Pratt, GE escalate engine battle in Congress
Pratt, GE escalate engine battle in Congress
Wednesday, July 14, 2010
WASHINGTON-Two of Connecticut's corporate giants-Pratt & Whitney and General Electric Co.-have long been at loggerheads over a multi-million dollar spending item in the federal budget: $485 million to fund an alternate engine for the F-35 Joint Strike Fighter.
Pratt makes the JSF's lead engine, while GE and Rolls Royce are jointly developing an alternative. For the last several years, Pratt and its allies have tried to block federal funding for the GE-Rolls' fall-back, an effort the latter two companies have thwarted every time.
But this year, their perennial fight has become a pitched battle, with the two companies together enlisting more than a dozen new lobbyists over the last year in an all-out campaign over whether to put in, or strip out, that one item in the $708 billion proposed military spending plan.
"Clearly, both sides feel this issue is coming to a head," said Chris Hellman, of the National Priorities Project, a nonpartisan research group that tracks federal spending. "The final decision on this is coming, so both sides are pouring as much energy, time, and money into this as they can."
Over the last several months, the Fairfield-based GE and its aviation subsidiary have tapped three new D.C. lobbying firms to increase its firepower on the engine issue, according to lobby disclosure reports. The company's new roster of advocates includes Republican ex-Congressman Henry Bonilla, of Texas, and five former congressional staffers, including several aides who used to work on the House and Senate committees that will decide this issue.
"This is quite a war," acknowledged Rick Kennedy, a spokesman for GE, which has taken a higher profile than Rolls Royce in the lobbying battle.
Pratt & Whitney's parent company, Hartford-based United Technologies Corp., has hired one new lobby firm this year, on top of the two firms it added in 2009 to work on defense legislation. And in just the first three months of this year, UTC had already spent nearly $3 million on its in-house lobbying activities-$1 million more than it had spent at that point in 2009.
"I can assure you, I'm exhausted," said David Manke, UTC's vice president of government and international affairs and the firm's lead lobbyist on the alternate engine issue. "This has been one of our most active issues."
In all, the two companies have at least 33 lobbyists working on the issue, according to an analysis by the Center for Public Integrity, a nonpartisan watchdog group. And just yesterday, Pratt began circulating a three-page memo detailing the results of a poll it commissioned on the alternate engine issue. Not surprisingly, Pratt's survey favored the company's position, with respondents expressing "decidedly negative feelings" about spending gobs of money on a project the Pentagon does not want.
Both sides have also been generous with campaign contributions. UTC's political action committee, for example, has already given the $10,000 maximum donation to 4 members of Connecticut's House delegation for this election cycle, according to the Center for Responsive Politics. (The 5th lawmaker, Rep. Chris Murphy, D-5th District, has received $5,000.) UTC's PAC, which has doled out $500,000 so far this election cycle, also maxed out to House Speaker Nancy Pelosi, D-Calif., and gave to nearly every member of the defense appropriations subcommittee, as well as key players on the House Armed Services Committee.
GE has given more than $900,000 in PAC contributions this year, with hefty checks going to members of those same two defense committees. GE has not been as generous with the Connecticut lawmakers as Pratt, writing checks under the $10,000 limit, so far anyway.
These two corporate titans are fighting over more than just one $485 million provision. The Department of Defense (DOD) could eventually spend $100 billion on Joint Strike Fighter (JSF) engines. The JSF, the largest weapons program ever, is "the contract of the century," noted Hellman, of the National Priorities Project.
As such, he added, defense interests such as GE worry that if they don't get a piece of it, they will be shut out of the market for decades. And if they do, they're set.
When the JSF program was first launched, defense officials called for the development of two engines for the fighter aircraft, a lead engine made by Pratt & Whitney and an alternate made jointly by GE and Rolls Royce. But since 2006, DOD officials have said they no longer wanted the GE-Rolls Royce alternative, saying the Pratt engine was on track and it was a waste of money to build both.
In past years, GE and its allies successfully countered that the alternate engine was vital, spurring competition in the defense industry that could help keep costs down for the JSF program. For the last three years, Congress has repeatedly overruled the Pentagon and included funding for the GE-Rolls Royce engine.
But Pratt officials decided this year might be different. Defense Secretary Robert Gates laid the groundwork for a fresh fight in February, when he announced that he would seek a presidential veto of the defense spending bill if it included the alternate engine funding or money for a C-17 cargo plane.
"I am fully aware of the political pressure to continue building the C-17 and proceed with an alternate engine for the F-35, so let me be very clear," Gates said at a Feb. 2 Senate Armed Services Committee hearing on President Barack Obama's 2011 military budget request. "I will strongly recommend that the president veto any legislation that sustains the unnecessary continuation of these two programs."
It was a small but significant rhetorical shift for Gates, who in 2009 had said he would only recommend a veto if the alternate engine funding "seriously" disrupted the entire fighter jet program, a high threshold.
