Where is Kryder's Money?

Defense Contractor Notes

General Dynamics

"General Dynamics was officially established February 21, 1952, although it has organizational roots dating back to the late 1800s. The company was formed after its predecessor and current operating division, Electric Boat, acquired the aircraft company Canadair Ltd. and began building the first nuclear-powered submarine, USS Nautilus. Through the years, General Dynamics has applied the wisdom of its experience and insight to recognize and act on change to build its position in the defense and technology business sectors. Building upon its marine business, the company added its first Combat Systems business unit, Land Systems, in 1982; its first Information Systems and Technology business unit , Advanced Technology Systems, in 1997; and returned to the aerospace business with Gulfstream in 1999. Today, General Dynamics has leading market positions in business aviation and aircraft services, land and amphibious combat systems, mission-critical information systems and technologies, and shipbuilding and marine systems. The company is a leading supplier of sophisticated defense systems to the United States and its allies, and sets the world standard in business jets. It is headquartered in Falls Church, Virginia, employs approximately 54,000 people worldwide, and has four main business segments: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems.

In addition to its four primary business segments, General Dynamics also owns and operates Freeman Energy, a coal mining concern in southern, and central Illinois, and Material Service, a Chicago-based construction supplier of crushed stone, sand, and gravel products. Freeman Energy operates two underground coal mines and one surface coal mine in Illinois. The three facilities have coal preparation and rail loading capabilities on site to handle the output. Material Service operates several stone quarries and sand and gravel pits in the central Illinois and northwestern Indiana areas for its aggregates business.

Material Service Corporation is engaged in the mining and sale of aggregates (stone, sand, and gravel) for use in the construction of highways and other infrastructure projects and for commercial and residential building construction. Our primary markets are in Northern and Central Illinois and Northwest Indiana. The Company also provides other services through its marine material handling facilities, construction department, and heavy equipment machine shop. Material Service Corporation is a wholly owned subsidiary of General Dynamics Corporation.

Material Service Corporation was founded in 1919 by three brothers - Henry, Sol, and Irving Crown. At that time, there were 80 sand and gravel companies operating in the highly competitive, major market of Chicago, and Material Service ranked last. The Company owned no sources of raw material and only had a single distribution point - a 50' x 100' lot on the north side of Chicago. Over the years, the Crowns acquired or developed production facilities, especially those near water to take advantage of low cost barge transportation. We are now a leading producer of aggregate materials in the Chicago area. Material Service believes strongly in the importance of its customer relationships, perhaps best captured in Colonel Henry Crown's recollections of the Company's early years in business: "We started on the premise that our building material was really no different than any competitor's, so we had to provide something extra. That something extra was better service, and we worked day and night to provide it."


A BILLION DOLLAR BOONDOGGLE By John Riley John Riley is with the Project on Military Procurement Rep. Dingell: I have been looking here at the vouchers, and the vouchers on this are signed, Mr. MacDonald, by you, I observe, rather approved by you here at the bottom and the first one is Fursten boarding at Silver Maple Farm $87.25, and there's a proper receipt. It says "receipt received from Silver Maple Farm, $87.25." Then I further come down and I see here, as I go through these vouchers, it says here, at a later one it says Silver Maple Farm, boarding for Fursten, $42. Then another one says dog boarding, $26.25. Is Fursten a dog? Mr. MacDonald: I don't know what document you have, Mr. Chairman. May I see it, and I can answer it maybe. Mr. Dingell: Are the taxpayers paying for dog boarding? Mr. MacDonald: I wouldn't think so. -Rep. John Dingell, D-Mich., questioning a General Dynamics employee at a hearing before the Subcommittee on Oversight and Investigations, House Energy and Commerce Committee, Feb. 28, 1985. WITH THESE OUTRAGEOUS and absurd revelations of the conduct of the nation's largest defense contractor, the issue of military procurement reached its zenith as a news item. In the span of a year, General Dynamics, the nation's largest defense contractor, would be twice suspended and reinstated, executives would be indicted and replaced, and billions in defense dollars would be sent into limbo. Inside the Washington, D.C. beltway, Fursten became a household name. Across the country, headlines announced the latest details of General Dynamics' management atrocities and editorials called for fundamental Pentagon reform. Three years, many scandals, and a Presidential Commission later, the government is still without an effective buyer-seller relationship with its defense contractors. The government remains dependent on a set of administrative sanctions that leave it little hope of forcing real reform. Of these sanctions, suspension and debarment are among the most serious. In the Federal Acquisition Regulations, suspension means "to disqualify a contractor temporarily from Government contracting and Government-approved subcontracting." Debarment is "to exclude a contractor from Government contracting and (subcontracting) for a reasonable, specified period." The raison d'etre of these actions is not what it might appear, however. The regulations further state: "The serious nature of debarment and suspension requires that these sanctions be imposed only in the public interest for the Government's protection and not for purposes of punishment." And all of the sanctions are used only sporadically. An examination of Department of Defense (DoD) statistics reveals how unequally suspensions and debarments are applied. The Cleveland Plain-Dealer reported in May 1987 that "of the 594 suspensions and debarments active as of March 10, 1987, none was among the top 100 defense contractors. Private individuals made up 236 of the contractors, or 48%." Defense Department officials, once reluctant to talk about this phenomenon, are now openly admitting it. When asked about the uneven application of sanctions at a December 1987 congressional hearing, DoD Deputy Inspector General Derek Vander Schaaf replied, "There is a large degree of truth in what you say. It is a problem that needs to be dealt with and hasn't been because we are afraid to suspend or debar the big contractors." The government regulations with regard to suspension and debarment proceedings are a reflection of the government's relationship with the military-industrial complex. Defense Secretary Frank Carlucci described the current situation well in his confirmation hearings in November 1987. "The Defense Department has to have an arms-length relationship with defense contractors, but the industrial base is an extremely important national asset, defense contractors are the tools we use to build our military establishment, and we have to provide them with the proper incentives." That Secretary Carlucci felt compelled to be circumspect when speaking on the subject of defense contractors is indicative of the history of the development of the defense industry. The federal government has for decades had an active role in fostering development in the defense industries and creating and maintaining a lucrative business environment. Over time, however, this policy, along with the trend towards high- technology systems, has resulted in a concentration of defense projects and