WASHINGTON – Three weeks ago a naval ship launched a military contractor’s experimental missile off Hawaii to intercept and destroy a decoy pretending to be an incoming nuclear weapon for the first time in space.
The same company, Raytheon Technologies, that accomplished the feat was selected for another contract this year in a program that could cost up to $ 20 billion to build a new generation of nuclear-armed cruise missiles for the United States .
And Raytheon, whose 195,000 employees make warplanes, weapons, high-tech sensors, and dozens of other military products, has sold billions of dollars in weapons and radar systems to allies in the Middle East in recent years, some of which have been used to help To wage war in Yemen.
Now, Raytheon could soon have another differentiator: one board member, retired Army General Lloyd J. Austin III, has been named the next Secretary of Defense by President-elect Joseph R. Biden Jr.
Raytheon isn’t General Austin’s only connection with military contractors. He was also a partner in an investment firm that bought small defense firms. And his move from the arms business to a leadership role in the Pentagon continues a pattern that President Trump has begun in recent years.
Mr Trump elected James N. Mattis, also a retired four-star general, who then served on the board of General Dynamics, another major military entrepreneur, as its first secretary of defense. Mark T. Esper, a former Raytheon chief lobbyist, succeeded Mr. Mattis.
This is a departure from the norm. Defense ministers who had served prior to Mr Trump’s tenure – at least three decades until President George Bush’s tenure – did not come directly from boards or executive suites of contractors, although some, like Ashton Carter, President Barack Obama’s last Secretary of Defense, did served as an industry advisor.
Mr. Biden’s decision to appoint General Austin has raised a new wave of questions about the corporate relationships of people Mr. Biden selects to serve in his administration.
These links are especially relevant when it comes to the Pentagon, which spends hundreds of billions of dollars each year on weapons and other supplies. During Mr. Trump’s tenure, the military budget increased by about 15 percent, reaching $ 705 billion in the last fiscal year. This is one of the highest values in constant US dollars since World War II.
“It is important for the defense minister to bring independence of thought into this role, and it is deeply worrying when a candidate comes straight from one of the major military contractors,” said Daryl G. Kimball, the executive director of the arms control association, who pointed out urges reducing nuclear weapons and military spending.
He added, “I would note that Raytheon has a tremendous financial stake in upcoming decisions by the Biden administration, Congress and the Secretary of Defense.”
At Raytheon, officials are said to be excited about the prospect of a board member becoming secretary of defense, according to a person who works with the company. However, that person and another person working with Raytheon warned that the appointment could result in an undesirable audit of the company.
Even members of Mr. Biden’s own party had urged Mr. Biden to refrain from nominating anyone for the job of Secretary of Defense who came directly from the military business world.
“US national security should not be defined by the bottom line of Boeing, General Dynamics and Raytheon,” Democrat Representative Mark Pocan of Wisconsin said in a statement last month.
As Secretary of Defense, General Austin would have to sell any stock he holds in Raytheon or other defense companies, or companies that do business in the industry, and would most likely be prohibited from directing contract decisions or other “special matter” directly affecting companies with whom he has had financial relationships for the past two years if Mr. Biden follows the ethical guidelines first adopted by Mr. Obama.
General Austin joined Raytheon Technologies in April as part of a merger between Raytheon Company, known as a manufacturer of Patriot and Tomahawk missiles, and United Technologies, a manufacturer of commercial and military jet engines and avionics. General Austin joined the board in June In 2016 after leaving the military.
According to Raytheon records, General Austin owned more than $ 500,000 in Raytheon stock as of October. As a member of the United Technologies board of directors, General Austin received a total of $ 1.4 million in stock and other compensation over a four year period.
Raytheon is now one of the largest military contractors in the world. Raytheon boasts in an earnings report to Wall Street that it has a record federal government order book totaling $ 73 billion.
His aggressive drive over the past five years to sell billions of dollars in precision-guided bombs and bomb parts to Saudi Arabia and the United Arab Emirates, which weaponized civilians in a catastrophic war in Yemen, sparked an outcry from human rights groups and some members of Congress who repeatedly tried to block sales.
But Raytheon, who pays an army of well-connected lobbyists, overcame the opposition and sold the weapons – thanks in part to his close relationship with the Trump administration.
General Austin was also a partner in an investment firm called Pine Island Capital, which he joined on the board of directors in July. The company was recently on a buying spree from small military contractors including Precinmac Precision Machining, which sells specialty parts for missile launch systems and machine guns.
By the time General Austin joined Pine Island, Pine Island said he was “already fully committed, working with us on new investments and bringing his experience and judgment to our portfolio companies,” including InVeris Training Solutions, the virtual gun firing training service offers.
General Austin, Anthony J. Blinken, the election of Mr. Biden as Secretary of State, and Michèle A. Flournoy, who had been Mr. Biden’s other nominee for Secretary of Defense, were made clear because of their connections with the Pine Island team competed in the past few months prior to the sale of $ 218 million worth of stock in preparation for buying other defense industry targets.
Pine Island has a partnership with WestExec Advisors, a consulting firm founded in part by Mr. Blinken and Ms. Flournoy. Another Raytheon board member, former Pentagon official Robert O. Work, was also involved with WestExec and advised Mr Biden’s transition to national security planning.
While WestExec advised at least one defense contractor, a WestExec spokeswoman did not respond to questions about whether Raytheon was a customer, stating that the company has nondisclosure agreements with many customers and “does not comment on potential customers.”
When asked about General Austin’s relationships with defense companies, Andrew Bates, a spokesman for Mr. Biden’s transition, said, “Every cabinet member will comply with all disclosure requirements and strict ethical rules, including withdrawals as appropriate.”
He added that General Austin and Mr. Blinken, if confirmed, would sell all of Pine Island’s shares.
It’s not clear how much equity they have in Pine Island.
Mandy Smithberger, a director of the Project on Government Oversight, which tracks federal contract decisions, said the problem with hiring former industry executives as senior Pentagon officials is broader because they often bring with them an industry-friendly mindset.
As a result, Mr Biden’s administration may find it more difficult to make the tough decisions that will be necessary as the United States faces large budget deficits and growing demands for public health programs to increase to better prepare for the next global world to be pandemic.
“The defense industry is already way too close to the Pentagon, and if the Biden administration is to reform the department the way we know, that must change,” Ms. Smithberger said. “What is in the best interests of our national security may not be the same as what is in the best interests of the defense industry.”
