The Pentagonists: An Insider's View of Waste, Mismanagement

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.

Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 2:18 am

15. Carpet Bombing the Constitution

ASSUME YOU ARE the mastermind of a conservative administration in a faraway democratic country. Assume also that you know of a number of scandals brewing in your defense purchasing establishments as well as a potentially quite nasty scandal in your National Security Council involving illegal payments to mercenary soldiers. Your highest military officers, subverting a law passed by the legislature, have just taken power away from the civilian officers who are their legal supervisors. As you see it, your problem is to keep the country from getting upset about these unsavory affairs.

The trouble is, a number of individual employees in your own executive branch think such things are wrong. And they feel conscience-bound to bring the wrongdoing to the attention of the legislative body. That will surely cause a furor that will damage both you and your political party. What do you do to protect your interests?

Perhaps you find the answer in new and much tighter secrecy restrictions on government employees, restrictions even more severe in some respects than any your country has applied in time of war. The best way to stop the leaks, you decide, is to throttle the leakers by making everybody sign the toughest new secrecy oath your legal people can devise.

But you have to deal with troublesome private organizations that spring to the defense of individual rights under the constitution. One of the chief of these is a lawyers' union dedicated to defending unpopular causes and attacking restrictions of civil liberties. And suddenly you have the key. If you can neutralize that lawyers' union by some kind of pressure, you will have disarmed a large and influential part of the liberal Establishment. With your new regulations, you can then hunt down and get rid of dissenters without fear of a public attack.

Of course, as Sinclair Lewis phrased it in the title of one of his novels, It Can't Happen Here. But those who look for comparisons and analogies in everything might imagine some parallels between this fable and the situation in Washington in the fall of 1986.

On October 15 of that year, Chairman John Dingell of the House Energy and Commerce Committee sat down and wrote a long letter to President Reagan. He told the president that he'd been having trouble with his correspondence; most of the officials he had written to either refused to answer or would not answer frankly. It had crossed Chairman Dingell's mind that they could be hiding something.

Secretary Weinberger, for instance. He hadn't answered Dingell's request for a copy of National Security Decision Directive 219 (containing the Poindexter-Packard plan), but his deputy had replied, "Under policies governing the release of classified documents, requests for release should be directed to the originator of the document."

The originator, of course, was Vice Admiral John Poindexter, the national security adviser. The admiral, being busy with various secret arms shipments to the east and south, did not answer his mail. Rodney B. McDaniel of the NSC did, however, write to tell the chairman that it was "not the policy of the National Security Council to provide a copy of classified NSDD's to anyone other than the addressees." He enclosed an unclassified fact sheet on the Packard commission's recommendations for the chairman's edification.

Dingell, of course, was simply testing; he had read NSDD 219 and knew perfectly well what was in it, as he proceeded to tell the president:

Although we do not have a copy of the Directive we requested, we have had an opportunity to examine it. We know that two documents are involved. One is a letter from Admiral Poindexter to Secretary Weinberger and the other is the Directive itself. The Poindexter letter consists of three paragraphs. One of the paragraphs, which is classified SECRET, indicates that the attached Directive is "intended to strengthen your hand vis-a-vis legislation on the Hill." The third paragraph in the document, which is classified CONFIDENTIAL, indicates the "Packard Commission got favorable reviews and this gives the President leverage in dealing with reforms on the Hill." In effect, the SECRET and CONFIDENTIAL classifications were used to conceal an agenda intended to avoid more sweeping Congressional reforms of the Defense procurement system.

Attached to Admiral Poindexter's letter is the Directive itself. Within the Directive, there is a paragraph, classified SECRET, which would effectively negate the current Packard Commission recommendations relating to accountability of defense contractors. That paragraph indicates an intention that it apply only to situations where the contractor lacks "present responsibility." It would not rely on former or ongoing contracts which are already awarded in making decisions relating to suspensions and debarments.


Dingell pointed out to the president that his assistants were violating Reagan's Executive Order 12356 by classifying documents not for national security reasons but in order to withhold information from Congress. The chairman closed by requesting criminal or administrative proceedings against the suspects and renewing his request for the Poindexter-Packard documents.

The president did not reply. He, too, was a poor correspondent.

In the meantime, Reagan's security people were stiffening controls by reviving NSDD 84, "Safeguarding National Security Information," which had been issued in early 1983. This directive gave lip service to the declassification of information "that no longer requires protection in the interest of national security," but it also contained a long list of measures to repress the free flow of information. The three most salient were: greatly increased and wider use of the polygraph, or lie detector, much wider prepublication review of any writing by anyone who ever held a compartmented security clearance, and a new secrecy oath, or "nondisclosure agreement," for people with security clearances.

To impose and monitor the complicated new secrecy oath, the directive gave responsibility to an already existing organization called ISOO -- Information and Security Oversight Office. ISOO, for budgetary and housekeeping purposes, is a part of the General Services Administration, which is also responsible for the National Archives. Thus it was that Steven Garfinkel, who as general counsel for the Archives had stonewalled our subpoenas in the Carter administration, was now head of ISOO.

Garfinkel told me he got his "policy direction" from the NSC but reported directly to Reagan. He said that the NSC staffers who were drawing up the secrecy oaths were Deputy Director Robert McFarlane, Commander Paul Thompson (the attorney who later distinguished himself by finding nothing wrong in the Iran-Contra scam), Brenda Reger (a security expert whose later claim to fame was omitting to seal Oliver North's office to stop him from shredding his records), Major Robert Kimmit, and Kenneth DeGraffenreid.

When Congress had held hearings on NSDD 84, beginning in September 1983, the administration had downplayed its harsh new stipulations. Speaking for the Pentagon, retired Army General Richard G. Stilwell dismissed any immediate concerns about the new gag order (Standard Form 189, or SF 189) by saying: "This requirement will be implemented prospectively -- we will not ask current employees to sign them, unless they are processed in the future for a new level of clearance." This displayed a shrewd insight into the congressional mind: as long as current employees are exempt from the particular outrage, no one will care what happens in the future.

The administration did have problems with the polygraph provision, though. In the House Government Operations Committee hearings on October 19, 1983, Chairman Jack Brooks demolished the NSC's position by producing some damning evidence from the Pentagon itself. It seems that back on December 16, 1982, Dr. John F. Beary, III, then DoD acting assistant secretary for health affairs, had written Secretary Weinberger a memo on the subject of polygraphs:

1. No machine can detect a lie. The machine can only detect stress; however, the stress may result from several emotional causes other than guilt: such as fear, surprise, or anger.

2. Even setting aside the argument that the argument is flawed, there are accuracy problems. We have only been able to locate two scientifically acceptable studies so far.... In one, the polygraph accuracy is 62%. In the other ... 72%. (You get 50% by tossing a coin.) The several studies in the scientific literature that report accuracy rates of 95% to 99% are flawed by inadequate experimental design and sometimes by conflict of interest (people doing the study who make their living from the polygraph).

3. The polygraph misclassifies innocent people as liars. In one study, 49% of truthful subjects were scored as deceptive. In another study, 55% of the innocent were misclassified.


Dr. Beary was supported by Henry E. Catto, Jr., the assistant secretary of defense for public affairs, in a memo to Weinberger the following day:

Cap, I believe we are headed for real trouble if the proposed changes in the polygraph regulation are published, and I know we are headed for trouble if they are approved....

... it is totally disingenuous to try to portray these changes as "updating of regulations" as a search for subversives, or as an attempt to speed clearances. These may all be true, but the fact is that we are trying to stem leaks which hurt the country (which is nothing to be ashamed of) and the press knows it.


Catto wrote, "The polygraph has a whiff of the jack-boot about it," and summarized his plea to Weinberger:

In short, I urge you to end this whole thing at once. As Dr. Beary reported in your December 16 staff meeting, the reliability of polygraphs is in question. They will scare our people. They will infuriate the press. They will hurt Cap Weinberger and, in the process, the President. Let's forget it.


By the time Dr. Beary testified before the Brooks committee, he had found work with a more honest employer at Georgetown University's School of Medicine. He reiterated his views, saying that people who ask, "How accurate is the polygraph?" are asking the wrong question; they should be asking, "Does it work at all?" He added that a stopped clock shows the right time twice a day. At those two instants, it is 100 percent accurate, even though it does not work at all. He then made this parallel:

I have brought with me a polygraph machine today. I would like to show it to you. It has some advantages compared to the one up here on the witness table. It is inexpensive. It is very portable. It has very low maintenance costs. It has about the same range of reliability as the polygraph.

It is a simple coin. It will be right 50% of the time in a dichotomous situation, that is, lie or nonlie.


So much for the polygraph.

The proposed censorship of writing for publication got an equally hard going-over by the committee. Publishers, publishing trade associations, journalists, associations, government unions, and the legal profession all sent impressive witnesses to condemn it. The press joined in. An excellent editorial in the New York Times summed up newspaper opinion:

The secrecy madness will not shut down rumor mills or plug leaks, especially those at the highest levels. But it will deprive Americans of much information that ought to circulate freely between the public and its servants. It will especially chill discussion of national security issues.


The outcome of the hearings was that Chairman Brooks introduced a good, though seriously flawed, bill, the Federal Polygraph Limitation and Anti-Censorship Act of 1984 (HR 4681). It tamed polygraphs and censorship, but it failed to deal with the gag agreements in NSDD 84. It also exempted the CIA and the National Security Agency (NSA), the two most secretive government agencies, from meaningful restrictions. (Testifying before the House Subcommittee on Civil Service, Brooks said of the spook agencies, "We are going to exempt them. They can use thumb screws, water torture, whatever they want to do to prove their people are honest, clean, pristine Americans.") Brooks's bill went nowhere. In a compromise negotiated between the NSC apparatchiks and the congressional staffs, McFarlane gave assurances that NSDD 84 would be suspended indefinitely but it would not be rescinded.

Indeed, the new secrecy oath provision lay dormant for about two years. Then, in mid- 1986, the pressures to put it into effect began quietly. Noted whistle blower Chuck Spinney was given a form to sign by his bosses in the office of the secretary of defense. If he didn't sign, he would lose his security clearance and, consequently, his job. If he signed, he could be framed for phony, contrived "security" violations. Worried about this, Spinney went to the Government Accountability Project (GAP), a public-interest law group, for advice. The GAP lawyers, lacking expertise in arcane security matters, passed the question on to an expert, attorney Allan Adler of the ACLU's national office in Washington. Adler said there was nothing wrong with the form, so Spinney held his nose and signed.

In late 1986 Lieutenant Colonel Jim Wolfe brought a copy of SF 189 to my office and asked me to sign. What was his authority for this? I asked. Jim had a couple of letters from a captain and a major in Air Force security, which said that Air Force members should be "encouraged" to sign the secrecy oath. Now, "members" is a term of art for uniformed members of the Air Force; civilians are "employees." So the terms didn't apply to me, and in any case, I hardly felt encouraged to surrender my rights.

I heard no more about this matter until several months after the Santa Claus coup. Then, on May 13, 1987, Captain David Price, General Watts's assistant, came to my office with a copy of SF 189 and an ultimatum: "Sign this or your security clearance will be taken away." Price also brought a pamphlet (DoD 5200.1-R/AFR 205-l) that made the same threat and, worse, went on to say, "Reluctance to sign an NdA (nondisclosure agreement) will be considered a lack of personal commitment to protect classified information."

I've already lost, I thought. I'm reluctant, and therefore I'm untrustworthy. By this logic, I may even be an espionage suspect. All it would take to expose me is a good Thought Policeman.

When I read the rest of the truly daft regulations, I knew I was in even more trouble. It said that the government could decide, retroactively, to classify information that was already public. Furthermore, the hapless signer of the oath might be held accountable for "indirect" leaks. That is, if I gave a congressman an unclassified government document, and a security officer discovered that the document contained something he considered sensitive information (or that he just wanted to cover up), he could declare that the paper was now classified SECRET. And if the congressman had already given it to a reporter, the government could indict me on a criminal charge!

I was in a box. If I didn't sign, I'd lose my security clearance and be fired. If I did sign, my official ill-wishers could frame me and send me to prison. Thinking I must have missed something, that there ought to be some reasonable solution, I called Steven Garfinkel and put the question to him.

Garfinkel is no man to try to sweeten the pill. He said that the whole point of the oath was to "simplify going after leakers."

Signing the oath would mean that I couldn't any longer communicate with Congressman Dingell's staff without getting the approval of third-party "authorities." Despite repeated questions, verbal and written, the Air Force wouldn't even identify who those omnipotent authorities were. I could almost hear the ghost of Mel Laird's assistant, Colonel Bob Pursley, saying, "Such a paper would be of great value if he were to jump the fence again." Meaning: "Then we could cut him off at the knees." Other voices from the past came back with the same message: Gerald Ford's CIA chief George Bush, Jimmy Carter, Nixon's Alexander Butterfield.

Paragraph 7 of SF 189 read, "I understand that all information (not just classified information) to which I may obtain access by signing this agreement is now and will forever remain the property of the United States Government" (emphasis added). Garfinkel made it clear that "the United States Government" did not include Congress or the judiciary of the United States. A nice distinction.

I called Peter Stockton and told him about this incredible conversation. The upshot was that two days later, on May 15, Stockton, Bruce Chafin of Dingell's committee, and I questioned Garfinkel at length. He was even more weird in person than he had been on the phone.

The Air Force regulation supplementing the gag agreement said that "the SF 189 did not impose any obligation beyond those set by law." If we had a law, we asked, why did we need SF 189?

It was just to "simplify going after someone," Garfinkel said. The White House was very angry over leaks. Garfinkel asked a rhetorical question, "What always upsets people at the White House?" And he found the answer: "Leaks!" (Not illegal leaks, or leaks of classified information, or leaks that might endanger national security. Just any leaks.)

Standard Form 189 spoke of classified information as something "that is either classified or classifiable." What did "classifiable" mean? we asked.

"Arguably, it could be anything," Garfinkel said. Well, he added, information that would be universally understood to need classification even though not so marked.

But the DoD pamphlet on SF 189 had a much broader construction. "Classifiable" material, it seemed, could be classified long after it was published on the front page of the New York Times -- just in order to stick it to the person who'd originally released it. I read Garfinkel a passage from the pamphlet:

Question 8B: Can a signer of the SF 189 be held liable under the provision for releasing information from publicly available sources which became classified after these sources were published, but the sources were never sanitized or destroyed?

Answer: Liability would depend on the circumstances of the case. In the case cited (i.e., Snepp v. United States), it is unclear whether the signer had any knowledge that the information from publicly available sources became classified after the sources were published. Therefore, ISOO cannot make a blanket ruling on such limited information.


Another important point: why didn't the word "classifiable" appear in the secrecy agreement to be signed by contractors' employees, SF 189A?

That, Garfinkel said, was because the Defense Investigative Service (DIS) had wanted to simplify the form. If the word were put in, DIS had advised him, "industry will come back screaming."

Would Mr. Garfinkel remove the offensive "classifiable," which "could be anything" and make the government employee form at least as fair as the industry employee form?

Not a chance.

Another discrepancy: SF 189 said government employees who signed were accountable for "all information," but contractor employees were accountable for "classified information" alone.

A discrepancy, Garfinkel agreed. But he didn't want to try to correct it.

What did "indirect unauthorized disclosure" mean?

Garfinkel didn't know. Maybe it would mean leaving classified material lying around for just anybody to pick up. There are "probably a million" examples, he said.

Garfinkel thought the prosecution was beautifully simple. "No common law, no statutes -- just show the form to the judge and say the agreement has been violated -- you don't have to argue principles."

But surely the accused must have some recourse, some protection against selective, arbitrary, and capricious application of the secrecy rules?

Garfinkel couldn't think of any.

Then what about existing contracts? The stiff new secrecy rules seemed to be a retroactive change in the employment contracts of government workers.

Yes, he said, that was the effect. But it was within the president's inherent powers and his authority as commander in chief.

We pointed out that the president was C in C of the armed forces, not of the nation; furthermore, it was the responsibility of Congress "to make rules for the government and regulation of the land and naval forces."

Another dubious aspect was that the new rules went beyond the DoD and the contractors and applied to most executive agencies and government corporations as well. What about the Department of Energy, Commerce, SEC, and TVA (all part of the Dingell committee's oversight) -- would their employees also be muzzled by the gag agreement?

No problem, Garfinkel said. DoE employees and others throughout the government were signing voluntarily.

Knowing that if they didn't sign voluntarily, they'd lose their clearance and their jobs? That, in Henry Catto's phrase, had the "whiff of the jack-boot about it." We went on to press Garfinkel about the statement that "reluctance" to sign raised questions about a person's trustworthiness and loyalty.

He didn't at all care for this provision, he said, but he had no intention of getting it corrected.

After the interview, Stockton said incredulously, "My God! Reagan's carpet bombing the Constitution just to simplify going after a few leakers. Mostly you."

I protested that I didn't "leak" in the accepted sense of the word. I told embarrassing truths in public when I knew that embarrassment was the only way to right wrongs. About the carpet bombing, I agreed.

Drawing on the interview with Garfinkel, we wrote a long report for Dingell, who passed it on to Chairman William Ford of the House Post Office and Civil Service Committee. Ford assigned it to subcommittee chairman Gerry Sikorski, who began to look into SF 189 vigorously.

Perhaps the most startling of Garfinkel's answers was his claim that Mort Halperin, director of the Washington office of the ACLU, had reviewed and approved SF 189 before it was issued.

I called Anne Zill, president of the Fund for Constitutional Government, whose offices were in the same building as the ACLU, and she talked with Halperin directly. When she asked him if he had approved the secrecy oath, he would say only, "Anne, it could have been much worse." He said this was not the right time to go up against the Reagan administration.

At the May 19 meeting of the FCG's board of directors, Anne Zill reported on this, and I reported on my interview with Garfinkel. Louis Clark, director of the Government Accountability Project (GAP), and Tom Devine, its legal director, were particularly interested in the issue. Tom said he would oppose SF 189 in practice and in his forthcoming testimony on constitutional rights for government employees before Senator David Pryor's subcommittee.

I felt that it was crucial to get the ACLU to repudiate SF 189. For better or worse, most liberal members of Congress accepted the ACLU as the authority on First Amendment questions; they would endorse what it endorsed.

Timing was becoming critical. So far, I'd received nothing but oral threats from low-ranking officers for not signing. But let a general officer put the threat in writing and it was a different game. Once a general's pride, prestige, and arrogance were on the line, the administration couldn't back down. Air Force procedures required giving thirty days' notice in writing of its intent to revoke the security clearance of someone who refused to sign the secrecy oath.

Our first soundings of the ACLU brought the reaction that the new requirements, although undesirable, were quite legal; old curmudgeon Fitzgerald was just being obstinate. So on June 12, 1987, I called Allan Adler of the ACLU. He was mildly sympathetic. Only mildly. He said he agreed that the Air Force interpretation of SF 189 requirements was unduly harsh -- he'd talk to Garfinkel about that -- but that the ACLU, after initial opposition, had okayed the "contract," as he kept calling SF 189. He also thought the government intended to require only new hires to sign.

We then got into a complicated discussion of the legal justification for SF 189. Adler said the president's right to make employees sign a secrecy oath derived from his own executive order and from case law.

I pointed out that there was no mention of the new gag rule in the then-current Executive Order, EO 12356, and that NSDD 84, which the government claimed as its legal basis, spoke of an agreement only. There was no mention of a "contract" and, in any case, a contract was invalid if one party to it signed under duress.

Irrelevant, said Adler. The executive could impose an "adhesion contract" and dictate its terms.

But surely the president couldn't attach illegal or unconstitutional provisions to his contract or agreement?

Wrong, he said. There are no established limits on what the president may attach to such contracts in the national security area.

It was quite interesting to find the ACLU in bed with Robert Bork. Adler's position recalled Bork's argument at the American Bar Association's 1979 workshop on law, intelligence, and national security. Bork suggested that it was irrelevant to argue that extralegal violations of an individual's rights for "national security" reasons were unconstitutional. "The question is," he said, "in the circumstances, given the exigencies of the situation and so forth, is there a constitutional right?" Answering himself, he said, "Constitutional rights vary enormously according to the circumstance, according to government need, according to safety, according to all sorts of things."

In other words, if the government has the need to perpetrate some unconstitutional outrage, it may do so. Robert Bork and the ACLU, in the SF 189 case, would sanction it.

Adler went on to lecture me on the importance of working with the "right people" on the Hill if I wanted anything done. Dingell wasn't one of them; Nunn, Stokes, Boren, and Aspin were.

He ended the conversation with a little tutorial on the case of Frank Snepp, reading a "dictum" by Harold Koontz and Cyril O'Donnell, people I'd never heard of, to the effect that the executive could do whatever it wanted in national security matters, and giving me a list of congressional hearings that would show me the error of my ways.

