Nuclear Missile Deception: Corruption and Conflicts of Interest in the National Missile Defense (NMD) Test Program

July 7, 2000

Frida Berrigan, ATRC

The following report was originally released , the day of thelatest Missile Defense test. It was updated after the test. You can access this and other reports at www.worldpolicy.org/projects/arms/reports.html.

I. Fraud and Incompetence in Missile Defense Programs

"It's not a defense of the United States . . . It's a conspiracy to allow them to milk the government. They are creating jobs for themselves for life." Former TRW Engineer Nira Schwartz, quoted by William Broad, New York Times, March 7, 2000

"We rigged the test," the scientist said. "We put a beacon with a certain frequency on the target vehicle. On the interceptor, we had a receiver." In effect the scientist said, the target was talking to the missile, saying, "Here I am, come get me . . . The hit looked beautiful, so Congress didn't ask any questions." Scientist involved in the Pentagon's June 1984 missile defense test, quoted by Tim Weiner, New York Times, August 18, 1993

The spectacular failure of the Pentagon's latest National Missile Defense (NMD) test on July 8th dramatically underscores the fact that this deeply flawed program is simply not up to the task of defending the United States from even a small number of ballistic missiles armed with nuclear warheads. The NMD project has now failed two of its first three "hit-to-kill" tests, in which an interceptor vehicle is supposed to destroy a mock nuclear warhead in mid-flight. And even in the one "successful" test, last October, it was later revealed that the interceptor vehicle had originally honed in on a large, brightly illuminated decoy balloon that in effect helped guide it to the mock warhead. Despite this dismal track record, the Clinton administration is still seriously considering moving towards deployment of an NMD system by preparing to award contracts for long lead-time procurement to begin construction on a key NMD radar system in Shemya, Alaska in the spring of 2001.

What's the rush? Why move full speed ahead on a system with no demonstrated capability for actually protecting the United States against ballistic missiles? The short answer is politics. In the short-term, the Clinton administration is seeking to inoculate Al Gore from Republican charges of being "soft on defense" by throwing money at the defense budget generally and missile defense projects in particular. But now Vice President Gore, who has tried to carve out a reputation for himself as a knowledgeable reformer of costly and inefficient government programs and practices, is in danger of being charged with being "soft on defense contractors" as he stands by in silence while billions of dollars of missile defense contracts are doled out to companies that have records of fraud, corruption, and mismanagement. Given their recent performance, it would be risky to buy a used car from these companies, much less trust them to build one of the most technically demanding and costly weapons programs ever undertaken by the Pentagon.

Fraud is nothing new in missile defense research. But the Clinton Administration's National Missile Defense initiative is permeated with fraud to a degree not seen since the heyday of Ronald Reagan's Strategic Defense Initiative (SDI) in the 1980s. Under persistent pressure from conservative true believers and cash hungry contractors, the Clinton/Gore NMD plan has been an ad hoc undertaking from the start, characterized by scientific fraud, exaggerated threat assessments and political manipulation. Hopefully, the mounting revelations of fraud and mismanagement in the NMD program will force Congress, the Executive Branch, and the defense industry to stop the mad rush to deploy this dangerous and ill-conceived system BEFORE U.S. taxpayers waste tens of billions of dollars pursuing what John Isaacs of the Council for a Livable World has aptly described as "a new Maginot Line."

On March 7th of this year, in a front page article entitled "Ex-Employee Says Contractor Faked Results of Missile Test," New York Times science writer William Broad revealed that Nira Schwartz, a senior research scientist at TRW, had filed suit against the company alleging that she had been fired for refusing to falsify basic research findings on the essential question of whether an NMD interceptor could tell the difference between a decoy and a nuclear warhead. On May 11th, after conducting the only independent scientific analysis to date on test data released pursuant to Dr. Schwartz's lawsuit, Dr. Theodore Postol of the Massachusetts Institute of Technology sent a letter to White House Chief of Staff John Podesta presenting evidence of "criminal fraud" in the NMD testing program.

