Oklahomans Denied Substantive Tax Relief While Providing “New” Private Defense Contractor Kratos $1,728,394.00 In Subsidies From 2019

Today, a press release from Senators Kristin Thompson and Todd Golihare, “Thompson, Gollihare Applaud New Kratos Facility in Bristow; Senators Highlight Major Aerospace Investment and Job Creation in Rural Oklahoma” was sent to Oklahomans. Since it was not posted to the Senate media page, I’ve copied and pasted the message from my inbox below.

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Thompson, Gollihare Applaud New Kratos Facility in Bristow
Senators Highlight Major Aerospace Investment and Job Creation in Rural Oklahoma

OKLAHOMA CITY – Senate Economic Development, Workforce, and Tourism Chair Kristen Thompson, R-Edmond, and Sen. Todd Gollihare, R-Kellyville, today celebrated the announcement of a new Kratos Defense & Security Solutions facility coming to Bristow. The advanced manufacturing site will produce tactical jet engines for U.S. defense systems and is expected to bring dozens of high-quality jobs to Creek County and surrounding areas.

“This is a major win for Oklahoma,” said Thompson. “We’ve made targeted investments in research, development, and workforce to attract exactly this kind of advanced industry. The Bristow facility strengthens our national security footprint while delivering real economic opportunity to our communities.”

As Co-Chair of the Senate’s LEAD Committee (Legislative Evaluation and Development), Thompson has championed policies that support high-tech growth sectors like aerospace, defense, and advanced manufacturing — aligning long-term economic planning with real-world job creation.The 50,000 square-foot facility — expandable to 100,000 square feet — will house up to five production lines for Kratos’ GEK-series engines and include on-site test cells funded in part through state incentive programs. Kratos plans to begin hiring in late 2025 with full operations expected by the end of 2026.

Senator Gollihare, whose district includes the Bristow area, emphasized the regional impact:

“This is a big win — not just for Bristow, but for our region, for the state, and for the country,” Gollihare said. “We’re talking about high-quality jobs and cutting-edge manufacturing right here in rural Oklahoma, supporting our local economy and strengthening America’s defense capabilities. I’m proud to support projects that deliver for our communities and for the nation.”

The announcement was made at the Paris Air Show, where Oklahoma aerospace officials joined Kratos executives to highlight the state’s growing role in defense manufacturing. For more information, contact: Senator Kristen Thompson (405) 521-5592 or kristen.thompson@oksenate.gov

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Since my reporting on Canoo and it’s detrimental effects on Oklahoma, I’ve been concerned about the use of Oklahoman’s tax dollars as business ‘incentives’. Consequently, I did some basic research on Kratos.

Kratos is an enormous, publicly-traded, investor-owned, company headquartered in San Diego, California, devoted to six areas of defense contracting; C51SR Systems, Defense and Rocket Support Systems, Microwave Electronics, Space, Training and Cybersecurity, Turbine Technologies and Unmanned Systems. It has international offices in Australia, Canada, France, Germany, Norway, Indonesia, Israel, Japan, Saudi Arabia, Singapore and the UK and trades in the $40/share range. It also has offices in the US in Alabama, California, Colorado, Florida, Maryland, Michigan, New Hampshire, New York, Texas, Virginia – and now (?) Oklahoma.

Just this year (January), the Pentagon award[ed] Kratos a megadeal worth nearly $1.5B for a new hypersonic testbed. Kratos’ press release announcing the ‘award’ said, “Kratos is honored to receive the largest contract award in our company’s history, a testament of the value Kratos’ employees and team bring both to our Company and United States National Security,” Eric DeMarco, president and CEO of Kratos Defense and Security Solutions, said in a statement. “This programmatic milestone underscores our unwavering commitment to making upfront investments for rapidly developing, and being first to market with affordable, mission-critical solutions that meet the evolving needs of the warfighter.”

Unfortunately, a few things cropped up in my research. Let’s start with this: though the good Senators use the wording, “celebrated the announcement of a new Kratos Defense & Security Solutions facility coming to Bristow“, Oklahoma has been doling out tax dollars to Kratos since 2019 to the tune of $1,728,394. Here are the credits in chronological order:

If Kratos is a NEW business in Oklahoma, why are there tax credits go back to 2019? Why was there no mention of them previously having had an office/manufacturing plant in Oklahoma before – either in the Senators’ press release or on Kratos’ website?

Here’s another issue. Kratos works out of locations in 10 other states. Not one single state – excepting Maryland ($126,414) – has given Kratos any kind of tax break at all according to the Subsidy Tracker website.

