive bidders for the fire-fighting service. 

Sincerely, 



Edward J. Driscoll 
President and 
Chief Executive 
EJD:ra 

cc : Leon Sncad, Inspector General 



71 

January 11, 199: 



The Honorable Edward R. Madigan 

Secretary of Agriculture 

U.S. DepartiTient of Argriculture 

12th Street and Jefferson Drive 

Room 200A 

Washington, D.C. 20250 

Dear Mr. Secretary: 

I refer to rr.y letter of November 20, 1992, (copy 
enclosed for your ready reference) concerning the 
Agriculture Inspector General's report on "Forest 
Service, Historic Aircraft Exchange Program" Audit 
Report No. 08097-2-At October 1992. 

Your response with regard to future procurements, as 
mentioned in rry letter, would be greatly appreciated 
as soon as possible. Tv/c of our members are vitally 
interested in this matter. 

I look forward to hearing from you at your earliest 
convenience . 

Sincerely, 



Edward J, Driscoll 
President and 
Chief Executive 



EJD: ra 
Enclosure 



72 



«/. 



V 



United States 
Department of 
Agriculture 



Forest 
Service 



Washington 
Office 



14 th fc Independence SW /^iC^^ 
P.O. Box 96090 
Washington, DC 20090-6090 



Reply To: 5700 



Data: 






Mr. Edward J. Driscoll / 

President and Chief Executive 

National Air Carrier Association, Inc. 

Suite 806 

1730 M Street, N.W. 

Washington, D.C. 20036-4573 

Dear Mr. Driscoll: 

Thank you for your January 11 letter to former Secretary Madigan regarding the 
Forest Service "Historic Aircraft Exchange Program" and for the copy of an 
earlier letter you sent on this matter. President Clinton has asked that we 
respond directly to inquiries on subjects such as this during the transition 
period. 

Let me assure you, we will place this issue before Secretary Espy as soon as 
possible . 

Again, thank you for your letters. 

Sincerely, 



Dale Robertson y 
Chief 




Caring for the Land and Serving People 



FS-620O.MW4/88) 



73 



law offces op 
1 Michael W. Carmel, Ltd. 



2 

3 
4 

5 Attorney for 

6 

7 

8 

9 
10 
1 1 Debtor 



ao EAST COUA«OS AVtMJE 
PHOENIX ARIZONA SM<2 

(602) 264-«965 
Anww Sun B« No 007366 



In re: 



Debtor 

IN THE UNITED STATES BANKRUPTCY COURT 
FOR THE DISTRICT OF ARIZONA 

CHAPTER 11 PROCEEDINGS 
Case No. B-93-6216-PHX-GBN 



T i G AVIATION, INC. , 
an Arizona corporation. 



MOTION TO ASSUME EXECUTORY 
CONTRACTS AND MOTION TO 
SHORTEN TIME FOR NOTICE 
TO FIVE DAYS 



12 

■13 T s G Aviation, Inc. ("T s G") , the debtor and debtor-in 

■>* possession herein, respectfully moves this Court for an order 

■•5 I authorizing it to assume the agreement with Aero Postal de Mexico 

"^^ I S.A- and its agreement with Military Aircraft Restoration Corp., 

17 I a California corporation ("Marc") , and for an order shortening the 

18 I time for notice hereof and directing notice hereof to the U.S. 

19 j Trustee, Marc, Aero Postal de Mexico S.A., BanX One, formerly Known 

20 as Valley National bank, La S.A.R.L. Itratech, Orix and those 

21 j listed on the List of the Twenty Largest Unsecured Creditors. 

22 j RESPECTFULLY SUBMITTED this _9V^ day of June, 1993. 

23 I MICHAEL W. CARMEL, LTD 
24 

25 . 

i 80 East Columbus Avenue 

26 Phoenix, Arizona 85012 

Attorney for Debtor 




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MFMORANPOM OF POIMTS AND AUTHORITIES 

1. Background . 

T 4 G Aviation, Inc. ("T & G") filed its Petition For Relief 
Under Chapter 11 on June 17, 1993. The filing was necessitated by 
the fact that Orix, a secured creditor of T S G, had denied T S G 
access to two of its C-130 Hercules aircraft which were to be in 
France on June 2 4 in accordance with the terms of an agreement with 
Itratech. 

Prior to the filing of the Chapter 11 case, T & G had 
entered into an agreement with Aero Postal for the sale to Aero 
Postal of two C-13 Hercules aircraft. The purchase by Aero Postal 
was being financed by Banco BCH, a Mexican bank. Repayment to 
Banco BCH was in turn to be assured of payment by Export-Import 
Bank of the United States, an agency of the United States of 
America. one of the two aircraft to be sold to Aero Postal was 
acquired by T i G from Valley National Bank of Arizona, now Bank 
One. Bank One has a perfected security interest in the aircraft 
securing the balance it is owed and Bank One will be paid on the 
closing of the sale of the two Hercules aircraft to Aero Postal. 

The second C-130 Hercules being sold to Aero Postal is in 
the process of being acquired by T 4 G from Marc. The agreement 
with Aero Postal is substantially evidenced by Exhibit 1 hereto, 
but there have been subsequent modifications as hereafter 
explained. 

A copy of the agreement with Marc is attached as Exhibit 2 . 



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Attached as Exhibit 3 is an April 30, 1993 letter amendment to the 
agreement. 

2. Material Terms Of The Two Agreements . 

Aero Postal originally agreed to purchase three Hercules 
aircraft from T 4 G. One was to be a three-bladed Hercules 
aircraft (the one acquired by T S G from Valley National Bank of 
Arizona) . Two were to be four-bladed Hercules aircraft which had 
been acquired by T & G from another company. However, those 
aircraft were returned to the other company and were no longer 
available and Aero Postal agreed to acquire only two aircraft, each 
of which could be a three-bladed aircraft. In addition to the 
Hercules aircraft acquired from Valley National BanX of Arizona, 
T & G made arrangements to acquire a second three-bladed Hercules 
aircraft from Marc. The price for each of the two aircraft was to 
be Si, 850, 000, or a total of $3,700,000. However, the aircraft 
acquired from Valley National Bank of Arizona required siibstantial 
repairs or modifications to bring it up to standards required by 
the Mexican government issuing the equivalent of the FAA Part 121 
permit. That has been done, and the purchase price is being 
reduced by the cost of such repairs. 

T i G has already received $534,000 of the purchase price 
of the two aircraft, leaving a balance owed of $3,030,696, although 
some additional amounts will be owed to T i G, perhaps in the 
neighborhood of $500,000 to $600,000, representing additional work 
on the aircraft acquired from Marc, costs of delivery and certain 



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other related expenses. T & G has agreed to de£er payment of the 
$500,000 to $600,000 balance, but paynent of the $3,030,696 will 
be assured as a result of a letter of credit issued by Swiss Bank 
Corporation. The funds to be delivered from the letter of credit 
will be used to pay amounts owed Bank One emd Marc, with the excess 
going to T i G. It is estimated that there will be approximately 
$600,000 in proceeds available to T fc G. Those proceeds are needed 
to fund the ongoing costs of operations of T & G, and in particular 
the performance of the contract with Itratech. 

3. Assumption Of Executory Contracts . 

The contracts with Aero Postal and Marc are clearly 
executory contracts within the meaning of 11 U.S.C. Section 365. 
There is material performance yet to be performed by T & G and Marc 
under that agreement as well as material performance to be 
completed by T S G and Aero Postal under the contract for the 
purchase by Aero Postal of the two Hercules aircraft. Therefore, 
under 11 U.S.C. Section 365(a), it is necessary to obtain this 
Court's approval of the assumption, which must be on a shortened 
notice period. 

4 . Emergency Nature Of Hearing . 

The transactions involved in the two agreements are complex 
and are ready to close. Much effort and expense has been incurred 
in getting to that point. It is essential that the agreements be 
concluded before something happens that might prevent the 
consummation of the two transactions . These are important 



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transactions to the financial well-being and reorganization of T 
& G. They will substantially reduce T & G's obligations, and will 
provide much needed working capital. The working capital is needed 
at this time and it is essential that authority be obtained and the 
contracts closed within the next two weeks so that the funds will 
be available to fund ongoing operations of T S G in Alaska and 
France. It is therefore essential that this motion be heard and 
resolved within five days and sooner, if at all possible. To the 
extent the matter would be heard within five days, it will be 
necessary to shorten the time of notice prescribed under Bankruptcy 
Rule 9006(d). Alternatively, the Debtor requests the Court 
authorize a negative notice period of five (5) days. 

WHEREFORE, it is respectfully requested that this Court (1) 
enter an order directing those who are to receive notice of the 
hearing on the motion for an order authorizing the assumption of 
the executory contracts with Marc and Aero Postal, shortening the 
period of notice to the extent it is necessary to do so, and (2) 
after hearing pursuant to notice directed by the Court, authorize 
the assumption and performance of the executory contracts involving 
the two Hercules aircraft. 

RESPECTFULLY SUBMITTED this ctM^ day of June, 1993. 



MICHAEL W. CARMEL, 



MM, 




Michael W. Carmel 
80 East Columbus Avenue 
Phoenix, Arizona 85012 
Attorney for Debtor 



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COPY of the foregoing 
hand-delivered/ this 
t^y-TV^ day of June, 1993, to: 

James J. Sienicki 
Cynthia D. StarKey, Esq. 
SHELL & WILMER 
One Arizona Center 
Phoenix, Arizona 85004 
Attorneys for orix credit 
Alliance, Inc. 



7 I and sent via first-class 
mail this 24th day of 
June, 1993, to: 



Orix Credit Alliance, Inc. 
3 00 Lighting Way 
Secaucus, KJ 07096 
Phone: (201) 601-9000 
Fax: (201) 601-9100 

Aero Postal de Mexico, S.A. DE C.V. 
Insurgentes Sur No. 1160 1 PISO 
COL. DEL VALLE C.P. 03100 

Itratech 

c/o Mr. Joe Grigel 
10355 N. 73th Way 
Scottsdale, AZ 85258 



U.S. Trustee's Office 
3 20 North Central Avenue 
Suite 100 
Phoenix, Arizona 85004 

AND TO THE TWENTY LARGEST 
UNSECURED CREDITORS 



^ 



*a^^^ XJ ■ >W^ 



76-251 117 



portir c»CT-? 



79 

Mr. ElTEL. Mr. Fuchs wanted me to understand the economical 
repercussions of getting into the C-130 program, that those C- 
130's would have to be parked in the late fall and pickled down in 
a dry desert and only be used the following firefighting season. If 
I had the responsibility for paying for aircraft it wouldn't have been 
feasible to be in a C-130 program because there would be 9 months 
of downtime, but there would be 12 months of overhead. I could ac- 
cept their concept under the belief the aircraft were being given 
free. 

Mr. Rose. Let me ask you a question. Do you know Roy Reagan? 

Mr. ElTEL. Yes, sir. I know him in the footprints of the paper- 
work. 

Mr. Rose. You never met him or talked to him? 

Mr. EiTEL. Not personally. 

Mr. Rose. We need to move on to another witness, so we may 
call you back in a minute. Can you stay around? 

Mr. ElTEL. I can, sir. 

Mr. Rose. Our next witness is Mr. Dale Robertson, Chief of the 
U.S. Forest Service, U.S. Department of Agriculture, Washington, 
DC. 

Mr. Robertson, thank you for being here. 

I believe you have a statement for the record, and you have 
heard a lot of information already. We will make your statement 
part of the record. Let's go right to questions and then if you want 
to make a summary for us, you can. 

On page 3 of your statement you say, the methods the Forest 
Service used to acquire aircraft suitable for conversion were wrong. 
Why was the way they acquired them wrong rather than the way 
they were used after they were acquired? 

Mr. Robertson. Well, the process by which we went through to 
transfer these planes to our air tanker contractors following GSA 
regulations were not followed, and so mistakes were made in fol- 
lowing those regulations. 

Mr. Rose. So you include in that how they were used as part of 
acquiring, I guess? 

Clearly, management oversight was not sufficient, resulting in 
decisions which caused us to be in noncompliance with these regu- 
lations. I think that is an understatement of some large proportion. 

Are you aware of these contracts that Mr. Eitel has put in the 
record? And we make his testimony and his attachments a part of 
the record. The Forest Service will provide the following aircraft to 
the Exchanger for use as firefighting air tankers, and they may 
only be flown in support of forest, brush, or rangeland protection. 
Is there any room for misunderstanding there, Mr. Robertson? 

Mr. Robertson. No, I think that is very clear. 

Mr. Rose. So what went wrong? 

