Cheney and Lockheed CEO Try to Keep Automatic Cuts from Happening in DoD

NOTE:  This post is being updated (7/18, 11:43 am) to share the email from the CEO of Lockheed to his employees about sequestering and possible layoffs which is now added at the end of this article.  The contacts my husband made over the years have come in handy!

******

Don't know whether to laugh or get disgusted about the President of Lockheed who makes $26 million a year as of 2011 and received a raise for 2012, whose company has the F-22 with an oxygen problem where pilots refuse to fly and an F-35 which is over budget and behind schedule, saying there shouldn't be cuts at defense.  That doesn't even count the problems that still exist that it is too heavy to land on a carrier along with some other problems.  Did they ever get the wiring fixed in the bomb bay so it doesn't fry the electrical wiring?

For months test pilots had the privilege of piloting the plane to the tarmack but spending a lot of time on the simulators.  Why did the Air Force go down this path with Lockheed that is costing billions and at the end of the day the F-16 will still perform better in the combat role of today because its skin and plane is not a maintenance nightmare.  Navy and Marines don't want the F-35 -- they want upgrades to what they have.  Lockheed is set to go in the hole on the F-35 but some Congressional people who are in their hip pocket they hope will bail them out.  That's probably the real reason the Lockheed CEO met up with Cheney.

We would bet that the head of the House Armed Services McKeon (R-CA) is in the hip pockets of Northrup-Grumman and Lockheed -- doesn't take a genius to figure that one out.  If members of Congress were not so bought and paid for by Defense contractors, they would take a look at what these weapon systems like the F-35 are really costing.  Any major weapon system program like the F-35 that is this far behind schedule and still has major problems, it going to end up costing a lot more then was budgeted but Lockheed gave their CEO a raise for 2012.  Lockheed has been known over the years for being behind schedule and over budget on major weapon systems but yet the people at DoD continue to award them contracts and look the other way.  F-16 should have been fully upgraded but that doesn't fit the shiny and new of some of the Air Force generals.

Our family has been around DoD for well over 30 years and my husband longer.  He has been on both sides of source selection -- on the side that awards the contract and after retiring from Civil Service on the side of the contractor waiting for the award.  Anyone who says there is not a lot of waste in the Defense Department is either bought and paid for or is very naive and not around contracting.  He was the System Control Officer for the C-141 for Logistics/Materiel Command when it went through the stretch and he made numerous trips in and out of Marietta, GA, to the Lockheed plant.  He couldn't believe what he was seeing -- it was so bad that he took a job in the Air Force Contract Maintenance Center to travel overseas rather than deal with Lockheed where he was expected to turn his head and not see how bad it was but instead giving glowing reports after being wined and dined and trying to add on a  few extra dollars for him to use.  My husband was the wrong person to try and influence as those who know him well will tell you.  He was a pain in the neck to contractors but had the Air Force's best interest at heart.  Put it this way, contractors couldn't shove him around.  I used to type up his reports and would ask him if he was sure he wanted to say that and sure enough he was -- he told it like it was.

After our daughter was born, he decided he had enough of overseas travel and transferred to the F-16 heading support equipment and automatic test which were his areas of expertise.  The people at General Dynamics in Fort Worth who built the F-16 he considered the best people he had worked with but unfortunately that part of General Dynamics was bought out by Lockheed to add to Martin Marietta which my husband worked with when we were at Norton AFB, CA, on the MX and Minuteman missiles.  He called them honest.  When Lockheed bought out both companies, he said it was a sad day for the Air Force because he was convinced that Lockheed would bring its suspect practices to those two companies.  Sure enough they did so that companies who were respected for delivering on time and budget now were part of an atmosphere where delivering on time and on budget was foreign.

Ask a Martin or General Dynamics person what they think about working for Lockheed and most likely it is not printable.  Yet we have the President of Lockheed threatening pink slips to his employees if the Defense budget is cut (see email to employees at the end of this post).  The man should have been fired when former Secretary of Defense Gates found out that the F-35 was way behind schedule, had major problems, and was over budget.  In fact they were so over budget they started taking money from other parts of Lockheed which left the new innovative  It was the automated logistics information system (ALIS) that took the biggest hit for F35 when money was pulled from Logistics.  Lockheed needed the money allocated to the Logistics to throw away on aero and its incompetence.  Now he gets to retire with one of those golden parachutes paid for by the Defense Department and there is no savings can be made in the DoD?  Give me a break!

Put a group of long time civil service in a room who have to deal with these greedy aerospace contractors and bet they can come up with a lot of savings starting with the F-35 that is being forced on the Navy and Marine Corps.  I still remember getting a 2" thick document telling everyone how to do paperwork management to reduce the amount of paper being used in the 70's.  If you added all those documents in a stack, we didn't turn out that much paperwork in six months.  My boss at the time sent a letter back with the suggestion they quit sending out a page every time they wanted to change a few words in a regulation and he got back a 3-page reply why it was necessary.  We decided it was to keep some people employed because it was a waste.  From that day forward our office used to send in fraud, waste, and abuse comments to save the Government money.  My boss was transferred after three months to a base in northern part of the Country that handled missiles.  Imagine that!

