Hx of contracting 3 16 feb 12

1. Industry Landscape Learning Outcomes Total: 1 hour 15 min Lesson 1: Industry Landscape   Learning Outcomes: Students will be able to explain how the scope and diversity of the current industry landscape influences companies’ methods of competing for defense contracts. Compare differences in business/market strategies, priorities, and processes between large, medium, small companies. Compare differences in business operations and strategies between companies focused on weapons systems, commercial products, and/or services. Describe defense companies’ core offerings. Differentiate between public and private companies. Describe the core businesses and focus of the current largest defense companies. Explain potential company strategic options in reaction to mission and budget changes, such as consolidation, restructures, diversification, mergers, acquisitions, divestitures, leave the market, etc. Describe macro issues that drive DoD industry today. Explain how industry can be vulnerable to economic trends, such as technology breakthroughs, workforce skill availability, energy issues, raw material supplies, etc. Explain how global competition impacts US industry market opportunities. Describe recent revenue and profit trends in the US defense industry. Describe how DoD funding profiles impact competitive outlook for defense industry. Describe tools and regulations that enable the Government to preserve a competitive base .

2. Industry Landscape Learning Outcomes 1.0 1.0 Students will be able to explain how the scope and diversity of the current industry landscape influences companies’ methods of competing for defense contracts.

3. Industry Landscape Learning Outcomes 1.1 Compare differences in business /market strategies, priorities , and processes between large, medium, small companies.

4. Industry Landscape Learning Outcomes 1.2 Compare differences in business operations and strategies between companies focused on weapons systems, commercial products, and /or services.

5. Industry Landscape Learning Outcomes 1.3 Describe defense companies’ core offerings.

6. Industry Landscape Learning Outcomes 1.4 Differentiate between public and private companies. Public: Lockheed Martin Private: General Atomics

7. Lockheed Martin

8. General Atomics Aeronautical Systems, Inc. (GA-ASI) The company is a designer and manufacturer of unmanned aircraft systems (UAS) with names like Predator , Avenger , and Gray Eagle , as well as airborne intelligence , reconnaissance , and surveillance (ISR) sensor systems , including the Lynx multi-function radar and the Highlighter sensor for detecting improvised explosive devices. The company also manufactures solid- state digital ground control stations and provides UAS training and field operations support services. Additionally , it is developing lasers for rangefinding and marking targets . GA-ASI is an affiliate of privately-held General Atomics .

9. Industry Landscape Learning Outcomes 1.5 Describe the core businesses and focus of the current largest defense companies . http:// washingtontechnology.com / toplists /top-100-lists/2010.aspx

10. Rank   Top Defense Companies (follow links for complete company profiles)  Defense Revenue   ( 2010) 1 Lockheed Martin Corp. $ 10,888,633,000 2 Northrop Grumman Corp. $ 8,212,891,000 3 Boeing Co. $ 5,051,984,000 4 General Dynamics Corp. $ 4,576,415,00 5 Raytheon Co. $ 4,095,309 6 KBR Inc $ 3,546,554,000 7 L -3 Communications Corp. $ 3,332,433,000 8 Science Applications International Corp. $3,280,980,000 9 DynCorp International Inc. $ 2,398,874,000 10 Hewlett-Packard Co. $ 2,344,325,000 11 Booz Allen Hamilton $ 2,344,325,000 12 CACI International Inc. $ 2,059,613,000 13 Harris Corp. $ 1,993,623,000 14 Computer Sciences Corp. $ 1,828,670,000 15 ITT Corp. $ 1,808,674,000 16 Fluor Corp. $ 1,742,216,000 17 BAE Systems Inc. $ 1,381,184,000 18 Dell Inc. $ 1,263,236,000 18 ManTech International Corp. $ 1,167,928,000 20 United Technologies Corp. $ 1,121,492,000

11. Industry Landscape Learning Outcomes 1.6 Explain potential company strategic options in reaction to mission and budget changes, such as consolidation, restructures, diversification, mergers, acquisitions, divestitures, leave the market, etc.

12. Industry Landscape Learning Outcomes 1.7 Describe macro issues that drive DoD industry today.

13. Industry Landscape Learning Outcomes 1.8 Explain how industry can be vulnerable to economic trends, such as technology breakthroughs, workforce skill availability, energy issues, raw material supplies, etc. Energy see RAND on biofuels Rand on Titanium Lockheed Workforce Slide

14. Industry Landscape Learning Outcomes 1.9 Explain how global competition impacts US industry market opportunities.

15. Industry Landscape Learning Outcomes 1.10 Describe recent revenue and profit trends in the US defense industry.

16. Industry Landscape Learning Outcomes 1.11 Describe how DoD funding profiles impact competitive outlook for defense industry.

17. Industry Landscape Learning Outcomes 1.12 Describe tools and regulations that enable the Government to preserve a competitive base . Full and Open Competition Source Selection Criteria Incentives Small Business Set Asides Anti-trust Laws

18. Industry Landscape 3 minutes Film Clip Clip from to highlight an example of how an arsenal product was developed and used in early WWII – military-industrial complex transition. Need to acquire film clip from DAU video services Content is new. Reference: * Operation Pacific (John Wayne)

19. 70 minutes Lecture Brief overview of the history of defense industry growth, arsenal to military-industrial complex Brief review of course read-ahead (consider the industrial base changes and trends to evaluate the industry playing field). Frame this review with discussion prompts Transitioning from a Pre-WWII government run arsenal system to nationalization of industrial capacity to mobilize for WWII, to military-industrial complex growth, the 1990s consolidation of industry capacity in the 90s to where we are today facing another drawdown. During this discussion a simple picture card recognition game will be used to assess students’ pre-reading assignments. This will be followed by a discussion (10 minutes) of macro issues currently driving industry with impacts to overall revenue and profits over time and summary of expected CBO and DoD budget profiles to illustrate ongoing downsizing. Company differences will be compared with a focus on the largest companies, their core offerings, and vulnerabilities to economic trends. A comparison of company product focus and strategic options in light of government budget changes will be explored. Finally a look at what government tools exist and under consideration to preserve the health of our defense industry. Need to identify pre-course reading (excerpt that talks about evolution of industrial base)   Need 15-20 slides framing this lecture  

20. Early Armaments Industry The activities of the Cannon Committee showed that Congress realized the need for a reliable source of armaments. In 1778 Congress authorized its first facility in Springfield, Massachusetts to provide and store gun powder for the Continental Army

21. Government Infrastructure The army’s Detroit Arsenal produced more than 22,000 of the 88,000 tanks made in WWII. At the beginning of the war, the Springfield Armory produced 1000 M-1 rifles per day, but by the end of the war, it was producing 3,000 per day.

22. From the Revolution to World War I After the Revolution the infant Republic continued to rely on imported weapons for many of its military requirements. To reduce this reliance, Congress voted in 1794 to establish government-owned facilities for the manufacture of firearms. These installations, most notably the army arsenals in Springfield, Massachusetts, and Harpers Ferry, Virginia (now West Virginia), gradually acquired expertise in the mass production of rifles and carbines.

23. Surge Capacity Although these facilities were largely able to satisfy government requirements during periods of relative calm, they could not produce sufficient weapons in times of war—as during the War of 1812 and the Mexican War of 1846–1848. To supplement production at Springfield and Harpers Ferry, the War Department contracted with private gunmakers such as Robbins and Lawrence of Windsor, Vermont, and Remington Arms, of Ilion, New York—thus giving a significant boost to the development of a commercial arms industry in the United States. Many of these firms failed or were absorbed by others when government contracts disappeared, but others survived by embracing new technologies and finding foreign customers for their innovative products.

24. The Civil War North and South forced to procure arms from abroad North declares a naval blockade to prevent smuggling of arms to the south

25. Post Civil War The Civil War, like the wars that preceded it, proved to be an enormous boon to the private arms industry. Once the war ended, however, the U.S. government sharply reduced its procurement of commercially manufactured weapons. To survive in this new environment, private arms companies such as Remington, Winchester, and Colt looked to the civilian market and to foreign customers for the orders needed to survive. This in turn spurred the introduction of new gun designs and manufacturing processes. As a result, American gun firms became adept at the mass production of cheap, reliable, and highly effective firearms.

26. Foreign Military Sales an Early Beginning Although the U.S. government did not always take advantage of this burgeoning capability, other governments were less inhibited. Samuel Remington, the president of Remington Arms Company, opened a sales office in Paris and secured lucrative contracts for the sale of rifles and ammunition to several European countries. Other U.S. firms, including Winchester, also obtained significant contracts from European governments. During the Franco-Prussian War of 1870–1871, for example, the French army ordered 100,000 rifles and 18 million rounds of ammunition from the Union Metallic Cartridge Company of Bridgeport, Connecticut (later a division of Remington Arms).

27. Foreign Military Sales an Early Beginning The capacity of American military firms to produce large quantities of weaponry in a relatively short amount of time was next tested in 1914, when World War I broke out in Europe. Although the U.S. government initially adopted a policy of neutrality in the conflict, President Woodrow Wilson allowed American firms to sell arms and ammunition to the Allied powers. Desperate to supplement their own manufacturing capabilities, Britain, France, and Russia then contracted with American companies to produce large numbers of guns and cartridges. The British, for example, ordered one million Enfield rifles from Remington. As one such order followed another, American military exports jumped from $40 million in 1914 to $1.3 billion in 1916 and $2.3 billion in the final nineteen months of war. This marked the first time that U.S. arms manufacturers played a truly significant role in the international weapons trade.

