Welcome William Hartung, and Host, Sharon Weinberger.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread. - bev]

Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex

Sharon Weinberger, Host:

“A detailed accounting of all of Lockheed Martin’s government contracts could fill several large volumes,” writes William Hartung, in his new book Prophets of War, a history of the nation’s largest defense contractor. “Suffice it to say that they are involved at one level or another in nearly everything the federal government does, from providing instruments of death and destruction to collecting taxes and recruiting spies.”

For those who have followed the defense industry for years, that statement is no revelation, but for the vast majority of the American public, the notion that the maker of the radar-evading F-22 Raptor aircraft has also been involved in sorting the mail, is both surprising, and important.

In fact, given the current reach of the company—from multi-billion contracts to build jet fighters to helping the IRS with tax notices—it’s surprising that no one has written a comprehensive and critical account of the nation’s largest defense contractor. Hartung artfully traces the company’s history from a pair of brother described as “carnival performers who had become enmeshed in the birth of the aviation industry,” to one of its modern CEOs, Norm Augustine, a “virtual renaissance man of the military industrial complex.”

Lockheed’s rise to the top of the military industrial heap follows a chaotic history of near bankruptcy, bribery scandals, and weapons buying disasters. Other companies might well have imploded from the type of crises Lockheed has weathered, and it seems at times that the company has survived in spite of itself. What has often saved it is not corporate genius but the belief among senior policymakers that the defense megalith is vital to national security. But is that true?

Indeed, Lockheed has also had some notable successes, like the U-2 spy plane, a complex technological challenge that the company’s secretive Skunk Works division completed under budget. The U-2, as Hartung acknowledges, played a significant role in proving that the United States was overestimating Soviet military capabilities (even if that revelation did little to change the course of the arms race).

It’s sometimes difficult to know who the bad guys are: Congress, which pushes funding for unneeded defense projects to benefit parochial interests? Pentagon bureaucrats, who fail in their job to properly manage the contracts? The military services, which make unrealistic demands for exotic technology that drives up costs? Or the company itself, which benefits from all of these forces by way of lucrative defense contracts?

Hartung’s book doesn’t always answer the intriguing questions raised by the rapid growth of Lockheed Martin, but it should provoke a lively debate. One thing is clear, it’s the American taxpayer that foots the bill, and we need look no further than today’s headlines to understand what’s at stake: a $700 billion a year defense budget that few think we can actually afford.

114 Responses to “FDL Book Salon Welcomes William Hartung, Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex”

BevW January 16th, 2011 at 1:56 pm

Bill, Welcome to the Lake.

Sharon, Welcome to the Lake and for Hosting today’s Book Salon.

dakine01 January 16th, 2011 at 2:00 pm

Good afternoon William and Sharon and welcome to FDL this afternoon.

William, as I read your book I found myself nodding my head in agreement with a lot of your points about the DoD acquisition systems. I worked as an in-plant QA specialist at a Defense Contracts Administration Services Plant Rep Office (DCASPRO) for over two years plus another ten plus years as support contractor for mostly USAF programs (though no Lockheed programs). Among the roles over the years, I was a “Non-Government Technical Adviser to the Source Selection Evaluation Board” on a project. I also always looked to Ernie Fitzgerald as my role model of someone doing the correct thing (which did not always endear me to project managers)

Note: I did work on the Connecticut SACWIS (Statewide Automated Child Welfare Information System) that Lockheed primed (My then employer did the actual development and testing as a sub to Lockheed)

William Hartung January 16th, 2011 at 2:00 pm
In response to BevW @ 1

Hello everyone, thanks for logging in for this book chat.

Sharon Weinberger January 16th, 2011 at 2:02 pm

Hi Bill,

I wanted to start off with a big picture question. Tomorrow is the 50th anniversary of President Eisenhower’s “military-industrial-complex” speech. Have Eisenhower’s worst fears been born out?

William Hartung January 16th, 2011 at 2:03 pm
In response to dakine01 @ 2

Ernie Fitzgerald is a great role model. He stood up to the Air Force bureucracy when they tried to hide $2 billion in projected overruns on Lockheed’s C-5 transport plane, and he stuck with it through great difficulties and risk to his career.

dakine01 January 16th, 2011 at 2:04 pm
In response to William Hartung @ 5

Yeah, I had some project managers and other folks who had known him who attempted to trash him as a “publicity seeker” and other such.

They never were able to actually refute his information though.

William Hartung January 16th, 2011 at 2:05 pm

In many ways, yes. The weapons industry is larger, it is invovled in more aspects of security (intelligence and homeland security as well as the Pentagon), and it has as much or more clout, using jobs, lobbying money, political contributions, the revolving door, funding of sympathetic think tanks, advertising, and more to exert its will over procurement decisions.

lsls January 16th, 2011 at 2:06 pm

Who is Lockheed Martin, i.e., who is making the money? Anyone in particular or just millions of investors?

William Hartung January 16th, 2011 at 2:06 pm
In response to dakine01 @ 6

The most important publicity Fitzgerald generated was on the cost and performance problems of the C-5A, which might have been buried for years more without his efforts.

William Hartung January 16th, 2011 at 2:08 pm
In response to lsls @ 8

They have a diverse range of investors, from banks to individuals to pension funds and other investment vehicles. Their executives own substantial amounts of stock as well, and benefit from those as part of what are among the highest compensation packages in the industry. But as far as I know there is not one major player that owns the company.

Sharon Weinberger January 16th, 2011 at 2:09 pm

Most accounts of Lockheed Martin are laudatory histories written by
insiders, focusing on the company’s technological successes. Your
books is clearly critical. I’m curious to know if you’ve gotten any
feedback from Lockheed Martin, or former executive or employees of the
company, about your book? Do they think it’s a fair portrayal? Do they
have any objections? Have they said anything?

lsls January 16th, 2011 at 2:09 pm

Who are the executives? Names? ;)

PeasantParty January 16th, 2011 at 2:10 pm

Is it possible for the citizens to curtail some of this public funding now that we are into cutting deficit spending mode?

eCAHNomics January 16th, 2011 at 2:12 pm

What’s LMT’s biz model that has gotten it into all those other businesses?