dollars in the hands of fewer and fewer suppliers. Today, only a handful of contractors control large portions of the national defense effort. As the size of the contractors has increased, so has their political importance as constituencies. The result is a process too unwieldy to properly direct or control. The latest Air Force fighter project, the Advanced Tactical Fighter (ATF), is a good example. All seven of the nation's top aerospace firms have combined to form two rival teams, one of which will win a contract said to be worth at least $30 billion. In this case, the possibility of seriously disciplining a major contractor is next to nil, even for gross misconduct. In response to its dilemma, the administration has developed an alternative to exercising its administrative powers of suspension and debarment. Instead, the government has adopted a widely-criticized policy of contractor self-governance and voluntary disclosure of wrongdoing. It hopes that the new policy will win back public confidence in the industry and improve the government's ability to recoup losses due to wrongdoing. Although there have been several milestones along the way to the present situation, the scandals which helped spur the DoD into action were those surrounding the General Dynamics suspensions. General Dynamics The General Dynamics Corp. has had the unfortunate distinction of being in the headlines for wrongdoing almost continually for the last 10 years. Most of the problems have centered on the Electric Boat division, maker of Trident ballistic missile submarines and Los Angeles-class attack submarines. In 1976 General Dynamics filed a $544 million claim--later to be increased to $843 million--on Navy contracts for 18 attack submarines, claiming that changes in the design and Navy mismanagement were responsible for the overruns. The Navy disputed the claims, but agreed to settle in 1978 for $643 million. Navy officials, however, were not satisfied with the legitimacy of General Dynamics's claim and submitted the case to the Justice Department, claiming that General Dynamics had "bought into the contract" through artificially low bids and later recouped expenses through fraudulent claims. The Justice Department investigated, but in late 1981 decided not to prosecute. The story might have ended there had it not been for Takis Veliotis, an Electric Boat executive who had fled to Greece in the face of an indictment on kickback charges. In 1984 Veliotis made statements to investigators from the Joint Economic Committee, headed by Sen. William Proxmire, D-Wis., that the overruns were almost entirely the fault of Electric Boat. A study of internal documents, released in July 1984, asserted "that Navy officials collaborated with the contractor to jointly contrive an explanation for the settlement that would be approved by Congress." Also investigating the Veliotis material was the Subcommittee on Oversight and Investigations of the House Energy and Commerce Committee, headed by Rep. John Dingell. In February and March 1985, the subcommittee held its startling hearings. The subcommittee grilled the company's executives over allegations that they had been submitting millions of dollars worth of improper overhead claims, giving illegal gratuities to government officials, and conspiring to manipulate stock activity. Allegations of charging for private plane trips, dog boarding and chili cookoffs made for colorful news stories. In May of 1985, Navy Secretary John Lehman announced the suspension of the Electric Boat and Pomona divisions of the company. As soon as the suspension was announced, however, the government found itself in a difficult position. The nation's largest defense contractor, General Dynamics, was the sole supplier of the Trident submarine, the M-1 tank, the F-16 fighter plane, the Stinger anti-aircraft missile, and other systems. Though only two divisions of the company were suspended, the overall state of the company had an important effect on national security. One of the conditions imposed by the Navy for the lifting of the suspension was "the establishment of a rigorous code of ethics for all General Dynamics officers and employees with mandatory sanctions for violation." The question of ethics was to reappear in the coming months. Despite the conditions, the Navy lost much of its credibility as a tough customer when it announced the lifting of the General Dynamics suspension in August 1985. To make matters worse, at the same time it announced that General Dynamics was ready to go back to normal status, it also announced the recipients of the new contract awards: General Dynamics won $658.3 million for a new Trident submarine, and $233.7 million for Army and Navy missile contracts. Critics said the decision sent the wrong signal to contractors. It was hard to get away from asking the question: what possible leverage does the government have over its contractors if they know that when the dust settles, they will get the business anyway? What almost no one knew, however, was that the General Dynamics case would soon be repeated in its entirety and that the same question would be asked again. On December 2, 1985, James M. Beggs and three present and former General Dynamics executives were indicted on charges of trying to hide cost overruns through mischarging of costs on an Army contract for development of a prototype in the Sgt. York air- defense gun program. The next day, the Navy again suspended General Dynamics. On the 4th, the Navy announced the extension "indefinitely" of a bid deadline for construction of four Los Angeles-class submarines. The Navy was caught in a bad situation: it could award all four submarines to the only other competitor, Newport News Shipping & Drydock Co., or it could appear to be bending over backwards again for General Dynamics. Secretary Lehman explained his decision in terms of the benefits of competition. "It would be foolish of us to award a sole-source contract just to spite another contractor," he explained. Perhaps he was right, but critics again interpreted the Navy's actions as coddling General Dynamics, and the administration lost its opportunity to send a tough signal to its major contractors. Things got worse on December 6, when the Air Force extended its deadline for bids on its Advanced Tactical Fighter (ATF) program, thereby keeping General Dynamics in the running. The Pentagon belatedly explained on the 10th that the ATF extension was made because of the need for technical additions and not for the sake of General Dynamics, and then made what it thought was a clarifying statement: "It is the view of Secretary Weinberger that this sort of extension, while clearly in the public interest when made for a short time, must be weighed against the intent of the suspension and the circumstances giving rise to it and unless it is demonstrated that the contractor is responsible the government may have to give up the benefits of competition in this and other cases that involve fraud or other illegal activities. This determination involves a judgement of what is in the public interest in a particular case." The Navy lifted the second suspension on February 7, 1986 in what was termed a "global settlement." General Dynamics agreed to set up a $50 million escrow account to cover potential liabilities resulting from the Beggs case, and the Navy agreed not to impose any further contract suspensions based on past actions, even though there were three ongoing Federal grand jury investigations and 10-15 DoD investigations of General Dynamics. The Navy waited a month this time before awarding General Dynamics a $1.033 billion contract for construction of four nuclear attack submarines, and a total of $ 3.4 billion in contracts for the month of March. Newport News, the only other competitor on the submarine contract, received nothing. Critics again roared. "For the Defense Department to give General Dynamics more contracts than any other defense contractor in history in just two short months is rather like giving a child a lollipop reward right after a spanking for