The Gift Economy

Published — July 16, 2013 Updated — May 19, 2014 at 12:19 pm ET

The huge drone that could not be grounded

An RQ-4B Global Hawk Block 30 prepares to land at Beale Air Force Base in Yuba County, Calif. Chris Kaufman/AP

A major defense contractor used campaign donations and insider access on Capitol Hill to defy the Air Force and keep a troubled drone aloft at a cost to taxpayers of billions of dollars


With large budget cuts looming in the next decade, top Air Force officials knew last year they needed to halt spending on some large and expensive programs. So they looked for a candidate that was underperforming, had busted its budget, and wasn’t vital to immediate combat needs.

They soon settled on the production line for a $223 million aircraft with the wingspan of a tanker but no pilot in the cockpit, built to fly over vast terrain for a little more than a day while sending imagery and other data back to military commanders on the ground. Given the ambitious name “Global Hawk,” the aircraft had cost far more than expected, and was plagued by recurrent operating flaws and maintenance troubles.

“The Block 30 [version of Global Hawk] is not operationally effective,” the Pentagon’s top testing official had declared in a blunt May 2011 report about the drones being assembled by Northrop Grumman in Palmdale, Calif.

Canceling the purchase of new Global Hawks and putting recently-built planes in long-term storage would save $2.5 billion over five years, the service projected. And the drone’s military missions could be picked up by an Air Force stalwart, the U-2 spy plane, which had room for more sensors and could fly higher.

But what happened next was an object lesson in the power of a defense contractor to trump the Pentagon’s own attempts to set the nation’s military spending priorities amid a tough fiscal climate. A team of Northrop lobbyists, packed with former congressional staff and bolstered by hundreds of thousands of dollars in campaign contributions, persuaded Congress to demand the drone’s continued production and operation.

In so doing, the contractor — which had revenue of $25.2 billion in 2012, more than 90 percent from the federal treasury — defied not only the leadership of the Air Force, but also the chairman of the Joint Chiefs of Staff, Army Gen. Martin Dempsey. He told the House Armed Services Committee in February 2012 that the Global Hawk “has fundamentally priced itself out of our ability to afford it.” The White House, in two messages to Congress last year, said it “strongly objects” to the lawmakers’ demand for additional Global Hawks, but the protests were to no avail.

Northrop’s strikingly successful campaign to thwart the government culminated in a letter this May from two influential House lawmakers to newly installed Secretary of Defense Chuck Hagel, reminding him of the requirement to buy three more of the drone aircraft. The Air Force, they complained to Hagel, had not heeded “clear congressional intent [and] explicit direction to complete the acquisition.”

The letter, whose authors — Rep. Howard “Buck” McKeon, R-Calif., and Rep. Jim Moran, D-Va. — received a total of $135,100 from Northrop Grumman’s political action committee and employees for their election campaigns and leadership PACs since the beginning of 2009, is emblematic of the political forces that helped stoke a 117 percent jump in the Defense Department’s procurement budget from fiscal year 2001 through its peak in fiscal year 2010.

Those forces are now causing some lawmakers to resist the drawdown in military spending that President Obama and some military analysts say is needed to help shrink the federal deficit, projected to be $759 billion this year, and repair the nation’s long-term economic health.

Northrop Grumman’s political strategy “is entirely predictable — hire the right people, target the right people, contribute to the right people, then link them together with subcontractors and go for the gold,” said Gordon Adams, who served as the senior White House budget official for national security from 1993 to 1997 and has studied defense spending and procurement for more than 30 years.

“Killing a major program, in production, is rather like vampire-killing,” Adams added. “You have to drive a silver stake through its heart to make sure it is dead.”

The battle over the Global Hawk is one of many in which a major defense contractor and its influential friends in Congress have forced the military to spend money on hardware it doesn’t want. An Army proposal in 2011 to stop refurbishing the M1 Abrams tank to save $3 billion was blocked by the same House and Senate defense panels in response to the lobbying muscle of the tank manufacturer, General Dynamics.

A contractor-driven campaign “often works,” Adams said. “It eked out more F-22 [fighters] than the Air Force wanted. It extended the C-17 [transport] production line by several years as Congress ordered up 10 more aircraft beyond what the Air Force needed.”