William Hartung January 16th, 2011 at 2:12 pm

Lockheed Martin responded to an interview with me/profile of the book that appeared in Politico. They basically said they were disappointed I didn’t contact them (although I did, numerous times with no luck), that it impugned their 140,000 employees (when the bulk of my critique really involved company management and overall business practices), and they did suggest that it was an inaccurate portrayal, although at least on this round they haven’t cited any specifics.

dakine01 January 16th, 2011 at 2:12 pm
In response to William Hartung @ 9

The thing about the C5 being way over budget and not as fully capable is fairly common across the board.

One project I worked on for Navy submarine communications was pushing some then state of the art. After a round of testing there was a big project meeting of the Navy, developer and everyone. The developer test director was expounding on how wonderful everything was when I held up my hand pointing out that “testing has been completed but not necessarily passed” The Navy O6 Captain project manager turned to me and said “We’re dealing with design issues now, not Quality”

Still trying to figure out how the two are separate.

The DoD system is filled with this type

eCAHNomics January 16th, 2011 at 2:12 pm
In response to lsls @ 8
William Hartung January 16th, 2011 at 2:12 pm
In response to lsls @ 12

Robert Stevens, the CEO, is the key. He is among the top ten in compensation among U.S. corporate executives.

tjbs January 16th, 2011 at 2:12 pm

Proud to say I have stood against these immoral, bloodsucking, rabid murder machine manufacturers at their Newtown Pa campuss.

Even better, they will be the focus of monthly demonstrations as the supreme war mongers in the county starting next month. For anyone near enough go to CFPA/ Bucks county

FULM, Karma baby

emptywheel January 16th, 2011 at 2:14 pm

Welcome to FDL, Bill and Sharon.

Bill, I’ve just read the first couple of chapters so far, but in them, you allude to one of the reasons why, I think, we’re in this plight: because the MIC is really our substitute for a real industrial policy. Our military culture makes it safe for the same people who would poo poo an industrial policy to do the same in the guise of security. And as you rightly point out, Lockheed plays to this by spreading the jobs around to many states. And–as we’ve seen in WL–our government makes exporting Lockheed’s products a central part of our foreign policy.

Yet we’re unsuccessful in using similar security arguments to justify investing in green industries (even though contractors like Lockheed would presumably get some of that business too).

How do we make this point more clearly?

Sharon Weinberger January 16th, 2011 at 2:14 pm

Your book recounts some of the darker episodes in Lockheed history,
like bribery used to secure foreign contracts in the 1960s. Yet in
recent years, it seems like Lockheed has avoided public scandals like the
Boeing-Air Force tanker imbroglio. They’ve also pretty clearly stayed
out of the personal security contractor business that made companies
like Blackwater (Xe) a lightning rod for controversy. How do you think
Lockheed measures up to other defense companies?

William Hartung January 16th, 2011 at 2:16 pm
In response to PeasantParty @ 13

A majority of the president’s deficit commission called for cuts in Pentagon spending on the order of $100 billion a year (phased in over time), as have a number of independent panels. Republican leadership member Eric Cantor has said defense needs to be on the table in any deficit reduction plan, as has Tea Party-favorite Ron Paul. Barney Frank and Ron Paul have gathered 50 fellow members to call for substantial Pentagon cuts. So there is a chance that the Pentagon’s post-WW II record budgets could be curtailed.

eCAHNomics January 16th, 2011 at 2:16 pm

Heh. Where is wikileaks when we need them.

eCAHNomics January 16th, 2011 at 2:17 pm

The U.S. Air Force is populated by its share of religious nutcases. Is that also true of LMT?

William Hartung January 16th, 2011 at 2:18 pm
In response to dakine01 @ 16

I may be going out of order. Lots of good questions. There is a history of problems with getting out ahead of testing (no “fly-before-you-buy”) on systems like the F-35 and others. We’ll see if the company can get the design right before building hundreds of these things . . .

dakine01 January 16th, 2011 at 2:20 pm

Take all the time you need and whatever order you like. We’re a patient (but persistent) bunch

lsls January 16th, 2011 at 2:21 pm

Interesting. According to Wiki, he’s also:

He is a member of the Council on Foreign Relations, is Lead Director of the Monsanto Company, and a member of the Board of Directors of the Congressional Medal of Honor Foundation. Mr. Stevens also served on President Bush’s Commission to Examine the Future of the United States Aerospace Industry.

He only makes about 2B’s a year.

Delightful fellow, I’m sure.

William Hartung January 16th, 2011 at 2:22 pm

Lockheed Martin has avoided major scandals recently — no executives going to jail, as happened in the Boeing tanker scandal; no getting barred from government contracts for purloining confidential information from its rivals, as happened to Boeing; no “gun toting” a la Blackwater/Xe. They have had problems with overcharging, environmental cleanup, major performance problems (like its mismanagement of the Coast Guard’s “Deepwater program). They have the most instances of abuses in the Project on Government Oversight’s contractor misconduct data base, but some of the worst examples are ten years old or more. So I would say they are average to above average regarding major ethical/legal issues, but perhpas below average in competence/cost control/performance.

PeasantParty January 16th, 2011 at 2:24 pm
In response to lsls @ 27

(placing hand on chin, closing mouth) Ah-hem! He seems to have his fingers in all the pies.

