When the United States gives military aid to its allies, the benefits accrue to Lockheed Martin, too. Israel, for example, spends much of the $1.8 billion a year it receives in military aid from the U.S. on planes and missile systems from Lockheed -- and that's in years when it is not actively at war with Hezbollah. Lockheed's market is worldwide, selling F-16 fighters, surveillance software and other equipment to more than 40 countries. The United Arab Emirates, forced to give up its deal to run American ports through its state-run Dubai entity, has been a major customer, spending more than $6 billion on F-16 fighters in 2000 as it looked forward to the Bush presidency. No wonder Bush threatened to veto legislation barring the ports deal.

Stevens has boasted that Lockheed Martin not only creates the technology, it makes military policy as well. He told The New York Times in November of 2004 that Lockheed stands at "the intersection of policy and technology," which, he observed, "is really a very interesting place to be. We are deployed, entirely in developing daunting technology" that "requires thinking through the policy dimensions of national security as well as technology." He acknowledges "this is not a business where in the purest economical sense there's a broad market of supply and demand."

And although he may shine his own shoes, Stevens is paid $7 million a year, not counting bonuses and stock options. In 2002, Stevens left Bush's aerospace commission, becoming a member of the influential Council on Foreign Relations, and Jackson left Lockheed Martin to work on the Project on Transitional Democracies and the Committee for the Liberation of Iraq. Stevens and Jackson were tag team wrestlers, Mr. Inside and Mr. Outside, of Team Lockheed. And, increasingly, the distinction between Lockheed Martin and the government began to blur as the war in Iraq became inevitable.

With the 2002 election over and Democrats increasingly hawkish on Iraq, Bush made his State of the Union address on January 29, 2003, uttering this now famous line: "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa." The threat of Saddam Hussein was established and the American people bought it. And the person claiming responsibility for leaving that line in was Hadley.

In February of 2003, Jackson helped draft a declaration for the 10 Eastern European foreign ministers -- all countries up for NATO membership and associated with Jackson's expansion efforts -- that became known as the "Vilnius Ten," rebuking French President Jacques Chirac's opposition to attacking Iraq. The declaration stated: "The newest members of the European community agree that we must confront the tyranny of Saddam Hussein and that the United Nations must act now." Jackson achieved this success when he attended a dinner party at the Slovak embassy in Washington and told assembled diplomats from the countries, according to The American Prospect's John B. Judis, that signing the declaration would help win U.S. approval of their membership.

On March 20, 2003, America attacked Iraq. "Shock and Awe" began at night, with Lockheed Martin Stealth F-117 Nighthawks leading the assault. Looking like gigantic, venomous black bats, the V-shaped killers with their sharply spiked tail wings swept over Baghdad in search of the concrete shelters and reinforced bunkers where it was believed Saddam Hussein and his inner circle were concealed. Light ground forces moved swiftly toward Baghdad. An American blitzkrieg had been launched.

The F-117 had been reconfigured to carry a 2,000-pound bunker buster bomb, accurately guided by new technology to hit its target at a vertical impact angle with a warhead called the BLU-109. The Lockheed Missiles and Space Company manufactured it. Lockheed's Keyhole and Lacrosse satellites beamed images from the war back to the military, employing its Theater Battle Management Core Systems, specialized software used to coordinate communications between intelligence systems and ground forces to assist the air campaign. Lockheed U-2 and the SR-71 Blackbird spy planes joined with its F-16 and the F/A 22 jet fighters in support of the F-117s. Army and Marine ground troops unleashed Lockheed Hellfire laser-guided anti-armor missiles to demolish helicopters and land attack vehicles, and PAC-3 missiles, a highly agile, "hit-to-kill" interceptor, to provide air defense for ground combat forces. Lockheed Javelin portable missiles were used to considerable effect, particularly later in the invasion of Fallujah. Lockheed's "arsenal of democracy" was in full display.

