Tag Archives: boeing

Corrupted Oversight: The FAA, Boeing, and the 737 Max

(Photo of the Boeing 737: MB-one & Marc Lacoste; illustration: CJ Ostrosky / POGO)


The FAA’s rules for certifying planes’ safety effectively give the aviation industry the power to regulate itself—a situation bordering on legalized corruption.


This analysis originally appeared on American University Washington College of Law’s “The Oversight Project” blog.

In the months since the second deadly crash of a Boeing 737 Max passenger jet in less than a year, a nightmare scenario of failed oversight has come into focus. The Federal Aviation Administration’s (FAA) approval process for the plane was fraught with lapses in safety regulation, precipitated by an institutional culture of deference to industry at the expense of accountability.

Mounting evidence, through news reports and congressional hearings, shows the FAA’s rules for certifying planes’ safety fundamentally conflict with meaningful oversight, as they effectively give the aviation industry the power to regulate itself—a situation bordering on legalized corruption.

While FAA officials continue to defend the agency’s practices, congressional committees, the Transportation Department’s inspector general, and federal prosecutors have opened investigations into the certification process for commercial planes and the 737 Max in particular.

Preliminary findings by the National Transportation Safety Board, released last week, cast further doubt on the certification process for the 737 Max, as the safety board urged Boeing and the FAA to make major changes to how they assess safety risks. Also last week, the Office of Special Counsel released findings, resulting from a whistleblower’s allegations, that raise concerns about whether safety inspectors were sufficiently qualified to “certify pilots or to assess pilot training” for planes including the 737 Max. Further, the watchdog found FAA officials’ responses to congressional inquiries on the issue “appear to have been misleading,” and the agency’s stance on the issue “suggests that, rather than taking ownership and accountability for confirmed systemic deficiencies, the FAA has not appropriately fulfilled its safety mandate.” FAA Deputy Administrator Daniel Elwell contested the watchdog’s findings and defended the agency’s oversight practices in testimony before a congressional panel last week. 

The 737 Max was approved under the FAA’s “Organizational Designation Authorization” (ODA) program, which allows aircraft manufacturers to certify parts of their own designs with limited federal oversight. The FAA has long delegated some safety certification duties to companies and individuals, as resource limitations have meant that agency employees can’t personally monitor every aspect of certification processes. The ODA program, however, gives companies such as Boeing unprecedented authority to certify the airworthiness, and accordingly the safety, of their own planes.

Initiated in 2005, the program has faced repeated criticism from the Transportation Department’s inspector general. The watchdog warned in 2015 that under the program the agency was not prioritizing oversight of “the highest-risk areas,” like new aircraft designs, and that it didn’t have an adequate system for determining whether the teams overseeing certifications were sufficiently staffed.

Citing accounts from current and former FAA employees, the New York Times recounted in July how, during the 737 Max certification process, the agency “handed nearly complete control to Boeing” as the company was “racing to finish the plane” to compete with a rival manufacturer. As the Times further reported, FAA engineers determined after the October 2018 737 Max crash that they did not “fully understand the automated system” that contributed to the crash, and that the regulator “had never independently assessed the risks” of the system before approving the jet the previous year.

Late in the design process Boeing had made the system, known as MCAS (short for Maneuvering Characteristics Augmentation System), significantly more powerful, which introduced potential new dangers. However, as the Times notes, “Boeing did not submit a formal review of MCAS after the overhaul,” and that the agency’s rules didn’t require it to do so. And in a move that the FAA’s then-acting administrator told lawmakers during a May hearing was misguided, the FAA chose not to require Boeing to mention MCAS in the 737 Max pilot manuals. MCAS was also absent from Boeing’s hour-long virtual training for pilots on the differences between the 737 Max and its predecessor, as the Seattle Times noted. In an effort to cut costs and speed the certification process, Boeing officials had pushed to reduce and downplay those differences to minimize training and testing requirements, the New York Times reported.

In March 2019, a second 737 Max crashed, bringing the total deaths in the two crashes to 346.

The problems with the Organizational Designation Authorization program go beyond the certification process itself. In 2012, the inspector general had reported that some employees at the FAA office overseeing Boeing felt they couldn’t raise concerns about the company’s compliance with regulations without fear of retaliation. Along with unease about the office’s close relationship with the company, some felt they didn’t always have agency leaders’ backing “to hold Boeing accountable.” (There’s reason to fear that a culture that chills whistleblowers could persist at the FAA: Stephen Dickson was confirmed as administrator in July amid reports he was implicated in a whistleblower retaliation case during his tenure at Delta.)

Meanwhile, as recently as last year, Congress has mandated and encouraged the FAA to give industry more certification authority, to cut government costs and speed up the process for companies. For its part, Boeing shells out millions of dollars lobbying Congress and federal agencies each year, according to data compiled by the Center for Responsive Politics. CNBC reported the company’s lobbying spending in the second quarter of 2019 totaled $3.9 million.

Congress’s encouragement of self-regulation, possibly fueled by significant industry lobbying, raises legitimate concerns about undue industry influence or regulatory capture—that is, when a regulator works to advance the interests of the industry it regulates, often at the expense of the public.

The résumés of current and former high-level FAA officials offer additional signs of industry capture or at least the appearance of a conflict of interest. For example, Ali Bahrami, now the FAA’s top safety official, previously led the office that oversaw Boeing before leaving in 2013 (early in the 737 Max’s certification process) for a top post at the Aerospace Industries Association, a major aviation industry lobby that’s funded in part by Boeing and is a proponent of the Organizational Designation Authorization program. As a former FAA engineer told the New York Times, Bahrami pushed an agenda of “abdication” to Boeing during his leadership of the office regulating the company.

In a July hearing before a Senate panel, Bahrami, when asked whether the FAA had bent the rules for Boeing, defended the agency’s oversight and certification process, and said, “In my view, the process was followed.”

As the Project On Government Oversight (POGO) has detailed, other key FAA officials, such as the agency’s most recent acting chief, have also moved between government and the aviation industry, including to the Aerospace Industries Association.

Undue industry influence such as this can corrode accountability throughout the federal government. As POGO discussed in our recommendations to the 116th Congress, lawmakers have a vital role to play in curbing undue influence, particularly by slowing the revolving door and eliminating loopholes that result—or appear to result—in policies that put special interests over the public interest.

