Politics Seen Playing Role in Fighter-Jet Competition : Defense: Experts expect Lockheed to win $75-billion pact over Northrop. Stakes are also high for Pentagon.
For the last four months, Air Force officials have been poring over six tons of secret documents in an effort to decide who will win the most lucrative aerospace contract in history.
But the prognosis on Wall Street, and the wagering among many inside the Pentagon, is that the winner of the $75-billion contract for an advanced tactical fighter is all but decided. They think Northrop has little chance of besting rival Lockheed when the service announces a decision some time in the next week.
The handicappers lay down their bets not on any insight into the Air Force’s official criteria for the selection, which include the technical capabilities of the competing aircraft, the cost proposals and an assessment of the management capabilities of the two firms. Most of that information is top secret.
Rather, many experts believe that other factors--notably naked politics and the Pentagon’s desire to spread work among defense contractors--will decide the award, although both companies say that they have met all of the Air Force’s requirements.
Whatever the outcome, the ATF decision promises to be among the most closely scrutinized of any Pentagon awards. It pits two teams that together encompass the sum and substance of the aerospace industry, threatening the losers with the prospect of never building another military airplane.
The stakes also are high for the Pentagon. The decision comes at an especially crucial juncture for the Defense Department, which is trying to usher in a new era of responsible procurement--one that is based on merit and hard-boiled financial analysis rather than on political favoritism.
The aerospace industry hopes the ATF decision will demonstrate that the Pentagon has closed the book on the subterfuge and mismanagement that has characterized so much of the past. But critics are not convinced. They charge that the business of government is no less tainted by pork barrel politics today than in decades past and that the ATF will be just another victim of that system.
“It is pure politics,” said Paul Nisbet, the veteran aerospace analyst at Prudential Bache Securities. “Any time you have $75 billion at stake, you better believe that the Congress is not going to sit idly by and watch the program get awarded on the basis of merit. They get paid to bring home the bacon.”
Wall Street has already adjusted Lockheed’s stock price to reflect a victory on the ATF, Nisbet said. Investors, in other words, have bet millions of dollars on Lockheed, apparently because they think politics will be the key factor in the ATF decision. A survey of half a dozen securities analysts indicated that all favored Lockheed, primarily for political reasons.
The massive fighter-jet program has become a heated regional issue as well. If Northrop wins, thousands of jobs will go to its plants in Los Angeles County and its partner’s plant in Missouri. If Lockheed wins, the jobs will go to its plant in Georgia and its partners’ plants in Kansas and Texas.
With so much at stake, the question once again arises: In major military procurements, do the best weapons win?
Not always. History suggests that political skulduggery plays a role. Service secretaries occasionally have based their choices on faulty analysis or have been suckered by low-ball bids. That was the case with the Navy A-12 jet, a textbook procurement debacle that ended in a cancellation earlier this year.
Critics also say that the Army bailed out Ford Motor Co. with a huge award for a gun in 1981; that Democratic Party officials exerted pressure through the John F. Kennedy White House in the 1960s to ensure that the F-111 fighter program landed at General Dynamics in Texas, and that IBM in 1988 was selected on a questionable basis to build a new air traffic control system.
If politics plays a role in the ATF contract, the Air Force may favor Lockheed because it can muster greater support in Congress in future funding battles. Lockheed and its team of General Dynamics and Boeing have considerable political support in the three states where the firms would locate jobs.
Northrop and its partner in the ATF project, McDonnell Douglas, cannot count on the same degree of political support from Missouri representatives in Congress and from California’s divided delegation.
Lockheed has had its share of embarrassments, including defaulting on a huge Navy aircraft program last year. It also was the main culprit in the scandal over billing the Pentagon $600 for toilet seats in the mid-1980s.
But Northrop may have made even more political enemies over the years, especially in defending its turf on the massive B-2 bomber program. Congressional critics of Northrop, which pleaded guilty to criminal charges in 1990 and has a lengthy list of other legal problems, have vowed to howl in protest if Northrop wins the ATF contract.
The idea that such factors will decide the day is sheer torture to Thomas R. Rooney, the chief of the Northrop ATF program who has spent years perfecting his firm’s aircraft--a sleek, two-engine jet that can cruise faster than any fighter ever.
“This is not a pork barrel program,” Rooney insisted this week during an interview in his Hawthorne office. “We have been working for four years to do the best bloody job we could. I would hate to think that somebody is going to make a decision on that basis.”
