The DEW Line

The seven largest US defense companies have contributed nearly $3 million to congressional election campaigns through the first six months on 2007, according to my own analysis.

I am making my spreadsheet available for others to download. Please crunch the numbers as you see fit, and let me know if you come up with any surprises. Download file

The top 10 lawmakers are listed below. Representative Silvestre Reyes maintains his mysterious (to me anyway) lead among defense lobby recipients.

The big change since last month's tally is the huge bump for Representative Joe Courtney, whose home base in Connecticut has apparently made him a huge target for cash from General Dynamics, which operates the Electric Boat submarine plant in Groton, of course. Courtney has received $22,000 from General Dynamics alone so far this year, which is by far the biggest single contribution any lawmaker has received from one of the seven largest defense companies.

Without further ado, the top 10:

1: Rep. Silvestre Reyes; 2: Sen. Carl Levin; 3: Rep. Steny Hoyer; 4: Sen. Jack Reed; 5: Rep. Joe Courtney; 6: Rep. James P. Moran Jr.; 7: Rep. John P. Murtha; 8: Rep. Ike Skelton and Rep. Bennie G. Thompson (tie); 9: Rep. James Clyburn; 10: Sen. Susan Collins

Last week's "Top 10" list suffers from one major flaw. It tracked the money flowing from the seven largest defense companies into the re-election accounts of each lawmaker during the first six months of 2007, but it didn't include the additional money flowing into the "leadership PACs".
These are the PAC funds that allow one lawmaker to donate to another lawmaker. Some of them have very odd names (Dirigo??). But, as you can see from the amended list, they are clearly a huge piece of the campaign finance system.

Please download the new and improved spreadsheet to see the new results. Download file

The idea is to make this project participatory. Feel free to crunch the numbers yourselves, and let me know what you find. I've added fields for party affiliation and state, so you can have a little more fun.

Now, without further delay, the Top 10 of Big D are:

1) Rep. John Murtha (D) $57,500; 2) Rep. Steny Hoyer (D) $53,500; Sen. Ted Stevens (R) $41,000; 4) Rep. Silvestre Reyes (D) $31,000; 5) Sen. Carl Levin (D) $30,500; 6) Sen. Susan Collins (R) $30,000; 7) Sen. Jack Reed (D) $26,000; 8) Rep. Joe Courtney (D) $25,000; 9) Rep. Jim Clyburn (D) and (tie) Rep. Pete Sessions (R) $24,500; 10) Sen. James Inhofe (R) and (tie) Rep. Jim Moran (D) $24,000.

Quick takeaways:
-- None of the presidential candidates (Clinton, Hunter, McCain, Obama) appear on the Top 10 or on the full list. I have no idea what this means. Any answers?
-- Factoring in the leadership PAC funds, Rep. Reyes's position slips from #1 to #4, but even that still surprises me. Why are the seven largest defense companies pumping so many dollars into this particular lawmaker's campaign treasury?
-- Comparing my list to the list here of earmark sponsors in the latest appropriations bill, there are relatively few correlations.

Wall Street thinks Nick Chabraja, CEO of General Dynamics, is one of the shrewdest -- if least talkative -- executives in the aerospace and defense business.

If you're looking for someone to read political-industrial-strategic tea leaves for you, Chabraja's your man. And he's expected to retire in the near future, so savor his words now.

Chabraja certainly didn't disappoint during a 50-minute chat with analysts yesterday at the Morgan Stanley Industrials CEOs Unplugged Conference, which I tuned into via webcast. Here's what he said.

On why defense industry CEOs like himself don't fear an about-face for US security policy after the Bush term expires in 2008:

It seems to me that the market is unduly preoccupied with the Iraqi situation. These companies do not depend on that particular deployment. And when that one’s done there’s going to be another one. We will not be out of Afghanistan under any circumstances. So I don’t – I don’t know how to tell you what the industry could do to make it better. In many respects this is a wonderful market to be in. The credit of your customer is very good. They are mature in terms of systems. Very predictable in a lot of ways. In its early days, this industry was highly cyclical, had long shoulders, long cycles, but severely cyclical. And, I would say, in the first 40 years of its existence the aerospace and defense industry didn’t make any money for anybody. A 3% return on sales was probably the [total of the] first 40 years, with a lot of bust years. I think the investment community didn’t very much like the industry because they don’t do very well with it. I would say that this is an industry that has done very well since the end of the Cold War. You would think it would be just the opposite. [However], the cold war ended and the industry started to perform. Since early 1990 probably the returns from this industry have been as good as anybody else’s. But normally we have not been accorded very healthy multiples.