Speaking to NPR following the second 737 Max crash, James Hall, former chair of the National Transportation Safety Board, said of the FAA and the aviation industry, “All anyone has to do is look at the revolving door in Washington, DC, in this agency, and the industry, to realize that there is a cozy relationship. Now the question is: Is that cozy relationship having an adverse impact on the safety decisions being made?”

In the case of the 737 Max, the answer appears to be a resounding yes.”


Boeing Tanker Scandals Never Go Away



It has now been more than fifteen years since the National Legal and Policy Center (NLPC) first exposed the “cozy dealings” between Boeing and an Air Force procurement officer named Darleen Druyun. 

The scandal that followed saw Druyun go to prison along with then-Boeing CFO Michael Sears, and the resignation of then-CEO Phil Condit.”


“In the intervening years, the original plan for the Air Force to lease the tankers from Boeing was scrapped. Boeing then lost the contract to an Airbus/Northrop consortium, only to pry it back through the exercise of raw political influence by the Obama administration.

A summary of the scandal that I put together in 2010 can be found here. A more recent account by Mark Thompson of the Project on Government Oversight is here.

Today, Boeing is finally delivering the tankers but the project is mired in problems. After years of delays and cost overruns (surprised?), the Air Force in January stopped accepting delivery of the tankers because they were full of trash and loose tools.

Supposedly, all this junk rattling around posed no operational or design threat, but it certainly makes one wonder. If Boeing can’t even clean up and inspect for delivery brand new aircraft costing hundreds of millions each, just how carefully did it test and inspect the onboard systems that really do matter?

Years ago, we criticized the “culture of corruption” at Boeing. Will Roper, the assistant Air Force secretary for acquisition referenced Boeing’s culture last week when he said, “Culture doesn’t happen because you had a meeting. It happens because you did the little things right time and time after time.”

Roper continued, “Which is why for us to re-bestow trust on that line, we’re going to be measuring as we go, and we expect to see many months of pristine airplanes before we’ll say the culture is back. So for the next year or so, we’re going to be monitoring month by month saying: ‘Is it getting better?’ ”

The Air Force has announced that it will now accept deliveries of tidied up planes. Procurement officers are famous for talking tough, and then pulling punches when it comes to actually actually dealing with contractors. After all, they all someday want a “private sector” job.

The tanker’s troubles outlasted the man who uncovered the “cozy dealings” in 2003. Ken Boehm, who was then NLPC chairman, passed away last year. It remains to be seen if there has been a Boeing culture change. The questions generated by the 737 MAX tragedies don’t help the company’s image. Sometimes the more things change, the more they stay the same.


Boeing And The Art Of Capitalism



Boeing and Capitalism Plane

Boeing-Saab’s T-X trainer design won the Air Force’s T-X competition in September 2018. (John Parker/Boeing)


“Is fair competition achieved when one company has more cards to play than others and therefore walks away the winner? It doesn’t leave a clear path to victory for smaller competitors, particularly international ones that are inevitably at a disadvantage from the start.

Even a giant like Lockheed Martin, which has more than double the defense revenue of Boeing, has less than half the free cash flow.”

Boeing and Capitalism graphic

Image:  Seeking Alpha.com

“It’s been about a month since the U.S. Air Force’s T-X trainer contract was awarded, providing plenty of time for industry and media alike to chew over the decision.

A lot of the conversations I had started out pretty much the same: “Were you surprised?”

I’m not one to place bets on major defense programs, but, yes, I was surprised.

And I was in good company. As the only firm offering a clean-sheet design, with no track record and presumably a whole lot of development and manufacturing costs ahead of it, a lot of people I spoke to saw Boeing as a long shot.

And yet the company won the $9.2 billion contract to produce 351 jets. Moreover, they won on price. And it’s not the only thing Boeing won: there was also the $2.4 billion UN-1N Huey replacement, and the Navy’s $805 million MQ-25 aerial fueling drone contract.

So why Boeing?

First, one could argue that Lockheed Martin might have been pressed by the Air Force to compete for the trainer but did not actually want to win. Not enough to really go bold, anyway. The company has a pretty demanding portfolio already.

Notably, Lockheed Martin CEO Marillyn Hewson said that matching the winning prices for Boeing’s trifecta of wins would have led to cumulative losses across all three programs in excess of $5 billion, “an outcome that we do not feel would have been in the best interest of our stockholders or our customers.”

Why would it be all that different for Boeing?

It won’t be, necessarily. Chances are that Boeing knows full well that it will see losses. It already has — announcing $691 million of new third-quarter charges for winning the contracts. But even billions in charges is palatable for a company that last quarter alone saw free cash flow surge 37 percent to $4.1 billion, and that number is expected to climb to $13 billion or more for the year.

That is the fundamental advantage of having a commercial business. Boeing has shown what appears to be the strategy for this program: Ride the wave, borrow from one business to offset losses in the other, keep the St. Louis plant humming and eventually see a major return, particularly when other buyers emerge. (Beyond international sales for T-X, Richard Aboulafia of Teal Group pointed to a few dozen planes procured for U.S. “red air” adversary training, and the prospect of a navalized T-X variant one day replacing the Navy’s T-45 carrier-based trainer, which could be good for 200 more.)

Obviously there’s risk involved. Boeing is counting on future opportunities to more than offset any overages it swallows. The commercial business may be booming, but that’s still a gamble, albeit a relatively safe one. In the meantime, though, Wall Street is pleased, particularly after losses of the Joint Strike Fighter program and Long Range Strike Bomber left some questioning Boeing’s future in combat aircraft manufacturing. This keeps the company squarely in the game.

It’s also an advantage that benefits the Department of Defense and the taxpayer. Looking at the trainer specifically, the Air Force is ultimately getting a more advanced aircraft, built to order, so to speak, for a deep discount. Cost overruns will happen, but the Pentagon won’t be on the hook for them. Perhaps it could bring some added oversight from congressional watchdogs, but that’s a small price to pay. This is a good deal.

