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No bidding on 40% of Pentagon contracts

  1. Nov 16, 2004 #1

    WASHINGTON -- More than 40 percent of all Pentagon contracts, a total of $362 billion, have been awarded on a no-bid basis over the last six years, according to a report issued yesterday. It showed that the biggest companies won the bulk of their contracts without going through a competitive process.
    The nation's largest military contractor, Lockheed Martin Corp., received the most Pentagon business on a non-competitive basis. Seventy-four percent of Lockheed's $94 billion in Pentagon contracts since 1998 were awarded without competition, according to a report from the Center for Public Integrity, a Washington non-profit group that studied 2.2 million Pentagon contracts totaling $900 billion.

    "Competitive bidding at the Pentagon happens less often than we think, and the no-bid controversy surrounding Halliburton in Iraq actually is, unfortunately, not an aberration," said Charles Lewis, the center's executive director. Lewis' organization was one of the first to study contracts won by Halliburton and other companies in Iraq and Afghanistan. Yesterday's report grew out of that earlier work.

    At Boeing, the nation's second-largest contractor, 60 percent of the $81 billion in Pentagon contracts since 1998 were awarded without competition, as were 67 percent at the third-largest contractor, Raytheon Co., which received $39 billion in contracts over the same period.

    Of the nation's top 10 military contractors, nine won more than half of their Pentagon contracts through non-competitive awards.

    Thomas Greer, a Lockheed spokesman, said that because of "the substantial investment and lengthy development cycles followed by limited annual production quantities," it is often not cost-effective for the Pentagon to have competitive bidding. Greer added that "it is important to note that sole source awards still mandate contractor performance."

    In addition, the report said that because of military industry consolidation, 80 percent of all Pentagon contracting dollars were won by the top 1 percent of all contractors. It found that the Pentagon has become increasingly dependent on military contractors for work that had previously been done by soldiers and Pentagon civilian employees.

    Currently, for instance, half of the defense budget is outsourced to contractors, while oversight of these contracts has declined, the report said. The Pentagon has reduced the number of government officials who supervise contractors, instead hiring contractors themselves to oversee and manage others, according to the report, which said that the Pentagon hired a contractor to determine how many contractors it had employed.

    "There is an even more fundamental problem underscoring our entire investigation: the stunning lack of accountability," said Lewis, who added, "This is a Keystone Kop situation where no one is monitoring the monitors. This is a very serious situation and the Pentagon is treating it like a hair in the soup."

    Glenn Flood, a Pentagon spokesman, said that the center's "accusations have been made before." Flood added that much of the Pentagon's business is so specialized, it is impossible to find more than one supplier, and industry consolidation has accelerated the non-competitive trend.

    "Where do you go if you want need a sub or a joint strike fighter?" said Flood. "The mergers of the 1980s have taken their toll. You have only five or six major contractors. Where do you go?"

    But the center's report said that the great growth in outsourcing is taking place in providing services, not in the making of weapon systems. This includes everything from interrogations at Abu Ghraib prison in Baghdad to helping write the Bush administration's defense budget and devise strategic plans. At the same time, military contractors have become skilled at politics and often provide employment for Pentagon officials after they leave the government.

    The leading recipient of campaign donations from military contractors has been President Bush, who has received $5.4 million from the industry since 1998. Military contractors, however, began stepping up contributions to Sen. John Kerry after he won the Iowa caucuses.

    Before the caucuses Kerry had received $332,000 from the industry, and he has received just under $2 million since then. The Republican Party has received $62 million from the industry since 1998, compared with $24 million for the Democratic Party, according to the report.

    Yes they are in irak to bring them freedom. right..
  2. jcsd
  3. Nov 16, 2004 #2


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    Considering the number of contractors cabable of building a B-2 stealth bomber (one), the number of contractors capable of building an Aegis cruiser (one), and the number of contractors capable of building a C-17 cargo plane (one), and the fact that all of these were won in a competitive design process, this is hardly surprising, nor does it raise any ethics questions.
  4. Nov 16, 2004 #3


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    This statement doesn't really give enough information to draw a conclusion. Is 80 percent of all contracting dollars won by the top 1 percent or does 80 percent of all contracting dollars go to the top 1 percent? Most big contracts have a prime contractor, who then subcontracts pieces to other companies. Your big contracts can have 10 to 20 companies working on it. (Considering how many employees move from the old contract to the new contract, remaining in the same job when an incumbent gets unseated, it almost seems like it's all just one big company, anyway, regardless of the name).

