Defense Industry UFOs on the Home Front!

Bayard & Holmes

~ Jay Holmes

With so many deadly conflicts brewing around the globe, it’s easy to lose sight of less spectacular defense news at home. Changes in the defense industry and their impacts on taxpayers are not likely to generate front page headlines with so many air strikes, battles and terrorist strikes filling the daily news reports. But sometimes, the bomb-free battles inside the Beltway can impact our national security more than anything that will ever happen in Syria or Ukraine.

 

Actual photo of Lockheed and Sikorsky in an intimate embrace.

Actual photo of Lockheed and Sikorsky in an intimate embrace.

 

One particular event in the defense industry might generate more impacts then were intended by the defense contractors involved. Lockheed Martin’s pending purchase of Sikorsky Aircraft for nine billion dollars has set off a ripple effect in the US defense community.

Last week, Undersecretary of Defense for Acquisition, Technology, and Logistics Frank Kendall stated that in the future, he would seek to deter consolidation of top tier defense contractors. Kendall explained that, “Mergers such as this, combined with significant financial resources of the largest defense companies, strategically position the acquiring companies to dominate large parts of the defense industry.”

I can understand Kendall’s concerns. With the current number of large defense contractors, we are paying high prices for our high-tech military gear. In some cases, we are paying high prices for very low-tech gear, as well. Having fewer contractors might lead to less innovation and higher prices.

Kendall’s comments only surprised me because he was open and frank. In the Pentagon, that can be more dangerous than vacationing in Syria.

I am guessing that Kendall must have reason to believe that the White House shares his concerns. Not surprisingly, his comments generated what we might refer to as Unsourced Flying Opinions. To save space, let’s just call them UFOs.

A variety of “defense analysts” have been responding loudly to anyone who will listen that Kendall is creating “uncertainty” in the defense industry. According to some analysts, since large defense contractors will be uncertain about the viability of future mergers, they will be impaired in doing business.

Perhaps they will, and perhaps that’s a good thing. There has been all too much “certainty” in the defense contracting market. Certainly the manufacturing of complex high-tech defense items such as the F-35 fighter or the Gerald Ford supercarrier require a high degree of certainty once production starts, but the selection process should be an open field where the best ideas and greatest efficiencies can compete for contracts.

As Kendall pointed out, “With size comes power, and the department’s experience with large defense contractors is that they are not hesitant to use this power for corporate advantage. The trend toward fewer and larger prime contractors has the potential to affect innovation, limit the supply base, pose entry barriers to small, medium, and large businesses, and ultimately reduce competition, resulting in higher prices to be paid by the American taxpayer in order to support our war fighters.”

With so much money at stake, taxpayers should expect an increase in UFOs concerning defense spending and any further restrictions on defense contractor mergers. When reading the opinions of defense or national security “think tanks,” it’s a good idea to find out who funds them. You can bet that think tanks that are funded by large defense contractors are not going to think highly of Frank Kendall. As a taxpayer, I am starting to grow fond of him.

So far, the Department of Justice is wisely staying out of the debate on future defense acquisitions. Kendall has indicated that the Pentagon will work with Congress to set new policies governing defense contractors. As much as I agree with Frank Kendall’s intent, I disagree with his optimism for possible congressional action. I can easily imagine the sound of industrial strength shredders in the basement of the Capital building as underpaid staffers work overtime handling all those proposed defense contractor rules. But that doesn’t mean that Kendall’s concerns won’t have a real impact.

Kendall and his cohorts in the Pentagon have one very large ace up their sleeve.

If you want to do business in the defense market, you need happy customers, and the biggest customer of all is the Pentagon. In theory, it is only one customer, but in practice, the Pentagon can block anything involving publicly funded research and technology from sale to foreign customers. That leaves large defense contractors with a very small list of customers.

So what does this quiet and largely unnoticed battle in the Beltway mean?

My best guess is that the Pentagon, with the approval of the White House, is simply saying that it will not allow the US defense market to be too heavily influenced by any single competitor. Getting action for something this complex and this political from Congress is unlikely. Getting a defense contract from an unhappy Pentagon is even less likely. Let’s give kudos to Frank Kendall for standing up for the taxpayers and for national security.

America’s Future Low-Budget Bomber–When $550M Just Isn’t Enough

Bayard & Holmes

~ Jay Holmes

For the last six months American and foreign intelligence agencies have been reading about a new stealth bomber that is being developed for the US Air Force. Most of what has been published about the new plane has not been published by the Pentagon or the US Air Force, but rather by a variety of “defense experts” and “aviation writers.”

