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Washington Post June 09, 2004

Reagan's Defense Buildup Bridged Military Eras

Huge Budgets Brought Life Back to Industry

By Greg Schneider and Renae Merle, Washington Post Staff Writers

The U.S. military has a lot of planes, ships and tanks thanks to Ronald Reagan, but also a lot fewer companies remaining to make such weapons.

The Reagan defense buildup was a hallmark of his presidency, a free-spending crusade that lifted the nation's military industry out of the doldrums after the Vietnam War. He created a war-machine economy in a time of uneasy peace, with defense spending in amounts not seen since the heights of the Korean and Vietnam conflicts and sustained for longer than either of those wars.

Most of the fighter planes and armored vehicles used by today's U.S. military were purchased during the Reagan years.

"At the time it was going on it was a whole resurgence of the defense industry," said Kent Kresa, the former chairman of Northrop Grumman Corp., which won the contract to build the world's most expensive aircraft -- the $2 billion B-2 Stealth bomber -- from the Reagan administration.

Military spending levels are near Reagan-era levels, but for a very different type of military and world. Gone is the Soviet Union and the threat of a nuclear holocaust, and with it the World War II-style defense industry that had its last hurrah during the Reagan years. Today's Pentagon budget is aimed partly at cleaning up the remnants from that era: paying for maintenance on aging weapons systems, paying for costly programs from the days when money seemed no object, and catching up to private sector technology that has raced past Defense Department labs.

"The Reagan buildup was important from both the Pentagon's and the industry's perspective in terms of building back up a strong posture, but the problem is that . . . it was almost as though the way to strengthen the Pentagon was to give it a lot more money" instead of investing in long-term strategy, said Jacques S. Gansler, interim dean of the school of public policy at the University of Maryland and an undersecretary of defense in the Clinton administration. "The emphasis was much more on building stuff."

Once the money stopped flowing so freely by the early 1990s, the defense industry had too many factories and too many workers to support. So it went through a decade-long restructuring, with companies that had been around since the dawn of aviation snatched up by competitors until only a handful of giant companies were left. A Pentagon report last year found that the 50 largest defense suppliers of the early 1980s have become today's top five contractors.

The Reagan administration's drive to have the best of everything drove up prices for weapons systems. Some of the programs got so expensive they disappeared or shrank -- the A-12 bomber was canceled because of excessive cost, as were the Comanche helicopter and Crusader artillery gun. The B-2 and the F-22 fighter were drastically cut back. Missile defense, which as "Star Wars" was the emotional centerpiece of the Reagan buildup, has survived but as a much smaller, ground-based system rather than the grand, space-based umbrella that Reagan envisioned. And it still doesn't work.

So while some credit the great buildup with driving the Soviet Union to bankruptcy and collapse, its ramifications for today's defense industry have been mixed.

"While he was certainly more good than bad for the defense industry, there were some down sides as well," said Michael E. O'Hanlon, senior fellow in foreign policy studies at the Brookings Institution. The defense buildup "was less good for the defense industry than most people presumed."

Coming out of the Vietnam War, the defense industry was much as it had been since World War II, with scores of companies competing for work, but Pentagon budgets declined. Stores of weapons had been depleted by the war and not replaced. The companies were venturing into new areas of innovation -- such as radar-evading stealth technology -- and had developed two fighter planes that would be the finest in the world, the F-15 and the F-16.

Reagan came along and brought such programs to life with an infusion of money. Defense spending hit a peak of $456.5 billion in 1987 (in projected 2005 dollars), compared with $325.1 billion in 1980 and $339.6 million in 1981, according to the Center for Strategic and Budgetary Assessments. Most of the increase was for procurement and research and development programs. The procurement budget leapt to $147.3 billion from $71.2 billion in 1980.

"It was more during the Nixon and Ford era that key programs were developed that are the backbone of today's military, and during the Reagan era they were procured," said Norman R. Augustine, former chairman of Lockheed Martin Corp.

Even the most memorable of Reagan's defense programs -- the Strategic Defense Initiative, or "Star Wars" -- had been around since the late 1960s until Reagan embraced it and made it into something bigger. Or, at least, seemingly bigger.

Missile defense "had less impact on the industry than many might think," Augustine said. "Although it was a highly publicized and certainly controversial program, in the grand scheme of defense spending it wasn't that large, and much of it was spent on research and development, a relatively smaller part of the defense budget."

The people it really affected were the Soviets, he said. "They were much more convinced we could make it work than many of us were, frankly, and certainly more than much of our media."

The Soviets felt they couldn't keep up with such technology, Augustine said, and came to believe that Reagan would spend more on weapons than they could ever match -- pushing them to effectively surrender in the Cold War.

Critics question whether Reagan outsmarted his adversaries. Military officials in both the United States and the Soviet Union were bluffing about one another's capabilities to help fuel a push for more and more weapons, said Pierre Sprey, a Pentagon consultant in the 1970s and 1980s.

"What we had was two huge defense apparatuses busily propagandizing their governments to spend the absolute maximum amount of money," said Sprey, who was prominent in a group of reformers inside and outside the Pentagon who argued against increased military spending.

"It wasn't a buildup, it was just a spend-up," Sprey said. Reagan gave money to defense contractors for weapons while funds for troops, maintenance and training languished. For example, not only did Reagan approve construction of the costly B-2 bomber, Sprey said, he also resurrected the B-1 bomber, a problem-plagued program that the Air Force didn't want and the Carter administration canceled.

Reagan's generosity also bred waste and excess in the defense industry, Gansler said, leading to scandals after which Congress scolded the military for spending hundreds of dollars on spare parts such as hammers and toilet seats. That led to the formation of the Packard Commission during Reagan's second term, a group led by computer executive David Packard on which Gansler served.

The group recommended changing how the Pentagon does business, aiming it toward commercial practices in hopes of efficiency. A 1999 government study found that contracting efficiency got worse after Packard's reforms were put into practice, but many of them -- such as giving companies more freedom to oversee their own subcontractors -- continue to this day.

For all the criticism, some experts credit the Reagan administration with fostering the last real renaissance in Defense Department technology. Advances in stealth, the use of composite materials, software for increasingly sophisticated computer control systems, and the development of "smart" munitions all advanced because of heavy spending during the Reagan years, said Andrew F. Krepinevich Jr., director of the Center for Strategic and Budgetary Assessments.

That marked the end of a long period, dating at least to World War II, when the military was the nation's big technological innovator, said John E. Pike of Globalsecurity.org. Soon after Reagan left office, the rise of the Internet sent commercial technology zooming past the military, which has struggled to catch up.

"The defense sector has become a consumer of technological innovation rather than a leader of technological innovation," Pike said.

Fresh from a wave of consolidations, the defense industry is remaking itself again by absorbing information technology companies and working to develop networks and systems instead of machines that fly, crawl or explode. So while weapons spending is beginning to increase again, the Pentagon is not buying the same stuff that Reagan bought.

General Dynamics built 947 M1 tanks in 1987; it has not built one since 1993. The Reagan administration advocated the purchase of 29 Seawolf-class nuclear submarines, but only three have been built. Reagan was spending his way toward a 600-ship Navy and almost got there, with 591 ships in 1989; today the Navy has 295 ships.

Staff researcher Richard Drezen contributed to this report.

Copyright 2004, Washington Post