State Dept. Bullying Lockheed For Its Own Gain, Say Aerospace Execs
By Mary Motta
Senior Business Correspondent
posted: 07:42 pm ET
06 April 2000
COLORADO SPRINGS -- Industry executives are questioning the timing of the latest allegations against Lockheed Martin involving export control violations with China, saying the latest news is politically motivated.
"Why now is a six-year-old case headline news?" John Douglass, head of the Aerospace Industries Association (AIA) told SPACE.com at the 2000 National Space Symposium here. "This is a move by the State Department to effect a political debate in Washington."
Lockheed Martin Under Scrutiny 'Kick Motor' Technology At the Heart of Lockheed's Problems: The State Department's case involves data on how to fix potential problems with a Chinese-built "kick motor" used to position satellites in orbit. Want to Learn More? AIA is a trade association in Washington, D.C. representing 57 aerospace companies.
The charges stem from a 1994 report Lockheed provided to Asia Satellite Telecommunications, a Hong Kong-based satellite company. The company is linked to two state-run Chinese firms. The technical report explained how to fix problems with a Chinese-made solid-fuel rocket motor used to position satellites in orbit.
Douglass and others believe the agency's action is the result of a tug-of-war between the State Department and the Commerce and Defense Departments over control of export licensing to companies doing business overseas.
A year ago, Congress transferred authority over the licensing from the Commerce Department to the State Department. Congress acted on concerns that two U.S. satellite companies may have transferred sensitive satellite and missile technology to China.
"I think Commerce and the Department of Defense are beginning to win the battle, and this is the State Department's attempt to make certain points," Douglass said.
And this battle begins on Capitol Hill in the Senate Banking Committee.
"The State Department is saying what we did should have been under a munitions license ... but we did not do anything that affected national security."
-- Jim Fetig, Lockheed Martin
Last September, the committee passed a new Export Administration Act that called for a significant increase in penalties for companies that violate export laws and would put the Commerce and Defense Departments back in control over export licensing.
Sen. Phil Gramm (R-Texas), who chairs the Banking Committee, has struggled to get the measure to the Senate floor for a vote, but has been stifled by members who oppose the legislation.
"So what stays in place are export controls that are held together by little more than gum and chicken wire," says Christie Harlan, communications director for the committee.
Douglass and others believe that this legislation may be heading for a vote soon and the State Department is rushing to gain some control.
The aerospace industry has been lobbying for changes in current export control laws saying U.S. satellite sales have dropped 40 percent since the transfer of regulatory control to State.
A few weeks ago Douglass told the Senate Armed Services Committee that 16 nations had written to the secretary of state saying that they were "no longer going to buy any satellite parts at all from the United States because [they could not] get the parts at all from the United States in time."
If convicted on all the counts, Lockheed could be fined a maximum of $15 million and be banned from exporting satellites or satellite-based technology for up to three years.
"It is a national security concern for us," said Patricia Scott, a State Department official. "Any assistance to China's technical capability, particularly in space launch systems, has the potential to be applied to missile development."
Lockheed, which has 30 days to respond, said Thursday it did nothing wrong in furnishing 50 pages of technical data in 1994 to one of its clients, a Hong Kong satellite company that was one-third owned by a state-run Chinese firm.
The data dealt with how to fix potential problems with a Chinese-built "kick motor" used to position satellites in orbit.
The motor was to be used by the client AsiaSat on its AsiaSat 2 satellite that was launched into space atop a Chinese Long March rocket in 1995.
The State Department said any data on kick motor technology is highly sensitive because it can be used to develop better guidance systems for clusters of nuclear warheads that are launched on a single missile.
Lockheed said it had obtained the necessary clearance and licenses from the Commerce Department to divulge the kick-motor data.
"The State Department is saying what we did should have been under a munitions license.but we did not do anything that affected national security," said Jim Fetig, a Lockheed spokesman. "We have a very good reputation and we're very concerned about national security."
A General Accounting Office report that looked into the matter last year said that while Lockheed's action "represented a loss of technology, [it] did not significantly harm national security."
The kick motor in question "is basically a small solid-fuel rocket motor that fires once and is reasonably accurate, but not profoundly so," said John Pike, a space analyst with the Federation of American Scientists in Washington.
"Other insertion stages might use liquid propellant and are a lot closer to what you'd use for a post-boost missile-control system for multiple warheads. This was not anything like that," Pike said.
The case, as Pike sees it, hinges on two points. "One is whether Lockheed Martin broke the law -- and I have no way of knowing that. The other is whether whatever they did would provide a significant military benefit to the Chinese missile program. Of that, I am somewhat skeptical."
China, after all, has a vigorous missile program staffed by hundreds of thousands of people, Pike said.
"The notion that the Chinese are sitting over there completely bewildered and are sort of running their program on the basis of news clips and trade show brochures is absurd. It's very difficult to believe that any one document could have such an impact on what is an enormous industry."
China's missile program today is about where the U.S. program was in the 1960s. It is making the transition from large liquid-fueled rockets to smaller ones with solid fuel, but "moving very leisurely to do so," Pike said.
SPACE.com Washington Bureau Chief Paul Hoversten contributed to this report.
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