"axolotl" wrote in message
...
On 3/26/2011 3:17 PM, Ed Huntress wrote:
wrote in message
...
On 3/26/2011 12:12 AM, Ed Huntress wrote:



Lockheed, Northrup, Boeing compete for most of the large prime
contracts
in an overlapping area. Whether you like the defense industry or not,
you
really should try to be factually correct.

I am. I studied it for six months, including several visits to the BEA
and
the Defense Department before writing about US trade in aerospace and
arms
it some years ago. Looking around, it appears that nothing much has
changed.


Ed,

Could we see the figures on this?

Sure. This study was done a few years ago by The Center for Public
Integrity. It references DoD sources.

http://projects.publicintegrity.org/...t.aspx?aid=385

I ran into the same figures, generally, when I was researching the
finances
of arms trade a year or two earlier.


If a major weapon system goes through a flyoff, (say the F-303 by Wombat
Industries or the F-404 from Corpohell) the contractor with what is
deemed
the best value package gets a sole source contract. If the system chosen
has a Woodchuck 2000 engine, Woodchuck gets a sole source contract for
spares because they are the sole source.
I would not term these "no bid" contracts. If there was competition, all
the prospective supplier has to do is file a protest. The contract award
is halted automatically, and the award has to be justified.

But that's just the first contract, and not even all of those. The
follow-ups typically are no-bid, or "not full and open," as the Pentagon
puts is, with no competition. And that's where, along with original
no-bids,
Lockheed Martin makes something like 74% of its defense-related
revenue --
which is, in total, and curiously, is 74% of their total revenue.

Having been in the defense contracting business for the last couple of
decades, I will make the statement that a sole source contract is a
difficult thing to put in place, requiring a Justification and
Authorization (J and A) signed off in the upper reaches of The Building.
Those who initiate the contract will most assuredly have to answer to
someone's congressman (for the district that didn't get the bucks). In
war
conditions, it sometimes has to be done.
DoD goes to great lengths to preserve competition.

Most of the contracts for the major prime contractors, in dollar terms,
are
no-bid. You can track back the sources from the article linked to above.

This is exactly the same thing that I was told by DoD when I was
researching
a similar subject.



1) The article references "DoD contracting databases" whatever they may
be. No data source identified.

Welcome to the world of real research. g I had to make numerous phone
calls to DoD when I was writing my articles, and they had to send me Excel
and PDF files that were not available online. But they have to make them
available.

This stuff isn't trivial. Sometimes getting an answer takes some work.


2) Data described is old.

As I said, that was 2004. I doubt if anything has changed. I don't know what
John's basis is for saying this, but he says nothing has changed.

This has been going on for a half-century. I don't think you'll find much
difference in 2011 versus 2004, but you can check it out if you're really
interested. It might even be online, if you know how to track those things
down. It can take hours, or even days. But it's available one way or
another.


3) The scenarios given are as I described above, major weapon systems.
They complain about buying a Raytheon missile from Raytheon without a
competitive contract. The government did not pay for data rights so that
anyone could build the missile as a build to print. If you want to throw a
Tomahawk at Libya, you have to buy it from Raytheon, because Raytheon
makes it. Sole Source.

As I said to Dan (and to John), my point is not to argue about whether
sole-sourcing is justified. The point is simply that it's a FACT, which
impinges directly on their willingness to pay taxes. That was the subject.

There is nothing stopping you from making a better/less expensive cruise
missile and offering it to the military. If you had a better/less
expensive missile the military would buy it from you, but you don't have a
better/less expensive missile. So the military buys Raytheon. The article
cited uses the Faux method of riling up the populace with half truths.

Not if you're interested enough to read it critically. That's true with most
such studies.

The entire defense procurement business is seriously f**ked, and always has
been. It was the basis of Eisenhower's warning about the Military Industrial
Complex. Like the health care industry and several others, it has a fine
logic when viewed from the inside, deductively, but it looks like corruption
personified if you're on the outside looking in.

It IS corruption personified. But it's not what we usually think of as
corruption. It's not individuals trying to enrich themselves. It's
individuals charged with the responsibilities of getting things made, and
mixing together practices that would be normal to private business with the
oddity of having one overwhelmingly dominant consumer, which is driven by
regional interests and politics, and no-bid, sole-source deals that
inherently corrupt the whole process, from the point of view of efficiently
serving the country's needs.

Just look at how you and Dan reacted to this thread. The subject was the
fact that the taxes paid by Lockheed Martin are essentially meaningless, and
are so much higher than those paid by typical corporations in America. But
both of you immediately got defensive about the justifications for
sole-source and no-bid deals. They have an internal logic that looks
sensible to people on the inside. And that's how things go to hell, when an
inherently foul system, which has few of the normal competitive checks that
keep private business in check, begin to look like they make perfect sense.

When corruption of the competitive business model looks good, even
necessary, we're screwed. Just like Eisenhower warned us.


4) One point raised that is harder to refute is the small/disadvantaged
business scam imposed upon DoD by Congress. A guy can give his wife a
title and paper ownership and suddenly runs a disadvantaged business, with
preference in being awarded contracts. Small business set asides? There is
a good reason for them. The easiest thing for the military to do is award
one contract that covers everything, what are known as "omnibus"
contracts. A set aside insures that there will be little guys that can
grow up to be competition to the big guys.

There's plenty to complain about. The tax situation we've been discussing is
just one misleading facet of the multi-faceted business.

--
Ed Huntress