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Utah Refuses to Share Details of Nuclear Weapons Plant Subsidy

Utah official to Inkstick: “[T]he private interest of Northrop Grumman outweighs any public interest in obtaining private speculative future employment or salary projections.”

Words: Taylor Barnes
Pictures: NPS/Len Jenshel
Date:

A contract between the state of Utah and Northrop Grumman to subsidize the military contractor’s new intercontinental ballistic missile (ICBM) plant redacts key information: the schedule of job creation and salaries the contractor must meet in order to receive state subsidies.

The contract, obtained by Inkstick Media from the Governor’s Office of Economic Opportunity, says the ICBM plant “anticipates bringing approximately 2,250 FTEs [full-time employees] with an annual average salary of $104,000” over 20 years. But later sections of the contract say the job creation required in order to claim state subsidies are detailed in an attachment. The office refused to release that attachment even after Inkstick Media successfully appealed to have several other redactions removed from an even more restricted version of the contract initially provided to the media outlet. (See the redacted contract provided to Inkstick here.)

In other economic development contracts, such tables have revealed that publicized jobs numbers are misleading or inflated, for reasons such as by including short-term construction jobs or defining a high level of jobs as “bonus.” For example, in Asheville, North Carolina, a proposal to subsidize a Raytheon plant was widely advertised as creating up to 800 jobs while the contract instead suggested the plant may eventually have a baseline employment level of 525. A report by the Asheville Citizen-Times in January showed the plant, which produces parts for both military and commercial aircraft, had missed its employment target and only had 150 jobs in a year when it projected 250.

In addition to employment numbers, the salary information included on the Utah-Northrop Grumman contract attachment could also inform the public about what sort of jobs they are getting in exchange for subsidizing the plant. Pat Garofalo, a researcher who’s studied economic development deals for 15 years, told Inkstick that publicizing just a project’s projected average salaries could be misleading because “it’s really easy to game your wage numbers” if top executives are included and their pay “drags the average wage up.”

Jim Grover, the state government’s managing director of incentives and grants, said that the information on the attachment “provides significant details” that go “far beyond that which is already in the public domain” and that releasing it could “threaten economic harm to Northrop Grumman.” Grover also said that the state’s annual audits of the company’s employment would not be available to the public.

Northrop Grumman Breaks Ground on New Facility in Roy Utah to Support Next-Generation ICBM Program_201908272122
Northrop Grumman celebrates the groundbreaking of a new facility it says will “serve as a future headquarters for its workforce and nationwide team supporting the Ground Based Strategic Deterrent (GBSD) program, with the opportunity to add 2,500 jobs in the state of Utah.”

Each year, state and local governments spend more than $90 billion to subsidize corporations that expand in or relocate to their districts. While politicians describe these deals as incentives that create jobs for locals, in recent years the practice has attracted a growing body of critics on the political left and right who oppose handouts to profitable firms and say the subsidies undermine free market principles and shift tax burdens to ordinary people and small businesses.

“Nobody who’s looked at them seriously thinks they work economically,” Garofalo, the director of state and local policy at the anti-monopoly American Economic Liberties Project, told Inkstick. “But it’s a really potent political tool for incumbent politicians to say, ‘Hey, we’re doing something. Look, we’re creating jobs.’”

NDA With Northrop Grumman, No Opportunity for Public Comment

The new ICBM is one of the most contentious weapons being purchased as part of the United States’ “nuclear modernization.” The latter refers to an estimated $1.7 trillion spending program in which the military will restock every part of its nuclear weapons arsenal – new bomber aircraft, new plutonium pits, new stealthy submarines, and more.

The ICBMs made in Utah will be loaded with warheads and sent to 400 silos across Montana, Wyoming, North Dakota, Colorado and Nebraska. There, as they have done for six decades, the ICBMs will be buried underground as nearby Air Force personnel known as missileers man subterranean capsules around the clock, waiting for orders from the president to launch those ICBMs in fiery arcs across the globe toward targets in Russia or China in about the time it takes to get a pizza delivered in America.

Inkstick Media requested a copy of that NDA, to which a spokesman responded that the office had not located its original confidentiality agreement with the company and therefore signed a new one. That document is dated Dec. 16, 2022 – 11 days after Inkstick made its first records request.

A diverse body of critics have lobbied against the weapon for reasons related both to its military usefulness and its cost. From a national security perspective, delivering warheads via ICBMs in silos is seen as antiquated and at greater risk for a hair-trigger launch in comparison to alternative weapons delivered by submarines and aircraft. It’s also riskier for the Americans who live among the ICBM fields, since their fixed locations across the American West stamp them with a “bomb me first” bullseye should Moscow, Beijing or another rival one day decide to attack the United States’ nuclear infrastructure.

From a financial perspective, the projected $100 billion price tag of the ICBMs raised alarm among military-industrial complex watchdogs because the contract to produce the missiles wasn’t competitive. Only a single company – Northrop Grumman – bid on the project. Its would-be competitor, Boeing, backed out after Northrop Grumman acquired a key company that produces solid-fuel rocket engines, which make the ICBMs lift off. Boeing complained that the process to bid on the new ICBM was unfair.

However, Grover, the Utah state subsidies administrator, told Inkstick that Northrop Grumman operates in “a competitive defense contractor industry” and that releasing information on its job creation could harm the company.