I thereupon got copies of those hearing transcripts and spent a weekend reading them. One witness who struck me as especially well informed and articulate was Jack Landau, then executive director of the Reporters' Committee for Freedom of the Press. He had testified with reason and vigor against NSDD 84 before Jack Brooks's subcommittee on October 18, 1983. But in the course of four and a half months, something strange seemed to have happened to him. When he appeared before Pat Schroeder's subcommittee on February 29, 1984, he was meek and noncontroversial.

When I called Landau to find out the reason, he explained that he and practically all of the working press had wanted to repudiate NSDD 84 once and for all, but they had run up against the power of the ACLU. He said Mort Halperin had "gotten to" the important media editors and persuaded them to live with NSDD 84. Halperin had done the Reagan administration's work for it. "I couldn't take on Mort," Landau said bitterly. "I hope he's happy with what he has."

Meanwhile, Tom Devine and Judge Joe Kennedy of GAP and Dina Rasor of PMP had been talking with Allan Adler to find out why he had swallowed the Reagan administration line. These were the points Dina derived from Adler's apologia:

1. Fitzgerald had signed one security agreement; why make a fuss about the new one? It had been carefully worked out by the Reagan security experts.

2. The fact that the contractors' secrecy agreement differed from the employees' was explained by their being derived from two different executive orders.

3. We were working with the "wrong people." We should be working with the intelligence committees.

4. The ACLU Washington office had initially been in a "big fight" with the administration over NSDD 84 but had been forced to give in.


This was such a collection of surmises and misinformation that I had to answer it point by point.

1. I'd never signed any secrecy oath. Why was Adler pushing such a falsehood?

2. The inequality of the two gag rules was created because, as Garfinkel had put it, "industry would come back screaming" about the harsher version. Further, no one had argued that either gag agreement was required specifically by an executive order, much less by statute. Garfinkel and other authorities insisted that the legal basis was NSDD 84.

3. The House Intelligence Committee had never held hearings on NSDD 84 or SF 189. But one Senate committee (Governmental Affairs, which has jurisdiction over civil service matters) and two House committees (Government Operations and the Post Office and Civil Service's Subcommittee on Civil Service) had.

4. The ACLU's "big fight" wasn't apparent in the records. Halperin had appeared before Congresswoman Schroeder's committee in February 1984, but only to oppose prepublication review of writings by government officials. Even that opposition was much qualified: he didn't want the words of senior officials reviewed and "censored" by junior bureaucrats. For instance, he wanted the wisdom of Harold Brown's writing in an op-ed piece to be undefiled by government scissors. Anything else would be a "serious threat to the First Amendment." He failed to mention any concern for the First Amendment rights of junior officials or whistle blowers.


Pursuing this attempt to look into the mind of the ACLU, I looked at Halperin's 1977 book, Top Secret: National Security and the Right to Know. There he wrote (page 65):

In addition to legislative categories for mandatory disclosures, Congress should designate certain kinds of information as presumptively secret, because they are not in general important for public debate, while their release could have detrimental effects on national security.


"Presumptively secret" sounded a lot like Reagan's ineffable "classifiable information." Perhaps the Reagan team had stolen the idea and changed the name. Halperin's list of such mysteries included:

1. Weapons systems: Details of advanced weapons systems design and operational characteristics.

2. Details of plans for military operations.

3. Intelligence methods: Codes, technology, and spies.


The first category was the scary one. If it had been in place and rigidly enforced under the ex post facto "classifiable" lunacy, the Pentagon underground would never have been able to disclose dangerous deficiencies in some of our advanced weapons' systems. We'd be faced, hypothetically, with having to go to war with faulty planes and missiles that didn't work, with nobody the wiser. And Halperin's rules could have me in prison, along with Dina Rasor and a lot of other good people.

Halperin's other rule was that senior officials know best: "presumptively secret" information can be released "if responsible officials are satisfied that there is a strong need for the information for public debate on a major issue" (p. 65). This is a corollary to his congressional testimony: all senior officials believe that "everything is classified unless they decide it ought not to be classified."

It is hard to imagine the Reagan administration taking its cue from an ACLU lawyer, but the Defense Department regulation of April 28, 1987 (DoD 5200.I-R) echoed Halperin's ideas:

Classified information may be made available to individuals or agencies outside the Executive Branch provided that such information is necessary to the performance of a function from which the government will derive a benefit or advantage, and that such release is not prohibited by the originating department or agency.


From all this I decided that Ken Lawrence had been right. Lawrence, a civil rights activist, in the fall of 1981 wrote a sixteen-page memorandum to "people concerned about the decline of civil liberties in the U.S." Titled "Subject: Morton Halperin, Jerry Berman, the American Civil Liberties Union and the Campaign for Political Rights," the memo claimed that:

When ACLU representatives are convinced that the political climate is such that the legislatures and the courts won't respect constitutionally guaranteed rights, they seek to strike the best possible compromise, sacrificing some rights (or the rights of some) in order, as they see it, to preserve others, rather than to take a "purist" position, which many of them ridicule.


Hardly the views of an Alexander Hamilton, a Clarence Darrow, or a Martin Luther King. Would any of them have made a quiet deal -- okayed the contract, as Adler put it -- on civil rights with Ronald Reagan?

***

D-day for the Air Force assault on Fitzgerald came on July 2, 1987, at five o'clock in the afternoon. Lieutenant General Claudius E. Watts III sent two of his men to my office to deliver two messages. The first, as I mentioned at the end of Chapter 14, canceled my assignment to assist Congressman Dingell and his committee. The second revoked my security clearance on thirty days' notice and, practically speaking, removed me from my job.

The timing of the delivery was intended to be devilish shrewd. It was just minutes before the beginning of a three-day Fourth of July weekend, after which was scheduled the biggest media event in years: the public testimony of Lieutenant Colonel Oliver North in the Iran-Contra hearings.

The attempt to bury me silently might have worked if it hadn't been for the dedicated young people at the Project on Military Procurement. Friday, July 3, was a holiday in Washington, but Dina Rasor, John Riley, and Danielle Brian-Bland hand-delivered press packets on the Pentagon's plans to "get rid of that son of a bitch Fitzgerald," as Nixon had said so long before, to media offices all over town.

Because of the holiday, most of the reporters on duty were junior people. Veteran reporters might have dismissed this as just another Fitzgerald-in-trouble tale, but to the younger ones it seemed a significant story on a deadly dull news day. As a result, Associated Press and United Press International put excellent stories on the wire to appear in just about every Sunday paper in the country. The New York Times and the Washington Post interviewed me by telephone and wrote their own stories. The Cleveland Plain Dealer carried its hard-hitting story with a banner headline on the front page. Once again the Pentagonists had outsmarted themselves.

In response to questions raised by Representative Barbara Boxer, Reagan's national security adviser, Frank Carlucci, wrote a letter (September 21, 1987) summarizing the history of "the current controversy over Standard Form 189," as he put it. Carlucci first noted that the controversy "began when Air Force Employee A. Ernest Fitzgerald was first asked to execute the non-disclosure agreement in January 1987." The meeting with Garfinkel, and the subsequent letters from members of Congress to the White House, the Office of Personnel, and the ISOO, questioned the legality of certain things in SF 189. Carlucci continued:

These letters were also released to the news media, which commenced a series of news articles, stories, op-ed pieces, and editorials on the nondisclosure agreement, almost all of which contained serious errors of fact. This media attention, in turn, led to constituent correspondence to other members of Congress, more congressional inquiries, more media attention, etc. Within a couple of months, the situation had snowballed into a major controversy. Fueling the controversy have been a number of misrepresentations and misunderstandings about the SF 189 that have appeared repeatedly in both the media accounts and congressional pronouncements.


Carlucci did not back up his charges of "serious errors of fact" or "misrepresentations," nor were any ever revealed, but otherwise his account was a fairly accurate summary.

The ACLU continued to play a dubious role. Newsday reporter Marie Coco, working on a story about SF 189, killed it when Allan Adler told her (according to Dan Sweeney of GAP, who had been working with Coco) that the form was "underhanded and odious but legal." By July 7, when he talked with Dina Rasor, Adler was hedging a little more. He said that no First Amendment rights were involved in SF 189 and that no citizen had any right to a security clearance, but since 1already had one, I had certain procedural rights that had to be observed before it could be taken away.

On July 8 I had an interesting conversation with Kirk Robertson, assistant to Senator David Pryor. He said that the senator wanted to help us, but he warned me that the ACLU seemed to be running a sub rosa lobby against us. Someone from ACLU had called Pryor's office to argue that SF 189 was not illegal.

That same day Russ Hemenway, chairman of FCG, called to report a sign of moderation at the ACLU: Halperin had said that GAP and the ACLU were negotiating the term "classifiable" with ISOO, and he thought they'd get a compromise that would persuade me to sign SF 189. Another note of some interest was Kris Kolesnik's discovery that Garfinkel's supporting cast in approving the standard form had been Ed Meese's assistant attorney general, Richard Willard, Andy Feinstein of Pat Schroeder's staff -- and Allan Adler.

In the meantime, the ACLU was gradually feeling the pressure. Marion Edey of the FCG board rallied some of its financial supporters to our side and persuaded Ralph Nader to make calls to Halperin and Feinstein. The GAP lawyers negotiated with the ACLU for two weeks. The result was a July 16 memorandum from Adler, which contained some fairly tough dissection of SF 189. That was a short-term tactical benefit for us, but what drew my attention in the memo was a fascinating constitutional issue. Adler wrote:

The ACLU finds no inherent constitutional barrier to an Executive Order requirement that government employees and other individuals, as a condition of being granted access to classified information, must sign an agreement which (a) imposes an obligation not to disclose such information without authorization and (b) is legally enforceable in a civil action for breach of contract.


Here the ACLU seemed to be taking Robert Bork's advice that the government can do anything not expressly forbidden in the Constitution. My friends and I argued that the government can do only those things expressly authorized in the Constitution. Was the ACLU really willing to set aside the Ninth and Tenth Amendments?

Another salient constitutional point at issue was that of "unauthorized disclosure," especially in regard to giving information to Congress. Heretofore all members of Congress had been considered "authorized" to receive information, classified or not, from executive branch employees. By reason of their election, members of Congress are presumed "trustworthy" and therefore have "security clearances" and access ("need to know," as determined by the aforementioned nameless "authorities") to classified information in accordance with the rules of the House and of the Senate, which restrict distribution of some classified information within Congress.

By default, many members of Congress had acquiesced in the executive's control of "classified" information (under Reagan, almost everything important or embarrassing). The Reaganites were seeking to make formal the substitution of executive branch rules for congressional rules governing access by members of Congress. The Reagan team was trying to keep Congress in the dark by imposing its own rules under which "authorization" meant specific approval by the executive branch of each specific communication to Congress.

Steven Garfinkel underlined this in a Boston Globe interview on September 13, 1987: "Garfinkel maintained ... that legislators must demonstrate a 'need to know' before receiving classifiable information. 'No worker may provide classifiable ("it could be anything") information to Congress without first receiving the approval of the agency he works for,' Garfinkel said."

The ambiguous behavior of the ACLU aroused the interest of civil rights activist Mae Churchill, and in August she wrote Ira Glasser, the ACLU's national executive director, with some questions. (Churchill later packaged her exchanges with Glasser and distributed the package as widely as possible to First Amendment defenders.) Did the positions of the Washington office reflect those of the national board? Did the national board approve them? Did individual affiliates have any voice in such policy decisions? How did the Washington staff arrive at the positions it took in dealing with the administration and as "spokesman for the ACLU"? Then, the most pointer question of all: "Why has government secrecy been given tacit approval in ACLU's name?"

She was defining the second major issue that had arisen out of the controversy over SF 189: was an institution known as a dedicated protector of civil and individual rights being compromised by a few men playing an insider game?

On October 19 Glasser belatedly replied with a Machiavellian answer. He did not deal with the queries about policy formulation or accountability, nor did he venture a reply to the question about tacit approval of government secrecy. What he did do was paint a highly imaginary picture of a fearless ACLU springing early into battle with the administration over the secrecy agreement. Consider this:

We raised substantial objections from the outset both with respect to pre- publication review requirements and with respect to the overbroad definition of "classifiable" information, citing, in our July 16 memorandum, the potential for "overreaching ex post facto interpretations which would illegally and, we believe, unconstitutionally broaden the government's authority under this agreement to reach disclosure of unclassified information and other communications that are not prohibited by law (emphasis added).

The memorandum goes on to oppose SF 189 and urge its rescission. Our letter of July 28 to Stephen Garfinkel responding to ISOO's draft rule, which purported to address the concerns in our July 16 memorandum, repeats those concerns and opposes the draft rule as insufficient. The letter concludes by urging ISOO not to proceed with the promulgation of the draft rule.


"From the outset"? SF 189 had been around since 1983, but the first detectable evidence of any ACLU objection (save for Halperin's narrow dispute of the prepublication review) came in Adler's memorandum of July 16, 1987. By then, of course, there was all that accumulated evidence that the Washington ACLU had "okayed the contract."

Glasser then mixed fiction with sarcasm. His letter to Churchill went on:

Even if, from your distant outpost in Pacific Palisades, you are unaware of the firm and steady opposition of the ACLU to the singularly oppressive qualities of SF 189, it seems to me impossible to fairly read our memorandum of July 16 and the follow-up letter of July 28 and nonetheless conclude that the ACLU "raised no substantial objections" (emphasis added).


Having been in no "distant outpost" but in the Pentagon attic in the middle of the storm, I had plenty of reason to believe that the "firm and steady opposition" had been very late and unsteady. In fact, there was good reason to think that the ACLU was still privately content with SF 189. In late July Adler had told Tom Devine that the SF 189 storm was all just because "Ernie doesn't like secrecy agreements. Ernie wants to attack secrecy agreements and the administration." He added that the only real problems with the agreement were vagueness in the term "classifiable" and conflicts with provisions of the whistle blower law.

By then Adler was a step behind the administration, which had admitted some errors. In a series of changes published in the Federal Register during July, it had backed down on the notion of holding employees accountable for "all materials" and had narrowed that to "classified materials." And it had dropped the ambiguous provision holding employees accountable for information that "may have" come into their possession.

Nevertheless, in October the Reagan team pushed its security fixation to the point of absurdity. Representative Jack Brooks had requested some information from the Department of Energy in order to carry out the oversight functions of his committee. James Herrington, the DoE secretary, then had the foolhardiness to send a functionary to Brooks with an SF 189 that was to be signed before he would hand over the information.

The administration had chosen the wrong man to push its bad idea on: Brooks's blast was majestic. He wrote that this act "deeply offends the basic constitutional framework of the separation of powers," and that "such a contract is incompatible with the First Amendment to the Constitution, regardless of who is asked to sign it."

When Representative Gerry Sikorski's subcommittee held its hearing in mid-October, I testified. No representative of the ACLU was invited to appear, but Allan Adler was present and busy in the corridors explaining to reporters or anyone else who would listen that SF 189 was not all that bad. During one break he tried to trap me in the presence of some Air Force judge advocate general (JAG) officers -- military lawyers -- and challenge me to say whether I'd support any sort of secrecy at all. Then, as the JAG officers scribbled away, he made his own case for secrecy. The ACLU was still bringing up the rear in this fight against "the singularly repressive qualities of SF 189."

***

In my difficulties I had a lot of generous and heartwarming support. Senator Grassley and Kris Kolesnik went to see Howard Baker on my behalf; senators Proxmire and Pryor offered support; and representatives Sikorski, Boxer, and Aspin demanded an explanation from National Security Adviser Carlucci. When the military prepared to drop the axe on me, John Bodner requested and got a hearing before Judge Bryant to argue that the administration hadn't provided the substantive answers (which they were required to provide) to our constitutional and legal questions about the gag order. The Pentagon then extended my deadline for signing by two weeks.

Just a few days earlier the National Federation of Federal Employees (NFFE) had filed a suit challenging the gag agreement in the U.S. District Court. The NFFE suit was assigned to Judge Oliver Gasch, who had a reputation for more or less blind support of the federal national security apparatchiks. Sensing an opportunity to escape from John Bodner and constitutionalist Judge Bryant, the administration decided to stage the whole legal fight in the much more favorable climate of Judge Gasch's court.

In the meantime the American Federation of Government Employees (AFGE) had filed a similar suit in which an Air Force cryptologist named Louis Braase was a central figure. Braase had an unblemished record of thirty-two years of government service. A highly regarded teacher in the field of cryptology, he had held a Top Secret clearance for most of his career.

His only crime was that he had stood up for his constitutional rights against the gag agreement. The colonel he worked for, saying that in his position Braase had no constitutional rights, suspended him from his duties and sent him home. When public and congressional pressure forced the Air Force to back down and allow Lou to go back to work at the Air Force base, he was restricted to nonsecure areas and given routine clerical work.

A man of high character and exemplary record, Braase was ideal for a test case. My handicap was that my reputation had been scarred (the stab wounds were largely in the back) by successive generations of politicians and brass. And unlike me, Braase had never suffered the animus of the ACLU or Ralph Nader's lawyers. That made it possible for a redeemed Nader to make the beau geste and send one of his bright young lawyers, Patti Goldman, to represent the congressmen who had joined the legal fight. Ralph's return to the fold restored my faith in the perfectability of man. The Halperin-led ACLU sat on its hands, though.

The next move was led by Senator Grassley, who got Congress to attach to a spending resolution for fiscal 1988 a provision forbidding the executive branch to implement the new secrecy agreements for the first ten months of 1988 and allowing federal employees to communicate directly with Congress.

When the suits were heard in Judge Oliver Gasch's court, the executive branch argued that the president has "plenary" responsibilities and power in the national security area ("plenary" in this context means "absolute" or "unqualified"). The administration also brought as a witness an Air Force general working for the CIA, who said flatly that the intelligence community would not abide by the provision outlawing the gag agreement in the Continuing Resolution (the omnibus substitute for appropriations laws) passed by Congress and signed by the president.

In a judicial opinion laden with scary implications, Judge Gasch, on May 27, 1988, ruled against the congressmen's suit. He agreed with the contention that the president has "plenary powers" over national security matters, and he placed no bounds on the domain of national security. He cited NSDD 84 and "sovereign prerogative" in ruling that any non-disclosure agreement for federal employees was not subject to existing laws. And he found "particularly offensive" Congress's assertion of its right to receive information directly from government employees despite the constitutional right protected by Title 5, Section 7211, of the U.S. Code (the law passed in reaction to Teddy Roosevelt's gag order).

Thus the administration and its judicial ally had done everything in its power to prevent citizens who work for the government from transmitting any embarrassing information about abuses of trust to their elected representatives in Congress.

***

How had the great security campaign evolved in the Reagan years, and to what purpose? Early in the administration, Assistant Attorney General Richard Willard, had headed a commission on "leaks" that had, in part, concluded:

The unauthorized disclosure of classified information has been specifically prohibited by a series of Executive Orders dating back at least to 1951. Such disclosures also violate numerous more general standards of conduct for government employees based on statutes and regulations. It is clear that any government employee may also be discharged or otherwise disciplined for making unauthorized disclosures of classified information. Moreover, in virtually all cases the unauthorized disclosure of classified information potentially violates one or more federal criminal statutes.


Furthermore, Willard said, laws already on the books could be used to "protect" against the news media: "These laws could also be used to prosecute a journalist who knowingly receives and publishes classified documents or information." The report did not really deal with the problem of disclosures to Congress.

There was one rather startling and iconoclastic admission. The commission found that "some of the most embarrassing leaks do not involve classified information at all."

In sum, the commission felt that protection of classified information and violations of security could be easily treated under existing law. Even Air Force Regulation 205-1, which put SF 189 into effect, argued, though insincerely, that "SF 189 does not impose any obligations beyond those set by law."

Then what was the source of this drive for a new and troublesome secrecy requirement, overlaid on a perfectly effective body of law? The evidence offered by Stephen Garfinkel, certainly an authoritative source, suggests that the idea was to have a handy instrument for summary punishment on the vaguest of charges. Recall that the White House was worried not about security leaks specifically, but about leaks in general, including "indirect release" of "classifiable" information.

As John Dingell wrote in his letter of May 18, 1987, to Congressman Ford, Garfinkel said that SF 189 would "simplify going after someone." How? In our interview he explained: "No common law, no statutes -- just show the form to the judge and say the agreement has been violated. You don't have to argue principles."

In other words, no due process.

