The impact of government sanctions on the business ethics of defense contractors during the Cold War era

This study examines the ethical issues involved in the business transactions between the major armament corporations and the United States Government during the Cold War era. The vast expenditures required to construct complex weapons systems were conducive to various forms of contract fraud, which raised serious questions involving both the technology and ethical probity of corporate America. These scandals threatened vital defense production and the financial future of giant corporations, and serious efforts at ethical reform represented the only solution. After establishing the industry-wide pattern of these contract irregularities, the focus of the study is narrowed to one major defense contractor, General Dynamics Corporation, and one specific corporate division, Electric Boat, whose ethical difficulties may be said to typify the industry. Repeated allegations of poor ethical performance led to a corporate crisis when the government suspended all defense contracts for this division. This study examines the relevant events leading up to this critical situation and then details the pragmatic response in the form of a thorough ethical-reform program. This intensive rethinking and reshaping of corporate ethical policies involved all levels of management and the work force. A new corporate office and published procedures expedited the correction of any potential problems. This analysis of the ethical reform measures demonstrates the success of the program over the five-year period covered by this study. The conclusions consider the future implications of the large-scale effort to return corporate America to sound ethical principles