On how defense acquisition reform really works:

Change is constant in the defense side of our business. Why is that? Because acquisition is run by civilians many of them political appointees, and many of them -- at least against the sands of time -- are in office for a short period of time. Each [are] anxious to imprint some lasting improvement and legacy for their tour of duty. So the industry is faced with new initiatives from service secretaries, assistant secretaries for acquisition, technology. So this is not new. But there are only so many contract vehicles known to man, and we are going to have to deal with a handful and new initiatives. And I think it’s incumbent upon industry to be disciplined and flexible to meet our customers needs and at the same time to be able to calculate and measure the risk that we face for the benefit of our shareholders and not engage in foolish contracting practices. But I don’t think it’s political-party sensitive. But it comes with change in administration.

Today's Business Week features an investigation on Congressional earmarks, finding that (shock number 1) defense companies dominate the list of corporate recipients and (shock number 2) the navy used earmarks to buy a posh G550 to shuttle around the Chief of Naval Operations and the Secretary of the Navy.

I applaud the magazine for shedding light on the dark subject of extra-budgetary hand-outs to PAC-giving defense companies, but, please, a measley $50 million for a C-37 is your symbol of unnecessary government spending? Why not first bust lawmakers for continuing to earmark more than two-thirds of the navy's science and technology spending, including funds for examing cold fusion (cold fusion!!!!!) as a potential energy source?

Don't forget to download The DEW Line's database of PAC spending by the seven largest defense companies during the first six months of 2007. Here is the document: Download file

Boeing may never actually win the Combat Search and Rescue helicopter contract, but maybe they take a shot at an Oscar.

This is one of the most elaborate video productions of defense contractor propaganda I've ever seen. So grab a bag of popcorn, dim the lights and enjoy the show.

The seemingly always-threatened F136 program is about to get a new power base of support in Congress from the Mississippi delegation, if I'm reading this press release correctly.

Duke Realty Corporation to Develop New Manufacturing Facility in Batesville, Mississippi

BATESVILLE, Miss. & INDIANAPOLIS (November 27, 2007) -- Duke Realty Corporation (Duke) (NYSE:DRE) announced today that General Electric Company (GE) has selected Duke to develop a 300,000 square foot manufacturing and distribution facility located just east of Batesville, in northwest Mississippi. The facility will be utilized by GE Aviation, an operating unit of GE and a leading producer of jet engines for commercial and military aircraft, in the production of advanced composite components for jet engines. The facility is expected to employ approximately 100 people.

GE and Duke have a proven track record of other developments in North America, with GE accounting for over one half million square feet of leased space from Duke's properties in multiple states.

"We are very pleased to have been selected to develop this new manufacturing and distribution facility for GE's aviation business. Nearly 70-percent of Fortune's top 100 companies look to Duke for their national development, construction and leasing needs ," said Drew Sanders, Duke's Vice President of National Development and Construction. "We also look forward to working with area residents and Batesville officials as we prepare to break ground on this very exciting development for their community."

As part of this project, Duke has purchased nearly 87 acres of land, east of Batesville, Miss., on U.S. Highway 6, approximately ¼ mile from Interstate 55. Current plans call for 290,000 sq. ft of manufacturing space, 10,000 of office area, and an option for significant future expansion. The groundbreaking for this property began in early November 2007, and it is expected to be operational by September, 2008.

Brent Woodruff, First Vice President of CB Richard Ellis in Atlanta represented GE in this transaction.

As previously announced by GE in May, 2007, the new Batesville plant will produce composite fan blade platforms for the highly-popular GEnx engine. (GE's composite fan blades and fan cases are produced at other facilities.) The Batesville plant is also expected to produce composite components for GE military engines, including components for the F136 engine being developed jointly by GE and Rolls-Royce as the alternate engine for the F35 Joint Strike Fighter (JSF).

John Pruett, of the Project on Government Oversight (POGO), doesn't help himself by identifying Aurora Flight Sciences as a "little-known aerospace company", but he aims the earmark-innuendo wand at the company on POGO's blog yesterday.

He claims:

1. Rep. Roger Wicker, of Mississippi, requested the $6 million earmark for Aurora's Orion prototype program in the FY 08 defense budget

2. Aurora has funded a plane flight for Wicker in 2005, contributed $13,000 to Wicker's campaign, paid Wicker's former chief-of-staff $60,000 in lobbying fees, and shifted Orion-related work to Wicker's district

3. Aurora is going on an expansion kick, hiring a key manager away from BellBoeing, adding a retired general to its board of directors and opening a new production facility

POGO's blog provides no comment from Aurora or Wicker's office.

Aurora is building the Orion as the prototype aircraft to test the hydrogen-powered engine for Boeing Phantom Works' proposed high-altitude long endurance unmanned aerial vehicle. Read Flight International's latest article on the program here: http://www.flightglobal.com/articles/2007/07/20/215584/aurora-plans-two-versions-of-orion-long-loiter-uav.html