Research: Commentary

The Scandal We Should Be Talking About

Huffington Post, November 14, 2012 | Article

By Stephen Miles, William D. Hartung

Nothing grips Washington more than a good scandal, particularly when it involves sex, power and money. Last week's surprise resignation of C.I.A. Director David Petraeus has filled countless column inches and primetime minutes of television. The news of Gen. John Allen's involvement in the scandal is surely going to keep the story at the top of the news cycle for days to come.

While our news media pores over every titillating detail of the Petraeus affair, there's another scandal that's gone largely unnoticed by the defense community. Last Friday, Lockheed Martin quietly announced that after having been groomed to take over for departing C.E.O. Robert Stevens this January, that would-be C.E.O. Christopher Kubasik would be resigning over a long-term extramarital affair with a "subordinate employee."

And that might have been where this story ended. There is clearly no shortage of stories of rising stars whose careers were ended over personal indiscretion. However, on Monday, the Washington Post reported that according to S.E.C. filings, Lockheed Martin will pay Mr. Kubasik $3.5 million in separation pay. In other words, for being fired for misconduct before he ever spent one day in the job as its C.E.O., the Pentagon's largest contractor will be giving their former employee one heck of a going away gift.

Some may rightly point out that Lockheed Martin is a private company and they can spend or waste their money as they see fit. They problem is that the U.S. government is essentially Lockheed's only customer. Last year, a full 82 percent of their sales came from Uncle Sam directly while a good portion of the remaining 17 percent was funded by the federal government through our support for foreign military sales and local and state government security contracts. Put another way, nearly every penny that Lockheed earns comes directly from you and me.

Lockheed Martin is now using taxpayer dollars to pay $3.5 million to someone they're firing. This is tragically unsurprising for a company with Lockheed's executive salary track record. Before being summarily fired last week, Mr. Kubasik was likely on pace to match the $9.5 million he made in 2011. Upon his promotion to C.E.O. he would have been eligible to earn something closer to the $25.4 million Robert Stevens earned in 2011. All told, last year Lockheed Martin paid their top 5 executives a combined $51.9 million.

Outrageous executive compensation isn't the only way Lockheed spends the taxpayer's dime. Lockheed spent more than $11.5 million on a small army of lobbyists in the first three quarters on 2012, putting them on pace to surpass the $15.1 million they spent in 2011. Meanwhile, Lockheed's top executives have threatened tens of thousands of layoffs as the Pentagon starts to tighten its belt after more than a decade of runaway spending.

Furthermore, any review of Lockheed's many troubled weapons systems paints a bleak picture. After years developing the F-22, Lockheed delivered a plane that has the pesky problem of leaving its pilots without oxygen (a problem the Pentagon is ironically addressing by giving Lockheed Martin an additional multi-million dollar contract). Lockheed's marquee project for the Navy is the Littoral Combat Ship, a program so flawed that a recent investigation by the Project on Government Oversight called the many failures "almost too outrageous to fathom." However, the most egregious example of waste is the infamous Joint Strike Fighter, the F-35. The F-35 is now so far behind schedule and so over budget that at a lifetime cost of $1.5 trillion and growing, it has the unique distinction of being the most expensive weapons program in American history.

Which brings us back to Christopher Kubasik, the C.E.O. to be who never was. Pretty soon, Washington will move on from the sordid details of David Petraeus and turn its attention back to the fiscal showdown, the Bush tax cuts, and sequestration. Americans will be told scary stories about the dangers of cutting the Pentagon's grotesquely large budget and once again threatened with layoffs at Pentagon contractors. But as we debate how much to cut at the Pentagon, let's remember the story of Chris Kubasik. It's the story of how our tax dollars are wasted, not on keeping America safe, but on corporate greed and excess.


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