But is that ultimately how the procurement game is meant to be played? Is fair competition achieved when one company has more cards to play than others and therefore walks away the winner? It doesn’t leave a clear path to victory for smaller competitors, particularly international ones that are inevitably at a disadvantage from the start. Even a giant like Lockheed Martin, which has more than double the defense revenue of Boeing, has less than half the free cash flow.


Brass Parachutes: The Problem Of The Pentagon Revolving Door




“There were 645 instances of the top 20 defense contractors in fiscal year 2016 hiring former senior government officials, military officers, Members of Congress, and senior legislative staff as lobbyists, board members, or senior executives in 2018. 

Pentagon officials captured by the contractors they oversee is skewing our spending priorities and foreign policy. Military officers going through the revolving door included 25 Generals, 9 Admirals, 43 Lieutenant Generals, and 23 Vice Admirals.”

“Instances in Which Defense Contractors Hired Senior Government Officials as Executives, Directors, or Lobbyists

Company (in descending order of contract dollars awarded in FY 2016) Number of Lobbyists Number of Executives Number of Directors, Members, or Trustees Total
Lockheed Martin 51 0 4 55
Boeing 69 11 4 84
Raytheon 39 3 5 47
General Dynamics 63 4 3 70
Northrop Grumman 50 4 2 56
United Technologies 52 2 3 57
BAE Systems 24 1 1 26
L-3 Communications 19 0 3 22
Huntington Ingalls Industries 32 1 3 36
Humana 14 0 1 15
Bechtel 8 1 0 9
UnitedHealth Group 39 1 1 41
McKesson Corporation 13 0 0 13
Health Net 16 1 1 18
Bell Boeing Joint Program Office n/a n/a n/a n/a
Science Applications International Corporation (SAIC) 5 4 2 11
AmerisourceBergen 21 0 1 22
Textron 9 3 2 14
Harris Corporation 8 1 2 11
General Atomics 27 2 1 30
Booz Allen Hamilton 3 2 3 8
Totals 562 41 42 645

The number of instances of the revolving door is certainly much higher than what we found using publicly available sources since those sources largely rely upon self-reporting by the companies and individuals. A 2006 Government Accountability Office survey of contractors and Internal Revenue Service data—the most recent government review available—found that 52 contractors employed 2,435 former Department of Defense senior and acquisition officials who had “previously served as generals, admirals, senior executives, program managers, contracting officers, or in other acquisition positions which made them subject to restrictions on their post-DOD employment.”2

Explore the Pentagon Revolving Door Database

The Pentagon Revolving Door Database exposes the depth of the reciprocal relationship between senior Pentagon officials and defense contractors.

Explore the database


Governments and corporations want to make sure their leaders and employees act in the best interest of the organization. The private sector has a number of tools for protecting itself from conflicts of interests or otherwise compromising confidential business information. Law firms have conflict-of-interest reviews, and it’s pro forma for major corporations to require departing executives to sign non-disclosure and non-compete agreements. Even fast food restaurants can be exceedingly strict about employees taking jobs with competing chains, or with other franchises in the same chain. Private sector companies do this to protect themselves and their bottom lines.

When it comes to government officials, there are ethics laws that are supposed to protect the public interest. These laws should prevent government officials from using their public service to advance their personal or financial interests at the expense of the public. These laws are frequently insufficient, however. For instance, laws regulating the revolving door—the practice of government officials leaving public service to work for companies they oversaw or regulated—have been ineffective at slowing or stopping it. The revolving door between the government and the corporations it does business with often creates the appearance that government officials are improperly favoring a company in awarding or managing federal programs and contracts. Without transparency and more effective protections of the public interest the revolving door between senior Pentagon officials and officers and defense contractors may be costing American taxpayers billions. Taxpayers deserve protecting just as private sector companies do.

We should be able to have confidence that government officials are making informed decisions based on what’s best for national security, for men and women in uniform, and for the American people.

In his 1961 farewell address, President Dwight D. Eisenhower warned that the influence of the military-industrial complex could “endanger our liberties or democratic processes.” The revolving door of Pentagon officials and senior military leaders seeking lucrative post-government jobs does exactly that. It often confuses what is in the best financial interests of defense contractors—excessively large Pentagon budgets, endless wars, and overpriced weapon systems—with what is in the best interest of military effectiveness and protecting citizens.

The Project On Government Oversight (POGO) has consistently found federal ethics laws to be a tangled mess and insufficient to prevent conflicts of interest. Our first in-depth look into those laws, The Politics of Contracting, revealed how the revolving door leads to trends of agency capture and large defense contractors gathering more monopoly power.7 While those trends may benefit defense industry executives and their stockholders, they undermine competition and performance, lead to higher prices for the military and taxpayers, and can diminish military effectiveness. While there have been some improvements to the laws since we published our first report on the revolving door in 2004, our investigation found the tangled mess remains.

The leadership of the Senate Armed Services Committee expressed concerns in 2017 that the Department was too close to and depended too much on its largest contractors. “90 percent of the spending of the taxpayers’ dollars comes out of five different corporations. That’s not what our Founding Fathers had in mind,” then-Senate Armed Services Committee Chair John McCain (R-AZ) noted at a confirmation hearing for Patrick Shanahan, a former Boeing executive nominated to be Deputy Secretary of Defense. “If you’re drawing from one sector alone, you get this group-think possibility, which could be dangerous,” Ranking Member Jack Reed (D-RI) told reporters.11 Despite those concerns, the Senate confirmed Shanahan.

Following World War II, several five-star generals chose not to go through the revolving door. General George Marshall led the Red Cross. Before becoming president, General Dwight Eisenhower became president of Columbia University. “[A]n officer who has had procurement duties going with any company which does business with the Government presents a problem to the government, to the company with which he goes, and to himself,” General Omar Bradley told the House Armed Services Special investigations subcommittee in 1959. “[N]o former member of the Government should take advantage of his previous position to bring any influence on members of the Defense Department, or any department of Government, to grant contracts to the company with which he is now affiliated.” A number of contemporary retired officers have also found lucrative positions in the private sector that do not create a conflict of interest. Admiral Mike Mullen (USN Ret.), the former Chairman of the Joint Chiefs of Staff, joined the board of Sprint.14 Vice Admiral William Burke, formerly the deputy chief of naval operations for warfare systems, became the chief maritime officer for the Carnival cruise company.15 Lieutenant General Thomas P. Bostick, the 53rd Army Chief of Engineers, became an executive at Intrexon, a biotechnology company. “I have committed to myself to never do business with the US Army Corps of Engineers. I do not want to use my past position to do business with [the US Army Corps of Engineers] either for myself or as a consultant for anyone else,” Bostick told POGO.