That “somebody” would be Air Force Secretary Donald B. Rice, the designated “source selection authority” who ostensibly has the final say. The process starts with a 250-member examination board that submits findings to a “source selection advisory council,” a group whose very membership is a secret, but certainly includes the Air Force’s top generals.
President Bush and Defense Secretary Dick Cheney are not supposed to get a vote. And members of Congress are not even privy to the Lockheed and Northrop proposals.
The entire decision-making process is confidential and the working papers on the selection will be sealed after the decision. Perhaps only the selection of a Pope is more secret.
Both Rooney and his counterpart at Lockheed, J. A. (Micky) Blackwell, expressed confidence this week that their respective aircraft are the best and that the selection process will be fair. They agree also on this much: nobody outside the Air Force has enough information to make a credible judgment about which aircraft is technically superior.
“It has been run in a very tight, rigorous manner,” Blackwell said. “The Air Force even declined to ask any questions in our oral presentations, because, if they asked us, then they would have to ask Northrop the very same question.”
A senior congressional committee staffer agreed that the contract award will be “beyond reproach.” But others aren’t so sure.
Franklin Spinney, a Pentagon analyst, argued in a recent study that political influence exerted by Congress over defense procurement will increase in future years as budgets are cut and competition for remaining money grows more intense.
“In the ATF, the political component has to be a major factor and it may end up being the dominant factor,” Spinney said.
Eyebrows were raised during the ATF program, for example, when the Air Force extended the schedule by four months after Lockheed ran into delays. The decision was never fully explained.
Although senior Pentagon officials, like Cheney, aren’t supposed to be a part of the ATF decision-making process, they have already made their desires known and subordinates will mold their opinions to those desires, experts said.
Nisbet, the securities analyst, concurs about the political issue. “All you have to do is watch Congress operate for one day and it puts to lie the idea that politics isn’t going to play any role in this award. I would make a healthy bet that (Sen.) Sam Nunn already knows who won.”
Nunn, a Georgia Democrat, is the chairman of the Senate Armed Services Committee. Lockheed has already committed to building the ATF, if it wins, at a plant in Marietta, Ga. Since Nunn emerged as a power in military procurement, at least four major contractors have relocated or expanded plants in his state.
If Northrop wins the ATF, it will develop the aircraft in Pico Rivera and produce it at an as yet undisclosed site in California. The firm recently commissioned UCLA to do an economic study of the program, which concluded that the firm would directly employ 6,000 workers over the 25-year life of the program and that other firms in California would employ an additional 15,000 workers.
With so many jobs at stake, the ATF will represent the Pentagon’s single most important economic decision of the 1990s.
In the past, such decisions were not always the model of propriety.
“The problem is that in the end, you can’t see the work product that tells you how they arrived at the decision,” observed James Beggs, a former General Dynamics executive and former chief of the National Aeronautics and Space Administration. “As long as the work product is secret, the process will be suspect.”
Critics believe that the selection of Ford over General Dynamics in the Army’s air defense gun program in the early 1980s was a bailout. Although Beggs says he has no proof that the competition was rigged, he feels that the Army acted unfairly at the very least and eventually made an effort to destroy him personally.
The Army selected Ford, even though General Dynamics’ gun shot down more targets in test firings. But the Army devised a system for scoring which concluded that Ford would have shot down more targets if it had special equipment that was not available at the time.
“It never made a whole lot of sense,” Beggs said.
After the award, matters turned more serious. The Army began feeding the Justice Department information that led to a shaky indictment of Beggs on criminal charges. Eventually, the Justice Department withdrew the charges and issued an apology to Beggs.
“The way in which that case was brought was due in part to the acrimony in the selection process itself,” Beggs said.
The Kennedy White House engaged in blatant political intervention when it influenced the selection of General Dynamics over Boeing for the F-111 fighter bomber. Top Democratic Party officials, acting at the behest of contributors who had ties to the firm, sought to help General Dynamics, critics charged at the time.
In addition, General Dynamics was located in Texas, home of then-Vice President Lyndon B. Johnson. The F-111 never fulfilled its promise as a multi-role fighter and bomber and had a bad safety record in its early years.
Most recently, Hughes Aircraft protested in 1988 that the Federal Aviation Administration rigged the competition for a $3.6-billion air traffic control system. Hughes alleged that its competitor, IBM, shaved its bid by nearly $200 million by offering used computers, while Hughes was required to supply new computers. However, Hughes administrative protests were dismissed.