In France, under the old monarchy, there was a legal instrument called a penal lettre de cachet. By the king's order, any subject could be seized and, with no opportunity for defense, sentenced to imprisonment or transportation. The king seldom knew anything about the issuance of such letters, they were signed by a secretary of state, and they served as a swift and secret way to get rid of the government's enemies or dangerous writers. It took a revolution to abolish them. To repeat Stephen Garfinkel's formulation, "No common law, no statutes. Just show the form to the judge and say the agreement has been violated."
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 2:45 am

16. Operation Ill Wind

THE PRO-ECONOMY WARRIORS on Capitol Hill seemed to have run out of energy and spirit by early 1988. They were beginning to lose battles to the counterattacking big spenders. And the freedom fighters in the Pentagon underground were so thoroughly demoralized that many buried their weapons for use at some more favorable time. Those of us in the public Resistance found ourselves isolated and powerless. In an election year, when no campaigning politician wants to be attacked as weak on defense, our prospects looked poor. At that time, we had no inkling of the "ill wind" to come that might -- just possibly -- blow the nation a great deal of good.

In the meantime our cause was suffering a heavy cannonade in studies by noted professors at great universities, "defense intellectuals," and experts at prominent think tanks -- all, apparently, rented out to the defense establishment. Washington does not produce much in the way of ideas, but it does consume them. The city has nothing like a Harvard or a Stanford, but it has a thousand columnists and reporters who must turn out copy containing some kind of thought content every day. A Rand Corporation study, a Harvard report, or an article in Foreign Affairs is quickly appropriated, simplified, and popularized for tomorrow's newspaper or next week's magazine article. Thus an arm of the government that can rent a think tank or eminent professor can produce scholarly justifications for practices that might cause lifted eyebrows at a meeting of Mafia dons. The previously cited case of misinformation that traveled from the Defense Department to Professor Kelman to columnist George Will is a good example of propaganda that became "scholarship" that became punditry.

One practice that needed justification was a wonderful Pentagon handout of $5.634 billion -- that limit imposed by Congress for 1988 to subsidize about one hundred favored contractors. (As a rule, the bigger the contractor, the bigger the grant.) The thin excuse for the spending amounted to little more than some impressive-sounding labels: independent research and development (IR & D) and bid and proposal expenses (B & P).

When Senator Proxmire questioned this and suggested that the Pentagon ought not to be giving such birthday presents, the Pentagon struck back with a heavyweight draft report produced on the Rand Corporation's letterhead. The Rand draft report was widely distributed, especially on Capitol Hill, in the spring of 1987. The DoD wanted its case dignified, so the corporation performed as requested, with arguments so devious and full of syllogistic error as to make Richard Nixon blush with envy. In effect the Pentagon's acquisition spending czars had rented the Rand Corporation's letterhead.

Rand proposed looking at the size of each grant as a measure of the grant's "surrogate" contribution to national security: the more money laid out in grants, the more national security we got. (But did we get 100,000 tons of national security, FOB, for each billion we paid?) Of course, we needed as much national security as we could get, presumably to store away in the Pentagon basement for a rainy day.

After the report was published, my associates and I asked the Rand experts if they could come up with an example of benefit the country had received from the billions of dollars spent on the IR & D and B & P boondoggle. They couldn't. That fact, however, didn't stop Robert Costello, the Poindexter-Packard acquisition czar, from sending his people to Capitol Hill to argue, on the basis of the Rand absurdity, for removal of the ceiling on the IR & D and B & P birthday gifts.

It worked. The June 6, 1988, issue of Federal Contracts reported (page 1108): "For the first time since 1983, the House Appropriations Committee has approved a funding measure for the Defense Department that does not contain a ceiling on independent research and development and bid and proposal costs."

This breakthrough was aided by a barrage from the MAC Group, hirelings of the military contractor trade-and-lobbying associations, the Aerospace Industries Association (AIA), the Electronic Industries Association (EIA), and the National Security Industrial Association (NSIA). The "MAC Report" (from the initials on its letterhead) was more officially -- and stultifyingly -- titled "The Impact on Defense Industrial Capability of the Changes in Procurement and Tax Policy, 1984-87." It was prepared by a group of obedient scholars, prominent among whom were Harvard Business School professor Robert N. Anthony, former comptroller of the Department of Defense, and his colleague Joseph L. Bower.

The report was a fairly inept attempt to roll back the various reforms in Pentagon spending habits that had been effected between 1984 and 1987, reforms that had been essentially halted by the Poindexter-Packard coup after modest progress in the right direction.

The report's "analytical" approach was based on a highly suspect presentation of cash flow. (It should be explained that the contracts used for examples were asserted to be real ones, though they were not identified.) Ordinarily, a cash flow statement is the simplest kind of financial analysis; every small businessman who ever got a loan from a bank knows how to put one together. A cash flow analysis does not contain accrued or booked revenues, and it doesn't show accrued costs. What it does display are cash collections and disbursements. Cautious bankers know that money owed, or "accrued," to the business might never turn into cash, since not everybody pays his bills. The bankers also want to make sure that the business has enough money coming in to pay current bills plus a sufficient surplus to make loan repayments to the bank.

Professor Anthony, in his textbook Management Accounting, said this about cash flow statements: "Transactions that do not involve a flow of cash are eliminated." Yet in the MAC report he changed the rules for the big contractors. In its "cash flow model logic," the MAC group showed presumed cash collections on the credit side of the ledger and presumed "incurred" costs on the debit side. I say "presumed" because the figures were simply furnished by the contracting companies and may or may not have had anything to do with reality.

When I asked Russ Aney, one of the authors of the report, what was meant by "incurred" costs, he said that meant accrued or booked costs. This altered the meaning of "cash flow" dramatically. Many of these costs are "accrued" on the contractor's books months before he pays the bills for them, so the contractor's cash requirements looked much larger than they really were. This didn't seem to bother the faculty members because it bolstered the case they'd been assigned to bolster.

The other noticeable feature of the report was its candor. It made no attempt to hide the fact that it was trying to justify larger IR & D and B & P handouts for the giant contractors.

One of MAC's loudest complaints was about "lower allowable cost recovery." I asked Aney what he was really talking about. I asked him if the "lower" part meant recent congressional restrictions and the "allowable cost" part meant paying room and board for dogs like Fursten, sending flowers, paying strolling musicians, and the like. He said yes.

I then asked him whether the companies were still indulging in these amenities even after the government stopped paying for them.

"What other assumption could one make?" said Aney.

In the upper brackets of executiveville, it's important to maintain the quality of life even if the ungrateful taxpayer won't foot the bill any longer.

Finally, from Harvard, came another fearsome broadside: the MAC report warned that if the 1984-1987 reforms were "allowed to run their course," we could expect the dire result of "increased competition." And that would lead to the worst of consequences -- "the potential for a low-cost culture." Not a single strolling musician in sight.

The bombardment was joined by Georgetown University's Center for Strategic and International Studies (CSIS), which delivered a treatise titled "U.S. Defense Acquisition: A Process in Trouble." As the title suggests, the authors conceded what nobody in his right mind could deny: there were troubles in boondoggleland. "There has been influence peddling. Kickbacks have been made. The revolving-door syndrome has been abused. Patently unrealistic promises have been made." And so on. CSIS even dared to admit that some of the spare parts and support equipment were overpriced, but it went on to rationalize such scandals by writing that the tools were bought "in strict accordance with regulations." There was no mention of the glaring flaws in the regulations (see especially Chapter 12), much less any proposal for correcting them.

Did Georgetown's staid Jesuit fathers know what was being committed under their aegis? The report produced a remarkable piece of flimflam when it blamed the soaring weapons costs of the Reagan years on "program instability," which was further explained as "the cost of stretch-outs." According to this bit of sophism, alterations in a weapons funding program in midstream drove costs higher than expected.

As I described in Chapter 10, however, the astronomical unit cost increases -- both realized and projected -- were recognized by the Pentagon's advance planners during the period January to May 1984, when the Reagan spend-up was going full steam. Out-of-control contractor costs and even wilder projections of costs to come drove unit prices up so steeply that even the Reagan money pump fell behind.

And the CSIS solutions? They were, it turned out, based on the false gospel of David Packard, that is, to retain and attract "professionally competent (military) acquisition personnel" and then to appoint not one, but two blue-ribbon commissions!

The first of these commissions was supposed to "examine the role of Congress through all stages of the acquisition process." That, of course, could postpone any real reform until doomsday. The second commission, charged with monitoring progress of the reforms and restoring "national confidence," would have a life of five years in the grand tradition of Chet Holifield.

When I finally reached the end of the CSIS report and read the list of its creators, I had a sudden epiphany. The turgid style and the abundance of error were explained: the chairman was none other than that old apostle of pork, James Schlesinger. I noted sadly that the co-chairman was Representative Les Aspin. I hoped he was there only as a reserve piano player and that he didn't know what was going on upstairs.

Finally, among the scholarly artillery, came the sound of Big Bertha. Under the copyright of the President and the Fellows of Harvard College, the Harvard Business School Press published The Defense Management Challenge. Its principal author was my old friend and associate, Dr. J. Ronald Fox, the Jaime and Josefina Chua Tiampo Professor of Business Administration at the B-school. Along with his academic credentials, Ron could point to almost thirty years of experience in Pentagon procurement.

I had met with Fox and his assistant author, James Fields, and had described some of the lessons to be learned through case studies of overpricing on tools and spare parts. On my recommendation, Dingell's investigators and the PMP had opened their files to Fields. I expected a worthwhile analysis that would get to the roots of procurement troubles.

When I saw the finished book in June 1988, I was momentarily gratified to find that the section "problems in the Defense Business" began with a look at overpriced spare parts and tools. But after five and a half lines the sag set in. I was faced with a warning of sophisms to come: "These allegations cause many Americans to question DoD's management capability as well as the integrity of the defense industry."

Dismayed, I wondered if Major Ketcham and Colonel Roberts were co-authors. Cover up the truth, they suggested, so the taxpaying suckers won't get wise:

Although (the media) rarely -- if ever - explained that the high prices frequently had to do with the allocation of overhead costs and the rigor of military requirements as much as or more than they do with implied contractor overcharges.

Government regulations require that overhead costs (i.e., costs associated with more than one program) be distributed equally among a contractor's products. Under this system, prices for small items are artificially inflated and those for large items artificially reduced. Overhead costs have to be absorbed one way or another, but if the allocation system results in pricing anomalies and is not adequately understood or explained by the media, the public is misled.


Could Professor Kelman's snake oil still have buyers? In dismay I called Chuck Spinney, who said he had reviewed Ron's manuscript and had advised Ron to delete the "equal allocation of overhead" fallacy.

Colin Parfitt followed up on the very queer "government regulations require" line. Where were those regulations to be found?

They were in the FAR (Federal Acquisitions Regulations) or the DAR (Defense Acquisition Regulations), Ron said. "You can look them up."

They weren't and you couldn't.

The fact that the Pentagon and its academic footmen had to keep the old lie alive suggested that none of the DoD flacks had enough imagination to invent a new lie to justify exorbitant prices. There was no defense.

I still believed that Ron Fox was a basically honest man, but I had no choice except to confront him about the distortions in his book. With some mortification, he said I should remember that "distributed equally" could have several meanings. It might mean equal percentages of overhead. Brightening, he said that was, in fact, what he'd meant all along.

Just what we'd always been talking about, I said. Isn't it true, I asked, that the overhead, fat and all, is distributed proportionately to measures of direct costs -- hours or dollars -- of the products in question? He agreed.

Fox would not agree, however, that one major thesis of his book -- namely, that Pentagon critics use false reports because they are against national defense -- was wrong. A close reading of The Defense Management Challenge revealed where the cheating really lay. Consider page 31:

In some cases, the news reports contained outright distortions, by omission. The $3,046 coffee maker was designed for the huge C-5A aircraft, which carries as many as 365 people. Major airlines have purchased similar coffee makers for $3,107.


This has to be taken as a blatant attempt to mislead. First, the C-5A pot was priced at $7,622. (After Lockheed was publicly embarrassed, the replacement pots came in at "only" $3,046.) Second, it would be dangerous flying if anybody tried to cram 365 people into a C-5A. Third, the coffee pot in question is a ten-cup model.

The authors went on to damn "the inaccurate or incomplete reporting by the news media" and "the theatrics of a congressman or senator" as he displayed a pair of grossly overpriced duckbill pliers. "Sensationalism and entertainment," said the Harvard report, an attempt "to discredit efforts to achieve a defense buildup." After such amazing misrepresentations, one can only ask whether the Harvard motto Veritas has lost all meaning.

The hero of the book was, predictably, David Packard: "one of the ablest Pentagon managers" (page 134) and "dedicated to improving the acquisition process" (page 49). And there are, indeed, many noble Packard quotes that sternly denounce contractor inefficiency and non-enforcement of contracts. The authors did not point out, however, that these were hindsight quotes, delivered as Packard was leaving office and were the diametric opposite of Packard's actions. The ruinous effects of Packardism in office were not considered: the "capable" officers in charge of programs (and up to their ears in money), the Poindexter-Packard "streamlining" that meant "contract now, ask questions later." "Self-policing" meant looking the other way while the scoundrels make off with the loot. And how could a book purporting to discuss "the defense management challenge" overlook the fact that the streamlining has resulted in a huge shortfall between the President's fiscal guidance, much less what funds Congress will supply, and what the Pentagon plans to spend? And the most painful part is that the fighting part of the Air Force certainly -- and perhaps the other services as well -- will emerge from the $2 trillion Reagan spending binge smaller than it was before Reagan.

The mischief that such irresponsible academics can do is not immediately apparent. The effects of false teachings on the students don't show up for years. But the bad thinking in those specialized publications and university press books does trickle down to unsuspecting journalists. It may influence politicians as well. In the 1988 election year, the for-rent intellectuals around Harvard Square were being sought out by the spending coalition because of their presumed closeness to Democratic candidate Michael Dukakis.

In spite of my feelings about the book, I went to the publication party for The Defense Management Challenge. I got there late, but I soon found that the party had split into two factions; when Ron Fox was introduced as the author whose book would counter the criticism of Pentagon buying habits, the establishment Pentagonists cheered. The underground types just sulked. Looking around at the crowd, I had the depressing feeling that no matter who won the election, the same corps of rationalizers would still be there in the Pentagon, running the same old sick system.

While Colin Parfitt and I were driving home that night, I was reminded of Colonel Joe Warren's long-ago comment on an earlier shuffle of administrations: "Same old whores, just new beds."

***

Even with the apparent success of the big push to make Pentagon management look respectable and the decline in morale in the economizers' ranks, I was still hopeful of a revival in our fortunes. Despite the propaganda barrage, real improvements in Fort Fumble's wasteful system were minimal. The first new crack in the facade would cause the latent public discontent to erupt again.

On May 31, 1985, communications specialist Richard Pollack had reported, in a privately distributed letter, pollster Peter Hart's assessment of a new trend:

There has been a dramatic change in public thinking on the military budget. Support for higher arms spending has dropped dramatically. This is due to the sharp cutbacks in social spending and the many reports on corporate fraud and abuse. As Peter Hart put it, popular outrage over fiscal irresponsibility at the Pentagon "comes roaring out of the polling data."

The fact that Johnny Carson is making jokes about the Pentagon's toilet seats and ashtrays confirms this analysis. You can't make jokes about something like this unless popular feeling and concern are very widespread. This attitude on military spending is a complete about-face on how the public felt just a few years ago.


Even at the height of public support for the Pentagon, in October 1980, 78 percent of the sampled public believed that the Defense Department didn't use its ample sums efficiently. And by 1988 cynicism was rising. It was a sleeping campaign issue with great potential, but no candidate for the nominations seemed to be acute enough, or opportunistic enough, to seize upon it.

But in 1986 a former Navy employee, now working for a contractor, warned the Naval Investigative Service that a consultant was trying to sell contractors inside information from the Pentagon. An FBI investigation was begun under the supervision of William Weld, head of the criminal division at the Justice Department. Attorney General Meese was not informed, and the inquiry not made public until mid-1988.

The Justice Department, which had behaved with such suspicious partiality for nearly eight years, now proved to have its own underground -- a prosecutor who was willing to listen to a closet patriot, and a sizable investigative force to follow up. No thanks, of course, to Edwin Meese, Ronald Reagan, Caspar Weinberger, or Frank Carlucci.

The sudden revelation reminded us that there is one very old-fashioned check on malfeasance even in a system as vast and complicated as the Department of Defense. And, for those who could see the lesson, it was also a reminder of the kind of mentality that feared and hated the results of simple honesty.

On June 14, 1988 -- the day before Ron Fox's book party -- FBI agents with search warrants descended on at least five Pentagon offices and on dozens of contractors' and consultants' offices in twelve states and the District of Columbia. Later news put the number of grand jury subpoenas at about 275. The two-year investigation, code-named "Operation Ill Wind," was a wide-ranging examination of bribery, bid rigging, and insider trading in the defense industry.

Former Secretary of the Navy John Lehman and consultant Melvyn R. Paisley (ex-chief of Navy research and development) were among the former high Pentagon officials under suspicion. Henry Hudson, the U.S. attorney in Alexandria, Virginia, who was overseeing the investigation, was scrutinizing such well-known corporations as McDonnell-Douglas, Martin Marietta, Litton Industries, Unisys, Hercules, Pratt and Whitney, and Norden Systems.

I first heard of the raids when Peter Stockton telephoned to ask if the office of my fellow deputy in the Air Force, Victor Cohen, was being searched. William Weld and FBI directors Webster and Sessions had shrewdly -- considering the Meese justice Department's record in such past cases as those of George Spanton and Bob Golden, not to mention Ollie North -- kept the operation under deep cover. Among the very few people on Capitol Hill who I know had prior knowledge was Kris Kolesnik.

In October 1985, Kolesnik's boss, Senator Grassley, had tried to investigate similar allegations but had been blocked by the Justice Department on the grounds that it was pursuing its own investigation of the case. Nothing had come of Justice's supposed effort, however. Congressman Dingell, too, had warned Caspar Weinberger of some alarming indications, but Weinberger had ignored them.

Most members of Congress professed to be shocked at the news. Senator John Warner of Virginia, senior Republican on the Armed Services Committee, probably spoke for the majority of Congress in his unintentionally recorded remarks to Senator Sam Nunn on June 16, picked up by an open WUSA-TV microphone. "I'm shook to my shoes about this fraud case, Warner whispered, adding, "Bribery is rampant."

Senator Grassley, on the other hand, spoke for me and my allies when he said that the congressional expressions of disbelief reminded him of a scene in Casablanca with the French police captain, Louis Renault (Claude Rains). Sitting in the front room of Rick's saloon, Renault is informed that gambling is going on in the back room. He says, "I'm shocked!" Just then a porter hands Renault a sheaf of currency, saying, "Your winnings, sir." The Washington Post's Herblock cartoon here reproduced is a good example of what many journalists thought of the "shock."

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"Shocking!" copyright 1988 by Herblock in The Washington Post.

I was somewhat surprised by two aspects of the scandals. The first was that the FBI (and as later came out, Assistant Attorney General William Weld) was able to avoid having their project killed by Ed Meese, which they accomplished by not telling him about it.

The second mildly surprising aspect was the extent of alleged transactional bribery. My perception was that transactional, or "fee for service," bribery had been relatively rare in Pentagon acquisitions. Ordinarily the spending coalition buys the servant, so it has no need to buy specific services. The co-opted servants are obedient ("responsive," in the jargon) and understanding, real "team players." For the military, especially, the prospect of a plush, revolving-door retirement job gives the coalition a real hold on all but the most principled and selfless officers. Most are pushed out of the service in their mid-forties by the up-or-out system, and they need jobs for that expensive phase of life, what with growing families and staggering college costs ahead. They need good jobs, and the door at Defense Boondoggle Systems, Inc. (DBS) is open. As for simple black-bag bribes, most officers would regard them as both demeaning and unnecessary. There are so many fraternal, back-scratching relationships within the officer corps, including both active-duty and retired officers, that an ex-colonel at DBS can get the tip he wants without a bribe.

After the first shock the media stories of Pentagon scandal began to widen. Three congressmen were implicated, according to press reports, and names of more contractors and consultants began to surface. Reports cited specific examples of suspicious bid rigging, such as that on a $70 million Marine Air Traffic Control system. On July 1 Defense Secretary Carlucci announced that nine Navy contracts -- none for major weapons systems -- were "tainted" and would have their funding frozen.

Most of the Pentagon-industry spenders were, like Warner, "shook to their shoes" -- whether at the revelations or from the fear of being caught themselves only time would tell. The academic barrage they had instigated now seemed as feeble as the noise of firecrackers the ancient Chinese armies used to frighten the enemy. Nevertheless they tried to put on a bold face and offer explanations.

Because most of this happened on Weinberger's watch, he was questioned closely on a couple of TV panel programs. His defense, echoed in a statement by Reagan, was that "there are a few bad apples in any barrel" and that, with millions of people working for the Department of Defense, it wasn't surprising that a small minority were on the take. The corollary was that there was nothing wrong with "the system." That the system invites bad apples and makes bad apples prosper richly is, of course, part of the thesis of this book.

