Demystifying the Military-Industrial Monolith: the Myth of Competition

Todd Zimmer, Industrial Analysis and Research Intern
July 20, 2009
Note: The week after this article went to press, the Senate voted in favor of a McCain/Levin amendment, which stripped the funding for the F-22 from the Senate Defense Appropriations budget. This is a terrific step in the right direction, but it is clear that proponents of the F-22 will continue to scheme and fight to replace the funds for these planes in other parts of the budget, set to be finalized this fall.

As summer winds down and St. Louis begins to cool off, things will be heating up on Capitol Hill, where battle lines are being drawn in preparation for the latest fight to reduce military spending. Defense secretary Robert Gates is leading the charge against bloated and unnecessary weapons systems, specifically targeting the cold war relic F-22 Raptor, a $351 million-a-pop fighter originally designed for combat with Soviet jets. Gates' efforts to cap production of the F-22 at 187 units are strengthened by a coalition of congressional allies like senate armed services chairman Carl Levin (D.-MI) and ranking minority member John McCain (R.-AZ), who have endeavored to strip $1.75 billion of F-22 funding from the senate version of the proposed 2010 defense budget.

Meanwhile, in the lower chamber, Barney Frank (D.-MA) was defeated in an effort to pass an amendment to block the inclusion of F-22 money in the house version of the budget, where proposed funding for the F-22 has been siphoned from monies originally intended for the environmental cleanup of defense sites. Should congressional efforts to block further funding for the F-22 fail, president Obama has threatened a veto of any spending bill that would waste taxpayer money on unneeded F-22s. Yet despite considerable opposition to the program, the political puppets of the military-industrial complex are organizing to defraud the American public in the name of corporate profits.

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The industry won a victory over the Obama administration's proposed cuts already this summer, when $2.2 billion were dumped into a supplemental spending bill, ensuring the production of 8 additional Boeing C-17 Globemasters, planes Gates had deemed unnecessary. Earlier this year, 194 representatives and 44 senators signed a letter to Obama in support of the F-22, a plane which has yet to fly a single mission in Iraq or Afghanistan. As Barney Frank caustically remarked, the political battle over F-22 funding " will probably be the only combat the F-22 has ever engaged in or will engage in."

Although the house version of the 2010 budget includes a $369 million down payment on 12 new F-22s, the actual price of the acquisition is intentionally obscured. The estimated total cost of the dozen new jets exceeds $4.2 billion if cost-overruns and maintenance expenditures are included*. How can congressional representatives consciously advocate such a ludicrously costly program that is opposed by the president, the defense secretary, and the Air Force chief of staff? The answer to this question exposes insidious relationships between the defense industry and their partners on the hill.

Unsurprisingly, support for wasteful defense spending is led by those representatives whose states harbor centers for weapons production. Missouri senators Claire McCaskill (D.) and "Kit" Bond (R.) recently contorted themselves in order to deliver $2.2 billion to Boeing's C-17, a plane assembled in St. Charles. Lobbying for Lockheed Martin's F-22 is led by Georgia senator Saxby Chambliss (R.), who stands to win or lose considerable support in his home state, where production of the F-22 is centered. The efforts of these few senators alone does not explain how Lockheed Martin and Boeing are able to mobilize up to 44 senators at once in unanimous support of unneeded weapons systems. In order to understand this phenomenon, it is crucial to examine a hidden realm of the military-industrial complex: third-party defense contractors.

While government contracts such as the C-17 and the F-22 are awarded to major aerostructure firms like Boeing and Lockheed Martin, these larger corporations subcontract thousands of minute manufacturing and supply operations to a veritable army of smaller defense businesses. This practice of subcontracting serves many convenient purposes on behalf of the military-industrial complex and accounts for much of the graft and cost-overruns rampant in the industry. Boeing and Lockheed both intentionally spread out political culpability for program cuts across the geographical United States in an effort to influence the maximum number of elected congressional representatives.

The F-22 program involves subcontracts with over 1,000 suppliers scattered across 44 states; the C-17 incorporates 650 companies in 43 states. Estimating that the C-17 program generates 30,000 jobs nationally, Boeing attempts to coerce representatives into acquiring a minimum of 15 new Globemasters a year at an estimated $329 million a unit*. In an example of bad business, Boeing has dangled these jobs over the brink annually since 2006, the year in which C-17 production was originally slated to end. Essentially, Boeing gambles with the lives and livelihoods of those employed in the production of their weapons systems by refusing to diversify their own industrial base. Boeing and Lockheed use their employee numbers as weapons, supplying politically relevant briefings to local media and politicians in order to shore up support for their expensive products.

Boeing employed these coercive and reprehensible tactics in a May slideshow on the C-17 to St. Louis media, while Lockheed Martin embarked on a massive lobbying campaign in support of the F-22, spending $6.35 million in the first three months of 2009 to ensure that congressional representatives understood the potentiality for political fallout in their home states should efforts to remove F-22 funding succeed. In July, Lockheed magnanimously announced that it would respect Obama's wishes regarding the F-22 and cease lobbying for the program, a disingenuous move as it comes on the heels of an intense publicity effort by the Lockheed in the first six months of the year.

The upshot of Lockheed Martin's frantic lobbying efforts on behalf of its expensive F-22 program is a prepared narrative being employed by corporate executives, politicians, and unions alike that stresses the importance of protecting "America's strong industrial base." According to the myth, the defense industry is a paragon of free market competition, in which rivalry between major corporations like Boeing and Lockheed Martin drives innovation and keeps costs reasonable. The reality of the situation is quite different. Military-industrial corporations can legally sell their products to one customer and one customer only, the United States government, hardly an example of a traditional free market scenario. More importantly, the illusion of competition between these companies is totally manufactured.

In an egregious example of how the military-industrial complex conspires in defense of industry profits, Boeing subcontracts to supposed rival Lockheed Martin on a variety of projects including the F/A-18E/F Super Hornet, while Lockheed and Boeing work together on the tellingly designated " Lockheed Martin/Boeing F-22 Raptor." Incredibly, Lockheed Martin also produces the nauseatingly expensive F-35 joint strike fighter, which is considered to be the competing alternative to the F-22 Raptor.

Beyond this obviously problematic contradiction lurks a larger system in which hundreds of third party contractors field profits on nearly every aerostructure weapons system purchased by the United States Government, from Lockheed's C-130J, F-35, and F-22 to Boeing's C-17, F/A-18E/F, and F-15. The military-industrial complex should not be viewed as existing in a state of competition, but rather as an organization of defense contractors conspiring to win government contracts in an environment that is consistently win/win for every company involved. Regardless of which major aerostructure manufacturer lands a Pentagon contract, the entire industry receives a piece of the pie at the expense of the American people, who have yet to receive commensurable benefits from abhorrently costly aircraft like the F-22.

At the time of publication, the senate is preparing a vote on both the F-22 provision and the entire spending bill in the next week. It remains to be seen if congress will offer up a fat contract for the corporate irresponsibility embedded in the monolithic and wasteful military-industrial-congressional complex. It is our hope at Peace Economy Project that our representatives will stand firm in their opposition to unneeded and unconscionable funding of defense programs that our own military does not want and cannot use effectively. If congress and Obama cannot hold the line on the proposed F-22 spending, we can expect little change in the defense industries continued effort to bilk the American taxpaying public out of billions of dollars annually.

*Extrapolated from Mother Jones' estimates of a $351 million unit price for the F-22 and $329 million for the C-17.