More than two months later, after another failed NMD test, Dr. Postol's charges have yet to yield a serious, substantive response from the Clinton administration. Instead, the Pentagon and the White House have countered with political spin control, arguing that Dr. Postol would change his mind if only he knew of the Ballistic Missile Defense Organization's (BMDO) full, classified plans for addressing the decoy problem. The Department of Defense has also engaged in a clumsy and counterproductive effort to chill public discussion by declaring Postol's May 11th letter itself to be classified.

At a May 25th press briefing in Washington, DC, Postol urged the White House to "stop playing politics with an important decision that directly effects the security of the nation," and called for the establishment of "a team of scientists who are truly independent in their fields and independent of the Pentagon . . . to look into this matter." Postol urged the Department of Defense's Inspector General to "investigate and determine whether the BMDO classified the May 11, 2000 letter to the White House in order to hide waste, fraud, and abuse in the BMDO." While the White House has failed to act on Postol's charges, they have resonated on Capitol Hill, where 53 House members led by Representatives Dennis Kucinich (D-OH) and John Conyers (D-MI) have called for an FBI investigation of potential fraud in the NMD program. Meanwhile, Senator Richard Durbin (D-IL) has put forward an amendment that would require the Pentagon to test the NMD system in realistic conditions against multiple decoys before making any decisions about deployment.

Durbin's amendment responds in part to further revelations by Postol regarding the Pentagon's "dumbing down" of the test series for the NMD interceptor from now through 2005. Postol persuasively demonstrates that the BMDO redesigned the test series to purposely exclude the numbers and types of decoys that the interceptor had been unable to tell from the mock warhead during preliminary tests. In fact, Postol noted, the large, balloon shaped decoy that had played a part in the only successful NMD intercept to date acted not as a decoy but as a "beacon" which assisted the kill vehicle in its efforts to locate the mock warhead.

The test of July 8th was no better -- it failed despite the Pentagon's best efforts to ensure a positive outcome. As Mark Thompson noted in the July 10th issue of Time magazine (released on July 3rd), the latest test of the system used a similar decoy to the one that served as a beacon in last fall's test (the decoy balloon failed to inflate during the test). In addition, the other parameters of the test were so carefully scripted that Thompson rightly suggested that the experiment is all but rigged:

There are virtually no unknowns in the procedure. The Pentagon knows the type of rocket launching the target as well as the nature of the target; it knows how powerful the rocket's engine is, where it is coming from, and when it is being launched. The crew launching the interceptor will even get to listen in on the countdown of the warhead's rocket as it takes place. All that is valuable intelligence -- and much, if not all of it, would be denied to the U.S. if a rogue state decided to strike. Such advantages "place significant limitations" on the value of the test, says Philip Coyle, the Pentagon's chief weapons tester.

If the NMD system can't even pass a test that is "all but rigged," how would it fare in a more realistic test environment involving multiple decoys? The extreme difficulties involved in discriminating decoys from warheads and the inadequacy of the Pentagon's current testing regime have been highlighted in a major joint study by scientists affiliated with MIT and the Union of Concerned Scientists, in a statement by the American Physical Society (the largest organization of physicists in the U.S.), and in a recent letter by 50 American Nobel Laureates organized by the Washington-based Federation of American Scientists which also underscores the strategic risks of proceeding with NMD. But, much like Richard Nixon's "secret plan" for peace in Vietnam, the BMDO's sole response to this avalanche of informed technical criticism has been to claim that it has classified plans for dealing effectively with decoys that cannot be revealed at this time for fear of tipping off potential ad! versaries.