Another exculpatory, partial explanation of the scandals was voiced by Representative John Spratt, a member of the House Armed Services Committee (as quoted in Time, June 27, 1988), when he spoke about the contracts process: "You almost have to be an insider to understand it." Time went on to say that the consultant companies, or "rent-a-general" agencies, hire former procurement officers who "know both the procedural intricacies of how contracts are processed and the technical needs of the services." Time added, "Without these middlemen, the military's complex procurement system might not work at all."

If, instead of the insider system, we tried honest, old-fashioned competition -- such as that envisioned by Senator Grassley's Creeping Capitalism -- the greasemen wouldn't have a foothold. They would have little to sell, and bid rigging would be much more difficult, especially if we had good internal checks and balances.

The way the system "works" and to whose advantage it works was becoming more and more apparent. If and when the details of Project Ill Wind are fully exposed, the public will be more surprised by what is legal than by what is illegal. As I had illustrated in my June 4, 1987, congressional testimony, the Pentagon had all but destroyed its traditional, time-tested safeguards against corruption. Along with that, the Reagan team had suppressed that greatest of all controls: the impulse of honest men to tell the truth in public. The First Amendment's guarantee of free speech is not only the best of all legitimate management controls; no other works without it. Ex-Secretary Weinberger might be reminded of Sherlock Holmes's dialogue with Colonel Ross, speaking of a watchdog: "'Is there any point to which you would wish to draw my attention?' 'To the curious incident of the dog in the night-time.' 'The dog did nothing in the night-time.' 'That was the curious incident,' remarked Sherlock Holmes."

In addition, the combination of loose procurement rules and government acquiescence in rip-offs leaves many a crook untouched. As exposure followed exposure, the Packard doctrine of contractor "self- governance" or self-policing looked more and more ludicrous. Solemnly accepting the Packard rules on their face value, the Dingell staffers and I inquired as to whether any contractor had turned in a self-arrest form when the scandal broke. None had. We had previously asked Derek Vander Schaaf, the Pentagon's deputy inspector general and self-policing advocate, if he had been busy distributing the self-policing forms. Apparently he hadn't. On July 6, 1988, the House Armed Services Committee laughed out loud when Vander Schaaf testified that thirty-nine of the forty-six contractors who had signed up for the self-policing program were under investigation.

Secretary Carlucci moved quickly in the crisis. He appointed an internal review committee headed for the moment by his general counsel, Kathleen Buck. And he called in the oldest hand of all, David Packard, to go once more into the breach. On June 22 the Washington Post reported that Carlucci had asked Packard to examine the issues involved and to advise the Pentagon on ways to handle them.

One of the issues was very close to home. Kathleen Buck already knew that Secretary Frank Carlucci had a continuing financial stake in one of the companies under investigation. Between his Pentagon job as deputy secretary in the early 1980s and his appointment as Reagan's national security adviser, Carlucci had been elected to the board of Unisys Corporation, a major investigative target. He served on that board for two handsomely rewarded years.

In addition, this two-year stint earned him $82,482, to be paid over an unspecified number of years, starting when he left federal service, according to the financial disclosure statement Carlucci filed with Buck on November 9, 1987. Carlucci's disclosure form also included the following entry: "Pursuant to Unisys (Sperry) Corporation directorship, will receive pension plan payments ($14,300 to be paid annually effective 11/90)." These payments depend on Unisys still being in business by then, a circumstance heavily dependent on the actions of Secretary Carlucci.

After the June 1988 scandal broke, reporters began asking for copies of Carlucci's financial disclosure forms, whereupon another version appeared, this one dated May 16, 1988, and also approved by Buck. The earlier, obvious conflicts were changed, but not too neatly and certainly not convincingly. The new disclosures said that the $82,482 Unisys would pay Carlucci had been "cashed out." Actually, it appeared that Carlucci had cashed in. The disclosure form did not specify how much the serving secretary of defense received from the investigative target, but David Evans reported in the July 6, 1988, Chicago Tribune that the payoff was nearly $96,000.

In addition, Carlucci's new disclosure stated that his Unisys pension plan was being replaced "with an annuity with Travelers (Insurance Company)." No details were forthcoming, but the arrangements elicited these observations in Evans's July 6 article:

The report does not say if the transfer is, or was, made by a single lump-sum payment from Unisys, or if Travelers will receive a series of payments.

A series of payments would leave Carlucci with a continuing financial stake in the fortunes of Unisys, presenting a conflict of interest if he makes decisions on defense issues regarding the company. Carlucci has not made a public statement about how he will handle Unisys matters.

If a lump-sum payment was made, Carlucci may be in a similar situation to that of Melvyn R. Paisley, the former assistant Navy secretary who is one of the principal targets of the FBI investigation.

Paisley received a lump-sum "golden handshake" of $183,000 from the Boeing Co. when he left the company to join the government.

The U.S. Court of Appeals recently declared the payment was a conflict of interest, overturning a lower court ruling.


Where was General Cappucci, who saw conflicts of interest even where there were none, when we really needed him?

Finally, another talent pool was available to help out in the Pentagon inquiry. On the June 26 ABC "This Week" program already mentioned, Don Fuqua, head of AIA, the contractors' organization, volunteered that the CEOs of the giant corporations were willing to come to the Pentagon to help Packard smite their archenemy, Low-Cost Culture. What with Carlucci's own general counsel, an array of contractor moguls, and David Packard heading the parade, the malefactors would be begging for mercy.

On the other hand, they might be falling out of their chairs with laughter.
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 2:52 am

17. Our Corporate State

A LONG AND CURIOUS article titled "The Morning After" appeared in the October 1987 issue of the Atlantic Monthly. Its author, Peter G. Peterson, was an investment banker, former government official, and chairman of the Council on Foreign Relations. It was curious in that much of its analysis was so accurate and its conclusions so wrong. Those conclusions represent, in some interesting ways, a lot of the confused thinking of the 1980s.

Peterson wrote, "We now find that the budget deficits and an evaporation of the public's pro-defense consensus are drawing an ever-tightening circle around all our strategic options." That, of course, is only half the story. What is needed to complete the thought is a better understanding of the Reagan-era fiscal disasters that helped to evaporate the consensus.

Among other symptoms of fiscal illness, Peterson noted the collapse of our trade balance in manufactured goods "from a $17 billion surplus in 1980 to a $139 billion deficit in 1986." His solution? "First, we must tame the federal budget deficit." Obviously, but where do we start cutting? At the Pentagon? That's not impossible, according to Peterson, if fate would give us a lucky break: "Real defense spending has been effectively frozen for the last couple of years, and we may be at a crossroads in foreign policy which will allow us to make substantial future savings in security expenditure."

In looking forward to, presumably, a new era of detente with the Soviets, Peterson overlooked the fact that the greatest pacific development in American foreign policy over the past forty-two years -- the withdrawal from Southeast Asia -- was followed by an enormous increase in military spending. Peterson used the standard Establishment evasion: We can't control the huge expenditures at the Pentagon, but with a more benign foreign policy, expenditures may recede in some natural ebb of the tide. The reader will note that this argument rests on a supposed cause and effect that have no necessary connection.

Meanwhile, what to do? "We must," Peterson said, "increase federal revenue" by adding a huge sales tax on gasoline and a "five-percent value-added (sales) tax on all products." Presumably working people, who are hit hardest by such regressive taxes, would then be too broke to buy Japanese cars and televisions, and thereby the trade deficit would be reduced.

While in our nightly prayers we were supposed to wish for a change in foreign policy that might miraculously slow the Pentagon's upsurge in spending, where could we actually economize? The answer: in "non-means-tested entitlements," of which Social Security, a favorite Peterson target in the past, was the largest.

But wait. Social Security was not adding to the budget deficit; the Social Security trust fund was running a huge and growing surplus. According to the February 18, 1988, Washington Post, the Congressional Budget Office estimated that the surplus in the trust funds (Social Security was the largest of these) was likely to be $97 billion in fiscal 1988, as opposed to a deficit of $245 billion in the nontrust-fund part of the federal budget, or the Federal Funds Schedule. Chart 17-1 shows the role of the Social Security surplus in masking the size of the overall federal deficit and making the black hole look less deep than it is.

As of this writing, government actuaries estimate that Social Security surpluses will, unless there is an economic collapse, rise to the trillions before the inevitable downward trend when the Baby Boom generation begins to retire in the 2010s. The constant danger, of course, is that an administration faced with the hungry demands of the Pentagon will begin reneging on the deal with the old folks.

In his Atlantic Monthly article, Peterson pointed out that at the end of 1981 we were the world's largest net creditor nation, with foreigners collectively owing us $141 billion more than we owed them. By the end of 1987, Peterson forecast, we would be closing in on a negative $400 billion, with our net foreign debt projected to reach $1 trillion by the early 1990s. As Chart 17-2 shows, by 1988 the federal government's bonded debt was growing exponentially. It was becoming interest-driven; that is, we were borrowing money to pay accrued interest, which, as Senator Grassley has often pointed out, is a classic economic definition of bankruptcy.

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Chart 17-1. How the Social Security surplus masks the size of the federal deficit. Source: Congressional Budget Office.
Budget deficit (in billions of dollars), 1988-1993


So Congress had to take some action. It did that with the budget summit of 1987, making a modest start on the Peterson prescription. But in doing so it actually added more than $10 billion to the military budget set by the House Budget Committee and almost $5 billion to that approved by the Senate!

Since the two houses usually reconcile their budget figures by splitting the difference, the Senate Budget Committee staff focused on the midpoint of the difference between the two bodies, as shown in the summit outcome. This produced an increase for the military of $6.676 billion and a cut of $1.587 billion for everybody else, which meant a net increase of $5.089 billion in overall obligational authority. When this was translated into projected spending, the Pentagon outlays budget went up $5 billion from fiscal 1987 to 1988 and a whopping $8.5 billion for FY 1989. Most of that new $13.5 billion was for acquisitions.

In the end the Merlins of the budget announced a projected reduction in the deficit. But how? First they used the trust fund surpluses as camouflage. Next they whistled up some hoped-for increases in revenues from 1987 to 1989 -- $119 billion, partly from higher Social Security taxes and partly from projected increased revenues from general taxation.

The summit's action seemed insane: the only scare loose in the world was a peace scare. Congress had decided that we were not going to initiate a war in Central America. Mikhail Gorbachev was behaving less like an Evil Emperor and more like a politician eager to make arms reduction deals with Ronald Reagan. There was no known increase in The Threat. It had been demonstrated to all Pentagon insiders that we could drastically reduce unit costs for weapons while improving their quality. So why the big increases in the military budget?

The secret was that the planners in the DoD had continued to stick to their ascending plan even during the slowdown called the Freeze. Over the previous twelve years Congress had appropriated so much more than the Pentagon was able to unload that there was a huge backlog of unspent money. Spending did rise, just more slowly. Meanwhile, back at their computers, the planners and programmers looked into their crystal screens and saw visions of new billions after the Freeze nonsense was forgotten.

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Chart 17-2. U.S. public debt, 1930-1988. Source: Office of the Secretary of the Treasury, May 3, 1986.

Their guiding horoscope was a kind of five-year plan. Back in 1961 the Robert McNamara Whiz Kids created something called the Program Planning and Budgeting System, or PPBS. Managers used it to make their future cost projections, which were combined into the Five Year Defense Program, or FYDP. This latter, with its year-by-year estimates for each element, was intended as fiscal guidance for the president.

Needless to say, the negotiations that produced the FYDP were horrendous, with great politicking, re-estimating, trimming the losing programs and expanding the winners, adjusting and reallocating the adjustments. My friends in the office of the secretary of defense estimated that all this consumed at least a million manhours per year in the Pentagon. And though it was far from perfect, PPBS did bring some order to Fort Fumble's feeding frenzy.

Then in 1986 an odd thing happened. The price tag on the future plans vastly exceeded even Ronald Reagan's permissive guidelines, the sum of the parts being much greater than the acceptable total. Weinberger and his baffled aides finally gave up trying to reconcile the figures, and thus there was no balanced FYDP in 1987.

Under strictest secrecy, they were able to get away with the concealment, sharing the facts only with Pentagon insiders, big contractors, and tame members of Congress. This was management breakdown on a huge scale, involving hundreds of billions of dollars in mismatched projections. But it passed unnoticed in 1987, and in 1988, under the Poindexter-Packard plan, no reconciled FYDP was required.

It was a hefty time bomb that Cap Weinberger had wrapped up to present to the new administration when it took office in January 1989. A new management team would "discover" that the Pentagon "needed" as much as $400 billion more than previously planned for the ensuing five years in order to avoid immediate mass layoffs, contract terminations, and base closures -- all nightmare prospects for even the most fiscally responsible president.

The obvious course of that point would be for the president to announce to the country that in this crisis the nation's security and economic health were at stake. He would call upon everybody to make sacrifices until he could bring order out of chaos. In the meantime Pentagon spending would have to remain at the current level, or even higher.

The only thing that prevented Weinberger's ruse from succeeding was the vigilance of one senator, Lowell Weicker, and his staff assistant, Charlie Murphy. Informed members of the Pentagon underground passed the news to Murphy in early 1987. I learned of it at about the same time, but I was crippled by the straitjacket of Poindexter-Packard and the new secrecy gag rules, which threatened me even though I had not signed the SF 189. More important, almost everybody else had gagged themselves, which greatly reduced the flow of information.

My arithmetic showed that the Air Force alone had a five-year price tag that exceeded the Reagan guidance by $24.5 billion and exceeded our expectations of what Congress might appropriate by $72.8 billion. I tried repeatedly to get my new military bosses to discuss the issue, arguing that the sooner we squeezed some appreciable amount of fat from our programs, the better off we would be when we faced the budget discrepancy.

They had a sudden and interesting deafness. It took me a little while to realize that what the top Pentagonists were aiming for was fiscal chaos. They actually believed that chaos would benefit them and their contractor allies by forestalling any new spending discipline. It would be a license to steal.

I had some clues about this that would have been amusing under any other circumstances. In one staff meeting when I was trying to get some useful discussion of our overriding problem, I was silenced so that the meeting could devote itself to the price of haircuts in Air Force barbershops. In another meeting I was cut off in favor of a discussion dear to the heart of the chief of staff of the Air Force: leather flying jackets for pilots. In the year 1987 pilots no longer actually wore leather jackets (our open-cockpit biplanes had all been retired), but in their off-duty hours, such jackets would give them a kind of heroes-of-the-Dawn-Patrol look greatly admired by the chief of staff.

Specifications had been drawn up for the purchase of North African goatskins, which were supple and soft and supposedly had more sex appeal than other goatskins. But the North American goat breeders were horrified. What about the Buy American act? What about the fact that American goatskins were almost half again larger than the foreign kind? Shut up, Fitzgerald, this is a lot more important than any $73 million budget shortfall.

I then appealed to General Claudius Watts to declassify information about the serious budget mismatch, but while the bureaucrats stalled, Senator Weicker brought the news. In the meantime a secret deal -- a kind of defense summit -- had been in the works. Apparently, part of that deal was to replace Weinberger with Frank Carlucci. Carlucci, the rumor went, looked more "reasonable" to the public and Congress and would probably be a more plausible front for increased Pentagon spending.

On January 10, 1988, the Washington Post published a chart that gave a graphic view of the budget mismatch before the summit deal (see Chart 17-3). The exact details of the deal have not been made public at this writing, but the essentials were these: the Reagan administration had projected spending at the 1987 level plus 3 percent annual growth plus inflation; the deal changed that to 2 percent plus inflation, compounded annually. The trade-off was an accelerated increase in the congressional funding line. Instead of rising to $300 billion by 1997, congressional funding would get to that figure by 1990, seven years sooner. All this, of course, would be the problem of the new president. It was a true banana-republic solution: postpone it to manana. Peter Peterson was only one of many economists and critics who commented on the defense spending crisis. Seymour Melman wrote a monumental book on the subject, titled Profits without Production (1983). A key passage noted that "the Pentagon has effectively displaced cost-minimizing with a system of cost- and subsidy-maximizing," a demonstrably correct proposition that David Packard and Ronald Reagan have hailed as a virtue.

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Chart 17-3. Defense Department budget projections. Source: System Planning Corp., prepared for the Commission on Long Term Strategy but not included in the commission's report to the Pentagon and the president.

Gordon Adams and David Gold, in a July 1987 study financed by the Rockefeller Brothers Fund and the Circle Fund, tried to counter Melman's view with a kind of apologia. Defense contractors' prices were comparatively reasonable, they said: "Cost-maximizing practices within defense industries appear to have contributed to significant growth in weapons systems costs. However, defense sector price indexes compiled by the Department of Commerce indicate that inflation within defense industries is only slightly higher than inflation in civilian sectors with similar products" (emphasis added).

The point is that the comparison is tainted. The industries with "similar products" were already infected with cost-maximizing by the defense giants in their midst. Thus it was only natural that the infected sectors should be only slightly behind the disease carriers. Adams and Gold did not even begin to address the problem of a manufacturer whose cost for making one toilet pan was $600. He could not sell his product in any truly competitive market, domestic or foreign; his only conceivable buyer was the Pentagon.

Melman and his colleagues had noted the important "lost opportunity" factor, which is one way that military spending drains the general economy. Engineers who devote many hours to designing a plain three-inch piece of wire are not using their time to design products that might compete with Toyota or Sony. Worse, engineers long employed in such boondoggles rust and lose their skills. Adams and Gold missed those points entirely. They also failed to understand the additional drain caused by the lax and slovenly work habits so endemic to defense industries -- and so easily spread to "civilian sectors with similar products."

Another attempt to answer the great "why-can't-America-compete-any-longer?" question arrived in a 1988 treatise titled "The Case for Manufacturing in America's Future," prepared under the general supervision of Colby H. Chandler. Mr. Chandler was chairman and CEO of Eastman Kodak, a sizable military contractor. The paper began with the sensible but obvious thesis that American manufacturing now compares badly with that of the rest of the world and that we thus have reason to worry about our competitiveness. Chart 17-4 (constructed from data compiled by the CIA) illustrates the situation.

After that beginning, Chandler and company headed for the deep end. They decided that "our competitiveness plummeted due in large measure to an overvalued dollar." As patient readers of this book know by now, our "competitiveness" began to decline in 1965, and whatever the state of the dollar -- high in 1985 or low in 1988 -- the overall trend in our balance of trade has been down. Obviously we can improve the balance of trade if we take less for our goods and pay more for imports, thereby reducing the American standard of living. But this is a self-flagellating solution to the major problem of competitiveness.

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Chart I7-4. Changes in components of the U.S. trade deficit. Source: Central Intelligence Agency.

Chandler's article, in fact, gave evidence that our competitiveness did not plummet solely as a result of an overvalued dollar. He included a chart of values ("U.S. Real Exchange Rate") based on an index for the years 1970-1988 and compiled by Morgan Guaranty Trust. It compared the prices, in dollars, of nonfood manufactures in the United States, to prices for the same goods in other countries, in their currencies. In 1970 (the year before our first modern-day trade deficit), the index stood at 112. By 1987 it had dropped by 17 percent to 93. In other words, the dollar had lost only 17 percent in relative value while our balance-of-trade figures were in a free fall. The correlation Chandler's authors sought just wasn't there.

Chandler had a Petersonian remedy, though: boost consumer taxes, especially the value-added kind. That would raise the price of American manufactures at home and "all imported goods would be taxed, so that consumers would not detect any differential between the retail prices of domestic and imported goods." It was a marvelous soak-the-poor-to-support-the-rich program -- the rich being anybody who profited from military contracting and the poor being all ordinary taxpayers.

Chandler went on to give apparently impressive figures on increases in defense manufacturing jobs: over a million new ones in 1977, 1980, and 1985. As manufacturing employment in general decreased by 1.29 million from 1980 to 1986, defense employment went up by 740,000. Without defense industries to bolster the job market, he stressed, employment would be at its lowest since 1965.

So a lot more people were working in defense, but what were they producing? Chandler said nothing about output of useful products, nor even whether all that employment culminated in the noneconomic objective of outgunning the Evil Empire.

The ergo at the end of all this was that military acquisitions were wonderful medicine for our economic health: "Just as the manufacturing sector benefits the most when defense spending increases, it will be the largest loser as spending declines." And, making the prognosis of many a quack doctor before him, he uttered the words most likely to make Congress turn faint and helpless: "Defense cutbacks will ... lead to rather concentrated employment reductions."

