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href="https://www.counterpunch.org/2018/10/18/lockheed-and-loaded-how-the-maker-of-junk-fighters-like-the-f-22-and-f-35-came-to-have-full-spectrum-dominance-over-the-defense-industry/">https://www.counterpunch.org/2018/10/18/lockheed-and-loaded-how-the-maker-of-junk-fighters-like-the-f-22-and-f-35-came-to-have-full-spectrum-dominance-over-the-defense-industry/</a></font>
<h1 class="reader-title">Lockheed and Loaded: How the Maker of
Junk Fighters Like the F-22 and F-35 Came to Have
Full-Spectrum Dominance Over the Defense Industry</h1>
<span class="post_author_intro">by</span> <span
class="post_author" itemprop="author"><a
href="https://www.counterpunch.org/author/jeffrey-st-clair/"
rel="nofollow">Jeffrey St. Clair</a> - October 18, 2018</span></div>
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<p>Lockheed-Martin is headquartered in the Bethesda,
Maryland. No, the defense titan doesn’t have a
bomb-making factory in this toney Beltway suburb. But as
the nation’s top weapons contractor, it migrated to DC
from southern California because that’s where the money
is. And Lockheed rakes it in from the federal treasury
at the rate of $65 million every single day of the year.</p>
<p>From nuclear missiles to fighter planes, software code
to spy satellites, the Patriot missile to Star Wars,
Lockheed has come to dominate the weapons market in a
way that the Standard Oil Company used to hold sway over
the nation’s petroleum supplies. And it all happened
with the help of the federal government, which steered
lucrative no bid contracts Lockheed’s way, enacted tax
breaks that encouraged Lockheed’s merger and acquisition
frenzy in the 1980s and 1990s and turned a blind eye to
the company’s criminal rap sheet, ripe with
indiscretions ranging from bribery to contract fraud.</p>
<p>Now Lockheed stands almost alone. It not only serves as
an agent of US foreign policy, from the Pentagon to the
CIA; it also helps shape it. “We are deployed entirely
in developing daunting technology,” Lockheed’s new CEO
Robert J. Stevens told the New York Times report Tim
Weiner. “That requires thinking through the policy
dimensions of national security as well as technological
dimensions.”</p>
<p>Like many defense industry executives, Stevens is a
former military man who cashed in his Pentagon career
for a lucrative position in the private sector. The
stern-jawed Stevens served in the Marines and later
taught at the Pentagon’s Defense Systems Management
College, an institution which offers graduate level
seminars in how to design billion dollar weapons deals.
From the Marines, Stevens landed first at Loral, the
defense satellite company. Then in 1993 he went to work
at Lockheed, heading its “Corporate Strategic
Development Program”. There Stevens wrote the gameplan
for how Lockheed would soar past Boeing, General
Dynamics, Northrop Grumman and the others, as the top
recipient of Pentagon largesse.</p>
<p>The plan was as simple as it proved profitable. Instead
of risking the competition of the marketplace, Lockheed,
under Stevens’ scheme, would target the easy money:
federal contracts. The strategy was also
straightforward: flood the congress with PAC money to
get and keep grateful and obedient members in power.
