James A. Stevenson :
© March 9, 2002
"Come you masters of war
You that build all the guns
You that build the death planes
You that build the big bombs
You that hide behind the walls
I just want you to know
I can see through your masks"
(Bob Dylan, “Masters of War,” 1963)
I. U.S. Weapon Systems Acquisition and "Reform" for the Masters
of War: Context & Causes and Acquisition Reform to Cloak
By James A. Stevenson, March 9, 2002
Years ago, at the University of Wisconsin-Madison, professor Harvey
Goldberg told a great truth about the U.S. political culture and its military-industrial
complex that still retains all of its relevance. To paraphrase
him, he said that it was possible for a person to go on the U.S. presidential
campaign trail and "spout all of the most inconceivable immoralities about
subordinating the environment to private interests, about shafting the
poor by withdrawing even the barest wherewithal for their existence," and
about wasting scare resources on a bloated military budget and he "will
probably get elected." But, if he should go on the hustings and dare
to suggest that marriage and the family were somewhat repressive institutions
or say anything critical about the military-industrial complex, he "wouldn’t
even get past the first primary." Indeed, today, he probably
would be lucky to survive the multiple bullet holes that some demented
ultra-"patriot" is likely to pump into him. So, it is precisely that
climate of opinion — that attitude about U.S. patriotism and U.S. arms
— that we must contest for as long as it takes to change it. And
that is a crucial struggle that carries us deep into the nature of the
U.S. political economy, and, so, we must analyze and critique it as well.
"You that never done nothin’
But build to destroy
You play with my world
Like it’s your little toy
You put a gun in my hand
And you hide from my eyes
And you turn and run farther
When the fast bullets fly"
(Bob Dylan, "Masters of War," 1963)
Context & Causes
Now, in the very large and in their role as the chief military protectors
of corporate globalization and the currently accompanying economic ideology
of neo-liberalism (i.e., ideas and policies based on notions about the
virtues of a self-regulating economy, free trade, comparative advantage,
economies of scale, and productionism), U.S. policy makers have constructed
a world wide web of collective security organizations, sympathetic or client
regimes, quasi-dependencies, and U.S. military forces. The
price for that hegemony over what the great U.S. historian William A. Williams’s
writings characterize as an informal, open door empire is paid for in blood
– mostly non-U.S. blood – and money. And since some U.S. policy makers
seem to regard money making more dearly than foreigners’ blood, it is possible
to focus on their military spending habits to see who, by their standards,
gains and who loses. Accordingly, we find that, even before the tragic
events of September 11, 2001, when all of the disguised and related U.S.
military expenditures are added to the projected defense "function" of
the federal budget, it was costing almost $16,500 a second to pay for the
military in Fiscal Year 2002 (FY 2002). The annual U.S. military
budget (after the Cold War and even when all the concealed and related
military costs are not added to the discretionary budget line marked for
Defense) amounts to between 3.2-3.4% of the Gross Domestic Product (GDP).
And, now, in the aftermath of 9/11, rampaging military spending has probably
increased that real annual cost and portion of the GDP substantially.
Digging into these figures even deeper, however, may give us a clearer picture of who gets the gold and who gets the shaft from such enormous expenditures. As part of that military expenditure, the Pentagon spends an average of $120 billion per year on U.S. goods and services, and 57.25% of that amount, or $68.7 billion in FY 2003 (12% increase over the 2002 level) is projected by the FY 2003 defense budget to go to weapons procurement. Now, when that weapons procurement expenditure is added to the expenditures for military research and development (R&D), it amounts to $123 billion, or almost 33%, of the FY 2003 defense budget. But it gets even more lucrative for the arms manufacturers of America because total defense spending for FY 2003-FY 2007 is projected by President George W. Bush II's Administration to be over $2.144 trillion ($2,144,400,000,000), or roughly 15 percent above the Cold War average spending level. And even this amount is likely to skyrocket when such longtime corporate welfare beneficiaries as Bush, Vice-President Richard Cheney and Defense Secretary Donald Rumsfeld continue spreading the gospel about what a scary world it is, and how weak the U.S. will become without them, and how the U.S. needs to defend itself by pouring more money into the coffers of weapons makers who will build what some have termed a "faith-based," National Missile Defense (NMD) high-tech equivalent of the Maginot Line (the proposed Bush FY 2003 budget of $8.578 billion for NMD is almost 60% over year 2000 NMD spending levels) against some ill-defined and essentially low-tech enemies.
And, recently, given the "rash of military-industry mergers [that were] encouraged and generously subsidized by the Bill Clinton administration" in the 1990s and which cost the U.S. taxpayers "well over $1 billion," the principal beneficiaries of government manna so far have been only three weapons makers. And those corporations – Lockheed Martin, Boeing, and Raytheon – now receive over $30 billion per year in Pentagon contracts. That amounts to "more than one in every four dollars" that the Department of Defense (DoD) spends on "everything from rifles to rockets." And those corporations are likely to be the future leaders of a small number of arms manufacturers who are feeding off of public funds in a self-perpetuating, self-justifying, guaranteed arms race with only themselves as the winners and the vast majority of Americans as the losers. As a former president Ronald Reagan’s Undersecretary of Defense, Lawrence Korb, summarized the whole effect of the defense industry mergers on the government’s purchasing power and defense contractors’ profits: "Through customary cost-plus defense contracts [and subsidized mergers] . . . whatever efficiency gains might [have] accrue[d] to the government will be more than offset by . . . quasi-monopoly suppliers. [In fact], profits for defense firms in 1996 [after the mergers] were actually higher than they were in 1990." As for the reduction in contract prices and the $3.3 billion that the Pentagon claimed that it would save from defense company mergers, the U.S. Government Accounting Office (GAO) reported that it could not determine "the precise impact of [defense company] restructuring on specific contract prices." After all, the Pentagon did not require the defense companies to "propose or demonstrate" the government’s savings on "industrial contracts" or to use "any particular method or approach in estimating restructuring savings." In sum, while the GAO found that the "restructuring activities," which it studied, had "lowered the cost of operations at the seven business combinations by hundreds of millions of dollars . . . the precise impact of restructuring on specific contract prices" was impossible to measure because the GAO could not "isolate the effects of restructuring from those of other factors," such as changes in business volume, quantities purchased, and varied accounting practices. Still there is one effect from the merger movement that was absolutely certain and that was an increase on the bottom line of the major defense contractors involved in "restructuring."
Similarly, despite the fact that, in an era of defense restructuring and as measured by the distribution of Pentagon contracts in the period of 1986-1999, the political-economic clout of the weapons industry would appear to have fallen in Congress as a whole, it has not fallen where it counts the most and that is on the key defense and military appropriations committees of the House and Senate. The members of those committees, in conjunction with lobbyists from the military industries, have skewed defense procurements and spending in favor of their, mostly South and Southwest, districts and states. And this not only means that the few are dominating the many in terms of defense taxing and spending priorities, but it means that any momentarily slight decline in Pentagon spending from average Cold War spending levels has done nothing to change the structural impetus for high defense spending. And, now, with the resurgence of Defense spending in the Bush II FY 2003 budget request of $396.1 billion (i.e., "$379.3 billion for Department of Defense [plus] $16.8 billion for the nuclear weapons functions of the Department of Energy"), defense spending not only exceeds the Cold War spending average by 15 percent, but it probably will soon require a return to massive, federal deficit spending due to the existing and proposed Bush II tax cuts for the rich.
Meanwhile, in what has been called the "Contract State," there has become imbedded an excess defense-production capacity that not even the first two rounds of U.S. military base closings and defense industry mergers could touch. Fundamentally, this phenomenon is all part of a defense industry structural dynamic that was set in motion after World War II. At that time, established corporate arms manufacturers had to compete to win military contracts by making perpetual improvements in major weapons systems. This, in turn, appealed to military procurers who sought "’trend innovations’" but wanted weapons that would fit into their traditional force structures and notions "about how wars should be fought." So, over ten years after the collapse of the Soviet Union, "hardly any weapons platform line – aircraft, ship, or armored vehicle – has closed in the United States." This is because the Pentagon has established a weapons acquisition pattern designed "to keep private contractors willing to maintain the American edge in military technology," and those contractors must profit from "large production runs of weapons" or they might go bust. More importantly, all the defense restructuring mergers have merely reduced the number of firms in the weapons manufacturing sector of the economy while they have done virtually nothing to reduce the "number of active weapons production lines." And, with the threat of any creditable, conventional or nuclear military challenge to the U.S. military machine fading quicker than former President Bill Clinton’s boyhood chastity, the armed services are losing their clout over some of the weapons acquisition choices while the clout of the appropriations committees is growing. So, increasingly, "Congress buys weapons in response to defense firms’ lobbying" and unnecessary production facilities are kept running lest jobs, votes, previous taxpayer investments in research and development (R&D), other subsidies, and expensive prototype weapons be lost.
Now, with its proposed $396.1 billion (FY 2003) budget, Bush II’s White House can be expected to gratify its defense industry contractors in a way that suggests hogs at a trough. After all, in the two year election cycle of 1999-2000, the defense industries contributed 64% ($8,720,173) to Republican candidates for national office and only 35% ($4,789,381) to Democratic candidates. In fact, the positive correlation between defense contracts awarded and the lobbying and campaign money spent by the top five companies who received those contracts in 1998 and 1999 is overwhelming proof that some people don’t believe in the old adage that money can’t buy love. Thus, Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman received a total of $73.8 billion in DoD contracts awarded for 1998 and 1999. To grease the skids for these contracts, those corporations paid out (Raytheon Corporation was excluded because it was not listed in the top spending lobbyists) a total of almost of $49 million ($48,955,262) in reported lobbying expenditures in 1997 and 1998. All five of these companies, then, reinforced their lobbying successes and looked toward the future by contributing a reported total of almost $5.4 million ($5,395,428) to Democratic and Republican national candidates in the 1999-2000 election cycle.
The human element of these expenditures starts with the 1999 employment of a record number of 20,512 registered Washington lobbyists, including the 138 former members of Congress — known affectionately by some as the "rainmakers" — and it boils down to an average of 38 registered lobbyists and $2.7 million in lobbying expenditures for every one of the 435 members of Congress. The clout of these lobbyists, especially such people as former Democratic Congressional Campaign Committee Chairman Vic Fazio (D-CA) and Republicans, like former House Appropriations Committee Chairman Bob Livingston (R-LA), former House Rules Committee Chairman Gerald Solomon (R-NY), and former Representative Bill Paxon (R-NY) who headed the National Republican Congressional Committee, rests with getting access to policy makers. And these "former members of Congress are much more likely to get their calls returned," and their desires met. So, they and other lobbyists are often called upon by the serving congresspeople to supply them with information on issues and feedback on recommended legislation and even to draft bills and amendments. And, now, with the advent of "online lobbying," such lobbyists may even avoid the proverbial smoke filled room of deal-making by using the internet.
Still, doing it the "old fashioned way" is probably more enjoyable and more intoxicating. And that is probably why Lockheed Martin donated, even while denying it, $60,000 to former Senate Majority Leader Trent Lott’s corporate sponsored "Lott Hop" dance party for 1,500 of his supporters on the eve of the 2000 Republican National Convention. Lockheed also "pledged $1 million to the ‘Trent Lott Leadership Institute’ at the University of Mississippi." And, since Lott had saved the roughly $65-$70 billion F-22 program from being "stopped in its tracks" in 1999, it appeared to some observers like a partial payback for that act and for the continuing routine purchase of Lockheed’s C-130 transport planes that the Pentagon never requested. (Former congressman Cecil Heftel (D-Hawaii) once suggested that such practices resembled "’legalized bribery’"). Likewise, there also is the much anticipated profits to be gained by Lockheed Martin, TRW, Boeing, and Raytheon from all the future defense contracts that Bush II’s Administration plans to supply to them for the NMD system.
The Bush II Administration has strong ties to major defense contractors, especially Lockheed Martin (usually ranked at the top of the Pentagon’s list of top 15 defense contractors). Lockheed Martin vice president Bruce Jackson was not only a finance chair of the "Bush for President" 2000 campaign, but Vice President Dick Cheney’s wife, Lynne, served on Lockheed Martin’s board of directors. And Bush's current Secretaries of the Navy (Gordon England), Air Force (James G. Roche), Transportation (Norman Mineta), and an Undersecretary of the Air Force (Albert E. Smith) are all former top executives at either Lockheed Martin or Northrop "Grumman. Then, too, the whole menagerie of friends, relatives and political allies are linked together through that incessantly revolving door between big government and big business. In between his stints as a Defense Secretary in Bush-the-elder’s Administration and, now, as the Vice President in Bush II’s Administration, Cheney made a fortune running the Halliburton oil services corporation which ranked number 18 on the list of the Pentagon’s top contractors in FY 1999. Likewise, Bush-the-elder, his former Secretary of State, James Baker, Ronald Regan’s former Secretary of Defense, Frank Carlucci, and Bush-the-elder’s former Budget Director, Richard Darman, along with a number of wealthy Saudi investors, are all linked together in the Carlyle Group. This $12 billion private-equity company owns so many other companies that, according to the New York Times, it is now "the nation’s 11th largest defense contractor." And since "nearly two-thirds of its investments are in defense and telecommunication companies, which are affected by shifts in government spending and policy," it is no surprise that Carlyle’s President Carlucci has ready access to "his old college classmate," the current Secretary of Defense, Donald Rumsfeld, as well as Vice President Cheney. Of course, with Bush-the-elder’s placement in Carlyle as a privileged shareholder and "senior-advisor" on Carlyle’s "Asian activities," Bush junior should not need much more incentive to do what he can to keep his father’s Carlyle investments (and his inheritance) bringing in at least the same 34 percent average annual return that such investments have brought all Carlyle stockholders over the last decade.