“Go Utah will not disclose sensitive economic information that will harm the economic interests of businesses that participate in the EDTIF [state subsidies] program,” Grover wrote in a four-page letter justifying the redactions to Inkstick. “[T]he private interest of Northrop Grumman outweighs any public interest in obtaining private speculative future employment or salary projections,” he wrote.

Garofalo, the economic development expert, called that claim “nonsense.”

“The literal amount of people who will be sitting in this facility doing jobs – that can’t possibly be a trade secret,” he said.

Another reason the government told Inkstick it couldn’t release the full contract is because it had signed a non-disclosure agreement (NDA) with Northrop Grumman. Inkstick Media requested a copy of that NDA, to which a spokesman responded that the office had not located its original confidentiality agreement with the company and therefore signed a new one. That document is dated Dec. 16, 2022 – 11 days after Inkstick made its first records request.

Edward Carter, a journalism professor at Brigham Young University and attorney with experience in public records law, called the government’s citation of the NDA “really problematic.”

“If government agencies and companies can just sign agreements whenever they want, determining what’s public and what’s not, then why do we have an open records law?” he said.

Spokespeople for Northrop Grumman did not respond to calls, voicemails, or emails from Inkstick requesting comment on the deal.

Per the contract, the military contractor can claim more than $59 million in state subsidies, provided via refundable tax credits called Economic Development Tax Increment Financing (EDTIF). Though the deal was announced in 2020, the contract provided to Inkstick was only signed in 2022.

Unlike some other states and localities, Utah does not require public comment before approving an EDTIF contract, Tony Young, the communications director at the Governor’s Office of Economic Opportunity, told Inkstick.

Screenshot-2023-02-05-at-10.08.38-PM-e1675652970766

Minutes and an audio recording of the January 2020 board meeting to discuss the deal provide a glimpse into the decision-making process. No one spoke in opposition to the proposal or even used the term “nuclear weapon.” Instead, participants, which included politicians and the state employees who negotiated the deal, spoke favorably about the project, making reference to pride in the country’s military (“Here in the state of Utah we are obviously very patriotic”) and expressing gratitude to the defense contractor for choosing the state for its plant (“I couldn’t be more appreciative of Northrop Grumman’s decision to come north and be part of this family”).

With no critical perspectives represented, inaccurate characterizations of the project went unchecked.

Ben Hart, the former deputy director of the Governor’s Office of Economic Opportunity, told the meeting’s participants that the deal was “a little bit emotional because we’ve been working on this for a long time.” He said the project would bring Northrop Grumman’s employment figures in the state to nearly 8,000 and that “I think they’re already the largest single employer in the state of Utah.” Utah’s Department of Workforce Services, however, lists several employers in the state with payrolls of more than 20,000, including the University of Utah, Intermountain Healthcare, and Brigham Young University.

Hart then refers to the ICBM as “one of our important missile defense programs.” Missile defense refers to a category of weapons used to defend against incoming missiles, including nuclear-tipped ones. The ICBM is the nuclear weapon itself; what a gun is to a bullet, an ICBM is to a warhead.

Hart then refers to the ICBM as “one of our important missile defense programs.”

One lawmaker then appeared to suggest that ICBMs could defend the country against militants lobbing rockets over its border.

State Sen. Stuart Adams told the gathering that he had recently traveled to Israel and that at that time, the Israeli military “took out one of the Taliban operatives that they wanted in the Gaza strip.” He described watching the military then intercept incoming retaliatory rockets. “This is not a theoretical threat,” he said, adding that he shared the story because “I just want to convey to you that what is happening here goes way beyond economic development, that it goes to the defense of this country, the freedoms we love.”

Proposal to Curb Subsidies: Interstate Compact, Ban NDAs

Utah officials’ vigorous defense of the subsidies to Northrop Grumman are at odds with other political winds blowing in the state. In the same year that the Go Utah board meeting spoke effusively about its deal for the ICBM plant, the Utah House of Representatives passed a bill to curb the use of subsidies in economic development by an overwhelming 63-3 margin.

The legislation they approved was to join an interstate compact against corporate tax giveaways; the policy would function as a mutual ceasefire between signatory states who agree to not poach businesses from each other through the use of subsidies.

“I personally have been frustrated for years seeing businesses come in and look for economic development incentives,” former State Rep. Marc Roberts, a Republican who advocated for the compact, told his colleagues at a 2019 hearing. “It’s this race to the bottom, who can give the biggest incentive to, quote unquote, woo this company into our state.”

Other policy proposals include banning the use of nondisclosure agreements in economic development – bills to do so have been introduced in at least four states, according to Garofalo – and giving school boards veto power over such deals, which often involve property tax abatements that defund public schools.

Garofalo also advocates for basic transparency and democratic processes, like posting proposed contracts online, so citizens have tools to hold their governments accountable for how the projects play out.

“It’s an economic deal that they should be proud of and happy about. If they’ve done a good job of setting this up, then they’re going to want to claim the credit for that,” said Carter, the BYU professor.

And if not, he added, officials need to be forthcoming about it. “When you’re working with public funds and doing the public’s business, that’s just part of the deal. You own up to those things.”

Taylor Barnes

Field Reporter

Taylor Barnes in Inkstick Media's field reporter for military affairs and the defense industry. She is a grantee with the Ploughshares Fund and is based in Atlanta. Follow her work at @tkbarnes. Tips? tbarnes@inkstickmedia.com

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