Lockheed Martin: Well Versed In Unethical Lobbying (Part I)

Recently I examined the lobbying expenditures of Booz Allen Hamilton in comparison with the other contracting companies that vie for the monetary attention of the US government. I discovered that strangely—though they are the 14^th largest US Government contracts holder— Booz Allen doesn’t have much of a presence on K Street. As I also pointed out, this couldn’t be further from the truth with the other companies on that list. Their lack of spending was an anomaly and so I decided to take a closer look at the other companies who have so obviously found value in the art of the Washington lobby. The top player on that list of Federal contracts awarded, and naturally the first company to examine was Lockheed Martin which spent at least $15.3 million in lobbying last year.

First, a quick historical primer on the company:

Lockheed Martin is a company with roots that date back nearly to the dawn of heavier-than-air flight. Just prior to the start of World War II, Lockheed opened up its Skunk Works facility in Burbank California and quickly began to land government contracts for planes such as the P-38 Lightning and the Ventura. Through the next two decades following the War, Lockheed would continue to win contracts and produce some amazingly successful planes such as the C-130 Hercules (which is still used today nearly 60 years later for reasons we’ll get into further down), the Cold War workhorse spy-plane the U-2, and the plane that any boy growing up in the 1970’s or 80’s drew ad nauseam in the margins of their schoolwork, the SR-71 Blackbird. But in the late 60’s and early 70’s their luck would change with a number of troubled projects including the C-5 Galaxy and the cancelled AH-56 Cheyenne Helicopter, and the company found itself in serious financial trouble. Lockheed applied for and received an— at the time— unprecedented massive bailout from the Federal Government. Of course the bailout left a bad taste in a lot of people’s mouths, but shortly thereafter it was also revealed that Lockheed had added insult to injury and had actually used millions of dollars from the bailout to bribe foreign officials to land foreign contracts. On a more positive note, the scandal (along with a number of others including Bananagate) did ultimately result in the passing of the Foreign Corrupt Practices Act of 1977, so there’s that. So anyway, after a couple of resignations from the ensuing fallout and not much else, Lockheed pushed on, fought off a hostile takeover attempt and locked down a number of acquisitions over the next two decades including Martin Marietta and divisions of General Dynamics which brings us to where we are today.

So now, in light of the bribery scandal of the 1970’s, it’s unquestionable that Lockheed has previously engaged before in unethical business behavior to achieve its goals. The problem is that, as I’ll point out, they continued to operate in an ethically ambiguous manner. They aren’t alone in this, of course, but here’s the rub: the dark art of the multi-billion dollar contracting business lies in the murky grey area between legal and illegal, ethical and unethical. I like to refer to this area as the billion dollar buffer-zone, and Lockheed is a master of navigating within its confines.

A prime example of Lockheed operating in the billion dollar buffer zone is in their C-130 Hercules deals post 1978. It was right around that time that the Pentagon decided that they were fully loaded on C-130’s and didn’t really need to order any more. The truth was, the Department of Defense had been considering dropping the C-130 since 1963, as they were looking to acquire a newly designed plane—one with shorter landing capabilities— which would be better suited to the Pentagon’s overall mission. After all, the C-130 project was "ripe for replacement because they have been in operation since the Korean and Vietnam Wars, making parts and maintenance very expensive." In 1972 they had issued a formal request for proposal (RFP) and by 1973 had given contracts to both Boeing and Douglas to build and test two prototypes each.  Lockheed, already in financial distress, sensed that one of its key programs was in danger of being decommissioned and decided it best to circumvent the Pentagon entirely and instead take the issue straight to Congress. In a successful effort via Congressional earmarks, Lockheed managed to turn a DoD request for five more C-130’s over the course of the following twenty years into a Congressional order of 256.  Here’s how they did it:

“…Lockheed lobbied members of Congress who represent states and districts with C-130 production facilities or parts manufacturers. The most prominent group in this category has been the entire Georgia state delegation because the plane is assembled in Marietta, Georgia. Second, Lockheed increases congressional demand for new planes by identifying aging C-130 units in National Guard and Reserve units throughout the country. National Guard and Reserve units are ideal because, again, their inventories often consist of whatever the active-duty forces send their way and because the officers and enlisted men typically are part-time and reside in the states and congressional districts that the air station calls home. So Lockheed identifies and lobbies those members of Congress who represent the districts and states in which the bases are located…Lockheed then prioritizes these prospective C-130 replacements according to need and political opportunities to increase support in Congress. Not all members' C-130 needs can be satisfied in any one fiscal year, however. Lockheed strategically lines up potential senators and representatives to support current add-ons designated for other states and districts by committing to lobby for their own add-ons in the future. As one congressional aide put it, Lockheed has become adept at managing support for the tactical airlifter with "C-130 math" to make sure that, during any given fiscal year, a substantial and often influential cadre of members supports the C-130 add-on. By following this strategy from year to year, Lockheed has been able to turn what was to be the C-130's doom in the 1970s into a regularly funded military spending program, all without a single request having been sent by the administration to Congress.”

That last sentence sums it up. Lockheed managed to churn billions of dollars in revenue out of a losing proposition on an outdated program, not because it was what was best for the country’s military (because it certainly wasn’t) but because it was what was best for the company’s bottom line. Simple as that.

And what did the citizens of the United States get for their tax dollars? 251 planes that the Military didn’t want or need. Perhaps worst of all is what became of many of these multi-million dollar planes once they had been purchased. Jeremiah Goulka points out:

“The Air Force didn't have the space for them, so they retired some older models that still had plenty of life in them and shunted most of the rest off to the Air Force Reserves and Air National Guard.”

Many sat unusable for years in hanger bays and on tarmacs around the country because an additional problem was that:

“…sufficient operating and maintenance funds didn't always come with the planes…”

To those that are aware of Lockheed's penchant for shady dealings, this sort of behavior is enraging but not all that surprising. But for those unacquainted with the lobbying antics of the military industrial complex (and other industries), this sort of wasteful result might seem shocking but the odd occurrence. It’s not. The results aren’t always as dramatic as the C-130 fiasco, but these kind of scenarios are the rule unfortunately, not the exception.

Of course, at this point, without further explanation lobbying might seem like some sort of voodoo ritual, a mysterious ceremonial dance that magically produces billion dollar results.  After all, the C-130 deal that Lockheed pulled off certainly seems like an act of magic. In the second part of this post, I’ll take a look into the methods and strategies that contractors like Lockheed use to coerce those in Washington with a grip on the purse strings and will begin to explain how, in so many ways, it is detrimental it is to our Democracy.