 

Canstock 2015 Aug Money going down the toilet

 

The US Air Force and Pentagon are suggesting a cost limit of $550,000,000 per new bomber.

I am not a bomber expert, so I am happy to disclose my limitations in assessing bomber development. I am not a bomber pilot or even a pilot at all. I have never served in the US Air Force or anyone else’s air force. I am not any type of aviation engineer, nor have I ever dated one. It’s fair to say that I am not an aviation expert.

My qualifications for having an opinion on the US Air Force’s new bomber program are thus:

  • I don’t have $550,000,000.00 to give the US Air Force to pay for each bomber, and I don’t know anyone that does.
  • I am a happy US taxpayer. I don’t mind paying taxes, but I want the money to be used efficiently.
  • In the past, I have been a casual consumer of valuable products and services offered by the US Air Force, along with Marine Corps and Naval Aviation groups.

So, from this limited perspective, I offer my response to the scarce actual information and abundant “expert” opinions that have been published about the next US Air Force bomber.

For ease of communication, let’s refer to the imaginary new bomber as the “FD”—short for Flying Deficit.

Aviation “experts” thus far all agree that the greatest challenge to producing FD bomber will be the unreasonably tight price limitation of $550,000,000 per plane. To mere mortals, the price tag sounds dizzyingly high. Count me with the mere mortals.

So what does it mean that so many “aviation experts” are in a state of “deep concern” over the $550,000,000 suggested retail value for each FD bomber?

Are all of us non-aviation experts confused about the value of cash? Do we all fail to understand how difficult it is to make something fly and drop stuff on people we don’t like? Perhaps we are not all that confused.

Let us first examine what is known about the FD bomber. We know next to nothing.

We know that it will be “stealth,” like the B-2 already is. We know that it will be built for both conventional and nuclear payloads, like the B-2 already is. And we know that it will include the defense industry’s most important buzzwords. Yes, it will be like my house and my car. It will be “net centric.” Let’s all cheer for “net centric.” It sounds so nice and must cost a bunch. Right?

 

B-2 Stealth Bomber Image by Dept. of Defense, public domain

B-2 Stealth Bomber
Image by Dept. of Defense, public domain

 

You might find it interesting that the “experts” that are concerned about the suggested budget limitation for the FD bomber have yet to review the US Air Force’s requirements for the FD. Without knowing what the US Air Force wants to buy, they are already certain that a $550,000,000 price tag means that the next bomber will not be the best technology on the best bomber. I’m heartbroken . . . Not really.

How can well educated, experienced aviation experts suggest that the FD bomber will be an underpriced failure when the US Air Force has yet to release the actual requirements for the project?

To understand the answer to that critical question we must first understand who these “experts” are. So far, as near as I have been able to determine, they are not “aviation experts” in the traditional sense. The “experts” publishing those articles are not aviation engineers, retired US Air Force bomber pilots, or US Air Force project managers. They are, in fact, people with degrees and expertise in marketing, communications, public relations, and sales.

I was not surprised to discover that members of the Chicken Little’s The Bomber is Falling Choral Group are not bomber experts.

They harmonize well, but they don’t appear to know much about aviation, the sky, or falling bombs. What I have not been able to determine is how many of these “experts” have received free pens, free lunches, free junkets, free prostitutes, jobs, etc., from corporations that are hoping to receive a share of the “bomber windfall.” Thus far, the two competing potential prime contractors are Northrup Grumman and a team comprised of Lockheed Martin and Boeing. As is always the case when we consider opinions on large government projects, we must consider the source.

As of the time of this article, the US is in debt to the tune of $18 trillion. That figure is increasing every day, but what’s a few hundred billion between friends?

So while we accumulate debt faster than teenagers can consume pizza or congressional aids can snort cocaine, we are being told that rather than questioning the high price tag for FD bomber, we should actually be apologizing to the defense industry for expecting them to produce an adequate bomber for a measly $550,000,000 each. Shame on us . . . Not really.

My best guess is that a bomber that costs $550,000,000 each leaves lots of cash for PR campaigns peddled as “expert opinions.” Before you are overcome by shame for making the US Air Force use such a low budget bomber, you might want to drop a line to your elected officials to ask them why this, and other future projects, and so many current projects, cost as much as they do. Efficiency in defense spending will not get better until we, the taxpayers, convince Congress that, unlike them, we are not so easily boondoggled.