Mr. Robertson. Well, we had — ^you already talked — one contrac- 
tor sent two of those planes to Kuwait. We found out about that 
a few days later. I took very strong action to get those planes 
home, and I think I can provide those for the record. 

[The information follows:] 



80 




United States 
Departaent of 
Agriculture 



Forest 
Service 



Washington l4th & Independence SW 

Office P.O. Box 9609O 

Washington. DC 2OO9O-609O 



Reply To: 5700 

Date: MAY 9 1991 



Woody Grantham, President 
T & G Aviation, Inc. 
22000 South Price Road 
Chandler, Arizona 95248 

Dear Mr. Granthaa: 

It has recently cose to my attention that you are operating aircraft number 
NII9TG (foiTprly NI3ORH) in Kuwait. It appears that the Departaent of State 
and the Federal Aviation Administration (FAA) may have endorsed this use. 

This aircraft was obtained from the military by the Forest Service and 
transferred to the alrtanker industry under an a groo ae n *" that stipulates 
that the aircraft will be used as "flreflghtlng alrtankers, and they may only 
be flown In support of forest, brush, or rangeland protection." In addition, 
the Type Certificate Data Sheet specifies that "aircraft approved under this 
type certificate may only be used as f iref Ightlng aircraft . " 

This violation of the agreeaent must be corrected immediately by either 
returning the aircraft to its intended use or obtaining legal approval to 
operate it for purposes other than wlldland fire protection. As the type 
certificate wording states that the terms of the exchange agreement must 
remain in effect regardless of who has title to the exchanged aircraft. 

In the future, any use of this or other exchanged aircraft which is not 
strictly in compliance with the type certification and exchange agreeaent must 
have prior written approval by the Chief of the Forest Service. 

Sincerely , 



F. DALE ROBOnSON 
Chief 



Cartng tor Ow Land and S«n«ng Paepta 



FS4200-28M«m) 



81 



FOREST SERVICE 8002 

Unltea States Forest Washington I'itb & Independence SW 

Depaitaent of Service Office P.O. Box g6090 

Asricultura Washington, DC 2OO9O-609O 

Reply lb: 57OO 

Date: MAY 9 jgg) 



The Honorable James Busey 

Administrator 

Federal Aviation Adoinistration 

Rood 1010, 8OO Independence Avenue, S.W. 

Washington, D.C. 20591 

Dear Admiral Busey: 

An urgent situation has arisen concerning the use of Restricted category 
aircraft in the Persian Gulf area in possible violation of Federal Aviation 
Regulations. This situation is of great concern to the USDA Forest Service 
because the aircraft in question was transferred to the private sector by the 
Forest Service under conditions designed to preclude such use. 

I refer you to a letter from Mr. Edward Drlscoll, President of the National 
Air Carrier Association, to Mr. Anthony J. Broderick of your organization 
(enclosure 1). The aircraft discussed, NI3ORR (now registered as K119TG) , was 
transferred under the Historic Aircraft Exchange provisions of the Federal 
Property Management Regulations (GSA Regulation 101-46.203) to an airtanker 
operator. It was licensed In the Restricted category for flrefighting 
purposes only and the type certificate retained by the Forest Service. This 
was done specifically to prevent airtanker operators from using exchanged 
aircraft for other purposes in competition with private industry. 

During the Persian Gulf activities, TiG Aviation was apparently requested to 
provide aircraft service, including some comaeroial type cargo operations, by 
agents of the Department of State (enclosure 2) . They provided tiiis service 
with several aircraft, including at least three that were licensed m the 
Restricted category, under the Forest Service type certificate. The President 
of TtG Aviation maintains that the FAA has approved this operation in response 
to the Department of State request (enclosures 3 oai 4). 

I would like to know if your agency reclassified these aircraft for public tise 
and, if so, which Oovemment agency is responsible for providing direct 
operating control. In furnishing these aircraft to industry, it was our 
intent to have these aircraft operate under the control of land management 
agencies as flrefighting aircraft. Any reclassification must be coordinated 
with the Forest Service, which was not done in this case. 



82 



FOREST SERVICE 



The Honorable James Busey 2 

It is urgent that we correct the current situation regarding the use of these 
aircraft. Secondly, 1 want to woric out a Legal process by which we can deal 
with any future situation. 

Consequently, I have asked Deputy Chief Allan West to represent the Forest 
Service on this issue. He will be contacting your office the week of May 13 
to arrange for a meeting. 

Sincerely , 



Is} F. I>»-le- R.oL>-tr-^oir\ 



F. DALE ROBERTSON 
Chief 

Enclosures 



83 

Mr. Robertson. I personally talked to FAA. I sent letters to the 
contractor and told him that was illegal, wasn't right, and to get 
those planes home. They came home a few days after that. 

Mr. Rose. What is the status of the two C- ISO's that have been 
for sale in Mexico? 

Mr. Robertson. I am not sure I know which two those are. I 
think they are the same two planes or the same contractors, and 
all of those planes are in this country except for two right now who 
are fighting jfires in France. 

Mr. Rose. Has the United States got some forests over there in 
France that I didn't know about, maybe called the Louisiana Pur- 
chase in reverse or something? 

Mr. Robertson. No, sir. 

Mr. Rose. Isn't that an outrageous result for this program, Mr. 
Robertson? 

Mr. Robertson. Well, we are worried about fighting fires around 
the world, and we frequently help other countries. 

Mr. Rose. Oh, me. 

Mr. Robertson. These are two air tankers that were not under 
contract to us. 

Mr. Rose. Then they are not included in any of these agree- 
ments? 

Mr. Robertson. Yes, they are included in those agreements. 

Mr. Rose. They are not in the United States. 

Mr. Robertson. They are fighting forest fires in France. 

Mr. Rose. Is that under a payment to the Government or is that 
foreign aid? 

Mr. Robertson. No, this is a contract, as far as I know, between 
the French Government and the contractor. 

Mr. Rose. OK. What do you know about the A-10 program? 

Mr. Robertson. Well, it was a year or two ago that there was 
an interest in experimenting with A-lO's as a potential future air 
tanker, and we worked with a particular contractor to look at the 
merits of that. But we never did consummate the deal, and there 
was no A-lO's ever transferred or used as an air tanker. 

Mr. Rose. All right. Were there any A-lO's in the program? 

Mr. Robertson. No, sir. We just had that one discussion with 
one contractor in the Department of Defense about the potential 
and the possibility of using an A-10, and nothing ever happened 
with that. 

Mr. Rose. So you can assure us that you never acquired or did 
anything with A-lO's so that there is no possibility that A-lO's 
went the way of the C-130's? 

Mr. Robertson. There are no A-lO's being used as air tankers. 

Mr. Rose. That was not my question because you got some C- 
130's that were never being used to fight fires. So my question is, 
did you knowingly have anything to do with A-lO's coming through 
the Forest Service and going out to other uses? 

Mr. Robertson. No, sir. 

Mr. Rose. Did that ever happen, to your knowledge? 

Mr. Robertson. To my knowledge, that never happened. 

Mr. Rose. Do you have any knowledge of Roy Reagan owning the 
first typed certificate for an A-10? 

Mr. Robertson. For an A-10? No, I have no knowledge of that. 



84 

Mr. Rose. It appears to me that as soon as 1989 your Depart- 
ment of (Jeneral Counsel ruled that the Forest Service exchange 
program was not in compliance with Federal law. However, be- 
tween July 1990 and March 1991, the Forest Service initiated ac- 
tion to acquire six additional aircraft. Why did this happen? 

Mr. Robertson. Well, our intent was to transfer an additional 
six until we found out that our general counsel felt that was not 
according to the law and according to the regulations, and so we 
stopped it at that point. 

Mr. Rose. Well, my information was you knew that in 1989. In 
1989, the Office of General Counsel said the Forest Service ex- 
change program is not in compliance with Federal law, but be- 
tween July 1990 and March 1991 you went after six more planes. 

How long have you been at the Forest Service, Mr. Robertson? 

Mr. Robertson. Thirty-three years. 

Mr. Rose. So you have covered a lot of Presidents in that time. 
And are you telling us now that, when the Department's legal 
counsel ruled that the exchange program was not in compliance 
with Federal law, that you then after that never asked for any 
more aircraft in the Forest Service? 

Mr. Robertson. Well, we got six aircraft sometime between July 
1990 and 1991, and that was after we got the legal opinion, as I 
understand it, and we did not go through with those transfers. 

Mr. Rose. How come the Forest Service would ever transfer an 
airplane to a company that didn't have a contract to fight forest 
fires when it says in the contract that they will only be used — only 
be flown — they may only be flown in support of forest, brush, or 
rangeland protection? Yet you all actually transferred airplanes to 
contractors that had no contracts to do that. Is that not correct? 

Mr. Robertson. Well, maybe right at that particular year. But 
I believe all of these people have had contracts with us or the De- 
partment of Interior or States in fighting forest fires. 

Mr. Rose. Anything you want to say in summarizing your state- 
ment, sir? 

Mr. Robertson. I think my statement is fairly detailed, Mr. 
Chairman. 

Mr. Rose. You have some recommendations in here? 

Mr. Robertson. Yes. 

Mr. Rose. That is, policy changes within the Department or you 
think you need new legislation for that? 

Mr. Robertson. I think in the end we are going to need some 
legislation, and we need to work with you, Mr. Chairman, and the 
subcommittee to work out some kind of a workable legal arrange- 
ment with the proper controls on this. 

Because the objective is good. We need these air tankers to help 
us fight forest fires. We just need to figure out how to be able to 
achieve that objective and do it in the most efficient way, but deal 
with the control and accountability that you are so concerned about 
and I am concerned about. 

Mr. Rose. I know you are, and I know you are concerned about 
American Forest Service's reputation and fighting forest fires. I 
know how agencies are sometimes told, especially during the last 
30 years, to interfere with other agencies' work to get other jobs 
done, and I am not asking you to comment on that. 



85 

But what is the status right now of the title to all of these air- 
craft? Are we getting the title back in the United States of America 
or are they going to stay in the title of these companies that they 
were transferred to and in many cases, obviously, misused? Can 
you answer that? 

Mr. Robertson. The title for the 28 airplanes still remain with 
the contractors. Now, one of those planes has crashed, so we are 
dealing with 27 planes, and so we are working now with our gen- 
eral counsel on how to go back and put more teeth into this agree- 
ment which you referred to so that we can exercise a greater de- 
gree of control over the use of these planes. 

Mr. Rose. But let me ask you that. I think the contract is pretty 
clear the way it is. Don't you think that there have been fraudulent 
uses made of U.S. Government property? 

Mr. Robertson. Mr. Chairman, those two planes should not 
have gone to Kuwait. That was n noncompliance with the ex- 
change agreement we had with tho^ie contractors. 

I don't know about the other situation, but the Inspector General 
just testified that they know about another plane where some parts 
were sold off of it. That is not according to our agreement unless 
those parts were used to make planes flyable for firefighting, and 
so any of this use of these planes or any use of the parts to do any- 
thing other than fight forest fires 

Mr. Rose. Is a fraudulent use? 

Mr. Robertson. Yes, it is. The Forest Service is very concerned 
about that. We are working to try to get on top of that. We have 
had lots of discussions with the contractors, and we have already 
taken action, and we are going to do everything we can to keep the 
use of these planes within the confines of this exchange agreement 
that we have worked out and signed with the contractors. 

Mr. Rose. Why wasn't this resolved in 1989 since you knew in 
1989 that there were problems with the Federal law here? 

Mr. Robertson. Well, we did stop the exchange at that point. 
The ownership and the title had already passed. The contractors 
had already invested money into these planes. 

These planes don't come ready to fight fires. They have to be re- 
habilitated, made flyable, and retrofitted with tanks so here 

Mr. Rose. But that is charged back to the Government, isn't it? 

Mr. Robertson. Yes, through the contracts. To our 
advantage 

Mr. Rose. That was not much of an excuse for the contractors. 
They got all that money back through what they charged you at 
the Forest Service, is that not correct? 

Mr. Robertson. Well, over a period of years. 

Mr. Rose. Over a period of years, slow payment. I understand 
about slow payment. But they got all their money back, didn't 
they? 

Mr. Robertson. Well, they haven't yet, but they will over 5 or 
10 years. 

Mr. Rose. All right. 

Mr. Robertson. Mr. Chairman, this is 

Mr. Rose. I know you are concerned about this. 

Mr. Robertson. I am very concerned. 



86 

Mr. Rose. But you understand our concern about 30 years of ex- 
perience with several administrations. And I understand how dif- 
ficult it is to have many masters over a period of time. I am aware 
of that. But I think the public needs to know exactly how these 
things work, and we need a better way to look at how these kinds 
of policies get into Government. 

