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Brotherhood of Arms: General Dynamics and the Business of Defending America

October 06, 1985|Douglas M. Hart | Hart is a defense analyst with Pacific-Sierra Research Corp. and

Brotherhood of Arms: General Dynamics and the Business of Defending America

by Jacob Goodwin (Times Books: $18.95; 419 pp., illustrated)

The year 1985 has not been good for General Dynamics. The charges levied against the $6-billion conglomerate--contract fraud, kickback schemes, overhead expense abuse--seem to confirm President Eisenhower's prediction of a "military industrial complex" wielding "unwarranted influence" and "misplaced power."

Jacob Goodwin's detailed history of General Dynamics cautions against such sweeping judgments. After months of media hype concerning the alleged transgressions of General Dynamics (GD) and self-serving denials by corporate executives, a balanced account is sorely needed. "Brotherhood of Arms: General Dynamics and the Business of Defending America" more than meets this requirement.

The book's basic strengths are methodology and scope. Goodwin traces the evolution of the tiny Electric Boat Co., which sold the Navy its first submarine in 1900, into the nation's third-largest defense contractor in 1984. GD is the only arms merchant that supplies every branch of the armed services with major multibillion-dollar weapon systems. The story of GD's successes and failures serves as a microcosm of the entire defense industry.

"Brotherhood of Arms" eschews the sensational exposes common to defense reporting and concentrates upon the complex relationship between the government, the armed services and defense contractors. "Due process will eventually determine whether GD--or any of its employees--has broken the law. The question here is whether the institutional demands of the weapons business make such behavior almost inevitable."

The author's approach combines biographies with case studies. The men who run GD and those who buy its products are intertwined with the development histories of various weapon systems. Goodwin blends personality with technology to produce a surprisingly coherent description of the weapon acquisition process. He argues convincingly that it is this process that ultimately shapes corporate behavior.

The role of personalities is revealed in the triangle composed of David Lewis, Takis Veliotis and Hyman Rickover. These men proved capable of major accomplishments, but they have also apparently exhibited horrendous failures of judgment--or worse.

Lewis became chairman of GD in 1970 and turned a financially troubled business into one of the nation's leading defense contractor. But he must shoulder a great deal of the blame for GD's current difficulties, which Goodwin characterizes as "the struggle of its life." Goodwin indicates that Lewis was slow to heed rumors of kickbacks involving subcontractors at GD's Groton shipyard. Lewis has also been accused of using government overhead payments to cover thousands of dollars in personal entertainment and travel expenses. Following termination of two major contracts by the Navy and suspension of progress payments pending adoption of a "rigorous code of ethics" by GD employees, Lewis announced that he would resign by the end of the year.

Veliotis took over the floundering Groton shipyard in late 1977 and restored its profitability. In 1981, he was promoted to executive vice president and was considered likely to succeed Lewis. Within two years, however, Veliotis had fled to his native Greece to avoid prosecution for allegedly accepting $1.35 million in kickbacks from a GD subcontractor.

Vice Admiral Rickover earned his place in naval history by persuading Washington to invest in the development of nuclear-powered warships. Rickover also possessed what Goodwin terms a "deep-seated mistrust of defense contractors." Many credit Rickover with keeping shipbuilders from bilking the public, but others contend that he destroyed the traditional relationship between the Navy and private shipyards. From his exile in Greece, Veliotis provided evidence that the admiral had accepted about $67,000 in gifts from GD. Navy Secretary John Lehman eventually fined GD 10 times this sum and placed a letter of censure in Rickover's file.

Goodwin's case studies of submarines, cruise missiles, fighter aircraft and tanks demonstrate that responsibility for costly weapons that do not work as planned must be shared by both government and industry. The Pentagon's efforts to foster competitive bidding create incentives for contractors to submit unrealistically low bids that insure cost overruns. Congressional budgetary cuts result in higher unit prices as programs are stretched out. Changes in design specification by the armed services lead to delays and cost increases. Finally, quality control suffers because relatively small corporate staffs like GD's cannot adequately supervise their large, geographically widespread and semiautonomous divisions where assembly lines are actually located.

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