Mergers Generate Political Clout

By Dave Fulghum

"I see the Pentagon increasingly losing control of its requirements to the private sector," a senior House staffer said. "They are in an increasingly strong position to say to the military, 'Here's what you really need; here's what it looks like; here's when you'll get it; and here's what it will cost."'

Opponents of mega-mergers evoke President Dwight D. Eisenhower's warning to limit the power of any military-industrial complex. "These companies are so big that they have a presence in the districts of a majority of Congress," the staffer said. "It's increasingly hard to make meritorious decisions because of the political clout these people are able to amass. Eisenhower was prescient . . . these mergers are taking us to that point [of undue political influence]."

Senior military leaders, don't believe that influence on the Pentagon is so dire."Most of the technology you would need for a 21st century force is already available commercially," said a retired Air Force general who helped plan Desert Storm. "So, I don't believe large companies are going to be able to affect operational requirements."

He also noted that the Navy and Air Force, with their long history of developing and using advanced technology have the experience to turn down even a great invention if it is not of immediate operational impact.

"There has always been congressional lobbying," he said. "It's not a new phenomenon. It's just more focused now because there are fewer dollars."

Europeans see the mergers excluding them and exacerbating a growing technological gap between U.S. and European military forces. Partnerships between U.S. and European defense firms are necessary for NATO to survive, according to Javier Solana, the organization's Secretary General.

"As the trans-Atlantic technological gap increases, it gets more difficult to keep on talking about a real partnership," Solana said. Cooperation rests "on a very important ingredient-technology in all directions-without which no real partnership can be built when you are facing the 21 st century."

An initial draft of the Madrid communique that followed the recent NATO summit included a paragraph on military industrial cooperation between Europe and North American.

"In the end it was dropped," Solana said. "But the situation is getting ripe for a debate." He wants NATO to be the forum for these discussions of international mergers and cooperation. "I cannot conceive of a real partnership if we do not share, on a frank basis, more knowledge of future technology."

U.S. businessmen say they don't want to team until European companies restructure to become more competitive. Some U.S. military leaders say that the Europeans should stop whining, "get off their asses doctrinally," and start taking advantage of the technology that's already available on the commercial market. Moreover, they said, the Europeans had better move quickly because the U.S. will speed up, not slow down its pace of modernization.

Declining competition will be a concern, but probably not the primary one for most U.S. military leaders.

"Sure there's a loss of competition," a retired Air Force four-star general said. "It's inevitable-there's no longer enough money around to afford it."

In addition, there are the "dangers of bigness," he said. "Company officials start overlooking details, they become indifferent to projects outside their immediate control and new products fail to be introduced quickly."

"I don't know that lack of competition for something the services chose to do is as big an issue as the political clout these mega-companies have to cause the Pentagon to buy things they neither want nor need, the staffer said."The B-2 and submarine debates are about this."

"It's a cheap shot to single out the B-2," replied the general. "It's a bargain for power projection. And there's nothing else to replace it, so we'd better not let it die this year from lack of funding. The B-2, Joint Stars, and the Joint Strike Fighter are fundamental elements that are needed to establish rapid dominance, in future wars."

Some believe that the Pentagon eventually will lose much of its power to regulate the development of new weaponry as the budget continues in decline.

"We're trading off government work force and functions for private ones," the staffer said. "We're cutting down the Pentagon acquisition corps and staff and competing the finance functions. The private sector would then be the primary source of original data. Such outside control will lend itself to manipulation and creative bookkeeping. As a result, the government would be hard-pressed to generate independent estimates of what things should cost."

Several options being considered to keep mergers from becoming self destructive and to keep competition alive;

  • Put foreign contractors on an equal competitive footing with U.S. companies.
  • Split big contract awards among two or more companies.
  • Give research funds to the losers of a competition so they can start working on the next defense project.
  • Let the Pentagon select subcontractors to ensure they are best value.
  • Have cross-service competitions for the technology that best serves a mission, for example, missile-firing ships vs. missile-firing aircraft.

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