And, naturally, Bush II’s effort to keep the money flowing to the major defense contractors will be greatly aided and abetted by those Congresspersons and defense industry bosses who apparently connect with each other on the basis of a collective interest in self-aggrandizement. They are apparently the type of people — in the case of top defense industry executives — whose idea of patriotism is that someone else should die for the country. Just take note of the fact that as of 2000, only two of the eighteen top executives of the eleven top U.S. defense contractors had served in the military. In short, the vast majority of those top executives are like those condemned by Bob Dylan's bitter lyrics: "You fasten the triggers/ For the others to fire/ Then you set back and watch/ When the death count gets higher." But, such executives are not alone. They are joined by some counterparts in the current Congress and Bush II Administration. According to the "AWOL Bush.com" internet listing of "Prominent Republicans," all of the following, ostensibly patriotic conservatives not only avoided conscription during the Vietnam war but they avoided U.S. military service entirely: Speaker of the House Dennis Hastert, House Majority Leader Dick Armey, House Majority Whip Tom Delay, Senator Phil Gramm, Former Speaker of the House Newt Gingrich, Vice President Richard Cheney, Attorney General John Ashcroft, top presidential advisor Karl Rove, right-wing radio commentator Rush Limbaugh, ultra conservative champion of virtue Bill Bennett, and conservative ideologue George Will. Many of these individuals were fervent supporters of the U.S. war in Vietnam while they themselves avoided participating in the military risks involved. Meanwhile, others, like former Vice President Dan Quayle and George Bush II, shrewdly ensconced themselves in National Guard or Reserve units (a helpful option that Bill Clinton missed out on) and, thereby, ducked the danger of being in a combat zone. Had any of these people been nearly as patriotic as they would have us believe, they could easily have volunteered for active duty in Vietnam. Similarly, those great cinematic tough guys, John Wayne and Ronald Reagan, easily could have followed Tyrone Power's example and joined the Marines fighting in the Pacific during World War II. Could it be that such patriots (not including Powers) tend to believe that the form of patriotism that might entail personal sacrifice, rather than bringing personal gain, should be reserved for those who are less privileged, less "connected," less educated, less shrewd, less lucky and more gullible?
At any rate, as the lobbying activities of these weapons contractors and their allies make clear, the role of individuals in the weapons acquisition process should never be underestimated. But the most important factor in such money-making activity is the behavior demanded of executive decision-makers by the dominant socio-economic structure in which they operate. After all, "the rich man," in the words of Henry David Thoreau, "is always sold to the institution which makes him rich," and such self-aggrandizing executives in the defense industries, and in corporate America generally, interact with the intrinsic dynamic of the larger political economy to actively adjust or adapt it to their specific personal and corporate needs. No matter who they are, they are constantly and fundamentally moved by the imperatives and dictates of that political economy. Participating, then, in what some analysts describe as the "follow-on imperative," dominant U.S. policy makers and their corporate counterparts operate in a sort of tandem or a harmony of interests to sustain the major military contractors.
Accordingly, every major defense-policy strategic review since the end of the Cold War – the Base Force review, the Bottom-up Review, and the Quadrennial Defense Review – have followed one guiding principal: "cut government-owned defense infrastructure [meaning give away or sell cheap to private firms] and active military forces to maintain modernization (meaning the production of new weapons)." This, then, rather than simply the ideological, unilateralist need to have a military force structure capable of single-handedly fighting and winning two, nearly simultaneous, regional wars, is the motive force behind buying lots and lots of big weapon systems. In fact, even with the September 30, 2001, QDR's "move in the direction [of] eliminating the strategic necessity to be prepared to fight two major regional wars," current U.S. policy makers in the Bush II Administration are asking Congress for such an astronomical increase in U.S. spending that the defense budget function will cost U.S. tax payers over $2 trillion in the next five years. And, as always, it is all cloaked by the "doctrine of self-defense" which, since the days of the earliest American frontier, has provided U.S. expansionists with the excuse of being innocent victims while subduing or conquering others.
Of course, in a larger context, these doctrines and huge military expenditures — even when spent for unnecessary weaponry — are a rational response to the larger needs of an elite profiting strata of U.S. society. And that strata and its interests go far beyond just those elites directly involved in and benefiting from the military-industrial complex. Better than many writers, historian Thomas McCormick describes that interest and that larger context most clearly when he writes that the U.S. has become a "rentier [dominated] nation." In such a nation, he notes, "There is a tendency for the [wealthy] to overinvest and lend overseas and to live off the dividends and interest. . . . It happens," he explains, "because higher [domestic] wage bills make it more profitable to invest overseas than at home." Getting to his basic point, he finishes, "The tendency to overinvest abroad is compounded by the tendency to overinvest in military production. Essential to the hegemonic power’s capacity to act as a global policeman, military research and production receive favorable treatment from the government in the form of state subsidized higher profits."
"Like Judas of old
You lie and deceive
A world war can be won
You want me to believe
But I see through your eyes
And I see through your brain
Like I see through the water
That runs down my drain"
(Bob Dylan, "Masters of War," 1963)
Acquisition Reform to Cloak Additional Rip-Off
All this has to be made palatable to the public and to a few Congressional
critics, so large scale military contractor lobbying has intensified,
and, along with it, military acquisition reforms have been introduced and
touted as bringing more bang for the bucks (e.g., the motto of the 1997
Defense Reform Initiative (DRI): "Strength with Speed"). This
defense "reform" assumes that "business knows best" and, after the DRI
was launched in November 1997, it introduced a host of private enterprise
business practices into the Pentagon’s acquisition process and organization.
Many important acquisition innovations, however, preceded the DRI, and
they began as early as 1994. As they were developed, embellished,
and absorbed into the DRI, they continued to aim at three goals:
1) speed up the weapons acquisition "development" to "production" cycle
times, 2) lower the government’s total expenditures for defense products,
3) reduce the overhead cost of the acquisition and logistics workplace
and infrastructure (i.e., cut personnel ("downsize") and privatize government
property and service). Of course, in keeping with the fundamental
government aim of allowing no public program to block off private enterprise’s
ability to invest, produce, distribute, and make a profit, nothing in these
three goals challenges the profit-making capacity of any major weapons
Indeed, "reforms" greatly enhance that capacity by putting the emphasis on speeding up the weapon acquisition process, by more closely integrating government personnel with defense firm representatives, by reducing the former emphasis on government oversight of the defense industry’s product development, and by accelerating the privatization of government military facilities and services. In the words of the government official in charge of all matters relating to the Pentagon's acquisition system in 1995, Paul Kaminski, Under Secretary of Defense, Acquisition and Technology (USD(A&T)), the Clinton Administration was undertaking a "fundamental change in our acquisition oversight" and embarking on "a whole new approach to defense acquisition." And, as anticipated by the concept of "captured regulators" that historians like Richard Hofstadter, James Weinstein, Gabriel Kolko, Eric Goldman, and Howard Zinn, among others, have astutely analyzed in their writings about the U.S. progressive era, Kaminski beautifully outlined how he and the then Secretary of Defense William Perry were putting the latest fox (i.e., private profit makers) in the hen house (i.e., public money trough).
They started "reforming" by "institutionalizing" the acquisition management process which they termed "integrated product and process development" (IPPD). Then, they implemented it by using a new Pentagon organizational structure called an Integrated Product Team (IPT). This setup, ostensibly designed to save the taxpayers' money by "emulat[ing] the best commercial practices," was established to swiftly move weapons systems from inception and development to production and field use. It eliminated the slower, "old, often adversarial process" that previously existed between "various government and contractor organizations." Instead, the IPPD process encouraged "a partnership," said Kaminski, of all the "stakeholders" — these catch phrases really show how truly addicted bureaucrats (and academics) can become to the latest fad in jargon or ideas — involved in the weapon making, buying, and using activities. As Kaminski so soothingly assures the gullible, this new, non-adversarial, IPPD approach, brings military service representatives, the Pentagon staff and decision-makers, weapons program acquisition managers and, note it well, contractors into such a shared "ownership of their programs [that] they’ll [all] have a stake in making the program, successful." It all seems like the answer to the forlorn plea: "Why can’t we all just get along?" After all, with all the "stakeholders" working as part of an integrated team (military planners, Pentagon officials, contractors, and the people who will use the weapons) from the "very point that someone even considers" a weapon system and with "points" being "earned" by government representatives for acting as cooperative team players, it would seem that Rodney King’s plaintive cry has been rendered completely obsolete.
Just observe that as members of Integrated Product Teams, government employees are strictly admonished that, while "being part of an IPT does not compromise a . . . member’s independent assessment role," they are expected to raise their "concerns" in a "constructive way" and to accompany those "concerns" "with workable suggestions and practical solution" because, says Kaminski, "we’re implementing a process to secure early insight — not . . . oversight." Launching this "let’s-all-just-get-along" theme in his earlier press conference, Kaminski stressed that the government’s old approach — "in the dark ages of years past" — of scrutinizing the product development of arms contractors at later and later phases was passé. He added, "This is a different approach. This is building quality in from the start with an integrated team involving all the stakeholders."
At that point, a rather intrepid reporter asked, if this meant that there would be less government auditing, less oversight on the factory floor, or that the Defense Department would assert earlier control of a weapons system? And Kaminski replied, in words that undoubtedly made some potential defense contractors absolutely gleeful: "I think this will lead" he said," to less acquisition oversight people . . . I wouldn’t really describe this though, as [Office of the Secretary of Defense] control. I would describe this as a stakeholder arrangement. . . . Points are earned here," he said, "for being part of a team . . . and [for being] constructive . . . in offering solutions for the problem. . . . It should," he stressed, "involve less inspectors." Never, perhaps, has any bureaucratic leader anywhere so explicitly stated the strategy of "going-along-to-get-along" to his bureaucratic subordinates.
Yet, just in case anyone missed the message, Kaminski’s staff published the following written warning to all IPT members: "Program success is the number one priority of IPTs . . . While oversight/independent assessment are very important, they . . . should not be the staff’s primary focus." Even more to the point, the USD(T&A) staff issued this blunt threat to any government IPT member who had the temerity to buck the new system by being too sharply critical in ITP "stakeholder" debate or too recalcitrant in the style of the old "adversarial" mode: "Unprofessional activity [i.e., "’adversarial’ representatives on IPT’s" and "non-team players"] will be reviewed and resolved by the responsible supervisors." Then, in a truly ironic touch, the upper level architects of this collaborative and self-acclaimed "non-hierarchical decision-making" structure flatly exhibited the bureaucratic dictate that is explicit in every command coming from the top of such social pyramids that are fraught with subordination and dependency throughout. Those bureaucratic bosses stated: "Everyone must embrace the IPT concept and they must now be evaluated on how well they support the process and contribute to the success of acquisition program [rather than] finding fault late in the process."
Now, with all this pressure on government employees to conform to the bosses’ bureaucratic dictum and with the presence of weapon producer representatives at virtually all levels of the IPT structure, government employees would have to be either suicidal or nearly divine not to succumb to the pressures from above or the temptations that some arms merchants are likely to place before them. Furthermore, it is ridiculous to imaging that private corporations (from which the IPPD model was supposedly taken) have ever been foolish enough to have employed the model by inviting either their customers or their competitors to participate (or to spy?) as stakeholders in anything resembling a corporate IPTs. After all, the only "stakeholders" that corporate executives must really look out for are their shareholders. In other words, by adopting the IPPD model, the Pentagon not only conveniently ignored these crucial facts, but also facilitated the business world’s long-standing effort to dominate government policies and operations through a combination of "captured regulators" and the "Trojan Horse" strategy. In short, the IPPD is an arrangement that puts government members of IPTs in the contradictory position of having to facilitate and promote the weapon programs to which they are assigned, and, yet, it gives lip service to the idea that government representatives are acting as oversight inspectors of the very same programs. Inevitably, since the emphasis in weapons acquisition is on rapidly "fielding" a weapons system rather than delaying or killing it, job security, and promotions will come only to those who obstruct the least and acquire the most.
An obviously savvy Pentagon reporter summarized the social psychology of those trapped in such a bureaucratic dependency with these instructive words: "The endemic problem in the defense acquisition process [is that] no program manager ever wants to see his program fail and there’s constant effort to hide the fact that they are failing. By building in this team concept, you’re almost ingraining that process. . . . And the team mentality is not to let the program fail . . . or appear to be failing. [And that sort of thinking] would seem to be enriched by the IPPD process other than prevented." Naturally, Kaminski, who apparently had no awareness of either Robert Michels's "iron law of oligarchy" or that peer pressure has such almighty power that it can create pimples among teenagers, rejected this criticism. He, instead, asserted the official IPT party line, "I actually think this process is better than a sequential hierarchical system [i.e., the former acquisition oversight process] where a program manager is not involved in the same integrated process, therefore can keep to him or herself information about the program." And when Kaminski was confronted with a reporter’s thought about the possibility that government employees might develop so much of a "personal stake" in the particular weapons acquisition programs on which they were working that they would try to "prevent critical outside oversight," Kaminski, again, pretended to see no great conflict between the facilitator and oversight roles. Ostrich-like, he simply reiterating the conflicting duties of government IPT members as if that alone would resolve their conflicting roles.