Sharon Weinberger January 16th, 2011 at 2:24 pm

Do you think the so-called Last Supper, the 1993 dinner meeting when then Defense Secretary Les Aspin encouraged the defense industry to consolidate, was a mistake?

papau January 16th, 2011 at 2:24 pm

I loved your book – as in smiled, and shook my head, as I noted that acquisition is still as F’ed up as it was in the 40′s when Lockheed sold 14000 planes to the Allies that could not do the job in the European theater (I tried to sell US defense/intel an item that they agree they need and that it was cheap and that they were not going to get without buying – and was told to get more GOP Congressional support for the purchase).

I have left the game of dealing with intel/defense because it is owned by the major corporations – and sales of the un-needed and not working are approved before even tiny sales of what they agree they need.

Great book.

William Hartung January 16th, 2011 at 2:25 pm
In response to lsls @ 27

Have yet to meet Mr. Stevens, only seen speeches and other statements. He has great ambitions for the company, which he has (paraphrasing) said can change the world. He is not the first to be involved in interlocking directorates with other powerful companies, or to serve on government advisory committees on issues that can benefit his company. But he is a good example of same.

emptywheel January 16th, 2011 at 2:25 pm

Bill

I’m going to throw this out in hopes you’ll be able to get to it.

Like I said, I didn’t get to the chapters describing Lockheed’s recent activities.

But I was wondering whether you have any sense what role Lockheed may have played in Cheney’s illegal wiretap program? I did a study of the Democrats who voted for immunity on the FISA bill, and big Lockheed donations was one of the biggest correlates, bigger even then telecom donations.

So do you have any idea why Lockheed would have felt exposed by the exposure of the program. (All of which makes the Comey GC position all the more interesting.)

Jane Hamsher January 16th, 2011 at 2:25 pm

Thanks so much for being here today Bill and Sharon.

I’m traveling right now but so happy my flight layover in Denver allowed me to catch the salon. Bill I’ve been reading the book on the plane and am almost done. It’s a remarkable work, and I can bet Lockheed is none too pleased.

You stopped short of promoting actual policy change that would limit the influence of contractors on the ever-expanding Pentagon budget, but what kind of recommendations would you make?

William Hartung January 16th, 2011 at 2:28 pm

I think some consolidation of the industry was probably necessary, but I believe it went too far in creating giants like Lockheed Martin (which swallowed up about 18 companies large and small to get to its current size), Northrop Grumman and Boeing (which absorbed McDonnell Douglas). Now the Pentagon has few choices (for example, Lockheed Martin is now the only source of fighter planes for the Air Force), too few in my opinion.

Jane Hamsher January 16th, 2011 at 2:30 pm

In the book you say that Lockheed is now moving into “soft-power” related activities, specifically with their acquisition of PAE.

But this comment in LM Today (company newsletter) made my hair stand on end:

Aside from representing a growing line of business, PAE’s capacity building efforts benefit Lockheed Martin in another significant way: They introduce the in a positive light to regions that might someday develop into markets for customers for information technology, infrastructure and defense systems.” (P 229)

Seriously? We can’t find anyone else to go in and monitor elections, or log human rights abuses, than the guys who view it as a government-funded advance PR campaign for selling bombs when things aren’t going so swimmingly?

William Hartung January 16th, 2011 at 2:30 pm
In response to emptywheel @ 33

Lockheed Martin played a role in the Pentagon’s Counter Intelligence Field Activity (CIFA), which briefly was involved in spying on peace activists before Congress shut down that aspect of its activities. It is also closely intertwined with the National Security Agency. But I have seen no evidence of direct involvement in Cheney’s activities.

Sharon Weinberger January 16th, 2011 at 2:35 pm

One of the things I most enjoyed about your book was the early — and colorful — history of the brothers who founded Lockheed. You wouldn’t guess this would be the aerospace company — of the many dozens around– that would go on to be the world’s biggest defense company. What exactly accounts for its dominance? Good luck? Lobbyists? Strategy? Norm Augustine?

William Hartung January 16th, 2011 at 2:38 pm
In response to Jane Hamsher @ 34

It’s true, I didn’t do a list of possible reforms. I wasn’t sure I had the best answers, wanted to spark debate on that via the book. A few things that I think would help would be: 1) greater transparency on the “revolving door” between the Pentagon and industry, and perhaps a longer “cooling off” period before military officials can go work for contractors; 2) some way of addressing the jobs issue, which is the trump card in getting Congress to support systems that often aren’t needed at prices we often can’t afford — seems to me at a minimum this would involve retraining programs for defense workers and a government policy of investing in other public goods like infrastructure and green manufacturing that could create other job oppportunies (very difficult in this political climate, but perhaps a goal for the medium to longer-term; 3) more auditors and contracting officers to keep the companies honest; and 4)limiting the role of contractor personnel on government advisory committees (requiring a majority of members to have no financial stake in the outcome). These are far from adequate, but a few thoughts I had. One of my favorite groups that is thinking about how to rein in the contractors is the Project on Government Oversight. I, and all of us in the NGO community, are too often on the defensive fighting this or that unneeded weapon or outrageous practice and probably haven’t taken the time needed to think about larger reforms of the system. Of course most important of all would be a re-thinking of our national security strategy that would justify significant cuts across-the-board and allow us to invest in other forms of security, both in foreign policy and domestically. This would create positive incentives for change in the way the companies and the Pentagon do business because there would be a better sense of what’s at stake in terms of opportunity costs.

Jane Hamsher January 16th, 2011 at 2:39 pm

Sorry to throw so many questions out so quickly, but I wanted make sure I got them out there before I have to go catch my next plane.

Bill and Sharon, can you describe the defense contractor culture a bit? I notice you make reference to Joel Johnson’s work at the Aerospace Industries Association. Has industry consolidation created a culture where smaller players have to go along with whatever the big dogs want, or are they competitive?

