Billion-Dollar Babies: Five Stealth Pentagon Contractors Reaping Billions of Tax Dollars
by Nick Turse
The top Pentagon contractors, like death and taxes, almost never change. In 2002, the massive arms dealers Lockheed Martin, Boeing, and Northrop Grumman ranked one, two, and three among Department of Defense contractors, taking in $17 billion, $16.6 billion, and $8.7 billion.

 

 

Other regulars receiving mega-tax-funded payouts in a similarly clockwork-like manner include defense giants General Dynamics, Raytheon, the British weapons maker BAE Systems, and former Halliburton subsidiary KBR, as well as BP, Shell, and other power players from the military-petroleum complex.

 

 

At $34 billion, you're already counting pretty high. After all, that's Harvard's endowment; it's the amount of damage the triple hurricanes -- Charley, Ivan, and Jeanne -- inflicted in 2004; it's what car crashes involving 15-to-17-year-old teenage drivers mean yearly in "medical expenses, lost work, property damage, quality of life loss and other related costs"; it's the loans the nation's largest, crippled, home lender, Countrywide Financial, holds for home-equity lines of credit and second liens; it's Citigroup's recent write-off, mainly for subprime exposure; it's what New Jersey's tourism industry is worth -- and, according to the Center for Strategic and Budgetary Assessments, it's the minimal figure for the Pentagon's "black budget" for fiscal year 2009 -- money for, among other things, "classified weapons purchases and development," money for which the Pentagon will remain unaccountable because almost no Americans will have any way of knowing what it's being spent for.

Now, imagine that, due to a little more Pentagon/Bush administration wizardry, even this black budget estimate is undoubtedly a low-ball figure. One reason is simple enough: The proposed $541 billion Pentagon 2009 budget doesn't even include money for actual wars. George W. Bush's wars are all paid for by "supplemental" bills like the $162 billion one Congress will soon pass -- so the Department of Defense's $34 billion black budget skips "war-related funding." This means that even the overall figure for that budget remains darker than we might imagine (as in "black hole"). The Pentagon not only produces stealth planes, it is, in budgetary terms, a stealth operation. If honestly accounted, the actual Pentagon yearly budget, including all the "military-related" funds salted away elsewhere, is probably now more than $1 trillion a year.

There is, however, another stealth side to the Pentagon -- the corporate side where a range of giant companies you've never heard of are gobbling up our tax dollars at phenomenal rates. Nick Turse, author of the single best account of how our lives are being militarized, our civilian economy Pentagonized, and the Pentagon privatized -- I'm talking about The Complex: How the Military Invades Our Everyday Lives -- now turns to the stealth corporate side of the Pentagon to give us a glimpse into the larger black hole into which our dollars pour.

- Tom

 

 

Billion-Dollar Babies:

Five Stealth Pentagon Contractors

Reaping Billions of Tax Dollars

 

by Nick Turse

The top Pentagon contractors, like death and taxes, almost never change. In 2002, the massive arms dealers Lockheed Martin, Boeing, and Northrop Grumman ranked one, two, and three among Department of Defense contractors, taking in $17 billion, $16.6 billion, and $8.7 billion. Lockheed, Boeing, and Northrop Grumman did it again in 2003 ($21.9, $17.3, and $11.1 billion); 2004 ($20.7, $17.1, and $11.9 billion); 2005 ($19.4, $18.3, and $13.5 billion); 2006 ($26.6, $20.3, and $16.6 billion); and, not surprisingly, 2007 as well ($27.8, $22.5, and $14.6 billion). Other regulars receiving mega-tax-funded payouts in a similarly clockwork-like manner include defense giants General Dynamics, Raytheon, the British weapons maker BAE Systems, and former Halliburton subsidiary KBR, as well as BP, Shell, and other power players from the military-petroleum complex.

