WASHINGTON – Just over a year after Northrop Grumman won the multi-billion dollar contract to build a next-generation stealth bomber, the company appointed Mark Welsh, who was serving as Army Chief of Staff at the time of the contract award, to its board.
The appointment, announced Friday, is not unusual in Washington, where former high-ranking Pentagon officials often go to work for the defense industry after their military service. But it comes as President-elect Donald Trump is highlighting the potential conflicts of interests in the “revolving door” between the Pentagon and industry, as he vows to clean up Washington.
On Monday, Trump also took a shot at the $400 billion F-35 Joint Strike Fighter program, the most expensive in the history of the Pentagon, saying the “cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.”
In an interview on Fox News Sunday, Trump said there should be a “lifetime restriction” of top defense officials going to work for defense contractors.
“The people that are making these deals for the government, they should never be allowed to go to work for these companies,” he said. “You know, they make a deal like that and then a year later, or two years later, or three years later you see them working for these big companies that made the deal.”
As Air Force Chief of Staff, Welsh, a former four-star general, had “no involvement in the [bomber] source selection process and provided no input into the decision to award the bomber contract to Northrop Grumman,” Air Force spokeswoman Ann Stefanek said in a statement.
She said that all “departing federal employees are subject to post-government employment conflict of interest restrictions.” Those rules “do not prohibit General Welsh from joining Northrop Grumman. However, those rules may limit what he can do as a member of the board.” She added that the “facts of each former employee’s circumstances impact how these rules will apply,” and that departing Air Force senior leaders “receive detailed guidance on the various post-government employment restrictions they may encounter.”
In announcing Welsh’s appointment, Wes Bush, Northrop’s chief executive officer, said “his extensive leadership experience and deep understanding of global security are a great fit to our board, and we are excited about the contributions he will make as Northrop Grumman employees around the globe work to create value for our customers and shareholders.”
Former government employees frequently go to work in private industry, leveraging their experience and access to high-paying jobs in consulting, lobbying and contracting.
In 2008, the Government Accountability Office found that 52 of the biggest defense contractors employed 2,435 former generals, senior executives and acquisition officers. Of those, 422 were in a position to work on defense contracts directly related to their former agencies and at least nine may have been working on the same contracts they previously oversaw.
In addition to taking aim at the ties between the Pentagon and its suppliers, Trump has made it clear he intends to crack down on individual programs. Last week, he sent shock waves through the defense establishment when he called for the Air Force One program to be cancelled, saying the costs were too high.
He later softened his stance, after Boeing’s chief executive called him and vowed to keep the costs of the planes down. But Trump also promised that “if we don’t get the prices down, we’re not going to order them. We’re going to stay with what we have.”
On Monday, it was Lockheed Martin’s turn, when Trump took to Twitter to blast the F-35 program. For years, the program had gone wildly off the rails, billions of dollars over budget and years behind schedule.
But in the last couple of years, Pentagon and Lockheed Martin officials have said it has stabilized and that the costs are coming down.
Speaking before a ceremony in which Lockheed was to deliver Israel with its first F-35 aircraft on Monday, Jeff Babione, Lockheed’s, Executive Vice President and General Manager, F-35 Program, said the company welcomes “the opportunity to address any questions the president-elect has about the program. It’s an amazing program. Lockheed Martin and its industry partners understand the importance of affordability for the F-35 program.”
He called the plane a “great value” with “amazing technology” and said the company has “invested hundreds of millions of dollars to reduce the price of the airplane more than 70 percent.”
Earlier this year, Air Force Lt. Gen. Christopher Bogdan told a Senate hearing, that “our overall assessment is that the program is making solid progress across the board and shows improvement each day while continuing to manage emerging issues and mitigate programmatic risks. We are confident the F-35 team can overcome these challenges and deliver on our commitments.”
At the hearing, however, J. Michael Gilmore, the Pentagon’s chief weapons tester, painted a different picture, saying, “there are still many unresolved significant deficiencies. The program continues to fall behind the planned software block development and testing goals, and sustainment of the fielded aircraft is very burdensome.”
Lockheed’s stock fell by more than 4 percentage points at one point on Monday morning. But Byron Callan, a financial analyst at Capital Alpha Partners, said in a note to investors that Trump’s tweet was “more bark than bite.”
“We strongly doubt that Trump has been fully informed of the F-35 program or alternatives to modernize U.S. tactical aircraft inventories,” he wrote. “As well, we strongly doubt that he has been informed of the unique international nature of the program.”
He added: “We don’t believe investors should panic over the program’s prospects based on a single Trump tweet.”