Those friendly members of congress would also be
surrounded by squads of lobbyists to develop and write
legislation and insert Lockheed-friendly line items into
the bloated appropriations bills that fund the
government. It also called for seeding the Pentagon and
the White House with Lockheed loyalists, many of whom
formerly worked for the company.</p>
<p>“We need to be politically aware and astute,” said
Stevens. “We need to work with the congress. We need to
work with the executive branch. We need to say: we think
this is feasible, we think this is possible. We think we
have invented a new approach.”</p>
<p>The scheme succeeded brilliantly. By the end of the
1990s, Lockheed had made the transition from an airplane
manufacturer with defense contracts to a kind of
privatized supplier for nearly every Pentagon weapons
scheme, from the F-22 fighter to the Pentagon’s internet
system. Then 9/11 happened and the federal floodgates
for spending on national security, airline safety and
war making opened wide and haven’t closed. Lockheed has
been the prime beneficiary of this gusher of federal
money.</p>
<p>Since September 2001, the Pentagon’s weapons
procurement program has soared by more than $20 billion,
from $60 billion to $81 billion in 2004. Lockheed’s
revenues over the same time period jumped by a similar
30 percent. And, despite the recession and slumping Dow,
the company’s stock tripled in value.</p>
<p>Almost all of this profiteering came courtesy of the
federal treasury. More than 80 percent of Lockheed’s
revenues derives directly from federal government
contracts. And most of the rest comes from foreign
military sales to Israel, Saudi Arabia, South Korea and
Chile. Israel alone spends $1.8 billion a year on planes
and missile systems purchased from Lockheed. Lockheed
sells its weaponry, from F-16 fighters to surveillance
software, to more than 40 nations. “We’re looking at
world domination of the market,” gloated Bob Elrod, a
senior executive in Lockheed’s fighter plane division.</p>
<p>And there’s little risk involved. Nearly all of these
sales are guaranteed by the US government.</p>
<p>After 9/11, Bush tapped Lockheed’s Stevens to lead his
presidential commission on the Future of the US
Aerospace Industry, a body which, not surprisingly,
wasted little time pounding home the importance of
sluicing even more federal dollars in the form of
defense and air traffic control contracts to companies
such as Lockheed.</p>
<p>But Stevens’ position was just the icing on a very
sweet cake. Former Lockheed executives and lobbyists
toil every day on behalf of the defense giant from the
inside the administration and the Pentagon. At the very
top of the list is Steven J. Hadley, who replaced
Condoleezza Rice as Bush’s National Security Advisor.
Prior to joining the Bush administration, Hadley
represented Lockheed at the giant DC law firm of Shea
and Gardner. Other Lockheed executives have been
appointed to the Defense Policy Board and the Homeland
Security Advisory Council. Bush’s Transportation
Secretary, Norman Mineta, and Otto Reich, the former
deputy Secretary of State for the Western Hemisphere,
both once worked as Lockheed lobbyists.</p>
<p>But the revolving door swings both ways for Lockheed.
On its corporate board reposes E.C. Aldridge, Jr. Before
retiring from the Defense Department, Aldridge served as
the head of the Pentagon’s weapon procurement program
and signed the contracts with Lockheed to build the
F-22, the world’s most expensive airplane.</p>
<p>When insiders don’t get you everything you need,
there’s always political bribery. In the US, politicians
who serve Lockheed’s interests get annual dispensations
of cooperate swill courtesy of the company’s mammoth
political action committee. Each year Lockheed’s
corporate PAC doles out more than $1 million, mainly to
members of the crucial defense and appropriations
committees.</p>
<p>Overseas, the Lockheed has often resorted to a direct
bribe of government officials. In the 1970s, Lockheed
famously handed out $12.5 million in bribes to Japanese
officials (and organized crime figures) to secure the
sale of 21 Tristar aircraft to Nippon Airlines. The
ensuing scandal brought down Japanese Prime Minister
Kakuei Tanaka, who was convicted of being on the
receiving end of Lockheed’s payola. Even though the
imbroglio lead the enactment of the Foreign Corrupt
Practices Act in 1977 which set stiff penalties for
bribery, Carl Kochian, Lockheed’s CEO at the time,
defended the practice of handing out covert cash
