Gilpatric and General Dynamics: Some Unanswered Questions

When and if the McClellan committee reopens its hearings into the TFX affair and finally makes a report upon it, the role played by Gilpatric needs to be clarified. In the still incomplete record, his candor as a public official hardly matches his skill as a witness. At his confirmation hearing as Deputy Secretary of Defense on January 17, 1961, before the Senate Armed Services Committee, he made no mention of his relations with General Dynamics but said only that his firm “has served many large companies, small companies, that have done business with the Defense Department” and that on confirmation he would retire from the firm “and I will have no financial or other interest in it, except that I will be paid sums of money that will represent my interest in work that was done before I left the firm; not large sums of money [italics added] but sums that represent the unbilled and uncollected work of the firm for past periods.”

Somewhat fuller disclosure came two years later when he was called as a witness in the McClellan committee investigation of the TFX contract, as the following excerpt shows:

Mr. Jerome S. Adlerman [general counsel of the committee]: Mr. Gilpatric, you mentioned in this statement here that there were small sums of money that were to be paid to you. As a matter of fact, the total amount that would come to you would be $209,000, which is about $41,000 short of a quarter of a million dollars.

Senator Muskie (D. Maine): I correct counsel. He did not say small sums of money; he said “not large sums of money” which is a relative term. Small is much more precise.

Mr. Adlerman: It happens to be $41,000 less than a quarter of a million dollars. [TFX hearings, Part X, p. 2602]

Mr. Gilpatric had left the Cravath firm once before to do a tour of duty in the Pentagon. In 1951, after twenty years with Cravath, he became Under Secretary of the Air Force for two years. On his first appearance before the McClellan committee he testified that, after he left the Air Force and returned to the Cravath firm in 1953, “I made it a matter of my personal policy never to represent any client in any dealings with the Defense Department. I did do certain work for Boeing, and for General Dynamics, but I had no direct dealings with the Defense Department. That was somewhat of a penalty to me and to my firm.” [TFX hearings, Part II, p. 396, Italics added.] Since Boeing and General Dynamics were the two down-to-the-wire rivals for the TFX contract, this implied that there could hardly be a conflict of interest since he had represented both.

But ten months later, when Mr. Gilpatric appeared before the committee again, and after its investigators had been into the Cravath files, it turned out that all he had done for Boeing was to appear as a witness in a Contract Renegotiation Board hearing. Senator Jackson (D. Washington) read back the words from his earlier testimony, “I did do certain work for Boeing and General Dynamics” and asked—

Senator Jackson: Was that a full disclosure?

Mr. Gilpatric: I consider that it was and I consider—

Senator Jackson: If in one case [Boeing], Mr. Secretary, you got no fee, and in the other case [General Dynamics] you got $110,000 in fees, is that a comparable situation?

Mr. Gilpatric: It was never suggested the two were comparable.

Senator Jackson: Well, how do you interpret it?… The implication is clear that you did legal work for both.

Mr. Gilpatric: Well, you are putting the interpretation on it…I don’t think that you and I are going to agree on this….

Senator Jackson: As a matter of fact, if you had been called by the Government [instead of Boeing in this same renegotiation hearing] you would have prepared the same kind of testimony as a witness; is that not right?

Mr. Gilpatric: I wouldn’t have spent as much time as I did for Boeing in this matter. [He was called as a witness because of his previous experience as Under Secretary of the Air Force.]

Senator Jackson: Well, I am amazed to hear that. [TFX hearings, Part X, pp. 2704-5.]

At another point in this same appearance in November, 1963, the Chairman, Senator McClellan, asked Mr. Gilpatric whether he had spoken correctly when he told the committee in March that he had in the years between leaving the Air Force in 1953 and going back to the Pentagon in 1961 “followed the policy of never representing any member of the Defense industry in dealing with the Defense establishment.” This also elicited some extraordinary revelations:

The Chairman: Are these correct quotes of your testimony?

Mr. Gilpatric: Yes, they are, Mr. Chairman, and I want to emphasize as I did yesterday during the testimony that while it was my practice not to represent clients in transactions or dealings with the Defense Department, that did not mean that I did not have communications, inquiries, and in one instance I actually intervened in a matter between the Air Force and General Dynamics, but I did not represent General Dynamics in that connection…. It was not my policy to handle matters as a lawyer for the defense contractors dealing with the Defense Department.

The Chairman: Would you handle them in any other capacity than as a lawyer?

Mr. Gilpatric: In the one case of any consequence in which I did have an activity, namely a dispute between the Air Force and Convair Division of General Dynamics over the F-102 contract, I did bring about a set of negotiations between General Dynamics and its counsel, not myself, and the Air Force, in order to adjust that dispute…. In fact this matter ended up by the Air Force receiving from General Dynamics nearly $4 million.

The Chairman: I understand it was a dispute, a claim against General Dynamics by the government [the Comptroller General had found that Convair had put in a price on the F-102 that was too high by $12-13 million, Gilpatric later explained], was it not?

Mr. Gilpatric: That is right….

The Chairman: Was this a service for which you charged a fee?