I doubt that anybody on the Agriculture Committee was ever 
consulted about a contractor fighting fires in France. Now, I love 
France. They make — next to California — some pretty good wines. 
And I just can't understand how, without getting the permission of 
Congress, you all at the Forest Service would let airplanes fight 
fires in France. 

Now, it might have been for good and valid reasons. Did you ap- 
prove of that? 

Mr. Robertson. I didn't personally approve of it, and I wasn't 
aware of it until after I found out they were in France. These have 
to be approved by the State Department. They have to have an ex- 
port license. 

Mr. Rose. Oh, the State Department gets in on this? 

Mr. Robertson. Well, any plane leaving the country has to have 
approval of the State Department on an export license. 

Mr. Rose. Mr. Baker, former Secretary of State, was very much 
involved in telling the Department of Agriculture to make more 
GSM loans to Iraq. Do you have any knowledge that Secretary of 
State Baker may have had any hand in seeing that these planes 
were used offshore? 

Mr. Robertson. No, I have no knowledge of anything like that. 

Mr. Rose. I am going to close it unless you have something else 
you want to say. We have your statement for the record, and we 
have your answers. 

Mr. Robertson. I would like to say, Mr. Chairman, I am admit- 
ting mistakes were made. This has been poorly managed by the 
Forest Service. 

The objective of trying to fight the fires and save lives is a good 
objective, and I want to work with you and this subcommittee to 
figure out how we can meet that objective which everybody agrees 
with but do it in a good, businesslike way with control and account- 
ability on the planes. You will find me a very cooperative person 
working with you and the committee to see how we can do that 
best. 

I appreciate your interest and the subcommittee's interest in 
helping us with this problem. 

Mr. Rose. Thank you, Mr. Robertson, very much. 

[The prepared statement of Mr. Robertson appears at the conclu- 
sion of the hearing.] 

Mr. Rose. You are all excused. Thank you for being here. 

The next witness is the Honorable James Lyons, Assistant Sec- 
retary of Agriculture for Environment and Natural Resources. 

Mr. Lyons, we know where you were when all this was going on. 
You were right up here helping the House Agriculture Committee, 
weren't you? 

Mr. Lyons. That is right, Mr. Chairman. 

Mr. Rose. Now what are you going to do about it? 



87 

Mr. Lyons. That is why I am here today, to tell you what we are 
going to do about it. 

Mr. Rose. Your statement is in the record. 

Mr. Lyons. I will summarize. 

Mr. Rose. What do you want to do about it? 

STATEMENT OF JAMES R. LYONS, ASSISTANT SECRETARY, EN- 
VIRONMENT AND NATURAL RESOURCES, U.S. DEPARTMENT 
OF AGRICULTURE 

Mr. Lyons. Let me, first of all, say that we are very concerned 
about the OIG's audit and the findings and the clear misuse of ex- 
isting authority to exchange aircraft. Regardless of the intended 
purpose, this is something that shouldn't have proceeded. 

We recognize the Forest Service — and I think Dale recognizes the 
Forest Service didn't have the authority to proceed and was not in 
compliance with Federal property egulations in doing so. The first 
thing we are going to do, as a result of the OIG investigation is, 
if there is any evidence of wrongdoing, we are going to be directing 
the Forest Service to take appropriate administrative action. Also, 
if it is determined that illegal actions were taken, we are going to 
encourage the Department of Justice to prosecute to the full extent 
of the law those who are guilty of wrongdoing. 

What we need to do, though, is come up with a policy and a pro- 
gram that allows us to keep air tankers in business to help us with 
our firefighting mission down the road. I think the first thing we 
need to do to accomplish that is we need to get the Forest Service 
out of the business of facilitating the exchange of air tankers. That 
is clearly not a mission that they should have. 

For this reason, Mr. Chairman, the administration is considering 
seeking legislative authority to facilitate the sale of excess aircraft 
to bona fide air tanker operators. Simply stated, we want to get out 
of the business of handling aircraft through exchange. We would 
much prefer the Department of Defense sell its surplus air tankers 
on the market so as to facilitate their transfer to private holdings. 

This legislation will need to include detailed responsibilities and 
controls to ensure that the aircraft will be used solely for the pur- 
poses of suppressing wildfires and prohibit the transfer unless ex- 
plicitly approved by the Secretary. 

Mr. Rose. That is fine. You don't need to read about the legisla- 
tion because I know — but let me just put you on notice about some- 
thing that concerns me greatly. 

I have been involved ever since I found out that the GSM-102 
program was being abused to send money and other things of value 
other than U.S. -grown farm products to Iraq. I have turned all of 
that over to the Justice Department. I personally met with Ms. 
Reno, and she invited us to give it all to her and that she would 
look into it. 

I would also add now to my list of things that Ms. Reno looks 
at, and I am sure her Department will because she is a very good 
Attorney General, that they now look at whether or not this oper- 
ation in any way dovetails with th" GSM-102, -103 program. And 
you might just remind everybody hat they got my attention now 
and that I am going to be asking those questions about that as well 



88 

as GSM-102, -103 because I think there are some similarities 
here. 

But let's you and I pledge together that we are going to write leg- 
islation that the Congress can live with, that the administration 
can live with, that will solve this problem. You said you would like 
us to do that. 

Mr. Lyons. You have that pledge from me, Mr. Chairman. If we 
are not able to obtain that legislative authority, the only option 
that we have in operating an air tanker program is for the Forest 
Service to obtain planes from the Department of Defense and then 
offer them to contractors as Government-furnished property. We 
prefer not to have to do that. We prefer to get out of the business. 

Mr. Rose. I totally agree. You do need aircraft. I want to see you 
using aircraft. 

But I think the Secretary and all the assistant secretaries at 
USDA need to be on super notice that in the future your Depart- 
ment doesn't get used or abused either for aircraft or stuff going 
to Iraq to help rearm Iraq and that you basically run just an Agri- 
culture Department because we have enough problems in this Con- 
gress with the agricultural programs. 

And when the city Congressmen up here understand about 
things like this, it is tougher for us to get the work of American 
farmers taken care of by our regular agricultural appropriations. 
And I am quite sure you agree with that, don't you? 

Mr. Lyons. Yes, Mr. Chairman. We ought to focus on what we 
do best, which is agriculture. 

Mr. Rose. The Defense committees, Mr. Dellums, Mr. Murtha, 
Mr. Hefner, those committees on appropriations and authorization 
can work this out and get it off your back. And that I believe is 
your recommendation also. 

Mr. Lyons. We would like to work with them to do so. That is 
right. 

Mr. Rose. Thank you. 

Mr. Lyons. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Lyons appears at the conclusion 
of the hearing.] 

Mr. Rose. Mr. Bishop. 

Mr. Bishop. Thank you, Mr. Chairman. 

I apologize for my lateness in arriving. I had two other commit- 
ments. 

I would like to thank Mr. Lyons for his commitment on behalf 
of USDA. This is, obviously, a very serious problem, and it, obvi- 
ously, was a problem that seems to have festered under the pre- 
vious administration. It has been — the lid has been removed from 
it. 

And we are happy that the chairman, along with the Depart- 
ment, will be working together with this subcommittee to have 
some more serious oversight and to address the problems so that 
we will not continue to have this type of corruption that really vio- 
lates the trust that the people want to have in this Government. 
And I want to thank you for that commitment. Thank you. 

Mr. Rose. Thank you, Mr. Bishop. 

[The prepared statement of Mr. Bishop follows:] 



89 



REPRESENTATIVE SANFORD D. BISHOP, JR. 
SUBCOMMITTEE ON SPECIALTY CROPS AND VATURAL RESOURCES 

AUGUST 5, 19 93 







Thank you Mr. Chairman, this morning we are going to look 
into one of the most pressing problems of our nation. Govern tent 
fraud, abuse, and possible criminal activity by middle managem.ent 
level officials in the Forest Service. I was elected to Congress 
because people are fed up with the federal government. The 
people fear that their own government is corrupt and 
unfortunately, today, we will only reinforce those fears. 
Furthermore, reports I have been given questioning the 
involvement of the CIA in this money-making scheme disturb me 
greatly. We must get to the bottom of this scandal which I 
believe is much broader than what we will discuss today. 

I am disappointed in the Forest Service's oversight of its 
own program and believe this comes straight from the top. We 
must determine the scope of this scam between the broker of these 
airplanes and employees within the Forest Service. If in fact, 
Forest Service employees have benefitted monetarily from the 
transfer of these planes through the broker to contractors, I 
hope the Justice Department clean's house. 

It is hard for me to believe that only one individual within 
the agency had any knowledge of these transfers and I hope the 
Chief will clarify this today. I also want to know the extant of 



90 



the broker's and some of the contractors, ties with the 
intelligence community to determine what we are dealing with. It 
seems impossible that this situation is simply a middle- 
management foul up within the Forest Service. At this point, I 
believe we have a scandal on our hands which the Forest Service 
wishes to sweep under the rug and which could possibly involve 
illegal activity involving individuals with close ties to the 
CIA. 



91 

Mr. Rose. One last thing, Mr. Lyons. 

Just so I think there is no hint of a cover-up here either by any 
agency of Government that you should encourage Justice to work 
as hard as they can to get the title to these 28 aircraft back into 
the property of the United States of America, and we would appre- 
ciate it if you would keep us informed of your efforts as that goes 
along. 

Mr. Lyons. I will do so, Mr. Chairman. 

Mr. Rose. Thank you all very much. This subcommittee hearing 
is adjourned. 

[Whereupon, at 11:50 a.m., the subcommittee was adjoL .ned, to 
reconvene, subject to the call of the Chair.] 

[Material submitted for inclusion in the record follows.] 



92 



UNITED STATES DEPARTMENT OF AGRICULTURE 
OFHCE OF INSPECTOR GENERAL 

STATEMENT OF JAMES R. EBBITT 

ASSISTANT INSPECTOR GENERAL FOR AUDIT 

U.S. DEPARTMENT OF AGRICULTURE 



BEFORE THE HOUSE SUBCOMMITTEE ON 
SPECIALTY CROPS AND NATURAL RESOURCES 



ON THE 

Forest Service 
Historic Aircraft Excliange Program 

Augusts, 1993 



us DEPARTMENT OF AORICULTURE 




OFFICE OP INSPECTOR GENERAL 



93 



THANK YOU MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE. I AM JAMES R. EBBITT, 
ASSISTANT INSPECTOR GENERAL FOR AUDIT, AND WITH ME THIS MORNING IS CRAIG L. 
BEAUCHAMP, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS. 

WE ARE PLEASED TO APPEAR BEFORE YOU TODAY TO DISCUSS OUR AUDIT OF FOREST 
SERVICE AIRCRAFT ACTIVITIES. BASED UPON OUR AUDIT WORK, WE ALSO INITIATED AN 
INVESTIGATION TO DETERMINE IF THERE WAS ANY CRIMINAL WRONGDOING INVOLVED IN 
THIS MATTER. WE HAVE FURNISHED A REPORT OF INVESTIGATION TO THE DEPARTMENT OF 
JUSTICE FOR THEIR REVIEW. BECAUSE THIS MATTER IS STILL ONGOING, WE CANNOT 
DISCUSS THE SPECIFICS OF OUR INVESTIGATIVE FINDINGS. FOR BACKGROUND, 
MR. CHAIRMAN, . . . 

THE FOREST SERVICE OWNS AND OPERATES 45 AIRCRAFT AND 1 HELICOPTER, AND 
CONTRACTS FOR THE SERVICES OF ADDITIONAL AIRCRAFT FOR THE PURPOSE OF FIGHTING 
FIRES. FOREST SERVICE OWNED AIRCRAFT, WHICH ARE OPERATED AT THE COST OF ABOUT 
$3 MILLION ANNUALLY, PRIMARILY ASSIST THE AGENCY'S INCIDENT COMMANDERS IN THE 
MANAGEMENT OF A FIRE. THIS ROLE INCLUDES TARGETING AIRTANKERS TO THE POINTS 
WHERE RETARDANT NEEDS TO BE DROPPED. AIRTANKERS ARE USED TO CONDUCT AN 
INITIAL ATTACK ON SMALL FIRES UNTIL GROUND FORCES CAN CONTROL THEM, REINFORCE 
THE "FIRE LINE" CREATED BY THE GROUND CREWS, AND PROVIDE PROTECTION OF AND 
SUPPORT FOR THE GROUND FORCES. IN ADDITION TO THE OWNED AIRCRAFT, THE FOREST 
SERVICE CONTRACTED WITH 6 PRIVATE FIRMS FOR THE SERVICES OF 29 AIRTANKERS AT 
AN ESTIMATED COST OF ABOUT $16 MILLION. IN ADDITION, THE FOREST SERVICE HAS 
COOPERATIVE AGREEMENTS WITH THE U.S. DEPARTMENT OF THE INTERIOR AND SEVERAL 
STATE AGENCIES FOR USE OF ANOTHER 40 AIRTANKERS THOSE AGENCIES HAVE UNDER 
CONTRACT, AND CAN CALL UPON THE NATIONAL GUARD, IF NEEDED. 



