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.

Examining the Lobbying Effort of Booz Allen Hamilton (or Lack Thereof).

So, as everyone now knows thanks to whistle-blower Edward Snowden, the US Government via the NSA via a number of private companies has been at best gathering massive amounts of private communications data for later scrutiny if deemed necessary and at worst (though who knows how bad it could get) has been directly spying on unwitting, innocent American citizens.

The immediate question that came to mind when Mr. Snowden stepped forward and revealed that he had worked in an intelligence capacity for Booz Allen Hamilton (BAH) under the direction of the US Government, was how much money had the company spent on lobbying the government for contracts? How much had they spent convincing the US government that they should get the colossal intelligence contracts that created $1.3 billion of their revenue last year alone (and just landed a contract worth an additional five billion over the next five years)? Truth be told, the numbers I pulled up immediately following the question’s formation were perplexingly small.  The Fortune 500 company, which boasts of over 5 billion in annual revenue, has only spent $40,000 in lobbying efforts in the US, and that was more than ten years ago.

This relatively miniscule amount of lobbying cash doesn’t necessarily have to be suspicious, I suppose. There isn’t anything that says that a company is obligated to spend massive amounts on lobbying to acquire large contracts from the Federal Government. Maybe BAH is just stellar at what they do and it’s an easy sell, who can say? Still, to be sitting in the rather comfy position as the 14^th largest US Government Contractor (as of last year), they certainly aren’t behaving like their peers when it comes to lobby expenditures. Let’s break it down:

* Lockheed Martin, the largest Federal Government Contractor (with over 36 billion dollars awarded in contracts) spent at least $15,347,350 on lobbying in 2012.

* Boeing Co, the second largest contractor (with over 29 billion dollars awarded in contracts) spent at least $15,440,000 on lobbying in the same year.

* Raytheon (you guessed it, number three contractor with over 15 billion dollars in contracts) spent at least $7,450,000.

(Side Note: It’s mildly interesting that the ratios of money spent to contracts awarded seem roughly commensurate in these first three examples, although the trend doesn’t seem to extrapolate to the rest of the list.)

Of course, these are the three big boys in the Federal Contracts game. Admittedly, BAH isn’t quite that big. They’re fourteenth, so maybe that would account for the lack of lobbying expenditures. Let’s look at its more comparable competitors.

* Computer Sciences Corporation which comes in one under BAH at number fifteen on the list of Federal Contractors (with over $3.8 Billion in contracts) spent at least $1,532,000 on lobbying efforts in 2012.

* Bechtel Group, the thirteenth largest Federal Contractor ($4.1 billion in contracts) spent a smaller amount, but at $360,000, it still spent considerably more last year than BAH has in ten.

To satisfy my curiosity, I decided to head further down the list and look at a couple more. Textron (#29 on the list) spent nearly $5 million last year on lobbying.  Then I picked Deloitte LLP (#62 on the list), because it was a name that I happened to recognize. Turns out, they spent at least $3.4 million last year.

So, in terms of lobbying efforts, it would seem BAH is certainly the exception to the rule here. How they have directed billions of dollars into their coffers without significant lobbying is beyond me. It doesn’t seem to make much sense.

The military industrial complex is a reality; a behemoth awash in volleyed tax money and quid pro quo deals. The newly minted intelligence industrial complex is also a reality, and would seemingly operate within the same basic model: Lobbying begets contracts which results in more lobbying to get even more contracts and so forth. Right?

Slate’s Matthew Yglesias attempted to connect the dots in a quick post from 6/10, in which he points out:

… the… interesting issue is how it alters the lobbying dynamic. An established government bureaucracy has, of course, considerable capacity to lobby on behalf of its own interests. That's particularly true when the bureacracy's leadership can claim possession of secret information. But it's also constrained in certain respects. The National Security Agency can't bundle campaign contributions, give money to independent expenditure campaigns, or offer nice paydays to former congressional staffers.

But if you take a few billion dollars worth of intelligence spending and transfer it onto the Booz Allen balance sheet, then political organizing around the cause of higher intelligence spending can avail itself of the tools of private enterprise along with the tools of bureaucratic politics.

This would be a valid point and may be applicable to other contractors, but it doesn’t appear to be the case with BAH, who apparently doesn’t have to lobby at all to get the political machine to organize “around the cause of higher intelligence spending” and land the resulting enormous contracts.

So now, after sifting through these numbers, I suppose we come to the payoff—our Double Rainbow moment, if you will—and ask, “What does it mean?” I don’t know. Maybe nothing. Maybe there is no point in this exercise at all except to, in comparison, examine the lobbying practices of most major US government contractors. There is certainly more to look at, but for now the examination and the unanswered question will have to do.