28. Harpers Ferry, VA Harpers Ferry National Armory was both an armory and an arsenal. An arsenal is a place for the storage and the production of arms and military equipment while an armory is just a place of storage for such equipment . Photo: http:// www.wvculture.org /history/ thisdayinwvhistory /0630.html

29. Springfield Armory

30. Rock Island Arsena l As the largest government-owned weapons manufacturing arsenal in the western world, the Rock Island Arsenal [RIA] provides manufacturing, logistics, and base support services for the Armed Forces. The Arsenal is an active U.S. Army factory, which manufactures ordnance and equipment for the Armed Forces. Some of the Arsenal's most successful manufactured products include the M198 and M119 Towed Howitzers, and the M1A1 Gun Mount .

31. Watervliet Arsenal, NY

32. Springfield Rifle By the time of U.S. entry into World War I, 843,239 of these rifles had been produced at Springfield Armory and Rock Island Arsenal.

33. M-1 Garand Development

34. Springfield Armory Winchester Harrington & Richardson International Harvester Beretta Breda[1] F.M.A.P. Springfield Armory, Inc. (civilian)

35. The Naval Aircraft Factory (NAF)

36. The Vinson Trammel Act Expanded the operations of the Naval Aircraft Factory

37. Arsenal of Democracy The Arsenal of Democracy" was a propaganda slogan coined by U.S. President Franklin D. Roosevelt, in a radio broadcast delivered on December 29, 1940. Roosevelt promised to help the United Kingdom fight Nazi Germany by giving them military supplies while the United States stayed out of the actual fighting . Previous policies such as the Neutrality Acts had already begun to be replaced by intensified assistance to the Allies, including the cash and carry policy in 1939 and Destroyers for Bases Agreement in September 1940. The Lend-Lease program began in March 1941, several months after the Arsenal of Democracy address. After the Japanese attack on Pearl Harbor in December 1941—less than a year after the Arsenal of Democracy address—the United States entered the war.

38. Submarines From 1918 to 1924 the navy built submarines in conjunction with civilian contractors. Electric Boat Company, Groton, CT and; Lake Submarine Company of Bridgeport, CT

39. Balao Class BUILT BY: Electric Boat Co., CT; Portsmouth NSY, NH; Mare Island NSY, CA; Boston NSY, MA; Manitowoc Shipbuilding Co., WI; Cramp Shipbuilding Co., NJ

40. TACOM From tank-automotive and armaments weapons systems research and development, through procurement and fielding, to sustainment and retirement, TACOM's associates provide "cradle-to-grave" support to America's armed forces. The entire complex that houses TACOM's headquarters is located on what is known as the Detroit Arsenal.

41. M-3 and M-4 Production Detroit Tank Arsenal GOCO run by Chrysler

42. Detroit Tank Arsena l

43. Built in the 1920’s and 1930’s at Rock Island Arsenal, or under it’s direction. Manufacturers included: White Motor Company; Marmon-Herrington; Joseph Cunningham Son & Company Studebaker Pontiac International Harvester LaSalle Luxury Division of GM Armored Cars

44. Naval Torpedo Production In July 1869, the Secretary of the Navy announced the establishment of the Naval Torpedo Station on Goat Island in the harbor of Newport, Rhode Island,

45. Naval Torpedo Production Navy Torpedo Factory Alexandria, VA

46. NUWC Keyport The mission of the Naval Undersea Warfare Center Division, Keyport is to Provide advanced technical capabilities for test and evaluation, in-service engineering, maintenance and industrial base support, fleet material readiness, and obsolescence management for undersea warfare.

47. MK-14 Torpedo I t took twenty -one months to isolate and correct all of the Mark-14’s defects—less time than it took the OSRD to develop and field the first acoustic homing torpedo, the Mark -24, from scratch . Part of the reason it took so long to correct the Mark-14’ s defects was that each problem masked the remaining ones. after operational units began experiencing problems with the weapon on combat patrols , the Navy’s Newport Torpedo Station resisted realistic testing . “ The scandal was not that there were problems in what was then a relatively new weapon , but rather the refusal by the ordnance establishment [ashore] to verify the problems quickly and make appropriate alterations. ” As Clay Blair documented in 1975 , each of the Mark‑14’s major defects was largely “discovered and fixed in the field —always over the stubborn opposition of the [Navy’s] Bureau of Ordnance.

48. Emergence of a Permanent Defense Industry From the War of 1812 until World War II, government arsenals produced almost all the ordinance for the U.S Army and a good share of the ordnance and ships for the U.S. Navy.

49. Navy Between July 1, 1940 and June 30 th 1945, the navy added 10 battleships, 18 large aircraft carriers, 9 small aircraft carriers, 110 escort carriers, 2 large crusiers , 10 heavy crusiers , 33 light cruisers, 358 destroyers, 504 destroyer escorts, 211 submarines and 82, 028 landing craft.

50. Army Arsenals Detroit Arsenal, MI Picatinny Arsenal, NJ Pine Bluff, AR Redstone Arsenal, AL Rock Island Arsenal, IL Rocky Mountain, CO Watertown Arsenal, MA Watervliet Arsenal, NY

51. Army Centers Adelphi, MD Natick, MA Selfridge Garrison, MI

52. Army Ammunition Plants ALAAP, AL Badger, WI Cornhusker, NE Crane, IN Holston, TN Indiana, IN Iowa, IA Joliet, IL Kansas, KS Lake City, MO Letterkenny, PA Lone Star, TX Longhorn, TX Louisiana, LA McAlester, OK Milan, TN Mississippi, MS Radford, VA Ravenna, OH Riverbank, CA Scranton, PA St. Louis, MO Sunflower, KS Twin Cities, MN Volunteer, TN

53. Army Plants Detroit Tank Plant, MI Lima Tank Plant, OH Stratford Engine Plant, CT

54. Cambden , Arkansas Highland Industrial Park Highland Industrial Park, a storage and testing facility for Defense Department contractors in East Camden, is in Calhoun and Ouachita counties. The 17,000-acre park contains 600 munitions storage bunkers. Used for testing and storing Navy ammunitions during World War II, much of the former depot now functions as the Highland Industrial Park, where several Defense Department contractors store munitions and conduct tests. This site has been referred to by a number of names including Shumaker Ordnance Plant, Camden Naval Ordnance Plant, Naval Operations Camden-Shumaker, and U.S. Naval Ammunition Depot - Shumaker, Camden, Arkansas.

55. In 1802, the first great American powder factory, DuPont de Nemours, Pere et Fils ; et Cie (later renamed E. I. DuPont de Nemours and Company) opened in Delaware. The new company prospered from the beginning, and its mills turned out 600,000 pounds of powder in four years.

56. Montgomery C. Meigs On May 14, 1861, Meigs was appointed colonel, 11th U.S. Infantry, and on the following day, promoted to brigadier general and Quartermaster General of the Army. Meigs established a reputation for being efficient, hard-driving, and scrupulously honest. He molded a large and somewhat diffuse department into a great tool of war. He was one of the first to fully appreciate the importance of logistical preparations in military planning, and under his leadership, supplies moved forward and troops were transported over long distances with ever-greater efficiency.

57. Lincoln’s Secretary of War Simon Cameron His corruption was so notorious that Congressman Thaddeus Stevens, when discussing Cameron's honesty with Lincoln, told Lincoln that "I don't think that he would steal a red hot stove". When Cameron demanded Stevens retract this statement, Stevens told Lincoln "I believe I told you he would not steal a red-hot stove. I will now take that back."

58. Spencer Rifle

59. Development of Defense Industrial Base Three main externalities encouraged the development of a permanent defense industrial base centered on for-profit defense companies. First and foremost was the onset of the Cold War, whose central feature was the U.S.-Soviet competition in nuclear arms. A second catalyst was the determination of U.S. post-war leaders — including President Harry Truman, George Kennan, Dean Acheson, George Marshall and Paul Nitze —to “create an international system with American power at its center” in order to minimize the possibility of major power conflicts as destructive as the two world wars had been.31 And , third, the North Korean dictator Kim Il- sung’s invasion of South Korea in June 1950 precipitated a rapid increase in military spending.

60. Rand 2003 The U.S. Army retains organic facilities to provide a significant part of its ordnance materiel and ammunition. What should the future hold for these 16 facilities — five of them government-owned, government-operated, the rest government-owned contractor-operated? This briefing looked at four options (in addition to maintaining the status quo): privatization, creating a Federal Government Corporation, consolidation, and recapitalization. After looking at the pros and cons of each, the authors concluded that all four were feasible and that a mixed strategy probably offered the best possibility for achieving the Army’s aims.

61. Over several decades and across multiple administrations, the Pentagon’s acquisition system has developed four major problems that hamper our ability to acquire critical platforms and capabilities in a timely manner and at acceptable cost.