- 1 



94 



TODAY I WOULD LIKE TO DISCUSS OUR REVIEW OF THE AGENCY'S USE OF THE AIRTANKERS 
UNDER FS CONTRACT. 

BACKGROUND OF THE EXCHANGE PROGRAM 

AIRTANKERS WERE FIRST USED IN THE FS FIREFIGHTING MISSION IN 1954 AND WERE 
GOVERNMENT OWNED AND OPERATED. AS THE AIRTANKER PROGRAM EXPANDED, AND 
BEGINNING IN THE EARLY 1960'S, THE FOREST SERVICE CONTRACTED OUT THE AIRTANKER 
OPERATIONS. THE AIRTANKER FLEET HAS HISTORICALLY BEEN MADE UP OF MAINLY POST- 
WORLD WAR II PISTON-ENGINED MILITARY AIRCRAFT, LIKE C-I19'S, THAT THE 
CONTRACTORS OBTAINED THROUGH EXCHANGES WITH THE U.S. DEPARTMENT OF DEFENSE OR 
THAT THEY PURCHASED AS SURPLUS. 

IN OCTOBER 1987, THE INTERAGENCY AIRTANKER BOARD SUSPENDED THE USE OF C-I19 
AIRTANKERS BECAUSE OF FATAL ACCIDENTS CAUSED BY STRUCTURAL DEFECTS. TWO 
COMPANIES, WHOSE FLEETS WERE COMPOSED PRIMARILY OF C-119'S, WERE MOST AFFECTED 
BY THE SUSPENSION. AN INDIVIDUAL WITH A BACKGROUND IN THE INDUSTRY APPROACHED 
THE TWO COMPANIES WITH AN OFFER TO ARRANGE FOR AN AIRCRAFT EXCHANGE WITH THE 
DEPARTMENT OF DEFENSE. THE ORIGINAL PROPOSED EXCHANGE CONSISTED OF TRADING 
THE C-119'S FOR THE LARGER, SAFER AND MORE MANEUVERABLE C-130A'S. DOD WAS NOT 
INTERESTED, HOWEVER, IN MAKING ADDITIONAL EXCESS MILITARY AIRCRAFT AVAILABLE 
TO THE MUSEUMS BECAUSE OF PRIOR MISUSE OF SOME OF ITS PLANES. DURING THE 
AUDIT, THE U.S. AIR FORCE MUSEUM PERSONNEL STATED THAT THE AIRCRAFT OFFERED BY 
THE CONTRACTORS DID NOT WARRANT EXCHANGING WITH THE MORE VALUABLE C-130A'S, 
AND THE AIR FORCE HAD NO NEED OR INTEREST IN THE TYPES OF PLANES PROPOSED FOR 
THE SWAP. THE INDIVIDUAL THEN APPROACHED THE FOREST SERVICE AND REQUESTED 
ASSISTANCE IN OBTAINING PLANES. THE FOREST SERVICE AGREED TO HELP AND THEY 



95 



BEGAN WORKING WITH DOD AND THE GENERAL SERVICES ADMINISTRATION. AT THAT TIME, 
THE FOREST SERVICE HAD NO MECHANISM IN PLACE TO OBTAIN, TRANSFER, AND RECEIVE 
AIRPLANES BUT THOUGHT THEY COULD USE THE HISTORIC EXCHANGE PROGRAM. 

THE HISTORIC EXCHANGE PROVISIONS OF THE FEDERAL PROPERTY REGULATIONS ESTABLISH 
THE REQUIREMENTS FOR TRANSFERRING OWNERSHIP OF FEDERAL PROPERTY TO OUTSIDE 
PARTIES. THE EXCHANGE PROVISIONS WERE DESIGNED TO FACILITATE FEDERAL MUSEUMS' 
ABILITY TO ACQUIRE HISTORIC ITEMS FROM THE PUBLIC FOR PRESERVATION AND 
DISPLAY. ACCORDING TO THE REGULATIONS, BOTH THE ITEM RECEIVED AND THE ITEM 
EXCHANGED MUST BE HISTORIC. 

THE FOREST SERVICE'S JUSTIFICATION FOR THE EXCHANGE PROGRAM WAS THAT IT WAS 
NEEDED TO AVOID THE SUBSTANTIAL INCREASES IN CONTRACT COSTS THAT WOULD ARISE 
IF THE PRIVATE OPERATORS HAD TO PURCHASE COMMERCIAL AIRCRAFT. UNDER THE 
PROGRAM, DOD TRANSFERRED OWNERSHIP OF EXCESS C-130A AND P-3A MILITARY AIRCRAFT 
TO THE FOREST SERVICE. THE FOREST SERVICE THEN TRANSFERRED THE AIRCRAFT TO 
CONTRACTORS IN EXCHANGE FOR PLANES TO BE PLACED IN FEDERAL MUSEUMS. BETWEEN 
1988 AND 1991, THE FOREST SERVICE RECEIVED 35 AIRCRAFT FROM DOD WHICH IT THEN 
PROVIDED TO AIRTANKER CONTRACTORS. TITLE WAS ALSO PASSED FOR 28 OF THE 
AIRCRAFT TO THE OPERATORS; THE FOREST SERVICE RETAINED OWNERSHIP OF THE 
REMAINING 7. IN RETURN, THE FOREST SERVICE ACQUIRED 28 AIRCRAFT OF VARIOUS 
TYPES FROM THE CONTRACTORS. ALSO, OUR SUBCfQUENT INQUIRY DISCLOSED THAT DOD 
TRANSFERRED SIX ADDITIONAL C-130A'S TO GSA FOR THE FOREST SERVICE. THE FOREST 
SERVICE HAS NOT, HOWEVER, TAKEN POSSESSION NOR TITLE OF THESE PLANES. 



3 - 



96 



PROBLEMS WITH THE EXCHANGE PROGRAM 

IN DECEMBER 1989, IN RESPONSE TO COMPLAINTS ABOUT THE USE OF THE AIRCRAFT FROM 
THE NATIONAL AIR CARRIER ASSOCIATION, THE DEPARTMENT'S OFFICE OF THE GENERAL 
COUNSEL HAD RULED THAT THE FOREST SERVICE DID NOT HAVE AUTHORITY TO EXCHANGE 
GOVERNMENT-OWNED AIRCRAFT. OGC FOUND THAT THE EXCHANGES WERE NOT IN 
COMPLIANCE WITH THE TERMS OF THE PROPERTY REGULATIONS BECAUSE THE C-130A AND 
P-3A AIRCRAFT WERE NOT HISTORIC TO THE FOREST SERVICE IN THAT THEY HAD BEEN 
ACQUIRED FROM DOD FOR THE SPECIFIC PURPOSE OF GIVING THEM TO CONTRACTORS, 
RATHER THAN FOR PRESERVATION AND DISPLAY. 

BOTH GSA AND DOD OFFICIALS INFORMED US THAT THE AIRCRAFT WERE PROVIDED TO THE 
FOREST SERVICE WITH THE UNDERSTANDING THAT THE AIRCRAFT WERE TO BE OPERATED BY 
THE FOREST SERVICE OR USED BY AIRTANKER CONTRACTORS AS GOVERNMENT- FURNISHED 
EQUIPMENT. THE KEY FOREST SERVICE OFFICIAL INVOLVED IN THE PROCESS 
CONTRADICTED THESE STATEMENTS, HOWEVER, CLAIMING THAT HE HAD RECEIVED VERBAL 
AUTHORIZATION FOR THE OWNERSHIP TRANSFER. NONE OF THE AFFECTED AGENCIES, 
USDA, GSA, OR DOD HAD MAINTAINED SUFFICIENT DOCUMENTATION TO ENABLE US TO MORE 
PRECISELY DETERMINE WHO HAD AGREED TO WHAT. 

U.S. AIR FORCE MUSEUM PERSONNEL TOLD US THAT CONTRACTORS' AIRCRAFT WERE NOT OF 
SUFFICIENT HISTORIC OR MONETARY VALUE TO EXCHANGE FOR THE C-130A AIRCRAFT. WE 
WERE PROVIDED INFORMATION FROM INDUSTRY SOURCES THAT THE COMMERCIAL VALUE OF 
AN OPERATIONAL C-130A VARIED FROM $1.75 MILLION TO $3.5 MILLION. INDUSTRY 
SOURCES AND U.S. AIR FORCE OFFICIALS ESTIMATED THE COMMERCIAL VALUE OF A 
C-130A AIRCRAFT USED FOR PARTS ONLY AT OVER $1 MILLION. THEREFORE, THE VALUE 
OF THE C-130A'S AND P-3A'S WAS AT LEAST $28 MILLION AND AS MUCH AS 



- 4 - 



97 



$67 MILLION. AIR FORCE MUSEUM PERSONNEL ESTIMATED THE VALUE OF THE PLANES 
RECEIVED FROM THE CONTRACTORS TO BE ABOUT $10,000 EACH. 

ANOTHER PROBLEM WE NOTED WAS THAT THE ITEMS OBTAINED IN THE EXCHANGE MUST BE 
PRESERVED OR DISPLAYED AT FEDERAL MUSEUMS. OF THE 28 AIRCRAFT THAT 
CONTRACTORS TRANSFERRED TO THE FOREST SERVICE, ONLY 12 ARE DISPLAYED IN 
FEDERAL MUSEUMS. WHEN THE AUDIT REPORT WAS ISSUED, THE FOREST SERVICE HAD 
PLACED 12 OTHER AIRCRAFT IN PRIVATE MUSEUMS, AND 4 OF THE AIRCRAFT WERE STILL 
IN THE CONTRACTORS' POSSESSION. THE FOREST SERVICE ADVISED US THAT ALL OF THE 
PLANES ARE NOW IN MUSEUMS. 

PROBLEMS WITH HOW THE PLANES WERE USED 

THE FOREST SERVICE HAD NOT STRUCTURED THE TRANSFER OF THE MILITARY AIRCRAFT IN 
A WAY THAT WOULD ENSURE THAT THE AIRCRAFT WOULD BE USED ONLY FOR THE PURPOSES 
INTENDED. WHILE THE EXCHANGE AGREEMENTS SIGNED BY THE AGENCY AND THE 
CONTRACTORS REQUIRED USEAGE OF THE PLANES AS FIREFIGHTIN6 AIRTANKERS, THE 
AGREEMENTS DID NOT REQUIRE THAT THE FIRMS CONVERT THE PLANES TO AIRTANKERS NOR 
DID IT CONTAIN ANY RESTRICTIONS TO PREVENT CONTRACTORS FROM SELLING, 
TRANSFERRING, OR GIVING AWAY THE AIRCRAFT OR THEIR PARTS. IN ADDITION, THE 
ORIGINAL CERTIFICATE OBTAINED FROM THE FEDERAL AVIATION ADMINISTRATION, WHICH 
GOVERNS THE PURPOSES FOR WHICH PLANES CAN BE FLOWN, WAS HELD BY THE PRIVATE 
INDIVIDUAL INVOLVED WITH THE FOREST SERVICE IN THE EXCHANGE. THIS CERTIFICATE 
DID NOT LIMIT USE OF THE PLANES TO FIREFIGHTING BUT INCLUDED BROADER 
PROVISIONS SUCH AS CARRYING CARGO. WITH THIS LEEWAY, CONTRACTORS COULD, AND 
DID, USE THE AIRCRAFT FOR PURPOSES UNRELATED TO FIREFIGHTING. FOR EXAMPLE: 



- 5 



98 



ONE FIRM RECEIVED 5 C-130A'S, 3 FROM THE FOREST SERVICE AND 2 FROM THE 
PRIVATE INDIVIDUAL INVOLVED WITH THE FOREST SERVICE IN THE EXCHANGE. 
AT THE TIME, THIS FIRM DID NOT HAVE A CONTRACT WITH THE FOREST 
SERVICE, BUT DID HAVE A CONTRACT WITH THE U.S. DEPARTMENT OF THE 
INTERIOR AND USED TWO OF THE PLANES TO CARRY CARGO IN THE PERSIAN 
GULF. TWO OF THE PLANES HAVE SINCE BEEN REPOSSESSED BY A LENDER WHO 
IS TRYING TO SELL THEM TO FOREIGN BUYERS FOR SEVERAL MILLION DOLLARS 
EACH. THE SALE OF THESE AIRCRAFT IS THE SUBJECT OF LITIGATION BETWEEN 
THE DEPARTMENT AND THE LENDER. WE HAVE BEEN INFORMED THAT THE FIRM 
HAS TWO OF THE THREE REMAINING AIRCRAFT UNDER CONTRACT TO THE 
GOVERNMENT OF FRANCE. THE FIRM STILL HAS THE OTHER PLANE, BUT IT HAS 
NOT YET BEEN TANKED. 