The Pentagon's continued stonewalling in the face of valid technical critiques of NMD underscores the need for an independent assessment of the program by scientists and organizations that do not stand to profit by ignoring the system's glaring weaknesses. Unfortunately, the NMD testing program as currently structured does just the opposite: it maximizes the authority and influence of companies like Boeing, Lockheed Martin, and Raytheon which stand to make billions of dollars if a decision is made to go full speed ahead towards deployment.

II. Nonstop Money Dispenser: The Corporate Role in NMD Fraud

As the debate over whether or not to deploy the Clinton Administration's National Missile Defense (NMD) system heats up, it's worth taking a good, hard look at the companies responsible for building the Pentagon's most sophisticated and demanding weapon system yet. Since Ronald Reagan gave his March 1983 speech touting a new missile defense program that could render nuclear weapons "impotent and obsolete," the U.S. has spent over $70 billion researching and developing the various mutations of missile defense.

According to the Congressional Budget Office the first two phases of the Clinton administration's NMD system will cost taxpayers at least another $60 billion (counting the costs of dual use communications and tracking satellites). The Council for a Livable World has suggested that the multi-tiered approach favored by George W. Bush could cost $120 billion or more. Even by the standards of the Pentagon, that's a hell of a lot of money.

For the four "lumbering behemoths of the apocalypse" -- the military mega-firms Lockheed Martin, Boeing, Raytheon, and TRW, which despite splitting over $30 billion per year in Pentagon contracts are still struggling financially -- a lead role in the NMD program offers a glitzy new set of projects and a major stream of potential new revenues to lure back investors and skilled personnel who have been turned off by the companies recent track records of corruption, cost overruns, and mismanagement. These four companies dominate the missile defense program at this point, accounting for 60% of total missile defense contracts issued by the Pentagon during the last two fiscal years -- a total of over $2.2 billion during that time period. Since the results of the missile defense tests they are helping to carry out will determine whether they start reaping lucrative, multi-billion dollar NMD production contracts, these major corporate players in the NMD testing program have serious and direct conflicts of interest.

Boeing/TRW

As noted above, recent news reports indicate that TRW, a subcontractor for NMD, faked tests and evaluations of a key component in the NMD system, the "hit-to-kill" vehicle that is supposed to seek out and destroy incoming nuclear warheads against a backdrop of chaff and decoys. The whistle-blower, former TRW senior engineer Dr. Nira Schwartz, served on TRW's anti-missile team in 1995 and 1996. Schwartz contends that in test after test the interceptors failed to discriminate decoys from warheads, but management at TRW refused to report these failures to the Pentagon. After repeated appeals to her boss and colleagues to alert industrial partners and the military to her findings, Schwartz was fired.

Schwartz's allegations revolve around the interceptor being developed for the NMD system. In using computer programs to certify to the government that TRW's interceptor would pick out enemy warheads from decoys, Schwartz found that the proposed interceptor could do so only 5 to 15% of the time rather than 95% of the time, the performance goal established by the BMDO.

Pentagon spokesman Kenneth Bacon has tried to wave off charges of fraud involving the TRW "hit to kill" vehicle by arguing that a different vehicle, being developed by Raytheon, has been chosen for inclusion in the final NMD system. However, Bacon and his colleagues at the Pentagon have consistently failed to mention that Boeing, which is now the Lead Systems Integrator for the entire NMD project, designed the TRW interceptor vehicle that has been the subject of the fraud allegations. Indeed, Boeing proudly notes on its web site that the Boeing/TRW interceptor is still a "hot backup" in case the Raytheon version fails to perform adequately.

Furthermore, as Theodore Postol pointed out in his May 25th press briefing, "BMDO continues to make transparently false statements about the capabilities of the Raytheon Kill Vehicle relative to the Boeing Kill Vehicle. The Raytheon Kill Vehicle was NOT selected over the Boeing vehicle for technical reasons, as claimed by BMDO. It was selected because a Boeing employee illegally obtained sensitive Raytheon technical documentation on their Kill Vehicle." Postol's charge is particularly damning in the light of Boeing's central role in the biggest defense contracting scandal of the 1980s, Operation Ill Wind, in which the company and several of its key employees were at the center of a network of contractors and Pentagon employees trading in classified information in order to rig bids on major Pentagon weapons development programs.