misbehavior," Rep. Dingell was quoted as saying. The Packard Commission In June of 1985, at the height of the General Dynamics story, the White House announced the formation of a Blue-Ribbon Commission on Defense Management, to be headed by industrialist and former Secretary of Defense David Packard. In February 1986, the Commission released its interim report. In it were two important new concepts that would greatly affect DoD policy. The first was the idea of contractor self-governance, grounded firmly in comprehensive employee ethics programs. "To ensure that their houses are in order, defense contractors must promulgate and vigilantly enforce codes of ethics that address the unique problems and procedures incident to defense procurement. They must also develop and implement internal controls to monitor these codes of ethics and sensitive aspects of contract compliance." The second notion was a shift in suspension and debarment policy. "Suspension and debarment should be applied only to protect the public interest where a contractor is found to lack 'present responsibility' to contract with the federal government. Suspension and debarment should not be imposed solely as a result of an indictment or conviction predicated upon former (not ongoing) conduct, nor should they be used punitively." To this point, an indictment or conviction for a fraud-related offense were the primary basis for suspension and debarment, respectively. Thus the panel seemed to be saying that the government must have conclusive evidence that a fraud scandal is currently in place and operating before imposing suspension and debarment. Though some members of Congress and defense observers questioned the wisdom of these and other aspects of the Commission report, approval and implementation of the document was swift. The accountability ideas of the commission were put into the Defense Industry Initiatives on Business Ethics and Conduct, which were signed by 32 of the leading defense contractors by the time the final commission report was released. Deputy Secretary of Defense William H. Taft IV followed up in July with a letter to those contractors who had not signed on. "The (participating) contractors understand the Department's view that early voluntary disclosure, coupled with full cooperation and complete access to necessary records, are strong indications of an attitude of contractor integrity, even in the wake of disclosures of criminal liability. We will consider such cooperation as an important factor in any decisions that the Department takes in the matter." Though the DoD didn't agree to any specific limitation on sanctions for participating firms, Taft's letter, along with the recent Packard concepts, seemed to indicate that firms voluntarily disclosing problems would receive no suspension or debarment action. Only a few months later there would be a test case for the new policy. The TRW Case In June of 1984, TRW Inc., a major supplier of aerospace and electronic equipment to the armed forces, submitted to the Defense Department a report on an internal investigation of its Electronic Products Inc. sector in Colorado Springs, Colorado. TRW reported that about $1 million had been fraudulently charged to government contracts. TRW fired the president of the division, the acting director and the general manager, and promised to institute corrective actions. In November of 1984, TRW submitted another report, this time regarding its Aircraft Components Group in Cleveland. Irregularities in cost-estimating procedures had produced some $2-3 million in overcharges from 1978 through 1983, the report claimed. Once again, the company claimed corrective actions, and it fired several mid-level employees. Events took a radical turn in April of 1986 when three of the fired Cleveland employees filed a $1.2 billion suit against the company on behalf of the government using the False Claims Act (also known as the Abraham Lincoln Law). The suit alleged cost and labor mischarging (keeping two sets of books), as well as price fixing and anti-trust violations. The Justice Department joined in the suit in June but quickly limited the suit to the mischarging claims. Federal grand juries were convened in Colorado and Ohio. Investigations of all TRW facilities were initiated by the DoD and the Justice Department. TRW submitted two more internal reports, covering its San Diego and Sunnyvale, California divisions. Investigators for the Dingell subcommittee also began examining the case. Hearings were held in March of 1987. The subcommittee investigators concluded that the improper practices at TRW and the subsequent damage to the government went well beyond the disclosures made in the company's voluntary disclosures. TRW had denied, for example, that improper practices took place at its Redondo Beach, California facility, home of its $3.5 billion Electronics and Defense sector. At the subcommittee's hearings, however, two of the fired San Diego managers testified that their practices were based on earlier Redondo Beach programs. According to subcommittee staff, the inconsistency between TRW's disclosures suggests a plan designed to satisfy the DLA's requirements to demonstrate present responsibility while suppressing indicators presenting a picture of a company with widespread accounting irregularities and internal control weaknesses. The government, however, was having a difficult time coming to grips with its investigation. TRW, claiming a host of reasons including attorney-client privilege, was refusing DoD access to necessary documents. According to subcommittee reports, DoD officials were either unwilling or unable to resolve the issue, and thus had to settle for data which was far from complete. The official in charge of the investigation, Gerald Werfel, head of DLA's Contract Integrity Unit, admitted to the subcommittee he did not attempt to find out to what extent the Redondo Beach Electronics and Defense sector may have directed the Colorado Springs subsidiary to use improper practices. Many were watching, then, when the government announced in September of 1987 its terms in a "global" settlement with TRW. TRW agreed to pay the government $17 million, the amount estimated by the TRW investigations to have been improperly charged, and to take corrective actions outlined by the government. In addition, TRW agreed to plead guilty to 10 counts of making false statements, and the DLA agreed not to suspend or debar any division of TRW. TRW would continue to cooperate with DoD officials and to provide "reasonable access" to TRW records, personnel, and facilities. What Now? The voluntary disclosure issue is still far from settled. There are many in the industry who still feel that voluntary disclosure raises serious legal problems. "There is no concern for the rights of individual employees, officers, etc. Those people are completely exposed," according to John Dowd, an attorney with the Washington, D.C. office of Heron, Burchette, Ruckert and Rothwell, a law firm which represents defense contractors. "It puts the management of a company in a hell of a dilemma, because effectively, they are deputized. It is a short-circuiting of the recognized system of justice." DoD officials downplay these concerns. "To date, no company that has engaged in voluntary disclosure has ever been suspended or debarred based on the information they provided to us on the disclosure or as the result of a criminal investigation resulting from the disclosure," according to Howard Cox, DoD Deputy Assistant Inspector General for Criminal Investigations Policy. "I think that says it all," he said. But with voluntary disclosures not leading to effective disciplinary action, the DoD is left in much the same position as it was before. Given the trends in the defense industry away from competition and toward greater concentration, and without any serious political reform agenda in the near future, it does not appear likely that more healthy incentives for industry and government are near at hand. National security and economic vitality will surely suffer as a result.