I know that at the Chamber, for instance, if one company is getting screwed by something the chamber is actively promoting they will still be reluctant to publicly balk because they want to retain their seat at the table (as is happening with KORUS). Do smaller players sort of hope to be the next company gobbled up in a lucrative merger, or do they rely on subcontractor status too heavily to actually challenge Lockheed/Boeing contracting dominance? Or is it a highly competitive environment?

lareineblanche January 16th, 2011 at 2:39 pm

“tap tap” – “is this thing on?”

Funny, I just wrote some comments about this in a previous Wheeler thread, you people are always ahead of the game. (http://emptywheel.firedoglake.com/2011/01/14/hiding-our-cyberwar-from-congress/)

William :
As emptywheel alluded to, the “defense” industry seems to be one of the last parts of the industrial sector to have resisted massive outsourcing of labor (aside from Oshkosh trucks in Israel, and maybe others) – have you seen any signs that Lockheed Martin is/will be outsourcing as well? Or is there a policy at the Pentagon to try to keep “defense” as domestic as possible?

thank you

William Hartung January 16th, 2011 at 2:41 pm
In response to Jane Hamsher @ 36

In a lot of cases Lockheed Martin just buys up companies and people who already have done some of these things, but their management of them leaves much to be desired. There is a chance they will get out of some of these areas because they haven’t made the levels of profit they had hoped for and the activities haven’t led to other business (like selling weapons or information technology services to countries where they have done “soft power” activities. It is clear that NGOs or civilian firms could do as well or better at these activities, and if Lockheed Martin leaves this field it will open up a chance for them to do so (although companies like Northrop Grumman are into this as well, with their “Smart Power” division).

Jane Hamsher January 16th, 2011 at 2:45 pm

Those are all great suggestions.

You give Gates a lot of credit for beating back the F-22 and stopping Lockheed’s aggressive lobbying efforts. Do you think he has been open to real reform, or just doing some window dressing on the worst excesses?

Sharon Weinberger January 16th, 2011 at 2:45 pm
In response to Jane Hamsher @ 40

An interesting side note: the real innovators in unmanned aircraft — drones — have typically been smaller firms (which are then gobbled up by the large companies). I think there has long been the feeling among smaller companies that it’s extremely hard to get their foot in the door of the Pentagon, and that’s definitely true.

Teddy Partridge January 16th, 2011 at 2:45 pm

Thank you very much for taking time to chat today. I’m very intrigued by your book and hope to pick up a copy.

What would happen if our federal government applied old-time anti-trust standards to some of these companies in the defense biz? Do you think the government might get better value for our dollar if these were all smaller, more competitive companies? Who actually benefited from Lockheeds acquisition of Martin Marietta? Surely not the taxpayers.

William Hartung January 16th, 2011 at 2:45 pm

Lockheed Martin’s growth seems to me was hinged on a few key moments. When the financier Robert Gross salvaged the company from bankruptcy in the early 1930s he provided a tenacious management style that the Lockheed (or, originally, Loughead) brothers couldn’t provide. Then they got in early on the World War II boom, selling bombers to Britain. And they may have been the biggest benificiary of the war, going up to 91,000 employees by 1943 from a few thousand in the 1930s. I think Norm Augustine’s decision to get in early on the merger boom was certainly a major factor. And they do seem to have been among the best firms in the industry at lobbying, which has served them well when they got into major jams like their near bankruptcy in the early 1970s.

Jane Hamsher January 16th, 2011 at 2:48 pm

As I was reading that section, it didn’t seem like to much to ask that the peacekeeping functions not be performed by the guys who make the planes that drop the cluster bombs. I mean, just from an optics level alone. There just doesn’t seem to be any good reason to be giving those contracts to companies that are playing both sides. It’s not like Lockheed or Northrop Grummon are hurting for business.

William Hartung January 16th, 2011 at 2:48 pm
In response to Jane Hamsher @ 40

I think it cuts both ways. I have spoken to execs at smaller, innovative defense firms who would much prefer to stay that way, not get absorbed into a big conglomerate like Lockheed Martin or Northrop Grumman; others see it as a way to cash in on their good efforts and have no problem with it. Not sure that fully gets at it, but I’m trying to stay up with the flow! Will see if more comes to me along the way this afternoon.

William Hartung January 16th, 2011 at 2:52 pm

The taxpayers actually subsidized the Lockheed-Martin Marietta merger on the theory that the consolidated firm could lower prices by reducing overhead. Needless to say, this did not happen. I’m intrigued at what would happen if some of the mergers were undone, at least to a degree. But sometimes competition in defense can be gamed as well — in the 1980s there was a scandal called “Operation Ill Wind” in which under the guise of creating competition a bunch of fake firms were created to enrich people inside and outside the Pentagon. That’s an extreme case, of course. But I’d like to see a study of the impacts of trimming back some of the big firms to create more competition — there are legal, technical, and economic issues that would all have to be addressed.

john in sacramento January 16th, 2011 at 2:52 pm

If this isn’t in your book maybe it can be in your next one

Lockheed Martin Costs Each U.S. Taxpaying Household $260 Per Year

And, this reminds me

Indeed, Lockheed has also had some notable successes, like the U-2 spy plane, a complex technological challenge that the company’s secretive Skunk Works division completed under budget. The U-2, as Hartung acknowledges, played a significant role in proving that the United States was overestimating Soviet military capabilities (even if that revelation did little to change the course of the arms race).