Everyone I know in the DoD has stories of waste.  The latest for me is VDATS at Warner Robins meant to replace all the Automatic Test Systems that was approved by the DoD as the tester of choice before it was built.  Wonder if they ever got their security certificate for the system.  It was a boondoggle to save and add jobs at Warner Robins AFB.  Heard it is not going to be budgeted much longer after the F-16 group was able to get a waiver so they do not have to use the flawed system.  The F-16 which is the largest weapon system in the Air Force gets a waiver thanks to tenacious civil servant(s) who refused to take the word "no" as the final answer.  Should pretty much tank VDATS for use by major weapons systems.  Right there you have millions of savings where the people at Warner Robins wanted weapon systems to throw out perfectly good automatic test systems that needed upgraded for $10M to buy the new system (VDATS)_for over $100M that couldn't do the job.  There is a cost savings of at least $90M on each weapon system.  We are starting to talk some real savings.

That is a microcosm of savings that can be taken out of Defense.  Can it reach $50B a year?  I think it can because I can get to $1B in cuts today starting with the salaries of the leaders of the aerospace companies and go from there to how much they charge the DoD per manhour which is atrocious.  Threatening to lay off workers with notices days before the election is nothing short of blackmail -- call the CEO of Lockheed's bluff by having Lockheed hand over every piece of paperwork on the F-35 to see how the plane got so far behind schedule and over budget.  See how fast he backs off.  The CEO is also saying along with the cuts to employees they are going to jettison some real estate/facilities (tax write off if they donate a facility to a university?).

Cheney and the CEO of Lockheed can stop with the crocodile tears and be honest about the cuts that can be made that will not hurt the military.  It should not be a sacred cow but should have to explain its boondoggles of wasted tax dollars since 2000.  That is my opinion and I am sticking to it after years of seeing first hand the fraud, waste, and abuse in the DoD.

IMHO House Republicans helped put us in this mess of sequestering when the agreement was reached.  Their stubbornness in not compromising almost made the US go off a cliff.  I would tell both parties to grow up and stop the whine.  Work together for what is best for all Americans and put America before Party.

Cheney, Lockheed CEO deliver dire warnings of impact of automatic cuts
By Jeremy Herb and Carlo Munoz - 07/17/12 08:42 PM ET

Former Vice President Cheney made a rare trip to Capitol Hill on Tuesday to give House and Senate Republicans a dire assessment of what $500 billion in cuts to the Pentagon budget would mean for national security. 

Cheney’s appearance came amid a concerted lobbying push from the defense industry, which is trying to persuade Congress to act now on the sequester by warning the cuts will lead to massive job losses. 

Lockheed Martin CEO Bob Stevens, who will testify before a House panel on Wednesday, has threatened to issue layoff notices to all of his company’s 123,000 employees just before the November election. And the Aerospace Industries Association unveiled a new study Tuesday that claimed 2 million jobs could be lost due to the automatic cuts that are scheduled for both the defense and domestic sectors. 

Defense hawks hope that the flurry of activity will put the issue in the public eye and convince Congress to act. 

Cheney, who served as Defense secretary under President George H.W. Bush, told the Senate GOP conference that sequestration could have a damaging long-term impact on the military by killing major weapons programs, according to senators at the meeting. 

“He just talked about the stupidity of the sequester, where you cut everything the same,” said Sen. Tom Coburn (R-Okla.). 

Cheney’s appearance underscored the effort Republicans are making to apply pressure to Democrats, who are threatening to walk away from the negotiating table on sequestration unless the GOP agrees to tax increases. 

“It was just really a very sensible presentation about how sequester is a blunt object,” Sen. Bob Corker (R-Tenn.) said of Cheney’s talk. “He did talk about his time as Defense secretary in the ’90s and how he benefited from investments made the decade before.” 

Cheney did not discuss potential fixes for the cuts, GOP senators said, or other foreign-policy issues such as Syria. 

Democrats were decidedly unimpressed. White House deputy press secretary Josh Earnest said it was “odd” that Republicans “would be taking budget advice from somebody who famously declared that ‘deficits don’t matter.’ ” 

Senate Majority Leader Harry Reid (D-Nev.) questioned Cheney’s motives, noting his ties to the military contractor and oil giant Halliburton. 

“We know that before he became vice president, he worked for Halliburton,” Reid told reporters. “Halliburton did extremely well during his time as vice president, and I assume there’s going to be some concern about Halliburton again in this conversation they’re going to have today.” 

The sequestration debate is likely to dominate Capitol Hill on Wednesday, when defense executives will testify before the House Armed Services Committee and the House takes up the Sequestration Transparency Act, which requires reports from the Obama administration on the impact of the cuts. 