Kratos was the recipient of a $689,876 federal grant in 2019 tagged to their facility in Colorado, however, for, “SOUTHERN RESEARCH INSTITUTE LIFE MODELLING OF CRITICAL STEAM CYCLE COMPONENTS IN COAL-FUELED POWER PLANTS”.

According to Google Maps, this is the building currently housing Kratos in Bristow:

This building is also the site of Consolidated Turbine Specialists LLC.

According to a Bristow News article published Wednesday, March 17, 2021, “In 2019, Kratos Defense & Security Solutions, Inc., a California based company, purchased the parent company of Consolidated Turbine Specialists, aka CTS, which was originally founded in 2012.”

Interestingly, Consolidated Turbine Specialists LLC was given ‘grants‘ – Quality Job Incentive Payments – from 2019-2022 in the amount of $345,432, during the same time period Kratos was ALSO receiving Quality Job Incentive Payments from Oklahoma. While the Kratos ‘grants’ during that time period were given for “unmanned arial systems”, no specific category is listed for the Consolidated Turbine Specialists’ ‘grants’.

These businesses have been sharing the same space from 2019 and until – according to Kratos’ press release – the new building can be built in Bristow. Whether or not the ‘grants’ were for different reasons, this looks a whole lot like double-dipping. If Consolidated was merged with Kratos in 2019 – then, according to the idea of a merger – these two entities became one entity. Why would Oklahomans give double Quality Jobs ‘grants’ to one company?

But that’s not the only issue. Why are we – under a REPUBLICAN governor and a REPUBLICAN legislature – superseding the FREE MARKET by giving out so much money in SUBSIDIES?

Many of Oklahoma’s elected officials commented on Kratos’ announcement, but Governor Stitt was in Paris for the Paris Air Show when the announcement was made. He said, “This is a big win for American workers, for our military, and for every Oklahoman who believes in freedom, innovation, and strength. Kratos could’ve gone anywhere in the world, but they choose to continue investing in Oklahoma because it is the best place to build, grow, and do business. Oklahoma is proud to be a hub for national defense that is leading the way in rebuilding America’s industrial base and powering the technologies that keep our country safe.”

I wonder if Kratos didn’t go anywhere else in the world because Oklahomans have given a publicly-traded company with a billion and a half dollar contract with the federal government (also our tax dollars) over a million dollars ALREADY to do business in our state?

The President and CEO of Kratos said, “Kratos is truly honored to expand our presence in Oklahoma with this new, state-of-the-art propulsion production facility in Bristow. This new Kratos investment reflects our continued commitment to delivering high-performance, affordable jet engine technology to support the Department of Defense and our allies and answers the rising demand for propulsion systems for cruise missiles and CCA-type aircraft, while being targeted and optimized for cost reduction. The Bristow facility will play a critical role in accelerating production of the GEK family of engines, including the GEK800, and strengthening America’s industrial base in this decisive era. We thank Governor Stitt and the State of Oklahoma for their partnership in helping us build the future of high-performance propulsion right here in the heartland.”

So, if that’s the case, and they are CONTINUING to produce jet engines and nothing was said about unmanned arial systems having been a course of manufacture in Oklahoma, that the double-dipping theory might hold some water? Yes, it could also be that the CEO of a HUGE investor-held corporation with multi-billion dollars in contracts is very untethered to the day-to-day business of all their companies, but then, why is he CEO?

At the bottom of the Kratos press release is a required statement from the SEC about the fact that, since this is a publicly traded corporation which is telegraphing doing business in a way they can’t be certain of, investors must consider the statement “forward looking”. In other words, don’t make a stock purchase solely based on this announcement because Kratos might not be able to undertake the actions they’ve described. Seriously. Think on this.

Yes, Bristow may get a brand new Kratos building and yes, they may get new jobs from this business proposal – but then, they might not.

Kratos has to use the term “expected” in terms of their plans, but then they also indicate that Oklahoma will CONTINUE to give them further Oklahoma tax dollars to meet their expectations.

So why wouldn’t investors (like Markwayne Mullin?) want to invest in Kratos? What’s the downside? Oklahoma’s government will rob Oklahomans to make sure Kratos makes its projections for its investors.

Or, maybe not. Maybe, like Canoo, Governor Stitt will dig into the pockets of Oklahomans and the jobs WON’T materialize, nor the building in which to house them. But by then, our Governor will have left his position, and possibly the state – along with big holes in the pockets of Oklahoma tax payers and an uneven playing field for Oklahoma businesses.

*An email to Senator Kristin Thompson was sent regarding information in this blog. She did not return the email before this article was published. If she does respond at any point, I will add her response below.