“I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product.”


Although it is clear there are opportunities for post-Pentagon service that do not pose conflicts, sadly it is equally clear that a growing number of former military and civilian officials are choosing to take a different path. The vast majority of the individuals identified in this report did not violate any law or regulation. Many of these instances do, however, show the revolving door spinning out of control due to ethics laws that are insufficient to protect the public interest. We should be able to have confidence that government officials are making informed decisions based on what’s best for national security, for men and women in uniform, and for the American people. Instead, the system is skewed by undue influence, rewarding those public officials who favor a future employer or industry with contracts or lucrative jobs. The public is rightfully concerned about the concentration of wealth and self-dealing in the Capitol, with five of the ten richest counties in the United States located within an hour of Washington, DC. Some of that wealth is connected to increased spending on contracting, with the Washington region receiving 17 percent of all federal procurement spending in fiscal year 2016.

This system of influence-peddling has long been recognized, but speaking out against it can hurt the post-government careers of military and civilian officials. “If a colonel or a general stands up and makes a fuss about high cost and poor quality no nice man will come to see him when he retires,” reads a 1983 internal U.S. Air Force memo. “Even if he has no interest in a post-retirement job in the defense industry he is taking a chance by making a fuss.”20 Today, industry programs like “From Battlefield to Board Room,” match up retired and soon-to-be retired military officers with private companies—including large federal contractors—looking to hire new leadership. One individual who benefited from the Battlefield to Board Room program was Major General Mike Boera (USAF Ret.), who was the Air Force’s director of programs and director of requirements and developed programs and business plans for weapon systems. After he went through the Board Room program he became the Executive of Intelligence, Information and Services at Raytheon. The year he joined the company they had received approximately $2.9 billion in Air Force contracts.

In some instances laws designed to punish influence-peddling work. One of the most egregious revolving door examples involved the Principal Deputy Under Secretary of the Air Force Darleen Druyun, who oversaw the management of the Air Force’s weapons acquisition program from 1993 to 2002. Druyun helped Boeing win billions of dollars in business while simultaneously negotiating jobs at Boeing for her son-in-law, and eventually herself. In 2004, Druyun pleaded guilty to a conspiracy charge and was sentenced to nine months in prison.24The Congressional Budget Office found that an aerial refueling aircraft deal Druyun was negotiating with Boeing while seeking employment with the company would have overcharged taxpayers nearly $5.7 billion. In that case, the system ultimately worked, as existing laws did prohibit Druyun’s egregious behavior. However, that was an unusual case. A study commissioned by the Department’s acquisition office identified an additional eight acquisition actions involving Druyun “where the acquisition process appeared irregular or abnormal and where the results may not have been in the best interest of the Government.” The study specifically questioned justifications for sole-source decisions, contract adjustments made after initial award, and changes resulting in “less stringent requirements for the contractor, but higher costs for the Government.”

The revolving door is just one of several forms of undue influence on the operations of the Department of Defense.

The revolving door is just one of several forms of undue influence on the operations of the Department of Defense. While beyond the scope of this report, the reverse-revolving door (when defense industry officials join the government, raising concerns they will then give preferential treatment to their former employers) is also a matter of significant concern. Top contractors have been over-represented in Department leadership. At the beginning of his Administration, President Obama issued an ethics executive order banning lobbyists form working in agencies they lobbied during the previous two years, only to issue the first waiver shortly thereafter to his first Deputy Secretary of Defense, William Lynn, who was previously a Raytheon lobbyist. The last Deputy Secretary for that Administration, Bob Work, joined Raytheon’s board shortly after he retired from the government.28 President Donald Trump’s Secretary of Defense, James Mattis, was a former board member of General Dynamics. His Deputy Secretary, Patrick Shanahan, came from Boeing, the Pentagon’s second largest contractor. Campaign contributions, lobbyists, earmarks, industry-sponsored trips, and contracts structured to garner political support for specific contractors’ programs also undermine the fairness and effectiveness of the procurement system. The government and the public have significantly more—though still inadequate—information about those other forms of influence-peddling. For example, campaign contributions must be periodically disclosed, registered lobbyists must report their expenditures and generic lobbying activities, and incoming executive branch officials have to disclose their positions held outside of government. But the public has significantly less information when it comes to the activities of former government officials.

President Trump has spoken out against that conflict of interest. “I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product,” then-President-elect Trump said.

Companies will utilize all of the tools of the industry to gain

  • access to senior government policy and program officials;
  • a competitive advantage;
  • business opportunities; and
  • taxpayer dollars.

While all of these influence-peddling methods produce results for companies, the revolving door is truly the quickest and easiest way for a company to get a phone call answered or a person-to-person meeting inside the Pentagon. “I myself don’t get pressured by outsiders, but they do go higher up and get pressure put on me that way,” then-Vice Admiral Hyman G. Rickover told a House oversight committee in 1959 when asked about the revolving door. “It is generally in the nature of urging me to undertake new projects which we consider not worthwhile…it is almost subversive not to want to spend Government money.”30

While ethics restrictions ban some revolving door conflicts, many revolving door instances create an actual conflict of interest, or even the appearance of one, which, although not explicitly illegal, can be just as insidious. Such conflicts can potentially lead to favoritism, ineffective weapons and programs, and bad deals. As a result the conflicts can be detrimental to agencies achieving their mission and waste taxpayer dollars.


Many post-government employment ethics laws focus on limiting lobbying or representation before government agencies and officials. The lobbying/representational ban prohibits former federal employees from personally contacting the government on issues they handled during their public service and imposes a one-year or two-year cooling-off period, or a permanent restriction depending on the matter and their level of involvement. In 2008 the Government Accountability Office audit found “significant under-reporting of the contractors’ employment of former [Department of Defense] officials.” To try to get a handle on conflicts of interest, Congress required in the fiscal year 2008 National Defense Authorization Act that the Department of Defense create and maintain a database to track its ethics opinions for its senior officials and officers who seek employment with DoD contractors.33 Unfortunately, that database—known as the After Government Employment Advice Repository (AGEAR)—has never been made public, is limited to certain officials, and, according to several Department of Defense Inspector General reports, is incomplete.34 Notably, the United Kingdom does allow its citizens to see how its government interprets ethics laws for former members of its cabinet offices.

