The Air Force's approach of passing unwanted Herks off to the Air Guard and Reserves worked out nicely for Lockheed. The company allied with Air Guard and reservist advocacy groups to lobby Congress further. In an era of base closures, heavily lobbied governors would use the arrival of new planes to argue for the continuing life of bases in their states. In turn, states and their congressional delegations would fight to get new planes or hang onto existing ones. It was a veritable Lockheed feedback loop. Washington Post reporter Walter Pincus quoted a Pentagon official as seeing C-130 politics as a twist on the old military-industrial complex: "a triangle of the Guard, Lockheed, and politicians."
The result: the military was often prevented from retiring the oldest Herks, the ones that really needed to be put out to pasture. For example, as Pincus reported, the Joint Chiefs and the Air Force concluded in 1996 that they had 50 more C-130s than they needed, but Congress stymied efforts to retire any of them. One tactic used was to hold nominees hostage: a Kentucky senator repeatedly held up Air Force promotions until four Kentucky Air Guard C-130s were taken off the chopping block.
And it hasn't ended yet. In its FY2013 budget, the Pentagon planned to retire 65 older C-130s to save a little money. However, National Guard groups successfully mobilized state governors and congressional delegations from states like Alaska to, in the words of Alaska Senator Mark Begich "fight this action every step of the way." Congress managed to save all of them for a year, and half of them permanently.
The Not-So-Super Hercules, or the Program That Just Won't Die
Air Force attempts to replace the C-130 with a new generation of transport planes also have a habit of dying or getting rerouted. The Herk's turf has generally proved remarkably sacrosanct. The "Advanced Medium STOL" (short takeoff and landing) program of the 1970s, for instance, fizzled, possibly due to Lockheed's lobbying. The competing C-27J is being cancelled in favor of more C-130s. The C-130 Avionics Modernization Program (AMP), which in a surprise move was handed to competitor Boeing -- as one of several gifts from a senior Pentagon procurement official shortly before she took a high-paying job there (en route to prison) -- is being cancelled, too. (Though a new congressional C-130 Modernization Caucus spawned by Boeing and led by the congressman in whose district the AMP's training program is located, is doing its best to cancel the cancellation.)
Knowing that it could keep the C-130 alive through congressional add-ons and foreign sales well into the future, Lockheed took the unusual step of developing the next generation of the plane without new funding from the Pentagon. It invested $1 billion of its profits from government contracts in the new C-130J Super Hercules. This has kept the factory in Marietta, Georgia, humming, and with over 2,400 C-130s already built, Lockheed calls it "the longest continuously operating military aircraft production line in history."
Humming, yes, but not always in tune. The C-130J has been plagued by problems. In 2004, after the military had acquired 50 of the planes, the Pentagon's Inspector General found that, even while the Air Force and Congress kept ordering more of the planes, they didn't meet contracted standards. The weather chasers couldn't chase storms because propellers would crack in bad weather. The military wouldn't use C-130Js for air drops in Iraq or Afghanistan because they didn't think they were safe. "The design of the C-130J is not stable and the C-130J aircraft has not passed operational testing," the Inspector General concluded. It "is not operationally effective or suitable."
To fix these problems, the unit cost rapidly ran up to $81 million per plane. The problems proved so daunting that Secretary of Defense Donald Rumsfeld axed the C-130J program in 2005 -- or tried to.
For the lobbyists and the plane's fans in Congress, it was once more unto the breach. Lockheed also got help on the inside. The Air Force made up some numbers indicating that it would be far more expensive to cancel the program than to just keep buying -- overstating the possible cancellation cost by at least $1.1 billion. In the end, Rumsfeld surrendered. In 2006, in a relatively rare step, the Pentagon forced Lockheed to take a hit on its profits and negotiate a new contract reducing the sticker price of the planes by several million dollars. But that didn't last long. The unit cost soon bounced back; the basic C-130J now costs $93.6 million.
When it comes to military contracting like this, it doesn't seem to matter which party occupies the White House or controls Congress. It doesn't even seem to matter how many planes the Air Force puts on its additional "unfunded" wish list beyond the Pentagon's official request, because Congress so often buys more. Sure, some years Congress doesn't provide. In 2010, the Air Force asked for 12 Herks in its main request and put two more on its unfunded wish list, yet Congress only gave it six. And sometimes money is pushed around from one year to another or from one bucket to another, making it challenging to track through the intentionally hard-to-understand (and not even auditable) Pentagon labyrinth.
At the present time, the military is asking both for more standard C-130Js (to replace old or heavily used Herks) and for new AC-130 gunships as well as Special Operations MC-130 variants on the plane in the questionable belief that these will be "invaluable" for fighting insurgents and terrorists. This means that the abolition of earmarks isn't all that big a deal for Lockheed.
But that doesn't stop it. Even with the threat of sequestration looming, and the Pentagon asking for seven new Herks in 2013, the House still inserted funding for 14.
What will happen in this year's request? We don't know yet, because it's late in coming thanks to sequestration. But Lockheed isn't worried: even while threatening sequestration layoffs, the company forecasts record profits this year.
And why should it worry? As of last October, it had contracts to build 337 more Herks for the Pentagon and a variety of foreign countries. In November, it scored the program's biggest foreign military sale ever, $6.7 billion to build 25 of the planes for the Royal Saudi Air Force. It has three NextGen models in the works, including a wider version (suitably named the XL) to carry oversized new Army equipment. And with the Air Force starting to think about replacing the C-130 (again), Lockheed has already secured a spot as one of the two companies developing prototypes for that future plane with its nifty "Speed Agile" design. Besides, judging by the Pentagon's ongoing experiences with Lockheed's F-22 and F-35 advanced fighters, whose costs have hit the stratosphere, any next generation "trash hauler" is bound to carry a strikingly higher initial sticker price than the C-130J -- and that, of course, is before the inevitable cost upticks begin.
Out the Window
C-130s have a special place in my heart. The first military aircraft I got to ride in was a Coast Guard Herk. An Air Force C-130 got me out of Iraq. Now that the 928th Airlift Wing is no more, I get a little wistful when I fly through Chicago and all I see out the window are private cargo hangars.
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