General Dynamics Corporate Headquarters 3190 Fairview Park Drive Falls Church, Virginia 22042-4523 (703) 876-3000 www.generaldynamics.com ‹ Facilities and Subsidiaries General Dynamics (GD) is headquartered in Falls Church, Virginia, and employs approximately 46,000 people worldwide. GD and its’ subsidiaries have facilities throughout the United States, including Connecticut, Rhode Island, Maine, Massachusetts, California, Vermont, Pennsylvania, Arkansas, Ohio, Washington, North Carolina, and Virginia, and international offices in Italy, England, and Canada. GD operates in four main areas: l Marine Systems - producing warships and nuclear submarines l Aerospace - making business jets l Information Systems and Technology - designing command and control systems l Combat Systems - making tanks, amphibious assault vehicles, weaponry, and ammunition ‹ What They Make General Dynamics’ subsidiary, Electric Boat of Groton, Connecticut builds the Seawolf attack submarines; Bath Iron Works of Bath, Maine builds the DDG 51 destroyers; Land Systems of Sterling Heights, Michigan builds the M1 tank; and Gulfstream Aerospace of Savannah, Georgia makes business jets. GD Marine Systems is the U.S. Navy’s leading supplier of combat vessels – including nuclear submarines, surface combatants, and auxiliary ships. Additionally, General Dynamics manages information networks for NATO allies, provides water transportation in Boston Harbor (Harbor Express), supplies interactive displays for remote medical care (Telehealth), furnishes computer-based, automated diagnostic maintenance and instruction tools (TechSight™), and services various business aircraft. ‹ General Dynamics DOD Contracts Year Rank Awards (in Billions) 2000 4 $4.2 1999 4 $ 4.6 1998 4 $ 3.7 1997 4 $ 4.0 1996 5 $ 2.7 ‹ Troubled Programs The future of the $50 billion DD-21 Land Attack Destroyer program is uncertain. President Bush talked at length throughout the campaign about "skipping a generation" in developing new weapons technology, and the DD-21 is one of the weapons systems, among many, that the Pentagon is examining as it conducts its top to bottom reviews. However, the Bush administration’s 2002 defense request included $643.5 million for the DD-21 program. The DD-21 was described by the former director of the Pentagon’s testing office, Philip Coyle as "not only a replacement, but it’s also less observable, more stealthy in terms of its design, and operates more efficiently." The ship cost $100 million less than the current destroyer, and would put into place new "cutting edge" technologies, but whether or not it is necessary is the question. As Owen Cote of MIT’s security studies program said, "The problem it is going to have is there’s a very capable ship that’s now being made." The DDG-51 "doesn’t do many of the things that the DD-21 does, but the bottom line is the Navy is being put under tremendous budgetary pressure and the DD-21 is a little exposed." As John Donnelly of the Boston Globe points out, "The uncertainty has overshadowed another unfolding drama: competition between Bath and Ingalls over the designation of lead shipyard in the project. The winner would take over the design work and hire various subcontractors, making the award worth billions of dollars." Currently there are two teams, the Blue Team and the Gold Team. The Blue Team is made up of Bath as shipbuilder, Lockheed Martin as combat system designer, with Maine Senators Olympia Snowe and Susan Collins as its "political shepherds." Incidentally, the Blue Team has a website devoted to the DD-21, www.dd21.com. The other team is the Gold Team, made up of Ingalls as the shipbuilder, Raytheon as the systems integrator and Senate Majority Leader Trent Lott of Mississippi "as the more than equal political counterweight." Another item that might be on Defense Secretary Rumsfeld’s chopping board is the $11 billion Crusader howitzer. John Omnicinski reported in the Detroit News that the Crusader "will take 18 years to reach battlefield troops, may be too heavy to airlift and won’t end up anywhere near its original design. Nonetheless, it has risen like a phoenix from the ashes of every defense budget of the 1990s. He went on to point out that the Crusader has friends in high places "giving it a political geography hard to defeat, despite flaws, rising costs and a disastrous development schedule." This year’s defense budget has $447.9 million devoted to the program. ‹ Inside Political Connections The Bush administration has just named three corporate executives to lead the Air Force, Army and Navy. Among the three is Gordon R. England, 63, who recently retired from General Dynamics, if confirmed he would serve as the Secretary of the Navy. The Boston Globe noted, "Gordon England had no military experience, but he had just the right qualification to become President Bush’s pick for secretary of the Navy: Two decades in the corporate world." While Gordon England is on his way to the Pentagon, a number of former Pentagon officials and members of the armed services are lending their advice to GD by serving on the company’s Board of Directors (each receives an annual retainer of $40,000). These include Former U.S. Under Secretary of Defense for Acquisition and Technology Paul Kaminski, who reportedly also receives $200,000 a year for up to 40 business days of his time; retired Lieutenant General, U.S. Army Julius W. Becton, Jr.; George A. Joulwan, Former Supreme Allied Commander, Europe and General, U.S. Army, Ret.; Carl E. Mundy, Jr., Former Commandant, U.S. Marine Corps; and Carlisle A. H. Trost Former Chief of Naval Operations, U.S. Navy. ‹ The Money Stuff According to the Center for Responsive Politics, campaign contributions for the 2000 election totaled $1.2 million, with about 65% going to Republican candidates. To date, General Dynamics has donated close to half a million dollars for the 2002 election cycle, while lobbying expenditures average about $4.1 million a year. ‹ Merger Mania GD was hoping purchase Newport News Shipbuilding Inc. (for $2.1 billion), based in Newport News, VA. The acquisition would have combined the last remaining U.S. Navy aircraft carrier and submarine manufacturers. The Navy accounts for 98 percent of total sales of Newport News Shipbuilding (NNS), which is the only other company besides GD capable of building nuclear subs. NNS has built 10 of the last 12 active aircraft carriers and is scheduled to christen the USS Ronald Reagan in 2003. The merger took an interesting twist in early May 2001 when defense giant Northrop Grumman decided to make a hostile, unsolicited bid to purchase Newport News. The New York Times reported that Northrop, which acquired amphibious shipbuilder Litton Industries earlier this year, would have a monopoly on aircraft carriers, amphibious ships and large-deck amphibious ships if it purchased NNS. Northrop would also remain a partner with General Dynamics in the construction of nuclear submarines. One former DOD official said the Navy would favor the merger between GD and NNS because the two companies have been partners in the construction of nuclear submarines since 1997, unlike Northrop which has no experience building nuclear subs and little in the shipbuilding business. But in the end, Northrop Grumman prevailed, completing the acquisition of Newport News in December 2001. Both companies had strong advocates in their respective corners. Northrop owned Litton Industries is the biggest private employer in Mississippi, Senate Majority Leader Trent Lott’s home state. Newport News is the biggest employer in Virginia, home state of Senator John Warner, who heads the Armed Services Committee. The Washington Times reported that Sen. Lott, in a letter to Defense Secretary Rumsfeld, Sen. Lott said, "I believe the proposed Northorp Grumman-Newport News Shipbuilding merger is in the best interest of the nation, the Department of Defense and the Navy." Senator Warner also wrote to Mr. Rumsfeld, requesting a meeting as soon as possible to discuss the two offers. The acquisition makes Northrop Grumman the nation’s third-largest military contractor and its biggest maker of ships. ‹ US Weapons Makers Vie for Taiwan Arms Deal While the sale of Aegis Destroyers to Taiwan has been temporarily postponed, weapons manufactures aren’t giving up. General Dynamics, owner of Bath Iron Works where the destroyers would be built, hired Cassidy and Associates, whose key player is former Reagan defense official Carl Ford, to lobby for the sale. Cassidy, which also has a $10 million contract with a Taiwan think-tank with close ties to the ruling party, conceived of and drafted a letter sent to President Clinton by Senate Majority Leader Trent Lott and two other Republican Senators. The letter implied that congressional approval of permanent normal trade relations with China was contingent upon the White House’s prompt approval of the weapons sale. On the public relations front, jobs were made a major issue. The Aegis Industrial Alliance says that the destroyer contract represents work for 1,938 companies in 49 states that have stakes - including major weapons manufacturers Lockheed Martin, Boeing and Raytheon. Also on Taiwan’s wish list are P-3C Orion submarine-hunting aircraft from Lockheed Martin, and advanced-medium-range air-to-air missiles, diesel submarines, and M1 tanks made by General Dynamics Corp. This fact sheet was prepared by Michelle Ciarrocca of the Arms Trade Resource Center of the World Policy Institute in New York. Information was obtained from the General Dynamics website (www.generaldynamics.com) and various news articles. For more information please consult our website at www.worldpolicy.org/projects/arms.

