How Australian defence spending ‘contributes to American prosperity’

[Magda Hassan]

I'm sure this is the same situation for other countries as well. The trickle up effect.

​The extent of Australian taxpayer support for the US defence industry has become clearer from an analysis of major defence procurement data and current defence tendering.The government has continued to attract criticism for its cuts to major defence procurement spending in the May budget, with former chief of Army Peter Leahy the latest critic to voice concerns. Last month US neoconservative and defence industry lobbyist Richard Armitage criticised the government's funding cuts. In May, the government announced spending cuts of $5.4 billion, with big reductions obtained from delaying or cancelling major procurement processes.
Tony Abbott, after a recent trip to America, criticised the cuts and suggested the government had "disappoint[ed] our friends and allies at what is for everyone a difficult time".
A Crikey study of major procurement contracts over the last decade illustrates the stakes for US defence companies in Australian procurement cuts.
Based on data for only the largest contracts administered by the Defence Materiel Organisation and, before its establishment, the Department of Defence, US corporations have received just under $22 billion over the last decade of the $69 billion spent on major projects. That doesn't include revenue flows indirectly to US corporations via fully-owned local subsidiaries like Lockheed Martin Australia or Boeing Defence Australia. The list of projects includes some of the most controversial procurement projects of past and present, including the disastrous Seasprite Helicopter acquisition and the Joint Strike Fighter, now vastly behind schedule and over budget.
The US is easily the biggest offshore beneficiary of Australian defence procurement in the last decade; France is a distant second with a little over $3 billion. Many of the procurement projects are conducted under the US Foreign Military Sales program, which is described by US Defence Security Cooperation Agency as "the government-to-government method for selling U.S. defense equipment, services, and training". Its website states:

Responsible arms sales further national security and foreign policy objectives by strengthening bilateral defence relations, supporting coalition building, and enhancing interoperability between U.S. forces and militaries of friends and allies. These sales also contribute to American prosperity by improving the U.S. balance of trade position, sustaining highly skilled jobs in the defence industrial base, and extending production lines and lowering unit costs for key weapon systems.

Foreign Military Sales don't come without their own cost to the US. According to data submitted by the US Defence Department to Congress, in 2010 the Americans spent about US$480,000 as part of an overall US$600,000 spend on staff employed (four in the US, one based in Australia) to "work closely with members of the host country defence establishment to develop and execute security assistance/cooperation programs" in Australia. The US planned to spend around $480 million worldwide promoting its arms sales in 2010, including over a million dollars selling weapons to the Gaddafi régime it helped to overthrow last year.
However, US companies don't only benefit from major procurement projects. They and their local subsidiaries compete  or sometimes are simply handed via "direct sourcing"  tender contracts for a vast array of defence-related services, including everything from cleaning and building maintenance services to software, maintenance, consultancy services, engineering services and project management  as well as military, communications and computer hardware.
The Austender website shows that top five US defence corporations  Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon  have secured smaller contracts worth just under $160 million this calendar year alone from the Department of Defence and Defence Materiel Organisation. General Dynamics secured over 190 contracts. The fully-owned local subsidiaries of Lockheed Martin, Boeing and Raytheon have secured another $142 million. All provide services to other government departments as well; Raytheon Australia claims to have recorded revenue of $700 million in 2010. All are headed by men with deep roots in the Australian military. Lockheed Martin Australia is headed by former admiral and defence attaché to the US, Raydon Gates; Boeing Defence Australia is headed by former senior DMO official Kim Gillis.
Defence spending is often better understood as industry assistance under another guise. In Australia's case, a vast component of that assistance is for the benefit of US corporations, thereby "contributing to American prosperity".
http://www.crikey.com.au/2012/08/13/how-...rosperity/