Boeing's record of fraud and manipulation is especially troubling when one considers how dependent the Pentagon's Ballistic Missile Defense Organization has become on the company for carrying out even the most basic tasks relating to the testing program. As the Lead Systems Integrator for the NMD program, Boeing has unprecedented authority: the company is in charge of organizing and evaluating the entire BMD test series and supervising the work of key prime contractors and subcontractors involved in the research program. To cite one small recent example of the BMDO's dependence on Boeing, the New York Times reported on July 6th that journalists who want to view the July 7th NMD test via satellite would have to do so at Boeing's auditorium in the DC area because the Pentagon lacks the necessary equipment and facilities to provide simultaneous viewing of the test.

Whether Boeing colluded with TRW's manipulation of test results or merely overlooked them, it doesn't bode well for its role as the principal monitoring agent for subcontractors involved in NMD and the chief architect of the entire NMD testing program. Indeed, the most recent report on the NMD program by Philip Coyle, Director of the Pentagon's Independent Office of Testing and Evaluation, found that in its role as Lead Systems Integrator Boeing failed to establish a system for evaluating the testing program OR supervising the myriad subcontractors involved in NMD research and development.

For all practical purposes the fox is guarding the chicken coop: If Boeing is able to orchestrate a series of seemingly credible tests, it stands to make billions of dollars in production contracts for decades to come.

As the Project on Government Oversight (POGO) has demonstrated in a series of recent reports on waste and mismanagement in the defense sector, "until contractors improve their performance record and eliminate fraud, oversight remains crucial for protecting the public purse." POGO cites DOD Inspector General Eleanor Hill's similar concerns: "While we understand the many benefits of the new emphasis on Government/industry teamwork, the Department should not assume that procurement fraud no longer occurs. To the contrary, our criminal investigators report that their proactive undercover efforts regularly reveal significant fraudulent activity . . . Many advocates of drastic changes in Government acquisition practices are unaware of, or choose to ignore, the fact that procurement fraud remains a threat to the DOD and the U.S. taxpayer." For example, another POGO report notes that between 1994 and 1996, the defense industry returned more than $850 million to the government just to! settle fraud cases under the False Claims Act.

Lockheed Martin

Lockheed has long been associated with the best and the worst of defense contracting, from successful programs like the F-16 fighter and the SR-71 reconnaissance plane to emblematic episodes of fraud and mismanagement like its bailout by the U.S. government in the early 1970s, its central role in the foreign bribery scandals in the mid-1970s, and its infamous role as the provider of the $600 toilet seat in the 1980s. Which Lockheed Martin will we see in the NMD program -- the world class weapons producer or the world class purveyor of cost overruns and contract manipulation? A few examples may help shed light on this conundrum.

• Lockheed Martin was in charge of the 1984 Homing Overlay Experiment (part of Reagan's Star Wars) that was later exposed as fraudulent (see source notes for further details).
• Lockheed Martin agreed to pay $13 million to settle government accusations that it violated arms export laws by sharing satellite technology with China. The violations date back to 1994 and cover 30 charges concerning dealings with Hong Kong-based Asia Satellite. Lockheed Martin provided Asia Satellite Telecommunications with technology that State Department spokesman Richard Boucher said could be used in missile development.
• An independent review of expensive and well-publicized launch failures of Lockheed Martin's rockets and satellites found that the company focused too heavily on cutting costs and not enough on supervising the quality of its work. More than $2 billion worth of military and private satellites were either destroyed or deployed into useless orbits after launch from Lockheed's Titan, Centaur and Athena rockets. Lockheed Martin provided the booster for the failed test of July 8th. The test was delayed for several hours due to a problem with a fuel cell in the Lockheed Martin booster rocket, and when it was finally launched the kill vehicle failed to separate from the booster, which in turn triggered the failure of the kill vehicle to destroy the mock warhead.

