General Electric Wants Its Engine, Too!

Contractors are quivering about the Pentagon's crackdown and new rules, but most of the big firms figure they'll escape the new restrictions with few nicks. That's because a good number of them are the only capable providers of necessary services. 

General Electric has won three quarters of the no-bid contracts for defense aircraft engines. It is now furiously fighting back against the Secretary of Defense's firm declaration that he does not believe that the military needs to spend $3 billion to fund GE's development of a second engine prototype for the Joint Strike Fighter, which is the Pentagon's all-encompassing air combat platform of the future. The money is a pittance, but it's come to represent what so frustrates Robert Gates. 

Lockheed Martin is developing the JSF, and they decided that Pratt & Whitney's engine concept was better. The Pentagon agreed. GE, mindful of its future market share, began a massive public relations campaign in opposition. "Handing a sole source $100 billion engine monopoly could endanger national security, provide less protection to our troops and impede competition in defense procurement when it is most needed, and impose higher costs on taxpayers," the company says on a website. GE is spreading opposition research against Pratt & Whitney, pointing to some early problems with P&W engines in F-16s, which resulted in a competitive bidding process that GE later won.

GE's argument -- that developing a second engine is a good thing -- is solid, so far as it goes. Yes, it wouldn't be that expensive. Perhaps an engine developed by Rolls Royce might be better and more efficient. It would save jobs. There was no competition for the engine in the first place -- not a government competition, though there was an industry one.

But these arguments completely miss the point. The point is that business as usual is no longer business as usual. The entire process is changing. Indeed, in the future, the Pentagon doesn't want contractors to manage big programs like the JSF -- they want to do it themselves. 

GE has allies. It has allies not so much because it contributes to the campaigns of members of Congress but because it has so many employees at so many branches across the country. It has, at times, closed factories and moved jobs to Mexico. Rolls Royce has invested considerably in Virginia. Eric Cantor, the man who is leading the spending cut brigade in the House, is a champion of the second engine. (So is Mike Pence, a budget hawk. So are many Democrats eager to cut defense spending ... in general.)

Why? 

Jobs. 

And Virginia's future as a magnet for high-tech, high-paying jobs. It's a solid argument, too. But it's the inverse of NIMBY -- not in my back yard. It's PIMBY -- Please! In my back yard.  Actually, 40 percent of the engine will be built in Britain, so that country is lobbying Gates to reconsider, too.

Gates isn't budging. He was not happy when a GE executive accused him of essentially ignoring his own department's estimates. The Senate defense authorization bill has no money for the JSF; the House bill does. The White House has accepted Gates's request that it veto a bill that contains the additional funding.  

Now, GE is trying a different tack -- it wants to roll the money into the omnibus appropriations bill that will fund the government later in the year. The omnibus bill is a much nicer home for controversial projects because it is generally full of pork and earmarks.