Tuesday, July 13, 2010

Why defense industry lobbyists are so damn likeable!

The Joint Strike Fighter (aka F-35) is the most expensive U.S. defense buy in history. By the time the whole shooting match is over, the Defense Department will have procured around 2,500 of the aircraft, to be fielded by all services but the Army, at a total cost of nearly $400B. (Recent projections say $112M per plane for a total of $382B, a figure that's 65% higher than the 2002 estimate.)

You may have heard that there's a little legislative tussle going on over whether the JSF needs a second engine program. The Defense Department says no. (Unsurprisingly, it's joined by Pratt & Whitney, the manufacturer of the engine that was selected when the program was originally competed.) A whole bunch of members of Congress (plus GE and Rolls-Royce, who lost the original competition), along with defense industry shills in the think tank world, say yes. In fact, the House slapped the extra engine (called the F136) into the defense authorization bill, then defeated an amendment that would've stripped that language out by a 231-193 vote. The White House has threatened a veto if the F136 provisions don't come out when the House and Senate authorization bills are conferenced, but the Hill seems confident.

I tell you all of this as prelude to the point that I really want to make, which is this: the defense industry, the lobbyists, marketeers, pollsters, and who work for them, and the think tank "professionals" who pimp themselves out to industry in pursuit of their ideological conviction that bigger defense budgets are always better... are all acting like assholes. Why don't we look at a few examples?

Anyone who reads the blog or follows me on Twitter will have sorted out by now what I think about the alternate engine program. But this isn't really about that. Let me prove it to you by first talking about the most recent bitch move taken by a participant in this little political drama: poll data commissioned by Pratt & Whitney. Here's a blurb from today's edition of Mike Allen's Playbook:
The new "bridge to nowhere"? -- Pratt & Whitney allies will distribute research on the Hill today arguing against an alternate engine for the Joint Strike Fighter: "Voters in the 19 districts surveyed have decidedly negative feelings about Congress spending $3 billion on an extra jet engine when explained the circumstances, especially when they learn that the engine is opposed by the nation’s top military leaders for being wasteful and unnecessary."
(To be clear, by "Pratt & Whitney allies," he means Pratt & Whitney's lobbyists.)

Why don't we take a look at the poll results (pdf), commissioned by Pratt & Whitney and prepared by Clarus Research Group? Here's how the results of the "research" are introduced:

OVERALL TAKE-AWAY: Voters in the 19 districts surveyed have decidedly negative feelings about Congress spending $3 billion on an extra jet engine when explained the circumstances, especially when they learn that the engine is opposed by the nation’s top military leaders for being wasteful and unnecessary. Views expressed on the specific issue are clearly aggravated by, and must be understood within, the current political context in which voters believe that a massive amount of federal spending is wasted and that well-connected companies and special interests benefit from Congressional earmarks at taxpayers’ expense.
I for one am shocked that individuals would oppose spending deemed "wasteful and unnecessary" by "the nation's top military leaders," especially in the "current political context in which voters [presumably the same voters that are being asked these questions] believe that a massive amount of federal spending is wasted"!

Seriously, can you believe that shit? If that's not enough, let's look at the polling data a little more closely.
The survey found that 87% of voters agree with the statement: “If America’s military leaders at the Pentagon determine that a multi-billion dollar defense contract with a private company is wasteful and unnecessary, Congress should NOT spend the money.”
Only 87%?! Because I'd like to find the other 13% and punch them in the face. But really, when your interlocutor makes an argument from authority, throws out terms like "multi-billion" to people who probably don't have much sense for exactly how expensive defense procurement is, and then tells you that "America's military leaders at the Pentagon" -- another argument from authority, considering that no one wants to disagree with a general about what the troops want or need -- have determined that the program is "wasteful and unnecessary," how can you expect anybody to disagree? In a courtroom they call that a leading question (or maybe just in 7th grade mock trial; I'm not a lawyer or anything).

So who the hell are those 13% who disagree with that statement and think the money ought to be spent? Well, if you listen to the pollsters, those are just retards who didn't understand the question, or weren't asked forcefully enough. After all, among those who said initially that they support the extra engine:
  • 35% to 41% of them say they are less inclined to support it when they learn that "President Obama, former President Bush, Defense Secretary Robert Gates, and the country’s top military leaders are all opposed to spending the money for this extra jet engine because they say it is unnecessary and wasteful.”
  • 56% to 61% of them say they are less inclined to support it when they learn that “many of the jobs the manufacture of the extra jet engine would create would be in Great Britain, because Rolls Royce is a British company.”
  • 57% to 61% of them say they are less inclined to support it when they learn that “GE and Rolls Royce already have large government contracts and are spending millions of dollars on lobbyists and advertisements trying to put pressure on members of Congress to approve the extra jet engine they would profit from.”

So if instead of just saying "senior leaders at the Pentagon," you actually spell out who the senior leaders are, more than a third of those 13% will abandon their support. More than half will give up the extra engine if you make it clear that it's going to be built by dirty furriners. And a similar number can be cowed into agreement if you tell them that a dirty, dirty defense contractor is trying to exploit the gentle voter's innocent, unknowing support by pressuring Congress in order to enrich themselves. Easy!

But here's my favorite part: the conclusion.

Support for the extra jet engine is more likely to hurt Congressional incumbents seeking re-election than help them: To assess the bottom-line political impact of the issue, the following questioned was asked at the end of each survey interview: “If your member of Congress voted to spend the three billion dollars for this extra jet engine, would you be more or less inclined to support him or her for re-election in this November’s election?” The result: 7% more inclined, 67% less inclined, 13% volunteered it would make no difference.

