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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 3)

The Not-So-Super Hercules, or the Program That Just Won’t Die

Air Force attempts to replace the C-130 with a new generation of transport planes also have a habit of dying or getting rerouted.  The Herk’s turf has generally proved remarkably sacrosanct.  The “Advanced Medium STOL” (short takeoff and landing) program of the 1970s, for instance, fizzled, possibly due to Lockheed’s lobbying.  The competing C-27J is being cancelled in favor of more C-130s.  The C-130 Avionics Modernization Program (AMP), which in a surprise move was handed to competitor Boeing—as one of several gifts from a senior Pentagon procurement official shortly before she took a high-paying job there (en route to prison)—is being cancelled, too.  (Though a new congressional C-130 Modernization Caucus spawned by Boeing and led by the congressman in whose district the AMP’s training program is located, is doing its best to cancel the cancellation.)

Knowing that it could keep the C-130 alive through congressional add-ons and foreign sales well into the future, Lockheed took the unusual step of developing the next generation of the plane without new funding from the Pentagon.  It invested $1 billion of its profits from government contracts in the new C-130J Super Hercules.  This has kept the factory in Marietta, Georgia, humming, and with over 2,400 C-130s already built, Lockheed calls it “the longest continuously operating military aircraft production line in history.”

Humming, yes, but not always in tune.  The C-130J has been plagued by problems.  In 2004, after the military had acquired 50 of the planes, the Pentagon’s Inspector General found that, even while the Air Force and Congress kept ordering more of the planes, they didn’t meet contracted standards.  The weather chasers couldn’t chase storms because propellers would crack in bad weather.  The military wouldn’t use C-130Js for air drops in Iraq or Afghanistan because they didn’t think they were safe.  “The design of the C-130J is not stable and the C-130J aircraft has not passed operational testing,” the Inspector General concluded.  It “is not operationally effective or suitable.” 

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To fix these problems, the unit cost rapidly ran up to $81 million per plane.  The problems proved so daunting that Secretary of Defense Donald Rumsfeld axed the C-130J program in 2005—or tried to.

For the lobbyists and the plane’s fans in Congress, it was once more unto the breach.  Lockheed also got help on the inside.  The Air Force made up some numbers indicating that it would be far more expensive to cancel the program than to just keep buying—overstating the possible cancellation cost by at least $1.1 billion.  In the end, Rumsfeld surrendered.  In 2006, in a relatively rare step, the Pentagon forced Lockheed to take a hit on its profits and negotiate a new contract reducing the sticker price of the planes by several million dollars.  But that didn’t last longThe unit cost soon bounced back; the basic C-130J now costs $93.6 million.

When it comes to military contracting like this, it doesn’t seem to matter which party occupies the White House or controls Congress.  It doesn’t even seem to matter how many planes the Air Force puts on its additional “unfunded” wish list beyond the Pentagon’s official request, because Congress so often buys more.  Sure, some years Congress doesn’t provide.  In 2010, the Air Force asked for 12 Herks in its main request and put two more on its unfunded wish list, yet Congress only gave it six.  And sometimes money is pushed around from one year to another or from one bucket to another, making it challenging to track through the intentionally hard-to-understand (and not even auditable) Pentagon labyrinth

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