With the basic Pentagon budget now clocking in at roughly $541 billion per year -- before "supplemental" war funding for Iraq, Afghanistan, and the President's Global War on Terror, as well as national security spending by other agencies, are factored in -- even Lockheed's hefty $28 billion take is a small percentage of the massive total. Obviously, significant sums of money are headed to other companies. However, most of them, including some of the largest, are all but unknown even to Pentagon-watchers and antiwar critics with a good grasp of the military industrial complex.

Last year, in a piece headlined "Washington's $8 Billion Shadow," Vanity Fair published an exposé of one of the better known large stealth contractors, SAIC (Science Applications International Corporation). SAIC, however, is just one of tens of thousands of Pentagon contractors. Many of these firms receive only tens or hundreds of thousands of dollars from the Pentagon every year. Some take home millions, tens of millions, or even hundreds of millions of dollars.

Then there's a select group that are masters of the universe in the ever-expanding military-coroporate complex, regularly scoring more than a billion tax dollars a year from the Department of Defense. Unlike Lockheed, Boeing, and Northrop Grumman, however, most of these billion-dollar babies manage to fly beneath the radar of media (not to mention public) attention. If appearing at all, they generally do so innocuously in the business pages of newspapers. When it comes to their support for the Pentagon's wars and occupations in Afghanistan and Iraq, they are, in media terms, missing in action.

So, who are some of these mystery defense contractors you've probably never heard of? Here are snapshot portraits, culled largely from their own corporate documents, of five of the Pentagon's secret billion-dollar babies:

1. MacAndrews & Forbes Holdings Inc.

Total DoD dollars in 2007: $3,360,739,032

This is billionaire investor Ronald Perelman's massive holding company. It has "interests in a diversified portfolio of public and private companies" that includes the cosmetics maker Revlon and Panavision (the folks who make the cameras that bring you TV shows like 24 and CSI). MacAndrews & Forbes might, at first blush, seem an unlikely defense contractor, but one of those privately owned companies it holds is AM General -- the folks who make the military Humvee. Today, says the company, nearly 200,000 Humvees have been "built and delivered to the U.S. Armed Forces and more than 50 friendly overseas nations." Humvees, however, are only part of the story.

AM General has also assisted Carnegie Mellon University researchers in developing robots for the Pentagon blue-skies outfit, the Defense Advanced Research Projects Agency's "Grand Challenge," an autonomous robot-vehicle competition. Last year, AM General and General Dynamics Land Systems, a subsidiary of mega-weapons maker General Dynamics, formed a joint venture "to compete for the U.S. Army and Marine Corps Joint Light Tactical Vehicle (JLTV) program." AM General has even gone to war -- dispatching its "field service representatives" and "maintenance technical representatives" to Iraq where they were embedded with U.S. troops.

As such, it's hardly surprising that, earlier this year, the company received one of the Defense Logistics Agency's Outstanding Readiness Support Awards. Nor should anyone be surprised to discover that a top MacAndrews & Forbes corporate honcho, Executive Vice Chairman and Chief Administrative Officer Barry F. Schwartz, contributed a total of at least $10,000 to Straight Talk America, the political action committee of presidential candidate John McCain, who famously said it would be "fine" with him if U.S. troops occupied Iraq for "maybe a hundred years" (if not "a thousand" or "a million").

Perhaps hedging their bets just a bit, MacAndrews & Forbes is diversifying into an emerging complex-within-the-Complex: homeland security. Recently, AM General sold the Department of Homeland Security's Border Patrol "more than 100 HUMMER K-series trucks for use in border security operations."

2. DRS Technologies, Inc.

Total DoD dollars in 2007: $1,791,321,140

Incorporated during the Vietnam War, DRS Technologies has long been "a leading supplier of integrated products, services and support to military forces, intelligence agencies and prime contractors worldwide"; that is, they have been in the business of fielding products that enhance some of the DoD's deadliest weaponry, including "DDG-51 Aegis destroyers, M1A2 Abrams Main Battle Tanks, M2A3 Bradley Fighting Vehicles, OH-58D Kiowa Warrior helicopters, AH-64 Apache helicopters, F/A-18E/F Super Hornet and F-16 Fighting Falcon jet fighters, F-15 Eagle tactical fighters… [and] Ohio, Los Angeles and Virginia class submarines." They even have "contracts that support future military platforms, such as the DDG-1000 destroyer, CVN-78 next-generation aircraft carrier, Littoral Combat Ship and Future Combat System."