- ANOTHER CONTRACTOR USED A P-3A TO TEST ENGINES FOR A PRIVATE 
MANUFACTURER. 

- ANOTHER CONTRACTOR SOLD OVER $1 MILLION IN PARTS FROM AIRCRAFT. 

EXCHANGE BROKER 

THE EXCHANGES BETWEEN THE FOREST SERVICE AND THE AIRTANKER CONTRACTORS WERE 
"BROKERED" BY A PRIVATE INDIVIDUAL WHOSE CONTRACTOR CLIENTS RECEIVED 25 OF THE 
28 AIRCRAFT EVENTUALLY TRANSFERRED. ONLY 5 OF THE APPROXIMATELY 15 AIRTANKER 
CONTRACTORS IN THE INDUSTRY RECEIVED AIRCRAFT THROUGH THE EXCHANGE PROGRAM. 
FOUR OF THE FIVE CONTRACTORS RECEIVING AIRCRAFT WERE CLIENTS OF THE BROKER. 
THE FOREST SERVICE NOTIFIED THE INDUSTRY OF THE POTENTIAL AVAILABILITY OF THE 
MILITARY AIRCRAFT, ONLY AFTER THE INITIAL ARRANGEMENTS THROUGH THE BROKER HAD 



- 6 - 



99 



BEEN MADE. THE PROGRAM WAS HALTED BEFORE ALL INTERESTED PARTIES HAD AN 
OPPORTUNITY TO OBTAIN THE PLANES. FOR HIS SERVICES, THE BROKER RECEIVED 4 OF 
THE C-130A AIRCRAFT FROM THE CONTRACTORS WHICH HE SOLD BACK TO THEM FOR OVER 
$1 MILLION. THIS ARRANGEMENT WAS MADE POSSIBLE BECAUSE THE EXCHANGE AGREEMENT 
WAS NOT RESTRICTIVE. 

WE FOUND THAT THE CONTRACTORS' COSTS FOR PURCHASING THE AIRCRAFT FROM THE 
BROKER WERE RECORDED IN THEIR BOOKS TO BE CHARGED BACK TO THE FOREST SERVICE. 
IN ADDITION, THE CONTRACTORS INCURRED ABOUT $1 MILLION TO REFURBISH THE 
AIRCRAFT THEY TRADED TO THE FOREST SERVICE. WE ALSO NOTED THAT THESE COSTS 
WERE TO BE CHARGED BACK TO THE FOREST SERVICE. 

SEVEN ADDITIONAL GOVERNMENT-OWNED AIRCRAFT 

FOREST SERVICE ALSO PROVIDED SEVEN ADDITIONAL AIRCRAFT VALUED AT ABOUT 
$17 MILLION TO THE CONTRACTORS AFTER THE DEPARTMENT'S GENERAL COUNSEL HAD 
ISSUED AN OPINION THAT THE EXCHANGES WERE NOT AUTHORIZED. THE FOREST SERVICE 
PURPORTEDLY WAS OF THE OPINION THAT THE OGC DETERMINATION REPRESENTED ONLY A 
TEMPORARY ROADBLOCK AND THAT THE EXCHANGE PROGRAM WOULD SUBSEQUENTLY RESUME. 
OWNERSHIP OF THE SEVEN AIRCRAFT WAS NOT TRANSFERRED TO THE CONTRACTORS. THE 
CONTRACTORS, HOWEVER, CANNIBALIZED FIVE OF THE GOVERNMENT-OWNED AIRCRAFT FOR 
PARTS TO SUPPORT THEIR OWN FLEETS. CONTRACTORS STATED THAT THEY HAD 
PERMISSION FROM THE FOREST SERVICE TO USE THE AIRCRAFT FOR PARTS. FOREST 
SERVICE OFFICIALS SAID THAT ONE OF THEIR EMPLOYEES MAY HAVE AUTHORIZED USE OF 
THESE PARTS. HOWEVER, FOREST SERVICE DOCUMENTATION THAT WOULD SHED LIGHT ON 
THIS MATTER IS NEARLY NONEXISTENT. AS I PREVIOUSLY NOTED, ARRANGEMENTS HAD 
BEEN INITIATED BY THE FOREST SERVICE, BUT NOT FINALIZED, TO OBTAIN 



7 - 



100 

6 ADDITIONAL AIRCRAFT FROM DOD. 

RECOMMENDATIONS 
WE RECOMMENDED THAT THE FOREST SERVICE: 

- OBTAIN A LEGAL OPINION ON WHETHER THE AIRCRAFT TRANSFERRED TO 
CONTRACTORS COULD BE RECOVERED AND RECOVERING THE AIRCRAFT OR THEIR 
FAIR MARKET VALUES IF PERMISSIBLE; 

- AMEND AND STRENGTHEN THE EXCHANGE AGREEMENTS TO PRECLUDE IMPROPER USE 
OR DISPOSITION OF THE PLANES OR THEIR PARTS; 

- RECOVER THE SEVEN GOVERNMENT-OWNED AIRCRAFT OR THEIR FAIR MARKET 
VALUES FROM THE CONTRACTORS. 

DISALLOW OVER $2 MILLION CHARGED BY THE CONTRACTORS FOR THE VALUE OF 
THE AIRCRAFT THEY TRADED IN AND THE COSTS THEY PAID TO THE BROKER FOR 
HIS FOUR C-130A'S; AND 

- ESTABLISH CONTROLS TO ENSURE PROPERTY TRANSACTIONS IN THE FUTURE ARE 
LEGAL AND PROPER. 

CORRECTIVE ACTIONS 

THE FOREST SERVICE TOOK ACTION TO OBTAIN AND TIGHTEN THE FAA CERTIFICATE 
ISSUED FOR THE PLANES. SPECIFICALLY, THE AIRCRAFT USE WAS LIMITED SOLELY TO 
FIREFIGHTING. THE CONTRACTORS VOLUNTARILY COMPLIED WITH THIS REQUEST. THE 
FIRM WITHOUT A CONTRACT THAT PURCHASED TWO C-130A'S FROM THE BROKER DID NOT 
COMPLY, HOWEVER. ALTHOUGH THESE TWO PLANES ARE CURRENTLY UP FOR SALE, THE 



8 - 



101 



FOREST SERVICE DID NOTIFY ALL INVOLVED PARTIES OF THE OWNERSHIP QUESTION. 
FURTHER, THE AGENCY ALSO ACTED PROMPTLY TO HAVE THE TWO C-130A'S RETURNED FROM 
THE PERSIAN GULF WHEN IT BECAME AWARE OF THE SITUATION. 

IN RESPONSE TO OUR AUDIT, THE FOREST SERVICE AGREED TO DEVELOP WRITTEN 
PROCEDURES AND MAKE ORGANIZATIONAL REALIGNMENTS TO PROVIDE ASSURANCE THAT THE 
PROBLEMS NOTED WILL NOT BE REPEATED. IN ADDITION, THE FOREST SERVICE AGREED 
TO DISALLOW COSTS ASSOCIATED WITH THE BROKER'S PAYMENT IN THE CONTRACT COSTS 
AND HAS BEEN WORKING CLOSELY WITH OGC ON THE ENFORCEABILITY OF THE EXCHANGE 
AGREEMENTS AND OPPORTUNITIES TO MAKE NEEDED REVISIONS. FURTHER, THE 
DEPARTMENT ESTABLISHED A TASK FORCE TO RESOLVE OWNERSHIP ISSUES INVOLVING THE 
C-130A AND P-3A AIRCRAFT AND THE FUTURE ROLE OF THE FOREST SERVICE IN 
PROVIDING AIRCRAFT TO AIRTANKER CONTRACTORS. THE TASK FORCE IS COMPRISED OF 
REPRESENTATIVES OF THE FOREST SERVICE, OFFICE OF INSPECTOR GENERAL, OFFICE OF 
THE GENERAL COUNSEL, AND OFFICE OF OPERATIONS. THE PURPOSE OF THE TASK FORCE 
IS TO DEVELOP ALTERNATIVES FOR CONSIDERATION REGARDING THE FOREST SERVICE'S 
ROLE IN ACQUIRING PLANES IN THE FUTURE IN SUPPORT OF THE INDUSTRY. 

WE BELIEVE THE FIRST STEPS IN EVALUATING FUTURE SUPPORT SHOULD INCLUDE 

- REACHING A FORMAL AGREEMENT WITH THE DEPARTMENT OF DEFENSE OFFICIALS 
TO DETERMINE U THEY WILL MAKE AIRCRAFT AVAILABLE TO THIS PROGRAM IN 
THE FUTURE AND, IF SO, UNDER WHAT CONDITIONS; AND 

- HOLDING FORMAL DISCUSSIONS WITH GENERAL SERVICES ADMINISTRATION 
REPRESENTATIVES TO DETERMINE WHAT ALTERNATIVES THEY WILL SUPPORT. 



102 



IN ADDITION, THE U.S. DEPARTMENT OF THE INTERIOR IS A MAJOR PLAYER IN 
PROCURING FIREFIGHTING SERVICES. AGREEMENT NEEDS TO BE OBTAINED FROM DOI TO 
ENSURE CONSISTENCY IN THE CONTRACTING PROCESS AND THE MANAGEMENT OF THE 
AIRCRAFT. 

BASED UPON THE INFORMATION CURRENTLY AVAILABLE, WE RECOMMENDED THAT FUTURE 
AIRCRAFT BE PROVIDED AS EITHER GOVERNMENT FURNISHED PROPERTY OR LIMITED SALES 
DIRECT TO THE CONTRACTORS WITH PROPER CONTROLS AND OVERSIGHT BY THE FOREST 
SERVICE. ANY ADDITIONAL COSTS INCURRED BY THE FOREST SERVICE UNDER THE 
GOVERNMENT FURNISHED PROPERTY OPTION WOULD BE OFFSET BY THE STRENGTHENED 
CONTROL AND ACCOUNTABILITY OVER THE AIRCRAFT THAT WOULD BE GAINED. SIMILAR 
CONTROLS WILL BE NECESSARY IF PLANES ARE SOLD TO THE CONTRACTORS, BUT THE 
LIABILITY OF THE FOREST SERVICE IN CASE OF ACCIDENTS IS REDUCED UNDER THIS 
OPTION. 

THIS CONCLUDES MY STATEMENT MR. CHAIRMAN. I WILL BE HAPPY TO ANSWER ANY 
QUESTIONS YOU MIGHT HAVE. 



- 10 - 



103 



Honorable Charlie Rose July 3, 1993 

U.S. House of Representatives 
Committee on Agriculture 
Subcommittee on Specialty Crops 

and Natural Resources 
Room 1301. Longworth House Office Bldg. 
Washington. DC 20515 



Dear Mr. Chairman: 

You are applauded for your initiative and this hearing to investigate the U.S. 
Forestry Service program pertaining to forestry firefighting aircraft -the Lockheed 
C130 and AlO (Warthog jet aircraft). The issue of mismanagement or misconduct 
on the part of the Forestry Service concerning their aviation program is an 
understatement. At play is unreasonable restraints upon and monopolization of 
trade and exclusive dealing, all of which are prohibited under the Sherman Antitrust 
Act and the Clayton Act. 

My point of view in this matter was influenced by the statements contained 
within the Final Report by Senator Frank Church, Chairman of the Senate Select 
Committee to Study Governmental Operations With Respect to Intelligence 
Activities, and the widely publicized newspaper articles concerning Central 
Intelligence Agency (CIA) (1976 to current date). My aviation background furthered 
my understanding of the issues. I am a professional pilot and former military 
aviator. 1 am a military combat pilot from the Vietnam Era. My military service 
spanned 1960 through August 1979. As a professional pilot and aviation consultant I 
hold the senior ratings of the profession, to include Airline Transport with jet 
aircraft ratings. I have logged just under 11,000 hours pilot flight time. 