Clearly, it was a triumph of rhetoric over reason because, since early 1997, GAO reports have verified the folly of Kaminski’s contentions. While the GAO described, in 1997, the corrupting influence which bureaucratic careerism had on weapon "program outcomes," in 1999 and 2000, the GAO not only noted the crippling role it had on "improving the process itself," but the GAO argued that "lasting improvements" were difficult to imagine under the Pentagon's bureaucratic culture. So, in 1997, the GAO reported that "in DOD’s culture, the success of participants’ careers is more dependent on moving programs through the process than on achieving better program outcomes." And, in 1999, the GAO verified that "in DOD’s culture, the success of a manager’s career depends more often on moving programs and operations through the DOD process rather than on improving the process itself." And, finally, the GAO expresses a realistic note of futility when appraising the natural results stemming from careerism and an entrenched Pentagon bureaucracy: "We . . . believe that lasting improvements in program outcomes will not be realized until the Department changes the incentives that drive program managers to underestimate costs, rely on immature technologies, and underestimate the risk of cost, schedule, and performance problems."
Anyway, when Kaminski was asked an important question about how the IPT approach would deal with criminal fraud, he put on his ostrich feathers again and almost suggested that fraud was just the result of poor communication skills. As he saw it, the new IPT acquisition system would fair no worse than the old one had in regard to fraud. Here is that fascinating exchange: Q. "We have seen a pattern of criminal fraud on the part of the defense contractors [and] major subcontractors over the years. . . . How do you deal with the inherent competition between the customer [i.e., the government] who wants the program, and the contractor who wants to maximize its profits?" A. "I don’t see a fundamental conflict between making a profit and delivering an effective system. . . . I think a good piece of our problem has been in miscommunication. I don’t think this process [i.e., the IPPD process] by itself does anything different to deal with someone who intends to be fraudulent."
Kaminski seemed clearly discomforted by such sharp questioning about lax protection against defense contractor fraud because he started waffling like a notoriously incurious U.S. president who had begun to lose consciousness during a press conference. Facing those pesky reporters, Kaminski was forced to answer a question about whether he would permanently bar from getting government contracts those defense contractors who had been convicted twice of criminal fraud in the past five years. In a convoluted reply that was really an implicit recognition of the impossibility of any such ban, Kaminski said, "I think that’s really a separate issue. We have procedures in place for debarment and certainly those procedures are procedures that I would encourage enforcing when debarment is appropriate. The specific number of offenses I think is too narrow. It depends upon the nature and the degree."
Later in the press conference, Kaminski’s subordinate staff officer, the Service Acquisition Executive for the Army, Gil Decker, grew even more testy when he heard the following impertinent assertion and question: "Q. The point is, these companies who are convicted of criminal fraud are back in business in this building [i.e., the Pentagon] the next day. . . . There’s no restrictions, there’s no ban on these companies. You can get caught as many times as you want. Who’s protecting the taxpayer interest from these people?" Decker, obviously irritated, snapped his reply: "My answer to that is not to debate with you." Then, as if catching himself on the brink of a public relations blunder, he continued by asserting that all was well because the "people that usually are found guilty go to jail" and/or are fined severely and/or their companies replace them with new management and/or their companies are debarred. But that latter action, he complained, is "a tough issue" because, as he suggested, the rest of the firm may be "solid" and, once it has been "overhauled and gotten [its] act together," you "have to adjudge."
In fact, the companies among the top 100 defense contractors feel very little pain as a result of either accusations or punishments for engaging in procurement fraud. According to a relatively recent and fine study published in the Journal of Political Economy, 98 corporations were identified in press announcement as perpetuating some 249 separate cases of alleged defense contractor fraud from 1983 to 1995. Of these 98 defense contractors, 36 were ranked among the top 100 defense contractors in the year before the investigations into their alleged fraud began. Now, when all the payments for fines, investigations, civil claims and restitution, and damages are calculated, it shows that the penalized firms in the ranks of the top 100 defense contractors had committed 91 cases of fraud and paid a total of "$15.522 million." Meanwhile, the penalized firms below the top 100 defense contractors had committed 35 cases of fraud and paid a total of "$4.637 million." But, note this very well, while the penalty payment for the top 100 contractors was absolutely larger, it represented "only .89% of the market value of firm equity, compared to 2.81%" for the penalized firms under the top 100 contractors. Likewise, the fraud-perpetrating firms below the top 100 "experienced a decrease of 1.09 points in the percentage of their revenue [that were] derived from government contracts," while the firms in the top 100, "experienced virtually no change at all." Likewise, the top 100 defense firms, including the 36 who paid for their fraud, "continued to receive defense contracts at roughly the same relative levels as before their fraud investigations." More importantly, the authors of "Defense Procurement Fraud, Penalties, and Contractor Influence" concluded that the differential penalties for fraud – not evident in fines or restitution paid – that were imposed on defense contractors below the "influential" top 100 had the effect of transferring "wealth toward influential defense contractors." Our "results," they write "support the view that . . . such contractors as Boeing, General Dynamics, and Northrop suffer few real costs even when subjected to large apparent penalties."
Now, during the last decade at least, the GAO, apparently, has not undertaken any extensive, studies related to specific weapons contractor fraud. But it has rendered findings that confirm the facts of the Pentagon’s systemic vulnerability to contractor fraud and to certain cases of contractor fraud that were due to weaknesses in the Pentagon's inadequate oversight regime. Perhaps, the most comprehensive GAO study to deal with both the Pentagon’s systemic vulnerability to contractor fraud and its lack of oversight was printed in early 1997. Referring to some of its previous findings, the GAO wrote: "In the past, we found significant problems with contractors’ cost-estimating systems. In July 1994, we reported that 11 of 30 DOD contractors [i.e., 36.6 percent] had cost-estimating systems containing significant uncorrected deficiencies that had been outstanding an average of 3.8 years. . . . [And] we found that contracting officers were reluctant to use all available sanctions to encourage contractors to correct deficiencies."
Of course, the implication that the problem of contractor fraud is merely due to negligent government contracting officers is belied by the fact that Congress and the Pentagon have generally escorted the private profit making foxes right into the public taxpayer’s hen house. Well, to be precise, the foxes are not in the hen house. They dominate the hen house. As the GAO pointed out, "the government allows contractors to conduct their own [fraud] investigations," with predictable results, I might add. Anyway, in its review of the Pentagon’s so-called "Voluntary Disclosure Program," the GAO reported that, from "1986 through September 1994," the Pentagon claimed to have made "recoveries" from 325 voluntary disclosures of potential procurement fraud and these were worth $290 million. That amount represented "about 17% of the total reported DOD procurement fraud recoveries between fiscal years 1987 and 1994." This figure means that there was a total of over $1.7 billion ($1,705,882,353) in procurement fraud recoveries in that fiscal period. But even this miniscule return from flag-waving Pentagon contractors is overstated, according to the GAO. At least $75 million of it included monies that were derived from "premature progress payments" and monies from disclosures made prior to the Voluntary Disclosure Program. By February 2000, the Pentagon was looking into the ever-lasting potential for fraud in its financial operations, and the Pentagon's own Inspector General (IG) predictably concluded that the system was resplendent with fraudulent opportunities for those contractor and government employees who were knowledgeable about the Pentagon’s weak management and accounting systems. Referring to "about 80 open cases that involved DoD financial operations" and into which the Defense Criminal Investigation Service was looking, the Pentagon's Inspector General wrote: "These investigations demonstrate that DoD was vulnerable to misappropriation of assets. This is particularly true for DoD contractors or DoD employees with malicious intent. Their knowledge of systemic weaknesses in DoD would make it easier for them to commit and disguise inappropriate actions."
Yet, despite this danger for fraud, and the Pentagon’s record of poor corporate self-oversight, and the fact that the GAO noted that "contractors may be deterred from overpricing if they know that the government will identify and deal with it aggressively," the Pentagon aimed at reducing its contract auditing personnel at both of its two in-house, primary, oversight agencies (the Defense Contract Management Command or DCMC and the Defense Contract Audit Agency or DCAA) by "about 41 and 32 percents [respectively] from fiscal year 1991 [to fiscal year 2001]." Simultaneously, before 9/11, the Pentagon sought to increase its procurement of new weapon systems from $43 billion in FY 1996 to $60 billion in FY 2001. With plans for such increased procurement expenditures, reduced "oversight requirements," accelerated acquisition processes, and reductions in contract audit personnel, no wonder the GAO put its diplomatic tongue in its diplomatic cheek and noted that "DOD will need to be very creative in finding ways to meet an expected increase in demand for contract oversight."
As of late 1998, the GAO was reporting that the Pentagon still seemed to be a good deal less creative in retrieving its "overpayments" to contractors than the contractors were in holding on to them. After noting that the Pentagon had used a private firm (i.e., Profit Recovery Group International or PRGI) to perform a "recovery auditing analysis" of the purchases that the Pentagon had made during the fiscal years 1993-1995, the GAO wrote that "the government had recovered only $1.9 million" out of $19.1 million in identified overpayments. Beyond that, the Pentagon – in the form of the two main government purchasing centers (i.e., Defense Supply Center, Philadelphia or DSCP and Defense Finance and Accounting Service or DFAS) – neither critically reviewed nor implemented any of the recommendations that PRGI auditors had made to "reduce future [DoD] overpayments." A month after this unsurprising discovery, the GAO complained again that "we continue to identify risks in DOD’s contracting activity, including areas such as erroneous, fraudulent, and improper payments to contractors."
So, by late 1999, it appears that all the Pentagon’s efforts at being more "creative" in detecting and recovering its misspent monies on shrew military contractors had landed it about where it began in the GAO’s early 1997 appraisal. In late 1999, the Pentagon trotted out a problematic figure of $984 million in overpayments that it said its own DFAS auditing agency had identified as being "voluntary returned" by Pentagon contractors between fiscal years 1994 and 1998. Unfortunately, just as had been the result revealed by the GAO’s analysis of the recovered amounts in 1997, the amount claimed as being recovered is not only suspect, but "the [defense] contractors, as opposed to the DOD [auditing agencies], were [still] determining the existence and amount of erroneous payments." So, naturally, the GAO made another of its ineffectual criticisms that the "DOD has not yet made a comprehensive estimate of improper payments to its contractors, and there are likely more overpayments that have yet to be identified and returned."
Returning, now, from the world of contractor fraud to the Pentagon’s overly acronym saturated world of IPPDs, OIPTs, WIPTs, and just plain ole IPTs, we find that defense contractors and government representatives are co-mingling throughout the Pentagon’s weapons acquisition system. It is an instructive demonstration of how thoroughly intertwined current public policy is with private profits making. And it shows us the nadir to which the U.S. has sunk since President Dwight D. Eisenhower famously uttered his often repeated, but seldom heeded, warning to be on guard against the military-industrial complex. After all, in Eisenhower’s life-time there still existed something of a cleavage – albeit narrow – between the defense industry giants and the government agents who bought their wares. But, today, the various and sundry IPTs are filling that gap at the bottom of the military-industrial complex and a revolving door of Pentagon high-level decision-makers and defense contractor executives are continuing to plug it at the top of the complex. And, of course, it is at the top of the socio-economic pyramid where the manipulators of public opinion and decision makers in Congress, the Pentagon, and the leading defense contractors make the real decisions about weapons acquisition and procurement. Members of IPTs, after all, are just cogs in a bureaucratic machine that serves and is driven by more powerful interests and individuals. But just because IPTs do not have fundamental decision making power in either the weapons acquisition process or in weapons procurement, it does not mean that they are unimportant. Their primary function would seem to be to smooth the way for rapid weapons acquisition and procurement within the government bureaucracy. Such a process may well provide a public relations cloak of cost-effective efficiency to help tranquilize a potentially recalcitrant public or some inquisitive congresspeople. And while this role is not vital to the ultimate procurement outcome, it is significant because it lowers the bureaucratic hurtles and obstacles that weapons contractors would otherwise have to face. Simply put the IPPD management technique and its corresponding IPT institutional structure have the advantage of facilitating the decisions made at the top, and they greatly blur the distinction between buyer and seller in favor of the arms industry. Thus, we may ask if those procedures do not function to insure an accelerated acquisition and procurement process for those decision makers at the apex of the social pyramid who count the most and always want more?
At their common core, acquisition reform and the DRI are no more likely to create meaningful internal efficiencies, prevent chronic fraud, and make better use of tax dollars than Bush II is destined to become a friend of Texas convicts on death row. While ostensibly aiming at promoting more competition for Pentagon contracts and at saving money throughout the military edifice, the Pentagon’s "best business practices" go further than ever to accommodate the profit-making needs of private enterprise. That is why the Secretary of Defense’s principal mechanism for ensuring that all reform initiatives are carried out — the Defense Management Council (DMC) — has a primary duty of consulting with "business leaders to seek new solutions to management problems, reengineer [DoD] business practices, and streamline [DoD] operations." And it is why another of the DMC’s primary duties is to ensure that the latest update of the Office of Management and Budget’s (OMB) "A-76 Circular" (Performance of Commercial Activities) is being carried out. Now, A-76 mandates that all DoD functions that are commercial in nature must be competitively evaluated against comparable private firms or services to determine if the government should privatize those functions. Accordingly, the Pentagon, today, promotes changes to dramatically reduce unique government production standards that, presumably, not only make defense purchases more costly, but place a burden on contractors.
