Photo supplied by Lockheed Martin Corp.This is the first publicly released photo of a prototype of the MEADS missile defense system surveillance radar that was designed and developed at the Lockheed plant in Salina, NY, for the U.S. Army. The surveillance radar can search 360-degrees for incoming missiles, planes and drones and be hauled around on the back of a truck.
Washington, D.C. -- Hundreds of Central New York workers building a long-delayed missile defense system could lose their jobs if Congress proceeds with a plan to eliminate the program’s funding.
Lockheed Martin’s plant in Salina has a $625 million share of the multibillion-dollar contract to design and develop the Medium Extended Air Defense System, or MEADS.
About 325 Lockheed engineers and technicians in Salina have been building two radars to spot and track enemy missiles, fighter jets or drones — and target them with interceptor missiles.
The United States, with partners Germany and Italy, already has spent $3.4 billion to develop its replacement of the Army’s aging Patriot missile defenses.
But in February — after years of delays and cost overruns of at least $1 billion on MEADS — the Army announced it was abandoning plans to deploy the new system once the design was finished.
Now, Congress is wrestling with an $800 million choice: Should the Pentagon spend that much money to finish developing a new missile system that it has no intention of buying? Or should it cancel the contract early, forcing the nation to pay contractors more than $800 million in penalties?
The debate in Congress has set off a high-stakes international battle among defense contractors, lobbyists, taxpayer groups and House and Senate members eager to protect their districts and kill — or save — a program that could eventually cost $19 billion.
The outcome will have a huge economic impact on Central New York.
Lockheed, the prime contractor for MEADS, has already throttled back on its design work in Salina, prompting the layoffs of 89 of the 2,250 employees at the Electronics Parkway plant.
Depending on what Congress does, the job cuts could get worse.
The beginning
The MEADS system was conceived in the late 1990s as the next generation of short-range and cruise missile interceptors.
Missile defense batteries had captured worldwide attention during the Persian Gulf War in 1991 as television news crews aired scenes of Patriot missiles intercepting Iraqi Scud missiles.
The Pentagon asked for competing proposals from the builder of the Patriot system, Raytheon Company, of Waltham, Mass., and a team led by Lockheed Martin.
In 1999, the Lockheed team won. To defray costs, the United States joined with Germany and Italy. The U.S. would pay for 58 percent, Germany 25 percent and Italy 17 percent.
Lockheed’s challenge was to build a missile defense system that was lighter, easier to transport on aircraft and more mobile on the battlefield than Patriot batteries. The idea was to mount MEADS systems on trucks, an improvement over the Patriot systems, which require a large 10-ton truck to pull the missile batteries.
One of the biggest differences is the MEADS surveillance radar developed in Central New York. The constantly spinning MEADS radar is designed to swivel 360 degrees to spot targets from any direction. Patriot has 90-degree radars, meaning it takes four units to provide 360-degree coverage.
As a result, MEADS requires 200 fewer soldiers to operate, according to MEADS officials.
A Salina boom
MEADS represents the largest radar deal ever landed by Lockheed in Salina.
After receiving the MEADS order in 2004, Lockheed went on a hiring spree, promising to add 340 new employees in Salina over the first three years.
To attract highly skilled workers, such as software, electrical and systems engineers, Lockheed offered good salaries, from $60,000 to more than $100,000 per year.
Dennis Beres, a local vice president for Lockheed Martin, had a rosy vision when he announced the contract award.
“MEADS will be the largest radar program this site has ever undertaken,” Beres said of the Salina plant. “When the design and development phase is complete, the full-scale radar production that follows is expected to continue for decades.”
Now, that future is unlikely.
In February, the Army pulled the plug on production of the MEADS system. Instead, Defense Department officials said they wanted to convert the MEADS program into a “proof of concept” demonstration project, allowing for the potential “harvesting” of its technology at a later date.
The Defense Department cited cost overruns of at least $1 billion (some critics say $2 billion), 11 years of delays, technical challenges and an escalating price tag — now estimated to reach $19 billion by the time MEADS production would start in 2018.
In response, the United States and its European partners who formed Orlando, Fla.-based MEADS International to manage the project, cut back.
Instead of conducting seven flight tests, the MEADS team now expects to have only three tests for its missile interceptors, said Marty Coyne, director of business development for MEADS International. The first test is scheduled for November at White Sands Missile Range in New Mexico, Coyne said.
MEADS managers also decided not to include the two-story-high surveillance radars developed in Central New York in the test firings.
Coyne said the Salina plant went into a slowdown on the development of the surveillance radars.
In May, Lockheed announced the layoffs of 89 local employees, mostly engineers. The layoffs were part of a larger furlough of 227 employees in the company’s Mission Systems and Sensors Division, which includes Salina. Coyne said the bulk of the layoffs were related to MEADS.
Monday, Lockheed announced 85 layoffs of production workers in Salina, unrelated to MEADS, said Troy Scully, a spokesman for the local plant.
But because of the slowdown, Lockheed decided to complete construction of one prototype surveillance radar instead of two.