Mr. Gilpatric: It probably was included in my time….

The Chairman: The point was, first, did you represent General Dynamics in a matter with the Defense Department whereas you had stated it was your policy and you did not do it, and neither did the firm?

Mr. Gilpatric: I did not represent General Dynamics in adjusting this claim. That is the fact of the matter.

The Chairman: Well, you rendered a service for them in connection with it for which you charged a fee; is that not correct?

Mr. Gilpatric: I think I rendered as much a service to the government as I did for General Dynamics. [TFX hearings, Part X, pp. 2612-14]

It turned out that Mr. Gilpatric’s efforts in this non-representational activity were quite extensive, including trips, letters, and telephone calls to bring about a settlement. As so often in these hearings, Senator Muskie came to Mr. Gilpatric’s rescue:

Senator Muskie: If you had chosen to represent General Dynamics fully in connection with the matter about which you have been testifying, there is no prohibition in law that would have prohibited you from doing so.

Mr. Gilpatric: Not in law nor in ethics….

Senator Muskie: So the degree to which you participated in this transaction was governed and limited wholly by personal policy of your own?

Mr. Gilpatric: Just an act of self-denial on my part. [Part X, pp. 2618-19]

Senator Ervin also lent a helping hand and elicited as lofty a response. The Senator from North Carolina had noted that during the time of this F-102 overcharge negotiation Mr. Gilpatric was not yet back in the government:

Senator Ervin: The conflict of interest principle is based fundamentally upon the doctrine that no man should serve two masters?

Mr. Gilpatric: That is right. That goes right back to the Gospel of St. Matthew. [Part X, p. 2638]

But it soon appeared that Gilpatric was ready to allow a wider latitude for lawyers when they entered government:

Senator Ervin: Do you think you can say that a member of the bar has rendered services to a client [sic] should impress upon him an indelible incapacity to render Government service in any matter that he may have in connection with his client or lawyer, Government service in anything which may concern their client?

Mr. Gilpatric: I think not. If that were a fact I and many of my predecessors in the Defense Department would be incapable of serving because any attorney who has any large practice involving many associations with industrial clients doing business with the Defense Department would be inhibited from carrying out his day-to-day duties. [Part X, p. 2638]

This broad and generous view, however, failed to appeal to Senator Curtis who observed that exactly the same problem arose in selecting judges:

Senator Curtis: If you are going to get an experienced lawyer he is going to have clients; is that not correct, when you are looking for a judge?

Mr. Gilpatric: That is right.

Senator Curtis: But the practice followed on the bench is that the judges disqualify themselves when former clients appear before the court. The thing that strikes me is that this was not done in this case. [The reference here is to the huge TFX contract which was awarded to Mr. Gilpatric’s former client, General Dynamics, while he was Under Secretary of Defense.]

Mr. Gilpatric: Are you suggesting, Senator, in your judgment I should have disqualified myself in this case?

Senator Curtis: I do. I do.

Mr. Gilpatric: I must respectfully disagree with you, because if I disqualified myself in this case, then applying the same rules would have required me to have stood out of dozens of other matters that come up to me [present tense because he was still Under Secretary] in the ordinary course of business affecting former clients of the Cravath firm, as to whom I can be just as objective as I was in regard to General Dynamics. [Part X, p. 2639]

Not everyone was as ready to accept Mr. Gilpatric’s view of his own objectivity. During his appearance before the committee a letter of September 16, 1963 went into the record from Senator Williams of Delaware to Attorney General Robert F. Kennedy. This is how Senator Williams summarized the situation, after reading all the previous nine volumes of testimony before the McClellan committee:

1. From 1958 until January 1961, Secretary Roswell Gilpatric was a member of the law firm of Cravath, Swaine & Moore that was counsel for the General Dynamics Corp. and based on this testimony he was the member of the law firm who brought the business to that firm and personally handled the account. The General Dynamics Corp. set aside an office for his use and convenience. [Italics added]
2. In January 1961, Mr. Gilpatric became the Deputy Secretary of Defense and explained that he “arranged” to turn the business over to one of his partners, Mr. T. M. Moore. Mr. Gilpatric has stated that he resigned from the law firm but was to receive money from it for past services.
3. The law firm continued to serve General Dynamics and from 1958 through the summer of 1963 was billed for $300,000 in legal fees.

4. Deputy Secretary of Defense Gilpatric did not disqualify himself in the TFX warplane contract competition involving his former client, General Dynamics. He took an active role in the contract discussions, wrote letters in connection with the bidding procedures, and recommended that the award be given to General Dynamics. His views in favor of General Dynamics overrode the Pentagon Source Selection Board’s recommendations for Boeing on the basis of performance and price.

5. Secretary Gilpatric has indicated that he will leave the Government and return to his law firm, a firm that still represents General Dynamics. Mr. Moore of the law firm has become a member of the board of directors of General Dynamics.