When I lived in Palmdale, my place was about two miles South (East ave Q) of Plant 42 and the Skunkworks, and I used to see B-2′s and F-117′s all the time. They looked like giant flying bats

CTuttle January 16th, 2011 at 2:53 pm

Aloha, Bill and Sharon…! With Lockheed’s take over of Martin Marieta do you think they’ll ever clean up Rocky Flats…? Speaking of Denver…

William Hartung January 16th, 2011 at 2:56 pm
In response to lareineblanche @ 41

The biggest form of outsourcing probably comes from the practice of providing “offsets” to foreign countries that buy U.S. weapons. Under an offset arrangement, a company like Lockheed Martin will give back some work to the purchasing country (maybe by letting them build key components, or even by investing in other, non-defense aspects of their economy). There is an increasing tendency to use foreign suppliers in the production of fighter aircraft (F-16s produced in ten or more countries — or at least parts thereof, F-35s to be produced in 18 or more — again pieces, not the whole). But final assembly still happens in the U.S., as does most R&D. So the arms industry may still be somewhat than others, but it is becoming more international over time.

William Hartung January 16th, 2011 at 2:57 pm

Actually, the $260 per taxpaying household number is from my book. Glad to see it is being covered elsewhere.

William Hartung January 16th, 2011 at 2:59 pm
In response to CTuttle @ 51

All of the former nuclear weapons sites are such disasters that it is hard to know what a good cleanup would look like; but the government generally takes the lead in pressing the contractors to do the clean up work, so that’s probably the real pressure point in trying to get these things done.

Jane Hamsher January 16th, 2011 at 2:59 pm

I ask because I was reading the part about the battle over the VH-71 with Sikorsky Helicopters. Sikorsky was making the argument that they should get the contract because the President shouldn’t be flying around in a foreign-made helicopter, and those jobs should go to Americans.

If other companies are willing to challenge Lockheed’s contracting dominance, it seems like it could have a serious impact on the number of contracts that the government actually enters into. For example, you cite the way in which Lockheed virtually guaranteed its market for the F-35 by pushing for an expansion of NATO, traveling to new NATO partners and pushing the F-35, then arranging for 100% loans from the government to finance them that didn’t have to begin being paid back for 8 years.

It doesn’t seem like too much of a stretch to think that Lockheed would not have used its lobbying might for any portion of that if they did not believe that they would get the contracts. They successfully push for policies that will guarantee nothing more than the expansion of their own market, and the public seems quite powerless to counter that.

Sharon Weinberger January 16th, 2011 at 3:00 pm
In response to CTuttle @ 51

Any clean up at Rocky Flats would be under the control of the Energy Department (and Interior). Lockheed, or any company, would only be involved in clean up if tasked by the government.

Jane Hamsher January 16th, 2011 at 3:01 pm

Your description of the way Norman Augustine got taxpayers to subsidize his mergers is one of the biggest scams I’ve ever read about. You have to admire his sheer gall. Who would even imagine such a thing.

Sharon Weinberger January 16th, 2011 at 3:01 pm

You discuss the revolving door in your book — the phenomenon of industry officials going into government positions and vice versa. There was also a really marvelous piece about this in the Boston Globe recently. How much influence do you think it has on a Pentagon official or military officer, when they make decisions about buying weapons or giving contracts, that some day they will be on the job market and Lockheed (or any other defense company) is a potential employer?

William Hartung January 16th, 2011 at 3:04 pm
In response to Jane Hamsher @ 55

Part of what I hope will eventually create a counter-weight to a company like Lockheed Martin so doggedly pressing for policies like NATO expansion that end up lining their pockets is more transparency, and more media attenton. Not easy to do, but worth doing. The complicating factor in many of these cases is that there are multiple causes (e.g., the Clinton administration had its own political take on the need for NATO expansion independent of Lockheed Martin’s interest in it). It would also help if there were more independent think tanks tracking these things. When the Democratic founder of the Center for a New American Security was quizzed by Sen. Jim Webb about the implications of his organization receiving money from Lockheed Martin and other contractors part of his argument was that everybody else does it. A little contractor money may not pre-determine all the work of a place like that, but it may have a subtle or not-so-subtle effect of steering them away from making major critiques of the implications of the actions of a company like Lockheed Martin.

Gitcheegumee January 16th, 2011 at 3:04 pm

Good afternoon.

By any chance do you profile the extremely lucrative connection between Saudi Arabia and Lockheed?

i.e.:

Lockheed Martin signs $40 million Saudi deal – BusinessWeekMay 20, 2010 … Defense contractor Lockheed Martin said Thursday it signed a $40 million contract to deliver more Sniper Advanced Targeting Pods to the …
http://www.businessweek.com/ap/financialnews/D9FQPAKG0.htm – Cached

World Tribune — Lockheed Martin training thousands to guard Saudi oilAug 28, 2007 … NICOSIA — Lockheed Martin has been selected to lead a multi-billion-dollar project to protect the oil sector of Saudi Arabia in one of the …
http://www.worldtribune.com/worldtribune/…/me_oil_08_27.asp – Cached – Similar

William Hartung January 16th, 2011 at 3:05 pm

That’s what I was trying to get at. You said it much better (and more informatively!).

William Hartung January 16th, 2011 at 3:06 pm
In response to Gitcheegumee @ 60

Historically, yes, with respect to its use of Adnan Khashoggi as its agent and the deals that flowed from that. But not as much up to the moment, as with their role in the record $60 billion arms deal with the Saudis (Boeing got the biggest piece, but Lockheed Martin came in second).

William Hartung January 16th, 2011 at 3:09 pm

I think it has to have a role,knowing that one may well go work for the company that one is supposed to be keeping an eye on as a government employee. The extreme cases include Darleen Druyun, who did jail time for favoring Boeing while she was in the Pentagon, even as she was simultaneously negotiating a job with them. In most cases it would be more subtle, but I can’t believe it wouldn’t have a psychological effect, if not driving outright favoritism.

Jane Hamsher January 16th, 2011 at 3:11 pm

I believe you are talking about Kurt Cambell, who was quizzed by Webb during his confirmation hearing for a position in the Obama administration as Undersecretary of Defense for Policy.