    If you're going to cut military personnel without cutting the work, someone has to do it. The budget guys somehow came to the conclusion that it's easier to add/cut contractor services as necessary rather than carrying pay/health benefits for entire families/retirement benefits, etc for the minimum amount of personnel needed to ensure the maximum surge load could be met. It also overlooks the overall picture - higher paying officer jobs being converted to lower paying enlisted jobs, more reliance on Reserves and Guard personnel, and many support services being contracted out, period.

    Also overlooked are training costs. Military jobs include rotations into areas where it would be hard to keep someone for 20 years. That means frequent moves and training for each new military job an individual takes. Contractors normally stay in the same job much longer than their military counterpart, reducing the training costs.

    Looking at the current manning problems where Reserves and Guards are being called up for extended periods of time, you could have second thoughts about how smart it was to cut the military so deep, but this article doesn't really add much to the discussion.
  5. Nov 16, 2004 #4
    No. the ethics questions raise when this contractors gave millons dolars to bush and kerry campaing.. and when many of the directors of this corporations was working for the pentagon and vice versa,,, and when this contractors make millons in profit from a controversial war. and more yet when bin ladens family has shares in one of the bigest holding of defence contractors. the carlyle group
    The carlyle group:

    US President and
    Vice President
    Former Director
    of the CIA
    Carlyle Senior Advisor

    Former Secretary of Defense
    Deputy Director
    of the CIA
    Carlyle Chairman Emeritus

    Secretary of State
    Sec. of Treasury
    Carlyle Senior Counselor

    White House
    Budget Advisor
    Bush / Clinton
    Managing Director

    Former President of the Philippines
    Carlyle Asia
    Advisory Board

    Former Prime Minister of England
    Carlyle Europe Chairman

    The NYT ran a front-page photo of former President Bush with Saudi King Fahd on a trip to Saudi Arabia as part of his work for the Carlyle Group. The ice-breaking story by Leslie Wayne quoted Charles Lewis: "In a really peculiar way, George W. Bush could, some day, benefit financially from his own administration's decisions, through his father's investments. The average American doesn't know that and, to me, that's a jaw-dropper."

    Judicial Watch commented that the senior Bush's association with the Carlyle Group was a "conflict of interest (which) could cause problems for America's foreign policy in Middle East and Asia". Judicial Watch called on the President's father to resign.

    Without saying 'revolving door, it was noted that the former FCC chair was joining the telecom and media section at Carlyle:
    As the Carlyle investors watched the World Trade towers go down, the group's prospects went up. In running what its own marketing literature spookily calls "a vast, interlocking, global network of businesses and investment professionals" that operates within the so-called iron triangle of industry, government, and the military, the Carlyle Group leaves itself open to any number of conflicts of interest and stunning ironies. For example, it is hard to ignore the fact that Osama bin Laden's family members, who renounced their son ten years ago, stood to gain financially from the war being waged against him until late October, when public criticism of the relationship forced them to liquidate their holdings in the firm. Or consider that U.S. president George W. Bush is in a position to make budgetary decisions that could pad his father's bank account. But for the Carlyle Group, walking that narrow line is the art of doing business at the murky intersection of Washington politics, national security, and private capital; mastering it has enabled the group to amass $12 billion in funds under management.
    Now i gues you can't denied the existence of the carlyle group..
    but i guess you will say: "It's all a crazy conspiracy theory" and erase all this from your mind, just like in 1984 CrimeStop

    Crimestop: Orwell's definition: "The faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to the party, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. In short....protective stupidity."
    Last edited: Nov 16, 2004
  6. Nov 16, 2004 #5


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    I don't know that that matters either way because of what I said above: the big-ticket items can only be built by a handful of companies. That said, even a B-2 has an enormous amount of subs making small pieces of it.

