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They Both Suck! Washington Post brainwashing below. Photo caption didn't say why Italy 'needs' tankers. No concern about the corrupting potential of the golf outings. Destabilizing effects of both companies' weapon |
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Lockheed, Boeing Spar In a Battle Of Rivals By Greg Schneider In the half-dozen years since they emerged as the strongest survivors of wrenching changes in the country's defense and aerospace industry, Lockheed Martin Corp. and Boeing Co. have grown into bitter rivals whose skirmishes are beginning to rattle the military-industrial establishment. The struggle between the two titans, in the past mostly confined to maneuvering behind the scenes, is now spilling into public view. Last week, Lockheed sued Boeing, alleging it had engaged in industrial espionage to win a major rocket contract. A day before the legal papers were filed, Boeing took out extraordinary full-page advertisements in several newspapers, apologizing for the unethical conduct of some of its employees but arguing that the company otherwise keeps to high standards of honesty. Lockheed, based in Bethesda, and Boeing, which moved its headquarters in 2001 to Chicago from Seattle, share one of the great head-to-head rivalries of American business, much like General Motors Corp. and Ford Motor Co. dueling for the domestic auto crown. Industry officials say it has become increasingly common for one company to mount whispering campaigns about flaws in the other. Each lobbies the Pentagon and the media for advantage, and each scrutinizes the other's public statements for signs of aggression or weakness. The level of combat worries some observers, because Boeing and Lockheed also cooperate on some of the nation's most sensitive programs, from managing the space shuttle to ballistic missile defense. The board investigating the space shuttle Columbia disaster, for example, is looking into whether the relationship between the two contractors was a problem in management of United Space Alliance, their joint venture that runs the shuttle program for NASA. "They're now taking everything personally and remembering every time they lost to the other, and the cooperation going on between them is not what it used to be," a former senior executive at one of the companies said. "Every time they're cooperating on a contract, it's something each one felt they should have had the lead on. That's true on both sides." Both companies have grown so big through industry consolidation that they are ravenous to win contracts. Lockheed Martin needs to find $500 million worth of work every week just to keep from shrinking. Boeing needs a staggering $1 billion per week, and it can no longer rely on its struggling commercial aircraft business to supply most of that figure. To make up the difference, Boeing has expanded intensively into military and space contracting, which puts Lockheed Martin, the Pentagon's top supplier, directly in its path. The result is tension, conflict and, some would say, paranoia. Lockheed is the insider, the dominant government contractor whose tendrils reach throughout the bureaucracy, from the Postal Service to Homeland Defense. Boeing plays the brash newcomer, buying its way into Lockheed's markets by absorbing competing companies. It carries the mystique of big commerce from its global passenger jet business. Lockheed has scored the biggest single win over its rival, beating Boeing in 2001 for the Pentagon's richest contract, the $200 billion Joint Strike Fighter program. But Boeing has logged upset after upset in other contests, competing so aggressively that critics say the company sometimes overextends itself. The rivalry plays out daily in ways large and small. Lockheed wins the Joint Strike Fighter race, so Boeing promotes unmanned combat drones as a replacement for fighter planes. Boeing takes the lead in a rocket launch competition, so Lockheed leaks word that the Boeing rocket is flawed. Lockheed takes out advertisements honoring military personnel, so Boeing sponsors a coffee-table picture book called "A Day in the Life of the U.S. Armed Forces." "You get to a certain point on this stuff where it can become pernicious," said one former Pentagon official. "You get to a point where you're just killing each other." As is often the case with rivals, Boeing and Lockheed clash partly because they're so much alike. They're both old-school aerospace companies, American industry's last major havens for guys in oil-stained jumpsuits who make things whoosh and zoom. "Boeing and Lockheed Martin are most of what's left from the old Cold War defense and aerospace sector. They're almost all the launch capability, most of the satellite capability, most of the aircraft capability and a big chunk of the missile capability," said Loren Thompson, an industry analyst who does consulting work for Lockheed. "To a large degree America's future in the aerospace sector depends on how they fare." While they have other rivals in particular segments of the industry -- Lockheed vies with Raytheon Co. in air-traffic control, for instance -- no two contractors are in as many similar lines of work as Lockheed and Boeing. But style and culture set them apart. Led by chief executive Vance D. Coffman, a former spy satellite engineer who can't talk about most of his super-secret career, Lockheed comes across as all pocket protectors and slide rules. "Lockheed Martin's view is that Boeing is great at public relations but not at substance, and Lockheed sees itself as the other way around. And that's how they want it," a former Lockheed executive said. Still, Lockheed officials worry increasingly that government decision makers simply don't like them as much as Boeing. In 1999, for example, then-Air Force weapons buyer Darleen A. Druyun criticized Lockheed Martin's management style during a private meeting. Details leaked around Washington, and the scolding reportedly contributed to a Lockheed management shakeup. Earlier this year, Druyun retired from the Pentagon and went to work for Boeing. There is a special sense of status for Boeing that comes from being one of the world's top commercial brands. It is among the 30 closely watched companies of the Dow Jones Industrial Average, and carries political weight as the nation's biggest exporter and sole remaining competitor to Europe's Airbus Industrie in manufacturing jetliners. A former Boeing executive recalled working earlier in his career for a different aerospace company and making a pitch against Boeing on a particular program. "I remember someone on Capitol Hill pulling me aside and saying . . . 