62. Requirements First, the requirements for new systems are too often set at the far limit of current technological boundaries. Such ambition can sometimes help produce breakthrough developments that can significantly extend America’s technological edge . But far too often the result is disappointing initial performance followed by chronic cost and schedule overruns. The Department and the nation can no longer afford the quixotic pursuit of high-tech perfection that incurs unacceptable cost and risk. Nor can the Department afford to chase requirements that shift or continue to increase throughout a program’s life cycle.

63. The Acquisition Workforce Second, the Pentagon’s acquisition workforce has been allowed to atrophy, exacerbating a decline in the critical skills necessary for effective oversight . For example, over the past ten years, the Department’s contractual obligations have nearly tripled while our acquisition workforce fell by more than 10 percent. The Department also has great difficulty hiring qualified senior acquisition officials. Over the past eight years the Department has operated with vacancies in key acquisition positions averaging from 13 percent in the Army to 43 percent in the Air Force. There remains an urgent need for technically trained personnel—cost estimators, systems engineers, and acquisition managers—to conduct effective oversight.

64. Cost Realism Third, our system of defining requirements and developing capability too often encourages reliance on overly optimistic cost estimates. In order for the Pentagon to produce weapons systems efficiently, it is critical to have budget stability—but it is impossible to attain such stability in DoD’s modernization budgets if we continue to underestimate the cost of such systems from the start. We must demand cost, schedule, and performance realism in our acquisition process, and hold industry and ourselves accountable. We must also ensure that only essential systems are procured, particularly in a resource-constrained environment. There are too many programs under way. We cannot afford everything we might desire; therefore, in the future, the Department must balance capability portfolios to better align with budget constraints and operational needs, based on priorities assigned to warfighter capabilities.

65. Logistics Fourth, effective and efficient delivery of logistical support to our men and women in the field is an enduring priority and an area where continued improvements must be made. DoD is working to improve the integration of joint logistics to provide operational commanders with the flexibility and sustainability required to better support unity of effort within the joint force and between multinational, interagency, and nongovernmental elements. Wartime innovations in logistics rules, tools, and processes have helped support high levels of long- term deployments, and has enhanced operational freedom of action .

66. Improving Program Execution

67. Strengthening the Industrial Base

68. CSIS November 2011

69. Top 20 Federal Services Contractors, 2000 and 2010 (dollars, millions) Source: Federal Procurement Data System; analysis by CSIS Defense-Industrial Initiatives Group.

70. What are the trends shaping the structure of the services industrial base? The first trend is government promotion of small, disadvantaged, and disabled-veterans businesses. Since 1997, the Small Business Administration has had a goal of awarding 23 percent of government contracts to small businesses. In 2010, 22.7 percent of government contracts were awarded to small businesses, and in 2009 it was 21.9 percent The second trend is the significant growth of companies with annual revenue greater than $3 billion. While some of this growth is internal, a significant share is through mergers and acquisitions of smaller companies; in 2010, small companies represented 75 percent of government services acquisitions. As a result of these two trends, a viable cadre of mid-tier companies is being squeezed out of the federal services market

71. Trend O rganizational conflicts of interest (OCI) S ince 2001, the transaction volume of M&A deals in the services sector has doubled The government has grown increasingly concerned about the potential for OCI. Such conflicts arise when employees of the acquired firm assume oversight responsibilities over a sister firm as a result of a preexisting federal contract. As a by-product of this activity, several scientific engineering and technical assistance (SETA) contractors were absorbed by larger firms, sometimes supervising their parent or sister companies for the federal government. Efforts are currently underway to limit OCI in contracting.

72. Trend One area that is still expected to experience growth, however, is the expansion of DoD’s in-house contracting and acquisition corps . The insourcing of functions, higher oversight scrutiny, as well as the declining requirement for support services in contingency operations are likely to have a limiting effect on spending for services contracting.

73. Trend An issue that has more recently captured the limelight is service contracts for operations in Iraq and Afghanistan. Services account for well over sixty percent of the value of federal contracts performed in those two countries and their theaters. GAO has scrutinized inadequacies of some of the practices employed for service contracts in support of operationsin these theaters

74. DoD Industrial Capabilities Report

75. Shipbuilding Industrial Base The shipbuilding industrial base sector, consisting of six major U.S. shipyards building nearly all of the Navy’s ships, continues to produce the most capable warships in the world. While the quality of the ships being produced for the Navy has remained high , the quantity of ships the domestic shipbuilding base can produce in one year pales in comparison to the leading international shipyards. A low volume of production makes it extremely difficult for U.S. shipyards to match the improvements in technology and productivity seen in the international shipyards. Serial production and a stable design are key elements that U.S. shipyards must have to increase productivity and reduce the cost of shipbuilding for the U.S. Navy.

76. Space Industrial Base In the space industrial base sector, fifteen of the top U.S. space companies remain financially healthy. The companies were generally profitable at a five percent return on assets or better with all companies having positive gross profit margin. All but one of the companies had increased backlog from the previous year, indicating guaranteed work in the queue. While about half the companies had debt ratios above 60 percent (two of which appear to have high leverage and low liquidity), most were liquid with quick ratios close to or above one.

77. War of Independence (1775–1783) Since many Americans of the revolutionary generation had strong distrust of permanent or standing armies, the Continental Army was quickly disbanded after the Revolution. General Washington, who throughout the war deferred to elected officials, averted a potential crisis and resigned as commander-in-chief after the war, establishing a tradition of civil control of the U.S. military.[ 9]

78. Civil War The American Civil War was one of the earliest true industrial wars. Railroads, the telegraph, steamships, and mass-produced weapons were employed extensively. The practices of total war, developed by Sherman in Georgia, and of trench warfare around Petersburg foreshadowed World War I in Europe.

79. Industrialization From 1865 to about 1913, the U.S. grew to become the world's leading industrial nation. Land and labor, the diversity of climate, the ample presence of railroads (as well as navigable rivers), and the natural resources all fostered the cheap extraction of energy, fast transport, and the availability of capital that powered this Second Industrial Revolution.[12] The average annual income (after inflation) of nonfarm workers grew by 75% from 1865 to 1900, and then grew another 33% by 1918.[13]

80. WW I German efforts to use its submarines ("U-boats") to blockade Britain resulted in the deaths of American travelers and sailors, and attacks on passenger liners caused public outrage. Most notable was torpedoing without warning the passenger liner Lusitania in 1915. Germany promised not to repeat but decided in early 1917 that unrestricted U-boat warfare against all ships headed to Britain would win the war, albeit at the cost of American entry. When Americans read the text of the German offer to Mexico, known as the Zimmermann Telegram, they saw an offer for Mexico to go to war with Germany against the United States, with German funding, with the promise of the return of the lost territories of Arizona, New Mexico, and Texas . Congress voted on April 6, 1917 to declare war, but it was far from unanimous. [1 ]

81. Reliance on Foreign Weapons Pershing wanted an American force that could operate independently of the other Allies, but his vision could not be realized until adequately trained troops reached Europe. In order to rush as many troops as possible to France, the AEF left its heavy weapons behind and used French and British equipment. Particularly appreciated were the French canon de 75, the canon de 155 C modele 1917 Schneider and the canon de 155mm GPF. American aviation units received the SPAD XIII and Nieuport 28 fighters and the US tank corps used the French Renault FT17 light tanks. Pershing established facilities in France to train new arrivals with their new weapons.[5] The Renault FT The Nieuport 28 (N.28C-1) Canon de 75 modèle 1897

82. WWI On the battlefields of France in spring 1918, the fresh American troops were enthusiastically welcomed by the war-weary Allied armies in the summer of 1918. They arrived at the rate of 10,000 a day, at a time that the Germans were unable to replace their losses. After the Allies turned back the powerful final German offensive (Spring Offensive), the Americans played a central role in the Allied final offensive (Hundred Days Offensive). Victory over Germany achieved on November 11, 1918. [ 2 ]

83. Mobilizing the Economy The first and most important mobilization decision was the size of the army. When the United States entered the war, the army stood at 200,000, hardly enough to have a decisive impact in Europe. However , on May 18, 1917 a draft was imposed and the numbers were increased rapidly. Initially , the expectation was that the United States would mobilize an army of one million. The number, however, would go much higher. Overall some 4,791,172 Americans would serve in World War I. Some 2,084,000 would reach France, and 1,390,000 would see active combat.

84. WW I Once the size of the Army had been determined, the demands on the economy became obvious, although the means to satisfy them did not: food and clothing, guns and ammunition, places to train, and the means of transport. The Navy also had to be expanded to protect American shipping and the troop transports. Contracts immediately began flowing from the Army and Navy to the private sector. The result, of course, was a rapid increase in federal spending from $477 million in 1916 to a peak of $8,450 million in 1918. The latter figure amounted to over 12 percent of GNP, and that amount excludes spending by other wartime agencies and spending by allies, much of which was financed by U.S. loans.