The case of the Global Hawks Block 30s also shows how lawmakers — even deficit hawks who say they want to slash federal spending — still earmark money for favored defense projects, even though such earmarks are formally prohibited by both House and Senate rules.

In this case, the fiscal year 2013 defense authorization bill Congress passed last December and the spending bill it enacted in March require the Air Force not only to keep flying Block 30s for roughly $260 million a year through calendar year 2014, but to also spend as much as $443 million on three more. The House — which has been Northrop Grumman’s close ally in the fight — voted in June for a fiscal year 2014 defense authorization bill that extends Block 30 operations two additional years, through 2016.

Unexpected maintenance and flight problems

The Global Hawk at issue — the largest drone in the U.S. arsenal — is a successor to a smaller Block 10 drone that the Air Force flew successfully from 2001 until 2011. Northrop Grumman hailed the Block 30 as an “unblinking eye” platform that does a better job of tracking objects on the ground for a longer period.

But in a reversal of the prescribed path in which weapons systems are designed and fully tested before going into full production and being dispatched to war zones, Global Hawks were pressed quickly into service over Iraq, Afghanistan, Libya, the Horn of Africa, Japan and Haiti while still technically under development.

The reason is that the drones were a “technology push rather than a requirements pull,” in which the manufacturer developed a new capability before combat commanders specified exactly what they needed, according to a congressional source familiar with the program. Only after the new Global Hawks were in the field “did the services find out how commanders would actually use them,” he said. Randy Belote, Northrop Grumman’s vice president for strategic communications, declined comment on this characterization.

The Block 30 models were designed to fly for 28-35 hours compared to the 10-12 hour endurance limit of the piloted U-2s. But unlike the U-2, Global Hawks are not equipped with electronic countermeasures to defeat air defenses, and lack the U-2’s “all-weather” capability, according to congressional testimony by Air Force officials.

Moreover, the drones and their sensors have been prone to a wide range of problems, many of them blamed on the speed with which the aircraft were deployed.

To meet certain data needs, for example, Block 30s have been torn apart and rebuilt to add some sensors already present on the U-2. Built with hardwired sensors, unlike a newer, more “plug-and-play” version known as the Block 40, the Block 30 “lacks the flexibility to change with new requirements,” said the congressional source, who spoke on the condition that he not be identified.

The concurrent testing and production also “put it at increased risk of cost growth,” the Government Accountability Office said last year, and the program has twice triggered special statutory provisions alerting Congress to its cost overruns. In all, the cost of a single Global Hawk jumped by more than 150 percent, from about $88 million in 2001 to $223 million in 2012, GAO reported in March.

That record caused a special Pentagon report on June 28, examining why the defense-wide acquisition system routinely produces large cost overruns, to depict the Global Hawk in particular as an egregious outlier. “Analyzing just aircraft development contracts” such as Global Hawk, the report said, Northrop Grumman had “significantly higher cost growth” than rival behemoths Lockheed Martin and Boeing.

The program was restructured in 2011 by Deputy Defense Secretary Ashton Carter, then the Pentagon’s procurement chief, who nonetheless told Congress that its continuation “is essential to national security.” He cut the number of Block 30s to be bought and scaled back the full program’s price tag of $13.9 billion to $12.4 billion.

Meanwhile, rigorous testing from October 2010 through January 2011 led the Pentagon’s chief weapons tester to conclude that the Block 30 was unreliable. The Block 30’s “mission-critical air vehicle components fail at high rates, resulting in poor takeoff reliability, high air abort rates, low mission capable rates, an excessive demand for critical spare parts and a high demand for maintenance support,” J. Michael Gilmore said in a May 2011 report.

When flying at a near-continuous pace, the Block 30 provided less than half the required 55 percent “Effective Time On Station” coverage — the amount of time loitering over a target to gather intelligence — over a 30-day period, Gilmore said. Its sensor to identify radar and communications signals “does not consistently deliver actionable signal intelligence end-products to operational users due to technical performance deficiencies” and other reasons, he said.

As a result, Gilmore added, the Block 30 “is not operationally effective for conducting near-continuous, persistent ISR [intelligence, surveillance and reconnaissance operations].”

