[Salon] DEFENSE-CONTRACTING TRIFECTA Takes a licking, but keeps on ticking

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February 2, 2022 Washington, DC

DEFENSE-CONTRACTING TRIFECTA
Takes a licking, but keeps on ticking

Grim times for the military-industrial complex. First, a government agency stood up and declared that defense-industry consolidation has gone too far. Two days later, another government agency—and, like the first, unrelated to the Pentagon—declared that the Air Force and one of its biggest suppliers are unable to produce a low-risk, and vitally-needed, program. Finally, a Pentagon —surprise!—shop reported on how new weapons are working, but decided to hold back a lot of critical details for the first time.

Once again, taxpayers are right to be puzzled over a Pentagon that seems to act more like a public-works project, seeing its primary mission to spend money willy-nilly, rather than winning wars. The latest particulars:

The Federal Trade Commission said January 25 that it would sue to block Lockheed, the Pentagon’s #1 contractor, from gobbling up rocket-builder Aerojet Rocketdyne. The headline on the FTC’s press release spells it out: “Agency Seeks to Prevent World’s Largest Defense Contractor from Eliminating Last Independent U.S. Missile Propulsion Provider and Further Consolidating Markets Critical to National Security and Defense.” The fact that this is even up for debate shows how far the Pentagon’s procurement pendulum has swung toward consolidation, with all the risk that entails.

The FTC isn’t buying Lockheed’s assurances that Aerojet, as a Lockheed subsidiary, would be permitted to sell rocket engines to Lockheed’s rivals. That doubt surfaced in the agency’s heavily redacted 22-page complaint (PDF) seeking to stop the deal. Even before Lockheed began its push to buy Aerojet, “Lockheed sought unsuccessfully to prevent Aerojet from supplying Critical Propulsion Technologies to other prime contractors on a number of occasions,” it said. Lockheed said it was debating whether to fight the FTC in court or abandon the deal. The Bunker bets it bows out.

Meanwhile, Boeing and the Air Force remain unable to fix long-standing woes on their new KC-46 aerial tanker. “The Air Force and Boeing are currently addressing several critical deficiencies—such shortfalls that can cause death or injury, or loss or damage to the aircraft—that are delaying use of KC-46's full aerial refueling capabilities,” the Government Accountability Office said in a January 27 report. The GAO said the plane “was considered to be a relatively low-risk effort to integrate mostly-mature military technologies onto an aircraft designed for commercial use,” which makes it that much more vexing that the program has had repeated cost overruns and delays. The good news for taxpayers is that Boeing’s contract with the Air Force requires the company to pay for development costs above $4.9 billion. The bad news for Boeing is that it has now spent $5.4 billion more than that on the program. The Bunker detailed this sad saga three years ago—and it’s only gotten sadder since.

Finally, the Pentagon’s testing office published its latest annual report (PDF), minus key details on weapons performance that have been routinely included in prior years. The Defense Department’s Director of Operational Test & Evaluation’s (DOT&E) yearly accounting has always been issued in classified and unclassified forms. But this year marks the first time there’s a third version, containing “controlled unclassified information.” Last month, the testing office said this Goldilocks variation is needed because some unclassified material “shouldn’t end up in our adversaries’ hands.”

This is Pentagon poppycock, as POGO’s Dan Grazier told Valerie Insinna at Breaking Defense. “Congress established DOT&E in 1983 over the furious objections of service and defense-industry leaders because members knew they weren’t getting the truth about the performance of new weapons,” Grazier said. “By caving to pressure inside the Pentagon and hiding unclassified information behind a pseudo-classification, the current leaders of DOT&E are undermining the effectiveness of their own agency.” It reminds The Bunker of how information about the Afghan war dried up as the U.S. effort there flagged. We all know how that turned out.

Yet none of this kind of rot seems to impact the U.S. arms industry. In fact, these are the good ol’ days, per defense execs’ recent briefings with Wall Street analysts. “According to chief executives of the top taxpayer-funded weapons firms, their balance sheets will benefit from the U.S. engaging in great power competition with Russia and China, the recent escalations in the Yemen war, and the potential for a Russian invasion of Ukraine,” Eli Clifton wrote January 28 at Responsible Statecraft. Such quarterly earnings calls bring out “a degree of candor about companies’ fundamentals and their business interests that aren’t always disclosed in marketing materials and carefully-worded press releases.”

Now that’s something you can take to the bank.