Five days later, Bush asked Congress for $74.7 billion to pay for six months of combat, separate from the regular defense budget. But by June, it had become obvious that the "uranium from Africa" intelligence had been deeply flawed and erroneous. Acknowledging the CIA had warned him in two separate memos that the Agency would not stand by the information suggesting Iraq was trying to buy yellowcake uranium in Niger to reconstitute a nuclear weapons program, Stephen Hadley had this to say about it: "When the language in the drafts of the State of the Union referred to efforts to acquire natural uranium, I should have either asked that they -- the 16 words given to that subject -- be stricken, or I should have alerted DCI Tenet. And had I done so, this would have avoided the whole current controversy. And in my current position, I am the senior-most official within the NSC staff, directly responsible for the substantive review and clearance of presidential speeches. The president and the national security advisor look to me to ensure that the substantive statements in those speeches are the ones in which the president can have confidence. And it is now clear to me that I failed in that responsibility in connection with the inclusion of these 16 words in the speech that he gave on the 28th of January."

Yet when Colin Powell resigned as secretary of state and National Security Advisor Condoleezza Rice took his place, Stephen Hadley was promoted to take her position as national security advisor. Hadley's "error" had enabled Bush to go to war, the big payoff for Lockheed Martin.

But how had the British government gotten the intelligence on the African uranium so wrong? How had MI6, the most fabled intelligence service in the world, allowed itself to be misled by dubious sources? While Tony Blair and his government deny any pressure was put on its intelligence services, the stakes were high for Britain to join America in the war. And here again Lockheed loomed large.

In October of 2001, the Pentagon announced it was awarding Lockheed Martin a nearly $20 billion contract for the next phase of the development of the Joint Strike Fighter, called the F-35. To the industry, it was "the deal of the century," despite the fact that the century had only just begun. In beating out Boeing, Lockheed asserted itself as the undisputed leader of military contractors for decades to come, if not forever. But it did not go it alone. It brought in on the deal not only Northrop Grumman, but also the beleaguered BAE Systems, Britain's, and Europe's, largest defense contractor. Under the terms of the contract, BAE was responsible for building the aft fuselage and the tails; Lockheed the forward fuselage and wings; and Northrop the middle fuselage.

On September 30, 2005, following Britain's participation in the invasion of Iraq and with its ground troops still on the ground as other coalition partners, such as Spain, pulled out their troops, according to John A. Smith of Lockheed's Fort Worth operation: "Lockheed Martin and the U.S. Department of Defense formalized a $25.7 billion Joint Strike Fighter system development and demonstration contract that effectively replaces the $19.7 billion SDD contract under which the JSF was operating previously." As this was all covered by the fiscal year 2005 Congressional budget, it "requires no additional Congressional funding."

Smith explains that nine countries will use the F-35 -- the United States, the U.K., Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- with all nine negotiating for what they will buy in the future, with sales worth $257 billion. (Israel has recently indicated its intention of converting its air force to F-35s in a deal worth $5 billion.) He explains that this is the fifth year of 12 in the systems development stage. Smith further explains that there is "no fixed percentage" as to how the three participating companies receive money, which is paid out on an "as needed" basis.

Bush couldn't go into Iraq without a major ally and Lockheed knew it. To sweeten the pot for Blair, Lockheed dragged BAE Systems into the F-35 deal. When BAE still struggled prior to the war (Goldman Sachs reported that BAE would have to cut its dividend), Lockheed began renegotiating the contract -- with the new version unveiled in 2005, giving BAE billions more to be paid "as needed." This put BAE back on its feet, able to build the Typhoon jet fighter for sale to Saudi Arabia in a $70 billion deal, saving 10,000 BAE jobs and 4,000 Rolls-Royce jet engine building jobs.

Meanwhile, a government accountability office report for Congress says the Defense Department is investing too heavily in the F-35 without knowing whether the aircraft will work properly. The report criticizes the Pentagon plan to spend $49 billion on 424 fighters before full testing on the stealth plane is completed in 2013. "Starting production before ensuring the design is mature through flight testing significantly increases the risk of costly design change that will push the program over budget and behind schedule," the report concludes. But that is all light years away, as far as Lockheed and BAE are concerned. As Bob Elrod, a senior executive at Lockheed's fighter plane division boasted, "We're looking at world domination of the market."

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