inducements as a cost-effective way of securing billions
in contracts for the company. Bribery was just a cost of
doing big business.</p>
<p>And indeed the Corrupt Practices Act didn’t deter
Lockheed from handing out financial incentives to
foreign officials to speed things along. In the 1990s,
Lockheed admitted to stuffing the pockets of an Egyptian
official with $1.2 million dollars in order to grease
the sale of three Lockheed-made C-130 transport planes
to the Egyptian military.</p>
<p>The clunky old C-130 Hercules continues to bring
millions to Lockheed, which sells the cargo plane to
Jordan, Egypt and Israel. But the biggest profits
continue to derive from sales to the Pentagon, even
though the latest model of the transport has been
plagued with operational problems and cost overruns. Of
course, in the funhouse economics of defense contracts
“cost over-runs” simply mean more millions in taxpayer
money going into the accounts of the very defense
contractors that performed the untimely or shoddy work
in the first place.</p>
<p>Since 1999, the Air Force has purchased 50 of the new
C-130J prop planes from Lockheed. But none of these
planes have performed well enough to allow the Air Force
to put them into service. An audit of the C-130 contract
by the Inspector General of the Air Force revealed a
host of problems with the new plane that had been gilded
over by Lockheed and Pentagon weapons buyers.</p>
<p>One of the biggest problems with the plane is an
ineptly designed propeller system that keeps the C-130
from being flown in bad weather. The C-130J is powered
by six-propellers covered in composite material that
becomes pitted or even dissolves under sleet, hail or
even heavy rain. Ironically, many of the first batch of
planes were delivered to an Air Force reserve unit in
Biloxi, Mississippi, where they were supposed to
function as “Hurricane Hunters,” plying through
thunderstorms and heavy winds in search of the eye of
the storm. The planes proved useless for the task. As a
result, most of the C-130Js have been used only for
pilot training.</p>
<p>“The government fielded C-130J aircraft that cannot
perform their intended mission, which forces the users
to incur additional operations and maintenance costs to
operate and maintain older C-130 mission-capable
aircraft because the C-130J aircraft can be used only
for training,” the IG audit concluded.</p>
<p>Nevertheless, the Air Force paid Lockheed 99 percent of
the contract price for the useless planes.</p>
<p>“This is yet another sad chapter in the history of bad
Pentagon weapons systems acquisitions,” said Eric
Miller, a senior Defense Investigator at the Project on
Government Oversight. “For years, the Air Force has
known it was paying too much for an aircraft that
doesn’t do what it’s supposed to. Yet it has turned a
blind eye. The aircrews who have to fly these aircraft
should be very angry. They’ve been betrayed by the very
government that should be ensuring that the weapons they
receive are safe and effective.”</p>
<p>The profits from the C-130 are a mere pittance compared
to what Lockheed stands to make from its contracts to
produce the two costliest airplanes ever envisioned: the
Joint Strike Fighter and the F-22 Raptor.</p>
<p>The Joint Strike Fighter, also known as the F-35, is
slated to replace the venerable F-16. Even though the
initial designs for the F-35 proved faulty (there
continue to be intractable problems with the weight of
the plane), the Pentagon, under prodding from
influential members of Congress, awarded the Lockheed a
$200 billion contract to build nearly 2,000 of the still
unairworthy planes. Lockheed plans to sell another 2,500
planes at a sticker price of $38 million apiece to other
nations, starting with Great Britain. Once again, most
of these sales will be underwritten by US government
loans.</p>
<p>The F-35 contract was awarded on October 16, 2001.
Already, costs have soared by $45 billion over the
initial estimate with no end in sight.</p>
<p>But the F-22 Raptor stands in a class of its own. With
a unit price of more than $300 million per plane, the
Raptor is the most expensive fighter jet ever designed.
One congressional staffer dubbed it, “Tiffany’s on
wings.” Conceived in the 1980s to penetrate deep into
the airspace of the Soviet Union, the F-22 has no
function these days, except to keep a slate of defense
contractors in business, from Lockheed, which runs the
project, to Boeing which designed the wings to
Pratt-Whitney which designed the huge jet engines.</p>
<p>The F-22 was supposed to be operational a decade ago.
