Missile defense shift redirects billions in government contracts

The Obama administration’s new missile defense plan is setting off a parochial battle on Capitol Hill with lawmakers concerned about a shift in federal contract money.

This week’s announcement—calling for more flexible, sea-based missile deterrents--is a boon for the Raytheon Co. and Lockheed Martin, which have significant missile defense operations in Arizona, Arkansas and New Jersey. It is however bad news for the Boeing Co. and its congressional supporters in Alabama, where the company builds and manages its ground based missile interceptors.

President Barack Obama said Thursday he was dropping Bush-era plans to put ten, two-stage ground-based interceptors in Poland, a project that Boeing would have managed, and a related radar site in the Czech Republic, and it builds and manages the complex ground-based interceptor enterprise. Boeing has key subcontractors - Orbital Sciences, Raytheon and Northrop Grumman.

Missile defense is less parochial and more ideological than most defense contract matters. Most Republicans strongly support the ground-based interceptors that became a centerpiece of the Reagan administration while Democrats have generally been critical, saying they don’t work well.

But politics ends for those whose districts depend greatly on the money generated by the program.

Boeing does most of the work on ground-based missile defense in freshman Rep. Parker Griffith’s (D-Ala.) district of Huntsville.  Griffith won last year in a conservative district and has been worried for months that the administration’s missile defense plans could hurt hundreds of jobs his district.

For its 2010 budget request, the Pentagon already slashed $2 billion from the ground missile defense program. Earlier this summer Griffith voted against the 2010 defense authorization bill because of the cuts in missile defense, said his spokesman Sean Magers.

Now, with no prospects for ground interceptors in Europe, Griffith finds himself one of a small minority of Democrats questioning the move by the Obama White House.

“The initial information that the White House is canceling our plans to construct interceptors in Poland and our radars in the Czech Republic is disturbing,” Griffith said in a statement.

Griffith has reinforcements from Boeing’s supporters in Missouri where the company has its Integrated Defense headquarters.

Sen. Claire McCaskill (D-Mo.), a member of the Senate Armed Services Committee, has voiced concerns about “scrapping” the program, although she’s also a strong Obama ally. 

Senior defense authorizer Rep. Todd Akin (R-Mo.) is an outspoken supporter of the ground-based interceptor concept.

The Obama administration’s plan is to deploy ships equipped with Lockheed Martin’s Aegis combat system and Raytheon’s Standard Missile-3 or SM-3 interceptors to help defend European allies and U.S. forces against threats from Iran and others. Lockheed Martin does the work on the Aegis system in Moorestown, N.J., the home district of Rep. John Adler (D).

The Pentagon is also looking to deploy sensors, such as Raytheon’s Army Navy/Transportable Radar Surveillance system (AN/TPY-2).

The Pentagon also seeks to develop and deploy a ground-based version of the SM-3. Raytheon does most of the work on the missile in Tucson, Ariz., and has already invested some of its own money into the development of a ground-based system. But now the Pentagon is looking to fund those developments. The research and development in that area is estimated to cost more than $3 billion, according to Gen. James Cartwright, the vice chairman of the Joint Chiefs of Staff.

The Pentagon’s 2010 budget request seeks 250 Standard Missile-3 interceptors and looks to increase the number of warships equipped with the Aegis system and the ability to launch the SM-3 missiles from 21 to 27. The Pentagon slated about $50 million in 2010 for the development of the ground-based SM-3 system.

Arizona Reps. Gabrielle Giffords (D), a member of the House Armed Services Committee, and Raul Grijalva (D) share the Tucson district. Giffords supports a strong missile defense budget, including ground-based interceptors.

For the 2010 election cycle Raytheon has already contributed $3,000 to the reelection campaigns of Giffords and Grijalva and its political action committee maxed out its contributions to $10,000 for both lawmakers in the 2008 elections.

Sen. John McCain (R-Ariz.) has questioned the new plan, as has his colleague Sen. Jon Kyl (R-Ariz.), who called the decision “dangerous and shortsighted.”  Kyl received $4,000 from Raytheon in 2008. Raytheon employees donated about $38,000 to McCain’s presidential campaign. By comparison Obama received close to $66,000 in campaign donations from Raytheon employees.

William Lynn, the Deputy Secretary of Defense, is a former Raytheon executive who received a waiver from the White House to be able to serve in the Pentagon, because he had been registered as a lobbyist. Lynn divested all his interests in his former company before he was confirmed. Meanwhile, the Senate requires him to adhere to strict ethics rule, including recusal for at least a year from any decisions related to his former company.

The deputy secretary of Defense is essentially the Pentagon’s top manager not only making day-to-day decisions, but also decisions over what kind of weapons the Pentagon should buy.