In addition to 2007's haul of Pentagon dollars, DRS Technologies has continued to clean up in 2008 for a range of projects, including: a $16.2 million Army contract for refrigeration units; $51 million in new orders from the Army for thermal weapon sights (part of a five-year, $2.3-billion deal inked in 2007); a $10.1 million contract to build more than 140 M989A1 Heavy Expanded Mobility Ammunition Trailers (to transport "numerous and extremely heavy Multiple Launch Rocket System pods, palletized or non-palletized conventional ammunition and fuel bladders"); and a $23 million deal "to provide engineering support, field service support and general depot repairs for the Mast Mounted Sights (MMS) on OH-58 Kiowa Warrior attack helicopters," among many other contracts.

Fitch Ratings, an international credit rating agency, recently made a smart, if perhaps understated, point -- one that actually fits all of these billion-dollar babies. DRS, it wrote, "has benefited from the conflicts in Iraq and Afghanistan…"

3. Harris Corporation

Total DoD dollars in 2007: $1,501,163,834

Harris is "an international communications and information technology company serving government, defense and commercial markets in more than 150 countries." It has an annual revenue of more than $4 billion and an impressive roster of former military personnel and other military-corporate complex insiders on its payroll. Not only does Harris assist and do business with a number of the Pentagon's largest contractors (like Lockheed Martin and BAE Systems), it is also an active participant in occupations abroad. On its website, the company boasts that "Harris technology has been used for a variety of commercial and defense applications, including the War in Iraq where the [Harris software] system provided detailed, 3-D representations of Baghdad and other key Iraqi cities."

Last year, Harris signed multiple deals with the military, including contracts to create a high-speed digital data link that transmits tactical video, radar, acoustic, and other sensor data from Navy MH-60R helicopters to their host ships. It also supplies the Navy with advanced computers that provide the "highly sophisticated moving maps and critical mission information via cockpit displays" used by flight crews.

In the first six months of this year, Harris has continued its hard work for the Complex. In January, the company was "selected by the U.S. Air Force for the Network and Space Operations and Maintenance (NSOM) program" for "a base contract and six options that bring the potential overall value to $410 million over six-and-a-half-years" to provide "operations and maintenance support to the 50th Space Wing's Air Force Satellite Control Network at locations around the world."

In May, the company was "awarded a three-year, $20 million contract by [top 10 Pentagon contractor] L3 Communications to provide products and services for a next-generation Tactical Video Capture System (TVCS)" -- a system that integrates real time video streams to enhance tactical training exercises -- "that will support training at various U.S. Marine Corps locations across the U.S. and abroad." That same month, Harris was also "awarded a potential five-year, $85 million Indefinite Delivery/Indefinite Quantity (IDIQ) contract from the U.S. Navy for multiband satellite communications terminals that will provide advanced communications for aircraft carriers and other large deck ships."

In addition, Harris is now hard at work in the Homeland. Not only did the company pick up more than $3 million from the Department of Homeland Security last year, but national security expert Tim Shorrock, in a 2007 CorpWatch article, "Domestic Spying, Inc.," specifically noted that Harris and fellow intelligence industry contractors "stand to profit from th[e] unprecedented expansion of America's domestic intelligence system."

4. Navistar Defense

Total DoD dollars in 2007: $1,166,805,361

Still listed in Pentagon documents under its old name, International Military and Government, LLC, Navistar is the military subsidiary of Navistar International Corporation -- "a holding company whose individual units provide integrated and best-in-class transportation solutions." While the company has served the U.S. military since World War I, it's known, if at all, by the public for making some of the Mine Resistant Ambush Protected (MRAP) vehicles designed to thwart Iraqi roadside bombs. As of April 2008, the U.S. military had "ordered 5,214 total production MaxxPro MRAP vehicles" from Navistar and, that same month, the company was awarded "a contract valued at more than $261 million… for engineering upgrades to the armor used on International MaxxPro MRAP vehicles."