The U.S. Forestry Service is mired in controversy concerning the C130 and 
AlO aircraft program. The conduct of the Forestry Service has raised serious 
questions of CIA involvement. This should not be a surprise or something out of 
the ordinary. Both agencies have had a long standing hand-in-glove relationship as 
admitted in the Church report and extensive news articles, to include that of the 
Oregonian - 1988 (by James Long and Lauren Cowen - 9 series article). 

In 1991 numerous clients of mine became interested in government contract 
opportunities. In furtherance of business interests, I began looking at opportunities 
involving the U.S. Forestry Service, the U.S. Postal Service, and the military air 
logistics command. It became apparent and clear there were a select few doing 
business of major importance with these agencies and that these select few had 
extensive CIA involvement in their background. Questions began to percolate to the 
surface concerning the amount of CIA influence in the trade and marketplace. The 
U.S. Forestry Service and the U.S. Postal Service kept a secret agenda concerning 
these issues. This has been revealed to a certain degree by agency audits, 
investigations and government committee hearings. 

Again, in 1991, business interests brought me in contact with the U.S. 
Forestry Service concerning aviation contract opportunities. I had read an August 



104 



1991 aviation magazine article concerning a new program just implemented by the 
Forestry Service involving former military CI 30 aircraft (4-engine turbine-powered). 
On the surface, using C130 aircraft as a firefighting water tanker seemed 
appropriate with the times and available technology. Inquiries to the Forestry 
Service were initially stonewalled, with misinformation or no information at all. 
Industry sources revealed two separate programs involving C130 and AlO fighter 
aircraft. I was initially told the AlO program involved a military experiment that 
would convert AlO fighter planes to civilian water tankers. An unlikely concept 
because of the dangers involved using a former military jet that, in addition, could 
be radioactive because of its munitions (spent uranium ammunition). In 1991 I was 
told and believed the C130 program was being managed by the U.S. Forestry Service 
and the AlO fighter program was handled by the military under the direction of an 
aeronautical engineer named "Roy Reagan". 

Initial contacts with the Forestry Service in 1991 amounted to their 
statements there were only three C130's involved in the program, and considering 
its infancy, the program was closed to anyone other than those participating with 
the three aircraft. For verification of these statements, 1 contacted the General 
Services Administration legal counsel and was surprised to learn there were more 
than 28 four-engine turbine-powered aircraft involved in the program (22 C130's 
and 6 P3A's). GSA legal further explained the program was in trouble because 
several C130's had been caught operating in Kuwait, apparently without authority to 
do so. I was told the Forestry Service had requested GSA to issue a position paper 
exonerating the Forestry Service of any wrongdoing in the affair. GSA was 
reluctant to do so, and this reluctancy - among other reasons - had put the C130 
program on temporary hold. 

In early 1992 I became incensed with the Forestry Service's efforts to 
"circle the wagons". In hopes of clearing up the underlying facts, I began 
numerous inquiries to the Forestry Service under the Freedom of Information Act. 
Their responses were untimely, irregular and, in certain matters, untrue. I 
intentionally drew a line in the sand between the Forestry Service and myself 
concerning their misbehavior. At the same time, I had a business associate in the 
aviation industry contact me explaining his extreme concern because he was 
associated with the C130's that were caught operating in Kuwait. This associate 
revealed the framework of a covert military operation involving Southern Air 
Transport and Evergreen Airlines, both of which have admitted former military and 
CIA ties. I became personally concerned that I had inadvertently stepped into a 
covert CIA operation involving C130 and AlO fighter aircraft. 

In late 1991 I mistakenly believed a C130 program was merely mismanaged 
by the Forestry Service. It appeared millions of dollars were being unnecessarily 
wasted of taxpayers money. A potentially feasible C130 program appeared to have 
jumped the tracks and the Forestry Service was neither candid nor truthful when 
asked about the C130 program. As a former law enforcement officer, I became 
concerned there was criminal wrongdoing at play and I filed a complaint with the 
Department of Agriculture's Office of Inspector General in Washington, DC. Later 
on in 1992, I learned my initial complaint to the OIG had instigated a full blown 
audit of the C130 program. When contacted by the OIG's office, I agreed to 
cooperate in any way possible. The OIG asked questions concerning "Roy Reagan" 
and "Del Rio Flying Serr'^e". I was shocked to learn there were CIA footprints 



-2- 



105 



everywhere. To my surprise, the government believed "Roy Reagan" was a key 
player in the C130 program and had little or no knowledge of a blossoming military 
program involving Roy Reagan and AlO fighter planes to be used by the Forestry 
Service in the same program as the C130 aircraft were to have been used. 

In late 1992, the Office of Inspector General issued audit report no. 08097- 
2-At pertaining to the Forestry Service's mismanagement of the C130 and P3A 
program. I waj surprised - and at the same time amused - at the report's 
contents. There was no mention whatsoever of Roy Reagan and the AlO fighter 
plane program that was also associated in some way with the U.S. Forestry Service 
C130 program. I quickly realized the OIG's audit was merely the tip of the 
iceberg of a growing political scandal raising questions of a CIA involvement with 
the U.S. Forestry Service programs. 

Also in late 1992, the business associate who had spoken with me earlier and 
explained his part in the C130's that were caught in Kuwait was suddenly killed. 
This was a sad note in the whole sordid affair. The individual was truly a fine 
gentleman and the "John Wayne" of aviation. 

In early 1993, I was put in contact with the criminal division of the Office 
of Inspector General for the Department of Agriculture. I learned the OIG audit 
was indeed merely the tip of the iceberg. I cooperated fully with the OIG's 
criminal division. I, too, have become weary of the corruption in government and 
certainly of the CIA's misguided agenda. 

The truth concerning the C130 and AlO program is far from being told. 
Hopefully this Honorable Committee can get to the bottom of all that is at play. 
The result could be beneficial for everyone concerned. There are legitimate needs 
for both the U.S. Forestry Service and the CIA. The question arises whether those 
needs go hand-in-hand. I, for one, do not believe so. What I've seen and heard 
convinces me hundreds of millions of dollars of taxpayers money has been wasted 
for programs that were unneeded or misguided. The aviation industry has suffered 
tremendously because of CIA involvement in the marketplace. As one who has 
formerly worked with the CIA in one form or another, 1 support their existence. I 
simply question the reasonableness of co-mingling Intelligence affairs with the 
affairs of the U.S. Forestry Service or, for that matter, with the affairs of the 
U.S. Postal Service or other legitimate government agencies. 

Mr. Chairman, I hope my appearance before this Committee has been helpful. 
There is a lot more work to be done before there can be a turnaround in programs 
that are surely heading down the pathway of doom. 



Sincerely, 



6^ 
Gary R/ Eitel 



S'iH 



Professional Pilot 6 Aviation Consultant 



(Attachments follow:) 



-3- 




106 



EXCHANGE AGREEMENT 



It is mutually agreed by and between the USDA Forest Service, hereinafter 
referred to as the Forest Service, and Heaet Tmllay Flying Sarrloa, Hemet 
Valley, California, hereinafter referred to as the Exchanger, as follows: 

The Forest Service will provide the following aircraft to the Exchanger for use 
as flreflghting airtankers, and they may only be flown in support of forest, 
brush, or rangeland protection: ^/f^ 



C-130A 


S/N 


-56=lf«^ 


C-130A 


S/N 


56-530 


C-130A 


S/N 


56-534 


C-130A 


S/N 


56-535 


C-130A 


S/N 


56-538 


C-130A 


S/N 


56-540 


C-130A 


S/N 


56-541 




The Exchanger will provide to the Foerst Service the following fully restored 
and flyable aircraft: 



C-119 


S/N 


49-132 


C-119 


S/N 


48-322 


C-119 


S/N 


49-199 


C-119 


S/N 


48-352 


C-119 


S/N 


10-956 


C-119 


S/N 


10-776 


C-119 


S/N 


10-870 



\<.f' 



^,„,,p....-VC- 



This exchange la made under authority of GSA Regulation 101-46.203. > ■t:< 

Delivery : 

The above seven C-130A'3 will be delivered to the Exchanger in an "as Is, where 
Is" condition at Davis-Monthan AFB, AZ, within 30 days of the completion date 
of this Exchange Agreement. The Exchanger agrees to remove the seven aircraft 
within 180 days of receipt of an approved copy of this Exchange Agreement 
signed by the Director, Fire and Aviation Management, all at no expense to the 
0.S. Government. 

All military markings will be obliterated permanently prior to flight. Thla 
Includes serial numbers, national Insignia, unit markings, or other markings 
which Identify the aircraft as government/military property. 

The above C-119 aircraft will be painted by the Exchanger prior to delivery In 
accordance with color, markings, and insignia specifications to be provided by 
the Forest Service. All aircraft from the Exchanger will be flight-delivered 
to destination museums to be designated by the Forest Service at a later date. 
Title to these aircraft will transfer to the Forest Service at the time of 
engine-shutdown on the ramps at their designated destinations. 

This agreement will be considered consummated upon delivery of all aircraft by 
both parties. 



FS'e200-28(7-B2| 




107 



Release of Liability : 

In consideration of the mutual exchange herein, the Exchanger agrees that he 
will hold the U.S. Government harmless from any and all liability which might 
arise by reason of this exchange and that the exchange will be at no expense to 
the Government. 



Warranty of Title : 

The Exchanger hereby warrants that he has title to the aircraft and that there 
are no liens or encumbrances whatever against the said articles. 



FS'e200'2e(7.e2i 



108 



•'i'^'i'A ^^ WITNESS WHEREOf , the parties have hereunto signed their names on the dates 
;^^' Indicated. 






,\VTV>^|->>\.V 



i 



L. A. AMICARELLA, Director 
Fire and Aviation Management 



Mr 



Date 



Witnessed by: 

As to the Forest Service 



> / 



y 



r , ' '■• 


. ' 


/ J 




Name 




', 


.- /c.r 





Date 



Name 



Date 



As to the Exchanger 















Name 



6~'r' ^r 



Date 



Name 
Date 




FS-6200-28a (S 8*1 



109 



EXCHANGE AGREEMENT 



It is mutually agreed by and between the USDA Forest Service, hereinafter 
referred to as the Forest Service, and Hawkins & Powers Aviation, Inc., 
Creybull, Wyoming, hereinafter referred to as the Exchanger, as follows: 

The Forest Service will provide six C-13OA aircraft to the Exchanger on an 
as-available basis for use as firefighting air tankers, and they may only be 
flown in support of forest, brush, or rangeland protection: 

C-I3OA S/N 56-507 

C-I3OA S/N 56-496 

C-13GA S/N 57-482 

C-I3OA To be assigned f/- •:r-ii J J/ 

C-I3OA To be assigned >?- » 5 */ '-^^ 

C-I3OA To be assigned 

The Exchanger will provide to the Forest Service the following fully restored 
and flyable aircraft: 



c-119 


S/N 


10-678 


c-119 


S/N 


10-773 


c-119 


S/N 


10-860 


c-119 


S/N 


10-676 


c-119 


S/N 


10-994 


c-119 


S/N 


10-872 



This exchange is made under authority of GSA Regulation 101-46.203. 

Delivery : 

The six C-130A's will be delivered to the Exchanger in an "as-is, where-ls, 
where available" condition as they are officially made available to the Forest 
Service. The Exchanger agrees to remove the C-I30 aircraft within 60 days of 
notification of their availability by the Director, Fire and Aviation 
Management, all at no expense to the U.S. Government. 

All military markings will be obliterated permanently prior to flight. This 
includes serial numbers, national insignia, unit markings, or other markings 
which identify the aircraft as government/military property. 

The above C-119 aircraft will be painted by the Exchanger prior to delivery in 
accordance with color, markings, and insignia specifications to be provided by 
the Forest Service. All aircraft from the Exchanger will be flight-delivered 
within 180 days to destination museums to be designated by the Forest Service 
at a later date. Title to these aircraft will transfer to the Forest Service 
at the time of engine-shutdown on the ramps at their designated destinations. 

This agreement will be considered consummated upon delivery of all aircraft by 
both parties. 



no 



Release of Liability : 

In consideration of the mutual exchange herein, the Exchanger agrees that he 
will hold the U.S. Government harmless from any and all liability which might 
arise by reason of this exchange and that the exchange will be at no expense to 
the Government. 

Warranty of Title : 

The Exchanger hereby warrants that he has title to the aircraft and that there 
are no liens or encumbrances whatever against the said articles. 



Ill 



IN WITNESS WHEREOF, the parties have hereunto signed their names on the dates 
indicated. 