Lockheed Martin will pay the government $5 million to settle claims that two subsidiaries overcharged the Navy for anti-submarine devices. U.S. Attorney Paul Gagnon stated that the government paid between $1.8 million and $3.8 million too much for products from Nashua-based Sanders, a Lockheed Martin Company, and Marietta, Georgia-based Lockheed Martin Aeronautics Co. He also noted that the settlement would save the government the expense of a court battle over Lockheed's pricing practices.

A rash of last-minute technical problems prevented Lockheed Martin's new rocket from lifting off in May of this year. It was the third delay in three days for the Atlas III, the first U.S. rocket to be equipped with a Russian engine. A broken radar thwarted the following try. In addition to the diplomatic and political issues raised by the professed willingness of the Clinton/Gore administration and the Bush campaign to share missile defense technology with Russia, the problems with the Atlas III raise an additional warning flag regarding such cooperative efforts.

Lockheed Martin is the prime contractor for the PAC-3 theater missile defense system, which is running more than 30% over budget (or approximately $233 million). Lockheed Martin may have to pay about $70 million to cover its portion of the cost overrun.

Lockheed Martin is the prime contractor for the Army's troubled Theater High Altitude Area Defense system (THAAD), which has succeeded in only 2 of 8 tests to date and was plagued by such serious problems that there was talk in late 1998 of taking the program away from Lockheed Martin and giving it to another contractor. A $15 million fine against Lockheed Martin for poor performance was lifted last year after THAAD scored two hits after six consecutive failures. Despite the history of problems in the program, Lockheed Martin recently received clearance to proceed to the Engineering and Manufacturing Development (EMD) phase of the THAAD project, which could be worth up to $4 billion in contracts to the firm.

Raytheon

Raytheon, which just a few years ago seemed like the "most likely to succeed" among the new breed of military mega-firms, has been plagued by its own problems lately, ranging from an embarrassing "recall" of hundreds of Patriot missiles it had sold to U.S. allies after the 1991 Persian Gulf War to an admission that it had not engaged in proper testing of electronic components provided to the Pentagon.

The Exoatmospheric Kill Vehicle (EKV) being developed for the NMD program has been the object of serious concern and criticism. The Welch panel stated, "The visit to the Raytheon facility in Tucson highlighted the impacts of the 'hardware-poor' nature of the EKV program. There were no spares, no development articles, and no articles available for parallel activities that could significantly reduce development and test risk. The first article built appears to be the one that will fly." The panel also pointed out that the EKV may not be able to withstand the shock loads once mounted on the actual Ground Based Interceptor booster, which will not be demonstrated until 2003 when the integrated GBI (operational version of the booster and EKV) will be tested.

Other technical problems with the EKV have included fuel leaks, problems with the Inertial Measurement Unit (which independently guides the test kill vehicle in flight), and failure of components of the IR sensor system on the EKV. The failure of the July 7th NMD test was due in large part to the failure of the Raytheon kill vehicle to separate properly from the Lockheed Martin booster rocket. As a result, the sensors used to hone in on the mock warhead were never turned on, and the vehicle sailed wide of its target.

The Army had to replace hundreds of PAC-2 missiles after problems with components of the missile. While the Army is working with Raytheon to find the root of the problem, so far they were able to pinpoint it to the missile's black box, or the radio frequency downlink, which sends signals back and forth to the ground station and the missile.

As part of a settlement with the government, Raytheon will pay back $1.06 million to the federal government for cutting corners on tests of electronic weapons components.

Raytheon Aerospace Co., a subsidiary of Raytheon Co., has agreed to settle allegations that it used a security firm to spy on a small competitor in Alabama three years ago. Raytheon agreed to pay $16 million to AGES Group, of Boca Raton, FL, to settle allegations that it had engaged in at least three days of industrial spying that included video and audio surveillance and thefts of documents.