But Navistar makes more than MRAPs. Just last month, the company signed a "multi-year contract valued at nearly $1.3 billion" with the U.S. Army "to provide Medium Tactical Vehicles and spare parts to the Afghanistan National Police, Afghan National Army, and the Iraqi Ministry of Defense." This followed a 2005 multi-year Army contract, worth $430 million, "for more than 2,900 vehicles and spare parts."

Quite obviously, the company is significantly, profitably, and proudly involved in the occupations of Iraq and Afghanistan. As Tom Feifar, the Global Defense and Export general manager for Navistar Parts, put it late last year, "It's an honor to be a part of the effort to support our troops."

5. Evergreen International Airlines

Total DoD dollars in 2007: $1,105,610,723

A privately held global aviation services company, it has subsidiaries in related industries such as helicopter aviation (Evergreen Helicopters, Inc.), as well as a few unrelated efforts like producing "agricultural, nursery and wine products" (Evergreen Agricultural Enterprises, Inc.). Evergreen has been on the Pentagon's payroll for a long time. Back in 2004, Ed Connolly, the executive vice president of Evergreen International Airlines, stated, "Evergreen has flown continuously for the [U.S. Air Force] Air Mobility Command since 1975 and is proud to continue its long standing history of supporting the U.S. Armed Forces global missions with quality and reliable services."

Not surprisingly, Evergreen has been intimately involved in the occupation of Iraq. In fact, in 2004, the company received "approximately 200 awards for its support of international airlift services during the Iraq war" from the Air Force's Air Mobility Command. An Air Force general even handed out these medals and certificates of achievement to Evergreen's employees.

In Amnesty International's 2006 report, "Below the Radar: Secret Flights to Torture and ‘Disappearance,'" the human rights organization noted that Evergreen was one of only a handful of private companies with current permits to land at U.S. military bases worldwide. That same year, the company even airlifted FOX News personality Bill O'Reilly and his TV show crew to Kuwait and Iraq to meet and greet troops, sign books and pictures, and hand out trinkets. And just last year the company was part of a consortium, including such high profile commercial carriers as American, Delta, and United Airlines that the Pentagon awarded a "$1,031,154,403 firm fixed-price contract for international airlift services… [that] is expected to be completed September 2008."

Under the Radar

All told, these five stealth corporations from the military-corporate complex received more than $8.9 billion in taxpayer dollars in 2007. To put this into perspective, that sum is almost $2 billion more than the Bush administration's proposed 2009 budget for the Environmental Protection Agency. Put another way, it's about nine times what one-sixth of the world's population spent on food last year.

Tens of thousands of defense contractors -- from well-known "civilian" corporations (like Coca-Cola, Kraft, and Dell) to tiny companies -- have fattened up on the Pentagon and its wars. Most of the time, large or small, they fly under the radar and are seldom identified as defense contractors at all. So it's hardly surprising that firms like Harris and Evergreen, without name recognition outside their own worlds, can take in billions in taxpayer dollars without notice or comment in our increasingly militarized civilian economy.

When the history of the Iraq War is finally written, chances are that these five billion-dollar babies, and most of the other defense contractors involved in making the U.S. occupation possible, will be left out. Until we begin coming to grips with the role of such corporations in creating the material basis for an imperial foreign policy, we'll never be able to grasp fully how the Pentagon works and why we so regularly make war in, and carry out occupations of, distant lands.

 

 

Nick Turse is the associate editor and research director of Tomdispatch.com. He has written for the Los Angeles Times, the San Francisco Chronicle, Adbusters, the Nation, and regularly for Tomdispatch.com. His first book, The Complex: How the Military Invades Our Everyday Lives, an exploration of the new military-corporate complex in America, was recently published by Metropolitan Books. His website, Nick Turse.com has been newly revamped and expanded.


Copyright 2008 Nick Turse

 

 

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