Witnessed by: 

As to the Forest Service 



L. A. AMICARELLA, Director 
Fire and Aviation Management 



■ '"^ ^ 



Date 



■^-^' r/ jei^^ 



Name 



'^A A 



Date 



Name 



Date 



Hawkins & Powers Aviation, Inc. 

Box 391 
'TfevouTrSVvo 82426 




As to the Exchanger 



_Joj^/ / Mi' 



Name 



I''/ LI? rr-e£.lJr-/^T 
Date 



{7 




Name 



Date 



Name 
Date 



<^ yj j2J2^ r'^ 



112 



EXCHANGE AGREEMENT 

It is mutually agreed by and between the USDA Forest Service, hereinafter 
referred to as the Forest Service, and T.B.M., Inc., Tulare, California, 
hereinafter referred to as the Exchanger, as follows: 

The Forest Service will provide six C-130A aircraft to the Exchanger on an 
as-available basis for use as firefighting airtankers, and they may only be 
flown in support of forest, brush, or rangeland protection: 



C-130A 


S/N 


56-537 


C-130A 


S/N 


56-473 


C-130A 


S/N 


57-166 


C-130A 


S/N 


To Be Assigned 


C-130A 


S/N 


To Be Assigned 


C-130A 


S/N 


To Be Assigned 



- :7-f y 7 






The Exchanger will provide to the Forest Service the following fully restored 
and flyable aircraft: 



c-123 


S/N 


5K-683 










c-123 


S/N 


54-610 










C-123 


S/N 


54-580 










BG-4 


-S/N 


27367 


li ■ >i- 


5 y 


- ..'^ 


P'/y^ 


DC-6 


S/N 


40044 


,,- >-r 


i V 


J J i 


.<^>' 


Stearman 


S/N 


N5158 











This exchange is made under authority of GSA Regulation 101-46.203. 
Delivery ; 

The above six C-130A's will be delivered to the Exchanger in an "as is, where 
is" condition at Pinal Air Park, Arizona. The Exchanger agrees to remove the 
six C-I30 aircraft within 60 days of receipt of notification of their 
availability by the Director, Fire and Aviation Management, all at no expense 
to the U.S. Government. 

All military markings will be obliterated permanently prior to flight. This 
includes serial numbers, national insignia, unit markings, or other markings 
which identify the aircraft as government/military property. 

The above exchange aircraft will be painted by the Exchanger prior to delivery 
in accordance with color, markings, and insignia specifications to be provided 
by the Forest Service. All aircraft from the Exchanger will be 
flight-delivered within 180 days to destination museums as designated by the 
Forest Service at a later date. Title to these aircraft will transfer to the 
Forest Service at the time of engine-shutdown on the ramps at their designated 
destinations. 

This agreement will be considered consummated upon delivery of all aircraft by 
both parties. 



113 



Release of Liability : 

In consideration of the mutual exchange herein, the Exchanger agrees that he 
will hold the U.S. Government harmless from any and all liability which night 
arise by reason of this exchange and that the exchange will be at no expense to 



the Government. 



Warranty of Title : 



The Exchanger hereby warrants that he has title to the aircraft and that there 
are no liens or encumbrances whatever against the said articles. 



114 



IN WITNESS WHEREOF, the parties have hereunto signed their names on the dates 
Indicated. 



Witnessed by: 

As to the Forest Service 



'^"yyr' 



L. A. AMICARELU, Director 
Fire and Aviation Management 



--h 



Date 



Naise 
Date 



Najne 



Date 



As to the Exchanger 




__3M^ 



Name 



Date 



^^ 



^ Naae \ 



115 



EXCHANGE AGREEMENT 

It is mutually agreed by and between the USDA Forest Service, hereinafter 
referred to as the Forest Service, and TSC/Douglas County Aviation, Chandler, 
Arizona, hereinafter referred to as the Exchanger, as follows: 

The Forest Service will provide three C-I3OA aircraft to the Exchanger on an 
as-available basis for use as firefighting airtankers, and they nay only be 
flown in support of forest, brush, or rangeland protection: 

C-13OA S/N 5(>-0'i7& 
C-13OA S/N 54-1631 
C-I3OA S/N 57-0512 

The Exchanger will provide to the Forest Service the following fully restored 
and flyable aircraft: 

T-33A S/N 53-58-50 

SNB5 S/N 89-468 

UH-19B S/N -55=^206. ;"/- -'''^.' ',/ - ^^5^' 

This exchange is made under authority of GSA Regulation 101-46.203. 

Delivery : 

The three C-130A's will be delivered to the Exchanger in an "as-is, where-ls, 
where available" condition as they are officially made available to the Forest 
Service. The Exchanger agrees to remove the C-130 aircraft within 60 days of 
notification of their availability by the Director, Fire and Aviation 
Management, all at no expense to the U.S. Government. 

All military markings will be obliterated permanently prior to flight. This 
includes serial numbers, national insignia, unit markings, or other markings 
which identify the aircraft as government/military property. 

The aircraft provided by the Exchanger will be painted prior to delivery in 
accordance with color, markings, and insignia specifications to be provided by 
the Forest Service. All aircraft from the Exchanger will be flight-delivered 
within 180 days to destination museums to be designated by the Forest Service 
at a later date. Title to these aircraft will transfer to the Forest Service 
at the time of engine-shutdown on the ramps at their designated destinations. 

This agreement will be considered consummated upon delivery of all aircraft by 
both parties. 



116 



Release of Liability : 

In consideration of the mLtual exchange herein, the Exchanger agrees that he 
will hold the U.S. Governnent harmless from any and all liability which night 
arise by reason of this exchange and that the exchange will be at no expense to 
the Government. 

Warranty of Title : 

The Exchanger hereby warrants that he has title to the aircraft and that there 
are no liens or encumbrances whatever against the said articles. 



117 



IN WITNESS WHEREOF, the parties have hereunto signed their names on the dates 
indicated. 



Witnessed by: 

As to the Forest Service 



L. A. AMICARELLA, Director 
Fire and Aviation Management 



Date 



,^ ^^-^, 



Name 



-v- -. 



--^ f^: 



Date 



iXi 



Name 



H-l'\-V\ 



Date 



As to the Exchanger 



/ Name 



-V, 



iergio Tomassoni, President 
T & G/Douqlas County Avia tion 

September 20, 1989 

Date 



^.JIUM^JL 



Name 

William Grantham, Sect/Treasur 
T & G/Douglas County Avia tion 

Date 
Seotember 20, 1989 

Name 

Robert Lee. Asst. Sect/Treasur. 
T & G/Douqlas t'lountv Avia tion 

Date 

20 September 20, 1989 




118 



STATEMENT OF 
F. DALE ROBERTSON 
CHIEF, FOREST SERVICE 
UNITED STATES DEPARTMENT OF AGRICULTURE 

Before the 

Subcommittee on Specialty Crops and Natural Resources 

Committee on Agriculture 

United States House of Representatives 

Concerning Airtankers for wildland Fire Suppression 

August 5, 1993 

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

Thank you for the opportunity to participate in your review of 
the Forest Service Airtanker program. I am accompanied today 
by Rex Hartgraves, Associate Deputy Chief for Administration. 
Mr. Hargraves is currently chairing a taskforce to deal with 
the airtanker issue. 

In my testimony today, I will review a brief history of the 
Forest Service's Airtanker program, status of USDA's Office of 
Inspector General Audit on the program, and current efforts to 
strengthen program management . The use of airtankers in 
firefighting has proven to be an invaluable tool in the 
protection of lives, property, and resources from rapidly 
advancing fire, and the Department of Agriculture is committed 
to maintaining the necessary airtanker capability in the most 
cost-effective manner. 

During the period 1987 through 1992, the Forest Service fought 
or assisted in the suppression of over 650,000 fires that 



119 



2 

burned almost 14 million acres. During this period, 30 Forest 
Service contracted airtankers were used which flew almost 
27,000 hours, making an estimated 31,000 fire retardant trips. 
Without the availability of these airtankers to support our 
fire suppression efforts, the associated resource/property 
values which would have been lost to wildfire would have been 
substantially greater. Airtankers are used primarily for 
initial attack on wildfires in an effort to keep small fires 
small until ground forces can control them, and supporting 
firefighters on large fires with fireline construction and 
protection of structures. Airtankers are also used to protect 
ground suppression forces and are credited with saving many 
firefighter lives. 

As an example, the Tucannon Fire, near the Oregon/Washington 
boarder, started August 2, 1992, with temperatures in the 80' s, 
low humidity, and high winds. The fire spread across a valley 
and burned over 4,000 acres in 4 hours. Values threatened were 
the Tucannon Game Range Headquarters and Fish Hatchery complex. 
Camp Wooten Environmental Learning Center, private homes, 
summer homes, logging operations, and National Forest lands. 
Losses included 2 barns, several outbuildings and farm 
equipment, several trailers, vehicles and standing timber. 
Suppression costs were $49,321 of which $22,000 were for 
aircraft and retardant. Landowners, State Department of 
Natural Resources and the Forest Service concluded the use of 



120 



airtankers and retardant prevented this fire from costing $1 to 
$2 million and saved many homes and high value resources. 

The type of aircraft which is suitable for dropping fire 
retardant requires that the aircraft be capable of flying at 
relatively slow speeds, close to the ground, and carrying heavy 
loads. At the same time, the aircraft must be capable of 
flying at higher cruise speeds to and from the fire to ensure 
quick turn around times for both initial and subsequent 
retardant drops. These unique requirements result in limited 
availability of aircraft suitable for conversion as 
airtankers. However, the methods the Forest Service used to 
acquire aircraft suitable for conversion were wrong. 
Specifically, we did not comply with the requirements of the 
Federal Property and Administrative Services Act as implemented 
by 41 CFR 101-46. Clearly, management oversight was not 
sufficient, resulting in decisions which caused us to be in 
non-compliance with these regulations. 

The corrective measures we have taken to date to correct these 
problems include: 

1. suspension of our aircraft exchange program; 

2. reassigning responsibility for the acquisition, 
inventory control, and oversight for airtankers from our 
Fire and Aviation Staff to our Property and procurement 
Staff; 



3 



121 



4 

3. initiated proposed disciplinary action; and 

4. assigning a Task Group to develop a long term 
resolution to meet airtanker needs and identify measures 
needed to get the current program back on track. 

Our intent has always been, and continues to be, to make the 
most suitable aircraft available to suppress wildland fire in a 
cost-effective manner. Providing excess aircraft at a 
reasonable cost to operators saves the Forest Service an 
estimated $3 to $10 million a year in airtanker service 
contract costs. 

Background 

In 1954 the Forest Service's successful experimentation using 
modified aircraft to drop fire retardant mixtures on a fire in 
Southern California resulted in initiation of the airtanker 
program. The program began with Government pilots utilizing 
Government - owned aircraft acquired by the Forest Service from 
the Navy as surplus property which were modified for air 
retardant drops. It was at this time that the Forest Service 
began to encourage the private sector to provide airtanker 
services in Northern California. The use of Government and 
private airtankers for fire suppression grew rapidly. 

The continued success of utilizing airtankers for fire 
suppression eventually led to the decision that the private 
sector could provide better airtanker service if they could 



122 



obtain suitable aircraft, and the Forest Service arranged for 
the sale of surplus aircraft from the Navy to the private 
sector. As the private airtanker fleet expanded, so did the 
use of water and retardant drops as a firefighting tool. 
During the early 1960's, many World War II aircraft were sold 
as surplus on the open market, many of which were modified and 
used as airtankers under contract with private operators. 

During this time the size of the private airtanker fleet grew 
to over 100 airtankers and became an established part of the 
firefighting system. As the aircraft aged, many components 
wore out, and the scarcity of replacement parts resulted in the 
aircraft becoming unsafe. As few private aircraft were 
available which could meet the requirements for use as 
airtankers. World War II aircraft in the fleet were replaced 
with newer excess military aircraft. Some were purchased as 
surplus Government property and some were acquired through 
exchange with the Air Force Museum. 

By 1987, about 60 percent of the active private airtanker fleet 
had been acquired through museum exchanges, 3 percent from 
surplus or scrap sales, and 10 percent purchased from 
commercial airlines as used aircraft. As these second 
generation airtankers began to age and in-flight structural 
failures of C-119 aircraft on retardant missions resulted in 
four crashes involving seven fatalities during a three year 
period, the C-119 was permanently grounded for airtanker use. 