Still, MEADS remains the largest project in the Salina complex, Scully said.
A better missile defense
Lockheed blames the development delays on several factors: challenges by Raytheon to the contract award; delays in funding from the European partners; changes ordered by the Pentagon; and some technical difficulties.
Lockheed hit its first two deadlines, Coyne said. But in 2007 and 2008, the first technical problems emerged. Coyne said some involved software development for the radar system, which he called expected.
Coyne said MEADS International officials are confident the November testing will convince members of Congress to at least approve spending $804 million over fiscal years 2012 and 2013 to complete the design and development phase, as the Pentagon requested.
But Raytheon, the Patriot manufacturer, emphasizes that all of MEADS is still unproven, and it has done nothing to deserve an investment of more money from taxpayers.
“It’s kind of hard to tell where MEADS is wrong because it is untested,” said Bill Blake, Raytheon’s senior manager for integrated air and missile defense business development. “I don’t understand how one would compare claims versus real-world performance.”
Blake also rejects claims from MEADS officials that their systems will save on operation and maintenance costs, and require 200 fewer troops to operate.
The battle in Congress
The battle in Congress has become one based more on regional loyalties to defense contractors than politics.
Liberal Sen. Charles Schumer, D-N.Y., and conservative Sen. Richard Shelby, R-Ala., both promised to advocate for MEADS. The work is also done in Alabama, Florida and Texas.
The most vocal opponents include three Republican senators — John McCain, of Arizona, Scott Brown, of Massachusetts, and Kelly Ayotte, of New Hampshire — and a Democrat, Mark Begich, of Alaska. All four of their states are home to Raytheon or suppliers for the Patriot.
Brown became particularly agitated about the $800 million MEADS termination penalty during an April 5 hearing with Army officials.
“I’m just flabbergasted. ...” Brown said. “Whoever advised whomever who signed it to say, ‘Oh, yeah, this is a great deal. And by the way, you can’t get out of it. And if you do, you have to pay $800 million.’”
“Are you kidding me?” Brown said. “I mean, I’m at the point now that I’m thinking of potentially with other members, you know, just putting something in the authorization bill saying, ‘You know, we’re out. Sue us.’ And then take our chances there and see what happens.”
Such termination fees have been standard in international defense contracting agreements since the late 1990s, and no nation has withdrawn from such an agreement since then, Under Secretary of Defense Ashton Carter told Congress.
In the end, the Senate Armed Services Committee voted to cancel all funding for MEADS, which would trigger the $800 million penalty. But earlier this month, the Senate Appropriations Committee restored the full funding request of $407 million for fiscal year 2012.
The House of Representatives took a third approach, reducing the 2012 funding request by about $150 million.
The differences between the House and Senate will have to be ironed out in a conference committee. Congressional staffers say privately that such a deal will likely be included in a wide-ranging appropriations bill.
Buerkle joins the fray
Eager to find an independent source, U.S. Rep. Ann Marie Buerkle asked the Government Accountability Office on July 29 to study whether MEADS or Patriot is more cost-effective over the long run.
Buerkle, R-Onondaga Hill, asked the GAO to examine the cost of upgrading, operating and maintaining Patriot for the next 20 years versus completing, procuring and maintaining MEADS.
“Everyone has special interests, and obviously we have Lockheed in our district,” Buerkle said. “But I think the wise thing to do is to ask the GAO to look at it and conduct an independent study.”
Buerkle said she is aware of the economic impact on Central New York. “But at the same time we have to look at what’s best for our country and the best use of taxpayer dollars,” said Buerkle, who has not taken sides in the debate.
The GAO has not yet responded to Buerkle’s request.
An uphill fight
The MEADS fight comes at a particularly bad time for the defense industry.
President Barack Obama has proposed cutting $400 billion from national security spending over the next 12 years. On top of that, Congress plans to slash billions more to reduce the deficit.
If the so-called Super Committee in Congress cannot agree this year on $1.2 trillion in long-term cuts to reduce the deficit, the lack of action would trigger a $600 billion cut in defense spending over the next decade.
Lockheed and its MEADS partners are fighting the proposed cuts to the MEADS program with an intense advertising and lobbying campaign, which includes purchase of a full-page ad in The Washington Post. Congressional lobbying disclosure records show Lockheed also spent at least $60,000 in the first half of the year with a Washington, D.C., firm that lobbied on MEADS and the F-35 joint strike fighter.
It’s possible the company spent considerably more to try to save MEADS, but Lockheed won’t provide details.
Meanwhile, at least four conservative taxpayer watchdog groups are calling on Congress to immediately cancel MEADS.
Americans for Tax Reform (led by anti-tax leader Grover Norquist), Citizens Against Government Waste, National Taxpayers Union and Taxpayers Protection Alliance sent a letter Sept. 12 to the leaders of the Senate Appropriations Committee.
“The Pentagon has already admitted it has no intention of procuring the system and both European nations are pursuing other options as well,” the letter said. “There is little reason, therefore, to continue to waste taxpayer dollars on developing a system that will never be put to military use.”
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