Unfortunately, for the proponents of Pentagon cost-saving and efficiency, the results from the A-76 program do not support their expectations. In a 1999 GAO study covering the results of A-76 competitions between October 1995 and March 1998, the GAO not only threw doubt on the reliability of the Commercial Activities Management Information System (CAMIS) databases that the Pentagon bureaucracy and military services have used to measure A-76 savings, but it flatly stated: "DOD officials have noted that they could not determine from the CAMIS data if savings were actually being realized from the A-76 competition. . . . Our current work [since previous GAO reports] and recent work by others have shown that the situation has not changed appreciably." And, again, in May of 2000, the GAO complained, "DOD is unable to provide actual data to fully account for the costs associated with functions studied for potential outsourcing [i.e., buying commercial firms’ goods and services] under OMB Circular A-76. We recently reported on a long-standing concern over how accurately DOD’s in-house cost estimates used in A-76 competitions reflect actual costs." Updating these Pentagon estimates of competitive souring savings in August 2000, the GAO slammed those estimates by reporting the opinion that "these estimates do not fully account for costs associated with completing the studies or implementing the results, which will reduce the amount of savings." Indeed, the GAO could only declare, "estimated costs and potential savings . . . are difficult to project at this point." Yet, despite the lack of any concrete evidence that the A-76 program has produced any of the savings for the Pentagon that its proponents have claimed, the GAO reported that "in recent years, some in Congress have sought to encourage greater reliance on the private sector for commercial activities [currently] being performed by government employees." This resulted in the Congressional passage of the 1998 Federal Activities Inventory Reform Act which directed federal agencies to submit an annual "inventory of all their activities that are performed by federal employees but are not inherently governmental functions and to make their inventories public." Obviously ignoring the critical findings of the GAO, this law is meant to buttress the deplorable practice of using the Pentagon as a cash cow for private profit. Accordingly, during the fiscal years 1997-2005, the DoD is projecting the study of 203,625 employee positions under the A-76 program and another 41,878 under a companion, commercial conversion study (i.e., "strategic sourcing"). Whenever possible those "positions" will be absorbed by private enterprise firms.
Now, the Pentagon's effort to speed up the weapons development cycle and to make the whole acquisition process more "efficient" is supported by the military chieftains and influential defense contractors because they expect that any Defense Department savings will be used to buy more modernized weapon systems in the future. And the "hope is that if the procurement process moves fast" enough, Congressional politicians will be less likely to cancel a program. But, as some defense critics have wryly observed, most politicians can always duck faster than a bullet with their name on it, and they can change their budget priorities faster than any conceivable acquisition process can produce a complex weapons system. More importantly, almost five years after acquisition reform began, the GAO reported that the empirical evidence led them to conclude: "We have concerns about the extent to which cost reductions from acquisition reform will be available to fund DOD’s modernization [weapons] program in the near term. We have reported that a large portion of the estimated cost reductions already identified have been used to meet needs within [ongoing] programs . . . or has been offset by cost increases elsewhere in the programs." Beyond that, by "compressing development times [and] training test schedules" and by undermining critical, independent oversight with compromised or co-opted IPTs, the accelerated acquisition process becomes "a formula for guaranteeing performance short falls and cost overruns." In summarizing its own outlook on this matter, the GAO noted in two separate reports in 1997 that its "reports of 1992, 1995, and 1997" had criticized "the high risk practice of . . . rushing [weapon systems] into production before critical tests have been successfully completed [and this has] resulted in the purchase of systems that do not perform as intended. [Yet,] in today’s national security environment, proceeding with low-rate production without demonstrating that the system will work as intended should rarely be necessary. Nevertheless, DOD still begins production of many major and nonmajor weapons without first ensuring that the systems will meet critical performance requirements."
Of course, no one should gain the impression that GAO reports are not chuck full of mountains of verbiage praising the Pentagon’s adoption of "best business practices" and the business-imposed operating model of the Defense Reform Initiative. And, yet, there recently occurred a moment of rare candor when the Comptroller General of the United States, David M. Walker, almost committed the unpardonable sin of telling some truths. He described the entire Pentagon strategy of modeling major weapon acquisition programs after commercial business practices as exceedingly misguided. He was not, of course, so candid (or insane) as to call it a failure because he was, after all, testifying before the Senate Armed Services Committee. Still, after naively contending that the Pentagon and business firms shared the same management goal of developing and delivering "a product that meets a customer’s needs," Walker exhibited a sort of high point in bourgeois courage when he said: "However, the pressures of successfully competing for the funds to start and sustain a DOD acquisition program make for a much different business case. Compared with commercial programs, the DOD environment encourages launching product developments that embody more technical unknowns and less knowledge about the performance and production risks they entail. . . . Consequently, DOD program managers [PMs] have incentives to promote performance feature and design characteristics that rely on immature technologies." On the other hand, "rewards for discovering and recognizing potential problems early in a weapon system development are few. . . . [and] other factors, such as short tenures and career pressures, discourage program managers from saying no. . . . For these reasons," Walker daringly states: "the practices associated with successful commercial ventures are not readily adopted in DOD." But, in the end, Walker, probably reflecting on his own nearly jeopardized career, ignored his own critique and supported the business model and practices of the Defense Reform Initiative as good for the Pentagon.
Considering the GAO’s April 1999 report, however, one wonders how Walker could have drawn such a conclusion since that report warned that neither of the two main cost-cutting initiatives of the DRI – Base Realignment And Closure (BRAC) and the combined A-76 and strategic sourcing programs – were likely to produce savings anywhere close to the annual $15-$20 billion that the Pentagon anticipated they would generate for its projected $60 billion per year weapons modernization program. In fact, despite all the hype associated with the DRI from its beginning to the present, the GAO admitted that the "DOD’s financial management systems are currently unable . . . to track savings associated with any changes [brought about through the DRI]." As the GAO put it, "whenever DOD officials estimate the potential or actual impact of an initiative or reform effort, the estimate is often based on either anecdotal information or data with limitations." And since, after four rounds of domestic BRAC actions between 1988 and 1995, Congress has refused to "authorize" the two "additional BRAC rounds in 2001 and 2005" that the Pentagon had envisioned, the Congress will simply hand out more of the taxpayers’ billions to make up for the "savings" that never materialized through the "best business practices" of DRI. In the end, the GAO characterized what an incredible flimflam the whole DRI program has been for all but the few rich and the many political naïfs who wander America’s bizarre political landscape with these words, "DOD budget documents show it will reach its $60 billion modernization goal in fiscal year 2001. [But] our analysis of these documents shows that the majority of the increase is expected to come from additional congressional funding for specific weapon systems."
In other words, even if the DRI and the IPPT mechanisms are utter failures at saving defense dollars, it is no real problem for elites at the top of the military-industrial complex. High costs and inadequately tested weapons mainly affect only ordinary soldiers and the vast majority of Americans adversely. With Congress always riding to the rescue on cavalcades of money for "defense," such so-called problems are merely temporary distractions that may be ignored by the elite few as long as the Pentagon serves their interests at little or not cost to their personal bank accounts. After all, the ranks of those wealthy people are filled with the modern-day "’stock-jobbers’" whom Jennifer Nedelsky and Noam Chomsky reported that James Madison warned us about long ago. Today, their modern counterparts function in the same capacity as their predecessors of 1791. They are "’the pretorian [sic] band of the Government, at once its tool and its tyrant; bribed by its largesses and overawing it by its clamours and combinations.’" Such being the case, the power and role of similar people and their class compatriots in the military-industrial complex and in today's U.S. society is brilliantly illustrated by an analysis of how the perennial "readiness crisis" is used to scare the many and enrich the few. (E)
Citations and Notes
In his unsurpassed 1970 conceptualization of the military-industrial
complex, Sidney Lens defined the nature of the complex and its fundamental
purpose as "a conglomerate of elites -- a military elite, an industrial
elite, a banking elite, a labor elite, an academic elite -- which seeks
its own aggrandizement. . . . The power elite," he wrote, "that is now
called the military-industrial complex has . . . fashioned a blueprint
for [a global] 'Pax Americana' in which American private interests could
advance unchecked." With the Pentagon ("though not the brainpower")
at the base of the complex and Congress and the defense contractors at
the sides of the infamous triumvirate, Lens identified seven categories
of what he called the "active sector of the military-industrial complex."
These, while needing updating or being problematical in some respects today,
include: 1) "A civilian-military faction in the Congress."
2) "The large corporate contractors who do business with the Pentagon."
3) "a selected group of organizations that act as a liaison between industry
and the military, such as the American Ordnance Association." 4)
"Sixteen DOD-subsidized research organizations . . . such as Rand Corporation,
and the Institute for Defense Analysis . . . headed for the most part by
former defense officials." 5) "A considerable number of private research
and educational organizations . . ." 6) "The leadership of the AFL-CIO
. . ." 7) "The academic community, whose fate is tied to the Pentagon
. . ." See Sidney Lens, The Military-Industrial Complex (Philadelphia,
PA: Pilgrim Press & National Catholic Reporter, 1970),
40. See more on profits in my section Patriotism of the Wealthy.
Harvey Goldberg, "Utopian Socialism: Saint-Simonianism and Feminism," Class lecture, University of Wisconsin-Madison, Madison, WI, no date.
Thomas J. McCormick, America’s Half Century: United States Foreign Policy in the Cold War and After, 2nd ed. (Baltimore: Johns Hopkins UP, 1995), xiii-xiv. At present, 17% of the 1.4 million U.S. active duty forces are deployed outside of the U.S. See Lawrence J. Korb, Council for a Livable World Education Fund (CLWEF), "Ten Defense Spending Myths," 2, available online at clw.org/ef/behindnumbers/myth.html; Internet. All Internet online web sites in this study require the prefix www. Lawrence J. Korb was an Assistant Secretary of Defense (1981-1985) during the Ronald Reagan Administration. He has been Director of the Center for Public Policy Education and Senior Fellow, Foreign Policy Studies Program, Brookings Institution (1988-1998). He currently is Vice President and Maurice R. Greenberg Chair, Director of Studies and Director of National Security Studies of the Council on Foreign Relations.
Center for Defense Information (CDI), 2001-2002 Military Almanac (Washington, D.C.: Center for Defense Information, 2001), 34. The Clinton Administration had put its estimated outlays for Defense spending in FY 2001 at $291.2 billion, and its proposed FY 2002 outlays were placed at $298.4 billion. But, even before 9/11, the incoming Bush II Administration requested tens of billions more, and, so, boosted the FY 2002 total to $343.2 billion. Now, after 9/11, in its FY 2003 defense budget request, the Bush Administration asked for $396.1 billion (including a $16.8 billion for the "nuclear weapons functions of the Department of Energy"). See CDI, 2001-2002 CDI Military Almanac (Washington, D.C.: Center for Defense Information, 2001), 34; CDI, "Fiscal Year 2001 Pentagon Budget Request," (7 February 2000), 1, available online at cdi.org/issues/usmi/fy01/topline.html; CDI, The Defense Monitor XXX, no.7 (August 2001): 1. CDI, "Fiscal Year 2003 Budget, Highlights of the FY'03 Budget Request," (4 February 2002); 1, available online at cdi.org/issues/budget/FY03Highlights-pr.cfm. (Cited as CDI, "Highlights of the FY'03 Budget Request."). But, even before all those increases and when using only the lower figures of the proposed FY 2002, defense budget "outlays" ($328.7 billion) and combining those outlays with all the related military expenditures that are conveniently concealed (or simply assumed away as non-defense related) in other "functions" of the discretionary budget, one gets a percent of increase that equals almost 58% (57.86%) and a grand total of $518.9 billion for the proposed military and military related budget outlays in FY 2002. That means that the actual proposed U.S. military expenditures in the pre-9/11, FY 2002 discretionary budget (and all other proposed budgets from FY 2002-Fy 2007) far exceed the 50% figure that is commonly given for U.S. defense spending. It also means that voters need to add a percent of increase over any give year's defense budget of approximately 60% to get the actual, annual defense spending of the U.S. See CDI, 2001-2002 Military Almanac, 34.
Beyond the overarching need to maintain what has been termed, by historians since the late 1950s, as the U.S. informal, open door empire for "global capital accumulation," political scientist Michael Parenti has detailed several reasons why powerful U.S. corporate interests and their elected and unelected political representatives chose to direct such massive public tax monies to the U.S. defense budget rather than to welfare and public works projects which would provide many more jobs and working class purchasing power. These may be listed as follows: 1) government expenditures on the "not-for-profit sector of the economy" (e.g., public railroads, hospitals, postal services, etc.) not only provides the undesired example of "how the public sector can create goods, services and jobs," but "such spending competes with the private market" and blocks it off from potential profit-making; 2) government expenditure on major and expensive weapon systems not only "does not compete with the civilian market," but the government "covers all production risks" and "picks up most of the research and development costs;" 3) government defense spending is not only virtually unlimited because there are always new threats and "new weapons that can be developed," but incessant technological advances make weapons obsolete and create the "need of updating or replacement" for more profits; 4) "defense contractors enjoy a rate of return substantially higher than what is usually available on the civilian market;" 5) "a massive military itself is a direct source of immense capital accumulation." See Michael Parenti, Against Empire (San Francisco: City Lights Books, 1995), 88-89 (Cited as Parenti, Against).