Raytheon is the third largest defense contractor in the United States, behind Lockheed Martin and Boeing. The Massachusetts-based conglomerate received more than $6.3 billion in Pentagon contracts in FY 2000, accounting for over 37% of the firm’s $16 billion in revenues. By its own accounting, the company is involved in over 4,000 weapons programs. As Tom Culligan, Raytheon VP for Business Development, put it, "As a top tier defense electronics company, our forte is to be a provider to major platform manufacturers, which means you see Raytheon’s brand name everywhere – from tanks and rifles to ships, aircraft and UAVs [unmanned aerial vehicles]." Raytheon’s best-known product is probably the Patriot air defense missile, which received massive publicity during the 1991 Gulf conflict when it was used to defend against Iraqi Scud missiles. Analyses performed after the conflict by Dr. Theodore Postol of MIT and the Israeli military indicated that the Patriots were far less accurate than U.S. officials had originally claimed, and that in fact they had missed their targets more often than not. The reputation of the Patriot was further tarnished when defects in the Patriot II system that was sold to many NATO allies after the Gulf War caused the systems to be recalled for repairs. Another high visibility system produced by Raytheon is the Tomahawk land attack missile, which company promotional materials describe as "the U.S. Navy’s weapon of choice." As evidenced from this passage on their web site, the company is proud of the Tomahawk’s combat record: "Tomahawk has played a crucial role in several theater operations including: Operation Desert Storm, Bosnia, Iraq and Kosovo. Over 300 Tomahawks were used in Operation Desert Storm alone. Since Desert Storm in 1991, more than 1,000 Tomahawks have been fired ..." Other Raytheon missile systems include the AIM-65 Maverick, an air-to-surface missile that the company describes as "the most widely used precision guided munition in the free world. . . integrated on virtually every fighter aircraft in the free world ranging from the F-4 Phantom, F/A-18 Hornet, F-16 Falcon, AV-8B Harrier, the JAS-39 Grippen, and most recently, the P-3C Orion"; the AIM-9 Sidewinder air-to-air missile; and the top-of-the-line AIM-120 AMRAAM (Advanced Medium Range Air-to-Air Missile), which has been sold to the U.S. armed forces along with more than 20 other nations, including recent controversial offers to Thailand and the United Arab Emirates. Raytheon also specializes in radar, surveillance, and targeting systems that are used on most U.S.-produced combat aircraft, including the Air Force F-15, F-16, and F-22 fighter planes; the Navy’s V-22 "Osprey" tilt-rotor aircraft; and the U.S. Special Forces AC-130U and AC-130H airborne gun ships which have been heavily utilized in the war in Afghanistan. Raytheon calls this latest line of equipment "the Terminator family of targeting systems." The company is also a major arms exporter, with billions in overseas arms sales in the past decade to a client list that includes Israel, Egypt, Saudi Arabia, Turkey, Indonesia, Malaysia, Oman, Singapore, Greece, Taiwan and South Korea. ‹ II. Raytheon’s Role in Nuclear Weapons and Ballistic Missile Defense Along with Boeing, Lockheed Martin, and TRW, Raytheon stands to profit the most from the Bush administration’s decision to walk away from the Anti-Ballistic Missile Treaty of 1972 and move full speed ahead towards deployment of a multi-tiered missile defense system. Major Raytheon contracts in the missile defense realm include the following: l Prime contractor for the Exoatmospheric Kill Vehicle (EKV), the component of the land-based missile defense interceptor that is designed to destroy incoming warheads in the midcourse portion of their flight path, while they are traveling through the weightless environment of space before re-entering the earth’s atmosphere. l Prime contractor for the X-band radar and Upgraded Early Warning Radar, major components of the land-based element of the missile defense program. l System integrator for the PAC-3 system, a medium range interceptor missile based on the Patriot missile; producer of the radar system for Lockheed Martin’s Theater High-Altitude Area Defense (THAAD) system; l Prime integrator for the Navy Theater Wide program, a sea-based missile defense project based on the Standard missile; Raytheon has had more than its share of problems in its missile defense work. Funding for the Space-Based Infrared System Low (SBIRS-Low), a satellite surveillance and targeting system that Raytheon has worked on with TRW, has been held up by Congress due to repeated cost overruns and schedule slippages. And in late 2001, the Pentagon’s Missile Defense Agency (MDA) announce that it was canceling the Navy Area Defense (NAD) program, a short-range missile defense system that, like Navy Theater Wide (see above) was to use interceptors based on the Raytheon standard missile. The cancellation of the $9 billion NAD program came shortly after a decision by the Pentagon to scale back its purchases of Raytheon’s Joint Standoff Weapon system (JSOW), a precision-guided "glider" bomb designed to hit targets from as far as 40 miles away. These setbacks for the firm’s financial picture have been more than compensated for by the overall rise in the company’s business since September 11th – a 26% rise in stock prices and an increase in the backlog of its main military division to $12.3 billion by the end of 2001. In early 2002, the firm received a $1.2 billion multi-year contract to provide over 200 T-6A "Texan" training aircraft to the Air Force and Navy – despite criticisms just six weeks earlier by the Pentagon’s Office of Independent Testing and Evaluation that there were serious performance problems in the T-6A program. Even the firm’s $100 million per year loss in revenue from the cancellation of the NAD program was softened by the Pentagon’s announcement that the top contractors on the project – Raytheon, TRW, Orbital Sciences Corp., and Loral Space – would split $300 million in contract termination fees paid for by none other than U.S. taxpayers. ‹ III. Big Guns, Big Money: Raytheon’s Campaign Spending and Lobbying Clout Like other major weapons makers, Raytheon has made a significant "investment" in political influence and access in Washington. Since 1996, the firm has made more than $2.4 million in soft money and Political Action Committee (PAC) donations, ranking third in donations among major defense contractors in the run up to the year 2000 elections, the most recent cycle for which full statistics are available. Because it has major facilities in New England, the company has traditionally had clout with key Democrats in the Massachusetts delegation. But the company’s pattern of contributions in recent years has leaned heavily toward Republicans, moving from a 35%/65% Republican/Democratic split in 1994, the year before the Republicans took control of the