It’s also illegal for contractors to knowingly provide compensation to covered officials for two years after the official left the government unless the official received a written ethics opinion that would allow them to receive compensation. Contractors must also certify they are in compliance with that restriction. If contractors don’t comply with these requirements they could be subject to rescission of their contract, suspension, or debarment.

“Ninety percent of the spending of the taxpayers’ dollars comes out of five different corporations. That’s not what our Founding Fathers had in mind.”


For this investigation, POGO compiled, and will continue to update, a database of senior Department officials and senior officers who go through the revolving door. Our database and this report use publicly available information and information obtained through the Freedom of Information Act to show what AGEAR could look like if the public could see it. Our database includes anyone who left the Department of Defense from 2008 to the present and was a senior political appointee, a military officer ranking O-6 and above, or a civilian equivalent, who went to work for an entity with a significant financial interest in the operations of the Department of Defense within two years—the recommended “cooling off period” between when someone leaves government service and when they join an entity that has a financial interest in the work they performed while in government. For defense contractors we defined “a significant financial interest” as receiving $10 million or more in Department of Defense contracts in a fiscal year. This financial threshold mirrors the Department’s standards for its own ethics regulations. We believe two years is long enough to appropriately balance protecting the integrity of the Department’s decision-making processes and the need for people to make a living. There is quantitative analysis that supports the idea that the “influence industry” provides financial incentives based on an individual’s relationships with current policymakers. A 2010 London School of Economics study found “lobbyists with past working experience in the office of a U.S. Senator suffer a 24% drop in revenue—around $177,000—when their ex-employers leave office.”40 At that point the former official’s value is based less on who they know and more appropriately on their substantive skills and knowledge.

We reviewed Department websites and Senate confirmation lists to identify officials who fell within the scope of our study. In some cases we used LinkedIn profiles, and independently confirmed information from those profiles when possible. We also sought comment from the companies, and individuals who could be reached, to confirm that information. We also submitted Freedom of Information Act requests for ethics decisions and information on retired military officers who received waivers from the State Department and their prior military Service to allow them to work on behalf of foreign governments. We are still waiting for responses from the Navy, the Air Force, and the State Department. When available, we referenced agency and employer pages, company and agency press releases, press reports, LinkedIn profiles, and financial disclosure documents. Employer names are based on the name of the entity at the time the official joined the company.

For the top 20 contractors we looked at the companies’ senior executives, board members, and registered lobbyists to see who had previous government experience. Unsurprisingly, a number of these individuals were former Congressional staffers or legislative liaisons for Defense agencies or military Services. Some executives were also lobbyists and counted in each category. A number of the lobbyists were employed by multiple contractors, so there were more instances of the revolving door than people. Many of the lobbyists are not employees of the companies but instead hired through outside firms.

Most of the cases in our database and this report are individuals who went from senior Pentagon positions to work directly for defense contractors as board members or executives, or as lobbyists or consultants on behalf of defense contractors. The definition of lobbyist no longer—if it ever did—captures all the methods of peddling influence, however. A 2016 Politico investigation revealed that well-intended lobbying reforms enacted in recent years not only failed to slow the revolving door but also “created an entire class of professional influencers who operate in the shadows” as “policy advisers, strategic consultants, trade association chiefs, corporate government relations executives, affiliates of agenda-driven research institutes,” among other positions.41

Many of those people occupying those positions aren’t required to register as lobbyists. As another Politico investigation revealed, even Lockheed Martin’s top government affairs official did not register as a lobbyist.42 Tom Eldridge, who was SAIC’s senior vice president for government affairs until mid-2018, was not registered while in that position, either.43 SAIC did not respond to a request for comment about why he was not registered.

Then-presidential candidate Donald Trump appeared to recognize this problem and proposed a five-point plan for ethics reform that would “close all the loopholes that former government officials use by labeling themselves consultants and advisors when we all know they are lobbyists.”44 We included consultants and strategic advisors when we found evidence that they or their firm were in the business of contracting with the Department of Defense, or they were advising corporations with a significant financial interest in Department of Defense programs. Unless otherwise noted, the entities and individuals mentioned in this report declined to comment or could not be reached for comment on our findings.”


What Is In the $717 Billion Military Spending Bill Signed Into Law on August 14, 2018?



What is in Defense Authorization


“What military contractors benefit from this legislation that only 10 senators and 66 representatives voted against?

There never seems to be many who are concerned about how military spending continues to balloon.”

“The bill authorizes $921 million for military construction in “overseas contingency operations,” which is the Pentagon’s euphemism for empire-building or war-making in countries and regions around the world.

That figure is a 23 percent increase from the $748 million in the military spending bill for fiscal year 2018.

As Ryan Alexander of Taxpayers for Common Sense wrote in 2017, this continues a practice President Barack Obama’s administration employed, where projects are moved “off budget” and do not count toward Budget Control Act caps. However, the military projects this slush fund pays for still add considerably to the country’s trillions of dollars in debt.

Sixty-nine million dollars is appropriated for a high value detention facility at Guantanamo Bay, which is a part of Trump’s agenda to not close the prison camps and continue to use facilities to hold detainees.

It extends the Pentagon’s authority to train and equip Syrian opposition groups with arms, which has fueled war in Syria.

Democratic Representative Tulsi Gabbard, who voted against the bill, opposed a section of the bill that gives Defense Secretary James Mattis the authority to draft a strategy to “counter the destabilizing activities of Iran.” She contended it authorized the U.S. military to go to war.

“The provision does not define what destabilizing activities they want our troops and taxpayer dollars to counter. It does not define a clear objective or end-state for our troops to achieve,” Gabbard stated. “In addition, this provision shuts the American people out from this decision entirely by circumventing Congress’s constitutional responsibility to declare war and giving unilateral power and unending authorization to ‘counter Iran’ to this and future administrationswithout defining in any way, shape, or form what the objective really is.”