Bracing for congressional “impact”

Given the Block 30 troubles, Air Force officials concluded in late 2011 that they could not fly both that aircraft and the U-2 under provisions in the Budget Control Act. The U-2 already met all the military’s requirements for intelligence, surveillance and reconnaissance, while significant investment would be needed to give Block 30s the same capabilities.

The Air Force knew its decision would be controversial on Capitol Hill. “We were bracing for impact,” recalled a retired Air Force pilot who worked with the Air Force liaison office. “There are too many constituencies tied to the Global Hawk.”

“The Block 30 Global Hawk has fundamentally priced itself out of our ability to afford it when the U-2 gives, in some cases, a better capability and, in some cases, just a slightly less capable platform,” Dempsey told a House Armed Services Committee hearing on Feb. 15, 2012. “So what you are seeing there is our ability to eliminate redundancy, to continue to invest in the best value, and to avoid at every possibility redundancy that fundamentally is too expensive.”

But cost and reliability concerns took a back seat to the risk of losing jobs, said former Rep. Roscoe Bartlett, R-Md., who last year played a key role in blocking the proposed retirement of Block 30s as chairman of the House Armed Services Subcommittee on Tactical Air and Land Forces.

Bartlett, who lost his bid for re-election last fall, spoke openly about how his colleagues on the full committee “see the military as a jobs program,” something he said is not necessarily in the national interest. “How is that consistent with national security? And budget frugality?” he asked rhetorically, asserting that his colleagues often rationalize such dilemmas away.

“Everybody has to look in the mirror and not see a jerk, so they have to argue with themselves that keeping this factory going in their district is the best thing for their country, whether it is or not,” Bartlett said.

After rumors of the program’s cancellation surfaced in late 2011, Northrop Grumman activated a “Support Global Hawk” website that described the drones as “high-flying, combat-proven aircraft [that] are so robust and reliable that they’re in high demand by warfighters who fly them.”

The advocacy site, which Belote, the Northrop Grumman spokesman, told the Center for Public Integrity was set up at the request of company employees who supported the Block 30, listed all the suppliers, their congressional districts and the lawmakers who represented them. The site also offered a “Take Action” form visitors could fill in that would be emailed to their elected officials. “Please help our troops continue to receive this much-needed capability,” the site said.

Northrop Grumman also circulated fliers on Capitol Hill with a map of the country showing the locations of major Global Hawk manufacturing sites, military bases and major subcontractors. The “Global Hawk Enterprise across the U.S.” has 3,483 Northrop Grumman employees in 22 states, 303 suppliers in 36 states and almost $600 million in supplier purchases, the flier said.

It was a sales pitch that major defense contractors — and often the military services themselves — routinely circulate on Capitol Hill. “There are probably 500 floating around right now,” a House armed services aide said, referring to fliers similar to Northrop Grumman’s, emphasizing the jobs issue.

Among the 26 in-house and outside lobbyists who identified Global Hawk or surveillance issues on their lobbying reports were three well-connected former Republican aides to the House Appropriations Committee: Jeff Shockey, a former staff director; John Scofield, a former communications director; and Letitia White, a longtime aide to former Chairman Jerry Lewis, R-Calif. Also on the team was Northrop Grumman Vice President for Government Relations Sid Ashworth, who spent 14 years on the Senate Appropriations Committee staff, serving as staff director for two subcommittees, including defense.

Discussions lubricated by donations

The company also reached out to lawmakers in another familiar way — with well-timed campaign contributions. A computer analysis of campaign finance records by the Center for Public Integrity shows that the company’s political action committee gave $10,000 to the re-election campaign and leadership PAC of House Armed Services Chairman McKeon in February and March 2012, when his committee was grilling senior Pentagon and Air Force officials about the Block 30 issue in public hearings.

Barely six weeks later, McKeon’s committee approved the fiscal year 2013 defense authorization bill with the provision ordering the Air Force to keep flying Block 30s through 2014.

McKeon, whose district is home to Northrop Grumman’s Palmdale facility where final assembly of Global Hawks is done, has received at least $113,000 from the company’s employees and PAC since becoming House Armed Services Committee chairman in January 2009, the CPI analysis shows. By comparison, McKeon received only $28,950 from the company’s employees and PAC in the four years before picking up the chairman’s gavel.

