Updated 1/13/21 at 8:40 am EST with Huntington Ingalls statement
WASHINGTON — Northrop Grumman on Monday became the first major defense contractor to pause political donations to members of Congress, as a wave of corporate entities react after the Jan. 6 riot on Capitol Hill. But it does not seem to be the last.
“We are pausing political action committee giving and evaluating the way forward,” Northrop spokesman Tim Paynter told Defense News Monday evening.
On Tuesday morning, Leidos — the 23rd largest defense firm in the world, according to the annual Defense News Top 100 — followed suit. In a statement, Leidos chairman and CEO Roger Krone said “Violence, lawlessness, and anarchy have no place in our nation. We believe in civil political discourse and the fundamental right to peacefully protest, but strongly condemn violence or intimidation. In light of these events, Leidos’ Political Action Committee (PAC) has decided to temporarily pause all political donations.”
Then Tuesday afternoon, Raytheon Technologies had joined in as well, with spokesman Chris Johnson saying “We have paused all political action committee contributions to reflect on the current environment and determine appropriate next steps.”
Combined, those three firms had donated about $15 million during the 2020 election cycle, according to OpenSecrets.org. Raytheon had donated $6.5 million, Northrop had donated $6.2 million and Leidos had contributed about $2.3 million.
Hunting Ingalls Industries, a key shipbuilder for the Navy, also told Defense News Tuesday that its “employee PAC is currently paused while they review the budget and any governance changes to possibly implement in the new cycle.” That PAC contributed over $1 million during the most recent election cycle.
All four freezes cover all political donations, a different stance than a number of non-defense companies, including Marriot Hotels and MasterCard, which specifically pledged to stop financially supporting the 147 members of Congress who voted against the certification of Joe Biden’s electoral victory.
Among those members were several leaders of the House Armed Services Committee, including incoming ranking member Rep. Mike Rogers of Alabama. Other notables included tactical Air and Land Forces subcommittee ranking member Rep. Vicky Hartzler of Missouri, seapower and projection forces subcommittee ranking member Rep. Rob Wittman of Virginia, and intelligence and emerging threats subcommittee ranking member Rep. Elise Stefanik of New York.
Senate Armed Services Committee member Sen. Josh Hawley, R-MO, seen as the leader of the effort against certification in the senate, has faced particular pushback.
Given those leadership roles, it’s of little surprise then that major defense firms have been regular donors to those members. According to OpenSecrets.com, which analyzed leadership PACs and individual donations for the 2020 election cycle, four defense firms were among the top 20 overall donors to the members who opposed Biden’s certification:
• Lockheed Martin ($794,353, 9th on the list),
• Northrop Grumman ($767,939, 11th),
• Raytheon Technologies ($736,866, 13th),
• Boeing ($662,701, 20th).
Generally, defense firms donate widely across Congress, including to Democrats.
A Boeing spokesman declined to comment beyond a Jan. 7 statement from CEO Dave Calhoun, which called the “vote of the people and the peaceful transition of government are core to our democracy…. Our company has a long history of working with elected officials over many years. In the spirit of bipartisanship, we encourage them to work with President-elect Biden to unify our nation.”
A spokesman for Lockheed Martin declined to comment on whether the company would cut off donations to the 147 members in the future. Although not in the OpenSecrets list of top 20 firms, a spokesperson for General Dynamics — the third-largest defense firm in the world — did not respond to a request for comment by publication time.
While consumer-facing brands, such as American Express or Hallmark, can come under public pressure, defense firms’ primary constituency is to please Pentagon officials and members of Congress. And given the number of House Armed Services Committee members who voted against certification, defense firms must tread carefully with members who sign off on billions in procurement funds.
“Obviously consumer brands may be more susceptible to calls of boycotts, and there is always reputational risk,” said Byron Callan, an industry analyst with Capital Alpha Partners. “But who is going to say they will boycott the F-35? It’s irrelevant. There’s just not that pressure.”
Many companies pause or dramatically reduce their PAC spending in the first few months of a new Congress, as they understand the makeup of the new committees and what issues may come up.
But Callan noted there is still a risk for a sector that is competing with other industries for engineers, software developers and material specialist. “At the end of the day I don’t think you want to do anything that diminishes your ability to compete and attract talent,” he said, adding that there could potentially be future fall out for defense firms that want to work with Silicon Valley companies.
For industry, the smart move “at this point is just sit back, watch and monitor,” Callan said. “It’s like dropping a rock in the pond — you don’t know how far the ripples will travel, and we won’t really know until this summer or next year how it all plays out.”
Aaron Mehta, Valerie Insinna and Jen Judson contributed to this report. This story will be updated as needed.
