Boeing Received $16.6 Billion in Federal Contracts Last Year

Major beneficiary of U.S. tax dollars trying to sell airliners to Iran for billions

A Boeing 747 of Iran's national airline is seen at Mehrabad International Airport in Tehran / AP
July 12, 2016

Boeing, the company trying to sell billions worth of commercial airliners to Iran, is one of the largest beneficiaries of U.S. taxpayer-funded government contracts and federal loan guarantees.

The U.S. government is the only force standing between Boeing and a deal to sell roughly 100 aircraft to Iran’s state-owned Iran Air, which would bring as much as $25 billion to the Chicago-based aircraft manufacturer. If the deal goes through, Boeing would become the first large American company to take advantage of the removal of U.S. sanctions on Iran as a result of the nuclear accord finalized one year ago.

The deal is being challenged by congressional lawmakers, who last week approved two measures aimed at preventing Boeing from selling airliners to Iran.

Boeing has received tens of billions from Defense Department contracts over the years, and has consistently been one of the top beneficiaries of U.S. taxpayer dollars. The Boeing Company received $16.6 billion in federal government contracts within the last fiscal year, making it the nation’s second-largest contractor after Lockheed Martin, according to federal procurement data.

Over the past five years Boeing has received over $108 billion from federal contracts.

Several Defense Department contracts have been awarded to Boeing as the company has pursued its deal to sell airliners to Iran Air. In just the last month, Boeing has been awarded $282.1 million in contracts from the Air Force and Navy, according to a Washington Free Beacon review of defense contract announcements.

Dennis Muilenburg, the CEO of Boeing, told CNBC on Monday that he sees "significant opportunity" for the company in selling aircraft to Iran.

Republican lawmakers have criticized the prospective deal between Boeing and Iran Air, pointing out that Iran’s commercial aviation sector has supported terror groups and other hostile actors. Reps. Peter Roskam (R., Ill.) and Jeb Hensarling (R., Texas) wrote a letter to Boeing in June after the tentative sale was revealed, asking for clarification on several points about the negotiations.

"Iran’s commercial aviation sector is deeply involved in supporting hostile actors. The Islamic Revolutionary Guard Corps (IRGC) systematically uses commercial aircraft to transport troops, weapons, military-related parts, rockets, and missiles to hostile actors around the world, including, but not limited to, Hezbollah, Hamas, Islamic Jihad, the Houthi Rebels in Yemen, and the Bashar Al-Assad Regime in Syria. These terrorist groups and rogue regimes have American blood on their hands. Your potential customers do as well," the lawmakers wrote.

Iran Air was designated for sanctions by the Treasury Department in 2011 for providing support and shipping military equipment to the IRGC and Iran’s Ministry of Defense and Armed Forces Logistics. However, the airline was quietly removed from the department’s list of designated entities as part of the nuclear agreement, a move the State Department has declined to explain publicly.

Roskam and Hensarling posed several questions to Boeing, asking if the company was attempting to involve the Export-Import Bank in the deal. The Export-Import Bank is an independent agency that provides export credit insurance, working capital guarantees, and commercial loan guarantees to foreign buyers of U.S. goods and services.

The Export-Import Bank, described by some as "Boeing’s Bank," has historically benefitted Boeing with its long-term loan guarantee awards. In the last fiscal year, roughly 70 percent of the loan guarantees handed out by the Ex-Im Bank went to foreign organizations buying products from Boeing, according to an analysis of the 2015 annual report released by the bank. These loan guarantees totaled $5.5 billion and went to entities in China, Turkey, Mexico, and several other countries.

On Monday, Roskam introduced legislation that would prohibit the Ex-Im Bank from directly or indirectly providing assistance to Iran’s government or other Iranian entities. The bill would prevent the federal bank from using taxpayer dollars to fund Iran’s purchase of "military-fungible aircraft."

"It's tragic to watch such an iconic American company make such a terribly short-sighted decision. If Boeing goes through with this deal, the company will forever be associated with Iran’s chief export: radical Islamic terrorism. The U.S. Congress will have much to say about this agreement," Roskam told the Free Beacon on Monday.

Last Thursday, House lawmakers overwhelmingly passed the Financial Services and General Government Appropriations Act containing two amendments authored by Roskam aimed at blocking sales of aircraft to Iran by Boeing, the Europe-based company Airbus, and other manufacturers.

One of the amendments would bar the Treasury Department’s Office of Foreign Assets Control from using funds to authorize a license needed to sell aircraft to Iran. The other would make it impossible for Iran to receive loans from U.S. financial institutions to buy military-fungible aircraft.

The Obama administration has not publicly criticized the prospective deal between Boeing and Iran Air. Last week, State Department spokesman John Kirby said he would not explain why Iran Air was removed from the Treasury Department’s list.

"Should we determine that licensed aircraft, goods or services are being used for purposes other than exclusively civil aviation and use, or they’ve been resold and retransferred to persons on the [specifically designated nationals] list, we would view this as grounds to cease performing our commitments under that aviation section in whole or in part," Kirby said.

"We’re not ever going to turn a blind eye to Iran’s continuing destabilizing activities, and their state sponsorship of terrorism," he insisted.

The State Department wrote in its annual report on terrorism released last month that Iran "remained the foremost state sponsor of terrorism" in 2015. The country has provided financial support, training, and equipment to terror groups globally, particularly to Hezbollah.

The fight surrounding Boeing’s possible sale to Iran comes days before the one-year anniversary of the signing of the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal. The deal was officially implemented in January, days after Iran arrested and detained 10 U.S. sailors traversing the Persian Gulf, an arrest that violated international law.

Boeing did not respond to a request for comment.

Published under: Iran , Iran Nuclear Deal