85. The Government’s Role in Mobilization Food Administration: created by the Lever Food and Fuel Act in August 1917. Herbert Hoover, who had already won international fame as a relief administrator in China and Europe, was appointed to head it. The mission of the Food Administration was to stimulate the production of food and assure a fair distribution. Fuel Administration: C reated under the same Act as the Food Administration. Harry Garfield, the son of President James Garfield, and the President of Williams College, was appointed to head it. Its main problem was controlling the price and distribution of bituminous coal. Railroad Administration: The Wilson Administration nationalized the railroads and put them under the control of the Railroad Administration in December of 1917, in response to severe congestion in the railway network that was holding up the movement of war goods and coal. Wilson's energetic Secretary of the Treasury (and son-in-law), William Gibbs McAdoo, was appointed to head it. The railroads would remain under government control for another 26 months War Industries Board: In March 1918 the Board was reorganized, and Wilson placed Bernard Baruch, a Wall Street investor, in charge. Baruch installed a "priorities system" to determine the order in which contracts could be filled by manufacturers. Contracts rated AA by the War Industries Board had to be filled before contracts rated A, and so on. Although much hailed at the time, this system proved inadequate when tried in World War II. The War Industries Board also set prices of industrial products such as iron and steel, coke, rubber, and so on. This was handled by the Board's independent Price Fixing Committee.

86. Long-run Economic Consequences The international economic position of the United States was permanently altered by the war. The United States had long been a debtor country. The United States emerged from the war, however, as a net creditor. The turnaround was dramatic. In 1914 U.S investments abroad amounted to $5.0 billion, while total foreign investments in the United States amounted to $7.2 billion. Americans were net debtors to the tune of $2.2 billion . By 1919 U.S investments abroad had risen to $9.7 billion, while total foreign investments in the United States had fallen to $3.3 billion: Americans were net creditors to the tune of $6.4 billion. [7 ] Before the war the center of the world capital market was London, and the Bank of England was the world's most important financial institution; after the war leadership shifted to New York, and the role of the Federal Reserve was enhanced.

87. US Aviation WW I To meet its overwhelming expansion schedule for the Aviation Section, the United States was forced to take drastic action to acquire raw materials. For example, more than 27,000 officers and men were assigned to the Spruce Division (working in forests and lumber mills) to supply sufficient wood for building planes. Since castor oil was needed for lubricating airplane engines, 100,000 acres of land in the southern United States had to be planted in castor beans . Also, to acquire material for lining flying clothing, 450,000 Nuchwang dog skins were purchased from China.

88. Liberty V-12 Aircraft Engine America's greatest technological contribution to the war effort was the development and mass production of the 12-cylinder Liberty engine. During a five-day period beginning May 29, 1917, Mr. J.G. Vincent of Packard Motors and Mr. E.J. Hall of Hall-Scott Motors redesigned an experimental 8-cylinder engine previously built and tested by Packard. Weighing only 710 pounds but delivering 410 hp , the Liberty far surpassed all other aviation engines in the world. Production lines were set up by various automobile manufacturers and by the end of 1918, they had built 17,935 Liberties, 5,827 of which had been sent to Europe. The engine was destined to be a mainstay in the U.S. Air Service for 10 years following WWI. Major Henry H. Arnold with first Liberty V12 engine completed

89. Emergency Fleet Corporation On 2 April 1917 President Woodrow Wilson cited Germany’s refusal to suspend unrestricted submarine warfare in the North Atlantic and the Mediterranean in his request for a declaration of war on Germany. In that April 1,250,000 deadweight tons were sunk with 122 ocean going ships sunk in the first two weeks after that declaration of war . British losses in that period equaled an average round trip voyage loss of 25%. Allied losses had already been heavy before U.S. entry so that construction in yards outside the U.S. was unable to sustain current losses.

90. Hog Island Shipyard The United States entered World War I in April 1917. Within days, the federal government created the Emergency Fleet Corporation (EFC) to construct a fleet of merchant ships. The EFC hired the American International Shipbuilding Corporation to build and operate the largest shipyard in the world: Hog Island, near Philadelphia. This badge identified the wearer as a member of the World War I Hog Island shipbuilding team.

91. The EFC was a subject of controversy. The armistice took effect before the yards, Hog Island being by far the largest and most publicized, reached full production and the expense was very large. The wooden ship program in particular resulted in a large number of hulls with no useful purpose that were then a disposal problem. Gearing up for wartime production produced a glut of ships and a market problem with peace. In retrospect some considered the entire effort waste. There were allegations of fraud, with one involving charges and civil suits against Charles W. Morse. The USSB and EFC are used by both those of the opinion government is too close to industry in collaboration for war projects and those with the view government should stay out of such matters and a source of waste even in national emergency . Some of the several designs are commonly named Ferris Designs after Theodore E. Ferris, the official naval architect for the USSB. Ferris designed both steel and wood ships for mass production. One design, 1001, was for wooden 3,500 ton steam freighters built largely of precut, numbered components of pine or Douglas fir . United States Shipping Board

92. Deficits and Surpluses

93. Debt as % of GDP Country Public Debt %GDP Japan 220% Italy 119% United States 91.6 France 84.3% Canada 84% Germany 80% United Kingdon 101.3%

94. Public Debt as % GDP

95. Military Expenditures as a % of GDP

96. Outsourcing the War This system of outsourcing has greatly benefited our military operations in many respects, providing an abundance of support (arguably the U.S. mission in Iraq is now among the best supplied and equipped in history), while avoiding added pressures on the active and reserve forces that would occur if there was not so much contracting. Additionally , the ad hoc manner in which this system has grown and the lack of an overall DoD strategy concerning contracting missions has incurred great costs. The Pentagon estimates that as much as $10 billion dollars have gone missing or been misspent by private military contractors in Iraq. Literally thousands of weapons have similarly disappeared in Iraq and Afghanistan, with some even ending up in the hands of local insurgents or transnational terrorist groups. As many as 15 or more U.S. troops have died inside U.S. bases as a result of shoddy electrical work performed or improperly supervised by logistics contractors. And , at the strategic level, contractors were involved in many of the most egregious and embarrassing incidents in the war, including Abu Ghraib and the Nisour Square shootings in September 2007. These incidents matter not only because of the consequent embarrassment to the nation, but also because many military officers believe private contractors have undermined our counterinsurgency goals, reflecting negatively upon U.S. grand strategy across in the region . The Regulation of New Warfare Defense, Defense Strategy, U.S. Military, U.S. Department of Defense Peter W. Singer, Director, 21st Century Defense Initiative The Politic Brookings Institute

97. The War: A Trillion Can Be Cheap NY Times Sunday 24 July 2010 By Elisabeth Bumiller Washington –Like e verything else, war is a lot more expensive than it used to be.

98. A last story in the numbers: A quick calculation shows that the United States has been at war for 47 of its 230 years, or 20 percent of its history. Put another way, Americans have been at war one year out of every five.

99. History of Radar

100. President Truman Truman was somewhat taken aback at the costs associated with the report's recommendations. As a politician, he hesitated to publicly support a program that would result in heavy tax increases for the American public, particularly since the increase would be spent on defending the United States during a time of peace. The outbreak of the Korean War in June 1950, however, prompted action. Truman signed NSC-68 into policy in September 1950. As one State Department official noted, "Thank God Korea came along," since this act of communist aggression was believed to be crucial in convincing the public to support increased military spending. NSC-68 remained the foundation of U.S. Cold War policy until at least the 1970s.

101. Cold War Apr 14, 1950: President Truman receives NSC-68 According to the report, the United States should vigorously pursue a policy of "containing" Soviet expansion. NSC-68 recommended that the United States embark on rapid military expansion of conventional forces and the nuclear arsenal, including the development of the new hydrogen bomb. In addition, massive increases in military aid to U.S. allies were necessary as well as more effective use of "covert" means to achieve U.S. goals. The price of these measures was estimated to be about $50 billion; at the time the report was issued, America was spending just $13 billion on defense.

102. Korean War Significant foreign policy challenges persisted into Truman’s second term. The President committed the United States to the defense of South Korea in the summer of 1950 after that nation, an American ally, was invaded by its communist neighbor, North Korea. The American military launched a counterattack that pushed the North Koreans back to the Chinese border, whereupon the Chinese entered the war in the fall of 1950 . The conflict settled into a bloody and grisly stalemate that would not be resolved until Truman left office in 1953. The Korean War globalized the Cold War and spurred a massive American military build-up that began the nuclear arms race in earnest.

103. The Last Supper 1993

104. The Last Supper The invitation received by about 15 defense industry chief executives in 1993 to drop by the Pentagon for dinner was signed by Defense Secretary Les Aspin. It was, as the saying goes, an invitation one simply couldn’t refuse. The events that took place that evening forever changed the character of the U.S. defense industry . After a brief introduction by Secretary Aspin, the presentation was largely made by Deputy Secretary Perry. He indicated the government had no intention of paying ballooning overhead costs as companies tried to preserve their headquarters and corporate aircraft fleets, even as their factories and labs disappeared. Ironically , no one seemed particularly concerned at the time. CEOs, being CEOs, each logically assumed that they would be the “one.” Secretaries Perry and Deutch concluded the meeting by making it abundantly clear the Defense Department was not going to solve industry’s overcapacity problem — that would be up to those of us in the audience. But they did assure us the DoD would strongly support industry consolidation and approve financial arrangements that benefited companies as long as they also significantly benefited the government.

 
 The rest is history. General Electric Aerospace merged with Martin Marietta, which combined with Lockheed. McDonnell Douglas joined Boeing. Grumman joined Northrop. When the dust had cleared, there were only a few firms left standing.