123 



6 

The shortage of suitable replacement aircraft for the aging 
airtanker fleet, associated with the fact that modern large 
military and commercial aircraft do not meet the slow flight 
performance required for retardant dropping, was causing a 
critical situation for the airtanker industry. In 1988, the 
Air Force, the General Services Administration (GSA) , and the 
airtanker industry made an effort to make C-130A and P-3A 
excess military aircraft available, since it was determined 
that these aircraft do have acceptable flight performance. 

Historic Exchange Program 

During this period, an initial request was made by an airtanker 
operator for assistance from the Forest Service to make 
7 excess Air Force C-130's available to the Air Force Museum 
for exchange, resulted in discussions between. the Department of 
Defense (DoD) , the Air Force, and the Forest Service. DoD and 
Air Force officials expressed reluctance to release more 
C-130's to the Air Force Museum as a result of a previous 
Museum exchange which had gone awry. However, DoD and the Air 
Force expressed support to assist the Forest Service in its 
firefighting efforts. The suggestion was made that the Forest 
Service facilitate the acquisition of aircraft, as the Forest 
Service could better identify bonafide airtanker operators. 
DoD, the Air Force, and GSA assumed that the Forest Service 
would retain title to the aircraft. 



124 



In June 1988, after review of General Service Administration 
(GSA) regulations by Forest Service Fire and Aviation 
Management personnel, we processed these 7 C-130's from the Air 
Force through GSA to the Forest Service. However, we did not 
meet the legal requirements of these regulations and would have 
realized this had we requested a formal review by our Office of 
General Counsel or GSA. Specifically, we were in 
non-compliance with the following regulation requirements: 

1. Historic items must have added value for display 
purposes because of their historical significance that is 
greater than the fair market value of the items for 
continued use; 

2. the exchange or sale of originally acquired excess 
property must be placed in official use by an acquiring 
agency for at least one year; and 

3. the agency head must document and certify that historic 
items acquired for exchange be in the best interest of the 
Government . 

Nonetheless, using an exchange agreement similar to previous 
military exchange agreements, the Forest Service completed the 
exchange of the 7 C-130's for 7 C-119's with an airtanker 
operator. In 1989, the military transferred an additional 
16 C-130's and 6 P-3's to the Forest Service. ■ The Forest 
Service subsequently transferred all but one C-130 to airtanker 
operators. 



7 



125 



During December 1989 to January 1990, in response to a 
complaint by the National Air Carriers Association, USDA's 
Office of General Counsel (OGC) reviewed the exchange process 
and ruled that the Forest Service was not in compliance with 
GSA regulations and recommended the agency request a deviation 
from the regulations from GSA. At this time the exchange 
program was suspended. 

Between July 1990 and March 1991, the Forest Service received 
an additional 6 P-3's from the Navy. However, as GSA denied 
the request for deviation from the regulations, none of these 
aircraft were transferred to airtanker operators and are still 
in possession of the Forest Service for parts. Three of these 
aircraft are being used as Government Furnished Property under 
existing contracts. Thus, 27 of the 28 aircraft exchanged with 
the airtanker industry since 19 88 still remain in possession of 
airtanker operators; one of the exchanged aircraft has crashed. 

In August 1991, there were 6 excess C-130 aircraft at 
Davis -Montham Air Force Base scheduled for transfer to the 
Forest Service. The necessary paperwork was prepared, however, 
this transfer was not made because the exchange program had 
been suspended. Ownership of these aircraft has never been 
transferred to the Forest Service. 

Audit Status 



126 



In October 1992, USDA' s Office of the Inspector General (OIG) 
issued its Audit Report on the Forest Service Historic Aircraft 
Exchange Program (HAEP) . OIG evaluated the HAEP to determine 
conformance with Federal property regulations, whether aircraft 
were used for authorized purposes, and propriety of 
transactions . 

There were seven specific recommendations by the Office of 
Inspector General as a result of their audit of the Exchange 
Program. The Forest Service has worked with the OIG, and the 
Office of General Counsel in an effort to implement the 
recommendations. Several actions have been completed, and we 
are prepared to take action on the remaining items pending 
final decision by the Secretary. Assistant Secretary Lyons is 
here to address pending Departmental policy actions regarding 
final resolution on the remaining items. I will briefly 
summarize the seven recommendations and the status of each: 

Recommendation 1: Establish written policy for acquiring 
aircraft, for airtanker purposes, addressing legal _ authority 
and appropriate management controls. Status: This policy has 
been developed and will be addressed by Assistant Secretary 
Lyons. The OIG concurs with the Forest Service management 
decisicn on this recommendation. 

Recommendation 2: Establish written policy requiring 
justification and cost analysis for future aircraft 



9 



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acquisition. Status: This policy has been developed and will 
be addressed by Assistant Secretary Lyons. The OIG concurs 
with Forest Service management decision on this recommendation. 

Recommendation 3: Forest Service should not allow the 
capitalization by the contractors of $1,181,476 in costs for 
remuneration received by the consultant for the sale of C-130's 
to various operators for brokering the exchanges. 
Status: Forest Service did not allow capitalization of 
$1,083,564. The OIG concurs with this action. 

Recommendation 4: Forest Service should not allow the 
contractors to charge $1,079,189 against airtanker contracts as 
the cost associated with the aircraft they traded in. 
Status: The Forest Service believes these are legitimate costs 
and allowed under Generally Accepted Accounting Principles. 
Seeking resolution with the OIG on this issue. 

Recommendation 5a: Forest Service should seek legal opinion on 
ultimate status of the 28 previously exchanged aircraft. 
Status: The Forest Service is in the process of obtaining this 
opinion from the Office of General Counsel. The Department of 
Justice is preparing an opinion on a lawsuit involving two of 
the aircraft. 

Recommendation 5b: Forest Service should seek legal opinion on 
the enforceability of existing exchange agreements and 



128 



opportunity to amend tha agreements to provide increased 
accountability. Status: The Forest Service will obtain this 
opinion from the OGC. The OIG concurs with the Forest Service 
management decision on this recommendation. 

Reconnaendation 6: Of the seven aircraft for which the Forest 
Service retains title, the Forest Service should recover the 
operational aircraft and fair market value of aircraft parts. 
Status: Three aircraft used for parts are designated 
Goverrjnent Furnished Property (GFP) under the current airtanker 
ser\-ices contracts. Parts being used a GFP will be returned at 
the end of the contract period and reconciliation made. The 
Forest Service Contracting Officer is currently reconciling the 
inventory of any parts that have been removed and will bill the 
contractor for any shortages. The four other aircraft are 
secured and under the control of the Forest Service. 

Recommendation 7: Forest Service should correct accounting 
entries made to property records concerning the seven Forest 
Service owned aircraft and the twenty eight museum aircraft. 
Status: Completed. The OIG concurs with the Forest Service 
management decision on this issue. 

Current Efforts to Strengthen Program Management 
Since the OIG audit of the program, we have not executed any 
additional exchanges of aircraft. We have reassigned the 
primary responsibility for the acquisition, inventory control 



129 



12 

and management, and oversight from the Fire and Aviation Staff 
to the Procurement and Property Staff. This provides a clear 
separation of responsibilities between the end user and those 
responsible for oversight and control. 

An Investigation Report compiled by OIG has been forwarded to 
the Department of Justice to expedite any legal action which 
may be required resulting from any misconduct on the part of 
any Forest Service employees or other involved parties. In 
addition, we "have initiated proposed disciplinary action. 

Of the seven aircraft still in possession of the Forest 
Service, three are provided as Government Furnished Property 
under existing airtanker service contracts with appropriate 
contractual controls. The remaining four aircraft are secured 
and under the direct control of the Forest Service. Security 
checks on these aircraft continue to be performed monthly. 

Upon final decision by t'he Secretary, we will issue written 
policy implementing the recommendations of the OIG audit. 



Summary 

The use of airtankers to support our wildland fire- suppression 
efforts in cooperation with other Federal and State agencies 
continues to be an invaluable tool. Historically, our 
airtanker program has allowed us to keep the number of acres 



130 



13 
burned annually to a much lower level than might otherwise be 
expected. We are currently implementing administrative 
procedures to strengthen the overall management of this 
important program and look forward to working with the Congress 
in the development of any necessairy legislative remedies to 
further these goals. 

Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions you or members of the Subcommittee may 
have. 



131 



STATEMENT OF 
JAMES LYONS, ASSISTANT SECRETARY 
NATURAL RESOURCES AND ENVIRONMENT 
UNITED STATES DEPARTMENT OF AGRICULTURE 

Before the 

Subcommittee on Specialty Crops and Natural Resources 

Committee on Agriculture 

United States House of Representatives 

Concerning Airtankers for Wildland Fire Suppression 

August 5, 1993 

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

Thank you for the opportunity to participate in your review of 
the Forest Service Airtanker program. I am accompanied today 
by Chief Dale Robertson and Associate Deputy Chief Rex 
Hartgraves . 

In my testimony today, I will review the steps Secretary Espy 
intends to take to correct existing problems with the Forest 
Service Airtanker program and to improve its management in the 
future . 

As indicated by Chief Robertson the use of airtankers as a part 
of the overall cooperative interagency mission to combat 
wildfires on public and private lands is invaluable. There is 
no argument that without the use of airtanker technology lives, 
structures, and natural resources would be unduly threatened. 
However, USDA is very concerned with the findings of the recent 



132 



2 

Office of Inspector General Audit and investigation of the 
Forest Service Historic Aircraft Exchange Program. This 
Administration committed to restoring the integrity of the 
Airtanker Program. 

As discussed by Mr. Ebbitt, of the Department's Office of 
Inspector General, the Forest Service did not have the 
authority to exchange aircraft with airtanker contractors and 
was not in compliance with Federal property regulations by 
doing so. In addition, the Office of Inspector General has 
completed an investigation of alleged improprieties associated 
with the aircraft exchange and has forwarded its report to the 
Forest Seirvice for appropriate Administrative action, and to 
the Department of Justice to expedite any legal action which 
may be required. 

Although there have been significant problems with the 
airtanker program, it remains a fact that we will continue to 
need airtankers to fight forest fires. As a result, we are 
committed to developing a policy that can correct problems that 
have been created in the short term and ensure that the 
mistakes of the past are not repeated in implementing a long 
term strategy to meet our future needs. 

To accomplish this objective, the Forest Service needs to get 
out of the business of facilitating the exchange of 
airtankers. As determined by the OIG, these past exchanges 



133 



were done through an inappropriate use of existing 
authorities. Clearly, a new policy is needed. 

For this reason, Mr. Chairman, the Administration is 
considering seeking legislative authority to facilitate the 
sale of excess aircraft to bonafide airtanker operators. This 
legislation will need to include detailed responsibilities and 
controls to ensure that the aircraft will be used solely for 
the purpose of suppressing wildfires and prohibit the transfer 
unless explicitly approved by the Secretary. Nevertheless, and 
most importantly, this approach would attempt to provide for a 
simple and straightforward way of selling aircraft with minimal 
Forest Service intervention. 

Until the Administration makes a decision on seeking 
legislative authority, USDA will obtain airtankers directly 
from the Department of Defense and provide them to airtanker 
services contractors as "Government Furnished Property" . This 
approach complies with the Federal Property and Administrative 
Services Act. USDA also intends to exercise a one year option 
on the current airtanker services contracts. 

Upon completion of legal review regarding ownership of the 
remaining 27 aircraft exchanged under the Historic Aircraft 



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Exchange Program, we will either recover the aircraft or modify 

the Exchange Agreements to: 

1) require that the Government be compensated for any 
Government owned aircraft or parts released to airtanker 
operators ; 

2) require written approval by the Secretary for use of 
aircraft or parts for any purpose other than in the 
performance of providing airtanker service to the Forest 
Service and Federal, State, and local agencies that have 
cooperative agreements with us in fire control; 

3) prohibit the use of aircraft outside the United States 
unless dispatched by the National Interagency Fire Center; 

4) provide for accountability and audit of all aircraft, 
parts, inventories, and records; and 

5) prohibit the sale, leasing, trade, barter, 
cannibalization, or other disposal of the purchased 
aircraft without prior written approval . 

Finally, if the Department of Justice recommends that legal 
action be taken, in addition to Administrative action we are 
taking, as a result of any misconduct on the part of any 
employees, we will respond accordingly. 

Summary 

In summary Mr. Chairman, the use of airtankers is essential to 
the protection of lives, property, and public and private 
forest and rangelands. Our policy will provide for an 



135 



airtanker program which is legal, maintains necessary controls, 
and is cost-effective. We will work closely with the Congress 
in the development of any necessary legislation in order to 
implement this policy. 

This concludes my statement and Dale Robertson, Rex Hartgraves, 
and I would be pleased to answer the Subcommittee's questions. 

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