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

In my previous post, I briefly went into the lobbying expenditures of Lockheed Martin—currently the largest US Federal Government contractor—and also highlighted a couple of blatant ethical transgressions. I wanted to follow it up by answering a question that many people might have: What is lobbying?

There are two answers. The short, simple answer of what lobbying is supposed to be and the much longer, much more complicated reality of what lobbying actually can be and predominately is.

Before we get in too far, let me first clarify that I’m not reflexively opposed to lobbying per se. The concept of having direct communication between constituents and their government is an important and essential piece of representative democratic infrastructure. It was, in fact, considered so important a function to the nation’s founders that it was protected in the very first amendment of the Constitution: "Congress shall make no law … abridging … the right of the people peaceably … to petition the Government for a redress of grievances."

In its simplest incarnation lobbying works like this (please forgive me if this comes across as patronizing, my intent is to provide a comparison, so just bear with me): Under the protection of the First Amendment, citizens in Congressional District ABC might discover that they have a collective problem with issue XYZ. They decide that they should get together and petition their representative to have issue XYZ resolved legislatively.  They do so. After hearing the collective’s concerns, the representative makes the decision on whether issue XYZ truly affects the majority of his constituency and attempt to legislate accordingly.

Why does this work as a system? In theory, a representative must rely on the majority of his constituents to vote for him to remain in office and would therefore be directly accountable to them. If he doesn’t do what the majority of his constituents desire of him he runs the risk of being voted out in favor of someone who will. Simultaneously, the representative has to develop working relationships with his colleagues in order to be an effective legislator and achieve the goals of his constituency so necessary to stay in office. Thus, a congenial congress would necessarily emerge and ultimately a legislative equilibrium which would generally benefit the nation as a whole.

It should be apparent, particularly after examining the last three decades in Washington that this ideal scenario has not played out.

To be fair, the authors of the Constitution weren’t naïve to the potential corruption of the lobbying system—James Madison famously weighed the implications of “faction” throughout his Federalist #10 essay— and certainly anticipated there to be questionable practices in small proportion as well as the possible rise of powerful professional lobby agents, like the 19^th century “King of the Lobby”, Samuel Ward. What they couldn’t have reasonably anticipated though, and what has frequently debased the good intentions of the lobbying system, was the powerful rise of the modern corporation over the course of the late 19^th and 20^th centuries and the increased importance of campaign finance in the modern political landscape. Both of these factors have converged to give us the lobbying system and its rampant, systemic corruption.

(I’m going to avoid getting derailed here on the history and details of these two factors. Suffice to say, they deserve and will soon get much more than a simple paragraph synopsis from me.)

Having quickly covered the short, simple answer to what lobbying is, let’s take a look at one real world example of what lobbying actually is via Lockheed Martin.

The first complication in defining lobbying is that, in reality, lobbying is actually an amalgamation of tools and tactics that various parties use to solicit influence. For instance, the amount of money that Lockheed Martin officially spent on lobbying last year (2012) was $15,347,350. What this number actually represents is the reported amount of money that Lockheed officially paid to lobbying firms like Podesta Group or Venable LLP or Carliner Strategies to lobby on their behalf—that is, to show up on Capitol Hill and arrange for time to speak with politicians on a variety of key issues with the hopes of influencing them to legislate in a particular direction. These conversations often occur in all sorts of ideal, vacation-like settings. Still, this doesn’t paint close to the entire picture.

In addition to spending $15 million plus on official lobbying, Lockheed Martin is also responsible for a total of $4,034,489 in campaign contributions for the 2012 election cycle. $1,143,092 of this went to Political Action Committees, Parties and various other outside spending groups, while $2,891,397 went directly to candidates like Kay Granger (R-TX) whose district just so happens to contain a number of Lockheed locations and has, for reasons that should be apparent to anyone after viewing her political donation disclosure, helped the company out in numerous ways including pressing Taiwan to purchase Lockheed F-16’s that they didn’t want.

For politicians like Granger, making sure Lockheed is happy is an easy win/win calculation. After all, legislating favorably for Lockheed means they stand to not only gain the hefty political donations that are so necessary for reelection but also, during their next campaign, they can point to all the jobs that they have created or saved via the Lockheed projects they supported on Capitol Hill. No politician wants to be perceived as a job killer.

The problem is that what amounts to a win/win for politicians and congressional districts intertwined with Lockheed Martin, in many cases, ultimately amounts to a net loss for the rest of the country and the American taxpayer. I discussed the C-130 scenario in my last post, in which Lockheed, via direct lobbying of Congress in the late 1970’s, had managed to pull down a contract for 256 of the airplanes when the Department of Defense had only wanted five—many of which sat idle on tarmacs and in hangars afterward. Now, I’ll turn quickly to a modern program with similar results: the infamous F-35 Joint Strike Fighter.

The F-35 is the most expensive military weapons program in US history. In accordance with standard practice, Lockheed has strategically stretched the influential jobs programs (and the corresponding congressional influence) for the project out across the country, covering over 47 states as well as Puerto Rico.  The fighter jet program, which was initially quoted at $226 billion for around 2,900 planes and an operational start date estimated at 2012 has now ballooned into a cost of $400 billion for 2,400 planes, an additional $1 Trillion in maintenance and repairs over the programs lifetime and an operational start date now estimated at 2017. The increased cost had also made the Pentagon under Robert Gates consider terminating portions of the project. Lockheed consultant’s immediately rejected the cuts as unreasonable. When cuts to the program were formally submitted by House Representative Todd Akin, Lockheed lobbyist marched on the House Armed Services Committee. Unsurprisingly, the suggested cuts never came. Sound familiar? It should.

It’s happened with numerous programs like the C-130, the F-35, and recently, in another example, when the Pentagon wanted to end General Dynamics’ M1-Abrams battle tank program, largely considered to be a cold war relic without much use in today’s defense (a program which already had more tanks sitting idle than actually deployed), they found their efforts thwarted “…after a well-organized campaign of lobbying and political donations involving the lawmakers on four key committees that…decide the tanks’ fate…”. 

It’s fairly standard play in the US armaments industry. The Pentagon wants to cut or drastically reduce an outdated or ineffectual weapons program that nets your company a significant sum, so you do an end-around the Department of Defense, toss some money to key congressional members, scare them about job cuts, pay some lobbyist to talk to the other representatives and voila, the program isn’t ended or cut and in some cases—like the C-130— might even be expanded. Your company and its shareholders win, the American military and taxpayers lose. This is what lobbying can be.

In his farewell address of 1961, President Eisenhower offered up a prescient warning on the potential corruption in maintaining a war-ready private armaments industry:

“This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence-economic, political, even spiritual-is felt in every city, every state house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

It’s a shame the American public didn’t listen then.

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.