William D. Hartung, "The Shrinking Military Pork Barrel," in Changing Dynamics of U.S. Defense Spending, ed. Leon V. Sigal (Westport, CN: Praeger, 1999), 30. (Cited as Hartung, "Shrinking"). Hartung put the military spending at 3.4% of the GDP. The U.S. General Accounting Office (GAO) put it at 3.2% in 1999. See GAO, Major Management Challenges and Program Risks, Department of Defense, Performance and Accountability Series, GAO/OCG-99-4 (Washington, D.C.: January 1999), 12. Newsweek’s economic analyst, Robert J. Samuelson, put the fiscal 1998 U.S. defense spending at "roughly 3 percent" of the GDP, but neither he nor Hartung include all the concealed and related military expenditures that are not indicated on the Defense budget function, and those add up to make a roughly 57-60 percent of increase over the annual national defense budget (57.86% in the pre-9/11 proposed FY 2002 defense budget outlays). See Robert J. Samuelson, "The Peace Dividend," Newsweek, 26 January 1998, 49, and CDI, 2001-2002 Military Almanac, 34. William D. Hartung is Director of the Arms Trade Resource Center and Senior Research Fellow at the World Policy Institute at the New School for Social Research. His latest work was the institute’s report, co-authored with Michelle Ciarrocca, Tangled Web: The Marketing of Missile Defense, 1994-2000.
William D.Hartung, "Corporate Welfare for Weapons Makers: The Hidden Costs of Spending on Defense and Foreign Aid," Policy Analysis no. 350 ( August 12, 1999): 1, 20; available online at cato.org/pubs/pas/pa-350es.html; Internet (Cited as Hartung, "Welfare: Hidden Costs" in Policy Analysis). This spending covers all Department of Defense (DoD) contracts for goods and services. From 1981 to 1995, the Pentagon used 26 percent of total defense outlays to procure military equipment and services and that amounted to 1.43% of the Gross National Product (GNP). Jonathan M. Karpoff, D. Scott Lee, and Valaria P. Vendrzyk, "Defense Procurement Fraud, Penalties, and Contractor Influence," Journal of Political Economy (August 1999): 2, available online at proquest.umi.com/pqdweb?TS=974477…1+Fmt =4dSid=4&Idx=5&Deli=I&RQT=309&Dtp= (Cited as Karpoff).
CDI, "Fiscal Year 2003 Budget: Highlights of the FY'03 Budget Request," (4 February 2002): 1, available online at cdi.org/issues/budget/RY03Highlights-pr.cfm; Internet. Cited as CDI, "Highlights of the FY'03 Budget").
Brad Knickerbocker, "Return of the 'Military-Industrial Complex'?" Christian Science Monitor's electronic edition, 2, available online at csmonitor.com/2002/0213/p02s03-uspo.html. Internet. In any given year, roughly half or more of all federal R&D expenditures go to R&D for the military. For instance, in the R&D monies requested in the 1997 federal budget, more than half, or $38 billion, was designated for military R&D. The other $35 billion in federal R&D monies went to health ($13 billion), space ($9 billion -- some very likely going to military-related projects), and $13 billion was to be shared by energy (some, again, military-related), science (ditto), agriculture, commerce, transportation, environment, and other. See CDI, "Federal Funding for Scientific Research: Military Remains Top Priority," (25 April 1996): 1, available online at cdi.org/issues/research.html. Internet.
CDI, "Highlights of the FY'03 Budget"; CDI, "Fiscal Year 2003 Pentagon Budget Request," available at cdi.org/issues/budget/FY03topline-pr.cfm. Internet. According to an analysis presented in the Journal of Political Economy, from 1983 to 1995, the "mean annual operating return on assets (equal to earnings before interest, taxes, deprivation, and amortization, divided by average assets)" for the top 100 defense contractors was 14.11%. In contrast, the return for defense contract firms below the top 100 was 13.53%. See Karpoff 16.
Probably taking into account the likely defense increases brought about by Congressional pork barreling and defense firm lobbying, defense analysts are predicting that the "defense budget will increase 66 percent to $500 billion by 2005." See Keith Naughton, "'Lock and Download,'" Newsweek, 22 October 2001, 61. Among the best exposés of these individuals and their submersion in corporate welfareism and publicly subsidized, weapon-making profiteering are: Michael C. Ruppert, "Halliburton Corporation’s Brown and Root is one of the major components of "‘The Bush-Cheney drug empire,’" 24 October 2000, available online at u-grenoble.3.fr/cresimsa/ateliers/a15/; Internet; Michael T. Klare, "Rumsfeld: Star Warrior Returns," The Nation, 29 January 2001, 1-4, available online at thenation.com/docPrint:mhtml?=20010129ds=klare; Internet. Hartung defines corporate welfare as "government spending on unnecessary or excess goods and services as a result of special-interest lobbying, overpaying for widely available equipment, and providing tax breaks or subsidies to ‘encourage’ or ‘support’ activities that would occur without those subsidies." He also quotes another, more specific definition: "'Corporate Welfare should be defined as any government spending program that provides . . . subsidies, grants, cut-rate insurance, low-interest loans and loan guarantees, trade restrictions, and other special privileges that confer benefits on targeted firms or industries,’" Hartung, "Welfare: Hidden Costs" in Policy Analysis 3, 23.
CDI, "Highlights of the FY '03 Budget,"1; CDI, "Fiscal Year 2003 Budget: Funding Request for Ballistic Missile Defense," (4 February 2002): 2, available online at cdi.org/issues/budget/FY03bmd-pr.cfm. Citing Defense Department News Release #008-02, January 4, 2002, this document noted that on January 4, 2002, Secretary of Defense Rumsfeld "'redesignated the Ballistic Missile Defense Organization (BMDO) as the Missile Defense Agency (MDA)'" and, thereby, elevated the NMD program to an "'agency status'" that "'recognizes the national priority and mission emphasis on missile defense.'"
William D. Hartung, "Military-Industrial Complex Revisited: How Weapons Makers are Shaping U.S. Foreign and Military Policies: Introduction," World Policy Institute (June 8, 1999): 2, available online at foreignpolicy-infocus.org/papers/micr/introduction.html; Internet. (Cited as Hartung "Complex Revisited: Introduction." Other subtitles from this study will be identified with the key words in their titles after the prefix of "Complex Revisited:"); Hartung, "Welfare: Hidden Costs" in Policy Analysis 17. According to the thoroughgoing analysis done by Hartung, the seven mergers in the defense industry that took place between 1993-1998, cost $1.3 billion in taxpayer subsidies. Those subsidies, presumably for the costs of shutting down factories, moving equipment, laying off workers, and providing fat bonuses for top executives, were largely inspired by the Chief Executive Officer (CEO) of Martin Marietta, Norman Augustine. He, along with the CEO of Lockheed, Daniel Tellep, and Bernard Schwartz, a Loral Corporation top executive, suggested the idea for such merger subsidies in a 1993 letter to President Bill Clinton's second and third highest officials at the Pentagon, Assistant Secretary of Defense William Perry and Assistant Secretary of Defense John Deutch, respectively. After he became the CEO of Lockheed Martin (1995-1997), Augustine reported that the new company had received over $855 million in merger-related payments. Augustine himself got "$8.2 million in merger-related bonuses, of which $2.9 million was directly paid for by the taxpayers." See Hartung, "Welfare: Hidden Costs" in Policy Analysis 17-19; available online at cato.org/pubs/pas/pa-350es.html; Internet.
Vance D. Coffman took over as CEO of Lockheed Martin in 1997. He had been the Chief Operation Officer (COO) of Lockheed Martin from 1995-1997. Neither Augustine nor Coffman served in the U.S. military, and the same is true of the CEO of Boeing (1996-present), Philip M. Condit. See Interview in "People," (Vance Coffman), Business Week Archives, 27 October 1997, 1, 2, available online at businessweek.com/1997/43/b3550131.htm; Internet; "Executive Biography: Philip (Phil) M. Condit," The Boeing Company, August 2000, 1, available online atboeing.com/companyoffices/aboutus/execprofiles/condit.html; Internet.
Hartung, "Complex Revisited: Introduction" 2. The Council for a Livable World Education Fund (CLWEF) provided the following listing of contracts awarded and PAC money contributed by the top 10 U.S. defense contractors in the period 1997-2000,. See CLWEF, "Behind the Numbers: An Analysis of the FY2001 Defense Budget Resolution, Top Ten Defense Contractors by Contracts Awarded," 2000: 1, available online at clw.org/ef/behind numbers/index.html; Internet.
Contract Awards and PAC Contributions
Prepared by Council for a Livable World Education Fund
Sources: Office of the Department of Defense, Center for Responsive Politics, Federal Election Commission.
Lawrence J. Korb, "Defense Mega-Mergers Weaken the U.S.," Newsday, 28 April 1998, in Opinion Piece, 1, available online at brook.edu/Views/Op-ed/Korb/19980428.htm; Internet.
There are seven basic "prime contract" types ($25,000 or more in FY 2000). These are: 1. Firm Fixed/Fixed Price EPA (i.e., Economic Price Adjustment); 2. Cost-Plus Fixed Fee (CPFF); 3. Other Cost Types; 4. Cost-Plus Award Fee; 5. Fixed Price Incentive; 6. Cost-Plus Incentive Fee; 7. Fixed Price Redetermination. Of these seven contract types, numbers 2-7, or six of them, are some type of cost-reimbursement contract which favors the contractor with few incentives to control costs. In terms of the net value derived from all seven basic contract types in FY 2000, almost 44% (43.8%) was obtained from these six contractor-friendly, cost-reimbursement, prime contracts. In FY 1999, roughly 35% of DoD prime contract awards were of the cost-reimbursement type. Because the development of expensive, new, and more sophisticated or exotic weapon systems goes mainly to the top 10-20 defense contractors, those contractors tend to get a disproportionate share of the cost-reimburse type contracts. In FY 2000, the remaining 56% (56.2%) of net contract value went to firms who held Firm Fixed/Fixed Price Economic Price Adjustment contracts, which still provided compensation for the cost of inflation. See DoD, "Prime Contract Awards, Fiscal Year 1999," 10, 11, available online at Department of DefensePRIME CONTRACT AWARDSUnti...NTRACTING PROGRAMPRIME CONTRACT AWARDSUhttp://web1.whs.osd.mil/peidhome/procstat/p03/fy1999/p03.htm; Internet. DoD, "Prime Contract Awards, Size Distribution, Fiscal Year 2000," ("Prime Contract Awards by type of Contract" and Chart), 4-5, available online at web1.whs.osd.mil/peidhome/procstat/p08/fy2000/po8.htm; Internet. Also, Table 3, "Department of Defense Prime Contract Award by Size and by Type of Contract: FY 2000," 1, available online at web1.whs.osd.mil/peidhome/procstat/p08/fy2000/p08tab03.htm. Internet. The U.S. Space and Naval Warfare Systems Center explained the CPFF contract as a "cost-reimbursement contract that provides for payments to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with the actual cost, but may be adjusted as a result of changes in the work to be performed under the contract. This contract type provides the contractor only a minimal incentive to control costs." It is very good for contractors. See U.S. Space and Naval Warfare Systems Center, "Contracts Standard Operating Procedure No 27" ("Definitions"), (San Diego, CA: U.S. Navy, January 13, 1998), 2, available online at spawar.navy.mil/contract/bedop/definition.html; Internet (Cited as CSOP NO. 127). See also Appendix A and C.
GAO, Defense Contractor Restructuring: Benefits to Department of Defense (DOD) and Contractors, Report to Congressional Requesters, GAO/NSIAD-98-225 (Washington, D.C.: September 1998), 2. The GAO examined seven major defense company mergers between 1993 and 1997 to develop its findings. The DoD had calculated that it would save about $3.3 billion from contractor restructuring between 1993 and 2000. That figure was arrived at by DoD calculations that had projected that the total "restructuring," (i.e., mergers) savings to all the contractors’ customers would be over $6.5 billion ($6,540,900,000). Now, since DoD’s share of the contractors’ business base was calculated at slightly more than $4.1 billion ($4,117,800,000), the DoD subtracted its share of "restructuring costs" (i.e., public subsidies to the defense companies which merged and a euphemism for laying off workers) and arrived at a net savings of almost $3.3 billion ($3,261,600,000). See Ibid., 3.
Ibid., 3. The GAO also pointed out that the "Defense Contract Audit Agency’s (DCAA) guidance on reviewing restructuring proposals states that the contractor is responsible for establishing and supporting the reasonableness of the restructuring savings estimates." See Ibid., 4. The upshot of this laissez-faire approach means that the defense companies have claimed that some of their lower contract prices were caused by mergers when they were not. For example, the GAO noted that because "Lockheed Martin [corporation] did not consider [downsizing] reductions that were already planned [before merging/restructuring], the amount of [government] savings [from that firm] that was directly attributed to restructuring for 1995 may be overstated by $170 million." See Ibid. In another example, the GAO noted that Martin Marietta officials claimed that their acquisition of General Electric Aerospace allowed the Navy to save $24,294 in its before merger and after merger purchases of two different but identical sets of 25 test equipment items. But the GAO stated, "we could not isolate the impact of restructuring [on these contract prices] from the influence of other factors." Ibid., 7-8.
Ibid., 2, 3. The seven "business combinations (i.e., mergers) that the GAO studied were as follows: Hughes-General Dynamics (missile operations), United Defense Limited Partnerships, Martin Marietta-General Electric Aerospace, Northrop-Grumman-Vought, Martin Marietta-General Dynamics Space Systems Division, Lockheed-Martin Marietta, Hughes-CAE-Link. See Ibid., 3.
Hartung, "Shrinking" 30, 32-33.
Hartung, "Shrinking" 6-39. These committees include: Senate Armed Services Committee and Defense Appropriations Subcommittee, House National Security Committee and House Defense Appropriations Subcommittee.