House of Representatives, to a 72%/28% Republican/Democratic split during the current election cycle, which culminates in the 2002 mid-term Congressional elections. In order to keep its Democratic contacts active, during the Democratic National Convention in Los Angeles in the summer of 2000 Raytheon served as a major corporate sponsor of a fundraiser for the conservative "Blue Dog" Democrats, a group that generally favors high military spending and pet industry projects like missile defense. Raytheon is also a major player in industry trade and lobbying associations like the Aerospace Industries Association (AIA) and the American Institute for Aeronautics and Astronautics (AIAA). The company’s CEO emeritus and current board member Dennis J. Picard is the president emeritus of the AIAA, which holds regular meetings in Washington and around the country to promote greater investment in weapons technologies. And company personnel have been key players at the Aerospace Industries Association, heading up committees on lucrative issues such as the drive to establish greater subsides for weapons exports at the Pentagon. The firm has a number of "heavy hitters" on its board, including former CIA Director John Deutch, former NATO Supreme Commander General John Galvin (Retired), and former New Hampshire Senator Warren Rudman, who has served as both a board member and a consultant to the firm. In addition to lobbying at the federal level, Raytheon has pioneered in squeezing tax breaks out of state and local governments as well. In 1995 the company threatened to move out of the state if the Massachusetts State Legislature failed to pass a bill that drastically reduced its state tax burden in exchange for a pledge by Raytheon and other affected firms to maintain at least 90 percent of their payroll and property levels in the state as they existed on January 1, 1996. The company has made thousands of layoffs since, but claims to still be in compliance with the 1995 law. ‹ IV. Civilian Business and Location of Major Facilities Raytheon has significant civilian business lines in construction, transportation, data processing (including processing student loan payments), and civil aviation (through its ownership of Beech Aircraft of Wichita, Kansas). But in recent years, government contracts – mostly with the Department of Defense – have accounted for between 66 and 72% of the company’s business, which no doubt explains why it puts so much emphasis on developing lobbying power in Washington. A list of major Raytheon facilities as of December 31, 2000 is as follows: l Electronic Systems Division: East Camden, Arizona (AZ); Tucson, AZ; El Segundo, California (CA); Goleta, CA; Long Beach, CA; Louisville, Kentucky (KY); Andover, Massachusetts (MA); Bedford, MA; Sudbury, MA; Tewksbury, MA; Portsmouth, Rhode Island (RI); Dallas, Texas (TX); Plano, TX; and Sherman, TX; l Command, Control, Communication & Information Systems: Fullerton, CA; Aurora, Colorado (CO); St. Petersburg, Florida (FL); Ft. Wayne, Indiana (IN); Landover, Maryland (MD); Towson, MD; Marlboro, MA; State College, Pennsylvania (PA); Garland, TX; and Falls Church, Virginia (VA); l Aircraft Integration Systems: Lexington, KY; Greenville, TX; and Waco, TX; l Raytheon Technical Services Company: Chula Vista, CA; Long Beach, CA; Indianapolis, IN; Burlington, MA; and Norfolk and Reston, VA; l Commercial Electronics -- Andover, MA; Kiel, Germany; Portsmouth, United Kingdom (UK); and Malaga, Spain; and Midland, Ontario (Canada); l Aircraft -- Selma, Alabama (AL); Salina, Kansas (KS); and Wichita, KS; l Corporate Headquarters -- Lexington, MA. Note on sources: Sources of information for this profile included major newspapers like the Wall Street Journal, New York Times, and Boston Globe; Department of Defense contract announcements; and official Raytheon documents, including the company’s annual report and 10K. Additional information can be found on the company’s web site, at www.raytheon.com. This report was prepared by William D. Hartung of the World Policy Institute; questions can be referred to him at hartung@newschool.edu .

Lockheed Martin: World's Largest Weapons Manufacturer ‹ I. Introduction: Nuclear Weapons and Missile Defense Contracts Lockheed Martin is the world's largest weapons contractor, a major player in the areas of nuclear weapons and ballistic missile defense. The company received over $15 billion in contracts from the Pentagon in FY 2000, plus an additional $2 billion for nuclear weapons design work from the Department of Energy. Lockheed Martin is the prime contractor for the Trident II Submarine-Launched Ballistic Missile (SLBM), a multiple-warhead, long-range missile which is produced for deployment on the Trident submarine. The Trident II is the only long-range U.S. nuclear missile currently in production. The company is also involved in the design and production of nuclear warheads through its role as the prime contractor for Sandia National Laboratories, a nuclear weapons engineering and design lab funded by the U.S. Department of Energy. The company also has a major subcontract at the Nevada Test Site to carry out "subcritical testing" of new nuclear weapons designs, a form of testing that attempts to exploit possible loopholes in the Comprehensive Test Ban Treaty (which, as of this writing, the United States has failed to ratify). Even as it profits from working on the next generation of nuclear weapons, Lockheed Martin is also heavily invested in ballistic missile defense. The company is the lead contractor for the Theater High-Altitude Area Defense (THAAD) program, a system designed to intercept medium-to-long-range ballistic missiles. Even though the THAAD system has failed in 6 out of 8 tests to date, last year the company received a contract extension worth up to $4 billion for continuing work on the system. Lockheed Martin is also designing and building the payload launch vehicle which is slated to be used to launch the interceptor and "kill vehicle" for the land-based version of National Missile Defense; serving as prime contractor for the Space-Based Infrared System-High (SBIRS-High), a space-based early warning system for missile defense which has been plagued by cost overruns and technical problems; serving as a major contractor for the Space-Based Laser (SBL) program, a favorite of Star Wars boosters which is currently scheduled for its first test in 2012, but may be accelerated under the Bush/Rumsfeld missile defense plan; and playing a central role in "Team ABL", a partnership which involves Boeing, TRW, and Lockheed Martin in the design and production of the Airborne Laser (ABL), which is meant to place lasers on 747 aircraft for use in attacking medium-range ballistic missiles in their boost or ascent phases. Last but not least, Lockheed Martin stands to profit handsomely from any move towards emphasizing sea-based approaches to missile defense, since many of the proposed approaches for sea-based interceptors