Like Adams and Gold, Chandler was not quite in the real world. As many of our giant corporations became less and less able to compete in foreign -- or domestic -- markets, Congress gave them massive intravenous injections of military money. Unfortunately, as Chart 17-5 demonstrates, that was no cure. If anything, Congress anticipated the steep drop in our competitive ability. The upward-zooming line of "total obligation authority for DoD acquisition" actually preceded the downward slide of the trade figures because the former is done by fiscal year and the latter by calendar year. Prior to 1977, then, the obligation figures appeared on July 30 and the trade figures at year's end. Furthermore, the obligation authority is simply a permission to spend. The actual spending usually comes a year or so later.

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Chart 17-5. Defense acquisition costs versus U.S. balance of trade, 1960-1988, in current dollars. Source: Office of the Secretary of Defense and the Department of Commerce.

In their simplistic surveys of economic problems, Chandler and other writers overlooked another subtle aspect of the "lost opportunity" factor Melman had pointed out. This was the deterioration brought about by underemployment in defense industry. When a contractor warehoused a team of engineers in order to take advantage of the "full absorption accounting principle," he was letting talent rust. That principle encouraged corporations to keep technical teams together even if they had to be given busywork. The degradation of so many American engineers may be the most devastating hidden effect of our reckless military spending. When I was an engineering student and young engineering practitioner, we were indoctrinated with the idea that engineering is applied economics. Defense manufacturers seem never to have heard it.

Still another strain of military-contractor infection that began to spread through the general body of the nation from the 1970s on was cost justification, which the academics in charge of B-school management training adopted in all its manifestations. The cost-plus-percentage-of-cost concept (politely called "pass-through") spread into the campus courses and from there into many areas of business and industry, most rapidly in administered-price industries.

The health-care industry became one of the chief sufferers. The feverish rise of health-care costs starting in the late 1960s went hand in hand with the hospitals' adoption of cost-plus pricing. Along with that, physicians' billings were now based on an elaborate pricing system that (like the military contractors') was based on an average of past billings -- an average that kept moving higher and higher. The same disease spread to the quasi-public corporations such as the Postal Service, Amtrak, and Comsat.

For a long time I have felt like an eyewitness to the systematic disintegration of everything that made America competitive in the industrial world of the twentieth century. From the factory floor to the boardroom to the rarefied air of high government offices, a slackness of mind has set in. To be tough-minded, economical, and bent on winning is no longer the fashion.

Not that these shoddy, new habits are unresisted or universal; some stubborn and honest people do remain in corporations and the government. In my own area of concern, performance measurement systems are still in place even after years of battering from the cover-up troops. Should-cost worked when we were allowed to use it properly. Whenever we could pry loose enough information to do technical audits, they were valuable. We clung to the concept of work measurement for factories and managed to preserve it in principle. The times when we could persuade the big spenders to permit some competition for a contract, it paid off.

Competition had some interesting facets. In 1985 Congress passed a "reform" act called the Competition in Contracting Act, or CICA. One of its immediate effects was to allow the Pentagon to change the definition of "competitive" in its reporting. Before CICA, competition meant advertised solicitations and sealed-bid responses. Under the new system, even if the rivalry was no more fierce than two sumo wrestlers running the hundred-yard dash, any vying qualified. One striking case of CICA's effects was when a little competition brought the bid from one of our worst-case contractors down by about 80 percent. This contractor still couldn't make, say, a plastic toilet pan for less than $1,000 apiece, and if he ever tried to compete in the world market, the most insignificant Japanese company would eat him up.

And CICA failed to do anything about the grand swindles that hid under the Pentagon's label of competition. A splendid example of this was demonstrated by Ronald Brousseau, Sr., whose remarks were first secretly recorded by the FBI and later amplified in a guilty plea, according to Peter Stockton, who was following the case.

Brousseau was a Northrop buyer who took kickbacks on purchases for the B-2 Stealth bomber. This machine was headed for a $500 million price tag (each), and Brousseau explained part of the reason. Original bids would be "bumped," or increased, so that the seller could pay a kickback, about 25 percent of the bump, and keep the rest. Brousseau explained how he got away with it for so long: "Nobody questions dollars or anything like that. As long as I can show competition or courtesy competition or bullshit competition you know. That's all I gotta be able to show is competition." (All these quotes come from the U.S. Attorney's sentencing memorandum.)

Brousseau's prosecutor further illuminated the practices, describing "courtesy competition" as "a fraudulent arrangement between a buyer and a group of sellers who agree that the suppliers will take turns being the low bidder." Everybody inflates his bid so that the low bid is still fat enough to provide a kickback and a nice cushion of profit for the winner.

It's a beautiful scam, and if it weren't for the occasional FBI operative with a body mike, a safe one. The big corporate contractors have let their own internal controls wither away until they no longer have much ability to check on such schemes. The auditors and purchasing systems evaluators have the comforting multiple-bid documentation to show that competition has taken place and the rest doesn't matter. Brousseau summed it up when he said, "Don't get greedy. You know, a nickel (5 percent) here and a nickel there. Everybody's gonna get fat and everybody's gonna be happy."

Peter Stockton shortly thereafter interviewed a supplier who said he'd been shaken down by most of the big corporate names in his industry. He was willing to testify that what Brousseau had done was common practice in military contracting. But the Edwin Meese Justice Department wouldn't grant Stockton's source immunity in return. The department promised to take some action, but that action never came. Not surprising, inasmuch as Brousseau himself received only light punishment, according to Stockton.

Another subtle and seldom-perceived danger was the growth of the military into a gross and mighty bureaucracy, one of the scariest developments of the 1980s. Reagan, after outbidding Carter with contract gold for the favor of the military party, then supplanted civilians with the Praetorian prefects of procurement. In this he was only following the example of the Emperor Lucius Septimius Severus, who, as he lay dying after a pointless campaign in North Britain, advised his two sons and heirs, "Make your soldiers rich; don't bother about anything else."

Reagan raised the pay and allowances of the military brass to unprecedented levels. With their handsome raises and tax-free allowances, supplemented by taxpayer-financed personal servants, drivers, homes, and executive airplanes, generals and admirals live in multimillionaire style. Even Air Force colonels, so thick on the ground that special jobs have to be concocted for them, cost the taxpayers 40 percent more than equivalent-grade civilians doing the same work. And many, of course, are headed for retirement rewards as executives in the contractor companies they have been cozy with while in uniform or as consultants ("rainmakers" in trade jargon) making sure the big contractors don't want for business.

Edward Gibbon, in his Decline and Fall of the Roman Empire, noted that "an hundred thousand well-disciplined soldiers will command, with despotic sway, ten millions of subjects." Instead of the gladius and the pilum, the dominating weapons of our own military party are rich contracts, jobs, assured profits, power, and prestige. And one more: the power to deny jobs to people in many areas of our society. For example, the loss of a security clearance is often tantamount to the loss of a work permit. I don't intend to imply by this that the military alone is running an "invisible government." The military side of the spending coalition has thus far been satisfied with its perks and has remained a servant of the corporate side. But if one day the power should shift, we are in for more serious trouble.

Where the military exercises a scarcely visible governing power is in its use of National Security Decision Directives (NSDDs). These, as we have seen, can be promulgated by a militarized National Security Council staff and okayed by the president's auto-pen. (And remember, the Nixon v. Fitzgerald decision put the president out of reach for civil damage suits.)

In 1988 The Threat seemed to have lost much of its old black magic, what with perestroika, a medium-range ballistic missile treaty, and the withdrawal of troops from Afghanistan. A Russian landing on Long Island did not seem imminent. The administration started a frantic search for sinister foreign enemies -- even little Threats -- to make continued big military spending seem respectable. But Ortega failed the test, then Noriega failed to build as hoped and even became an embarrassment.

A move was made to throw our armed forces into the war against the drug smugglers, but that was handicapped by increasing evidence that our national security apparatus, or parts of it, had tolerated certain smugglers in certain very suspect ways. In any classic scenario of power taking, the military would be happy to move into enforcement, but our military wanted none of the drug-policing role. Narcs have a hard, nasty job and few showy victories.

***

Another circumstance that separated the United States from the classic banana republic was our highly developed industrial and economic base, dominated by corporate oligarchies rather than oligarch families. The privileged Pentagon contracting corporations took for granted that they would give to their government customer in accordance with their ability, or their mood of the moment. The grateful government would see to it that the ever-malleable contracts were changed to conform to the giants' actual products. And the big corporations would be compensated in accordance with their need, as documented by their actual spending.

Just as the Pentagon contractors' bad work habits and worse management practices were encouraged and spread throughout the United States' corporate body, so did the notion of corporate communism. Every big corporation seemed to think it had a right to be kept alive, no matter how poorly it performed. The sloppier and more unsuccessful the management, the more it insisted on bailouts and protection from competition. The very thought that favored giant business firms should compete for the trade of consumers with free choice was somehow abhorrent to the defenders of privileged status for the big corporations. The suggestion that a changing economic climate demanded that dinosaur companies adapt or die bred panic. The pampered giants had become so grossly fat, so lethargic, and so nonproductive that their most strenuous efforts were periodic campaigns for more public money and more protection.

The evolving corporate welfare system was brilliantly described and analyzed by two British academics, R. E. Pahl and J. T. Winkler, in "The Coming Corporatism" (Economic Affairs, March-April, 1975). By their definition, corporatism is a political-economic system under which government guides privately owned businesses toward four goals: order, unity, nationalism, and "success."

Order, they said, "meant the elimination of the anarchy of the market in all its forms (including extreme success or failure for capital or for labor). This desire for stability emanates from a revulsion against the market processes that lead, on one hand, to the collapse of major companies in important industries ... and, on the other, to excessive speculation and windfall profits."

Unity is the "substitution of cooperation for competition. This desire for collaborative effort arises from a revulsion against the perceived wastefulness of competitive struggles."

Nationalism is the "elevation of 'general welfare' to complete priority over self interest or sectional advantage."

"Success" is the "attainment of national objectives established by the state.... it means giving conscious direction to the economy by establishing priorities and targets and by restricting work done toward alternative objectives. First and foremost, this means the control and concentration of investment and of the allocation of resources."

The authors were writing about corporatism in Britain; American academic writers prefer the more palatable "industrial policy." Pahl and Winkler had a less bland description: "Let us not mince words. Corporatism is fascism with a human face." They went on to say, "An acceptable face of fascism, indeed, a masked version of it, because so far the more repugnant political and social aspects of the German and Italian regimes are absent or only present in diluted form." Corporatism, they said, takes over "the core elements of the economic strategy" of old-fashioned fascism. "Corporatism is a distinct form of economic structure. It was recognized as such in the 1930s by people of diverse political backgrounds, before Hitler extinguished the enthusiasm which greeted Mussolini's variant." That is true; many economists of the 1930s admired Mussolini's reorganization of the Italian economy along corporative and syndicalist lines. By setting up special parastate agencies or "corporations" to replace failing or inadequate private enterprises, he was able to control the important economic sectors. Elitists everywhere found that laudable.

Hitler, with a much more highly industrialized nation, built on and to a great extent integrated the existing large corporations into the government system. The smokestack barons of the munitions industry benefitted greatly, of course.

At first both Italy and Germany seemed to have produced an economic marvel. They had created markets for troubled industries and made jobs for many more workers. Hitler's wehrwirtschaft (roughly, "defense economic system") was very much like our own parastate cartel of giant defense contractors in many respects. It appeared to be a splendid tonic for the economy. Another similarity was that the smokestack barons supported this new order and gave it direction. The Wehrwirtschaftfuhrer role played by Alfried Krupp was similar to that of David Packard in our own day.

Despite the rosy look of prosperity from making more guns than butter, the German and Italian arms economies were nonproductive in a classic economic sense. They did not add much of anything to the infrastructure or to the quality of life, and they weren't competitive in foreign markets. And that meant even more subsidies and protectionism.

In the end, going to war was the only cure. In Hitler's Secret Book, the Fuhrer despaired of competing with the productive capacity and efficiency of the United States, and he spoke of us as "emerging in all fields as the sharpest competition to all European nations fighting ... for the world's markets." He added, "Despite (America's) enormous wages, it no longer seems possible to undercut her prices."

It is tempting to array all the similarities between the 1930s corporate state and today's American military-industrial complex and use them as a predictor of things to come. However, I think the threat we face is from a peculiarly American version of corporatism. In this, our strengths are also our weaknesses. Hitler, Mussolini, and Tojo had no chance of making their vast slave empires work in the long run -- the home bases were too small and inadequate. Ours, in contrast, is the largest economy in the world, if we decided to, we could live very well within our own borders, with perhaps a few raids abroad to secure strategic materials or to prevent Grenada from falling into Cuban hands.

Or to teach somebody like Khadafi a lesson. The morning after the April 1986 bombing of Libya by the USAF, my associate Tom Amlie appeared live on Cable News Network and explained that the raid was necessary: "It's that time of year." In other words, military budget time. "The budget's in trouble; aid to the Contras is in trouble," Tom said. And Khadafi was an ideal enemy. As Tom pointed out, he was "not a Christian, he talks funny, and he is probably guilty of most of the things we accuse him of." Tom then got the hook from CNN, but he had made his point.

Most Americans have a deep respect, almost reverence toward the military, from memories of Washington at Valley Forge to the Marines at Iwo Jima. They don't realize that the combination of Pentagon Praetorians and big-corporation executives has nothing to do with heroism and, in fact, almost nothing to do with war except for the occasional bloody spasm to provide an emotional excuse for more big spending. The only thing the soldiers, sailors, and pilots in combat arms service have in common with the Praetorians is the uniform.

It was only natural that corporatism in America should flourish during the eight-year lease of the White House by a sleepy old actor who loved multimillionaires, but it had been well started under his predecessor, whose notable contribution was a scheme called the President's Executive Interchange Program.

In a personally signed directive, Carter told us that this program was "a positive force for marshalling our human resources. Through this effort, both the public and private sectors jointly contribute to greater sensitivity and responsiveness in the interest of all Americans."

No, he was not offering a sensitivity-training course. He was very gently trying to give us a kind of Mussolini message: "Boundary lines between government and business are blurring. The activities of both have become increasingly similar. Each recognizes the need for closer cooperation to achieve its goals." Those goals were:

To exchange management expertise and innovative techniques; To develop a cadre of executives of experience in both sectors (government and private) who could be called to serve on government advisory panels and in higher appointive positions in future administrations.


It was the perfect definition of institutionalized conflict of interest, which is one of the "unifying" aspects of corporatism.

If Carter's interchange program should reach full flower, imagine the pool of executives and generals who could be called to serve on blue-ribbon commissions. Since not all Pentagon acquisition practices have been made legal, and since some of them still leak out and get a bad reaction in the press and from Congress and the public, we'll need blue-ribbon commissions for some time to come. Somebody has to drag the red herring, paint the whitewash on, pull the wool, stack the deck, and otherwise get the world to overlook whatever must be overlooked.

The Carter-era and Reagan-era moves for tighter "nationa1 security" secrecy is another support for corporatism (as well as for larceny). Congressman Jack Brooks gave a stirring description in testimony before the House Post Office and Civil Service Committee on October 15, 1987:

Most of the (security) classification, in my judgment, is not to keep our enemies from finding out information. It is to keep the American people and the Congress from finding out what in God's world various agencies are doing and how they are throwing away money, wasting it. They preach economy and they throw money away like dirt, and lie and cheat, and hide, and dissemble....

Now, that's what their real complaint is, that the people and the Congress might find out what they are doing. Reprogramming money, wasting money foolishly, not enforcing the law, not enforcing safety provisions, all sorts of things, and they just do not want anybody in a position to know to say publicly that, yes, this did happen. They want these people to shut up and go away.


Yet the secret part of the government keeps adding bulk. Tim Weiner, who won the Pulitzer Prize for his reporting on the "black," or supersecret, budget told a meeting of the Fund for Constitutional Government on April 20, 1988, that one measure of this was the increase in funding for secret programs during Reagan's first seven years. When Reagan took office, the price tag for intelligence and secret military activities was about $12 billion a year. In 1988 it had risen to $35 billion a year. The military portion of that amount had gone from about $2 billion to $18 billion, an increase of 900 percent. That jump suggests how much more the Pentagon, under Reagan, had to cover up. For instance, the Stealth Bomber fiscal atrocities, some of which are beginning to come to light at this writing.

The corporate state always encroaches on individual rights. And one sign of corporatism victorious is court decisions against individual rights in favor of government "security." There is the pernicious practice of making a security clearance and a work permit one and the same, in imitation of the KGB. Take the 1987 case of Navy v. Egan. Egan, a shipyard worker, was denied a security clearance and thus had his job taken away without due process. A majority of the U.S. Court of Appeals panel agreed that Egan was entitled to a fair trial, but Chief Judge Markey dissented. The man couldn't have a trial, he ruled, "because there is no law to apply." The security clearance process, Markey wrote, was "predictive ... judgmental and neither factual nor legal." For the millions of people who needed security clearances to keep their jobs, the single test was the judgment of "responsible military officials."

Markey added that the officials derived their power from the president, and his power flowed from "the President's constitutional mandate to provide for the national defense, U.S. Const., Art. II, Section II." Interestingly, Article II, Section II says nothing of the sort.

When the case went to the Supreme Court on February 23, 1988, the court upheld Judge Markey. This logic, if carried to its conclusion, could permit the (mostly secret) NSDDs to usurp the legislative power of Congress, as usually happens in corporate states. The Reagan administration's push in this direction can be measured by the estimated three hundred or more of these edicts that Reagan issued between February 1981 and mid-1988.

The most dangerous sign of the times in 1988, however, was the slowly gathering consensus in favor of a big budget increase to finance a new spendthrift era at the Pentagon. The Washington Post's lead editorial on April 10, 1988, denounced candidate Jesse Jackson's military spending proposals as a "caricature of a policy" that "no president would try, or, if he did, would not be allowed by either party in Congress to pursue."

And what proposal by the Reverend Mr. Jackson so frightened the Post? A budget freeze like the one sponsored by those dangerous left-wingers Senator Charles Grassley and Representative Denny Smith. The editorialist's notion was a strange anomaly for a newspaper with an excellent reporting staff and plenty of stored information to show what damage irresponsible military spending has done. I called the editorial office to ask for clarification, but I was given no answer.

The adverse consequences of the Pentagon's addictive boondoggling to our economy and true military capability are serious indeed, but the damage to our country's moral fiber is catastrophic. Our Constitution and our laws have been subverted to excuse wrongdoing and to rationalize the wasteful system. Concealment of misdeeds had become an official virtue, and suppression of truth national policy. Sophistry reigns in "intellectual" circles. Government officials, from the majestic office of the president to the lowest, sleaziest procurement office, lie routinely and with impunity in defense of the system. So do leaders of business and academia. Some, though thankfully not most, working people have succumbed to the lure of easy money, of what was called blood money in my youth.

So, the blocks, beams, and lintels of a corporate state are already at the construction site and the foundation has been laid. Anyone who has seen the marble structures built in Rome between 1922 and 1943 will know what it is going to look like. But looks are deceiving: this is meant to be a prison for most of us.

I have a hunch, however, admittedly an overly optimistic hunch, that it will never be built. Part of that hope comes from the fact that the military party is so blunder-prone that even its rites of omerta can't keep the truth from getting out eventually. The June 1988 disclosures of widespread bribery and bid rigging in the acquisition community are just one example. But, even more important, I conjecture that ordinary Americans will stop this sinister architecture from being built on our soil. To use an old and unfortunately debased word, it's truly un-American.

Here is the voice of one working man who figured it out. Greg Nelson, a Lockheed employee, published this view in the October 1987 issue of The Union Member's Review:

We are the only ones worried about layoffs. Lockheed is trying to make as much money as possible right now. They love Star Wars because it's so easy to make big bucks inventing things nobody can check on. Unlike Lockheed, IAM (International Association of Machinists) members are in it for the long term. We want secure jobs and a good retirement. Is that what we get with Star Wars? What does your work experience tell you? Most folks who work here know that producing useful things with all these tax dollars is not what Lockheed is all about. That's why Lockheed is more interested in attendance than production. They don't care what we make, as long as we show up, so they can justify their budget. That's the real "Lockheed way."

What happens when people find out what their tax dollars have been wasted on? They are gonna be pissed, and we are gonna get the axe. It's up to our union to show the way out.

Why doesn't Lockheed and its governmental sugar-daddies care about production? First, they're all getting rich off this scam. They won't get laid off when we do. Second, the government doesn't really need this stuff. It's just the best way to get rich quick. If they really needed all these nuclear bombs and killer satellites, they wouldn't run this place the way they do. They'd fire three-fourths of the white badges (management people) around here and set this place up to get some work done.

They tell us what we make is vitally important for national Defense. If that's true, looking at the way they run Lockheed, we're in big trouble.

Never underestimate the blindness of greed. Beware of the man who gets more money the more he claims to defend the country. That's the guy who got so many people killed in Vietnam. War industries got rich while we were dying, and for what?