Both Independent Senator Bernie Sanders and Republican Senator Mike Lee voted against the bill. They’ve demanded Mattis disclose the scope of U.S. military involvement in Saudi Arabia’s war against Yemen.

Remarkably, Democratic Senator Dianne Feinstein voted against the military spending bill because of provisions that remove “congressional oversight for building future nuclear weapons.”

“I don’t believe any president needs more nuclear weapons, but I’m particularly troubled by this administration’s statements that it would consider using low-yield weapons to fight so-called ‘limited’ nuclear wars,” Feinstein declared. “Building nuclear weapons for a role beyond deterrence is incredibly reckless. There is no such thing as a ‘limited’ nuclear war. Once a nuclear weapon is used, it’s game over.”

Trump will have funds available in fiscal year 2019 for a military parade. It also accelerates the Pentagon’s militarization of space by establishing a structure under Strategic Command for a force for “space warfighting,” creating a boondoggle for military contractors.

According to the Republican Policy Committee’s summary, the bill appropriates $360 million for Stryker A1 combat vehicles—an increase of $338.1 million. General Dynamics, which was recently awarded a $258 million “contract modification” by the Pentagon to upgrade 116 Stryker flat-bottom vehicles to the Stryker A1 configuration,” will benefit.

It grants “multiyear procurement authorities” for the Boeing F/A-18E/F Super Hornet aircraft (Boeing), Lockheed Martin C130 Super Hercules aircraft, and Northrop Grumman E-2 Hawkeye aircraft.

Congress appropriated $1.8 billion for the Boeing Super Hornet and $903 million for the Northrop Grumman E-2 Hawkeye.

It earmarks $1.13 billion for the Lockheed Martin F-35 Joint Strike Fighter program.

As the Project on Government Oversight (POGO) reported, “The F-35 has now entered an unprecedented seventeenth year of continuing redesign, test deficiencies, fixes, schedule slippages, and cost overruns. And it’s still not at the finish line.”

“Numerous missteps along the way—from the fact that the two competing contractors, Lockheed Martin and Boeing, submitted ‘flyoff’ planes that were crude and undeveloped ‘technology demonstrators’ rather than following the better practice of submitting fully functional prototypes, to concurrent acquisition malpractice that has prevented design flaws from being discovered until after production models were built—have led to where we are now,” POGO added.

Another billion will further enable the Pentagon to hide cost overruns and conceal developmental issues.

Bloomberg reported in February that Trump would seek 24 Boeing Super Hornets, which reversed a decision by President Barack Obama’s administration to no longer purchase the fighter from Boeing. The Navy is trying to make up for the fact that the Lockheed Martin F-35 Joint Strike Fighters are not yet ready for deployment.

The Navy plans to procure a total of 75 E-2 Hawkeye aircraft from Northrop Grumman, and 45 were already manufactured. The remaining aircraft will feature “aerial refueling capability.”

The bill appropriates $452 million for Boeing’s Apache Block III helicopters, and more than a billion for Lockheed Martin’s UH-60 Blackhawk M Model helicopters. It also earmarks over a billion for the Pentagon’s M1 Abrams Tanks upgrade program, which will benefit General Dynamics.

General Dynamics already was granted a contract from the Army to upgrade 100 Abrams “main battle tanks.” In January 2018, it was reported that the military contractor was not only upgrading the tanks for the U.S. but also Kuwait and Saudi Arabia.

When it comes to drones, the military spending bill appropriates $60 million for the Army’s Gray Eagle system, which benefits General Atomics and Raytheon.

Remarkably, the bill increases the funds for General Atomics’ MQ1 Predator drones from $87 million to more than $100 million. The initial request was for $43 million, but during conference, that number was raised over 100 percent to $103,326,000.

According to OpenSecrets.org, as of August 13, Boeing donated $2.9 million in 2018 to candidates, party committees, other political action committees, or outside spending groups. They ranked 62 out of 16,585 companies or organizations whose PACs or employees and their families that made contributions. The corporation spent $7.5 million on lobbying in 2018 and $16.7 million on lobbying in 2017, ranking tenth out of 3,846 companies or organizations. It donated over $2 million to incumbent senators and representatives.

General Atomics donated $941,000 in 2018. They ranked 273. The corporation spent $2.7 million on lobbying in 2018 and $4.7 million on lobbying in 2017, ranking 94th in 2018. The corporation gave over a half million to incumbents.

General Dynamics donated $2.4 million in 2018. They ranked 84. The corporation spent $5.9 million on lobbying in 2018 and $11.46 million in 2017, ranking twenty-sixth. The corporation gave over $1.4 million to incumbents.

Lockheed Martin donated $3.4 million in 2018. They ranked 44. The corporation spent $6.8 million on lobbying in 2018, and $14.4 million in 2017, ranking sixteenth. The corporation gave over $2.3 million to incumbents.

Raytheon donated $2.2 million in 2018. They ranked 97. The corporation spent $2 million on lobbying in 2018 and $5 million in 2017, ranking eighty-fourth out of 3,645. The corporation donated over $1.2 million to incumbents.

Donations to incumbents are significant because defense corporations have a significant interest in maintaining the status quo. They want representatives and senators who have proven themselves to be dependable in delivering massive appropriations bills for what they manufacture, and they depend on the U.S. government to help them meet their shareholders’ expectations for growth.

Very few senators made statements critical of the military spending bill in its entirety, but Democratic Senator Ron Wyden, who voted against the bill, called attention to how it will benefit the military industrial-complex.

“After Republicans in Congress spent almost $2 trillion in tax breaks that are overwhelmingly skewed to multinational corporations, they’re now pushing through legislation that green-lights billions more for open-ended military commitments,” Wyden stated.

Wyden was also concerned about the provisions for nuclear weapons. He also indicated he could not support a $700 billion bill without having an opportunity to vote for amendments “related to nuclear weapons, sexual assault in the military, presidential war powers, cybersecurity, and Buy America for important national security industries, among others.”

Much is made about how many trillions a program like Medicare For All would cost taxpayers. Everyone is always concerned about social welfare programs, including increasingly popular plans for free college tuition, and how much that would impact the country’s budget.

The best way to build support for these policy changes that would be important to millions of Americans is to emphasize how the country always has trillions for wars (as well as trillions for tax cuts and bailouts for corporations). But there never seems to be many who are concerned about how military spending continues to balloon.”


