The Contract State

...More frequently in recent years, they have served as hand-maidens to industry or the military, as legitimizers of the "cold war state" which encourages the existence of concentrated power (and extravagant profits) largely beyond Federal control...

...Though McNamara is the first occupant of his position to tame the services generally, his accomplish­ments in this venture have been few...

...Bitter service rivalries and corporate fights for juicy contracts have occasionally disrupted the government, as combina­tions of business, military, and political leaders clashed in Washington's periodic internecine warfare...

...Also sympto­matic of the system is the hucksterism it encourages: in many cases, "the best qualified engineers are engaged . . . in writing proposals...

...More troubling is the case of Drs...

...Public control was eroded...

...Partly from the demands of private enterprise, the Federal government has allowed American business, rather than government facilities, to conduct the bulk of research and development (R&D), which now exceeds $40 billion...

...In size, in bureaucracy by its nature, there are always difficulties in gathering accurate information and asserting effective power...

...In the Eisenhower years, the Air Force gained a march on the other services by contracting out nearly all ~f its R&D work...

...and 'second-rate scientists...

...The failure to attack pressing domestic problems is more than America can afford...

...Yet, ironically, as research and development have become more profitable, the government has lost control over private corporations handling the bulk of its work...

...As the nation confronts new crises in the cities, where race riots erupt with searing frequency, the gov­ernment continues to allocate much of its limited resources to the ill-conceived, the mismanaged, and the unnecessary...

...Along with Richard Barber's recent study, The Politics of Research, Nie­burg has raised issues created by the new technological-political structure which the nation must confront...

...So fierce has the rivalry been for contracts and so weak has been the control that services have sabotaged one another's missiles, and contractors have made false claims, with impunity, and even secured the huge contracts they sought...

...perform the actual work...

...Throughout the postwar years, scientists have joined these battles...

...When these private enterprises are so heavily financed by the govern­ment and charged with public respon­sibility, suggests Nieburg, the traditional distinctions between public and private disappear and the government gains new obligations and rights...

...The aerospace industry, the most dramatic example, would crumble without the approximately $30 billion it will receive from this year's Federal budget...

...Within this group, of course, there are fierce disputes...

...There is the "payola" of companies operating on what amount to cost-plus contracts: for example, Martin Company charging the government $3,800 to fly crabs from Baltimore to Colorado for a company picnic...

...Simon Ramo and Dean Woolridge, sponsored by the Air Force and given control over billions in con­tracts, who parlayed a few thousand dollars into a multi-million dollar em­pire within a few years...

...Stripped of expert personnel who were lured to industry by higher salaries indirectly paid by Washington, the government was left without the capacity for effective judg­ment...

...But for Nieburg, who admires the Secretary's valiant struggles to reform and control the "contract state," he is an "unflinching hero...

...The "contract state," with blocs of power disregarding or opposing the na­tional welfare, "is now eating the heart out of American society," warns Nie­burg...

...The same 300 firms continue to per­form 97 per cent of Federal R&D and 91 per cent of private R&D, and much of this private activity is charged to the government as overhead on other con­tracts...

...or Aerojet General leasing Dis­neyland for a $101,000 outing billed to the government...

...When others followed the Air Force, concludes Nieburg, the process "decimated the government's in­house management...

...Though many may boggle at C. Wright Mills' doctrine of the "power elite," it is clear that a few hundred men exercise great power to advance their own interests, affect economic growth (and inflation), allo­cate national resources, and shape na­ .tional policies...

...The volume bristles with disclosures about the "contract state...

...But in this case the problem is largely the result of conscious planning, of the effort by Federal groups, like the military, the National Aeronautics and Space Administration, and the Atomic Energy Commission, to secure external allies to assist them in the annual battle for a larger share of the Federal budget...

...Under the vigorous guidance of Secretary of Defense Robert McNa­mara, the Kennedy Administration tried to reassert control over R&D by redeveloping cadres of experts and by returning some of the work to Federal agencies...

...By emphasizing through re­peated examples the operations of the "contract state" and the loss of public control over allocations of resources and determination of national policy, the author has performed a valuable service...

...The 'Contract State' Reviewed by Bart Bernstein THE American political dialogue be­ tween the advocates of private enterprise and the exponents of more active government has long obscured reality: widespread dependence upon the Federal government as a promoter and customer...

...December, 1966 The growth of this scientific-military­industrial complex is the subject of In the Name of Science', the occasionally rambling, fact-studded book by H. L. Nieburg, a political scientist at the University of Wisconsin (Milwaukee...

...Observing the reliance of most inter­ests upon government benefits, critics have properly begun to focus, in par­ticular, upon the "warfare state" and its alliances of financiers and indus­trialists with military chiefs and polit­ical leaders...

...At first they operated largely as autonomous intellectuals...