are based on the idea of utilizing and expanding upon the capabilities of the Aegis air defense system, which is produced by Lockheed Martin at its Moorestown, New Jersey facility. ‹ II. Influence Peddling: Lockheed Martin's Political Connections Lockheed Martin is the "leader of the PACs" * Political Action Committees * among U.S. weapons manufacturing firms. According to data assembled by the Center for Responsive Politics, the company made over $10.6 million in campaign contributions to candidates and party committees from 1990 to 2000, including $3.4 million in donations in the run-up to the year 2000 elections. The company's contributions are targeted towards the politicians that are in the position to do it the most good. For example, Lockheed Martin served as one of a select group of corporate sponsors that pitched in $60,000 each to support the "Lott Hop," a dance party fundraiser that was held in honor of then Senate Majority Leader Trent Lott during the Republican convention in Philadelphia in the summer of 2000. The company has also pledged a $1 million contribution in support of the "Trent Lott Leadership Institute" at the University of Mississippi. Lockheed Martin was the top corporate contributor to members of the House Armed Services Committee during 1999/2000, and among the top ten contributors to the powerful House Appropriations Committee. The company has strong ties to both major parties. Lockheed Martin Vice-President Bruce Jackson was a top fundraiser for the Dole for President campaign in 1996, and he was the chief drafter of the foreign policy platform of the Republican party for the year 2000 elections. Meanwhile, former Lockheed Martin board member and major shareholder Bernard Schwartz, the CEO of Loral Space, was a top soft money donor to the Democratic Party during the 1996 and 2000 presidential elections, contributing $601,000 and $1.1 million to Democratic committees during those election cycles, respectively. ‹ III. Civilian Contracts Although Lockheed Martin relies heavily on government military contracts for its business base, the company does have numerous civilian government contracts. As part of an effort to diversify its business base, the company has been aggressively seeking data processing and other service contracts at the federal, state, and local levels. Among the government agencies which have contracted with Lockheed Martin's Information Management Systems (IMS) division are the Internal Revenue Service, the U.S. Census Bureau, the states of California, Florida, and Connecticut, and localities such as New York City, Washington, DC, and Baltimore, Maryland. Lockheed Martin's civilian contracts cover a wide range of services, from tracking down "deadbeat dads," to processing foster care payments, to training job recipients under "welfare-to-work" programs, to collecting parking fees in major municipalities. Activists in Texas and California have targeted Lockheed Martin's role as a major weapons contractor to protest its involvement in human services projects: the company's failed bid to take over the Texas welfare system was foiled in part by a series of radio ads produced by the Texas State Employees Union which used the punch line "do you want the company that gave us the $3,000 toilet seat to run public services in the state of Texas," with the sound of a toilet flushing in the background. ‹ IV. Global Presence Lockheed Martin's most significant global presence stems from its role as the world's largest arms exporting company. Its most lucrative export item is the F-16 combat aircraft. The company has sold over 3,000 F-16s to overseas customers since the mid-1970s, and the client list for the plane includes Israel, Turkey, Pakistan, Indonesia, Taiwan, South Korea, Thailand, Egypt, and Venezuela. Lockheed Martin F-16s are co-produced in 10 countries, including Turkey, where an F-16 assembly line in Ankara employs 2,000 workers. In late 2001, the company won what has been touted as "the largest defense contract in history," a $19 billion development contract for the $200 billion Joint Strike Fighter program. Plans call for producing variants of the JSF for the U.S. Air Force, Navy, and Marines, as well as for the Navy and Air Force of the United Kingdom. Other countries that have been discussed as potential customers for this "world aircraft" are Germany, Turkey, and Israel. Former company CEO Norman Augustine was a major lobbyist on behalf of the more than $7 billion per year in grants and subsidized loans that the U.S. government provides to U.S. arms exporters each year to help them hawk their products around the world. Both Augustine and company Vice President Bruce Jackson have also been major supporters of the expansion of the North Atlantic Treaty Organization (NATO), in hopes of selling combat aircraft and other weapons systems to new NATO members states. During the year 2000, Lockheed Martin received the largest fine in the history of the U.S. Arms Export Control Act for illegal technology transfers to China that may have been utilized to improve Beijing's ballistic missiles. The company also figured in the April 2001 U.S./China spy plane incident, because the E-P3E surveillance aircraft that crashed on Hainan Island was produced by Lockheed Martin. ‹ V. Major Facilities For a more detailed list of Lockheed Martin facilities, consult the companies web site at : l Lockheed Martin Corporate headquarters, Bethesda, Maryland l Lockheed Martin Space Systems-Missiles and Space, Sunnyvale, California (site for production of Trident II missile) l Sandia Corporation, Albuquerque, New Mexico (run under contract by Lockheed Martin for the U.S. Department of Energy, involved in design and engineering of nuclear weapons) l Lockheed Martin Space Systems-Astronautics Operations, Littleton, Colorado l Lockheed Martin Aeronautics Company, Fort Worth, Texas (main production site for F-16 fighter, major production site for F-22 fighter) l Lockheed Martin Aeronautical Systems, Marietta, Georgia (site for production of C-130 transport aircraft and F-22 fighter plane) l Lockheed Martin Missiles and Fire Control, Orlando, Florida l Lockheed Martin Tactical Systems, Eagan, Minnesota l Lockheed Martin Naval Electronic and Surveillance Systems-Surface Systems, Moorestown, New Jersey (site for work on Aegis-related systems) l Lockheed Martin Naval Electronics and Surveillance Systems, Baltimore, Maryland Source note: This profile was prepared by William D. Hartung of the World Policy Institute's Arms Trade Resource Center. Main sources for the information provided here include company press releases, documents, and annual reports, available at defense contract data from Eagle Eye Services, Vienna, Virginia; Pentagon press releases, accessible at and articles in the trade press (especially Defense News, Aviation Week and Space Technology, and Jane's Defence Weekly). Additional information on sources is available from the author, at hartung@newschool.edu.