Raytheon agreed to pay the federal government more than $400,000 to settle a claim that its Beech Aerospace Services subsidiary overcharged the Pentagon on a 1991 aircraft maintenance contract. The government claimed that Raytheon double-billed for certain parts in maintenance work that was performed at various sites around the world.

The Bottom Line: Still Rushing to Failure

Given their inherent conflicts of interest and their recent histories of fraud and mismanagement, Boeing, Lockheed Martin, TRW and Raytheon must be closely monitored -- by both the Pentagon and by a panel of outside experts on ANY testing and research and development work they undertake on the NMD program. Until an effective monitoring system can be established, the Clinton Administration should suspend the NMD program and take it off what the first Welch panel rightly described as its "rush to failure."

Selected Sources (consult the authors for additional details):

These source notes include selected excerpts from key articles along with a list of some of the major sources consulted in the production of this report. For additional information, consult www.worldpolicy.org/projects/arms, as well as the web sites of the Coalition to Reduce Nuclear Dangers, the Carnegie Endowment for International Peace(click on Nonproliferation Project), and the Federation of American Scientists (click on Space Policy Project).

New York Times by Tim Weiner, August 27, 1993 "Last year, the GAO audited seven 'Star Wars' tests between 1990 and 1992. The auditors found that three of the tests were accurately described to Congress. Those three tests were complete or partial failures. The missile defense program's officials told Congress the other four tests were successes. That was untrue, the auditors said.

The inaccurate claims included the success rate of experiments, the progress of the programs, the sophistication of the tests, the ability of interceptor missiles to distinguish between a target and a decoy and the missiles' achievement of accuracy and altitude goals, the GAO reported.

They have lied about certain functions that their missiles are supposed to perform,' said a Federal investigator who agreed to speak only if he was not identified. 'They've used things to enhance the target. The fact is that you've got something up there solving your guidance problem. And you've got an incentive to deceive. That's how you keep your program going.'

A former Reagan administration official, a nuclear physicist who closely studied the missile defense program in the 1980s, said it was characterized by 'secrecy, greed, self-deception, deception of Congress and actually even of the President.' The former official, who remains a Pentagon consultant and who spoke on condition of anonymity, is not among the accusers in the debate."

New York Times by Tim Weiner, August 18, 1993 "Officials in the 'Star Wars' project rigged a crucial 1984 test and faked other data in a program of deception that misled Congress as well as the intended target, the Soviet Union, four former Reagan administration officials said."

· "Lockheed Will Pay $13 Million to Settle Charges of Sharing Satellite Technology," by Helene Cooper, Wall Street Journal, June 15, 2000.

· "Report Hits Lockheed Cost Cutting," by Tim Smart, Washington Post, September 1, 1999.

"Lockheed Martin to Pay $5 Million," The Associated Press, May 21, 2000.

"New Rocket Runs Into Rash of Woes," The Associated Press, May 18, 2000.

"Patriot PAC-3 Missile 37 percent Over Budget," by Tony Capaccio, Defense News, June 21, 1999.

DOD News Briefing with Lt. Gen. Paul Kern, Military Deputy Assistant Secretary of the Army for Logistics and Technology, March 23, 2000.

"Raytheon Settles for $1.06m," by Ross Kerber, Boston Globe, June 10, 2000.

"Raytheon Unit Settles Industrial-Spying Allegations," by Gregg Krupa, Boston Globe, May 13, 1999.

"Raytheon Agrees to Settle Claim," Wall Street Journal, January 22, 1999.

"A Missile Defense With Limits: The ABC 's of the Clinton Plan," by William Broad, New York Times, June 30, 2000.

"Ex-Employee Says Contractor Faked Results of Missile Tests," by William J. Broad, New York Times, March 7, 2000.

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