As you say (p. 214):

Campbell’s assertion that CNAS never talks about weapons systems hasn’t held true. In a February 2010 report, “Arsenal’s End: American Power and the Global Defense Industry,” author Ethan Kapstein advocates for high Pentagon weapons budgets for items like the Lockheed Martin’s F-35, even as it absolves the company of any responsibility for cost overruns on the system. It’s hard to imagine a better analysis from Lockheed’s point of view. And while the report came out after Campbell left CNAS, it represents the kind of analysis that he implied would never be done by the organization.

Ye olde revolving door from defense-industry funded think tank to government post is alive and well.

William Hartung January 16th, 2011 at 3:11 pm
In response to Jane Hamsher @ 57

A guess that one person’s gall is another’s business strategy! Augustine was a particularly smooth operator, but he also could inspire fear (as evidenced by the fact that a lot of people stood down from criticizing the merger subsidies — folks like Lawrence Korb and then Rep. Bernie Sanders seemed to be the only ones that made major noise about it at the time it was happening.

CTuttle January 16th, 2011 at 3:11 pm

Having served 20 yrs in the Army(’85-’05) it was astonishing to see the sudden reliance on PC’s for ‘beans and bullets’…! Then, the utter decimation of our elite forces, being sapped by Xe/Dyncorp/CCC, ad nauseum…!

Gitcheegumee January 16th, 2011 at 3:11 pm

Thank you.

I find it extremely interesting that BAE-who is entertwined with the Saudis,(i.e.Al Yamamamah) bought one of Lockheed’s entities back in 2000.

. In November 2000 BAE Systems purchased Lockheed Martin Aerospace Electronic Systems, a defence systems company which encompassed Sanders, Fairchild Systems and Lockheed Martin Space Electronics & Communications. Following an internal reorganisation the division became BAE Systems Electronics & Integrated Solutions (E&IS). This acquisition was described by John Hamre, CEO of the Center for Strategic and International Studies and former Deputy Secretary of Defense, as “precedent setting” given the advanced and classified nature of many of that company’s products.[4]

Wiki

PeasantParty January 16th, 2011 at 3:13 pm

William, can they sell their planes and other arms to places like Saudi Arabi, India, Pakist, etc. without consulting our Government? I am asking because some members of my military family say they are being shot at with American equipment.

sadlyyes January 16th, 2011 at 3:14 pm
In response to eCAHNomics @ 17

ugly ass looking chart imo

William Hartung January 16th, 2011 at 3:14 pm
In response to Gitcheegumee @ 67

It’s hard to tell the players without a scorecard in the defense business. After the big merger boom of the 1990s there is still alot of buying and selling back and forth of smaller units. Lockheed Martin has put its PAE unit — the one doing some of its more bizarre soft power work — on the auction block. Don’t think they’ve sold it yet, but conceivably another big contractor could pick up that business line.

CTuttle January 16th, 2011 at 3:15 pm
In response to PeasantParty @ 68

The Israelis sell our American arms to ‘em…! 8-(

PeasantParty January 16th, 2011 at 3:17 pm
In response to CTuttle @ 71

:-( Waaaaaaaaa!

William Hartung January 16th, 2011 at 3:17 pm
In response to PeasantParty @ 68

All major arms deals have to be reported to Congress, and in theory Congress can veto them on foreign policy or human rights grounds. But in reality, this has never been done (at least not directly; occasionally Congress will jaw bone the executive branch and get them to change the terms of a given deal). Smaller deals have to be licensed by the State Department or the Commerce Department. But we could clearly use stronger government oversight. State Department licenses are too often routine, and deals like the recent $60 billion sale to the Saudis sail by with minimal Congressional oversight (not even a hearing, for example).

Jane Hamsher January 16th, 2011 at 3:17 pm

Bill, you got into some discussion of the black budget, but I’d like to know more about how big you think it is, and how much of a role Lockheed plays in it.

It seems like the upcoming debt limit fight is going to have a lot of people talking about what exactly annual US spending is, but the government has refused to respond to FOIA requests about it. I’ll throw it out to both Bill and Sharon — what can you tell us on this front?

CTuttle January 16th, 2011 at 3:20 pm

…(not even a hearing, for example)…

It’s only the largest Arms Deal ever…! 8-(

William Hartung January 16th, 2011 at 3:20 pm
In response to Jane Hamsher @ 74

The Center for Strategic and Budgetary Assessments has done a guesstimate that the black budget accounts for about 15% of procurement spending, but as you suggest, no one outside a few people in the relevant agencies really knows. Perhaps for early stages of R&D it might make some sense, but it seems to me it would be a great public service to acknowledge how large the black budget is.

Jane Hamsher January 16th, 2011 at 3:21 pm

I have thoroughly enjoyed this, Bill and Sharon. Thank you both so much for being here today. I hate to dash, but I have to catch my next plane. I’ve only got 10 or 12 pages to go in the book so I’ll read them sloooowly and enjoy them on the last leg of my trip.

The pages are filled with underlines and notes in the margins, so I hope to be able to put what I’ve learned to good use in the upcoming budget debate. Thank you so much for writing the book Bill, I found it fascinating. And I encourage everyone to read it.

lareineblanche January 16th, 2011 at 3:21 pm

Excellent discussion, thanks

William Hartung January 16th, 2011 at 3:22 pm
In response to lareineblanche @ 78

More questions welcome!

William Hartung January 16th, 2011 at 3:25 pm
In response to CTuttle @ 75

There was a letter from some members raising questions about the Saudi deal, but that’s about it. Congress only gets 30 days to weigh in on a major sale, sometimes with an informal notice earlier. It’s really up to folks on the foreign relations or armed services committees to take a closer look (although having a gadfly from outside those circles would be welcome!).

