2.  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.

3. • 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.

4. • Compare differences in
• business/market strategies,
• priorities, and
• processes between large, medium, small companies.

5. • Compare differences in business operations and
strategies between companies focused on
• weapons systems,
• commercial products,
• and/or services.

6. • Describe defense companies’ core offerings.

7. • Differentiate between public and private companies.
 Public: Lockheed Martin
 Private: General Atomics

9.  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.

10. • Describe the core businesses and focus of the
current largest defense companies.
• http://washingtontechnology.com/toplists/top-100-
lists/2010.aspx

11.  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

12. • Explain potential company strategic options in
reaction to mission and budget changes, such as
consolidation, restructures, diversification, mergers,
acquisitions, divestitures, leave the market, etc.

13. • Describe macro issues that drive DoD industry today.

14. • 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

15. • Explain how global competition impacts US industry
market opportunities.

16. • Describe recent revenue and profit trends in the US
defense industry.

17. • Describe how DoD funding profiles impact
competitive outlook for defense industry.

18. • 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

19.  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)

20.  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


21.  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

22.  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.

23.  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.

24. 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.

25.  North and South forced to procure arms from
abroad
 North declares a naval blockade to prevent
smuggling of arms to the south

26. • 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.

27. 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).

28.  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.

29.  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

31.  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.

33.  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.

34.  Development

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

37.  Expanded the operations of the Naval Aircraft
Factory

38. • 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.

39.  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

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

41. 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.

44.  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

45.  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,

47. 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.

48.  It 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.

49.  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.

50.  Between July 1, 1940 and June 30th 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.

51.  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

52.  Adelphi, MD
 Natick, MA
 Selfridge Garrison, MI

53.  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

54.  Detroit Tank Plant, MI
 Lima Tank Plant, OH
 Stratford Engine Plant, CT

55.  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.

56.  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.

57.  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.

58.  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."

60.  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.

61.  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.

62.  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.

63.  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.

64.  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.

65.  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.

66.  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.

71. Source: Federal Procurement Data System; analysis by CSIS Defense-Industrial Initiatives Group.

72.  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

73.  Organizational conflicts of interest (OCI)
 Since 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.

74.  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.

75.  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

79.  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.

80.  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.

81.  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]

82.  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.

83.  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]

84. 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]

85.  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

86. 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]

87.  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.

88.  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.

89.  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:
 Created 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.

90.  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.

91.  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.

92. 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

93.  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.

94.  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.

95.  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 Some of the several designs are
large number of hulls with no useful purpose that commonly named Ferris Designs
were then a disposal problem.
after Theodore E. Ferris, the official
 Gearing up for wartime production produced a glut naval architect for the USSB.
of ships and a market problem with peace.
Ferris designed both steel and wood
 In retrospect some considered the entire effort
waste. There were allegations of fraud, with one ships for mass production. One
involving charges and civil suits against Charles W. design, 1001, was for wooden 3,500
Morse. ton steam freighters built largely of
precut, numbered components of
 The USSB and EFC are used by both those of the
opinion government is too close to industry in pine or Douglas fir.
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.

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

101.  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

102. NY Times Sunday 24 July 2010
By Elisabeth Bumiller
Washington –Like everything else, war is a lot more expensive than it used
to be.

106.  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.

118.  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.

119.  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.

120.  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.

122.  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

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

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

131.  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

134.  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.

135.  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.

136.  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.

137.  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.


138.  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.

139.  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.


140.  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).

142.  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

144.  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").

145.  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.

146.  Bombers 49,123
 Fighters 63,933
 Cargo 14,710
 Total 127,766
 Source: Air Force History Support Office

147.  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.

148.  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).

149.  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.

150.  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.

154.  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.

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

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

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

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

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

160. The U.S. Petraeus rejects
returns suggestions that the
TIMELINES PHOTOS
President Bush sovereignty
U.S. shift from a
counterinsurgency
to an interim operation to training
USS Cole (DDG-76) is signs legislation government
bombed in Yemeni waters, Iraqi forces and
killing seventeen U.S. sailors.
creating a new in Iraq, but fighting terrorists.
cabinet maintains Instead, he says the
department of roughly U.S. must continue
Homeland 135,000 Hurricane Katrina all three missions BP Oil Spill
Security. troops in the
World Trade
Center
country to
fight a
growing Credit Markets Meltdown
insurgency
201
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
G.W Bush elected
by 537 votes in
Florida George W. Bush orders
a troop surge which
Invasion of Iraq Invasion Rumsfeld Resigns substantially increases
the number of U.S.
Afghanistan troops in Iraq and
Operation ultimately leads to
reductions in casualties
"Enduring and major victories for
coalition and Iraqi
Freedom" forces, against the
insurgency.
2000 -2010

161.  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.

162.  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.

164. 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 Novembe

165. 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/
BATTLESHIPS 15 15 15 17 19 21
CARRIERS, FLEET 5 5 6 7 4 19
CARRIERS,
ESCORT - - - 1 12 35
CRUISERS 32 36 37 37 39 48
DESTROYERS 112 127 185 171 224 332 3
FRIGATES - - - - - 234 3
SUBMARINES 54 58 64 112 133 172 2
MINE WARFARE 27 29 36 135 323 551 6
PATROL 34 20 19 100 515 1050 11
AMPHIBIOUS - - - - 121 673 21
AUXILIARY 101 104 116 210 392 564 9
SURFACE
WARSHIPS 159 178 237 225 282 635 8
TOTAL ACTIVE 380 394 478 790 1782 3699 60
EVENTS
• WWII begins in Europe when Germany and the USSR invade Poland September 1939.

167. 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.

168.  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."

169.  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.

170.  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.

172. 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

173. 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

174.  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

177.  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.

178.  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.

179.  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.

184. 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.
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