Special treatment for the government's friends

Google's cozy jet fuel deal with feds cost California taxpayers up to $5.3M, report finds

A simple “misunderstanding” allowed Google’s top executives to pay between $3.3 and $5.3 million less than market price for fuel to fly a fleet of private jets on both scientific missions and flights to some of the world’s most exclusive beaches.

Google billionaires Larry Page, Eric Schmidt and Sergey Brin own as many as nine planes and helicopters that they operate at a government-run airbase mere steps from Google headquarters. Run by a secretive holding company called H211, the jets take NASA scientist on an occasional flight, and appear to carry Google's billionaire bosses to Tahiti, Hawaii and a host of private Caribbean hotspots on a regular basis.

A report released Wednesday by NASA’s Office of the Inspector General reveals that a "misunderstanding" let Page, Schmidt and Brin buy fuel for science missions and pleasure rides alike without paying state and local taxes, saving the Googlers millions.

'This arrangement ... engendered a sense of unfairness and a perception of favoritism toward H211 and its owners.'

- NASA Inspector General Paul Martin

“H211 received a significant discount on fuel for its many non-NASA-related flights to which it was not entitled,” wrote Inspector General Paul Martin. “While this arrangement did not cause an economic loss to NASA or DLA-Energy, it did result in considerable savings for H211 and engendered a sense of unfairness and a perception of favoritism toward H211 and its owners.”

“We recommend that NASA explore with the company possible options to remedy this situation.”

Will the Google guys pay back the money? A spokeswoman did not immediately respond to a FoxNews.com e-mail posing the question, but Sen. Chuck Grassley, R.-Iowa and a senior member of the Congressional Budget Committee, said NASA ought to seek repayment.

“Given that a ‘misunderstanding’ between NASA and the Defense Department led to taxpayers’ losing out on $3.3 million to $5.3 million in this one contract, a look at these arrangements as a whole is definitely warranted,” Grassley said. “The Inspector General recommends that NASA explore ‘remedies.’ The obvious remedy would be for NASA to seek repayment to the taxpayers.”

According to the OIG report, the issue stems from a July 2007 contract between the Google executives and NASA to license approximately 70,000 square feet of space in Building N211, a large hangar near Moffett Federal Airfield at NASA’s Ames Research Center. The airfield was once a U.S. Navy base, and sits a convenient, 4-mile jaunt from Google’s Mountain View, Calif., headquarters.

Part of the special deal with the billionaires let NASA use their fleet of up to nine aircraft to conduct Earth science research; in exchange, H211 bought aviation fuel at discount rates from the Defense Logistics Agency-Energy (DLA-Energy), an arm of the U.S. Department of Defense.

“In 2012, the … rate DLA-Energy charged H211 ranged between $3.05 and $3.81 per gallon, while the retail price at the San Jose airport fluctuated between $7.01 and $7.44 per gallon,” the report states. That discount fuel was meant for science trips. In reality, the Google guys used it for everything.

“We found that a misunderstanding between Ames and DLA-Energy personnel rather than intentional misconduct led to H211 enjoying the discounted fuel rate for flights that had no NASA-related mission,” the report states.

According to the Inspector General, when the contract expired on Sept. 1, a new contract was signed that lets NASA charge market rate for private flights, which the space agency will pay to the U.S. Treasury as “miscellaneous receipts.”