The KC-X Tanker Deal: Tracking the Lobbyists
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The $35 billion KC-45 aerial tanker deal has attracted a lot of attention and commentary lately, as one might expect. It has also attracted a lot of lobbying dollars – again, as one might expect. While the Pentagon hopes it can keep a lid on the program’s planned costs, it’s an absolute certainty that the lobbying bill will grow quite a bit before all is said and done.
Taxpayers for Common Sense, who built that useful Congressional earmark database, offers some figures re: lobbying monies paid to date – and DID looks at the message in terms of the political system, and the industry…
TCS RE: Boeing
“Boeing has been among the top three defense companies in terms of lobbying expenditures for years, retaining more than 30 lobbying firms and consultants outside of the 17 in-house lobbyists registered under the Lobbying Disclosure Act… they spent big on the tanker campaign between January 2005 and June 2007, according to disclosure filings that specifically name the tanker program. These include:
- $1.2 million to Akin, Gump, Strauss, Hauer and Feld for “air tanker replacement;”
- $240 thousand to Kerr Consulting (headed by Senator Carl Levin’s former chief of staff Gordon Kerr) for “U.S. Air Force tanker aircraft program;”
- $160 thousand to PAW Associates (headed by retired Air National Guard Major General Paul A. Weaver) for “tanker and cargo aircraft modernization programs.”
- Boeing also gave $180 million [DID: we think they mean $180 thousand] to the firm Baker Donelson Bearman Caldwell & Berkowitz to lobby on a Senate resolution and a U.S. Trade Representative complaint criticizing European governments for subsidizing EADS.”
TOTAL: $1.4-1.6 million so far. That isn’t chump change, but it’s also about 5 hundredths of one percent against the total contract value. TCS adds that:
TCS RE: EADS
“EADS may have won the contract on technical merit, but that doesn’t mean it didn’t spend plenty of money on the campaign. EADS has laid out considerable funds in establishing its Washington office, luring executives from competitors and Capitol Hill and building up its lobby infrastructure. While the company spent $4.7 million on lobbying in the 2005-2007 time frame, disclosure filings show it spent at least $1 million exclusively on the tanker deal, contacting lawmakers such as Senate Majority Leader Harry Reid (D-NV) and Rep. Don Young (R-AK). These expenditures include:
- $340 thousand to the Federalist Group to lobby on “army cargo aircraft” language in the defense appropriations bill;
- $240 thousand to Ogilvy Public Relations for “issues related to air refueling tanker procurement;”
- $220 thousand to the Loeffler Group (founded by Rep. Tom Loeffler (R-TX) and headed by former Reagan administration official William Ball) for “initiatives and interests regarding the KC-30 aerial refueling tanker program.”
Northrop Grumman, EADS’ partner in the tanker deal, is also a top defense spender on lobbying, though none of its lobbyists specified the tanker program in their disclosure filings. However, it’s a safe bet that a healthy portion of its lobbying expenses between 2005 and 2007 — $37 million, according to the Center for Responsive Politics — focused on the tanker. And remember that the bottom line for the companies’ campaigns are much higher when campaign contributions and non-lobbying advertising funds are factored in.”
Conclusions
The issues between Boeing and EADS re: government subsidies go much deeper than the tanker contract, and are properly placed in their own category. The result is lobbying figures of about $1.4 million for Boeing, $1 million for EADS, and an unknown amount from Northrop Grumman, plus additional campaign contributions and advertising funds tat drive the totals higher. Don’t forget union expenditures, either, which tend to factor in on Boeing’s side because that side has an established, unionized workforce. Overall, the amounts appear relatively balanced, and not unreasonable for any commercial entity given an opportunity of this size.
The lobbying isn’t finished, of course – a long fight lies ahead, and the totals will grow. The more important question may well turn out to have more to do with tactical execution than amounts spent. Questions like:
- How well was the money spent by the firm? By its agents?
- What were the returns, and how do we measure that answer?
- How well targeted were the campaigns, in terms of the audiences they actually reached?
- Which channels were used, and which neglected? Was a price paid for that neglect?
- Once the attention of relevant people was bought at a dear price, what kind of investments were in place the leverage that attention, and convert it into tangible support?
- What tools were supporters given, in order to help them convert or recruit more supporters?
If these sound like the kinds of questions you’d expect any major political campaign to be asking these days, it’s because they are.
“The USAF’s KC-X Aerial Tanker RFP” discusses the “guerilla marketing” efforts made in the course of this deal, but except for using email as the mailing channel, none of it would have been wildly out of place in 1975. Defense Industry Daily’s sister publication, MarketingVOX, could hardly deal with a more different industry – but the lessons its stories offer from other industries are valuable to a defense industry that is often years behind the curve in this area.
In an environment where deals like the KC-45 competition make it clear that the old loyalties won’t always apply under the twin pressures of squeezed budgets and new needs, that can become an expensive gap.
