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12/18/2001 (14:06)

LOCKHEED MARTIN
Lockheed Martin is the world's largest weapons contractor, a major player in the areas of nuclear weapons and ballistic missile defense. The company was recently awarded the world's largest weapons contract ever, a $200 billion deal to build the Joint Strike Fighter, a 'next-generation' combat jet that eventually will replace aircraft used by the Navy, Air Force and Marine Corps.

Lockheed Martin did not win the contract on force of personality alone, or fighter plane design. During the calendar year 2000, Lockheed Martin spent more than $9.8 million lobbying members of Congress and the Clinton administration, more than double the $4.2 million the company spent during 1999. Among the company's newest lobbyists: Haley Barbour, the former chairman of the Republican National Committee. During the 1999-2000 election cycle, Lockheed Martin contributed just over $2.7 million in soft money, PAC and individual contributions to federal candidates and parties. More than two-thirds of that money went to Republicans. Lockheed Martin spends more on lobbying Congress than any of its competitors, spending a whopping $9.7 million last year. Only General Electric and Philip Morris reported more lobbying expenses last year.

Since September 11th, the weapons giant has been steaming along. Stock prices rose almost $10, from $39.39 on September 10th to a high of $48.11 on November 12th , the stock is now steady above $46. Lockheed Martin makes the ubiquitous F-16 fighter plane, the Hellfire missile, 'bunker buster' munitions and the massive C-130 transport plane. The F-16 plant in Ft. Worth, Texas expects to hire as many as 1,200 factory workers to increase production. They have more than 200 orders to fill from foreign governments for 1999-2000.

As the largest military contractor, Lockheed Martin has a lot of jobs in the pipeline. The company wants to go highest tech with its 'combat Internet system,' a rugged handheld computer, that will put a 'dot-com face on the modern battlefield.' The company is hiring in Silicon Valley, looking to replace 'Rosie the Riveter' with 'Suzie the Software Programmer.' A recent Lockheed Martin job fair attracted 1,300 applicants for 290 new positions in the company's missile defense division. Even while Lockheed Martin celebrates its JSF successful, it is trying to shore up support for an additional $3.9 billion for development the F-22 Raptor.

BOEING
The Chicago-based Boeing Company, manufacturer of commercial and military aircraft, has not had an easy time since September 11th. While other weapons manufacturers are picking up new orders for weapons, Boeing announced the lay off of 39,000 workers in its commercial aircraft division.

On the military side, despite losing of the coveted Joint Strike Fighter contract, Boeing has a lot to be grateful for. Boeing's JDAM (joint direct attack munitions) is the most widely used smart bomb in the war. The JDAM kit fits over a 'dumb' missile and coverts it into a satellite-guided weapon using movable fins and a satellite positioning system. According to Pentagon spokeswoman Victoria Clarke, of the 12,000 bombs the U.S. has dropped on Afghanistan, 7,200 (about 60%) were precision-guided. Of these, 4,600 were Boeing's Joint Direct Attack Munitions. The rest were laser-guided bombs or satellite-guided Raytheon Co. Tomahawk cruise missiles. But there was a downside, the precision JDAMs have repeatedly missed their targets; crashing into a residential neighborhood near the Kabul airport on October 12th and killing at least 10 civilians, falling off target and killing three American soldiers on December 5th, and wounding five Special Forces soldiers a week earlier. The Pentagon maintains there is no problem with the weapon, and insists it will continue to use it.

Since the United States began bombing Afghanistan, Boeing has received two separate orders for more than 1,074 JDAMs, to be delivered by December 2001 and March 2002. Boeing spokesman Robert Algarotti said the company expects to receive an additional contract soon. 'We don't have anything officially from the government yet, but we are expecting a new order to come in and we'll be producing them faster than we have before.' As David Baker, retired Air Force General now with Schwab Washington research, said approvingly, 'Boeing has taken a thrashing, but their military sector is pounding away like a Ferrari on all cylinders.'

JDAMs and Ferraris notwithstanding, the Pentagon's award of the Joint Strike Fighter contract to rival Lockheed Martin was a major setback for Boeing. Panicked about commercial losses and military snubs, Boeing has dispatched an army of lobbyists to Washington and their wish list is a mile long and more expensive. Boeing is looking for Congress' help in the form of approval for:
 Air Force purchase of 60 Boeing C-17 cargo aircraft under a special 'commercial' provision that removes financial oversight;
 Air Force leasing of 100 Boeing 767 planes to be converted into surveillance planes and mobile command centers for the military;
 Protection from billions in potential liability claims stemming from the 9-11 attacks;
 Measures to encourage Lockheed Martin to share its Joint Strike Fighter contract.

These proposals make sense if the goal is saving Boeing, but they make neither military nor financial sense.

The C-17 Globemaster is Boeing's jumbo military transport plane, which performed high altitude food drops in Afghanistan. As recently as March 2001, Boeing tried unsuccessfully to make the plane available to commercial buyers. This time around it seems the company is capitalizing on widespread sympathy for its commercial losses, but the proposal is still a bad ideal. Selling the military planes as though they were commercial would allow the Air Force to bypass important pricing oversight. In addition, the $232 million per copy C-17s aren't all they promised to be. A General Accounting Office report found that Boeing's failure to rigorously test the C-17 before production resulted in increased costs of more than $2 billion to the program.

The plan to lease 100 converted Boeing 767 air-refueling aircraft for a period of 10 years is a big rip-off for taxpayers too. The Office of Management and Budget estimates that the lease plan would cost $22 billion, while purchasing the aircraft outright would cost just over $15 billion-that is a difference of $7 billion that Boeing can pocket. The aircraft is even less of a bargain when the $600 million cost of modifying existing hangers to house the plane is taken into account.

Some officials at the Congressional Budget Office and in the House and Senate budget committees oppose the leasing plan, contending it is a scam that adds to the long-term costs. 'This would be a first,' said G. William Hoagland, minority staff director on the Senate Budget Committee, of Boeing's plan. 'We've got to maintain some discipline. This just isn't the time to be adding in this way.'

But, cool heads like Mr. Hoagland's might have a hard time prevailing, given Boeing's political weight. The 767 plan goes before a House-Senate conference committee next week and Boeing has a lot of well-connected and important people looking out for its interests. John M. Shalikashvili, retired Chairman of the Joint Chiefs of Staff is on the Boeing board. Former Deputy Secretary of Defense, Rudy de Leon heads Boeing's Washington office. After September 11th Boeing beefed up its political connections by hiring former Senator Bennett Johnson (D-LA) and former Rep. Bill Paxon (R-NY). Former Ambassador Thomas Pickering, Boeing's senior vice president for international relations since January, uses his forty years of experience to generate business for Boeing with foreign governments and corporations.

Also on the Boeing agenda is more money for its portfolio of major contracts. Boeing is currently working on more than a dozen contracts-- including the expensive F/A-18 fighter jet, the crash prone V-22 Osprey tilt-rotor aircraft, the AH-64 Apache Longbow helicopter and the Airborne Laser for the Pentagon's Ballistic Missile Defense Organization-- that account for well over $10 billion in the 2002 Pentagon budget alone.

Frida Berrigan is a Research Associate at the World Policy Institute