105. Royal Bank of Canada Defense and Aerospace Conference USS Intrepid USS Intrepid Sea, Air and Space Museum in New York, May 11, 2011. DOD photo by Terry Mitchell

106. Ship Type 2751 Liberty’s from 1941-1945 Ship Mass Production Eighteen Shipyards Four Major Types Liberty Ship Construction TIMELINES PHOTOS 3 STEPS H og Island Naval Shipyard Philadelphia

107. Inspecting Ammunition Aerospace Bombers 49,123 Fighters 63,933 Cargo 14,710 Total 127,766 Shipbuilding Munitions Levingston Shipyard Orange, Texas TIMELINES PHOTOS 3 STEPS WW II Production

108. Contingency Contracting

109. Contractor Support in theatre

110. Congressional Research Service DOD relies extensively upon contractors to support overseas contingency operations. As of March 2011, DOD had more contractor personnel in Afghanistan and Iraq (155,000) than uniformed personnel (145,000). Contractors made up 52% of DOD’s workforce in Afghanistan and Iraq. Since December 2009, the number of DOD contractors in Afghanistan has exceeded the number in Iraq . 7-5700 www.crs.gov R40764

111. Industry Analysis

112. Rand Titanium Study

113. WW II Mobilization The modern process of preparing armies for war originated in the middle of the nineteenth century. The recruitment of volunteers to fill the ranks no longer sufficed . Governments turned to conscription, created huge forces, and harnessed their national economies to conduct war. The word mobilization was first used in the 1850s to describe the preparation of the army of Prussia for deployment. The American Civil War marked the appearance in the United States of the draft and mass armies, along with the organization of productive resources to sustain them. The volunteer tradition of the minutemen was on its way to becoming little more than a sacred memory, and the logistical simplicity of the American Revolution was gradually falling by the wayside . The era of mobilization, the reallocation of a nation's resources for the assembly, preparation, and equipping of forces for war had arrived.

114. Mobilization Background The very size of the forces assembled during the Civil War, with millions of men under arms at one time or another, bespoke a new era. Moreover, the principle of a national military obligation was successfully asserted by both sides, and the Confederacy sought to organize its economy to prosecute the war. In the years that followed as the United States became an industrial power with interests beyond its borders, this growing stature and the wartime experience in Cuba, the Philippines, and along the Mexican border compelled Congress and military leaders to think more about mobilization issues . In 1903 the Army acquired a General Staff, whose mission included planning for mobilization and defense. Thereafter, signs of a broader conception of the Army's role appeared in revised field service regulations and in training exercises involving ever-larger troop organizations.

115. Mobilization Planning In 1923 the General Staff produced its first peacetime plan for the assembly of an army. The plan called for six field armies with a strength rising from 400,000 on the day of mobilization known as M- day to 1.3 million in four months and increasing every month thereafter . It acknowledged that the availability of supplies and equipment determined the rate at which troops could be absorbed. However, the plan neglected the critical issue of the resources needed to create the supplies on which mobilization depended. It assumed that production would adjust to strategic plans, expanding when necessary and contracting when not. It also left unresolved the question of whether different plans were needed for different contingencies. This initial plan incorporated the outmoded World War I concept of M-day as the basis for planning. In the summer of 1914 the European armies, one after the other, had mobilized on specific M-days, triggering complex and apparently irreversible processes that followed rigid timetables. These mobilizations generated similar responses from adversary armies and made hostilities almost inevitable. But M-day as a concept and tool for planning was more convenient than helpful. It made no allowances for gradual changes in preparedness or a measured transition to a mobilized state. Instead it posited an overnight complete conversion. In the interwar period the M-day fixation kept American planners from visualizing any situation that required implementation of mobilization measures before the official outbreak of war.

116. Mobilization Planning The plan's first thorough revision in 1925 failed to correct this shortcoming. In fact, the 1928 plan represented a step backward giving supply a secondary position and putting the emphasis back on manpower. Materiel, only recently considered the pacing factor, was assumed to take care of itself. Men would simply be equipped supplied and trained as they entered service. While these plans for the assembly of forces for war were being developed separate plans for wartime procurement were under way in the War Department. The assistant secretary's office relied on the supply services for detailed planning on wartime procurement, a task that was clearly understood to be part of the military mission. Procurement Planning for mobilization involved assessing the types of supplies and equipment needed to meet given emergencies and calculating quantities needed at specific intervals. Each supply branch had its own procurement planning section as early as May 1921. In the 1920s the needs of the War Department represented the bulk of requirements for a war production program. The supporting mobilization plans for raw materials, labor, power, fuel, and transport, as well as the associated development of economic controls, were seen as derivative functions.  

117. Educational Orders By 1930, procurement planning had gone far enough that War Department attention could turn to a system for presidential control and direction of industry in an emergency. Moreover, with the Army finally using up its World War I surplus stocks, new procurement was becoming critical. Depression-era retrenchment, most severe in 1933-34, still held back purchasing. However, an upward trend in appropriations followed and procurement planning expanded. It included surveys and the allocation of manufacturing plants among the procuring services, along with production studies and even occasional "educational" orders small actual orders that gave manufacturers experience with military specifications and standards and other aspects of providing needed supplies to the Army. This process added realism to the program.   Industrial mobilization planning, as understood by the end of the 1920s, concerned all activities necessary to ensure the success and minimize the burdens of wartime procurement. The series of industrial mobilization plans that started in 1930 and culminated in 1939 finally came to grips with the old assumption that supplies would simply be available when needed. The plans also went beyond the role of the Army and examined how the nation should organize the control of industry in war. Implicit was the expectation that management of the economy and particularly, control of industry in wartime were presidential functions that would be exercised through temporary agencies run and largely staffed by civilians. This assumption reflected a realistic understanding of the American political system and the transcendent character of industrial mobilization. The issue was bigger than any one service or department. The plans showed familiarity with the tools for wartime economic control, from preference lists and priorities for facilities and commodities, to control of foreign trade, and as a last resort, to the establishment of government corporations, price controls, and seizures. The editions of 1930, 1933, 1936, and 1939 amounted to administrative blueprints for wartime civilian control and direction of the nation's resources.

118. Inter War Period Each version centered on national agencies that would control production. Early editions included four superagencies, managing war industries, selective service, public relations, and labor. By 1936, the War Industries Administration, which was understood from the start to be the largest and most important wartime agency, had been renamed the War Resources Administration. Its responsibilities were to include control of war finance, trade, labor, and price control organizations, with only the selective service and public relations still autonomous. The superagency, which would have powers beyond those of the War Industries Board also would be responsible for acquiring and controlling strategic and critical materials. The plan's greatest flaw lay in its failure to consider effective control over the allocation of basic materials, such as steel, copper, and aluminum.   In the development of these plans the Army-Navy Munitions Board showed its usefulness. With the Navy an increasingly active participant but the office of the assistant secretary of war still the driving force, the board sponsored the industrial mobilization plans of the 1930s. In so doing, it actually became a transitional agency, until the establishment of the projected civilian superagency at the outset of war. As such, the board drew up lists of critical materials, studied raw material needs, and eventually obtained modest appropriations for importing and stockpiling critical materials. The board also made industrial surveys and apportioned productive capacity of firms and industries whose products were sought by both services. By mid-1939, President Franklin D. Roosevelt recognized the board's importance by placing it in the executive office of the president. Thereafter, Roosevelt had direct control of the board which in turn enjoyed unanticipated prestige and visibility.   By 1939, the industrial mobilization plans broke free of the M-day concept. That year's plan stipulated that the War Resources Administration should be established as early as practicable when an emergency was envisioned. No longer would economic mobilization for war be tied to the actual outbreak of hostilities. The policy change tacitly recognized the increasingly hostile international environment and the long lead-times necessary to produce the increasingly sophisticated tools of war.  

119. Office of War Mobilization By late 1942 it was clear that Nelson and the WPB were unable to fully control the growing war economy and especially to wrangle with the Army and Navy over the necessity of continued civilian production. Accordingly , in May 1943 President Roosevelt created the Office of War Mobilization and in July put James Byrne — a trusted advisor, a former U.S. Supreme Court justice, and the so-called "assistant president" — in charge. Though the WPB was not abolished, the OWM soon became the dominant mobilization body in Washington. Unlike Nelson, Byrnes was able to establish an accommodation with the military services over war production by "acting as an arbiter among contending forces in the WPB, settling disputes between the board and the armed services, and dealing with the multiple problems" of the War Manpower Commission, the agency charged with controlling civilian labor markets and with assuring a continuous supply of draftees to the military ( Koistinen , 510).

120. Financing the war The total cost of the war to the federal government between 1941 and 1945 was about $321,000,000,000 (10 times as much as World War I). Taxes paid 41 percent of the cost, less than Roosevelt requested but more than the World War I figure of 33 percent. The remainder was financed by borrowing from financial institutions, an expensive method but one that Congress preferred over the alternatives of raising taxes even higher or making war bond purchases compulsory. In consequence the national debt increased fivefold, amounting to $259,000,000,000 in 1945. The Revenue Act of 1942 revolutionized the tax structure by increasing the number who paid income taxes from 13,000,000 to 50,000,000 . At the same time, through taxes on excess profits and other sources of income, the rich were made to bear a larger part of the burden, making this the only period in modern history when wealth was significantly redistributed

121. B-29 Superfortress

122. B-29 Production Four main-assembly factories: Two Boeing operated plants at: Renton, Washington, and Wichita , Kansas, The Bell plant at Marietta, Georgia ("Bell-Atlanta"), and The Martin plant at Omaha, Nebraska ("Martin-Omaha").

