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Lockheed Martin’s Herculean Efforts to Profit From Defense Spending

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Posted on Mar 12, 2013
thefixer (CC BY 2.0)

By Jeremiah Goulka, TomDispatch

(Page 2)

Standard Operating Procedure

Lockheed made this happen by putting its lobbyists to work.  They focused on legislators in key committee positions and in states where Lockheed, like others in the defense industry, had strategically located their operations and subcontracts. The company poured millions of dollars into lobbying and political donations.

Tracking lobbying is hard to do, but to give a sense of the scope of the numbers, Lockheed has reported $22,289,859 in political donations since 1990 and millions in lobbying expenses every year, peaking in 2008 at $16,181,506, according to the Center for Responsive Politics.  And that doesn’t include what it paid its PR people or the work of defense and aerospace industry advocacy groups or the think tanks those industries fund.  As an example of the latter, consider the boldly titled “research study,” C-130J: How the Best Military Aircraft Became Even Better, written by Lockheed consultant Loren Thompson and published by the Lexington Institute, which was founded by a Lockheed lobbyist.  Of course, the puff piece mentions no affiliations with the company.  For these reasons, Dina Rasor of the Project on Government Oversight, which ranks the company #1 on its Federal Contractor Misconduct Database, calls Lockheed “the ultimate pay-to-play contractor.”

Most of the dollars the company spends on lobbying are tax dollars.  According to its 2011 annual report, “82% of our $46.5 billion in net sales were from the U.S. Government, including 61% from the Department of Defense.”  And don’t forget that a significant part of the 17% of its sales that went to international customers in 2011 were actually paid for by Uncle Sam under the rubric of foreign military aid.  Only 1% of its sales that year were to “U.S. commercial and other customers.”  Its CEO made $20,538,981, while the company paid only $722 million in net federal and foreign taxes in that same year.

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When it came to the C-130, the process worked like a dream. “By following this strategy from year to year,” writes a team of scholars of lobbying, “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.” Lockheed was so successful on Capitol Hill that its work even garnered a name in honor of the 50 planes bought for every one requested: “C-130 math.”

John McCain complained that “we’re going to have a C-130 for every schoolyard in America before this is over.”  The “add-on” legislators were unabashed.  Senator Max Cleland of Georgia—where Lockheed assembles the C-130—responded,  “I’m for schoolyards being able to be moved anywhere in the world on a moment’s notice.” 

I felt that way, too—when I was five.

How to Win Friends in the States and Influence People in Congress

So what happened to those extra planes?  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.  That’s why I used to see them at O’Hare.

The reason I usually saw them parked in front of the hangars is that sufficient operating and maintenance funds didn’t always come with the planes, which mattered even more after Lockheed introduced a new version, the C-130J Super Hercules, in the mid-1990s. 

The Air Force’s approach of passing unwanted Herks off to the Air Guard and Reserves worked out nicely for Lockheed.  The company allied with Air Guard and reservist advocacy groups to lobby Congress further. In an era of base closures, heavily lobbied governors would use the arrival of new planes to argue for the continuing life of bases in their states.  In turn, states and their congressional delegations would fight to get new planes or hang onto existing ones.  It was a veritable Lockheed feedback loop.  Washington Post reporter Walter Pincus quoted a Pentagon official as seeing C-130 politics as a twist on the old military-industrial complex: “a triangle of the Guard, Lockheed, and politicians.”

The result: the military was often prevented from retiring the oldest Herks, the ones that really needed to be put out to pasture.  For example, as Pincus reported, the Joint Chiefs and the Air Force concluded in 1996 that they had 50 more C-130s than they needed, but Congress stymied efforts to retire any of them.  One tactic used was to hold nominees hostage: a Kentucky senator repeatedly held up Air Force promotions until four Kentucky Air Guard C-130s were taken off the chopping block.

And it hasn’t ended yet.  In its FY2013 budget, the Pentagon planned to retire 65 older C-130s to save a little money.  However, National Guard groups successfully mobilized state governors and congressional delegations from states like Alaska to, in the words of Alaska Senator Mark Begich “fight this action every step of the way.”  Congress managed to save all of them for a year, and half of them permanently.

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