Hartung, "Shrinking" 36-43, 47. Hartung reported that, between 1991-1997, the defense companies not only made more political contributions than the tobacco lobby by a spending of $32.3 million to $26.9 million, but the six biggest U.S. defense mega-firms spent $51 million on lobbying in 1997-1999. See Hartung, "Complex Revisited: New Military Mega-Companies" 3.
A 1998 GAO study revealed that New York state taxpayers received a per capita return of .04 cents in DoD prime contract awards and DoD compensation for every personal tax dollar they sent to Washington while the national average was .16 cents returned and the people of Georgia, Alabama, Texas, and Florida got .24 cents, .30 cents, .20 cents, .21 cents, respectively. "’Compensation includes civilian pay, military active duty pay, reserve and national guard pay, and retired military pay." See GAO, Defense Spending: Trends and Geographical Distribution of Prime Contract Awards and Compensation, Report to the Ranking Minority Member, Committee on Appropriations, House of Representatives, GAO/NSIAD-98-195 (Washington, D.C.: August 1998), 13, 1.
CDI, "Highlights of the FY'03 Budget, 1.
Attributing this term to Don K. Price, authors Eugene Gholz and Harvey M. Sapolsky note that the "Contract State" consists of a "blending of the public and the private in America’s acquisition of weapons." And this is a regime in which the government, acting as the entrepreneur, absorbs all the risks of funding technological change while becoming "dependent upon private contractors for most of the military-technical skills" and facilities needed to produce weapons. See Eugene Gholz and Harvey M. Sapolsky, "Restructuring the American Defense Industry," in Changing Dynamics of U.S. Defense Spending, ed. Leon V. Sigal (Westport, CN: Praeger, 1999), 154. (Cited as Gholz).
Mary Kaldor, The Baroque Arsenal (New York: Hill and Wang, 1981), 4. Federal regulations define a weapon system as "An item or set of items that can be used directly by warfighters to carry out combat or combat support missions to include tactical communication systems." See regulation E2.1.21. DoDI5000.2; Operation of the Defense Acquisition System; (Including Change 1); 4 January 2001, available online at eb2.deskbook.osd.mil/reflib/mdod/012didoc.htm; Internet. Federal regulations define a Major Defense Acquisition Program (MDAP) as one "estimated" to "require an eventual total expenditure for research, development, test and evaluation of more than $365 million in fiscal year (FY) 2000 constant dollars or, for procurement, of more than $2.190 billion in FY 2000 constant dollars." See E22.214.171.124. DoDI 5000.2; Operation of the Defense Acquisition System; (Including Change 1); 4 January 2001, available online at web.deskbook.osd.mil/reflib/mdod/012didoc.htm; Internet.
Gholz 153, 157. There have been a total of four rounds of base closings to date, but none of these has fundamentally altered or lessened U.S. excess defense production capacity.
Morton H. Halperin and Kristen Lomasney "Playing the Add-on Game in Congress: The Increasing Importance of Constituent Interest and Budget Constraints in Determining Defense Policy," in The Changing Dynamics of U.S. Defense Spending, ed. Leon V. Sigal (Westport, CN: Praeger, 1999), 85-86, 91-100 (Cited as Halperin and Lomasney); Gholz 164; Sigal, ed., 1. Morton H. Halperin is currently Acting Director of the Washington Program and Senior Fellow, Democracy at the Council on Foreign Relations. In addition to other positions, he has served as Director Policy Planning Staff, Department of State, 1998-2001; Senior Fellow, Council on Foreign Relations, 1996-1998; Special Assistant to the President and Senior Director for Democracy, National Security Council, 1994-1996; Consultant, Department of Defense, 1993; Senior Associate, Carnegie Endowment for International Peace, 1992-1994; Director, American Civil Liberties Union, Washington Office, 1984-1992; Senior Staff (Director of Policy Planning), National Security Council, 1969; Deputy Assistant Secretary of Defense (International Security Affairs), Policy Planning and Arms Control, 1967-1969; Special Assistant for Planning to the Assistant Secretary of Defense (International Security Affairs), 1966-1967).
This $396.1 billion includes $16.8 billion for the nuclear weapons costs handled by the Department of Energy. In total, the $396.1 billion is 13.5% ($45.5 billion) more than the current 2002 spending levels, more than 51.6% of all federal discretionary spending, more than 66% greater than all the combined defense spending of Russia, China, and all seven U.S. potential adversaries (Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria), and more than the 36% share of all global military spending that the U.S. already had in FY 2000. See CDI, "Highlights of the FY'03 Budget Request," 1; CDI, "Fiscal Year 2003 Budget Request by Function -- Increase/Decrease From FY'02," 2, available online at cdi.org/issues/budget/FY03topline-pr.cfm; CDI, "World Military Expenditures: US Vs World," 1-2, available online at cdi.org/issues/wme/. Internet.
Center for Responsive Politics (CRP), "Defense: Long-Term Contribution Trends," 1, available online at opensecrets.org/industries/indus.asp?Ind=D; Internet.
CLWEF, "Behind the Numbers: Top 10 Defense Contractors by Contracts Awarded," 1, available online at clw.org/ef/behindnumbers/contractors.html; Internet.
CRP, "Top Spenders," 2-3, available online at opensecrets.org/pubs/lobby98/topspend.htm; Internet.
CRP, "Defense: Top Contributors," 1, available online at opensecrets.org/industries/contrib. asp?Ind=D; Internet.
CRP, "Summary," 1-2, available online at opensecrets.org/pubs/lobby98/index.htm; CRP, "Former Members Turned Lobbyists," 1, available at opensecrets.org/pubs/lobby98/ formerreps.htm; Internet.
CRP, "Summary," 6, available online at opensecrets.org/pubs/lobby98/indexhtm; Internet.
Hartung and Frida Berrigan, "Lockheed Martin and the GOP: Profiteering and Pork Barrel Politics with a Purpose," Arms Trade Resource Center, 31 July 2000, 1, available online at worldpolicy.org/projects/arms/reports/lockheedgop.htm; Internet (Cited as Hartung and Berrigan).
In 1999, the Congressional Budget Office (CBO) estimated that "the remaining costs of the . . . F-22 fighter [were] $45 billion (about $20 billion already spent)." See CLWEF, "Military Spending Briefing Book: Did you know?" May 1999, 1, available online at clw.org/ef/ mispend99/defvdom,html; Internet.
Ralph Nader, Cutting Corporate Welfare (New York: Seven Stories Press, 2000), 15.
According to the FY 1999 dollar figures provided by the outgoing Clinton Administration, for a 100 missile interceptor force the National Missile Defense (NMD) system has already cost $8.12 billion (FY 1993-1998). And when the price tag for the future development costs, the deployment costs, and the 20 year sustainment costs are added together with that figure, the actual and estimated costs for NMD from 1993 to beyond 2005 will equal more than $32.8 billion. See CDI, The Defense Monitor XXIX, no. 1 (2000): 6. Boeing, alone, will make at least $13 billion if all options on the NMD system are exercised. See Tucson Citizen (Tucson, Arizona), 19 July 2001, 1A.
Hartung and Berrigan 2.
Geoffrey Gray, "Below the Radar," Village Voice, 7 November 2001, 1-2, available online at villagevoice.com/issues/0145/gray.php; Internet. Secretary of the Navy Gordon England is a former president of Lockheed's Fort Worth division; Secretary of Air Force James G. Roche is a former top executive at Northrop Grumman; Secretary of Transportation Norman Mineta is a former executive at Lockheed, and Undersecretary of the Air Force, Albert E. Smith, is a former Lockheed vice president over its space program.
Leslie Wayne, "For the Old Bush Team, a Whole New Ball Game: Star Power and Connections Are Paying Off for ex-Officials in Private Equity Business," New York Times (New York), 6 March 2001, 1-2, excerpted in CIESIMSA, Atelier 15, available online at u-grenoble3.fr/ciesimsa/ateliers/a15/art15-9.htm; Internet.
Ibid., 4, 2.
Ibid., 4. Beneath this very top tier of the government-private business revolving door in the military-industrial complex, the figures from 1968, 1983, and 1984 show that thousands of senior level military and civilian employees left the federal government to work for defense contractors. In 1968, Senator William Proxmire (D-WI) reported that his Subcommittee on Economy in Government hearings had not only revealed the Pentagon's proclivity for "'excessive costs, burgeoning military budgets, and scandalous performances,'" but the hearings also revealed that, in FY 1968, "'2,072 retired military officers of the rank of colonel or Navy captain or above'" were employed by the "100 companies that did more than two thirds of the [government's] prime military work." See Lens 4, 8. In 1989 the CDI reported that the GAO found that "more than 30,000 senior military and civilian employees left the DoD in 1983 and 1984," and "approximately 5,700 [of these people] were thought to be working for companies contracting with the Pentagon." In other words, at least 19% of those 30,000 senior level, former federal employees took private defense company jobs after they left their federal employment. See CDI, The Defense Monitor XVIII, no. 7 (1989): 7.
These Defense contractors were selected on the basis of the dollar value of defense contract awards received in FYs 1998, 1999, and 2000. The executives were identified as being in one or more of the categories of Chairman and CEO, CEO, COO, Chief Financial Officer, or Executive Officer. Their biographies were obtained from online company biographies/profiles and, especially, "Hoover's Online Officer Biography: Executive Biography," (by company), 2001, available online at hoovers.com/hoovpub/0,1334,12_3932,00.html, or hoovers.co...bio/3/0,3353,10903_10903,00.html; Internet. These men and their companies are listed below. Those who served in the U.S. military marked by an asterick:
Lockheed Martin Corporation:
Vance D. Coffman (CEO, 1997-present)
*Robert J. Stevens (COO, 2001-present, served in U.S. Marines)
Phil Condit (CEO, 1996-present)
Daniel P. Burnham (CEO, 1998-present)
*Thomas M. Culligan (CEO of Raytheon International, Inc., present, served in the U.S. Air Force)
General Dynamics Corporation:
Nicholas D. Chabraja (CEO, 1997-present)
W.W. Boisture (COO of Gulfstream Aerospace, 1998-present)
Northrop Grumman Corporation:
Kent Kresa (CEO, 1990-present)
Ronald D. Sugar (COO, present)
Litton Industries, Inc:
Not obtained. Litton Industries merged with Northrop Grumman in 2001.
United Technologies Corporation:
George David (CEO, 1994-present)
Karl J. Krapek (COO, 1994-present)
David M. Cote (CEO, 2000-present)
Robert H. Swan (Chief Financial Officer, 2001-present)
General Electric Company, Incorporated:
Jeffrey R. Immelt (CEO, 2001-present)
Dennis D. Dammerman (Executive Officer, present)
Science Applications International Corporation:
J. Robert Beyster (CEO, 1969-present)
Textron Incorporated (Textron Inc. Was replaced in the top 10 military contractors by
Science Application International Corp. In 2000):
Lewis B. Cambell (CEO, 1998-present)
Ted R. French (Chief Financial Officer, 2000-present).
Bob Dylan, "Masters of War," Columbia, 1963, 1, available online at bobdylan.com/songs/masters.html.
"Who Served in the Military?" AWOLBush.com, 1-2, available online at awolbush.com/whoserved.html.
Henry David Thoreau, "Civil Disobedience," in Major Writers of America, vol.1, ed. Perry Miller (New York: Harcourt Brace and World, 1962), 617.
Gholz and Sapolsky argue that, while James Kurth coined the term "follow-on imperative," he wrongly applied it to describe the Cold War period of military-industrial practices in which the Pentagon and contractor lobbyists "combined" to maintain a "reliable stable of weapons suppliers" by means of forming a "procurement system in which new contracts were allocated to firms just in time to replace old contracts whose production runs were winding down." This prevented any important weapons production lines from closing down. In fact, as Gholz and Sapolsky point out, "many production lines [did close] during the Cold War," but, in the post-Cold War era, none have. See Gholz159.
Gholz 159-161, 163.
Ibid. In its tepid critique of the "two-military-theater of war construct," the government authorized/officially commissioned National Defense Panel (NDP) – composed of five retired or reserve officers (four of whom were "flag"-general/admiral-ranks), four civilians (three of whom were former DoD officials and all four were top executives of defense contractors) – concluded, "We are concerned that the construct may have become a force – protection mechanism – a means of justifying the current force structure . . ." See National Defense Panel (NDP), Transforming Defense National Security in the 21st Century (Arlington, VA: NDP, 1997), 23. The Panel also argued, albeit weakly, that the Pentagon was spending too much money on "yesterday’s weapons." Naturally, both the Joint Chiefs of Staff and Secretary of Defense William S. Cohen refused to endorse the Panel’s recommendations. See Lawrence J. Korb, "Downsizing the Military," Boston Globe (Boston, MA), 21 January 1998, 2, available online at the Brookings Institution brook.edu/view/op%2D.ed/krob/19980121.htm; Internet.
The predecessor to the QDR was the Bottom Up Review (BUR). And, like the QDR, the BUR was, according to David Isenberg, writing in Cato Institute’s Policy Analysis, a "highly politicized document designed to exaggerate the threat environment and preserve as much as possible of the Pentagon’s budget and forced structure." In fact, neither BUR nor the QDR strove to meet a new or different threat after the end of the Cold War. As Isenberg notes of the BUR, it simply reinvented "the threat to fit the existing military." And this means that "almost no major weapons systems were earmarked for cancellation" either after the phony BUR or QDR evaluations. See David Isenberg, "The Pentagon’s Fraudulent Bottom Up Review," Policy Analysis no. 206 (April 21, 1994): 1, 11, 43, available online at cato.org/pubs/pas/pa-206.html; Internet (Cited as Isenberg, "Pentagon’s Fraudulent).