123. Aerospace WW II Aerospace provides one crucial example. American heavy bombers, like the B-29 Superfortress , were highly sophisticated weapons which could not have existed, much less contributed to the air war on Germany and Japan, without innovations such as bombsights, radar, and high-performance engines or advances in aeronautical engineering, metallurgy, and even factory organization. Encompassing hundreds of thousands of workers, four major factories, and $3 billion in government spending, the B-29 project required almost unprecedented organizational capabilities by the U.S. Army Air Forces, several major private contractors, and labor unions (Vander Meulen , 7 ) Overall , American aircraft production was the single largest sector of the war economy, costing $45 billion (almost a quarter of the $183 billion spent on war production), employing a staggering two million workers, and, most importantly, producing over 125,000 aircraft, which Table 6 describe in more detail.

124. Production of Selected U.S. Military Aircraft (1941-1945) Bombers 49,123 Fighters 63,933 Cargo 14,710 Total 127,766 Source : Air Force History Support Office

125. Shipbuilding in WW II Shipbuilding offers a third example of innovation's importance to the war economy. Allied strategy in World War II utterly depended on the movement of war materiel produced in the United States to the fighting fronts in Africa, Europe, and Asia. Between 1939 and 1945, the hundred merchant shipyards overseen by the U.S. Maritime Commission (USMC) produced 5,777 ships at a cost of about $13 billion while navy shipbuilding cost about $18 billion .

126. US Strength in Manufacturing Though important and gigantic, the Manhattan Project was an anomaly in the broader war economy. Technological and scientific innovation also transformed less-sophisticated but still complex sectors such as aerospace or shipbuilding. The United States, as David Kennedy writes, "ultimately proved capable of some epochal scientific and technical breakthroughs, [but] innovated most characteristically and most tellingly in plant layout, production organization, economies of scale, and process engineering" (Kennedy, 648).

127. Reconversion and the War's Long-term Effects Reconversion from military to civilian production had been an issue as early as 1944, when WPB Chairman Nelson began pushing to scale back war production in favor of renewed civilian production. The military's opposition to Nelson had contributed to the accession by James Byrnes and the OWM to the paramount spot in the war-production bureaucracy. Meaningful planning for reconversion was postponed until 1944 and the actual process of reconversion only began in earnest in early 1945, accelerating through V-E Day in May and V-J Day in September.

128. Reconversion The most obvious effect of reconversion was the shift away from military production and back to civilian production . As Table 7 shows, this shift — as measured by declines in overall federal spending and in military spending — was dramatic, but did not cause the postwar depression which many Americans dreaded.

129. Post WW II Federal Defense Spending

130. Reconversion

131. Civilian Unemployment WW II

132. Creation of the Military Industrial Complex The high level of defense spending, in turn, contributed to the creation of the "military-industrial complex," the network of private companies, non-governmental organizations, universities, and federal agencies which collectively shaped American national defense policy and activity during the Cold War .

133. National Security Act of 1947 Created DoD , The CIA The National Security Council and the USAF Civil War WW I WW II Cold War / Vietnam Revolutionary War Borrowing from individuals and governments. Competing with the British for domestic supplies Reliance on Allies Equipment for AEF Eddie Rickenbacker’s SPAD Inflationary aspects of Guns and Butter First Industrial War Arsenal of Democracy TIMELINE Willow Run Detroit, MI Military –Industrial Complex Korea Three main externalities encouraged the development of a permanent defense industrial base centered on for-profit defense companies. First and foremost was the onset of the Cold War, whose central feature was the U.S.-Soviet competition in nuclear arms. A second catalyst was the determination of U.S. post-war leaders— including President Harry Truman, George Kennan, Dean Acheson, George Marshall and Paul Nitze —to “create an international system with American power at its center” in order to minimize the possibility of major power conflicts as destructive as the two world wars had been. And, third, the North Korean dictator Kim Il- sung’s invasion of South Korea in June 1950 precipitated a rapid increase in military spending. Johnson had another motive for playing down the commitment in Southeast Asia. After the Democrats won by a landslide in the 1964 election, the president believed he had a two-year window of opportunity to push through Congress legislation for his Great Society. He was painfully aware of what happened to Wilson's and Roosevelt's comparable programs when they fell victim to "guns-over- butter” . Incrementally escalating the war in Vietnam, Johnson was able to have "guns and butter" without increasing taxes to pay for both projects. This decision had a profound impact on the American economy. During the Revolutionary War, the Continental Congress borrowed money from Americans, such as Robert Morris and Haym Salomon, as well as foreign governments, such as France, Spain, and the Netherlands. The Continental Congress printed money, but as the war went on, the value of that money continued to go down causing a rapid rise in prices of every type of good and service. British control of the sea which made exporting and importing difficult and expensive contributed to the high prices . When the war ended the newly freed United States was forced to come to grips with high prices and a large public debt . Before the war the center of the world capital market was London, and the Bank of England was the world's most important financial institution; after the war leadership shifted to New York, and the role of the Federal Reserve was enhanced. Manhattan Project North blockades the south and retains most domestic means of production. Income Tax Draft Rationing

134. 1 2 3 Paris Berlin 6 7 9 10 11 12 Africa Italy Normandy 2014 2015 2016 2017 1942 1944 2013 Battle of Leyte Gulf 1943 1945 Timeline Pearl Harbor / Midway Tarawa / Rabaul Iwo Jima Hiroshima Nagasaki

135. 1950-1954 Berlin Wall U-2 Shoot down Berlin Wall Falls Soviets in Afghanistan Iranian Hostage Crises Rhyolite/ Aquacade Panama Invasion 12 Korea Rolling Thunder Bay of Pigs Détente 1950’s 1970’s 13 1960’s 1980’s Timeline Korea Cold War Sputnik 1 SR-71 All Volunteer Force Cambodia Iran–Contra affair Pentagon Papers Apollo Space Gap Polaris 1961 1975 Vietnam KH-11 Keyhole Nixon in China Mercury Mỹ Lai USS Pueblo Watergate Lt William Calley Spies Joseph McCarthy Aldridge Ames Christopher Lee Boyce John A. Walker Robert Hanssen Alger Hiss

136. 1949 1950 1951 1953 1954 1955 1956 1957 1958 1959 1960 NSC -68 Policy of "containing" Soviet expansion. NSC-68 recommended that the United States embark on rapid military expansion of conventional forces and the nuclear arsenal, including the development of the new hydrogen bomb. Korean War 1950-1953 first artificial satellite to be put into Earth's orbit by the Soviet Union Fidel Castro overthrows the Batista regime in Cuba Chinese Communist Victory AQUATONE U-2 Development Lockheed U.S. tests first aerial hydrogen bomb First Successful test of Polaris The Cold War Events during the Cold War 1952 Inchon "Open Skies" B-52 First Flight Julius and Ethel Rosenberg executed Korean armistice . Soviets explode hydrogen bomb. U -2 piloted by Francis Gary Powers is shot down over the U.S.S.R. U.S. Marines into Lebanon USS Nautilus Titan I (SM-68A) ICBM French defeat at Dien Bien Phu Chinese forces capture Seoul Truman fires Douglas McArthur Soviet Invasion of Hungary 1956

137. 1999 1993 1994 1995 1996 1997 1998 1990 1991 1992 Haiti TIMELINES PHOTOS Operation Uphold Democracy Oklahoma City Bombing Kosovo U.S. and Soviet Union sign START I treaty 66 cruise missiles rained down on the training camps. An additional 13 missiles were fired at a pharmaceutical plant. Bosnia The Gulf War is waged in the Middle East, by a U.N . coalition force from thirty-four nations, led by the U.S. and United Kingdom, against Iraq. Iraq invades Kuwait leading to the Gulf War. Multilaterial if we can unilateral if we must. 2000 1999 Operation Desert Shield . began on 7 August 1990 when U.S. troops were sent to Saudi Arabia U.S. launches air strikes on Bosnia to prevent ethnic cleansing. U.S . soldiers are killed in ambush by Somali militiamen in Mogadishu Somali 1993 World Trade Center bombing Just Cause Panama Operation Desert Storm U.S. launches missile attacks on targets in Sudan and Afghanistan following terrorist attacks on U.S. embassies in Kenya and Tanzania USS Cole CIA’s Counter Terrorism Center creates a special unit focusing specifically on bin Laden.