Sharon Weinberger January 16th, 2011 at 3:28 pm

Someone asked about the “black” — or classified — budget, which is such a great area for discussion. From the standpoint of oversight, do you think the U.S. still benefits from cloaking technology in secrecy, or does the lack of public oversight do more harm than good? And how much do we know about Lockheed’s current classified projects?

dakine01 January 16th, 2011 at 3:29 pm

Bill, with all the discussion about the DoD procurement problems so far, I am also interested in why and how Lockheed decided to go into State and Local Government efforts.

Do you think they just assumed that the same rules as DoD would fly with the states or was it a true attempt to diversify? My experiences with them, they really didn’t bring anything positive to the table as a prime but just added overhead.

(As I mentioned up top, I worked under a Lockheed prime contract on the CT SACWIS where my employer did the actual development and testing as a sub. Lockheed dropped out after that on though and my employer took the application to other states)

Gitcheegumee January 16th, 2011 at 3:29 pm

I have often pondered just exactly WHAT is in that black bag,er, I mean black budget. Who really knows what’s “off the books”?

Speaking of which, Lockheed in all probablity has benefitted from this as have-and still do-no doubt,many others:

http://www.businessweek.com/bwdaily/dnflash/may2006/nf2…

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. It couldn’t be immediately determined whether any company has received a waiver under this provision.

The timing of Bush’s move is intriguing. On the same day the President signed the memo, Porter Goss resigned as director of the Central Intelligence Agency amid criticism of ineffectiveness and poor morale at the agency. Only six days later, on May 11, USA Today reported that the National Security Agency had obtained millions of calling records of ordinary citizens provided by three major U.S. phone companies. Negroponte oversees both the CIA and NSA in his role as the administration’s top intelligence official.

William McLucas, the Securities & Exchange Commission’s former enforcement chief, suggested that the ability to conceal financial information in the name of national security could lead some companies “to play fast and loose with their numbers.” McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr in Washington, added: “It could be that you have a bunch of books and records out there that no one knows about.”

CTuttle January 16th, 2011 at 3:30 pm

What is the latest Black Budget… $85 Billion…? Seriously, It is spooky what we shell out to the Pentagon, as famously noted, Rummy, on 9/10/01 was presented a report on $2 Trillion being unaccounted for…

wendydavis January 16th, 2011 at 3:31 pm

Not a question, Mr. Hartung, and I have only read the online piece you had up at Tomdispatch, but I was a)astounded at the research you must have done for the book, and b) I appreciated the shivers that your writing engendered. The final sentence was somethin akin to: There is no governmental activity that is beyond Lockheed’s reach.

It’s crazy-making to think the corporation/megalopoly can have so much potential influence on so much data collection and analysis.

William Hartung January 16th, 2011 at 3:31 pm

On balance, I think much of the black budget could be made public without harming our security. I didn’t dig much into LM’s secret projects — hope to do so as a follow-on to the book. I feel like there are some areas of the company’s activities where I have just scratched the surface . . .

Starbuck January 16th, 2011 at 3:35 pm

William, good you are here.

Kind of late myself, but had to post.

I haven’t read the book, and normally I don’t post except perhaps to ask a question as a result of a specific post.

I had some experiences with some of the higher up management of Lockheed years ago, as I attended a workshop to which they also attended.

They scared me. Not heavy fear, but the flag went up and it didn’t take long to realize they thought I was someone to ignore and they were in charge. And that was during lunch! The air was heavy with arrogance, maybe hubris would be a better word. Spoiled lunch, like having the door to the refuse containers open to the lunch room.

I had considered that company as a possible source of contract work, but I kept strictly to myself, ignoring that whole part of the interactions.

William Hartung January 16th, 2011 at 3:35 pm
In response to dakine01 @ 82

I think Lockheed Martin thought it could handle state and local government services in a similar fashion to its Pentagon work. In Texas, for example, it hired a number of then Governor George W. Bush’s top aides — including the one who had drafted the state’s welfare privatization law — to help its drive to win a bid to run public services in the state. And it picked up a lot of other heads of state social service agencies to help it garner business. It had mixed results at best, with a number of computer glitches in key programs providing things like foster care payments or tracking down “deadbeat dads” and a few real disasters. The Texas Service Employees union did an ad during the Lockheed Martin bid that said something along the lines of “do you want the company that gave us the $600 toilet seat to run public services in Texas?” It may not have been that bad, but I think you’re right that they mostly added another layer of overhead.

CTuttle January 16th, 2011 at 3:35 pm

Will ya tackle Halliburton/KBR next…? Pretty please…? ;-)

Starbuck January 16th, 2011 at 3:36 pm
In response to dakine01 @ 82

You and I would have gotten along fine! After reading post#16, that became obvious!

William Hartung January 16th, 2011 at 3:37 pm
In response to CTuttle @ 84

Don’t have even a ballpark number that I can document, but I’m sure the black budget is in the tens of billions.

William Hartung January 16th, 2011 at 3:39 pm
In response to wendydavis @ 85

I was amazed by that myself. Really thought of them as mostly a weapons company that also did some work on homeland security and for the intelligence community (as if that weren’t enough!).

William Hartung January 16th, 2011 at 3:40 pm
In response to CTuttle @ 89

There are some good books on Halliburton, such as Pratap Chatterjee’s Halliburton’s Army. But these firms are moving targets, so someone should probably at least to a follow-up investigative piece.