'Be careful. You need to understand, people like the Boeing company,' " he said. "I think the reason people feel differently about Boeing is because Boeing is more than a government contractor. They are essentially our national entry in the commercial airplane world." Boeing can leverage its experience managing commercial programs to present itself to the Pentagon as a different breed of contractor. "Lockheed is an engineering company where Boeing is probably more of a management-oriented company," said Jacques S. Gansler, a University of Maryland professor who was the Pentagon's top weapons buyer during the Clinton administration. "[Boeing's] commercial business requires really sophisticated management." That reputation has fueled Boeing's push into government contracting. The company began girding for its run back in 1996, when it bought Rockwell's space business. Then came McDonnell Douglas and its long warplane heritage in 1997, and the satellite expertise of Hughes in 2000. Now Boeing markets itself to the Pentagon as the new guy, the fresh set of eyes. "I think we've benefited sometimes from walking in with a clean sheet of paper instead of walking in with preconceptions," said Shep Hill, Boeing's vice president for business development. "In terms of technical credibility, [Lockheed and Boeing] are equals with each other. We just think we've brought to bear some innovative concepts in terms of how you look at things." Boeing has scored major wins at Lockheed's expense. In 2001, for instance, the Air Force wanted to upgrade electronics on more than 500 C-130 transport planes. The roughly $4 billion contract was supposed to be an automatic win for Lockheed, which built the planes in the first place. But Boeing won, drawing on its expertise maintaining passenger jets worldwide. Arguably the most dramatic upset came in 1999 after Boeing won the job of building a new generation of spy satellites for the National Reconnaissance Office. Lockheed had done that work since satellites were invented. "They obviously had a more attractive proposal," said Gansler, who helped make the decision but wouldn't discuss details of the classified program. "To take something major away from somebody you've got to have something not just marginally more appealing, but it has to be significantly more appealing." What Boeing did, according to knowledgeable insiders, was promise it could make spy satellites both smaller and with sharper vision than ever before, as well as significantly cheaper. Boeing had also worked to get to know the customer, setting up an annual golf tournament for top-secret NRO staffers and other agency contractors. Today, Boeing is reportedly struggling to make its big promises come true. The program, called Future Imagery Architecture, was as much as $900 million over budget earlier this year, and has only gotten more expensive, congressional sources said. Difficulty in delivering the technology could leave gaps in the nation's ability to track terrorists and monitor hostile foreign regimes, according to a senior intelligence official. Lockheed officials have fumed over what they see as a job they could have done better, and some have seized every opportunity to point out Boeing's flaws to reporters for trade publications popular within the Pentagon, one former company official said. Contracts such as FIA represent a franchise, a line of work that produces revenue for years. The Pentagon is turning increasingly to another type of contract that represents even more power and prosperity for the winning company, one in which the chosen contractor has control over awarding subcontracts and shaping the entire program. The new type of contract creates a "lead systems integrator," or a supervising company that wields government-like powers to assemble an entire weapons system, rather than just build a specific product. Boeing has made a special push to win such work, with great success. It beat Lockheed and General Dynamics for the Army's Future Combat Systems, a contract to develop a new generation of Army weapons, which is a lead-systems-integrator job. Boeing's management of the International Space Station for NASA and its overseeing of the National Missile Defense program are similar projects. The trend puts great pressure on contractors to function ethically, because a firm chosen as a lead systems integrator gets secret technology and pricing information from competitors who want a piece of the job. That, in turn, has made Boeing's performance in the rocket launch competition an especially sensitive topic within the industry. According to court documents, Boeing hired someone from Lockheed who brought along boxes of proprietary Lockheed information. The Air Force and Justice Department are looking into whether Boeing used that information to beat Lockheed for a majority of the space launch work. If so, Boeing could lose its contracts and face fines. Lockheed Martin has pushed the matter further, charging in its court complaint that Boeing has shown a pattern of such behavior. But chief executive Coffman wrote employees last Tuesday to remind them that Boeing "is not just a competitor but a valued partner on many of our programs. For this reason, we must remain focused exclusively on meeting the needs of our customers." One of the companies' biggest partnerships is the United Space Alliance, which manages the space shuttle program. There reportedly was finger pointing behind the scenes after the Columbia disaster earlier this year, with officials from each company quick to assign blame to the other, but both sides say they've put partisanship aside in the effort to troubleshoot the program. Nonetheless, a spokesman for the Columbia Accident Investigation Board said the panel is looking into the companies' relationship as part of the overall review. Staff writers Renae Merle and Vernon Loeb contributed to this report.
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