Keepin' Ya Safe

In 1994, United Defense Industries (UDI) signed a contract with the Defense Department potentially worth $1.1 billion to develop a new howitzer weapon system called the Crusader. Sort of a big tank toting a Howitzer to deliver 100 pound projectiles with a new and improve tube length and cooling system, more automated and quicker.

In 1997 UDI was purchased by the Carlyle Group, a Washington, D.C., investment partnership formed in 1987 by David Rubenstein, a former aide to President Jimmy Carter; Daniel A. D'Aniello, and William Conway, billionaires all. Carlyle's portfolio includes other industries but purchasing defense companies added much to the company's success. Apparently, after the end of the Cold War there were lots of investor neglected defense companies. How sad. Who wants to invest in weapon systems unless we have a big war on.

A February 2001 UDI press release assures us the "Crusader is currently in the Program Definition/Risk Reduction (PD/RR) phase of development that will culminate in a Milestone II decision in April 2003. However, Crusader achieved a number of development goals that go beyond those required of the next milestone. This demonstration shows that Crusader is on the path to begin delivering operationally suitable prototypes beginning in FY 2004."

Doublespeak to say that after 7 years the company still hasn't delivered an operational prototype, in the definition phase of development, send more money please.

In the summer of 2001 UDI, after a leveraged recapitalization, goes public, the initial public offering was completed in December 2001.

May 9, 2002 Donald H. Rumsfeld announced he intends to cancel the Army's $11 billion Crusader artillery program so that money could be invested in more futuristic weapons technologies, setting himself on a collision course with Congress over the mobile, rapid-fire howitzer." (Is that why Rummy was dumped, over a tank?)

On May 29, 2002 the President canceled the Army’s Crusader Artillery program. "In development since 1994, the Crusader weighed 60 tons and would be too heavy for the Army to transport in a timely manner. Moreover, the Crusader was designed to fight a heavy land battle, more likely during the Cold War than the 21st Century. Rather than continuing a system with questionable future relevance, the President reallocated the Crusader’s funds to more advanced technologies including precision guided, artillery weapons. The President’s Crusader decision, endorsed by the Congress, represents a real step towards transformation."

Only futuristic need apply.

Some defense analysts felt that even though the Crusader did not fit into plans for transforming the military, it placated Pentagon officials who were resistant to change. Even if the project is canceled (which it was) UDI has already received $2 billion from the program and would receive more to shut it down.

In April 2004 Carlyle completely exited its UDI investment. In June 2005 BAE Systems, completed its acquisition of United Defense Industries Inc (United Defense). The Company announced it had entered into a definitive merger agreement to acquire United Defense on 7 March 2005 in a transaction valued at $4.192 billion.

Still tops in defense Carlyle advises real opportunity is not in the private sector, but in the U.S. government market, where federal agencies are spending hundreds of billions on new technologies for homeland defense and high-tech warfare.

So here we are, more cliques than you can shake a stick at. Ten years and a couple billion spent, and the Crusader was nothing more than a few test rounds on a Yuma desert, bling for generals who were Cold War relics. It's that military-industrial complex. The gravy train protection racket, sending congress (errand boys) to fetch the funds. Hundreds of billions in real opportunity.