CTuttle January 16th, 2011 at 3:41 pm

Speaking of ‘software glitches’ why aren’t they being truly held accountable for them…? It’s insane how they bolluxed up so many, yet, still receive the lion’s share…

William Hartung January 16th, 2011 at 3:44 pm
In response to CTuttle @ 94

Good question. I think part of it has to do with the nature of outsourcing. Government outsources, then doesn’t have the skills to take the work back if needed, or even evaluate what is going wrong adequately. But there are other companies out there; Lockheed Martin just lost a big NASA contract to Hewlett Packard, and some analysts think that defense companies may start losing out on some of these IT awards in favor of more traditional suppliers. We shall see . . .

lareineblanche January 16th, 2011 at 3:48 pm

Of course!
You wrote in your Jan 12 article for the Le Monde Diplo :

Much as in the Iran/Contra scandal of the 1980s, when Oliver North set up a network of shell companies to evade the laws against arming right-wing paramilitaries in Nicaragua, the Army used Lockheed Martin to do an end run around rules limiting U.S. military and intelligence activities in Pakistan

I guess what interests me most is the way the Pentagon / DoD is using private corporations (as outlined in the work of Shorrock , Scahill , Priest and others) in order to circumvent policy. It is a growing problem, and the collusion of the ideas of “defense” and domestic “surveillance”. It seems the Pentagon has become a “black site” hub for funneling taxpayer money into programs which citizens would normally object to, so it seems to be a much broader problem.

PeasantParty January 16th, 2011 at 3:48 pm

William, as a publicly traded corporation do they keep separate books for just R&D? I know the black budget is there, but is that where the R&D is? The CIA has it’s own black budget, don’t think it is covering up R&D so much as other clandestine ops.

William Hartung January 16th, 2011 at 3:49 pm

Let’s treat this like a telethon. See if we can get over 100 interactions with about ten minutes to go — we’re at 94 now . . .

dakine01 January 16th, 2011 at 3:50 pm

Of course we can hit 100!

Starbuck January 16th, 2011 at 3:51 pm

100!

William Hartung January 16th, 2011 at 3:52 pm
In response to lareineblanche @ 96

I agree, it is a much broader problem. Hard to uncover early enough to make a difference (as opposed to after the fact when some of the damage has already been done). My hat is off to Tim Shorrock, who has done some of the best work in this area. And the new information revealed by Dana Priest and Bill Arkin is critical.

CTuttle January 16th, 2011 at 3:52 pm

*heh* Okay…

Where is LM’s corporate HQ…? Another words did they off shore it to Bermuda or Dubai…?

Gitcheegumee January 16th, 2011 at 3:53 pm

On April 21, 2005, Savi Technology, Inc., then a private company, created Savi Networks LLC, a new joint venture company, with Hutchinson Ports Holdings to install active RFID (Radio Frequency Identification) equipment and software in participating ports around the world and to provide users with the information, identity location and status of their ocean cargo containers as they pass through such ports.

Tom Ridge, the first secretary of the U.S. Department of Homeland Security, joined the Savi Technology board April 5, 2005, just prior to the deal.Savi Networks was capitalized at $50 million from the joint venture partners. Savi Technology holds a 51 percent interest in Savi Networks while HPH holds the remaining 49 percent.

On the same day, April 21, 2005, HPH made a concurrent $50 million investment in Infolink Systems, Inc., the parent company of Savi Technology, which provided HPH with 10 percent of Infolink on a fully diluted basis.

On May 4, 2005, GlobeSecNine, made a $2 million strategic investment in Infolink Systems, Inc., the parent company of Savi Technology.

On June 8 of this year, Lockheed Martin acquired Infolink Systems, Inc., thereby acquiring Savi Technology, Inc.
A spokesperson for Lockheed Martin confirmed that the HPH interest in the joint venture subsidiary, Savi Networks, survived the acquisition of Infolink by Lockheed.

GlobeSecNine’s chairman of the board is Brent Scowcroft, who served as national security adviser to Presidents Reagan and George H. W. Bush. He also was chairman of President George W. Bush’s Foreign Intelligence Advisory Board from 2001 to 2005. From 1982 to 1989, Scowcroft also served as vice chairman of Kissinger Associates. ~~WND

NOTE: Conflict of interest much?

William Hartung January 16th, 2011 at 3:55 pm
In response to PeasantParty @ 97

There is some accounting for R&D, but I’m not sure how accurate it is; in the Pentagon, R&D can go pretty far along in the process (building prototypes, etc.), so don’t know how the company would represent that. As for where the black budget is hidden (assuming it is hidden within existing categories as opposed to totally off the books), there is so much R&D and Operations and Maintenance funding in the Pentagon that there would be room to hide a fair amount.

BevW January 16th, 2011 at 3:55 pm

As we come to the end of this great Book Salon,

Bill, Thank you for stopping by the Lake and spending the afternoon discussing your new book and Lockheed.

Sharon, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:
Bill’s website and book

Sharon’s website and books

Thanks all,
Have a great week!!

William Hartung January 16th, 2011 at 3:55 pm
In response to CTuttle @ 102

Bethesda, not Bermuda . . .

William Hartung January 16th, 2011 at 3:56 pm
In response to BevW @ 105

Sharon, thanks so much! And Bev, thanks for the chance to do this . . .

PeasantParty January 16th, 2011 at 3:56 pm
In response to Gitcheegumee @ 103

None, not a thing to see. Oh,Look over there. There is a bright light in the sky. Birds are falling to the ground and nobody knows why!

Sharon Weinberger January 16th, 2011 at 3:56 pm

Bill, thanks for the great discussion. Sharon

PeasantParty January 16th, 2011 at 3:57 pm

Thank you so much. Very Enlightening!

Gitcheegumee January 16th, 2011 at 3:59 pm

Thanks to all who made this informative interlude possible…especially Mr. Hartung.

I learned much.

CTuttle January 16th, 2011 at 4:00 pm

*heh* True patriots, eh…?

Mahalo Nui Loa for all your efforts…! *g*

Please don’t be a stranger…! The Lake is as deep as it’s wide…! ;-)

Beerfart Liberal January 16th, 2011 at 4:02 pm

didn’t aska question but it was great to sit thru. yesterdays book salon was great too. good weekend.

nahant January 16th, 2011 at 4:04 pm

Hey Bill haven’t read your book/s but sure have enjoyed the conservation here this afternoon. Thanks for educating all of us.. And please keep up the prying for the truth and bringing it to light…

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