    I'm not interested in conspiracy theory, Burnsys, so I have only one thing to respond to in your last post: Defense contractors have not profited directly from a war since Vietnam. Acquisitions and overall defense strategy take decades to formulate. Indeed, the most direct result of the end of the Cold War and the shifting of the threats has been a reduction in defense spending and cancelling or reducing the scope of decades-old projects. The basic goal in defense since the Cold War is this: to be capable of fighting two large regional wars simultaneously.
    Last edited: Nov 16, 2004
  7. Nov 16, 2004 #6


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    But Russ, the original contract for the B-2 was not given to Northrop, was it ?. They had to compete with Rockwell, and the prototype that won the contract was Northrop's. Of course, Northop will receive all subsequent re-orders (but there haven't been any for the B-2, have there ?), but the original contract is fought over.
  8. Nov 16, 2004 #7
    Aren't we supposed to be a CAPITALIST country? Why is it the lefties who are seemingly the most outraged about this violation of the tennents of Capitalism? I can understand only giving contracts to one company if they're the only company that has the capacity to build a specific thing, but it's not like all the no bid contracts are going to companies that do one job that no one else does.
    Last edited: Nov 16, 2004
  9. Nov 16, 2004 #8
    Boeing's Profits Skyrocket, Outlook Raised
    Wednesday, October 27, 2004
    "Our Integrated Defense Systems business again delivered strong revenue growth and outstanding profitability, and made significant progress on key programs," said CEO Harry Stonecipher

    Lockheed profits take off
    Friday, 25 October, 2002, 14:20 GMT 15:20 UK
    "US defence giant Lockheed Martin has turned in sharply higher profits, crediting strong sales of fighter jet equipment. "

    Profits up at Northrop Grumman
    January 28, 2003
    "Together with the former TRW defense businesses, which completed one of their most impressive years ever, we are well positioned to benefit from increasing defense budgets and homeland security initiatives," Kresa said

    About your use of the words: "conspiracy theory":

    Crimestop: Orwell's definition: "The faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to the party, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. In short....protective stupidity."
    Last edited: Nov 16, 2004
  10. Nov 16, 2004 #9


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    The primary competitor was Lockheed (I think Rockwell partnered with one team and Boeing partnered with the other). According to the director of Skunk Works, Lockheed had a better plane and could have built it for cheaper, but the performance (at least on paper) of Northrup's was better.

    My point was that once the initial design contest is won, there is one plane and only one company can build it. Yeah, the B-2 was a short production run, but a lot of other platforms (Aegis) are built for decades. The DOD did consider having the winning company pass around their design for other companies to bid on and build, but that would have been enormously unfair due to the cost of developing the platform.

    wasteofo2, the 21 B-2 bombers we built cost a total of about $35 billion. A handful of such projects can account for the vast majority of that $362 billion.
  11. Nov 16, 2004 #10
    Who'da guessed stealth bombers were so expensive... :tongue2: Got any figures on other things like tanks and helicopters that we comissioned?
  12. Nov 17, 2004 #11


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    I'm an airplane buff, so we'll do another airplane first:

    -The F-22 is going to cost a total of about $43 billion for about 300 planes.
    -The Navy is building about 20 Aegis destoyers over the next decade at a cost of about $1 billion apiece (these are built by two companies).
    -Over 8 years('85-'93), 8,800 M1A1 tanks were built at a cost of $4.3 million apiece: total of $38 billion.

    Its also important to remember that servicing and spare parts for these systems is often only done by the company that built them.
  13. Nov 17, 2004 #12
    The Cato institue is highly critical of the way US defence spending is organized:

    For example:
  14. Nov 17, 2004 #13
    This is what i call ethics.....
    Things like this happens all the time, between goverment oficials and defence corporations, The famous revolving door. but of course.... we don't have to look at this, even if they make billons of dolars every time a new war is declared, becouse they are all crazy Conspiracy theorys

    Air Force’s Boeing deal flies into new troubles

    WASHINGTON - Air Force Secretary James Roche contacted his old company last year to help a brother of a top White House aide try to land a job, Northrop Grumman Corp. said on Friday.

    Roche’s intervention on behalf of the brother, even as he sought the aide’s backing for a multibillion-dollar lease of Boeing Co. refueling aircraft, has sparked new questions about Air Force plans to acquire 100 modified 767 aircraft.

    The action of Roche, a former vice president at Northrop, is among matters referred by the White House to the Justice Department last week regarding the $23.5 billion deal, officials said.
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