When, in 1998, Isenberg published the findings of his examination of the QDR, he found that nothing had changed. In his words, "the QDR, like the preceding efforts [1991 "Base Force" and 1993 BUR]’. . . failed to recognize a more benign threat environment; it did not change the criterion that forces should be structured to fight [and win] two regional wars nearly simultaneously; it did not question the military budget level and force structure . . . and it did not terminate any Cold War-oriented weapon systems." See David Isenberg, "The Quadrennial Defense Review: Reiterating the Tired Status Quo," Policy Analysis no. 317 (September 17, 1998): 1, 2, 5, 17, available online at cato.org//pubs/pas/pa-317es.html; Internet.
CDI, "Issue Brief: Reshaping the Military for Asymmetric Warfare," 5 October 2001, 5, available online at cdi.org/press/press_releases/2001/terrorism100501-pr.cfm. Internet.
McCormick 6, 7.
This, of course, is an ongoing process and one well documented by, among others, such scholars as Noam Chomsky, Edward Herman, Sidney Lens, Michael Parenti, Edward Said, and Howard Zinn. Lens described the scope and impact of the process as well as anyone when he pointed out that, from 1946 to 1967, according to the statistics provided by Senator J. William Fulbright (D-AK), the "federal government spent . . . 57.29 percent of its budget 'for military power,' and only . . . 6.08 percent for 'social functions,' such as education, health, labor and welfare programs. Convincing the American people," he went on to write, "that they ought to spend nine times as much on guns as on human welfare was an act of mesmerism by the military establishment without parallel." See Lens 1.
Even using the lower figures of Bush's pre-9/11 proposed FY 2002, defense budget "outlays" ($328.7 billion) and combining those outlays with all the related military expenditures that are concealed in other functions of the descretionary budget, one gets a percent of increase that equals almost 58% (57.86%) and amounts to a total of $518.9 billion for the proposed military and military related budget outlays in FY 2002. That means that the actual proposed U.S. military expenditure in the FY 2002 budget (and all other proposed budgets from FY 2002-FY2007) not only far exceeds 50% of all federal discretionary spending, but it is over 3.8 times greater than the monies spent on what could be broadly called the "social functions" (e.g., education, health, environment, etc.) in the discretionary budget. Indeed, given the enormous defense spending increases proposed by the Bush Administration from FY 2002-FY 2007 (an average yearly increase of $23.7 billion), U.S. defense spending is likely to outstrip social spending in the discretionary budget by, at least, four times. See CDI, 2001-2002 Military Almanac, 34; CDI, "Fiscal Year 2003 Pentagon Budget Request< Budget Authority," 1, available online at cdi.org/issues/budget/RY03toplinee-pr.cfm.
William S. Cohen (Secretary of Defense), Department of Defense, Defense Reform Initiative Report (Washington, D.C.: November 1997), iii (Cited as Cohen, DRIR).
DoD, "Defense Reform Initiative (DRI), Overview," Defense Reform 2000 (November 1997), 1, 3, available online at defenselink.mil/dodreform/overview/overview.htm; Internet.
Stressing the federal government's recent role in purchasing – not producing – goods and services from the profit-making private sector, the GAO offered this brief history of the government 's pro-business operating principle: "Since 1955, the executive branch has encouraged federal agencies to obtain commercially available goods and services from the private sector when the [government] agencies determined that such action was cost-effective. [This comment refers to the President Dwight D. Eisenhower Administration's policy directive called budget Bulletin 55-4, January 1955. That directive stated, "'It is the general policy of the Federal Government that it will not start or carry on any commercial activity to provide a service or product for its own use if such a product or service can be procured from private enterprise through ordinary business channels.'" See Cohen, DRIR 28.]. The Office of Management and Budget (OMB) formalized the policy in its Circular A-76, issued in 1966. In 1979, OMB supplemented the circular with a handbook that included procedures for competitively determining whether commercial activities should be performed in-house, by another federal agency . . . or by the private sector. OMB updated this handbook in August 1983, March 1996, and June 1999." See GAO, DOD Competitive Sourcing: Some Progress but Continuing Challenges Remain in Meeting Program Goals, Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-00-106 (Washington, D.C.: August 2000), 5. Likewise, the government regulation dealing with government owned property in the hands of private contractors directs government agents to privatize all of it that it is possible to privatize. See Defense Acquisition System general regulations DoDD 5000.1; The Defense Acquisition System; 23 October 2000, 2.6.5. which states: "Government Property in the Possession of Contractors (GPPC). All PMs (Acquisition Program Managers) who own or use GPPC shall have a process to ensure continued management emphasis on reducing GPPC and prevent any unnecessary additions of GPPC. . . . The PM shall periodically review and continuously maintain oversight of GPPC to assure that property no longer needed for current contract performance or future needs is disposed of promptly [i.e., sell or give to private firms or persons] or reutilized in accordance with applicable laws and regulations. . . ." Available online at web2.deskbook.osd.mil/refib/mdod/061dd/061dddoc.htm; Internet.
See Appendix A.
"The Under Secretary of Defense, Acquisition and Technology (USD(A&T)) is the principal Office of the Secretary of Defense (OSD) staff assistant for all matters relating to the DoD acquisition system, research and development, advanced technology test and evaluation, production, logistics military construction, procurement, and environmental issues." See Cohen, DRIR 61. This office has been renamed as Under Secretary of Defense, Acquisition, Technology, and Logistics (USD(AT&L)). As of October 2001, the (USD(AT&L)) was E.C. "Pete" Aldridge Jr. See Greg Schneider, "Lockheed Martin Beats Boeing for [Joint-Strike Fighter} Contract," Washington Post Online, 27 October 2001, A01, available online at washingtonp.wysiwg://e/http://www.washingtonp...dyn/articles/A59595-2001oct26htm. Internet.
Paul Kaminski (USD(A&T)), "DoD News Briefing," 16 May 1995, 1, available online at defenselink.mil/cgi-bin/dlprint.cgi; Internet (Cited as Kaminski, "DoD News Briefing"). The DRI was added onto and absorbed ongoing acquisition reform initiatives in March 1999. See GAO, Defense Management: Actions Needed to Sustain Reform Initiatives and Achieve Greater Results, Report to the Chairman Subcommittee on Armed Services, House of Representatives, GAO/NSIAD-00-72 (Washington, D.C.: July 2000), 65.
See Richard Hofstadter, The American Political Tradition (New York: Random House, 1954); Gabriel Kolko, The Triumph of Conservatism (New York: Free Press, 1977); James Weinstein, The Corporate Ideal in the Liberal State, 1900-1918 (Boston: Beacon Press, 1968); Eric Goldman, Rendezvous with Destiny: A History of Modern American Reform (New York, Random House, 1952); Howard Zinn, A People’s History of the United States, 1492-Present (New York: Harper, 1995).
"Integrated Product and Process Development (IPPD). A management process that integrates all activities from product concept through production and support, using a multifunctional team to simultaneously optimize the product and its manufacturing and sustainment processes to meet cost, schedule, and performance objectives." See E2.1.6. in DoDI 5000.2; Operation of the Defense Acquisition System; (Including Change 1); 4 January 2001.
"Integrated Product Team (IPT). A multifunctional team assembled around a product or service, and responsible for advising the project leader, Program Manager, or MDA on cost, schedule, and performance of that product. There are three types of IPTs: Program IPTs, Work-level IPTs [WIPTs], and Overarching IPTs [OIPT]." A typical IPT consists of roughly 30 plus members. See E2.1.7. Appendix B. Superior to all the IPTs in a given weapons program is an Overarching Integrated Product Team (OIPT) and its leader: "Overarching Integrated Product Team Leader. The person in the Office of the Secretary of Defense who leads the Overarching Integrated Product Team and is responsible for providing an assessment of each assigned program. The OIPT Leader is not in the decision-making line of authority for programs. See E2.1.15. DoDI 5000.2; Operation of the Defense Acquisition System; (Including Change 1); 4 January 2001.
Kaminski, "DoD News Briefing" 1.
Rodney King is the African-American who was the victim of a notorious Los Angeles police gang beating that was captured on video and which later led to the Los Angeles riot of 1992 after the police were acquitted in their first trial. Over 50 people were killed in the riot.
My emphasis. Paul G. Kaminski (USD(A&T)), "Integrated Product Teams: One Important Step Forward in Military Acquisition Affairs, July 20, 1995," in OIPT-WIPT Information Guide (Washington, D.C.: Office of the Under Secretary of Defense, March 1996), 50 (Cited as Kaminski, "Integrated," OIPT-WIPT).
Kaminski, "DoD News Briefing" 3.
Kaminski, "Integrated," OIPT-WIPT 56.
William J. Perry (Secretary of Defense), "Use of Integrated Product and Process Development and Integrated Product Teams in DoD Acquisition," Memorandum, Attachment 2 (Washington, D.C.: May 10, 1995), in Kaminski, "Integrated," OIPT-WIPT 50.
My emphasis. Kaminski, "Integrated," OIPT-WIPT 58-59.
Kaminski, "DoD News Briefing" 5.
The quotes in this paragraph are taken from the following sources: GAO, Defense Weapon Systems Acquisition," Hugh-Risk Series, GAO/HR-97-6 (Washington, D.C.: February 1997), 6, available online at fas.org/man/gao/hr97006.htm; Internet; GAO, Defense Reform Initiative: Organization, Status, and Challenges," Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-99-87 (Washington, D.C.: April 1999), 3; GAO, Defense Management: Actions Needed to Sustain Reform Initiatives and Achieve Greater Results, Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-00-72 (Washington, D.C.: July 2000), 69. In May of 1997, the GAO provided its typical criticism on this issue by writing: "In DOD’s culture, the success of a manager’s career depends more on moving programs and operations through the DOD process . . . the desire of managers to keep cost estimates as low as possible and present attractive milestone [acquisition] schedules encourages the use of unreasonable assumptions about the pace and magnitude of the efforts, material costs, production rates, savings, and other factors. . . . The fact that a given program costs more than estimated, takes longer to complete, and does not generate results or perform as promised is secondary to fielding a new, improved program." See GAO, DOD High Risk Areas: Eliminating Underlying Causes Will Avoid Billions of Dollars in Waste, Testimony, GAO/T-NSIAD/AIMD-97-143 (Washington, D.C.: May 1, 1997), 22-23, available online at fas.org/man/gao/ns9714.htm; Internet. As reported by the CDI, in 1986 the GAO pointed at another difficulty in the weapon acquisition process with its finding that the average tenure of a weapons acquisition program manager was just two years. So, since most major weapon systems take 8-12 years to complete their development to production cycles, any single weapon system would be likely to have four or five different program managers. See CDI, The Defense Monitor XVIII, no. 7 (1989): 7.
Kaminski, "DoD News Briefing" 3.
Since 1982, the laws and regulations concerning procurement fraud have undergone frequent changes. They now permit seven different agencies to monitor defense contractor compliance with Pentagon regulations, including the DoD’s Defense Contract Audit Agency, the Office of the Inspector General, the General Accounting Office, the Department of Justice, and military services auditors. After a contract award, contractors are required to provide the Pentagon with "detailed information on inputs, cost pricing, and quality control." Actions that bring on procurement fraud investigation are violation of Federal Acquisition Regulations and the corresponding DoD Acquisition Supplement. These actions include "falsification of accounting documents or test results, the charging of personal expenses to government contracts, submission of invoices that include false claims, bribery, defective pricing of proposals submitted to the government to obtain additional government contracts, fraudulent accounting classifications, intentional mischarging or misallocations of cost, and product substitution." Punishments for suspected procurement fraud, even before a finding of guilt, include: "Temporarily suspending a contractor from receiving government contracts, bidding on contracts, or subcontracting with another government supplier until the [fraud] investigation is completed [and] payments for partially completed work can be reduced or stopped." Contractor punishment after a guilty plea or finding of guilt includes: paying fines, penalties, and restitution of mischarged costs. The Pentagon can also debar a contractor or selected divisions of a contractor from doing business with the government for up to three years. But debarments are rare. From 1946 to 1982, not a single top defense contractor was convicted of procurement fraud largely because of lax regulations and lax enforcement oversight. But after 1982, more stringent laws, rules, oversight, and penalties were introduced and, between 1983 and 1990, 17 top defense contractors were convicted of fraud. Still, those firms barely noticed the impact. See Karpoff 2-5. For an extensive list of the monetary fines placed on the top 100 corporate criminals in the 1990s, see "Corporate Crime in the '90s," extracted from Multinational Monitor, July/August 1999, 1-2, available online at u-grenoble3.fr/cieimsa/ateliers/a15/; Internet.
The press reports about these 249 fraud cases indicated that a disproportionate number of the fraud cases involved large firms, e.g., General Dynamics, Eaton Corporation, and Aerosonic Corporation accounted for 186 of the fraud investigations, and the press announcements indicated that the 249 fraud cases produced 143 investigations, 35 indictments, 15 suspensions, 40 settlements, 13 announcements of guilt, and only three acquittals. See Karpoff 5, 9.
Ibid., 14, 15.
Ibid., 16. They also suffer "relatively small market value losses because the fraud event had little impact on their subsequent contract revenues." See Karpoff 19. In contrast, those defense contractors who are below the top 100 "experience significant losses in both market value and government contract revenues" after a fraud event. See Karpoff 18.
