Lockheed and the Sequester

Given that it’s stupid from a macro-economic sense, one silver lining in the sequester is that the cuts fall equally on the military budget.

Of course the likelihood is that the Pentagon will take it out of soldiers’ and veterans’ wages and benefits, but here are two programs from Lockheed that are absolute boondoggles.

The first is the C-130 program.  Over 2,300 of these planes have been built, far in excess of any operational need.  Good airframes are mothballed in the desert because National Guard units can’t find any useful purpose for them.  The latest upgrade, the C-130J has been plagued with counterfeit parts and propeller cracks.

C-130 Math and a Cargo of Pork

Posted by Jeremiah Goulka, TomDispatch and Mother Jones

8:54am, March 10, 2013

After 25 years, the Pentagon decided that it was well stocked with C-130s, so President Jimmy Carter’s administration stopped asking Congress for more of them.

Lockheed was in trouble.  A few years earlier, the Air Force had started looking into replacing the Hercules with a new medium-sized transport plane that could handle really short runways, and Lockheed wasn’t selected as one of the finalists.  Facing bankruptcy due to cost overruns and cancellations of programs, the company squeezed Uncle Sam for a bailout of around $1 billion in loan guarantees and other relief.

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Then a scandal exploded when it was revealed that Lockheed had proceeded to spend some $22 million of those funds in bribes to foreign officials to persuade them to buy its aircraft.  This helped prompt Congress to pass the Foreign Corrupt Practices Act.

So what did Lockheed do about the fate of the C-130?  It bypassed the Pentagon and went straight to Congress.  Using a procedure known as a congressional “add-on” — that is, an earmark — Lockheed was able to sell the military another fleet of C-130s that it didn’t want.

To be fair, the Air Force did request some C-130s.  Thanks to Senator John McCain, the Government Accountability Office (GAO) did a study of how many more C-130s the Air Force requested between 1978 and 1998.  The answer: Five.

How many did Congress add on?  Two hundred and fifty-six.

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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.

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.”

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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.

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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.”

Then there is the F-35.

F-35’s ability to evade budget cuts illustrates challenge of paring defense spending

By Rajiv Chandrasekaran, Washington Post

Published: March 9

The biggest barrier to cutting the F-35 program, however, is rooted in the way in which it was developed: The fighter jet is being mass-produced and placed in the hands of military aviators such as Walsh, who are not test pilots, while the aircraft remains a work in progress. Millions more lines of software code have to be written, vital parts need to be redesigned, and the plane has yet to complete 80 percent of its required flight tests. By the time all that is finished – in 2017, by the Pentagon’s estimates – it will be too late to pull the plug. The military will own 365 of them.

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When the F-35 finishes testing, “there will be no yes-or-no, up-or-down decision point,” said Pierre Sprey, who was a chief architect of the Air Force’s F-16 Fighting Falcon. “That’s totally deliberate. It was all in the name of ensuring it couldn’t be canceled.”

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Initial tests already have yielded serious problems that are forcing significant engineering modifications. The entire fleet was grounded earlier this year because of a crack in the fan blade in one jet’s engine. The Marine Corps’ version has been prohibited from its signature maneuver – taking off and landing vertically – because of a design flaw. And the Navy model has not been able to land on an aircraft carrier because its tailhook, an essential feature to alight aboard a ship, needs to be redesigned. The Pentagon’s top weapons tester issued a scathing report on the F-35 this year that questioned the plane’s reliability and warned of a “lack of maturity” in performance.

When the F-35 program was first approved by the Pentagon, Lockheed Martin said it could develop and manufacture 2,852 planes for $233 billion. The Pentagon now estimates the total price tag at $397.1 billion. And that is for 409 fewer planes.

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A bigger problem was the fundamental concept of building one plane, with stealth technology, that could fly as far and fast as the Air Force wanted while also being able to land on the Navy’s carriers and take off vertically from Marine amphibious assault ships.

Instead of meeting the original plan of being about 70 percent similar, the three versions now are 70 percent distinct, which has increased costs by tens of billions and led to years-long delays. “We have three airplane programs running in parallel,” Bogdan said. “They are very, very different airplanes.”

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An electrical engineer who worked as a manager at Lockheed’s F-35 program headquarters in Fort Worth beginning in 2001 said the development effort was beset with “tremendous organizational inadequacies” and “schedule and cost expectations that never were achievable.” In his unit, he said, there were no firm development timetables and no budgets. “It was all on autopilot,” he said. “It was doomed from the beginning.”

In 2005, the engineer, who spoke on the condition of anonymity because of concerns he will risk job opportunities in the close-knit aviation industry, participated in a two-week-long assessment of the program.”There were reds and yellows across the board,” he recalled. But when he briefed his superiors, “nobody was interested,” he said. And when he gave a copy of the assessment to those at the Pentagon office responsible for the plane, he said, “they didn’t want to hear it.”

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The Pentagon’s latest five-year budget plan, released last year, calls for a smaller volume of annual purchases to save money. Sequestration-related cuts this year also will defer a few more planes. But the overall purchase of 2,443 jets remains unchanged.

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Although Air Force and Marine leaders have held fast, an unofficial reexamination is occurring within the Navy, which is not as desperate for the F-35 because it possesses a relatively new fleet of F/A-18 Super Hornets. While toeing a public line of support for the F-35, some Navy experts are looking at whether it makes sense to reduce its planned order and plow some of the savings into high-speed drones that can operate off aircraft carriers, according to senior military officials.

Should that occur, or should Defense Secretary Chuck Hagel decide to shrink the overall purchase, it could prompt howls from key U.S. allies, including Britain, Italy and Norway, which all have contributed to the development of the aircraft. Their purchase price has been based on a U.S. order of about 2,500 jets. If that number drops, the per-plane cost will rise for the allies, possibly leading them to buy fewer then planned.

For some of them, cost increases and delays over the past decade have been significant enough to prompt a reexamination. Australia is deciding whether to halve its 100-plane order and Canada is reconsidering its plan to buy 65.

A smaller total purchase, of course, further increases unit costs for the United States, which likely would increase pressure to cut more. Procurement officers have a term for the phenomenon, borrowed from the world of aviation: a death spiral.

These are not the only examples of waste, fraud, and graft in the U.S. military inventory (the M1 Tank, Osprey VTOL, and Littoral Combat Ship spring to mind) but when you consider that the U.S. spends as much as the next 20 countries combined you have to ask yourself “Why?”