Boeing’s KC-46 Penalties Now Up To $3.4B Thanks To New $426M Charge


KC-46 Overrun

Unfinished KC-46 Pegasus aircraft sit awaiting modification at Boeing’s Everett facility near Seattle, Wash. (Jeff Martin/Staff)


“Another financial quarter meant another financial hit for Boeing, which disclosed $426 million in cost overruns to the KC-46 tanker program during an earnings call…

The newest charge brings Boeing up to $3.4 billion in pretax overruns on the program, and — due to its fixed-price contract with the U.S. Air Force — the company is required to foot the bill”.

“The price growth was attributed to delays in the certification process as well as “higher estimated costs” for incorporating needed modifications to six flight test and two early-build aircraft.

After tax, the charges come down to about $334 million, said Boeing CEO Dennis Muilenburg during the July 25 earnings call.

“We continue to make steady progress towards final certification for the KC-46 tanker and recently completed all flight tests required to deliver the first aircraft, which is expected to be in October of this year, as now agreed upon with the U.S. Air Force,” he said. “This is a significant milestone for us and our customer, representing the culmination of three years of testing and over 3,300 flight hours.”

Now that the flight testing needed for first delivery is complete and the final configuration of each KC-46 has been defined, Boeing can move ahead on wrapping up the manufacture of the first eight aircraft, Muilenburg said.

“While there is still a lot of work ahead of us, we now have a very clear line of sight what is needed to deliver these highly mission-capable aircraft to our customers,” he said.

The Air Force plans to buy 179 KC-46s, with the first 18 aircraft under a contractual obligation to be delivered in October. Boeing will likely miss that “required assets available” deadline because the earliest it can deliver the first tanker is October, and the Air Force is not capable of accepting 18 aircraft at a time. However, it is unclear whether Boeing will weather another financial penalty should that happen.

Although Boeing has incurred massive costs over the KC-46’s development, which was capped at $4.9 billion, Muilenburg said Wednesday that the company “remain[s] confident in the long-term value of this franchise” due to a projected program that will number hundreds of planes, as well as associated training and follow-on support.”


Major Defense Corporations Have Appetites For Startup Investments


Aerospace Companies Startups


“Major defense primes including Lockheed, Boeing and Airbus have recently started venture funds with the hope of deepening ties with fledgling commercial tech businesses.

Google may be backing away from future Pentagon contracts, but defense companies are finding a receptive audience in Silicon Valley startups, the head of Lockheed Martin’s venture fund said Wednesday.”


“Chris Moran had spent about 30 years of his career in Silicon Valley before taking over Lockheed’s venture fund in June 2016. So naturally he felt “a little trepidation” about moving into the defense sector, he told a group of reporters at June 6 roundtable.

“Almost from the outset, I was pleasantly surprised by the embracement from the folks that I met both inside the company and in the startup space, finding those technologies, talking about the problems that we have to work on, and finding that they were very excited about working on those technologies and working with Lockheed Martin,” he said.

Google announced on June 1 that it plans to no longer bid for future contracts on the Pentagon’s Project Maven, which used the company’s machine learning technologies to analyze drone imagery.

When Google’s involvement in the program was disclosed earlier this year, it was met with internal criticism, including a petition signed by 4,000 employees imploring Google to vow never to work with the Defense Department, Wired magazine reported in May.

But despite the controversy, Moran said he hasn’t seen startup companies try to move away from working with defense companies — or accepting their seed money.

“I know there’s kind of an independent streak in the Valley, so maybe they want to keep some distance there,” he said. “But I haven’t seen it. When I go talk to companies — and again I’m working at the engineering level a lot of times — they are absolutely enthralled by the types of things that we work on and love the challenge.”

Lockheed Martin's venture capital investments include a company called Terran Orbital, which is a partner to Lockheed on the LM50 nanosatellite shown here. (Lockheed Martin)
Lockheed Martin’s venture capital investments include a company called Terran Orbital, which is a partner to Lockheed on the LM50 nanosatellite shown here. (Lockheed Martin)

Major defense primes including Lockheed, Boeing and Airbus have recently started venture funds with the hope of deepening ties with fledgling commercial tech businesses, and Moran said the companies’ engagements in Silicon Valley have made defense firms more credible as a partner.

Now, Lockheed is doubling down on its investments. Moran announced during the roundtable that Lockheed will take $100 million of the money saved from recent tax reform legislation and funnel it into the its venture capital fund — increasing that pool of money two times over.

Since 2016, the company has invested $40 million in eight companies, some of which have not be publicly disclosed. While Lockheed’s venture capital arm gets about 500 leads on new technology a year, Moran wants to be able to double that.

“We’d love to go from — generically — about four investments per year, we’d love to get to six or even eight,” he said. “The $200 million will help us to work with more companies, and our goal is to try to get those relationships teed up earlier than later.”

With its new infusion of funds, it might also look to emerging technologies like quantum computing and quantum sensors, where there has been a lot of recent activity.

“Many companies have been formed in the last two years in that, so we’re looking in those areas as well,” Moran said.

So what has Lockheed been getting out of its venture capital investments?

Unlike other investors, Lockheed isn’t funding companies in the hopes of getting a massive financial return. Instead, it wants to invest in startups with big commercial potential, which are developing technologies that could give Lockheed a strategic edge in areas like cyber, space, artificial intelligence, autonomy, 3-D printing and data analytics.

“The perfect investments for us are those that are scaling and growing through commercial activity but at the same time are maturing, hardening, becoming more reliable as a result of the volume and scale that the commercial space can bring,” Moran said.

For instance, Lockheed has made investments in commercial radar and lidar companies closely aligned with the automobile industry.

If those products end up being successful and are integrated into hundreds of thousands of cars, that drastically decreases down the price for customers like Lockheed who could use the system for defense applications and creates a bigger pool of money for the startup to reinvest in its own infrastructure.

While a lot of venture funds are used by companies to pave the way for a future acquisition, that isn’t the case for Lockheed, which would rather keep those firms as potential suppliers based in the commercial sector.

“A home run would look like an entire portfolio of companies we’re working with like Terran Orbital,” the nanosatellite company that Lockheed has partnered with on Defense Department and NASA contracts, said Moran.