So these nice, complicit pollsters are ready to give Pratt & Whitney exactly what they need: assurances to Congress that this goofy F136 business, which looks like it might help get them elected, is actually going to kick them in the ass, so why don't they just go ahead and give up on this nonsense already and oppose the extra engine?!

It's impossible to overstate just exactly how noteworthy it is for this polling data to get linked by Mike Allen, perhaps the most influential Inside-Baseball political reporter in Washington, in the most influential daily political digest, in a paragraph that leads with an invocation of a senseless spending fiasco from times past: the "bridge to nowhere."

And now for the other side. I've already taken up a whole bunch of your time, and you're probably bored with the subject of acquisition and defense spending anyway, so I'm going to be brief. Fortunately, Pratt & Whitney's competitors at GE and Rolls Royce have misrepresented reality in such an unbelievably egregious fashion that this can pretty much be summed up with just one image.

Click on the image for a bigger version, but yeah, you're reading that correctly: "LET'S COMPETE: GE and Rolls-Royce are building the F136 engine for America's next fighter jet. But some want to hand a $100 billion monopoly to a sole contractor. At a time of record budget defecits, competition is more important than ever for taxpayers and the military."

Now, one might fairly argue that the competition is already over, that the other guys won, that the "sole contractor" approach is pretty much generally how these things go once one side has already won the competition for the contract, that the taxpayers can't really afford nearly $3B in extra spending on an unnecessary piece of redundant gear, and that GE and Rolls-Royce aren't "building the F136 engine for America's next fighter jet" because they already lost the competition for the right to do that... but I figure you guys can sort that one out for yourselves.

F the defense industry, man.

8 comments:

  1. Amen. The last line is the headline.

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  2. Drive on Brother Gulliver.

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  3. Is there any talk of breaking up the defense industry in the same way that we broke up AT&T? The lack of competition has been recognized as a problem for quite a while. Even before 9/11, when military budgets were less absurd, some in the DoD bureaucracy encouraged EADS to make more attempts to win defense contracts due to lack of competition in the US.

    I'm guessing the recent Airbus refueling tanker debacle probably left them with a bad taste in their pie-holes - though some of us who cynically purchased stock in anticipation of that nutroll are now very pleased :-)

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  4. That poster thing really does leave a kind of nasty taste in the mouth.

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  5. Schmedlap -- Is there any talk of breaking up the defense industry in the same way that we broke up AT&T? The lack of competition has been recognized as a problem for quite a while.

    Part of the difficulty with this is that as weapons systems have become increasingly complex, the barriers to entry into the industry have gotten higher and the sector has consolidated.

    That consolidation came largely as a result of a very well-intentioned effort by the Department to get better value for money and stop paying significant overhead. Here's a link with some details on what's now referred to as "the Last Supper," the 1993 come-to-Jesus between senior officials in the Department and defense industry CEOs.

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  6. Here's the nuts:

    In the briefing, it was pointed out the Defense Department was supported by five contractors providing surface combatants, but could afford to sustain only two; that it was provided rocket motors by five contractors, but needed only two; that it was provided bombers by three contractors, but needed only one; that it was provided submarines by two contractors, but needed only one; and so forth.

    Ironically, no one seemed particularly concerned at the time. CEOs, being CEOs, each logically assumed that they would be the “one.” Secretaries Perry and Deutch concluded the meeting by making it abundantly clear the Defense Department was not going to solve industry’s overcapacity problem — that would be up to those of us in the audience. But they did assure us the DoD would strongly support industry consolidation and approve financial arrangements that benefited companies as long as they also significantly benefited the government.

    The rest is history. General Electric Aerospace merged with Martin Marietta, which combined with Lockheed. McDonnell Douglas joined Boeing. Grumman joined Northrop. When the dust had cleared, there were only a few firms left standing.

    Was this good? To answer that question, one must consider the alternatives. Clearly, 10 healthy contractors is preferable to nine healthy contractors, which in turn is better than eight. Unfortunately, that was not among the options. The choice was to have a large number of relatively weak competitors or a small number of healthy competitors.

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  7. anyone consider doing away with the defense contracting industry?

    Hire all the engineers, developers, etc. directly and do away with private companies over-charging the taxpayer and lobbying members of Congress to continue wasteful projects.

    If the government is the only hirer in town, all the best talent would compete for the jobs, so we'd have the best guys working to develop all these projects instead of companies just looking to make a buck.

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  8. Anon @ 0038 -- anyone consider doing away with the defense contracting industry?

    No, not really, because there are a whole bunch of negative side effects (and that's leaving aside the optics of the whole thing, government control of industry, command economy, etc.).

    The U.S. defense industry used to be based on an arsenal system, that is, the government owned the armaments factories and employed arms makers. We moved away from that for a number of perfectly good and understandable reasons, most notably because 1) the government depots and arsenals couldn't keep up with production demand during wartime, and 2) in a general sense, competition allows for a better product at a lower cost, and with lower risk.

    The problem with your idea is that government is NEVER the only job in town. People would go work in different industries. That's the threat already when people start talking seriously about significant program cuts: "but we'll lose all our specialized workforce when this production line shuts down!" (Just read the aerospace lobby's papers on the issue.)

    Everybody wants to make a buck. It's the basis of our economy. And let's be clear: there's absolutely nothing wrong with that. The problem is when we develop a system and a process that fails to reward innovation, performance on schedule and below cost, development of a better product, etc etc.

    Basically the answer to your question is the balance sheet between capitalism and command economy.

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