In the instance of one $7.5 million overpayment to a contractor the time laps before detection was 8 years and the GAO estimated that it cost the government "nearly $5 million" in lost interest because of the overpayment. See GAO, Defense Contract Management, High-Risk Series, GAO/HR-97-4 (Washington, D.C.: February 1997), 3, available online at fas.org/ man/gao/hr97004.htm; Internet.
Office of the Inspector General (Department of Defense), Audit Report: Internal Controls and Compliance with Laws and Regulations for DOD Agency-wide Financial Statements for FY 1999, Report No. D-2000-091 (Washington, D.C.: February 2000), 18.
GAO, Defense Contract Management, High-Risk Series, GAO/HR-97-4 (Washington, D.C.: February 1997), 7, 6.
GAO, Contract Management: Recovery Auditing Offers Potential to Identify Overpayments, Report to Congressional Requesters, GAO/NSIAD-99-12 (Washington, D.C.: December 1998), 1, 2, 8.
GAO, Major Management Challenges and Program Risks, Department of Defense, Performance and Accountability Series, GAO/OCG-99-4 (Washington, D.C.: January 1999), 8.
GAO, Financial Management: Increased Attention Needed to Prevent Billions in Improper Payments, Report to the Chairman of the Committee on Government Affairs, U.S. Senate, GAO/AIMD-00-10 (Washington, D.C.: October 1999), 18.
Ibid., 18. One small indication of this likelihood is the GAO’s statement in one of its 1999 reports. The GAO wrote that "we recently reported that weak controls led to two fraud cases involving nearly $1 million in embezzled Air Force vender payments." See GAO, Major Management Challenges and Program Risks, Department of Defense, Performance and Accountability Series, GAO/OCG-99-4 (Washington, D.C., January 1999), 17. Another, more impressive, example of defense contractor fraud is found in the history of the Raytheon corporation. It is one of the four corporations -- TRW, Boeing, Raytheon, and Lockheed Martin -- that stands to make a huge chunk of the majority of the hundreds of billions of dollars which may be spent on the proposed NMD system. From just its Raytheon Missile Systems division, Raytheon is expecting to get "about 80 percent engineer/development [and] 20 percent production" monies for its work on the Exoatomospheric Kill Vehicle (EKV). As for its fraud convictions, Raytheon "pleaded guilty to one felony count of illegally obtaining classified Air Force budget and planning documents" and paid $910,000 in criminal fines ($10,000), civil penalties and damages ($900,000) in March 1990. In 1993, "Raytheon paid $3.7 million to settle allegations that it misled the Defense Department by overstating the labor costs involved in manufacturing Patriot missiles." And, in 1994, Raytheon "paid $4 million to settle a U.S. government claim that the company inflated a defense contract for [its] antimissile [Precision Acquisition Vehicle Entry Phase Array Warning System -- PAVE PAWS] radar" system. See Tucson Citizen (Tucson, Arizona), 19 July 2001, 1; J. Whitfield Larrabee, "Corporate Profile: The 'Patriots' at Raytheon," Raytheon Watch (Brookline, MA: J. Whitfield Larrabee & Associates, A People's Law Firm, 2000), 2, 3, available online at gis.net/~larrabee/ raytheonprofile.htm; Internet. Another huge defense contractor (ranked as number 149 on the list of Fortune 500 companies in 1998) is Textron Inc. In November 1998, Textron agreed to pay $9.8 million for the submission of false claims which inflated costs in its proposals on the production of 82 wing sets for the B-1B bomber by its former subsidiary, Textron Aerostructures (now named Aerostructures Corporation). See FAS, Military Analysis Network, "Textron," 21 February 1999, 2, available online at fas.org/man/company/textron.htm; Internet.
Eisenhower said: "The conjunction of immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, and even spiritual – is felt in every city, every State house, every office of the Federal government . . . In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. " See Dwight D. Eisenhower, "Farewell Address to the Nation," 17 January 1961, available online at usd.edu/~sbucklin/primary/ikefarewell.htm; Internet, or see "Complex Revisited: Introduction"in Foreign Policy in Focus: Internet Gateway to Global Affairs, 1, available online at foreignpolicy-infocus.org/papers/micr/ introductionghtm; Internet.
One institutionalized Pentagon example of this observation is the Defense Policy Advisory Committee on Trade (DPACT). It was established in 1975 "to provide confidential recommendations to the Secretary of Defense and the U.S. Trade Representatives on [U.S.] export policy." DPACT is composed of a group of top military and industrial executives who, in effect, constitute the quintessential revolving door of decision makers who occupy high public and private positions interchangeably. In 1995, for example, DPACT included such people as Lockheed Martin’s CEO Norman Augustine, Northrop Grumman’s CEO Kent Kresa, General Howard Fish, and Donald Atwood. Augustine once held positions as Undersecretary of the Army for Research and Development in the Nixon/Ford Administration. Fish once served as head of the Pentagon’s Defense Security Assistance Agency and, as an executive of Loral Corporation, he headed up DPACT’s Export Policy Subcommittee. Donald Atwood served on DPACT before joining Bush-the-elder’s Administration. In short, as Hartung explains, DPACT gives defense industry executives a "permanent open door into Executive Branch arms transfer policymaking circles." See William D. Hartung, "Welfare for Weapons Dealers: The Hidden Costs of the Arms Trade," World Policy Papers (1996): 12, 41, available online at cdi.org/ArmsTradeDatabase/Arm...s_The_Hidden_Costs_of_the_Arms_Trade.txt; Internet (Cited as Hartung, "Welfare: Hidden Costs" in World Policy Papers).
As for weapon system decision-making, the Defense Acquisition Board (DAB) is at the penultimate level of the Pentagon’s bureaucratic hierarchy for weapons acquisition. It is at the top of the IPPD hierarchy but beneath the level of the Secretary of Defense authority. It is composed of private firm defense industry "advisors" as well as government employees. It not only receives input from defense industry representatives at every level of the IPPD process but from representatives of prime contractors who sit on lower level Contractor Councils. See Appendix B: Federal regulations 7.6.2., 7.6.3., 7.13., and 7.3.1.
The importance of this function may be somewhat comparable to that of the Office of Information and Regulatory Affairs (OIRA) inside the Office of Management and Budget (OMB). That obscure office has the power to make critical decisions about a host of federal rules and regulations. The bureaucrat heading it has the authority to slow, weaken or halt regulatory proposals affecting virtually "every area of human and environmental health." That administrator has such discretionary power to relax or get tough on so many aspects of business regulations that he or she can really boost or lower corporate profits. Demonstrating his keen sensitivity to that power, Bush-the-little has nominated a proponent of lax regulation on business to head the OIRA. The nominee is John Graham, the current head of the Harvard Center for Risk Analysis that is funded by corporate and trade associations. As one who, for a decade has consistently supported corporate claims that "the costs of health and safety and environmental regulations out weight the benefits," Graham, his detractors, in the fields of public health and safety, labor rights, and environmental concerns, fear, "would give regulated industries a wide-open back door to the White House." See Online Beat, "Bush’s fox in the (regulatory) hen house," The Nation, 24 May 2001, 3-4, available online at thenation.com/thebeat/; Internet.
Cohen, DRIR 18-19.
Cohen, DRIR 27-28.
See 4.2.3. and 4.2.4. in Appendix A. Similarly, the DoD’s is pushing hard to create or purchase "dual-use technologies," i.e., technology and products useful in both civilian and military fields. See 4.2.1. in Appendix A. Meanwhile, the DoD is in the process of privatizing all of its utilities systems, selling off its surplus strategic metals, and asking Congress to permit it to privatize its family housing construction. See Cohen, DRIR 37, 43. It, also, is turning over more of its government-operated commercial functions through an accelerated A-76 program. See Cohen, DRIR 28.
GAO, DOD Competitive Sourcing: Results of Recent Competitions, Report to the Chairman, Subcommittee on Readiness and Management Support, Committee on Armed Services, U.S. Senate, GAO/NSIAD-99-44 (Washington, D.C.: February 1999), 10-11, 13. This report offered an example of an Air Force claim of an annual A-76 saving of "approximately $80 million" at Tyndall Air Base in Florida which the GAO "analysis estimated . . . to [actually] be "$22 million." See Ibid., 4.
GAO, Department of Defense: Progress in Financial Management Reform, Testimony of Jeffrey C. Steinhoff, Acting Assistant Comptroller General, Accounting and Information Management Division before the Subcommittee on Government Management, Information and Technology, Committee on Government Reform, House of Representatives (Washington, D.C.: May 9, 2000), 33. As the GAO precisely summarized its overall findings, "Our work to date has shown that . . . savings through competitive sourcing . . . are overestimated. . . . Therefore , DOD will have less infrastructure savings available than planned in the 2000 FYDP [Future Years Defense Program] to fund its priorities." See GAO, Future Years Defense Program: Funding Increase and Planned Savings in Fiscal Year 2000 Program Are at Risk, Report to the Chairman, Committee on the Budget, House of Representatives, GAO/NSIAD-00-11 (Washington, D.C.: November 1999), 29. This GAO report added that, by Pentagon estimates, – with which it disagreed on empirical grounds – the Pentagon’s "competitive sourcing will save about $11.2 billion over the 1997 through 2005 period and $3.4 billion each year thereafter." But, the GAO concluded "because these efforts achieved lower savings than anticipated, we see risk in that DOD may not achieve all the savings programmed in the 2000 FYDP." See Ibid., 33.
GAO, DOD Competitive Sourcing: Some Progress, but Continuing Challenges Remain in Meeting Program Goals, Report to the Chairman, Subcommittee in Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-00-106 (Washington, D.C.: August 2000), 4, 5.
In August 2000, the GAO unequivocally stated that "our work has shown that . . . overall [A-76 and strategic sourcing] costs to date are still exceeding realized savings." And it concluded that the "overall magnitude" of savings from A-76 and strategic sourcing are "overstated." For example, GAO stated, the "President’s Fiscal Year 2001 budget submission reports that during fiscal years 1998 and 1999, the overall costs of the A-76 program have exceeded the expected savings." See GAO, DOD Competitive Sourcing: Some Progress, but Continuing Challenges Remain in Meeting Program Goals, Report to the Chairman, Subcommittee in Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIA-00-106 (Washington, D.C.: August 2000), 17, 14.
Ibid., 4, 9.
GAO, High-Risk Series: An Update," GAO/HR-99-1 (Washington, D.C.: January 1999), 154.
Gholz 167. Gholz and Sapolsky got their facts right, but they drew the wrong conclusion. They apparently take profit-making elites at their word because they start from the assumption that the primary elite interest in buying and selling weapons is actually that of making the Pentagon more efficient or of improving weapons systems for the primary benefit of soldiers. This leads them to fret that the DoD reforms which are being implemented will only cut costs at the "margins," that there’s no guarantee that any military savings from efficiencies will go to buy more weapons, that speeding up the acquisition cycle will produce costly, inadequate weapons, that, in the post-Cold War era, the U.S. "can afford to go slow" in new weapons development, and that the U.S. "needs to do more [weapons technology] experimentation and stretch the work, reducing technological risks." See Gholz 167.
GAO, Defense Weapon Systems Acquisition, High-Risk Series, GAO/HR-97-6 (Washington, D.C.: February 1997), 7-8, available online at fas.org/man/gao/hr97006.htm; Internet. See also GAO, DOD High-Risk Areas: Eliminating Underlying Causes Will Avoid Billions of Dollars in Waste, Testimony, GAO/T-NSIAD/AIMD-97-143 (Washington, D.C.: May 1, 1997), 15, available online at fas.org/man/gao/ns97143.htm; Internet.
GAO, Defense Acquisition: Employing Best Practices Can Shape Better Weapon System Decisions, Testimony Before the Subcommittee on Readiness and Management Support, Committee on Armed Services U.S. Senate, Statement of David M. Walker, Comptroller General of the United States (Washington, D.C.: April 26, 2000), 2-3.
See Appendix D.
GAO, Defense Reform Initiative: Organization, Status, and Challenges," Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-99-87 (Washington, D.C.: April 1999), 14, 18. In its July 2000 report regarding this matter, GAO wrote "Initially, Defense officials expected that the DRI program would reduce operating costs and help it increase funding for weapons modernization from $42 billion in fiscal year 1998 to $60 billion in fiscal year 2001 . . . however, the program will not make a major contribution toward achieving this goal." See GAO, Defense Management: Actions Needed to Sustain Reform Initiatives and Achieve Greater Results, Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-00-72 (Washington, D.C.; July 2000), 25.
GAO, Defense Reform Initiative: Organization, Status, and Challenges, Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-99-87 (Washington, D.C.: April 1999), 36. The GAO also reported that the DRI, apart from whatever efforts the Pentagon intended to make on this issue, did not include any "major efforts planned to reform financial management systems." See Ibid., 5.
GAO, Defense Management: Actions Needed to Sustain Reform Initiatives and Achieve Greater Results, Report to the Chairman, Subcommittee on Military Readiness, Committee on Armed Services, House of Representatives, GAO/NSIAD-00-72 (Washington, D.C.: July 2000), 26. See also GAO, Defense Management: Actions Needed to Sustain Reform Initiatives and Achieve Greater Results, Letter Report, GAO/NSIAD-00-72 (Washington, D.C.: July 25, 2000), 21, 10, 1, available online at fas.org/man/gao/nsiad-00-072.htm; Internet.
Jennifer Nedelsky, Private Property and the Limits of American Constitutionalism: The Madisonian Framework and Its Legacy (Chicago: University of Chicago Press, 1990), 45; Noam Chomsky, Power and Prospects: Reflections on Human Nature and the Social Order (Boston: South End Press, 1996), 118-119.