A spokesman for McKeon, Claude Chafin, said he was responding to the absence of a credible Pentagon analysis supporting “the additional shedding of” assets like the Global Hawk in the midst of “the warfighter’s growing need.”

Other members of his committee also received generous support from the company while the Global Hawk’s future was up for grabs during the first half of 2012, with at least $243,000, in total, flowing into their campaigns.

Many of these checks coincided with important steps in keeping the Global Hawk Block 30 program alive. For example, the House Armed Services Tactical Air and Land Subcommittee voted on April 26, 2012 to approve its portion of the 2013 defense bill that included the provision requiring the Air Force to keep flying the drones. The following week, Northrop Grumman funneled $26,500 to seven subcommittee members, the largest one-week investment in the panel during the entire 2012 campaign cycle.

In all, Northrop Grumman employees and PAC gave considerably more in campaign contributions to the key House defense panels in the 2012 election cycle than they had in the previous one, the Center for Public Integrity’s analysis shows. Members of the full House Armed Services Committee received about $584,000, in total, during the 2012 election cycle, 46 percent more than in the 2010 cycle. Young’s House defense appropriations subcommittee received $191,000 in the 2012 cycle, an increase of nearly 50 percent.

Although McKeon was the top recipient of donations from Northrop Grumman’s employees and PAC among members of the four House and Senate defense committees, other influential House lawmakers also reaped substantial donations from the firm. Rep. C.W. Bill Young, R-Fla., chairman of the powerful House defense appropriations subcommittee, received $40,500 in campaign and leadership donations since 2009. Rep. Adam Smith, D-Wash., ranking member on House Armed Services, received $35,000 in the same period.

A spokesman for Young did not respond to repeated requests for comment. Smith said in an interview that he opposed mothballing a new aircraft “in favor of the U2 which is 50 or 60 year old technology.”

Belote, of Northrop Grumman, told the Center for Public Integrity that PAC contributions are made only at the request of lawmakers. “We do not solicit members to determine if they would like to receive PAC funds,” he said.

Belote confirmed that the Northrop Grumman’s PAC focuses on members of the four congressional defense panels — armed services and defense appropriations — and also on members of Congress whose districts include either company facilities or employees. In fact, Northrop Grumman and its employees gave almost $1.9 million to the campaigns and leadership PACs of members of the four panels since 2009, 52 percent of the total they gave to all members of Congress during the same period.

“We are very diligent in following PAC regulations and in meeting all reporting requirements,” Belote added.

A credibility problem for the Air Force

As the Air Force tried to counter Northrop’s lobbying effort in 2012, it faced a credibility problem. In early 2011, the service had initially urged that all 33 U-2s be retired and replaced with Global Hawk Block 30s, despite the drone program’s cost overruns and test failures.

“The Air Force … has done some things that were not well thought out,” said the retired pilot. He said the idea that Global Hawks could be substituted for U-2s first emerged a decade ago, when service officials were desperately looking for money to support full-scale production of the new F-22 fighter jet and thought ending the U-2 program would free up needed funds.

“Prior to that, there was never any discussion that Global Hawk could replace the U-2. There was zero analysis to support the idea,” this source said.

At that point, the Air Force had not designed the Global Hawk to perform all the intelligence, surveillance and reconnaissance work done by U-2s, which can fly at 70,000 feet and rival spy satellites in the quality of their imagery and data. Expensive upgrades would be necessary to make the drone a true competitor to the U-2, which had already been upgraded and will be viable through 2040.

As a result, skeptical lawmakers resoundingly defeated the Air Force’s bid to retire the U-2s, demanding in legislative language that the Air Force prove the Global Hawks would have the same or lower operating and maintenance costs than the U-2s.

Lawmakers and their aides subsequently inundated the Air Force with letters seeking detailed comparisons of the two programs, said the retired pilot, who helped the Air Force liaison office answer those requests.

Meanwhile, Northrop Grumman circulated an analysis of Air Force data that claimed the Global Hawk was cheaper to operate, giving ammunition to allies, such as Rep. Moran, a member of the House defense appropriations subcommittee.

