US military fuel deal with Prestwick 'kicked into long grass' over Trump investigation

A US Defence Department agency has postponed a lucrative new military aircraft refuelling deal with Glasgow Prestwick Airport amid multiple investigations and growing political scrutiny on both sides of the Atlantic into US military patronage and spending at the loss making hub and President Donald Trump’s flagship Scottish resort.

By Martyn McLaughlin Wednesday, 11th September 2019, 4:21 pm

A US Congressional committee investigation is scrutinising US Defence Department payments to President Donald Trump's Turnberry resort and Glasgow Prestwick Airport. Picture: John Devlin

The Scotsman can reveal that the expanded EUCOM Into-Plane agreement covering the Scottish-Government owned airport and the US Defence Logistics Agency (DLA), which was due to come into force in a matter of weeks, has been put on hold until December at the earliest.

One source familiar with the deal said the deal was being “kicked into the long grass” as a result of a newly-disclosed investigation by the US House Oversight Committee.

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However, the DLA said the decision was not related to or influenced by such developments, and said an extension to its existing contract - which subsequently pushed back the start of the new deal - had been ratified on 28 August.

While that predates the launch of an internal US Air Force inquiry, and details of the House Oversight's Committee being made public, it postdates the committee's first communications with the US Defence Department. It first wrote to the Pentagon in 21 June regarding the DLA and Prestwick deal.

The House committee is conducting a wide-ranging inquiry into the US Defence Department’s spending at Prestwick and Mr Trump’s nearby Turnberry resort over concerns of “serious conflicts of interest” and potential violations of the foreign emoluments clause of the US constitution.

It is understood one strand of the inquiry is focusing on the arrangement struck between Prestwick and the DLA, a Virginia-based body which manages the global supply chain for the US Army, Navy, and Air Force.

As The Scotsman revealed in June, the airport’s parent company, Glasgow Prestwick Airport Limited, received more than £9.02m between October 2017 and March this year for at least 644 separate aviation turbine fuel orders placed by the DLA. It has received a further £4.8m for hundreds more orders in the six months since.

With the existing deal set to expire at the end of the month, the pending extension promised to be even more gainful for the heavily indebted airport, which was put up for sale earlier this year by Scottish ministers and is reliant on the DLA for the vast majority of its revenue.

The new EUCOM deal covers not only Prestwick, but a host of European airports as far afield as Estonia, Iceland, Norway, and Poland, who supply US military aircraft with fuel.

Documentation obtained by The Scotsman shows the DLA attribute the postponement to issues with the “extensive pre-award process.”

However, sources familiar with the combat logistics support agency’s existing and future agreements with Prestwick said the controversy engulfing the airport, Trump Turnberry, and the US Defence Dept was directly to blame. .

One said the new deal has been “kicked into the long grass” in light of the increased scrutiny surrounding hub and its financial relationship the US defence apparatus.

“The DLA’s excuse for the delay is that it is slightly behind schedule in determining contract renewals. That’s nonsense,” added the source.

“They don’t want to do anything until the Congressional committee’s investigation has concluded.”

Prestwick, which has decades-long ties with the US military, remains an approved DLA site and is continuing to supply fuel to US aircraft in the meantime - it is understood the existing arrangement will simply continue until it is renewed.

But one source said the “political heat” meant it was likely US Air Mobility Command movements through Prestwick would reduce in number as they are routed through other European locations.

The monetary value of the planned new deal is unclear, but it is expected to surpass the terms of the existing arrangement, which is worth as much as £16.91m to Prestwick.

The debt owed by the airport to the Scottish Government stands at £38.4m. Its most recent accounts show its holding company’s annual losses total £7.6m.

It comes as Scotland’s transport secretary, Michael Matheson, today refused to rule out the sale of the airport to the US military.

Up to three offers for Prestwick are being assessed following the deadline for full bids last Friday. The sale is due to be completed early next month.

Mr Matheson told Holyrood’s connectivity committee that discussing potential bidders would “infringe on the integrity" of the sale process.

While the US Air Force (USAF) has launched its own review of the use of overseas airports and hotels, Politico reported today that Senator Gary Peters, the top Democrat on the Senate Committee on Homeland Security and Governmental Affairs, has formally requested an independent investigation into the USAF’s increased use of Prestwick and overnight stays at Mr Trump’s loss making hotel, which itself remains reliant on £107m in loans.

In a letter to the Pentagon, the Michigan senator wrote: “I am disturbed by the growing number of those in government willing to engage in questionable taxpayer funded travel to and lodging at properties owned by the president - properties from which President Trump can draw income at any time.”

A spokeswoman for Glasgow Prestwick Airport said: “The existing DLA approval has been extended by two months, until 30 November 2019. This is a European wide extension and not specific to the Glasgow Prestwick Airport location.”

The DLA said it was inaccurate to describe the changed dates regarding the deal as a "delay,"

It said there were more than 60 locations across Europe that required site inspections, "extensive negotiations," and technical evaluations of various proposals in order to "eventually determine which offeror will receive a contract award for a particular location."

The DLA energy technical and contracting teams, it added, have a "limited number" of members who are working simultaneously on multiple expansive programmes with "unique challenges and demands."

Asked if the decision was influenced by or related to the Congressional inquiry surrounding Prestwick and Mr Trump, a spokesman for the DLA said: "No. This decision was made in accordance with all applicable laws and regulations."