138. 2003 2004 2005 2006 2007 2008 2000 2001 2002 World Trade Center TIMELINES PHOTOS The U.S. returns sovereignty to an interim government in Iraq, but maintains roughly 135,000 troops in the country to fight a growing insurgency Petraeus rejects suggestions that the U.S. shift from a counterinsurgency operation to training Iraqi forces and fighting terrorists. Instead, he says the U.S. must continue all three missions Credit Markets Meltdown BP Oil Spill George W. Bush orders a troop surge which substantially increases the number of U.S. troops in Iraq and ultimately leads to reductions in casualties and major victories for coalition and Iraqi forces, against the insurgency . Hurricane Katrina Invasion of Afghanistan Operation "Enduring Freedom" Rumsfeld Resigns USS Cole (DDG-76) is bombed in Yemeni waters, killing seventeen U.S. sailors . 2000 -2010 G.W Bush elected by 537 votes in Florida 2010 President Bush signs legislation creating a new cabinet department of Homeland Security. 2009 Iraq Invasion

139. WW II Mobilization Marvin A. Kreidberg and Merton G. Henry, History of Military Mobilization in the United States Army, 1775-1945 (1955) . Civilian labor is covered in The Army and Industrial Manpower, by Byron Fairchild and Jonathan Grossman (1959) . R. Elberton Smith, The Army and Economic Mobilization (1959), covers resource allocation, contracting, and procurement , Lenore Fine and Jesse A. Remington, Construction in the United States (1972), deal with building of troop facilities and industrial capacity. Buying Aircraft: Materiel Procurement for the Army Air Forces (1964), by I. B. Holley, Jr., provides separate treatment of purchasing and production for the air arm.

140. CINC’s Five combatant commanders have geographic area responsibilities. These CINCs are assigned an area of operations by the Unified Command Plan and are responsible for all operations within their designated areas: U.S . Joint Forces Command, U.S . Central Command, U.S . European Command, U.S . Pacific Command, and U.S . Southern Command.

141. M1 Rocket Launcher General Electric Company

142. Maritime Commission-Liberty Ships The new design replaced much riveting, which accounted for one-third of the labor costs, with welding. During World War II, there were nearly 1,500 instances of significant brittle fractures. Twelve ships, including three of the 2,710 Liberties built, broke in half without warning, including the SS John P. Gaines which sank on 24 November 1943 with the loss of 10 lives.

143. U.S. Navy Active Ship Force Levels, 1938-1944 DATE 6/30/38 6/30/39 6/30/40 12/7/41 12/31/42 12/31/43 12/31/44 BATTLESHIPS 15 15 15 17 19 21 23 CARRIERS, FLEET 5 5 6 7 4 19 25 CARRIERS, ESCORT - - - 1 12 35 65 CRUISERS 32 36 37 37 39 48 61 DESTROYERS 112 127 185 171 224 332 367 FRIGATES - - - - - 234 376 SUBMARINES 54 58 64 112 133 172 230 MINE WARFARE 27 29 36 135 323 551 614 PATROL 34 20 19 100 515 1050 1183 AMPHIBIOUS - - - - 121 673 2147 AUXILIARY 101 104 116 210 392 564 993 SURFACE WARSHIPS 159 178 237 225 282 635 827 TOTAL ACTIVE 380 394 478 790 1782 3699 6084 EVENTS • WWII begins in Europe when Germany and the USSR invade Poland September 1939.

144. NSC-68 This ideology goes back to the first years of the Cold War. During the late 1940s, the U.S. was haunted by economic anxieties. The Great Depression of the 1930s had been overcome only by the war production boom of World War II. With peace and demobilization, there was a pervasive fear that the Depression would return. During 1949, alarmed by the Soviet Union's detonation of an atomic bomb, the looming communist victory in the Chinese civil war, a domestic recession, and the lowering of the Iron Curtain around the USSR's European satellites, the U.S. sought to draft basic strategy for the emerging cold war. The result was the militaristic National Security Council Report 68 (NSC-68) drafted under the supervision of Paul Nitze, then head of the Policy Planning Staff in the State Department. Dated April 14, 1950, and signed by President Harry S. Truman on September 30, 1950, it laid out the basic public economic policies that the United States pursues to the present day.

145. NSC-68 In its conclusions, NSC-68 asserted: " One of the most significant lessons of our World War II experience was that the American economy, when it operates at a level approaching full efficiency, can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living."

146. On May 1, 2007, the Center for Economic and Policy Research of Washington, D.C., released a study prepared by the global forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative . Needless to say, the U.S. economy has had to cope with growing defense spending for more than 60 years. He found that, after 10 years of higher defense spending, there would be 464,000 fewer jobs than in a baseline scenario that involved lower defense spending.

147. In order to get an approximation of the economic impact of the increase in U.S. military spending associated with the wars in Iraq and Afghanistan, CEPR commissioned the economic forecasting company Global Insight to run a simulation with its macroeconomic model. It produced a simulation of the impact of an increase in annual U.S. military spending equal to 1 percent of GDP, approximately the actual increase in spending compared with the pre-war budget. Global Insight's simulation shows higher military spending raises interest rates, which reduces net exports, housing construction and car sales, thereby slowing the economy and job creation.

148. Current Events

149. Layoffs at Defense Firms As the big defense contractors continue to restructure themselves and their workforces for what is expected to be a period of decline in spending more layoffs were announced this week. The pressure too from the U.S. and other governments to be more price conscious is also affecting decisions related to the size of overhead and support employees. Many of the major U.S. corporations have already announced plans to reduce their overall number of employees including General Dynamics (GD), Boeing (BA) and Lockheed Martin (LMT). Despite all three having strong sales and many major programs they feel that it is best to begin creating a leaner overall structure. Read more: http:// www.defenseprocurementnews.com /2011/09/28/more-defense-related-layoffs-announced/#ixzz1jHf0NRkz

150. BAE ending Typhoon Production In a bigger move British defense giant, BAE Systems (BAE:LSE), said that it would plan on reducing its workforce by about 3,000 positions. Most of these would be related to aircraft production where the Eurofighter Typhoon is near the end of its production run. Most of the original European customers have ordered all of that aircraft that they plan to buy leaving it needing Foreign Military Sales (FMS) customers to keep the line going beyond the next decade. Read more: http:// www.defenseprocurementnews.com /2011/09/28/more-defense-related-layoffs-announced/#ixzz1jHfYw1z5

151. GAO / FMS Weaknesses in Shipment Verification Process Continue, and; Expanded Monitoring Program Lacks Guidance for Country Visits DOD Lacks Information Needed to Effectively Administer and Oversee the FMS Program GAO-09-454 Defense Exports

152. FMS Pre 9/11/2001

153. Export Controls and the US Defense Industrial Base DoD asked IDA to assess the impact of current and proposed U.S. export controls in four industries: satellite manufacturing, semiconductors , machine tools, and advanced materials. Results showed that U.S.-based industry has not suffered severe economic impacts to date from export control policies but this may change in the future. Although licenses are rarely denied, U.S. companies experience more conditions on foreign sales and longer, less predictable waiting periods for license approval than competitors in Europe or Japan selling comparable products . Staffing costs and other administrative burdens contribute to the rising cost of compliance among U.S. firms. IDA recommended changes to the U.S. export control regulations and their implementation to enable companies to better compete in world markets.

154. The International Institute For Strategic Studies Among the other important areas that the latest Military Balance investigates, the assessments of Russian military reforms and Indian defence policy are particularly worthy of attention. These further emphasise the key theme that while the military sector in the West is, overall, contracting as a result of financial constraints, elsewhere the picture is often quite different. Many states are seeking to translate their economic strength into military power which they may then use in support of national goals ranging from protecting their energy supplies to asserting territorial claims.

155. The International Institute For Strategic Studies How quickly the global redistribution of military spending and procurement will translate into useful military capability will vary according to national circumstances. However , it is already clear that as a result of shifts in the global distribution of economic power and consequently the resources available for military spending, the United States and other Western powers are losing their monopoly in key areas of defence technology, including stealth aircraft, unmanned systems – and cyber warfare . As the IISS Defence and Military Analysis Programme develops its research and analysis, the questions of how quickly and in which directions non-Western military capabilities are evolving will be a top priority.

156. Arms Exports and Imports

157. House Armed Services Committee ranking member Rep. Howard P. "Buck" McKeon (R-Calif.), now chairman of the panel, welcomes Missile Defense Agency Director Lt. Gen. Patrick O'Reilly before a hearing of the committee about missile defense Oct. 1, 2009, in Washington. Getty Images House Armed Services Committee ranking member Rep. Howard P. "Buck" McKeon (R-Calif. )

158. House Armed Services Committee ranking member Rep. Howard P. "Buck" McKeon (R-Calif.), That’s the reality of these defense cuts. The President’s strategy, where he officially abandons America’s ability to fight two wars simultaneously, says this better than I could. We will be able to fight one war and “spoil” another. That’s political-speak for a one-dimensional force. The 21 st century has grown into one of the most dynamic and challenging security landscapes in history, a time when our economy has never been more dependent on our military and our security. It’s astounding that the President still pays lip service to shrinking our “Cold War” military, as if the Soviet Union was the only justification for having a strong, capable defense that could react to the unforeseen, and protect our prosperity in globalized world.

159. December 14, 2011 • By Barry Watts and Todd Harrison • Analysis • Original: Politico After evaluating future threats, capabilities, surge capacity and costs, the Pentagon can develop a list of key sectors of the industrial base — and the actions needed to preserve them. Whatever fiscal or military challenges the country may face, the Pentagon must take steps to monitor and, when necessary, intervene to preserve the health and adaptability of its defense industrial base.

