The U.S. Capitol. (File photo / Getty Images)
U.S.-based prime contractors may be looking for ways to cut costs in a difficult defense market, but they’re not skimping on lobbying.
The top five U.S. defense contractors increased spending on lobbying by a combined 11.5 percent in the first quarter of 2012 compared to the same quarter in 2011, a review of lobbying disclosure forms by Defense News found.
The increase, following a down year in 2011, brought lobbying investment for Lockheed Martin, Boeing, General Dynamics, Raytheon and Northrop Grumman to a combined total of $15.9 million for the quarter ending March 31. The number represented a new combined high in the four years that all five companies have been filing disclosures.
Lobbying disclosure filings are required under the Open Government Act of 2007, with quarterly data available going back only to 2009. The forms represent lobbying on Capitol Hill, as well as the Defense Department and the White House.
As spending on lobbying tends to be seasonal, coinciding with the legislative calendar, the review compared only first-quarter numbers from 2009 to 2012. The first quarter of the year includes the annual release of the Pentagon’s budget request to Congress, along with posture hearings on Capitol Hill involving senior military leaders.
Northrop Grumman led the charge, increasing its spending by 51 percent compared to 2011, followed by Lockheed Martin, which increased spending by 25 percent.
“Northrop got a whole new shop, they cleaned house,” said a lobbyist who has worked with large defense companies. “They moved their headquarters out here so their CEO is much more focused on Washington than he was before.”
The company — which moved its headquarters from Los Angeles to Falls Church, Va., in 2011 — would not detail its legislative goals but wrote in an email that it values interaction with government.
“As a leader in global security, Northrop Grumman believes it is important that the company participate in the democratic process at the federal, state and local level, to help ensure that support for a strong national defense is well-represented,” the statement said.
The lobbying spike is partially attributable to the election year, said Loren Thompson, an industry consultant and chief operating officer at the Lexington Institute, Arlington, Va.
“Election years often see a surge in lobbying activity as companies try to posture themselves to be supportive of key legislators,” Thompson said.
The last election year for the House of Representatives, 2010, also saw a large increase in spending compared to 2009. Combined first-quarter 2010 spending was $15.5 million, up 18.3 percent from 2009. In 2011, a non-election year, spending fell by 7.9 percent.
The ongoing discussion about the future of defense spending and the specter of automatic budget cuts is also leading to interest in lobbying, the companies said.
“We’ve never seen a more problematic economic and global security environment in the U.S. and in so many economies around the world,” Lockheed Martin spokeswoman Jennifer Allen wrote in an email. “That means the political leaders around the globe, and especially here at home, are going to have to make some very tough decisions. In this environment, there are many voices being raised, particularly in an election year, and we believe it is critical to have our voice heard on issues that are important to our future.”
Lockheed’s first-quarter spending had declined the past two years, before the sizable 2012 increase.
While companies may be pointing to larger economic trends, lobbying has been much more focused on individual programs, the defense lobbyist said. Lockheed in particular is likely gearing up for fights about the F-35 Joint Strike Fighter program, he said. “They’re not pushing for general budget lobbying, nobody is; they should be, but they aren’t.”
Northrop’s lobbying pattern follows the arc of recent spending decisions. The company increased its spending by 61 percent for the first quarter of 2010, when it was heavily involved in the U.S. Air Force’s competition for a new aerial refueling tanker plane, before announcing in March of that year that the company would bow out.
The company’s 2011 spending fell by 35 percent with no major programming decisions on the horizon, and 2012 corresponds with discussion of canceling the Air Force’s Block 30 Global Hawk UAV order, which the Pentagon announced it would do in February.
“What happened in 2011, with the passage of the Budget Control Act, the discussion of where defense spending was headed shifted from a program focus to an overall budget focus, which doesn’t lend itself as well to lobbying,” Thompson said.
Both Boeing and Raytheon saw small increases in 2012 spending, growing by 1 percent and 2 percent, respectively.
“Boeing continually advocates on behalf of its businesses in both the commercial aviation market and the defense market,” Boeing spokesman Marcellus Rolle wrote in an email. “The objective of our lobbying efforts is to strategically and tactically interact with the legislative and executive branches of federal, state and local governments to urge support on issues of interest to Boeing.”
General Dynamics was the lone company to decrease spending, likely attributable to the end of an aggressive lobbying campaign for the updated Stryker troop-carrying vehicle for the Army.
Raytheon declined to comment for this article, and General Dynamics did not immediately return calls for comment. All three companies that commented emphasized that the companies comply with all lobbying disclosure requirements.
The magnitude of the numbers, on average about $3 million per company, pales in comparison to the totals they actually spend advocating for legislative action, Thompson said.
“What these numbers show is that government records only capture a portion of the money spent to influence politicians,” he said. “The definition of lobbying is quite precise, and therefore, things that might legitimately be regarded as influencing government policy sometimes do not fall under the category of lobbying for purposes of the law.”
Lockheed, like all major defense contractors, has a variety of interactions with government officials, Allen said.
“With 82 percent of our company’s sales derived from U.S. government customers, we naturally have interactions with virtually every standing committee in the United States Congress who has oversight authority over the budgets and policies of all federal agencies, and by extension, the products and services that Lockheed Martin provides to them,” she said.
As budget pressures increase, lobbying may soon take a hit, the defense lobbyist said. “A lot of the contractors have been reducing the number of consultants that they have, avoiding fee increases, but we haven’t had the fights that we had in previous years.”