I happen to think that a lot of Greg Nelsons have the strength to overwhelm a few David Packards. But if we are going to stop the corporate state from rising on our land, we had best remember the words of the late Supreme Court Justice William O. Douglas, who wrote (in The Douglas Letters):

As nightfall does not come at once, neither does oppression. In both instances, there is a twilight when everything remains seemingly unchanged.

And it is in such twilight that we must be most aware of change in the air -- however slight -- lest we become unwitting victims of the darkness.
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 3:00 am

APPENDIX A

White House Memorandum, January 20, 1970

MEMORANDUM

THE WHITE HOUSE

WASHINGTON

January 20, 1970

ADMINISTRATIVELY CONFIDENTIAL

MEMORANDUM FOR: MR. HALDEMAN

FROM: ALEXANDER P. BUTTERFIELD

RE: A. Ernest Fitzgerald

I may be "beating a dead horse" at this late date ... but it was only a few days ago that Alan Woods called to ask if we had arrived at any particular Administration line regarding Mr. A. E. Fitzgerald. And someone else (I can't remember who) asked the same question at about the same time.

You'll recall that I relayed to you my personal comments while you were at San Clemente, but let me cite them once again -- partly for the record -- and partly because some of you with more political horse sense than I will probably want to review the matter prior to next Monday's press conference.

• Fitzgerald is no doubt a top-notch cost expert, but he must be given very low marks in loyalty; and after all, loyalty is the name of the game.
• Last May he slipped off alone to a meeting of the National Democratic Coalition and while there revealed to a senior AFL-CIO official (who happened to be unsympathetic) that he planned to "blow the whistle on the Air Force" by exposing to full public view that Service's "shoddy purchasing practices". Only a basic no-goodnik would take his official business grievances so far from normal channels. As imperfect as the Air Force and other military Services are, they very definitely do not go out of their way to waste government funds; in fact, quite to the contrary, they strive continuously (at least in spirit) to find new ways to economize. If McNamara did nothing else he made the Services more cost-conscious and introspective -- so I think it is safe to say that none of their bungling is malicious ... or even preconceived.
• Upon leaving the Pentagon -- on his last official day -- he announced to the press that "contrary to recent newspaper reports" he was not going to work for the Federal Government, but instead, was going to "work on the outside" as a private consultant.
• We should let him bleed, for a while at least. Any rush to pick him up and put him back on the Federal payroll would be tantamount to an admission of earlier wrong-doing on our part.
• We owe "first choice on Fitzgerald" to Proxmire and others who tried so hard to make him a hero.

cc: Mr. Ehrlichman
Dr. Kissinger
Mr. Klein
Mr. Colson
Mr. Nofziger
Mr. Magruder
Mr. Ziegler
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 3:02 am

APPENDIX B

FBI Memorandum, Two Versions, May 23, 1978

UNITED STATES GOVERNMENT

memorandum

DATE: 5/23/78

REPLY TO ATTN OF: SAC, WFO (74-303)

FROM: HANS H. DRIESSNACK, Major General,
United States Air Force
[Illegible]

TO: (00:WFO)

TO: DIRECTOR, FBI

This case was predicated upon a complaint received by SA [delete] of this office in late March of 1978 by A. ERNEST FITZGERALD (Protect).

For the information of the Bureau, Mr. FITZGERALD, since October, 1968, has been known as a "whistle-blower" while employed at the Department of the Air Force, which began in 1965. In 1968, FITZGERALD's biggest complaint had to do with the building of the Air Force C-5A cargo plane by Lockheed. In this Pentagon weapons contract involving Lockheed Corporation, the C-5A had developed huge cost overruns in the amount of 3.4 billion dollars. According to the contract between the Pentagon and Lockheed, if overruns did occur, it would be paid for by the company not the taxpayer. However, FITZGERALD found that the overruns were, in fact, paid by the taxpayers, and brought this to the attention of Senator WILLIAM PROXMIRE. PROXMIRE asked FITZGERALD to testify before his subcommittee to bring this information to the attention of this Congressional hearing, in 1968.

As a result of FITZGERALD's testimony in late 1969 and after his name was out of the headlines, the Air Force fired him. Plus, FITZGERALD found out that he was also black listed by the Air Force and was unable to get a job in his old calling. In 1973, after a series of administrative appeals and law suits, the Civil Service Commission (CSC) ordered the Air Force to reinstate FITZGERALD, but according to FITZGERALD his career today is at a dead end. FITZGERALD is currently suing to collect damages from the individuals who prevented his reinstatement to the Air Force in good standing and also for restoration to his old job or its equivalent. Civil Action Number 74-178, A. ERNEST FITZGERALD, Plaintiff, versus ROBERT C. SEAMANS, JR., Et Al; Defendants, is a current civil action that FITZGERALD has against those currently and formerly in the Air Force. FITZGERALD is suing these individuals, in their capacity as Government employees for the Air Force.

Version 1 of page 2

In April 1974, then Lieutenant-Colonel HANS H. DRIESSNACK, named also as a defendant in this civil action by FITZGERALD, produced a sworn affidavit dated and signed 4/18/74. Through discovery in this civil action, FITZGERALD's attorneys were able to produce an unsigned affidavit by DRIESSNACK with numerous corrections that eventually became his sworn affidavit of 4/18/74.

After reviewing FITZGERALD's civil suit at the U.S. District Court House during April and May, 1978, SA [delete] came across the affidavit of General DUWARD L. CROW dated and signed on 4/19/74. Through the chain-of-command, DIRESSNACK had reported to CROW on 5/7/69 allegations that FITZGERALD was involved in a conflict of interest as a civilian with the Air Force, and the private management firm, Performance Technology Corporation (PTC), which FITZGERALD was formerly President. CROW forwarded DRIESSNACK's allegation on FITZGERALD to his immediate superior, General MC CONNELL, Chief of Staff, which initiated an investigation by the Air Force's Office of Security (OSI).

In DIRESSNACK's signed affidavit of 4/18/74, he states, "I did not discuss these matters again with General CROW (after the meeting of 5/7/69) nor did I ever discuss them with other defendants in this case after the OSI interview."

It is the opinion of WFO that by DRIESSNACK altering his unsigned affidavit into its present form of 4/18/74, and the fact that both DRIESSNACK's and CROW's affidavits appear to be similar, it does give the appearance that DRIESSNACK "discussed these matters with General CROW" prior to submitting the final form of his affidavit dated 4/18/74. If this is the case, WFO feels DRIESSNACK perjured himself.

SA [delete] discussed the above with Assistant U.S. Attorney (AUSA) DONALD E. CAMPBELL, Major Crimes, Washington, D.C., and he advised the facts warrant that a preliminary investigation be instituted at this time.

FBI Headquarters is requested to grant WFO the authority to investigate captioned matter. For the information of FBI Headquarters, Major General DRIESSNACK is currently Director of the Budget for the Air Force, and the complainant A. ERNEST FITZGERALD, a well-known figure in the Washington, D.C. area, has strong ties with Senator WILLIAM PROXMIRE.

WFO indices negative regarding DRIESSNACK.

Version 2 of Page 2

In April, 1974, then Lieutenant-Colonel HANS H. DRIESSNACK, named also as a defendant in this civil action by FITZGERALD, produced a sworn affidavit dated and signed 4/18/74. Through discovery in this civil action, FITZGERALD's attorneys were able to produce an unsigned affidavit by DRIESSNACK with numerous corrections that eventually became his sworn affidavit of 4/18/74.

After reviewing FITZGERALD's civil suit at the U.S. District Court House during April and May, 1978, SA GOLDEN came across the affidavit of General DUWARD L. CROW dated and signed o 4/19/74. Through the chain-of-command, DIRESSNACK had reported to CROW on 5/7/69 allegations that FITZGERALD was involved in a conflict of interest as a civilian with the Air Force, and the private management firm, Performance Technology Corporation (PTC), which FITZGERALD was formerly President. CROW forwarded DRIESSNACK's allegation on FITZGERALD to his immediate superior, General MC CONNELL, Chief of Staff, which initiated an investigation by the Air Force's Office of Security (OSI).

In DIRESSNACK's signed affidavit of 4/18/74, he states, "I did not discuss these matters again with General CROW (after the meeting of 5/7/69) nor did I ever discuss them with other defendants in this case after the OSI interview."

SA GOLDEN discussed the above with Assistant U.S. Attorney (AUSA) DONALD E. CAMPBELL, Major Crimes, Washington, D.C., and he advised the facts warrant that a preliminary investigation be instituted at this time.

FBI Headquarters is requested to grant WFO the authority to investigate captioned matter. For the information of FBI Headquarters, Major General DRIESSNACK is currently Director of the Budget for the Air Force, and the complainant, A. ERNEST FITZGERALD, a well-known figure in the Washington, D.C. area, has strong ties with Senator WILLIAM PROXMIRE.

WFO indices negative regarding DRIESSNACK.
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

Postby admin » Sat Nov 02, 2013 3:03 am

APPENDIX C

National Security Decision Directive 102,
September 5, 1983

UNCLASSIFIED

Partially Declassified and released on Apr 1, 1986 Under provision of E.O. 12356, by B. [illegible], National Security Council
Partial Text of NSDD 102

September 5, 1983

U.S. RESPONSE TO SOVIET DESTRUCTION OF KAL AIRLINER (U)

INTRODUCTION


This directive defines the measures the United States will undertake to respond to the Soviet Union's shooting down of a Korean Airlines civil airliner, an act that resulted in the loss of 269 lives. This action demands a serious international and U.S. response, with primary focus on action by the world community. This Soviet attack underscores once again the refusal of the USSR to abide by normal standards of civilized behavior and thus confirms the basis of our existing policy of realism and strength. (U).

OBJECTIVES

• Seek Justice. We must consult with, and help to lead, the international community in calling for justice. Civilized societies demand punishment and restitution to deter, and raise the costs of, future egregious acts. We have a responsibility to impress upon the world that the Soviets, at a minimum, owe the international community:
o A full account of what happened, an apology, an admission of responsibility, and appropriate punishments to those responsible. (U)
o Immediate access to the crash site for joint efforts by Korea, Japan, and the United States to recover the bodies of their citizens and, if possible, the wreckage of the Korean airliner (U)
o Firm assurances that the USSR will not use destructive force against unarmed aircraft in the future, including necessary alterations in Soviet procedures for handling cases in which aircraft mistakenly cross its airspace. (U)
o Agreement to provide compensation for the benefit of the aggrieved families and KAL. (U)
• [Deleted]
• Advance Understanding of the Contrast Between Soviet words and Deeds. Soviet brutality in this incident presents an opportunity to reverse the false moral and political "peacemaker" perception that their regime has been cultivating. This image has complicated the efforts of the Free World to illuminate the USSR's true objectives. (U)

ACTION

In order to realize the objectives above, the United States will take the following bilateral and multilateral actions in the areas of diplomacy, aviation security and safety, and regional confidence building:

• Diplomacy and Justice. The following steps should be continued or undertaken immediately to mobilize the international community:
o Conduct intensive efforts to secure coordinated international action. (U)
o Seeks maximum condemnation of the Soviet Union in the U.N. Security Council and provide wide dissemination of statements made in these sessions. (U)
o Announce that the US-Soviet Transportation Agreement will not be renewed and suspend all discussion on the issue of consulates in Kiev and New York and on a new exchanges agreement. (U)
o Continue to conduct a search in international waters, in consultation with Japan and Korea, for the remains of the aircraft. Assure the government of Korea that we will vigorously support their request to conduct, participate in, or observe salvage operations. Indicate our clear willingness and desire to assist the government of Korea in recovering the bodies and flight recorder as appropriate and in accord with international law. (U)
o Make joint request with the government of Japan for Soviet authorization for access to Soviet territorial waters and airspace to search for remains of the downed aircraft. (U).
o Initiate a major public diplomatic effort to keep international and domestic attention focused on the Soviet action and the objectives outlined above. (U)
o [Big Delete]
o Develop an omnibus U.S. claim against the Soviet Union for compensation for the loss of life and property. Offer to present to the USSR similar claims on behalf of the Korean victims. Also coordinate claims with the governments of other countries with citizens on the aircraft to dramatize the USSR's responsibility for its actions. (U)
o Reaffirm the existing U.S. sanctions against Aeroflot that predate the Soviet attack on KAL. (U)
o [Big Delete]

IMPLEMENTATION

The Secretary of State, in concert with the Secretary of Defense, the Secretary of the treasury, the Secretary of Transportation, the Director of Central Intelligence, the Chairman of the JCS, the Direction of USIA, and the Administrator of the FAA, will develop a coordinated action plan to implement the provisions of this Directive. This plan should include a legislative, public affairs, and diplomatic strategy and be forwarded to the Assistant to the President for National Security Affairs by Wednesday, September 7, 1983. (U)

Under the direction of the Secretary of State, an interagency group will continue to evaluate and explore additional possibilities for international and U.S. actions consistent with this Directive. The first report on this continuing effort should be forwarded to the Assistant to the President for National Security Affairs by September 14, 1983. (U)
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Re: The Pentagonists: An Insider's View of Waste, Mismanagem

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Index

Abourezk, James, 100
Absolute immunity issue, 122-23,
124, 125
Accounting. See Cost analysis
and pricing policies
Acquisition Streamlining Panel,
238
Adams, Clark, 177, 179
Adams, Gordon, 300/ 301
Adams, Joe, 60
Adler, Allan, 263, 267-68, 269,
27 1, 272, 273, 275, 276
Adlfinger, AI, 145-46
Advanced Logistics System
(ALS), 79, 154
Advance Medium Range Air-to-Air
Missile (AMRAAM),
170
Aeronautical Systems Division
(ASD), 220, 222
Aerospace Daily, 192
Aerospace Education Foundation
Roundtable, 189
Aerospace Industries Association
(AIA), 280, 292
Agnew, Spiro T., 12, 64
Aiken, George, 41
Airborne Warning and Control
System (AWACS) airplane,
15 6
Air Force Logistics Command
(AFLC), n 78-79, 154,
238
Air Force Magazine, 1 89
Ail Force Plant Representative
Office (AFPRO), 141, 200,
201 , 202-3, 204, 205, 206,
207
Air Force Systems Command
(AFSC), 137, 138, 141, 152,
153, 189, 221, 238
Contract Management Divi
sion (CMD), 141, 143, 144
Air Logistic Centers (ALCs), 77,
78, 150, 151, 154, 155
work measurement system,
79
Air Staff Closet Coalition, 180,
182
Air University Review, 244
Aldridge, Edward, 171, 222, 239,
240
and reorganization, 246-48
Alerting America, 229
Allen, James, 84
Allen, Richard, 229
American Civil Liberties Union
(ACLU), 62
and Fitzgerald's damage suit,
74, 122, 123, 124, 125, 126
and secrecy issues, 266-71,
272, 273, 274-76, 277
and suit against Nixon, 122
American Federation of Government
Employees, 100-101,
102, 276
American Productivity Center
(APC), 190
Amlie, Thomas, 146-47, 149,
157, 309-10
investigation of Hughes Aircraft,
201, 202, 203
investigation of labor charges,
169, 170
investigation of spare parts and
tools, 151, 156, 186, 213,
224
Anderson, Jack, 117, 120, 154
Anderson, Robert, 97
Andrews, Reginald, 218-19, 220,
222
Aney, Russ, 281, 282
Anthony, Robert N., 14, 244,
281
Arizona Star, 201
Armed Services Committee, 181
19
Arthur Andersen and Company,
135, 236, 254
Aspin, Les, 87, 99, 191, 240, 245,
246, 268
and procurement, 283
and secrecy issues, 276
Atlantic Monthly, 293, 294
Aviation Week, 226

B-1 bomber, 97, 98, 99, 234-35,
245
B-2 Stealth bomber, 305, 311
Badhwar, Inderjit "Indy" 103-4,
105, 120
Badin, John, 114, 118
Baker, Howard, 27 6
Balanced budget proposal, 127-
28, 136, 139, 297-300
Balance of trade, 301- 2
Baroody, Bill, 30
Barrett, Mike, 1941 22 I
Barry, Edward, 25 2, 253
Basic Ordering Agreements
(BOAs), 139-40
Bast, Dick, 86
Beary, John F., III, 261, 262
Beckman, Kenneth, 16
Bedell, Berkley, 176-77
Before the Fall, 23
Bell, Griffin, 102, 112, 119
Bennett, , Charles, 234
Berteau, David, 229-30
Bettinger, F., 196
Bevill, Claudia, 250
Bid and proposal expenses
(B & P), 280
Bid rigging. See Bribes, kickbacks,
and bid rigging
Blandford, John, 84-85, 88
Blaylock, Ken, 106
Blaznik, Cecil, 25 3
Blowing the Whistle, 102
Blue-Ribbon Commission on Defense
Management, 226-35
Boddie, John, 239
Bodie, Ken, 103
Bodner, John, Jr., 67, 276
as lawyer for Fitzgerald, 6, 55,
56, 57, 60, 70, 74, 113, 126
Boeing Aircraft Company, 15 6,
157-58, 179, 292
Boren, David, 268
Bork, Robert, 268, 273
Boston Globe, 183, 237, 273-74
Bower, Joseph L., 28 I
Bowsher, Charles, Jr., 135, 254
Boxer, Barbara, 174, 188, 189,
191, 192, 193, 224, 225, 255
and Packard Commission,
232
and secrecy issues, 27 2
Boyd, John, 54
Boyd, Trenton, 14, 16
Braase, Louis, 27 6-77
Brian-Bland, Danielle, 27 1
Bribes, kickbacks, and bid rigging,
4, 46, 231, 237, 287-92, 313
by General Dynamics, 193-94
by Lockheed, 83-85
by Northrop, 83-86, 3°5
Brinkley, David, 235
Brooks, Jack, 133, 261, 262-63,
268, 275, 311
Brouk, Art, 194
Brousseau, Ronald, Sr., 305-6
Brown, Harold, 7-8, 95, 102, 109,
2 69
and C-5A scandal, 8-9, 11, 16
and firing of Fitzgerald, 9-10,
74, 126
and military spending, 38, 96-
97, 98, 99
Broydrick, Bill, 87, 90
Bruce, John, 55
Bryan, Jack, 145, 146, 170
Bryant, John, 195, 232
Bryant, William, 56-571 68, 111,
126, 276
Buchanan, Patrick, 18, 21, 23, 28,
66
and firing of Fitzgerald, 29, 30,
35, 65
Buchen, Philip H., 92
Buck, Kathleen, 29 1
Budget deficits, 293, 295
Budget reform legislation, 230,
233
Bueter, Arnold, 90
Bureau of the Budget, 32, 33,
35
Burns, Hugh, 166, 167
Bush, Bill, 12 5
Bush, George, 92, 97, 264
Bush v. Lucas, 125
Businessmen's Educational Fund
(BEF), 29, 40, 53, 95
Business Week, 97, 228
Butterfield, Alexander, 264
and firing of Fitzgerald, 24, 34,
36
Fitzgerald's damage suit
against, 741 112, 113, 122,
123, 125, 126
Button, Dan, 255
Byrd, Harry, Jr., 70-71
Byrd, Harry, Sr., 71
Byrne, Bill, 234
Byron, Beverly, 246-47