Bechtel Corporation San Francisco, CA www.bechtel.com "We are not in the construction and engineering business. We are in the business of making money." --Steve Bechtel Sr. From the most natural and essential resource on earth – water – to nuclear power and weapons that can potentially cause the extinction of all life, Bechtel Group has manipulated both elements to build a business empire. As one of the largest construction and engineering companies in the world, Bechtel Group develops, manages, engineers, builds and operates telecomunications projects, water systems, petroleum and chemical plants, pipelines, nuclear power plants, mining and metal projects and civil infrastructure projects. Bechtel has offices in Argentina, Australia, Brazil, Canada, Chile, China, Egypt, France, India, Indonesia, Japan, Korea, Malaysia, Mexico, Oman, Peru, Philippines, Russia, Saudi Arabia, Singapore, Spain, Taiwan, Thailand, Turkey, United Arab Emirates, United Kingdom, the U.S. and Venezuela. Last year Bechtel booked $23.3 billion worth of new business and worked off $15.1 billion in revenue, increases of 75% and 20% respectively (1). Bechtel has been involved in some of the world’s largest and most ambitious construction projects. The Hoover Dam, the first oil pipeline in Saudi Arabia, the Alaskan oil pipeline, and our first nuclear power plants; all constructed by the private corporation under contracts that have been secured through brilliant manipulation of personal connections. Since the dawn of the nuclear age Bechtel has successfully solidified its position as the preeminent company for building all things nuclear. In its history Bechtel has helped to design and /or construct 45 nuclear power plants in 22 states (2). Recent Bechtel projects include decommissioning the Connecticut Yankee nuclear power plant, managing ExxonMobil’s Singapore Chemical Complex, building an oil pipeline in Mexico, the Meizhou Wan power plant in China, the Collahuasi copper project in Chile, Space Launch Complex in California, the Reliance oil refinery in India, the Ragian nickel and copper complex in Canada and the Boyne Island aluminum smelter in Australia. One of Bechtel’s most important programs is Bechtel Nevada which manages operations at the Nevada Test site – a test bed for conducting defense-related nuclear experiments and national security experiments - for DoE’s Nevada Operations Office which recently became National Nuclear Security Administration. The Nevada Test site is a massive outdoor laboratory and experiment center that is larger than the state of Rhode Island. Bechtel Nevada runs in partnership with Johnson Controls Nevada, Inc.; and Lockheed Martin Nevada Technologies, Inc., and partners with Lawrence Livermore National Laboratory, Los Alamos National Laboratory and Sandia National Laboratories on many projects. Bechtel Nevada also works on projects for the Defense Threat Reduction Agency, NASA, the Nuclear Regulatory Commission and the U.S. Air Force, Army and Navy. The four major ‘missions’ of Bechtel Nevada are: l Stockpile Stewardship - provides experimental capabilities necessary to maintain confidence in the safety and performance of weapons in the U.S. nuclear weapons stockpile. Stockpile Stewardship is also responsible for maintaining the ability to resume underground nuclear testing. l Environmental Management – responsible for Environmental Management, Pollution Prevention, Waste Minimization, and Science and Technology Development. l Defense and Civil Projects – includes Conventional Ordinance Testing which supports the U.S. military in the research and development of new munitions. The benefit of performing the Conventional Ordinance Testing at the Nevada Test Site is the specialized facilities allow live munitions to be tested by firing them at real targets. The HazMat Spill Center (HSC) – fully permitted to release highly hazardous chemical is a controlled environment for experimental purposes. The X-Tunnel Demilitarization Test Facility – an underground testing ground for demilitarization processes including disposition of conventional ammunition, rocket motors, and energetics. l National Security Response – includes several programs for crisis management, which includes advanced technologies, terrorism-related intelligence and remote date acquisition and analysis. Includes Protective counter Measure/Weapons of Mass Destruction training. Bechtel Political Connections Bechtel’s close relationship with the Central Intelligence Agency helped influence overthrows of several foreign governments perceived as unfriendly to American business goals; and allowed the company to be at the right place at the right time to take advantage of new business opportunities with puppet regimes (3). Close ties between Alan Dulles the CIA deputy Director and Steve Bechtel’s financial advisor, John Simpson, facilitated the relationship between Bechtel and the CIA. Steve Bechtel served as the CIA’s liaison with the Business Council and several other organizations directly linked with the CIA (4). The ties between Bechtel and the CIA led to collaborations in intelligence gathering that helped overthrow Iran’s Mossadeq in 1953 and Indonesia’s Sukarno and replace them with the Reza Shah Pahlavi and Suharto respectively, pro-Western, pro-business allies. Key Bechtel alumni are Reagan Secretary of Defense Casper Weinburger former Bechtel general counsel, and Reagan Secretary of State, George Schultz former Bechtel President, and current Bechtel board member. W. Kenneth Davis, former vice-president for nuclear development became Reagan’s deputy secretary of Energy and head of the Atomic Energy Commission under Reagan. William Casey, chairman of the Security and Exchange Commission under Nixon, head of the Export-Import bank under Ford, Reagan campaign manger and head of the CIA under Reagan was also a Bechtel consultant. Richard Helm was CIA director under Nixon and eventually became a Bechtel consultant. White House political advisor Perter Flanigan under Nixon became a senior partner in the Bechtel-owned investment house Dillon, Read and Company. Robert L. Hollingsworth, AEC’s general manager under Nixon became manager of manpower services at Bechtel. Nixon Treasury secretary William Simon became a Bechtel consultant. Additionally, numerous friends of Bechtel, too long to list, many working in the AEC eventually ended up with Bechtel. The close collaboration between the AEC and Bechtel was "so incestuous it is impossible to tell where the public sector begins and the private one leaves off" (5). Bechtel’s political influence does not stop close relationships to people in power. The company also lets its money to the talking. In the last ten years, Bechtel has contributed almost a million dollars to election campaigns of members of Congress. Since Bechtel remains a private corporation the company has been quiet about its connections with the current Bush Administration. Considering Bechtel’s cozy relationship with past Republican Administrations and President Bush’s trend of recycling former politicos, it is more than likely that Bechtel has formed strong ties with Bush. Bush’s energy plan is corporate friendly and nuclear friendly, a formula most likely very attractive to Bechtel. Subsidiaries and other relationships with other corporations Some among the many Bechtel alliances and joint ventures are Bechtel Bettis, Inc – a subsidiary that manages and operates the U.S. navy Nuclear Propulsion Program Bettis Atomic Power Laboratory for the U.S. Department of Energy. InterGen – a joint venture with Shell to develop, own, and operate state-of-the-art power plants and related fuel and energy infrastructure around the world. International Water, Ltd (IWL) An international water development service company owned jointly by Bechtel Enterprises and Edison S.p.A. Lectrix, A joint venture of American Electric Power (AEP), Bechtel and Siemens to provide industrial power quality solutions transmission network enhancements (6). For longer version of this factsheet click here. This factsheet was prepared by Dena Montague of the Arms Trade Resource Center www.worldpolicy.org/projects/arms. For more information visit www.bechtel.com and www.bechtelnevada.com. Footnotes: (1) Bechtel Global Report 2000 (2) Riccio, Jim. "Incompetence, Wheeling and Dealing: The Real Bechtel" Multinational Monitor October, 1989. (3) McCartney, Laton. Friends in High Places The Bechtel Story: The Most Secret Corporation and how it Engineered the World. Simon & Schuster, 1998, p. 115. (4) ibid 119 (5) ibid 104 (6) Bechtel Global Report 2000 Special thanks to Antonia Juhasz, Global Exchange, www.globalexchange.org and Pratap Chatterjee, Corporate Watch, www.corpwatch.org.

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