Moran, who successfully urged Northrop Grumman to move its headquarters from Los Angeles to his district in Falls Church, Va., in 2011, confronted top Air Force officials at a May 9 hearing last year, insisting that their figures showing each aircraft operating at roughly the same $32,000 per hour cost was flawed and that the Global Hawk was cheaper to operate.

A spokesman for Moran did not respond to repeated requests for comment.

Gen. Mark Welsh, the Air Force chief of staff, responded that the hourly cost was “about the same” but argued that, because U-2s are deployed closer to their surveillance targets, their operation costs much less overall. Taking that into account, “the U-2 costs less than the Global Hawk, which typically is more centrally located in a region and has a longer way to travel; therefore, the longer endurance flights — which are the strength of the Global Hawk — cost more money,” the general said.

“Those opposed to the Global Hawk retirement already had their answers,” the retired pilot said. “They didn’t really want facts and explanations, so it was an exercise in futility.”

Northrop Grumman’s supporters also argued that after spending at least $4 billion to build the Block 30s, the drones should be put to good use, instead of being retired to the Air Force’s “boneyard” at the Davis-Monthan base in Arizona. Some lawmakers also argued that ending the Block 30 program could raise the cost of a version that the company was building for the Navy.

At a Feb. 28, 2012 hearing, Rep. Tom Rooney, R-Fla., who has received $17,500 from Northrop Grumman’s PAC since 2009, marveled about “these really cool” Global Hawks. “I’ve seen the Global Hawk up close, very impressive. You know, it makes you feel proud to be an American that this is the kind of stuff that we’re putting out,” Rooney told top Air Force officials. “Nothing against the U2, but when you talk about antiquated systems versus what we’ve got to show the world in the future, it was just impressive.”

When Rooney asked why the Air Force couldn’t keep flying both of them, Gen. Norton Schwartz, then the Air Force chief of staff, responded that “if resources were not an issue or were less an issue, we might well make a strategic decision to do something along those lines, but we did not have that option.” He called the potential savings “not trivial.”

The contractor gets its way

But when Bartlett drafted the fiscal year 2013 defense authorization bill for his subcommittee on April 26, 2012, he included language ordering the Air Force to keep the Block 30s in service. Bartlett said in the interview that his staff director, who he said had met with Northrop’s lobbyists, obtained approval for that language from staff on McKeon’s committee. Bartlett’s staff director died in January.

“The U-2 is old and obviously needs maintenance to keep it going. They just never convinced us that, in fact, it would save money to throw [Global Hawks] on the trash heap,” Bartlett said in an interview.

The Senate Armed Services Committee took a different view, and accepted the Air Force’s claim that the Block 30’s were more costly and less useful. But the committee allowed the House position to prevail in a conference that resolved disagreements over the defense bill. And the result was that the Air Force did not get what it said it wanted in 2011 or 2012: It was instead ordered by Congress to keep both the U-2 and the Global Hawk Block 30’s in operation.

“There’s no free lunch here,” then-Defense Secretary Leon Panetta complained at a news conference after McKeon’s committee acted. “Every dollar that is added will have to be offset by cuts in national security. And if for some reason they do not want to comply with the Budget Control Act, then they would certainly be adding to the deficit, which only puts our national security further at risk.”

Northrop Grumman at this point wants the Global Hawk budget to be approved as quickly as possible, and so it has offered the Air Force what it claims is a reduced price for the three additional aircraft. The Air Force until recently was not taking the bait, and it tried again this spring to resist the purchases.

But after Moran and McKeon sent their letter to Hagel, it folded its cards. “The Air Force considers the three additional Block 30 aircraft excess to need; however, to comply with congressional direction, the Air Force is taking action to execute unobligated funding and acquire these last three Block 30 aircraft,” said Ed Gulick, an Air Force spokesman.

Overall, defense procurement spending has been declining since 2011. But as the pie shrinks, “every contractor worth his salt is going to do battle for his system; every member of Congress, attentive to re-election, is going to discover that that one system is the key to our nation’s security,” observed Adams, the former national security budget official. The services, he said, will get squeezed as a result and wind up buying more “things they don’t need.”

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