Through Terran Orbital, “we found a really capable technology that had immediate or near term application to things that we’re running with our government customers,” he said. “We could both grow them, grow our ability to enter new markets or hone our abilities in existing markets.”


The Largest Non-Nuclear Bomb In America’s Arsenal Just Got An Upgrade



Massive Non-Atomic Bomb


“The Air Force has upgraded the United States’ largest non-nuclear bomb, a 30,000-pound “bunker-buster” capable of attacking hard and buried targets, according to Bloomberg Politics.

Also known as the Massive Ordnance Penetrator, the GBU-57 has just completed its fourth upgrade, and its inventory is being retrofitted, Air Force officials told Bloomberg.”


 Video:  https://www.youtube.com/watch?v=WlaIl9J14H4

“The bunker-buster, which is manufactured by Boeing, can only be carried by the B-2 stealth bomber, and it can be used to hit nuclear or missile factories up to 200 feet underground.

Three B-2 bombers were deployed to Guam this month, which the Air Force says was a planned rotation. When asked by Bloomberg, Capt. Emily Grabowski, an Air Force spokeswoman, declined to say if the GBU-57 was aboard.

This comes less than a month from the Winter Olympics in Pyeongchang, South Korea, and amid negotiations between North and South Korea, noted Stars and Stripes.

The GBU-57 is six times bigger than the 5,000-pound bombs that have been used by the Air Force for years, and it carries more than 5,300 pounds of explosives, according to Bloomberg.

It is 20.5 feet long, encased in hardened steel, and guided by Global Positioning System satellites, according to a description on the website of the Pentagon’s Defense Threat Reduction Agency.”




Boeing Takes Another $201M Hit On KC-46 Tanker



Image:  Military.com


“Boeing on Wednesday announced a $201 million post-tax charge on the KC-46 tanker program, bringing cost overruns on the program up to more than $2 billion dollars.

Boeing is locked into a fixed-price contract with the Air Force that makes the company liable for any cost growth exceeding the $4.9 billion contract value.

The company had previously paid more than $1.9 billion for cost growth induced by various technical issues during the tanker’s development. However, the $201 million charge incurred in the fourth quarter of 2016 stemmed from implementing changes to initial production aircraft, not a newly discovered problem, Boeing CEO Dennis Muilenburg said in a Jan. 25 earnings call.

“The charge we took in the fourth quarter is [centered] around the previously defined configuration changes, the wiring changes,” he said. “Now we are implementing those at the detailed level in the initial production aircraft.”

Although that work is well defined, “We have some job categories that are taking longer than planned in terms of hours per job, and that’s what you see in the charge,” he said.

The wiring issue dates back to 2014, when a Federal Aviation Administration review discovered that some wiring bundles within the tanker met commercial, but not military requirements. The issue forced Boeing to redesign some KC-46 wire bundles so that redundant wiring was not grouped together.

Today’s charge comes in at $312 million before tax, which is split between Boeing’s commercial and defense business segments.

Although the company was “disappointed” with yet another charge on the KC-46A, Muilenburg told investors that he believes the program has turned a corner as it moves from development into production.

“Last year we were talking about key development risks, flight test risks, and if you recall we had to work through some challenges on the refueling boom,” he said, referring to the problems discovered in 2016 that compelled Boeing to make hardware and software modifications to the boom.

“While we still have flight testing to go, it’s very clear now that we’re not discovering new testing risks,” he said. “It’s now about getting the first 18 aircraft delivered.”

Boeing plans to deliver the first KC-46 to the Air Force this year. Technical issues will force the company to miss its first contractual deadline to deliver 18 aircraft by August 2017. It now hopes meet that milestone by January 2018.

Last year, the Air Force awarded Boeing a $2.8 billion contract for the first 19 KC-46As. The service expects to purchase 179 tankers throughout the course of the KC-46 program.

Although President Donald Trump has indicated a desire to purchase more Super Hornets and reduce the price of Air Force One — two aircraft that could impact Boeing’s bottom line —  little was said about potential changes to the programs. Asked about Trump, Muilenburg stated that he had had productive discussions with the president and is encouraged by his engagement with the defense industry.”



Northrop Grumman Won $55 Billion B-21 Bomber Contract Based on Cost




“Northrop adjusted its cost estimates, and was also willing to spend its own cash on risk-reduction.

Boeing initially protested the award contract over inaccurate risk assessment for the program, the GAO revealed. The GAO said the claim had no bearing, as Northrop met the Air Force’s bid proposal.

In a redacted report released by the GAO on Tuesday, the investigative arm of Congress produced its final 52-page decision based on the Air Force’s assessment that the award to Northrop was “reasonable and consistent” with the service’s request for proposal.

“With respect to the cost price evaluation, we see no support for Boeing’s argument that the Air Force failed to reasonably account for Northrop’s technical risks in the cost realism analysis, and cannot conclude that the Air Force’s realism evaluation of Boeing’s proposal was flawed,” investigators offered in their conclusion.

All technical and cost-price estimates were redacted or deleted throughout the report.

“Significant structural advantages in Northrop’s proposal — specifically, its labor rate advantage and decision to absorb significant company investment — also strongly impacted the outcome of this essentially low-price, technically acceptable procurement, and Northrop’s significantly lower proposed process for the [Low Rate Initial Production] phase created a near-insurmountable obstacle to Boeing’s proposal achieving best-value or to Boeing’s protest demonstrating prejudice in the cost realism evaluation,” the report said.

RELATED: Air Force Unveils Name of Future Stealth Bomber as B-21 ‘Raider’

Boeing initially protested the award contract over inaccurate risk assessment for the program, the GAO revealed. The GAO said the claim had no bearing, as Northrop met the Air Force’s bid proposal.

Boeing’s protest, in tandem with partner Lockheed Martin Corp., prompted Northrop to suspend initial engineering work on the program in November 2015 until the decision in February reversed the temporary pause.

Earlier in the report, investigators also noted that, “throughout the discussion process, Boeing pursued an approach of revising and supplementing the substantiation of its original cost proposal without upwardly revising any of its proposed costs.”

Cost Was Deciding Factor in Air Force’s B-21 Decision: GAO