Ellen Mitchell, Politico
Defense lobbyists are getting inundated with calls from longtime clients and new prospects eager to take advantage of a potential military buildup but also uneasy that President-elect Donald Trump will spark a trade war and jeopardize lucrative arms deals, according to multiple defense lobbyists, consultants and industry officials.
They depicted a scramble on K Street in recent days to prepare for a new administration they spent little time planning for — one that promises to enlist Congress in a comprehensive effort to modernize the nation’s aging nuclear arsenal, expand the Navy, and increase the size of the Army and Marine Corps.
The defense industry is “optimistic about the prospect of increased defense spending based on Mr. Trump’s previous comments on boosting spending and strengthening the military,” Harris Corp. CEO Bill Brown told POLITICO.
One longtime lobbyist said his firm has been deluged with calls in recent days from all of its current clients and “people that we’ve never done direct work with but we know and are looking for a better understanding of what’s happening.”
“Whether you’re happy or you’re sad about what’s happened, I think most defense lobbyists are starting to think, ‘Wait a minute, there could be some opportunities here,” said the lobbyist, who asked not to be identified. “I think there’s going to be more interest from industry into how to do business in the U.S. government moving forward.”
One industry consultant also said his firm received multiple calls this week seeking insight into the Trump administration’s plans to fill cabinet positions and the consequences for Pentagon legislation.
“It’s all very preliminary questions: What does it mean? What’s going to happen with the FY-17 appropriations bill? And what’s going to happen with the FY-18 budget?” said the consultant, who spoke on the condition of anonymity.
While firms are always jockeying for new clients, the lobbyists predicted a major push in the coming weeks to snag new work from traditional defense companies hoping to protect or grow their contracts as well as those seeking to enter the market for the first time — what he called a “refocus of client procurement.”
“Firms are going to start doing things to get doubled down on their pipeline, maybe in different ways than if Hilary [Clinton] came in,” he said.
Others are also gearing up for the prospect of more defense spending.
“Rebuilding America’s military means a lot of things: It means readiness, it means sizing force structure, it means buying the proper equipment,” said Michael Herson of American Defense International, which lobbies for L-3 Communications, General Atomics, Leidos, Northrop Grumman, Fluor Corporation and many others. “So there’s opportunities throughout all the [military] services.”
(Herson’s partner, Vann Hipp, is also a leading contender to be Trump’s Army secretary).
Another long-time defense lobbyist who asked not to be identified echoed the generally bullish sentiment. He said there is a sense that Trump’s history in business could help defense companies and their supporters on Capitol Hill to negotiate with his administration in a way that has been more difficult in the Obama years.
“It is safe to say that defense lobbyists, as well as the defense industry, are pretty optimistic about a Trump presidency, at least coming out of the gates,” the lobbyist said. “That is both from an overall spending perspective but then also clearly he has a reputation and a record of deal making, which I think industry thinks is a good thing.”
But the flurry of calls to lobbying firms also highlighted a clear concern about Trump’s protectionist stance and the possibility his policies will hinder defense trade, in which the U.S. currently enjoys a $60 billion trade surplus.
Trump has pledged to renegotiate bilateral and multilateral trade pacts to get better terms and threatened to increase tariffs on imports, which some economists have predicted could backfire.
Defense industry executives fear that by making it more difficult for the U.S. military to acquire things it needs from overseas manufacturers, foreign governments will retaliate by shutting out U.S. contractors.
“There is some really good [equipment] that we get from foreign defense companies that is absolutely critical and if we start putting walls up around defense trade, our allies are going to do the same and that’s a dangerous place to be,” said one longtime defense lobbyist who asked not to be identified.
The lobbyist predicted that major U.S. and foreign defense companies will trickle through the White House in the next six months with the same message: “Do whatever you want to the rest, but we’ve got a $60 billion defense surplus here and exports are important.”
The same defense lobbyist predicted “there will be strong messaging to the White House on the unique value inherent to defense trade.”
“Defense trade allows the U.S. soldiers access to critical defense technologies from our allied partners, enables interoperability and facilitates a near $60 billion trade surplus in defense and aerospace equipment and services,” he said. “I believe it’s the only trade surplus left that the U.S. still enjoys. In this, a lot of good paying U.S. jobs are created.”
The impact of Trump’s trade policies is perhaps the biggest unknown in the defense industry at this stage, others agreed.
“With change comes uncertainty and with uncertainty comes a surge in people hiring lobbyists to work through that,” said Jeff Green, whose firm J.A. Green & Company has been representing a slew of Pentagon contractors this year such as Oshkosh Corporation, Harris Corporation, Palantir Technologies, SpaceX, and Colt.
Oshkosh is among a number of leading Pentagon contractors who are heavily reliant on international sales, reporting last week a 22.2 percent jump in quarterly earnings largely due to “higher international sales in the defense segment.”
In another sign of the growing importance of foreign arms sales, Lockheed Martin, the world’s largest defense company, reported last month that international sales are on track to account for 25 percent of annual revenue later this year and 30 percent in the next few years.
But despite those concerns, most agree that overall Trump is likely to benefit the defense industry and military. Said one of the lobbyists: “There seems to be a healthy amount of ‘glass half full’ going on.”