Talking About Defense: A struggle for the Army's soul

Squads of lawyers will square off next week inside the General Accounting Office over whether the Army acted improperly when it awarded a $4.3 billion contract for armored troop carriers to the high bidder--a team made up of defense contractors General Dynamics and General Motors of Canada. The low bidder--United Defense, which has built such venerable troop carriers as the M-113 and the Bradley Fighting Vehicle--filed the protest with the GAO.

But the fight is far more than a dispute between lawyers over contracting procedures. What is really going on here is a struggle for the Army's soul. One set of Army officers is convinced that Gen. Eric K. Shinseki, the Army chief of staff, is trying to do too much too soon to make the Army lighter and faster. A second group is equally convinced that the Army must restructure itself for the half-wars of the 21st century or it will sink of its own weight into irrelevancy.

The new vehicle caught in this cross fire of philosophies is called the LAV--for light armored vehicle. The Army is ordering more than 2,000 of them. United Defense proposed to build an affordable armored vehicle that would still move like a tank, traveling on tracks. General Dynamics-General Motors won on its idea to build a new and speedier troop carrier that travels on large rubber tires, which, it argued, are lighter and easier to maintain but can go almost anywhere a tracked vehicle can. United Defense will contend that the Army broke the rules when it chose a vehicle twice as costly as its own offering. Another sore point with United Defense is that its LAV would have been delivered to the Army much sooner.

The Army, in urging the GAO to reject United Defense's protest, has said that the advantages of the rubber-tired entry in performance and maintenance support "were so significant as to outweigh" United Defense's superiority in price and delivery time.

But long before the contract was awarded in November, the competing contractors went to great lengths to influence the outcome. Part of this effort included arming themselves with Washington operators and retired Army generals plugged into the Pentagon's old-boy network. And, according to Shinseki's allies still on active duty, the retired officers who passionately believe that Shinseki is taking the Army up the wrong hill are doing more than just serving decorously on corporate boards and giving occasional advice.

"Some of my old friends are fighting us," one active-duty general lamented, without identifying the retired obstructers. "That's new," he continued. "And it's making it tough for us."

Besides that, big contracts today are so few and far between that winning them can be a matter of life or death for defense contractors, one defense executive told National Journal. This desperation leads to more protests such as the one United Defense has lodged, and it accelerates the scramble among surviving contractors to enlist prominent retired generals to help their cause.

"There is a mystique to Washington, especially for CEOs based on the West Coast," said one former chief of a defense contractor's Washington office. "They're always asking, `Never mind the specs, what does the Army really want?' They put big names on their board who they think can tell them." This voracious head-hunting, he contended, "can corrupt the process" in the sense that small firms cannot afford to compete with the giants who can offer seats on corporate boards to generals and former government officials well plugged into the defense establishment.

For example, both United Defense and General Dynamics had plenty of high-powered help in their bid for the LAV and other defense work. In United Defense's corner were Frank Carlucci, who was Secretary of Defense under President Reagan and chairs the Carlyle Group, a venture capital group that owns United Defense; James A. Baker III, Reagan's Treasury Secretary and President George H.W. Bush's Secretary of State, who is a managing director and the senior counselor of the Carlyle Group; retired Army general and former Chairman of the Joint Chiefs John Shalikashvili, whom United Defense pays $25,000 a year as a board member, according to Securities and Exchange Commission records; and retired Army Gen. J.H. Binford Peay III, vice chief of the Army in 1993-94 and until 1997 commander of U.S. Central Command. United Defense pays him an annual retainer of $25,000 as a board member.

In the opposing corner, General Dynamics had Paul G. Kaminski, director of Pentagon procurement, 1994-97, who receives an annual retainer of $40,000 from the company, plus $200,000 a year for up to 40 business days of his time; retired Army Gen. George A. Joulwan, NATO supreme allied commander, 1993-97, who receives an annual retainer of $40,000 as a board member; retired Adm. Carlisle A.H. Trost, chief of naval operations, 1986-90, whose annual retainer is $40,000; and retired Gen. Carl E. Mundy Jr., Marine Corps commandant, 1991-95, who receives an annual retainer of $40,000 as a board member.

The hotly contested LAV competition, featuring a collision of philosophies and high-powered lobbying, is a sign of battles to come as a dwindling number of defense contractors try to survive the ongoing restructuring of the American military.