Senator Williams asked the Attorney General two questions. One was whether this constituted a violation of Section 434, Title 18, US Code, a conflict of interest statute which says that,

Whoever being an officer, agent or member of, or directly or indirectly interested in the pecuniary profits or contracts of any corporation, joint-stock company, or association, or of any firm or partnership, or any other business entity, is employed or acts as an officer or agent of the United States for the transaction of business with such business entity, shall be fined not more than $2,000 or imprisoned not more than two years or both [italics added].

The other question raised by Senator Williams was whether Mr. Gilpatric’s conduct violated President Kennedy’s memorandum of July 15, 1962, instructing Department of Defense employees not only to avoid conflicts of interest but even where “a technical conflict of interest, as set forth in the statutes…may not exist, it is desirable to avoid the appearance of such conflict from a public confidence point of view.” Senator Williams also quoted another portion of President Kennedy’s directive, which would seem to bear directly on Mr. Gilpatric’s plans to return to the Cravath firm, and his payments from it while in the Pentagon. The directive says, “in any case where DOD personnel have any financial interest in any business entity, or are negotiating for their subsequent employment by such entity, they are disqualified from representing the DOD in dealings of any kind with such entity” [p. 2596].

This elicited a reply dated October 21 from the Assistant Attorney General, Office of Legal Counsel, Norbert A. Schlei. This said that while Mr. Gilpatric “has indicated an intention to return” to Cravath on leaving the Pentagon, “nothing has come to our attention indicating that either Mr. Gilpatric or the firm has ever been committed to his return or that they have engaged in negotiations to that end.” The letter also said, “Moreover, so far as we are aware, Mr. Gilpatric’s former firm neither performed nor expected to perform any services for General Dynamics in relation to the TFX contract either before or after it was awarded.” The Assistant Attorney General therefore held [pp. 2597-8] that Mr. Gilpatric’s activity in getting the TFX contract awarded to General Dynamics violated neither the law nor President Kennedy’s directive that Pentagon officials, like Caesar’s wife, be above suspicion.

This reply left McClellan and several other members of his committee deeply dissatisfied. For one thing Senator Williams, in concluding his letter to the Attorney General had asked the Justice Department to review the testimony taken by the committee. The Justice Department letter made no claim to have done so and the committee staff members testified that the Department had not sought to examine their findings and testimony. “I am a little bit disappointed,” Senator Curtis told Mr. Gilpatric, “that the Justice Department in rendering its opinion on this—because I am sure you would abide by their opinion—did not avail themselves of whatever facts this committee has and the staff.”

Senator McClellan himself objected strongly to that passage in the Department of Justice letter which said Cravath was performing no services for General Dynamics in connection with TFX. The Senator wanted to know how Cravath could act as a general counsel for General Dynamics and yet have nothing to do with so major a matter of business.

The Chairman: I want to ask you if it is not true that the firm is still representing General Dynamics.

Mr. Gilpatric: Yes; but not in connection with the TFX contract.

The Chairman: Was that some arrangement that has been made specifically because of the TFX contract?

Mr. Gilpatric: No.

The Chairman: There has been no specific arrangement made with regard [sic] in any way so far as you know?

Mr. Gilpatric: All I know is that I have been told by the man who is now the senior partner of the firm, Mr. Moore, that at no time has the Cravath firm done any work or had any interest in the TFX contract.

The Chairman: Mr. Moore is now a member of the board [of General Dynamics]?

Mr. Gilpatric: That is right.

The Chairman: And he became a member of the board within how long a time after that contract was announced? About how long, about a week was it?

Mr. Gilpatric: He became a member, so I learned afterwards, not at the time, in December of 1962, the award was made on the 24th of November.

The Chairman: So immediately afterwards he became a member of the board, is that right?

Mr. Gilpatric: That is right.

The Chairman: Not only is he a member of the board, but he became a member of the board immediately after the contract award, but the firm still continues to represent General Dynamics. The only technical feature of it that is contended here that would relieve you from a position of being in a position of conflict of interest is the fact that you are saying and the Department of Justice is saying, we will go [sic] although your law firm represents General Dynamics, it represents it in matters other than the TFX. [p. 2606]

Senator McClellan then put into the record the minutes of the General Dynamics board meeting of December 20, 1962, one month after it got the TFX contract. This meeting designated Cravath counsel for the firm and elected Moore a director. It made no reference to limiting these services to matters other than TFX [p. 2607]. Gilpatric admitted this but insisted, “The fact is that the corporation has not asked the Cravath firm and the Cravath firm has not served in any connection with the TFX” [p. 2608].

When the committee recessed at 4:25 P.M. on November 20, 1963, it was going to dig further into this relationship, which was crucial to the conflict of interest question. That was a Wednesday. On Friday morning November 22, President Kennedy was assassinated. The shock was so great that the hearings never resumed.

Now the committee staff is preparing to reopen hearings early next session. The General Accounting Office, at the request of Senator McClellan, is compiling cost data on the whole TFX-F-111 program. If the committee takes up where it left off, there is still dynamite buried in this story.

—I. F. Stone

(This is the second article in a continuing series by Mr. Stone on US arms policy; the first, “McNamara and the Militarists,” appeared in the November 7 issue.)