Indeed, in the wake of Gates' stronger remarks, Pratt & Whitney officials, who had closely watched Gates' successful campaign to kill the F-22 and a new presidential helicopter in 2009, decided to seize the moment.
"With that kind of push [from Gates], it seemed like we should give it our best shot," said Manke, the UTC lobbyist. "You can't do any better than being on the side of Gates and the White House."
But that high-level support has not deterred GE and Rolls Royce, which have easily matched Pratt's new campaign.
"Pratt and Whitney's desire ... is to get the whole business all to themselves," said Kelly. "They have spent millions and millions of dollars telling people it's a waste of money," he said, when the truth is "they want a monopoly."
Erin Dick, a spokeswoman for Pratt, sharply disputed that suggestion. She noted that both the Bush and Obama administrations "have said they don't want, they don't need, and they can't afford" the alternate engine.
"It is $2.9 billion of taxpayer money wasted on a piece of hardware, and in this economic climate, with the deficits we have, it is irresponsible" to continue to fund it, argued Dick. The $2.9 billion refers to the estimated cost of developing the second engine over the next five to six years.
In its most recent salvo, Pratt bought a full-page ad in a Capitol Hill newspaper, featuring an up-close photograph of a battle-scarred soldier. "Go ahead," the ad says. "Try explaining to him that $2.9 billion would be better spent on an F-35 extra engine than on what our troops really need."
Dick couldn't say what military needs would not get funded if lawmakers approve the $485 million alternate engine. But Pratt officials are clearly hoping that tight budgets in Washington will boost their case. GE, too, is using an economic argument, saying that Congress cannot afford to forgo potential savings garnered from competition, even if those savings don't emerge until years down the line.
The Pratt-GE fight is playing out over two defense bills, one to authorize military programs and the second to fund those programs. When a House subcommittee crafted the defense authorization bill this spring, lawmakers on the panel, as usual, included $485 million for alternate engine.
Rep. Ike Skelton, D-Mo., the House Armed Services chairman, told Gates at a Feb. 3 hearing that "having competing engine production lines for the F-35 program is the best way to control overall program costs" and necessary to protect against the possibility of problems emerging with the Pratt engine. "This is not a question of pork," Skelton said. "It is a sincere concern for the success of the F-35 program and for the benefits of competition."
By then, UTC had already hired Ogilvy Government Relations, a politically-wired firm whose lobbyists include a former top advisor to Speaker Pelosi. UTC hired the firm, Manke said, to help with a high-stakes gambit-a full House vote to strip out the alternate engine funding. Rep. John Larson, D-1st, the 4th ranking Democrat in the House, took the lead role in pressing for a vote and in crafting the amendment.
But even with the White House on its side and top-flight lobbying muscle working the Capitol's marbled halls, Pratt fell short. GE and Rolls-Royce had deployed their own army of advocates, who cobbled together a bipartisan coalition to defeat Larson's amendment nixing the alternate engine funds, which failed by a 231-to-193 vote.
"It's what everyone finds frustrating about Washington," said Larson. "At this time, when we're trying to make cuts and rein in the deficit, and when you have an engine that's unnecessary and unwanted, that we would go ahead" and still fund it.
Larson said GE's argument about competition is off-base. "Competition is always a good idea, except when the competition has already taken place in the private market and the winner has emerged and then you use your political clout" to try to change the outcome, he said.
But for many lawmakers, the vote was more about jobs than anything else. GE, Rolls Royce and Pratt all have facilities and suppliers across the country, a fact they all used in making their case to lawmakers.
For example, GE has a plant just outside of House Minority Leader John Boehner's Ohio district. And Rolls has workers in Minority Whip Eric Cantor's Virginia district. Both men voted in favor of the GE-Rolls position. And Larson has championed Pratt & Whitney's case, in no small measure because the company is headquartered in his district.
Larson and Pratt officials said that although they did not win the House vote, it showed that the GE-Rolls forces do not have enough support to override a veto. And the company has made more progress in the Senate.
"The deal is not done," said Dick, the Pratt spokeswoman.
She noted that the Senate's version of the defense authorization bill, for the first time, is moving forward without the alternative engine provision. Sen. Carl Levin, D-Mich., chair of the Senate Armed Services Committee and a supporter of the alternate engine, has said he will fight for the provision when the two bills are reconciled by a House-Senate conference committee. And Levin signaled that he is willing to call the Obama Administration's bluff on the matter.
"I can't believe the president would veto the bill because of a second engine," Levin told reporters at the end of June. The full Senate could take up the defense authorization bill later this month.
The parallel fight over the defense appropriations bills will also begin to unfold in the coming weeks. In the House, a defense spending subcommittee is expected to finish its version of the spending measure before the end of July. Larson said he's confident the committee chairman will not include the alternate engine in that bill, although he said another member could offer it as an amendment.
Manke said Pratt's arguments may carry more weight with the spending panels, which are working with limited pots of money and are under pressure to trim spending. But, he added, the outcome is "hard to know and dangerous to forecast."