160. Center for Strategic and Budgetary Assessments http :// www.csbaonline.org / One of the ways in which prime contractors have been able to put themselves into the position of a monopoly supplier after source selection has been through the use of proprietary interfaces at the sub-system and component levels.

161. The RAND Corporation and the Rise of the American Empire Chalmers Johnson's review of Soldiers of Reason: The RAND Corporation and the Rise of the American Empire, by Alex Abella .

162. Military Industrial Congressional Think Tank Complex

163. [email protected] 190

164. 2/26/12 191 IDA Leadership President and CEO Dr. David S.C. Chu Dr. Chu joined IDA as President and Chief Executive Officer of IDA in April 2009.  He came to IDA well-versed in defense policy and defense analyses. In Government, he served as the Under Secretary of Defense for Personnel and Readiness (2001-2008), as Director and then Assistant Secretary of Defense for Program Analysis and Evaluation (1981-1993), and as the Assistant Director for National Security and International Affairs in the Congressional Budget Office (1978-1981). At RAND, he served at various times as Director of the Arroyo Center (the Army's FFRDC) and as Director of its Washington Office . Dr. Chu received his BA in Economics and Mathematics from Yale in 1964, served in the Army from 1968 to 1970, and then returned to Yale for graduate school, earning a Ph.D. in Economics in 1972. IDA Leadership                                         IDA Leadership                                        

165. He's a graduate of Amherst and the Woodrow Wilson School at Princeton. BOB SOULE Director of Program Analysis and Evaluation, PA&E. Leading the previously unreported project for IDA, a quasi-governmental organization, is Bob Soule, who served as a senior Pentagon official during the Clinton administration along with Lynn. Soule was the Pentagon's director of program analysis and evaluation (PA&E) from 1998 to 2001; at that time PA&E reported to Lynn, who was the Pentagon comptroller.   BOB SOULE, DIRECTOR, INSTITUTE FOR DEFENSE ANALYSES

166. William J Lynn 2009- Dept of Defense Deputy Defense Secretary 2002- Raytheon Co Sr VP, Government Operations & Strategy 2001-2002 DFI International Exec VP Detica Federal Inc 1997-2001 Dept of Defense Undersec (Comptroller) 1993-1997 Dept of Defense Dir, Prgrm Analysis & Evaluation 1987-1993 Kennedy, Edward M Legislative Counsel 1985-1986 Institute for Defense Analyses, IDA Prof Staff 1982-1985 Center for Strategic & Intl Studies, CSIS, Exec Dir, Defense Project A BAE Systems company

167. CNA

168. Cato Institute The Military-Industrial Complex at 50: Assessing the Meaning and Impact of Eisenhower's Farewell Address CONFERENCE 
Thursday, January 13, 2011
9:00 AM - 12:30 PM http:// www.cato.org / event.php?eventid =7604

169. RAND The world's working-age population (ages 20-59) will grow more than 25 percent between 2010 and 2050, but it will grow rapidly in some places while shrinking in others. In East Asia, including China, the number of working-age people will contract nearly 25 percent (from 938 million to 715 million) . In South Asia, including India, it will expand more than 50 percent (from 833 million to 1.3 billion). In Central Africa, it will nearly triple (from 328 million to 943 million).

170. Lobbying by Defense Contractors

171. Crowding out commercial activity Boeing 707 Better off because of KC-135 and B-52? Airlines didn’t trust Boeing because they will not pay attention to our needs. Separate the commercial and military development Douglas Aircraft –focus on commercial Convair 880-Owned by General Dynamics Enclave economy

172. Eisenhower told Ridgeway cost out intervention in Southeast Asia $3.5B Secretary of Treasury– I promised; Get out of Korea Balance the Budget Cut Taxes It means a deficit—Economic strength is the lodestar of our national security strategy

173. Nation building in Iraq Mindsets Overexpansive foreign policy

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180. Without fiscal soundness there is no defense 1/3 of Americans have no private retirement ¼ are underwater on home mortgages 1/5 of of all wealth has been eliminated by the housing market meltdown

181. Interventionist Foreign Policy War Industries Board (WIB) Tradeoffs Munitions Inquiry—motives Senator Nye Decision by Wilson---Merchants of Death Unwarranted Influence—Ledbetter Relationship of profit and war

182. Dependence of academia and industry on the hand that feeds them. Concentrated benefits and diffuse costs

183. 2008 2009 2010 2011 2007 2012 This is an example text Go ahead an replace it with your own text. This is an example text. This is an example text Go ahead an replace it with your own text. This is an example text. This is an example text Go ahead an replace it with your own text. This is an example text. This is an example text Go ahead an replace it with your own text. This is an example text. This is an example text Go ahead an replace it with your own text. This is an example text. This is an example text Go ahead an replace it with your own text. This is an example text. TIMELINES PHOTOS This is an example text. Go ahead and replace it with your own text. It is meant to give you a feeling of how the designs looks including text.

184. 1948 1950 1951 1951 1947 NSC-68 T he United States should vigorously pursue a policy of "containing" Soviet expansion. NSC-68 recommended embarking on rapid military expansion of conventional forces and the nuclear arsenal. This is an example text. Go ahead an replace it with your own text. This is an example text. Go ahead an replace it with your own text. This is an example text. Go ahead an replace it with your own text. This is an example text. Go ahead an replace it with your own text. This is an example text. Go ahead an replace it with your own text. 1952 TIMELINES PHOTOS 1949 1953 1954

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190. Eisenhower State of the Union 1953 I have referred to the inescapable need for economic health and strength if we are to maintain adequate military power and exert influential leadership for peace in the world . Our immediate task is to chart a fiscal and economic policy that can : (1) Reduce the planned deficits and then balance the budget, which means, among other things, reducing Federal expenditures to the safe minimum ; (2) Meet the huge costs of our defense; ( 3) Properly handle the burden of our inheritance of debt and obligations ; ( 4) Check the menace of inflation ; ( 5) Work toward the earliest possible reduction of the tax burden ; ( 6) Make constructive plans to encourage the initiative of our citizens . It is important that all of us understand that this administration does not and cannot begin its task with a clean slate. Much already has been written on the record, beyond our power quickly to erase or to amend. This record includes our inherited burden of indebtedness and obligations and deficits.

191. Eisenhower State of the Union 1953 Our problem is to achieve adequate military strength within the limits of endurable strain upon our economy. To amass military power without regard to our economic capacity would be to defend ourselves against one kind of disaster by inviting another . Both military and economic objectives demand a single national military policy, proper coordination of our armed services, and effective consolidation of certain logistics activities.

192. Richard K. Betts
 Richard K. Betts
International Affairs Building, Room 1328
Arnold Saltzman Professor of War and Peace Studies
Phone: [phone]
 [email protected] 
 [email protected] Biography: 
 Richard K. Betts is the Arnold A. Saltzman Professor of War and Peace Studies in the political science department, Director of the Saltzman Institute of War and Peace Studies, and Director of the International Security Policy program in the School of International and Public Affairs at Columbia University. He was Director of National Security Studies at the Council on Foreign Relations for four years and is now an adjunct Senior Fellow there. A former staff member of the original Senate Select oCmmittee on Intelligence (the Church Committee), the National Security Council, and the Mondale Presidential Campaign, Betts has been an occasional consultant to the National Intelligence Council, Central Intelligence Agency, and Department of State, served for six years on the National Security Advisory Panel for the Director of Central Intelligence, and was a member of the National Commission on Terrorism (the Bremer Commission). He lectures frequently at schools such as the National War College, Foreign Service Institute, and service academies. He served briefly in the U.S. Army and was honorably discharged as a 2d lieutenant in 1971. Betts' writings have earned five prizes, including the Woodrow Wilson Award of the American Political Science Association for the best book in political science. His first book, Soldiers, Statesmen, and Cold War Crises (Harvard University Press, 1977) was issued in a second edition by Columbia University Press in 1991. He is also author of Enemies of Intelligence (Columbia University Press, 2007); three books published by the Brookings Institution: Surprise Attack (1982), Nuclear Blackmail and Nuclear Balance (1987), and Military Readiness (1995); coauthor and editor of three other Brookings books: The Irony of Vietnam (1979), Nonproliferation and U.S. Foreign Policy (1980), and Cruise Missiles: Technology, Strategy, Politics (1981); editor of Conflict After the Cold War, Third Edition (Pearson-Longman, 2008); and coeditor of Paradoxes of Strategic Intelligence (Cass, 2003). Betts has published numerous articles on foreign policy, military strategy, intelligence, conventional forces, nuclear weapons, arms trade, collective security, strategic issues in Asia, and other subjects in professional journals. He received the International Studies Association's ISSS Distinguished Scholar Award in 2005. Betts received his BA, MA, and PhD in Government from Harvard University. He was a Senior Fellow at the Brookings Institution until 1990 and adjunct Lecturer at the Johns Hopkins University's Paul H. Nitze School of Advanced International Studies. He also served at different times on the Harvard faculty as Lecturer in Government and as Visiting Professor of Government. Search Categories: security, intelligence, nuclear weapons, disarmament, foreign policy