C- 5A transport plane
cost overruns, 3, 5, 8, 9, 10, 17,
22, 36-37, 109, 147, 284
cover-up, 14,16, 17, 30, 115,
227
hearings on, 11, 15-161 36
inefficiency of, 8, 24-25, 227
and insider trading, 27
learning curve price for, 1471
148-49
spare parts: purchases for,
218
C-5B plane, 147, 148-49, 219,
220
Campbell, Donald E., 115, 116,
1171 120
Cannon, Howard, 86, 113
Capitol Hill Military Reform
Caucus, 224
Cappucci, Joseph, 201 35, 192
Fitzgerald's damage suit
against, 112, 116, 118,
119
and Fitzgerald's reinstatement
hearings, 57, 6o, 70
Carlucci, Frank, 129, 135-36,
147, 233, 287, 298-99
and procurement bribes, 289,
291-92
and secrecy issues, 272, 276
Carter, Jimmy, 103, 113, 115,
120, 127, 132, 310
campaign commitments, 96,
97, 98, 102
and civil service reform, 103-6,
1071 108-9, 110, 125-26,
130, 145
Fitzgerald's damage suit
against, 6, 117
and Lockheed, 109-10
military budget/policy, 93-94,
96-98, 991 101, 128, 150,
155, 159
and reorganization, 94
and secrecy/security issues,
110, 264, 311
Carter-Mondale Policy Planning
Group, 95
Carter Reform Act. See Carter,
Jimmy: and civil service reform
Carver, Richard, 174, 183, 1841
185, 187, 188-89, 221, 247
and investigation of Hughes
Aircraft, 205-6, 207-8, 211
and spare parts pricing, 220,
221, 222
and work standards, 239
Casey, Aloysius, 253
Casey, William, 229
Cash flow statements, 281
Catto, Henry E., 261, 266
Cavanaugh, James, 198, 199, 224
Center for Strategic and International
Studies (ICIS), 282-83
Chandler, Colby H., 300, d02,
30 4
Chapin, Bruce, 194, 250, 264
Chapin, Dwight, 30
Chapman, Dudley/Chapman Report,
38, 65
Charles, Robert, 9, 11, 14, 16
Chauhan, Ompal "Om" 141-42,
143, 145-46, 162, 201
and investigation of labor
charges, 170, 171, 179, 191
Checks and balances system,
235-36, 245, 254-55
Chennault, Anna, 87, 88
Chennault, Claire, 87
Chicago Tribune, 35, 36, 37, 291
Christein, Wayne, 166
Christian Science Monitor, 96
Church, Frank, 83, 84, 86
Churchill, Mae, 274
CIA, 181, 182, 183, 262-63
Civilian control of armed forces,
243-46, 249, 257, 25 8
Civil Service Commission
employment statistics, 106,
107
and Fitzgerald case, 39, 55, 56,
57, 62, 69, 70 , 71, 72-73, 74,
125, 126
Civil Service Reform Program,
106
Civil service system, 102-3, 104,
105-6, 146
Clark, Bruce, 117, 119
Clark, Louis, 267
Clark, Richard, 86
Clark, William, 161 233
Clay, Cassius, 104
Clements, William, 90-91
Cleveland Plain Dealer, 27
Clifton Precision, 237
Coalition for a New Foreign and
Military Policy, 99
Coalition to Stop the B-1, 98
Coco, Marie, 272
Code of Ethics, 26-27, 83, 101,
105, 237
Cohen, Felice "Fritzy," 82
Cohen, Victor, 287
Colson, Charles, 1, 2, 6, 36, 66
Colt, AI, 20r
Commercial Appeal, 132
Committee on the Present Danger,
95-96, 229
Committee to Back the President,
128
Competition
courtesy, 305
for military contracts, 282,
300-302, 304-5, 307-8
swindles, 305-6
Competition in Contracting Act
(CICA), 3 0 5
Condon, Edward, 134
Congressional Record, 16, 210
Contractors, 308-309
entertainment expenses, 85-
87
military standard for, 145
self-governance proposal, 231,
232, 237-38, 285, 290
systems, 52
See also specific companies
Contracts, military, 4, 40-43,
307, 309
cost analysis of, 50-52, 53
cost-justifying methods for, 22,
47-50, 236
cost rivalry, 54
cross checking of, 235-36, 245,
254-55
CWAS, 228
multiyear, 239
negotiations for, 46, 53-54
pricing, government, 17
pricing, "should cost" 17, 44,
50, 51, 52, 53, 77, 79, 159,
164, 220, 221-221 228, 304
procurement, r & d, 40-41, 129
protested, 239
shipbuilding, 21, 54
sole-source, 181
tools, 211, 212-18, 282
total package, 228
undefinitized orders, 46-47
and work measurement estimates
44-45, 51
Cook, Kenneth, 61-63, 82
Cooke, D.O., 90, 235
Cooper, Tom, 204
Corcoran, Tommy "the Cork"
88
Corporate communism, 30 7-8
Corporatism, 308-10, 313-14
Cost analysis and pricing policies,
50-51, 149
actual cost, 45-461 159, 164,
219
cost-plus, 47-48, 304
Dollar Model, 76, 182, 183
equal allocation of overhead,
174-75, 176, 177, 211, 226,
284
full absorption accounting,
177-79, 216, 304
learning curve for, 48-49, 77,
143, 147, 148-49
line item integrity, 176, 177,
179-80
should-cost, 17, 44, 50, 51, 52,
53, 77, 79, 159, 164, 220,
221-221 228, 304
Costello, Robert, 280
Cost Estimating Relationships
(CERs), 182
Cost maximizing, 300
Council of Defense and Space
Industry Associations
(CODSIA), 164
Courter, Jim, 191, 192, 193
Cox, Archibald, 75
Crane, Ed, 131, 132
Crow, Duward L. "Pete" 41, 71-72, 112, 113m
115, 116-17
Crown, Lester, 196, 197
Cuba, 309
Curtiss-Wright corporation, 225

Davidson, Jim, 67, 127, 130-3 1
Dawson, Rhett B., 229
Dean, John, 58, 60, 61 , 64, 65,
66-67
DeConcini, Dennis, 116, 119
Defense Authorization Bill, 193
Defense Contract Audit Agency
(DCAA) 87, 143, 144, 145,
199
and GAO, 227-28
labor charges audit, 165, 166,
168, 169, 221
Defense Intelligence Agency
(DIA) 182
Defense Investigative Service
(DIS), 89, 90, 91, 265
Defense Logistics Agency (DLA),
145
Defense Management Challenge,
The, 283-85
DeFrancis, Frank J., 84-85
DeGraffenreid, Kenneth, 260
DeLeon, Rudy, 191
deLuca, Joe, 72
Denfield, Louis, 5
Dent, Harry, 66
Department of Defense (DoD)
fallout funds, 180-8I
labor charges audit, 166, 174,
179
procurement, 179
and spare parts, 219
See also Defense Contract Audit
Agency (DCAA)
Determan, Sally, 124
Devine, Sana, 18
Devine, Tona, 267, 268, 275
Dickinson, Bill, 12, 18, 19, 25,
28, 206, 225-26, 232, 234
as ally of Fitzgerald, 63, 256
Dingell, John, 116, 240, 268
and Fitzgerald's damage suit,
119, 125
investigation of General Dynamics,
194, 195, 196
investigation of Hughes Aircraft,
211, 215
investigation of MX missile,
254, 256
investigation of procurement
pricing, 168, 184, 189, 283,
287
investigation of spare parts,
218-23, 225
and reorganization efforts, 245,
246, 247, 248, 249, 2 54
and secrecy issues, 259-60,
266, 271, 278
Directors and Boards, 135
Dixon, Jack C., 113
Dobrovir, William, 103
Dobrynin, Anatoly, 134, 135
Dole, Robert, 210
Dollar Model, 76, 182, 183
Dollars and Sense, 127, 128
Dollars per standard labor hour
index, 51, 52-53, 78, 79, 149,
156
Donaldson, Sam, 235
Dornan, Robert, 125, 135
Douglas, William 0., 314
Downer, Samuel, 42-43, 76
Driessnack, Hans "Whitey,"
20, 57, 112, 114, 148-49,
156
and Fitzgerald's damage suit,
112, 113-14, 117-18, 119
perjury charges against, 115,
116-17, 118, 120
Dudka, Bette, 171
Duesenberg, R., 196, 197
Duffy, Joe, 24
Dukakis, Michael, 285
Durham, Henry, 42, 73, 130

Economilitary issues in national
policy, 242-43
Edey, Marion, 273
Edwards, J. T. (Jay), 154, 155,
198
Edwards, Jack, 12, 25
Edwards, Willard, 35, 36
Ehrlichman, John, 2-3, 23, 24,
59, 65, 69
and firing of Fitzgerald, 30, 32,
33, 36
Eisenhower, Dwight D., 1, 82,
241
and military-industrial complex,
4, 100, 242, 243, 244,
309
Electronic Industries Association
(EIA), 280
Employment, defense, 302, 304
Engelbeck, Marshall, 170
Engwall, Richard, 192-93
Ensign, Dick, 137, I 54
Equal allocation pricing. See Cost
analysis and pricing policies:
equal allocation of overhead
costs
Ernst and Ernst, 85, 86
Ervin, Sam, 64, 68
Ethics Resource Center (ERC),
237
Evans, David, 291
Executive privilege, 58-59, 60,
61, 63, 64

F-5 Freedom Fighter, 84
F-16 fighter plane, 54, 84, 212,
213, 215
F-17 fighter plane, 84
F-18 fighter plane, 83
F-111 fighter plane, 21, 26, 135,
244
Fairhall, James, 177
Falcon missile, 147
FBI, 67, 91, 115, 254
and Fitzgerald's case, 116,
117
investigation of collusive fraud,
238, 247, 287, 305
and spare parts scandal, 163,
235
Federal Aviation Administration
(FAA), 58
Federal Polygraph Limitation and
Anti-Censorship Act, 262
Federal Register, 275
Federal Times, 101, 103, 117-18,
171
Feinstein, Andrew, 103, 273
Ferguson, D. N., 250-51
Fielding, Fred, 60-65
Fields, James, 283
Fischer, Fred, 161
Fitzgerald, Nell, 68
Five Year Defense Program
(FYDP), 297
Flannigan, Peter, 66
Ford, Gerald, 28, 88, 91, 97, 99
and secrecy/security issues,
91-92, 264
Ford, William, 266
Fortune, 168
Foster, Johnny, 22
Fox, J. Ronald, 50, 283, 284, 285,
287
Frank, Barney, 125
FIaud. See Bribes, kickbacks, and
bid rigging
Frech, Paul, 73
Free, Tim, 29
Freeze, the, 296-97/ 312
Fund for Constitutional Government
(FCG), 95, 103, 104-5,
108, 132, 160, 266-67, 311
Fuqua, Donald, 235, 292
Furlong, Ray, 234

Gag orders. See Standard Form
189 (SF 189)
Gansler, Jacques, 229
Garfinkel, Steven, 113, 260, 264-66, 267,
269, 272, 273-74,
278
Garment, Leonard, 38, 65, 68,
71
Gasch, Oliveri 276, 277
Gay, Lawrence, 87
General Accounting Office
(GAO), 15, 94
audit of General Dynamics,
216, 218
audit of Hewlett-Packard, 227
cost analysis of military contracts,
51, 165, 211, 215
and DCAA, 227-28
General Dynamics, 135, 193, 236
audit of, by GAO, 216, 218
bribes and kickbacks scandal,
193-99, 237
F-16 fighter plane, 84
pricing policy, 211, 216-18, 225
spare parts purchases, 166, 215
General Electric, 179, 182, 236
George, Jim, 222
Germany, 308-9
Gesell, Gerhard, 112, 113, 116, 120, 121, 123
Gileece, Maryanne, 188
Gilliland, Jim, 196
Gilmore, Hugh, 34
Gilpatric, Roswell, 22
Glasser, Ira, 274, 275
Goering, Hermann, 82
Gold, David, 300, 301
Golden, Robert, 115, 116, 120,
287
Goldman, Patti, 277
Goldwater, Barry, 22, 210, 234,
235, 238, 239, 245
Gorbachev, Mikhail, 296
Gore, Albert, Jr., 125
Gore, Albert, Sr., 228
Gorman, Paul, 233
Gottlieb, Sanford, 134
Gould Corporation, 176, 177, 179
Government Accountability
Project (GAP), 263, 267, 272,
273
Government Operations Committee,
261
Grace Commission, 175
Grady, Dan, 121
Grants to contractors, 4, 280
Grassley, Charles, 155, 156, 169-
70, 171-72, 174, 179, 191,
192, 294
Freeze proposal, 186-88, 189,
190, 191, 192, 193, 210, 224,
312
investigation of procurement
bribery, 287, 288, 290
and secrecy issues, 276, 277
Grassley-Boxer bill, 186-88, 189,
190, 191, 192, 193, 210, 224,
312
Greenstreet, Bob, 174
Grenada, 309
Gross, H. R., 29

Haig, Alexander, 23, 30, 69, 75
Haldeman, Robert, 24, 30, 38, 68,
69
and firing of Fitzgerald, 6, 32,
34-35, 36, 68, 69
Hale, Russell, 137, 143, 144, 145,
146, 147, 149, 183-84
and labor charges audit, 166,
168
and spare parts investigation,
151, 15 2, 154, 164
Halperin, Morton, 124
and secrecy issues, 266-67,
268, 269, 270, 272, 273, 274-
75, 277
suit against Nixon and Kis
singer, 122, 123-24
Hamilton, Lee, 162
Hamilton, Peter B., 117
Hamilton, Robert, 20, 55, 73, 74
Hancock, Robert, 15 1, 154
Harlow, Bryce, 18-19, 28, 31, 32,
64
and Fitzgerald's damage suit,
74, 120, 122, 123, 125, 126
Harris, Leslie, 126
Harshman, Dick, 168, 169, 187,
202, 204, 208
Hart, Peter, 286
Harvard Business School Press,
283
Harwood, Richard, 21-22
Hatch, Orrin, 116, 119, 120, 125,
133
Hatch Act, 255
Hatfield, Mark, 250
Haugh, Pat, 142
Hayduck, Ann, 89-90
Health care industry, 304
Heflin, Howell, 171
Hemenway, Russ, 272
Henderson, Tom, 120
Herbert, Jule, 131
Herblock cartoons, 219, 288-
89
Hercules corporation, 287
Herrington, James, 275
Hershow, Sheila, 103, 117-18,
183
Hetu, Herbert E., 229
Hewlett-Packard, 22, 25, 227
Heymann, Philip, 119
Higby, Larry, 34-35
High Priests of Waste, The, 3, 50,
169, 210, 227
Hills, Carla, 233
Hird, Grant, 139
Hitler, Adolf, 308-9
Hitler's Secret Book, 309
Hoewing, Linc, 167
Hoffman, Marty, 68, 71
Hoffman, Nicholas von, 63
Hogan and Hartson, 120, 124
Holifield, Chet, 17, 19, 48, 227,
283
and C-5A scandal, 12-13, 14-
15, 16
Holloway, James, 233
Holmes, D. Brainerd, 97
Hoover, Herbert/Hoover Commission,
242-43
Hoover, J. Edgar, 24
Hopkins, Larry, 255-56
House Armed Services Committee,
191, 225, 231-32, 248,
254
Hovelson, Lisa, 169
Hudson, Henry, 287
Hughes Aircraft Company, 137,
138, 141, 142, 147, 149,
248
cost and quality control problems,
200, 201-2, 203-4,
205, 206-7, 208
cost estimates for Soviet missiles,
182
labor charging policy, 165, 166,
170
Hughes, Harold, 113
Hughes, James, 24
Human Events, 43
Huston, John Charles, 21-22, 23,
28
Hyatt, Brian, 253

Independent research and development
(IR & D), 280
Industrial Management Assistance
Surveys (IMASs), 51
Inflation, 80, 300
Information and Security Oversight
Office (ISOO), 260, 265,
272, 274
Information categories
classifiable, 265, 270, 272, 274,
275
classified, 263, 264-65, 270,
273, 275, 277-7 8
confidential, 259
secret, 259, 264
Inouye, Daniel, 36, 64, 68
Institute for Police Studies, 43
Internal Revenue Service, 65-68
Iran-Contra hearings, 30, 260,
271
Iranian rescue mission, 129
Isbell, Florence, 6
Israel, 81, 99
Italy, 308-9

Jackson, Jesse, 312
Jacobs, Ted, 103, 104, 105
Jacobson, Raymond, 107
Johnson, Lyndon, 5, 7, 18, 23, 95
Johnson, Peggy, 153
Joint Economic Committee (JEC),
17, 27, 39
cost analysis of military contracts,
50, 51, 53, 54
Jones, Thomas, 85
Jonsson, Thorn, 174
Jordan, Hamilton, 95, 102
Jordan, Len, 12, 28
Julyan, David, 121

Kagan, Stan, 138
Kahn, Theodore, 80
Kampelman, Max, 229
Kann, Kurt von, 120, 123, 124
Kaplan, Fred, 183, 237
Kartis, James E., 90
Kassebaum, Nancy, 183, 224
Kaufman, Richard, 8-9, 13, 17,
224
Keating, David, 130
Keegan, George, 97
Keeney, Jack, 120
Kelman, Stephen, 175-76, 177,
279
Kelson, John, 117
Kemp, Jack, 133
Kennedy, Edward, 24
Kennedy, Joe, 268
Kennedy, John F., 7
Kennedy, Max/Project Max, 79,
80, 154
Kephart, Robert, 43, 67
Ketcham, Henry, 283
Khadafi, Moammar, 309
Kimmit, Robert, 260
Kindinger, Ed, 145-46
King, Susan, 121
Kinkaid, Bill, 90
Kirkland, Lane, 96, 229
Kirkpatrick, Jeane, 229
Kirschbaum, Eugene, 114, 118,
119
Kissinger, Henry, 38, 83
and firing of Fitzgerald, 21, 32,
36, 37
Halperin suit against, 122, 123
wiretapping activities, 23, 26,
69, 122
Kissinger v. Halperin, 123
Kitchens, Larry, 222
Klein, Herb, 36
Koch, Charles, 131
Koch, George, 131
Kolesnik, Kris, 186, 191, 210
and labor charges audit, 169,
172, 184, 187, 192
and procurement bribes, 287
and secrecy issues, 272-73,
276
Koontz, Harold, 268
Korean airliner disaster, 160-62
Kotz, Nick, 99
Kraft, Joseph, 96
Kramer, John, 103
Krogh, Bud, 30
Krupp, Alfreid, 309

Laird, Melvin, 19, 22, 23
and C-5A scandal, 16, 25, 37
and firing of Fitzgerald, 20, 30,
36, 60, 65
and Fitzgerald's damage suit,
112, 117
and Fitzgerald's reinstatement
hearings, 68
and military spending, 27-28,
36
Landau, Jack, 268
Lang, John, 10, 11
Latham, Watkins and Hills, 233
Laughter, Sy, 208
Laundered money, 84, 85, 86, 181
Lawrence, Ken, 270-71
Lazarus, Simon, 105, 106
Leahy, Patrick, 118, 119, 121
Learning curve. See Cost analysis
and pricing policies: learning
curve for
Lefevre, E. J., 197
Lehman, John, 194, 209, 229,
235, 287
Levine, Mel, 172, 224, 233
Lewis, David S., 196, 197
Libya, 309-10
Lie detectors (polygraphs), 260,
261-62
Lincoln Club, 136-37
Lindenfelser, James, 229, 248
Ling, James, 42, 43
Ling Temco Vought Corporation,
42
Litton Industries, 287
Lockheed, 132, 313
bailout, 47, 227
bribes by, 83, 85
and C-5A, 3, 8, 10, 11, 17, 27,
54, 73, 147, 218, 227
and C-5B, 147, 148-49, 219,
220
Carter ties with, 109-10
repricing formula, 19-20
spare parts pricing, 218, 219,
220-21
stock market interests, 16
Long, John, 201
Looney, Larry, 219
Los Angeles Times, 161
Lost opportunity factor, 300,
304
Lovelace, A. M., 197
LTV, 182
Lynch, Mark H., 124
Lynsky, John, 221

MacArthur, Douglas, 5, 242
McCarthy, Eugene, 131
McCarthy, Joseph, 125
McCleary, Terrence, 90
McClellan, John, 35
McClendon, Sarah, 32, 33, 34
McConnell, John P., 112, 116
McCracken, Paul, 27, 28
McDaniel, Rodney B., 259
MacDonald, Gorden, 196
McDonald, Robert, 139
McDonnell-Douglas, 84, 182,
237, 287
McFarlane, Robert, 226, 233, 260,
263
McGee, John, 202-3, 205, 207,
209
McGovern, George, 132
McGovern, James, 239, 240
MAC Group, 280-82
McLean, William, 146-47
McLucas, John, 70, 72-73, 89
McNamara, Robert, 71 21, 22, 23,
26, 297
Magruder, Jeb Stuart, 32, 36, 37
Mahon, George, 91
Malek, Fred, 66
Maloney, Fred, 207
Management Accounting, 281
Manned Orbiting Laboratory
(MOL), 21
Marietta Daily Journal, 109
Markey, Howard, 311-12
Marks, Ted, 244
Marsh, Jack, 71
Marsh, Thomas, 137, 138, 143
Martin, Donna, 188, 191-92
Martin Marietta Corporation,
287
Maverick missiles, 137-38, 139,
141, 142, 149, 203, 206, 210
Mavroules, Nick, 191
Mayo, Robert, 20, 28, 32, 33
Media
and Fitzgerald case, 117, 135
and government propaganda,
279-80
and Packard Commission re-
port, 231-32, 237
and procurement practices, 16,
159, 183, 239, 284, 289
and secrecy issues, 268, 272,
278
See also specific newspapers
Meese, Edwin, 195, 253, 273
Mellor, James, 197
Melman, Seymour, 41, 134, 300,
304
Messamore, Claude, 176
Metzenbaum, Howard, 97
Military Airlift Command, 100,
174
Military-industrial complex, 4,
100, 242, 243, 244, 309
Miller, Arnie, 121
Miller, Frank, 151
Miller, Merle, 225
Milwaukee Journal, 43
Minuteman program, 21
Mitchell, John, 34
Mitchell, Parren, 100
Mitchell, Willard, 145, 152, 153-
54
Moffett, Toby, 125
Mohr, Charles, 97
Mollenhoff, Clark (The Boomer),
23, 37, 38, 62, 144
as ally of Fitzgerald, 29, 133,
135
and executive privilege issue,
1-2
and firing of Fitzgerald, 30, 31,
32, 33, 34, 35
and Fitzgerald's reinstatement
hearings, 56, 58, 60-61, 63,
67, 68
Mondale, Fritz, 95, 97, 102, 172
Moon, Sun Yung, 145
Moorhead, William, 12, 13, 15,
16, 25
Moran, Thomas, 72, 79
More Bucks, Less Bang, 160
Morgan, Charles "Chuck," Jr.,
95, 102, 103
and civil service reforms, 104,
105-6
Morgan, Skip, 247
Morris, Anthony, 130
Morrison, Alan D., 103, 124
Morrison, David, 245
Moses, Harry, 109
Moses, Judith, I09
Moss, John, 105
"Motivating the Pentagon Bureaucracy
to Reduce the Unit
Cost of Defense," 95
Matt, Stewart, 95, 103, 104, 131,
132
Murphy, John, 19
Murphy, W. W., 168
Mussolini, Benito, 308-9, 310
MX missile, 249-54, 256