But the latest incarnation of the plane continues to
suffer severe problems in fight testing. Its onboard
computer system is mired with glitches and its Stealth
features haven’t prevented the plane from popping up
“like a fat strawberry” on radar. Even worse, several
test pilots have gotten dizzy to the point of nearly
passing out while trying to put the fighter through
evasive maneuvers at high altitudes.</p>
<p>Even so, the doomed project moves forward, consuming
millions every week, and no one with the power to do so
seems to show the slightest inclination to pull the
plug.</p>
<p>* * *</p>
<p>By one account, Lockheed garners $228 in federal tax
money from every household in the US each year. But when
it comes time to paying taxes Lockheed pleads poverty.
By taking advantage of a bevy designer loopholes,
Lockheed’s legion of accountants has reduced the
corporation’s annual tax liability to a mere 7 percent
of its net income. By comparison, the average federal
tax rate for individuals in the US is around 25 percent.</p>
<p>Of course, these kinds of special dispensations don’t
come cheaply. Lockheed spends more money lobbying
congress than any other defense contractor. In 2004, a
banner year for the company, it spent nearly $10 million
on more than 100 lobbyists to prowl the halls of
congress, keeping tabs on appropriations bills,
oversight hearings and tax committees. Over the past
five years, only Philip Morris and GE spent more money
lobbying congress.</p>
<p>With Lockheed, it’s sometimes difficult to discern
whether it’s taking advantage of US foreign policy or
shaping it. Take the Iraq war. Lockheed’s former
vice-president, Bruce Jackson, headed an ad hoc group
called the Committee for the Liberation of Iraq. This
coven of corporate executives, think tank gurus and
retired generals includes such war-mongering luminaries
as Richard Perle, Jeane Kirkpatrick, Gen. Wayne Downing
and former CIA director James Woolsey. The Washington
Post reported that group’s goal was to “promote regional
peace, political freedom and international security
through replacement of the Saddam Hussein regime with a
democratic government that respects the rights of the
Iraqi people and ceases to threaten the community of
nations.”</p>
<p>This supposedly independent body seems to have gotten
its marching orders from inside the Bush White House.
Jackson and others met repeatedly with Karl Rove and
Steven Hadley, Condoleezza’s Rice’s number two at the
National Security Council and a former Lockheed
lobbyist. The group eventually got a face-to-face
meeting with the dark lord himself, Dick Cheney. After
meeting with White House functionaries, members of the
Committee would fan out on cable news shows and talk
radio to inflame the fever for war against Saddam.</p>
<p>Jackson has long enjoyed close ties to the Bush inner
circle. In 2000, he chaired the Republican Party’s
platform committee on National Security and Foreign
Policy and served as a top advisor to the Bush campaign.
Naturally, the platform statement ended up reading like
catalogue of Lockheed weapons systems. At the top of the
list, the RNC platform pledged to revive and make
operational the $80 billion Missile Defense program
supervised by Lockheed.</p>
<p>In 2002, the Bush administration called on Jackson to
help drum up support in Eastern Europe for the war on
Iraq. When Poland and Hungary came on board, Jackson
actually drafted their letter supporting an invasion of
Iraq. His company was swiftly rewarded for his efforts.
In 2003, Poland purchased 50 of Lockheed’s F-16 fighters
for $3.5 billion. The sale was underwritten by a $3.8
billion loan from the Bush administration.</p>
<p>Lockheed also made out quite nicely from the Iraq war
itself. It’s F-117 Stealth fighters inaugurated the
start of the war with the “Shock and Awe” bombing of
Baghdad. Later, the Pentagon stepped up orders of
Lockheed’s PAC 3 Patriot missile. The missile batteries,
designed for use against SCUD missiles that Iraq no
longer possessed, sell for $91 million per unit.</p>
<p>After the toppling of Saddam, Lockheed executives saw
an opportunity to gobble up one of the big private
contractors doing business in Iraq, Titan Corporation.