Stevens, one of four executives scheduled to testify before the panel, has led the charge in the defense industry to warn about job losses from sequestration. 

(snip)

Democrats have been adamant that any compromise on sequestration must include revenue increases or the elimination of tax loopholes for the wealthiest Americans. 

“You can’t get there without revenue [increases] on the table,” Shaheen said, reiterating her party’s line. 

Republican lawmakers, however, have been opposed to any effort allowing the Bush-era tax rates to expire. 

At a media event last month, Stevens said he thought all options had to be included in a deficit-reduction deal, including discretionary spending, mandatory spending and new revenues.
The Lockheed CEO, who is retiring at the end of the year, is expected to urge Congress on Wednesday to find a solution now in order to give the industry some certainty. 

Stevens has said that his company would be required to put out layoff notices just days before the election due to federal 60-day reporting requirements. 

Republicans have supported Stevens’s threat, saying the layoff notices will help the public understand the impact of sequestration. 

“I’d just as soon they did it tomorrow,” Sen. John McCain (R-Ariz.) said Tuesday.
Senate Armed Services Committee Chairman Carl Levin (D-Mich.) said he would understand if the companies decided to issue pink slips before the election, but doubts it would have much impact at the polls. 

“I think by then probably most people will have made up their minds,” Levin said. “That’s my hunch.” 

Excerpt:  Read More at The Hill

******

DATE: July 18, 2012

TO: All Lockheed Martin U.S. Employees

FROM: Bob Stevens, Chairman and Chief Executive Officer

Chris Kubasik, Vice Chairman, President and Chief Operating Officer

SUBJECT: Straight Talk On Sequestration

Over the past several months, you may have seen news coverage about our position on a federal law passed last year and the negative effects it will have on our nation and our industry. And in the weeks ahead, you will hear more from us on this subject. It’s called sequestration.

Under the Budget Control Act (BCA) of 2011, the Department of Defense committed to reduce spending by $487 billion over the next 10 years, with $47 billion of that occurring in this year’s budget.

Like every company in our industry, we feel the effects of those reductions, but we understand the fiscal pressures our nation faces and we are doing our part.

However, there is a provision in the BCA known as sequestration, which was originally designed as a mechanism to force bipartisan cooperation on deficit spending and debt reduction – a process that failed. As a result, sequestration now requires $1.2 trillion in automatic cuts in U.S. government discretionary spending beginning January 2, 2013. Half that total is expected to come from defense spending; the rest from other domestic spending, including education and infrastructure. This would result in $492 billion in reductions for defense over the next nine years in addition to the $487 billion mentioned above.

We believe sequestration is the single greatest challenge facing our company and our industry. Defense Secretary Leon Panetta has said sequestration will have catastrophic consequences for our nation’s defense because it was developed without consideration for national security strategy, force structure, technology needs or operational reality. We agree, and we have candidly and publicly voiced our concerns with our government customers, members of Congress, and our industry partners.

With little guidance from the government on the specifics of sequestration, it is difficult to determine the impact of these cuts on our employees, programs and suppliers. We do know, however, that we have responsibilities under the federal Worker Adjustment and Retraining Notification (WARN) Act to provide 60 days’ notice to employees of a facility closure or major layoff. New York law requires 90 days’ notice. As we continue our analysis, we see that these laws could result in the need to issue conditional WARN notices to a substantial number of our employees, starting late in the third quarter.

We know this is unsettling information and you are probably asking, “Will I be affected?” Our very rough estimate of the number of employees who could be affected, based on the limited information available to us from the government, is about 10,000. We’d prefer to give you more clarity and details, and we will, just as soon as we get specific guidance from the government.

Until then, we ask that you remain focused on our global security mission. We know that you care deeply about the work you do in support of our nation and our customers, and we ask that you continue to help us meet our commitments to our customers as the sequestration debate plays out. At the same time, we will continue doing everything we can to encourage government leaders to find a better solution to the nation’s fiscal challenges than sequestration.

At Lockheed Martin, we have a seasoned leadership team and a strong strategy focused on growing our company in core, adjacent and international markets that is reliant on our continued strong performance. And we have you, the best employees in the business. As we embark on our second century as a successful enterprise supporting the U.S. government and our allies, we are committed to making sure our company, our industry, and our nation remain strong and vital.

One way we’ll do that is by continuing to voice our concerns about sequestration at every opportunity. If you would like to find out more about the effort to stop sequestration, visit the Aerospace Industries Association's Stop Sequestration website here.

Thank you, as always, for your commitment to Lockheed Martin, our customers and our nation.

Even with the challenges we face, our customers need us to focus with the full concentration and complete dedication that have been hallmarks of your work. We have great confidence in our future success because of our confidence in you.

Editor’s Note: Bob Stevens is testifying before the U.S. House of Representatives’ Armed Services Committee today on the impact of sequestration. You can see Bob’s statement for the record here.