Nader, Ralph, 102
and civil service reforms, 102,
103-4, 107-8
and Fitzgerald's damage suit, 6,
124, 125
and military spending, 82-83
and secrecy issues, 273, 277
National Democratic Coalition,
24, 36
National Journal, 245
National Security Agency (NSA),
262-63
National Security Council, 258,
307
National Security Decision Directives
(NSDDs), 259, 307,
312
NSDD # 84, 260-63, 267, 268,
269, 277
NSDD # 102, 162
NSDD # 219, 233, 234, 238,
259-60
See also Standard Form r89 (SF
r89)
National Security Industrial Association
(NSIA), 236,
280
National Taxpayers Legal Fund
(NTLF), 130-31
National Taxpayers Union
(NTU), 43, 67, 68, 127, 133,
135
and B-1 bomber issue, 98
and balanced budget proposal,
I27-28
and Fitzgerald's case, 133
Project on Military procurement
(PMP), 130-31, 132
National Transportation Safety
Board (NTSB), 161
Navy v. Egan, 311- 12
Nelson, Greg, 313
Newman, Barbara, 119
New Order reorganization plan,
238-40, 245, 247, 248, 249,
254, 256
and secrecy issues, 259
Newsday, 272
Newsweek, 129
New York Times
and Carter budget, 97
and contract pricing, 164
and Fitzgerald's reinstatement
hearings, 61, 63
and military spending, 23
and Packard Commission report,
232
and secrecy issues, 262, 265,
271
Nichols, Bill, 232, 238, 245
and reorganization plans, 246,
248, 249, 254, 255
Nielson, Thomas, 10, 12, 16, 20
Nitze, Paul, 229, 244
Nixon, Richard, 36, 60, 75, 134
and C-5A scandal, 5, 17-18,
36-37
and civil service system, 105
election (1972), 68, 84
and executive privilege, 1, 2-3,
65
and federal merit system, 102-3
and firing of Fitzgerald, 6, 29,
30, 31, 32, 33, 35, 65
and Fitzgerald's damage suit,
74, 112, 120-21, 122, 123,
124, 125
and Fitzgerald's reinstatement
hearings, 6, 57, 58-59, 60,
61, 68, 71, 121
"get tough" policy, 28, 30
Halperin suit against, 122
military spending budget,
policy, 3, 11, 21, 27, 36, 43, 48
and secrecy issues, 110, 264
and Southeast Asia war, 27, 28
Nixon, Richard (cont.)
space program, 21
and Watergate, 64, 65, 120
Nixon papers, 112-13
Nixon v. Fitzgerald, 307
Nixon White House tapes, 120
Nofziger, Lyn, 36
Nogoki, Warren, 185
Noland, John, 124, 125
Nondisclosure agreements. See
Secrecy: oaths
Norden Systems, 287
North, Oliver, 30, 260, 271, 287
Northrop Corporation
audit of, 89, 90, 91
bribery by, 83-86, 305
entertainment expenses, 87,
88, 91
MX missile operations, 249-
54
Nossiter, Bernard, 19-20, 42, 76
Nunn, Sam, 234-35, 268, 287

Obligation authority, 302-4
Office of Management and Budget
(OMB), 128
Office of Special Council (0SC),
145
Office of Special Investigations
(OSI), 20, 114, 116, 253
O'Donnell, Cyril, 268
Omerta concept, 26, 65, 253
Orr, Verne, 136-37, 138, 144,
146, 147
and C-5B, 149
and Fitzgerald, 185
and investigation of Hughes
Aircraft, 202, 203, 204, 205,
211
and investigation of procurement
practices, 166, 167-68,
170, 171, 182, 193, 215, 238-39
pay raise initiative, 146
and spare parts scandal, 156,
157, 164
and spending objectives, 183
Otepka, Otto, 35-36

Packard, David, 313
and firing of Fitzgerald, 30, 31,
33, 60
and investigation of procurement
practices, 227-28, 229
and military spending budget/
policy, 22, 28, 50, 54, 96, 300
review of Fitzgerald's book, 50,
228
See also Packard Commission;
Poindexter/Packard plan
Packard, Duane, 137, 138-39, 146
Packard Commission, 230, 231-32,
233-34, 235, 236, 244-45,
254, 259, 260
Pahl, R. E., 308
Paisley, Melvyn, 287, 292
Parfitt, Colin, 146, 156, 157, 252,
286
as ally of Fitzgerald, 78, 80, 90,
137, 143, 147, 239
and investigation of Hughes,
201
and labor charges audit, 164-65,
169, 174, 177
and procurement costs, 284
and spare parts scandal, 151,
152, 153, 154, 199, 224
Patman, Wright, 39, 84, 85
Patronage, 4-5
Payne, Daniel 0., 90
Peat, Marwick, Mitchell and
Company, 236-37
Pentagon Underground, The,
148, 155
Performance measurement. See
Work measurement
Performance Technology Corporation,
20, 114, 116, 119
Peterson, Peter G., 293-94, 300
Petkus, Peter, 82, 102, 103
Pewitt, James, 112
Pfautz, James C., 181, 182, 183
Philadelphia Bulletin, 99
Philadelphia Inquirer, 96
Phillips, Jim, 119
Phoenix missile, 202, 203, 206,
207, 208, 209
Pincus, Walter, 92
Poindexter, John, 259-60
Poindexter/Packard plan, 233,
234, 235, 237, 238, 244-45,
248, 259, 280, 281, 285, 290
and FYDP, 297, 298
political Economy of National
Security, The, 76
Pollack, Richard, 286
Powell, Jody, 97
Pratt and Whitney, 143, 144, 154,
182
and bribery, 154, 160, 287
FBI investigation of, 198
and General Dynamics hearings,
198-99
pricing policy, 150, 151-52,
153, 155, 156, 162-63, 164,
199, 225
Prepublication review, 260, 262,
269, 274
President's Executive Interchange
Program, 310
President Who Failed, The, 110
Press. See Media
Preston, Raymond C., 163
Prettyman, Barrett, 121, 12 3,
124
Price, David, 263
Price, Mel, 191
Pricing policies. See Cost analysis
and pricing policies
Private Sector Cost Management
Group, 205, 207, 208
Procurement. See Contracts, mil
itary
Profits without production, 41,
300
Program Planning and Budgeting
System (PPBS), 297
Project Maxi 79, 80, 154
Project on Military Procurement
(PMP), 130-31, 132, 151,
160, 237, 239, 271
Proxmire, William, 202
and firing of Fitzgerald, 10-11,
19, 33-34, 39, 65
and Fitzgerald's damage suit,
113, 114-15, 118-19
and Fitzgerald's reinstatement
hearings, 63, 69, 97, 102, 133
and grants to contractors, 280
investigation of C-5A, 8-9, 12,
13, 16, 19, 28, 36, 109, 110
investigation of military spend
ing, 21, 22-23, 24-25, 30, 33,
47, 50, 51, 199, 222
investigation of Northrop, 91
Joint Committee on Defense
Production, 90
Joint Economic Subcommittee,
174, 189
and secrecy issues, 276
Pryor, David, 224, 267, 2721 276
Public Integrity Section (PIS)
of Justice Department, 118-19,
120
Public Interest, The, 175
Puritano, Vincent, 195, 229
Pursley, Robert, 25

Quayle, Dan, 191

Rak, Dan, 238, 248
Ramsey, Nancy, 183
Rand Corporation, 280
Randolph, Bernard, 245, 251
Raskin, Marcus, 43
Rasor, Dina, 130, 132, 148, 155,
156, 188
and secrecy issues, 268-69,
270, 271, 272
Rauh, Carl, 120
Rauh, Joe, 103
Raven-Hansen, Peter, 120, 121,
123, 124
Reagan, Ronald, 86, 127, 132,
134, 229, 233, 287, 306
and balanced budget, 128, 136,
300
and civilian controls, 249
and cross checking of
contracts, 235-36
election (1984), 185
foreign policy, 296
and investigation of General
Dynamics, 195
and investigation of procurement
practices, 226-35
military spending budget,
policy, 4, 29, 121, 128, 129,
130, 139, 144, 150, 155, 159,
169, 172, 185, 186, 199, 210,
224, 225, 230, 282, 293, 297-98,
299
and Packard Commission, 230
and procurement bribery, 289
and secrecy/security issues,
259, 266, 267, 268, 269, 270,
272, 275, 277, 311, 312
and spare parts scandal, 155-
56, 158-59
Reagan Recovery Plan, 129
Redick, Lee, 118
Reed, Robert, 189
Reger, Brenda, 260
Rehnquist, William, 123-24,
125
Reorganization Act. See New Order
reorganization plan
Retired Officer, The, 80
Rey, Charlie, 250
Rhodes, George, 79
Riccioni, Everest, 54
Richard Nixon v. A. Ernest Fitzgerald,
124
Richardson, Elliot, 58, 75
Rickover, Hyman, 50, 53, 54, 194
Riggs, Robert, 85-87, 88, 89-90,
91, 160
Riley, John, 271
Ririe, Jim, 137, 143, 144, 156,
161, 183-84
Rivers, Mendel, 18, 19, 22, 41,
85, 191
Roback, Herb, 17, 19
Roberts, John E., 163, 164, 283
Robertson, Kirk, 272
Roche, R. D., 109
Rockwell International, 97, 99
Roehrig, J. R., 251
Rogers and Wells, 233
Rolling Stone, 96
Roosevelt, Franklin, 88
Roosevelt, Theodore, 11
Ross, Michael, 60
Ross, Rebecca, 113
Roth, William, 133
and labor charges audit, 165-
67, 168, 169, 170, 171, 211
Ruckelshaus, William, 75
Rule, Gordon, 122
Rumsfeld, Donald, 96
Rushford, Greg, 145, 154
Russ, Robert O., 174-75
Russell, Richard, 7I
Ryther, Phil, 58

Safire, William, 23
Sakharov, Andrei, 134
SANE, 133-34
Sansone, Joseph S., Jr., 177
Savy, William A., 84
Sawyer, G. A., 197
SCAM Improvement, 183
Scarret, Tom, 132-33
Schedler, Spencer, 12, 20, 28, 64,
112
Schlesinger, James (Dr. Doom),
229
Dollar Model, 76, 182, 183
firing of, 91
and firing of Fitzgerald, 21, 32-33
and Fitzgerald's reinstatement
hearings, 68
and military spending policy,
28, 33, 38, 75-77, 80-82, 89,
91
and Northrop audit, 90
and work measurement, 79
Schneider, Greg, 102
Scholzen, John, 106
Schroeder, Patricia, 125
Scowcroft, Brent, 233
Seamans, Robert, 16, 21
and C-5A scandal, 10, 12, 15,
17
executive privilege used by, 2
and firing of Fitzgerald, 2, 9-10,
12, 18, 19, 20, 28, 30, 33,
34, 37, 64, 73
and Fitzgerald's damage suit,
112, 126
and Fitzgerald's reinstatement
hearings, 56, 57-58, 59, 64,
69
Secrecy, 3, 4, 6, 90, 91-92, 110
oaths, 92, 258, 260
See also Standard Form 189 (SF
189)
Securities and Exchange Commission
(SEC), 193, 251, 266
and C-5A scandal, 16, 17, 27
Security
clearance, 306, 311-12
leaks. See Standard Form 189
(SF 189)
Shaheen, Mike, 120
Sherick, Joe, 168
Shillito, Barry, 22
Short Range Attack Missile
(SRAM), 21
Should-cost standards for contract
pricing, 17, 44, 50, 51,
52, 53, 77, 79, 159, 164, 221-22,
228, 304
Shoup, David, 22
Sidewinder missile, 147
Sikorski, Gerry, 195-96, 215,
266, 275, 276 '
Silbert, Earl, 1I6, 1I8-19
Silby, Frank, ro 5
Simons, William, 244
Sims, John Cary, 124
Skantze, Larry, 189, 190, 197, 221
and investigation of Hughes
Aircraft, 205, 208
and investigation of MX missile,
251, 252
Slay, Alton, 152, 154
Small Fred, 108-9
Small Business Administration
(SBA), 150-51
Smith, Barney investment brokers,
221
Smith, Denny, 172, 224, 312
SNECMA corporation, 179
Snepp, Frank, 268
Social Security, 294, 295
Sollee, Bill, 55, 56, 64, 69, 74
Solzhenitsyn, Alexander, 134
Southeast Asia war, 23, 27, 28,
29, 42, 91
body counts, 39-40
and military budget, 80, 81,
129, 294
Soviet Union, 43, 83, 129-30,
133-34, 293
invasion of Afghanistan, 98
Korean airliner disaster, 160-62
military budget, 76, 96, 97, 99,
182-83
Space Technology, 226
Spanton, George, 143-44, 146,
155, 162-631 195, 229, 287
and investigation of General
Dynamics, 194, 198-99
and labor charges audit, 165,
166, 168, 169
Spare parts, 186, 211-12
Fitzgerald's investigation of,
151, 152
for MX missile, 249-50
pricing scandal, 139-41, 150,
151-52, 155, I58-59, 232,
282, 283
"20/20" expose of, 154, 155,
156, 159
See also Contracts, military:
tools
Spector, Eleanor, 188
Speed, Thomas, 250, 252
Sperry Corporation, 193
Spinney, Franklin C. "Chuck, "
169, 263, 284
Spratt, John, 290
Sprey, Pierre, 54
Staats, Elmer, 15, 51, 133
Staiman, Herman, 56-57, 58, 60,
61, 64, 69-70
Standard Form 189 (SF 189), 261-69, 272, 273, 274, 275, 278,
298
Standard hour of work, 44-45,
77, 141, 142, 156, 189
See also Dollars per standard
labor hour index
Stapleton, John D., 117
Stempler, Jack, 69, 90
Stennis, John, 113, 118
Stern, Lawrence, 21-22
Stetson, John, 101
Stewart, James 20
Stilwell, Richard G., 261
Stimson, Richard, 144, 164, 188,
209
Productivity/Quality Network,
190, 192, 200
Stockman, David, 128-29
Stockton, Peter, 90, 119
and C-5A scandal, 13-16
and competition bribery, 305,
306
and firing of Fitzgerald, 16,
116-17
and Fitzgerald's damage suit,
120
and investigation of General
Dynamics, 194, 195, 198
and investigation of procurement
practices, 193, 218,
220, 287
and MX missile, 249
and secrecy issues, 264, 266
Stokes, Louis, 268
Stratton, Sam, 255
Stretchouts, 172-73, 282
Sullivan, Gene, 185
Sullivan, Pat, 192, 193
Sullivan, Vincent, 118
Sullivan, William "Crazy Billy, "
23-24, 35
Support equipment. See
Contracts, military: tools
Sweeney, Dan, 272
Sylvester, George, 205, 248
Syslo, J. M., 152
System Program Office (SPO),
14

T-38 training plane, 84
Taft, William Howard, 11
Taft, William Howard IV, 274,
225-26
Tammen, Ron, 90, 121
Tanguy, Robert, 100
Taylor, Maxwell, 22
Taxation, 4, 294, 295, 302
Teagarden, Claude, 58, 63
Technology transfer, 83
Temple, Ralph, 6, 55, 74, 124
Terrill, Delbert "Chip, " 167,
195
Thompson, Bill, 166
Thompson, Charlie, 154-55
Thompson, Paul, 260
Thorson, Eric, 205-6, 207-8, 222
Time, 80, 290
Tojo, Hideki, 309
Tool purchases. See Contracts,
military: tools
Top Secret: National Security
and the Right to Know, 270
Tower, John, 229
Trenton Boyd memo, 14, 16
Triumph of Politics, The, 128
Truman, Harry, 5, 225, 242
TRW Corporation, 182, 253
Tuebner, Hal, 119
TVA, 266
"20/20" program, 154, 155, 156,
159
Tyler, Pat, 195, 196
Tyrrell, Mert, 21, 50

United Technologies, 152
Unisys Corporation, 287, 291-92
Urquart, Gordon, 164

Vance, Cyrus, 95
VanCleve, William R., 229
Vander Schaaf, Derek, 290-91
Vaughn, Robert, 102, 103
Vaught, Wilma, 138
Veliotis, P. Takis, 195, 196
Vietnam war. See Southeast Asia
war

Wacker, Fred, 98
Wade, Jim, 191, 192
Waldie, Jerry, 62, 67, 111
Wall Street Journal, 3, 232
Walters, Johnnie, 66
Warner, John, 287-88, 289
War on Poverty, 160
Warren, Jerry, 7 I
Warren, Joc, 286
Washington Field Office (WFO),
115, 116, 120
Washington Monthly, 107, 177
Washington Post
and C-5A scandal, 16, 19
and Fitzgerald case, 34, 63
and military spending and procurement
bribery, 21, 42, 9 6,
288-89, 29, 299, 312
and reorganization, 246
and secrecy issues, 92, 271
and spare parts scandal, 157-
58, 219, 226
Washington Star, 96, 97, 98
Washington Times, 144, 145
Watergate scandal and hearings,
23, 36, 60, 63, 68, 116, 120
and executive privilege, 2, 65
and national security, 91
Watts, Claudius E. "Bud" III,
246, 25 6-57, 271, 298
Watts, William, 37
Webster, William, 115, 120
Weicker, Lowell, 298
Weinberger, Caspar, 129, 135,
145, 146, 147, 195, 290, 297,
298-99
and investigation of General
Dynamics, 196, 197-98
and investigation of Hughes
Aircraft, 203, 211
and military spending budget,
policy, 169, 174, 210, 225,
226, 235, 240
and New Order, 245
and Packard Commission report,
232, 2331 234
and secrecy issues, 259-60, 261
Weiner, Tim, 311
Weisbrod, Hubert, 85
Weiss, Bernie, 146, 152-53, 168,
176
Weld, William, 286, 287, 289
Welfare system, 308
Wertheim, Mitzi, 95, 101
Westinghouse, 211, 216-18
Westinghouse Electric, 165-66
Westover, Timothy, 207, 208
Wheeler, Winslow, 183
White, Byron, 125
White, Steve, 202, 209
White, William S., 43
White House Years, The, 37
Whittaker, Phillip, 28
Wild Blue Yonder, 99
Will, George, 129, 280
and spare parts scandal, 1155,
177, 235
Willard, Richard, 273, 277-78
Williams, John, 29
Williams, Jon, 213
Willoughby, Will, 209
Wilson, David, 64
Winkler, J. T., 308
Wiretapping, 23, 26, 69, 122, 124
Wirth, Timothy, 225
Witt, Hugh, 71
Woehrle, Chuck, 166, 167, 211
Wolfe, Fred, 254-55
Wolfe, Jim, 184, 185, 199, 263
Wood, Frederick, 2 15
Woodruff, William, 71-73, 78,
79, 88
Woolsey, James, 230
Work measurement, 44-45, 51,
138, 142-43, 145, 187, 191,
305
actual times, 169, 189
by ALC, 78, 79
dollar per standard labor hour
index, 51, 52-53, 78, 79, 149,
156, 187
Military Standard for, 239
should-take times, 44, 52, 139,
140, 141, 142, 169, 189
standard hour of work, 44-45,
77, 141, 142, 156, 189-90
touch labor, 51, 52
Wyden, Ron, 195, 233

Yates, Ronald, 215~I6
Yom Kippur war, 81
Young, Duff, 187

Ziegler, Ron, 34, 36, 37-38, 59,
71
Zill, Anne, 104, 121, 131, 266-67
Zoeckler, Zeke, 244
Zuchert, Eugene, 8
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