The San Diego-based company was awarded a $10 million
contract to provide translators for the Pentagon in
Iraq. Two of those translators, Adel Nakhl and John
Israel, were later accused of being involved in the
torture of Iraqi prisoners at Abu Ghraib prison. Titan
translators, who are paid upwards of $107,000 a year,
were also implicated in a scandal at Guantanamo prison.</p>
<p>Like Lockheed, after 9/11 Titan jettisoned almost all
of its commercial operations and began to focus entirely
on government work. By 2003, 99 percent of its $1.8
billion in corporate income came courtesy of government
contracts. The firm also went on a buying spree of other
smaller defense contractors. Since 2001, Titan gobbled
up ten other defense-related companies. The most
lucrative acquisition proved to be BMG, Inc., a Reston,
Virginia based company that specializes in information
collection and analysis for the Pentagon and the CIA.
BMG alone held Pentagon contracts worth $650 million.</p>
<p>The abuse scandals didn’t deter Lockheed from pursuing
Titan. Indeed, Christopher Kubasik, Lockheed’s chief
financial officer, told the Los Angeles Times that the
torture allegations “were not significant to our
strategic decision.”</p>
<p>The merger was later delayed for other reasons by the
Justice Department, which was looking into allegations
that Titan executives and subsidiaries paid bribes to
government officials in Africa, Asia and Europe in order
to win contracts–a method of doing business that
Lockheed executives must have admired.</p>
<p>Titan, which was formed amid the Reagan defense build
up of the early 1980s, saw itself as a new kind of
defense contractor, a weapons company that didn’t make
weapons. Instead of building missiles or planes, Titan
concentrated on developing software and communication
packages for Pentagon programs. Its first big contract
was for the development of a communications package for
the guidance system of the Minuteman missile. Since then
Titan has become a major player in the lucrative
information technology market.</p>
<p>In recent years, Lockheed has begun to aggressively
pursue the same types of “soft defense” programs. In the
past decade, Lockheed’s Information Technology sales
have increased by more than four hundred percent. The
bonanza began during the Clinton administration, when Al
Gore’s “reinventing government” scheme auctioned off
most of the data-management tasks of the federal
government to the private sector. Now nearly 90 percent
of the federal government’s Information Technology has
been privatized, most of it to Lockheed, which is not
only the nation’s top arms contractor but also its top
data-management supplier.</p>
<p>This opened vast new terrains of the government to
conquest by Lockheed. It now enjoys contracts with the
Department of Health and Human Services, Department of
Energy and EPA. Lockheed also just corralled a $550
million contract to take over the Social Security
Administration’s database. The privatization of Social
Security has already begun.</p>
<p>But even in the IT sector, the big bucks are to be made
in the burgeoning surveillance and Homeland Security
business. Lockheed now runs the FBI’s archaic computer
system, which took some much deserved heat for letting
the 9/11 hijackers slip through its net without
detection. It also won the $90 million contract to
manage the top secret computer network for the
Department of Homeland Security, a system that is
supposed to function as a kind of “deep web”, linking
the systems of the FBI, CIA and Pentagon.</p>
<p>All of this is a precursor to even bigger plans hatched
by Lockheed and its pals in the Pentagon to develop an
all-encompassing spying system called the Global
Information Grid, an internet system that is meant to
feed real time tracking information on terrorists
suspects directly into automated weapons systems,
manufactured, naturally, by Lockheed.</p>
<p>“We want to know what’s going on anytime, any place on
the planet,” pronounced Lorraine Martin, Lockheed’s
vice-president for Command, Control and Communications
Systems. And eliminate them, naturally.</p>
<p>On the battlefield of defense contractors, Lockheed has
now achieved full-spectrum dominance.</p>
<p><em>This is adapted from a chapter in <a
href="https://www.amazon.com/exec/obidos/ASIN/1567513360/counterpunchmaga">Grand
Theft Pentagon</a>.</em></p>
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