Budget Talks Have Major Defense Contractors on Edge

by , August 26, 2011

When an expensive unmanned aircraft built by Lockheed Martin Corporation, a U.S. defense contractor, disappeared during a U.S. military test flight off the Pacific coast earlier this month, the debacle raised eyebrows.

The incident also raised criticism that the U.S. government is spending millions on hefty defense contracts to pay for technology that does not work. 

The experimental craft was designed to travel at 20 times the speed of sound and be able to attack targets anywhere on earth within 60 minutes. Part of a defense department program named "Prompt Global Strike" that has cost about 320 million dollars – this was only the aircraft’s second flight. 

But Lockheed Martin, the world’s largest defense contractor, held a press briefing here Wednesday to defend its technology and responded to speculation that a congressional super-committee, appointed in August to identify areas for federal budget cuts, might take a red pen to defense spending. 

While company executives did not address the test flight incident, they did reassure reporters that the company’s missile defense programs are cutting-edge and that they are "affordable" – a word executives used several times during the briefing. 

According to the Arms Control Association, the U.S. spends about 10 billion dollars on missiles systems annually, which includes spending on missiles as well as satellites, communication, research, and anti- missile technology. 

Company executives told reporters that Lockheed Martin has actually saved the U.S. government hundreds of millions of dollars since 2006 by selling its PAC-3 missile defense technology – an interceptor missile the U.S. also buys – to Taiwan, Japan, the Netherlands, Germany, and the United Arab Emirates, a move Lockheed said reduced its production costs. 

Designed to intercept targets in mid-air, the technology is also slated for use in the Medium Extended Air Defense System (MEADS) program, a design-stage missile defense program paid for by Germany, Italy, and the United States, managed by the North-Atlantic Treaty Organization and developed by an industry group led by Lockheed Martin

In March, the U.S. defense department said it will continue to foot its 58 percent share of the bill to develop the MEADS program, at a cost of over 800 million dollars until 2013, even though it plans to exit the tri-national deal before the technology is up and running

The Pentagon has already spent 1.5 billion dollars on MEADS. Through the arrangement, Lockheed Martin executives said Wednesday that the U.S. would retain intellectual property (IP) rights to the technology that it will be able to "harvest" in the future. 

But critics have questioned not only whether spending so much money on technology developed by private defense contractors is worth the money, but whether the science behind the technology is sound. 

Nick Schwellenbach, director of investigations for the Washington-based government watchdog group Project On Government Oversight (POGO), said defense contractors often provide the scientific information governments use to evaluate such technologies. 

"These contractors are seen by the government as having scientific and technical expertise, especially since the government has largely gutted itself of its own scientific and technical expertise," Schwellenbach told IPS. 

"The government is especially reliant on contractors to tell it what works and what doesn’t, to provide data and then do analysis of the data," Schwellenbach said. "Basically contractors have a lot of power to help steer government decision-making regarding major weapons programs"

Schwellenbach said that the positive outlooks presented by contractors could influence government missile defense policy and spending. 

"Year after year we have dismal performance by Lockheed Martin," Schwellenbach told IPS. He said issues with the company included cost and schedule overruns on multiple contracts. Lockheed Martin holds the number one ranking at the top of POGO’s Federal Contractor Misconduct Database. "If the cost overruns and schedule delays were minor they could be overlooked – sometimes these contracts double in expense. Sometimes these weapons don’t even work." 

Schwellenbach said there are independent groups, such as the Union of Concerned Scientists, which can offer contrary opinions on such missile defense systems. The group, an independent, non-profit composed of citizens and scientists, has been critical of missile defense technology. 

"Tax payers have ponied up tens of billions of dollars and we still don’t have a system that works," Schwellenbach told IPS. He said there has never been a realistic test of the missile defense system. "Essentially, you are trying to get a bullet to hit a bullet." 

William Hartung, director of the Arms and Security Project at the Center for International Policy and author of ‘Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex’, said talks of defense budget cuts have private defense contractors like Lockheed Martin alarmed. 

"In contrast to the last decade or more… the days when the money was flowing easily and they could get everything they wanted are definitely coming to a close," Hartung told IPS. 

However, Hartung said Lockheed Martin had plans to bid on a contract worth billions of dollars to build ground-based missile defense silos in Alaska and at the Vandenberg Airforce Base in California – a project that could continue for many more years. 

The U.S. Department of Defense frames the need for the project around the idea of a threat from North Korea, but Hartung said North Korea didn’t have missiles strong enough to reach the U.S. 

"If (North Korea) attacked the United States it would be terrible but it would not undermine the U.S. ability to retaliate and destroy North Korea," Hartung told IPS. "It would be suicidal for North Korea to do that." 

Referring to the fact that the U.S. has justified its defense programs through fear mongering he added, "There is a lot riding on the notion that North Korea is an emerging threat."

(Inter Press Service)