Predator (10 page)

In 1988, under the new JPO, under the austere new budget for UAVs, and under the jaundiced eye of Lieutenant Colonel Thomas, Karem feared that his Amber, revolutionary as it was, might go into a deep political stall. If that happened, he planned to keep Leading Systems alive by designing a new drone to sell to foreign militaries. This larger, heavier aircraft would be less capable than the Amber, a requirement for getting State Department licenses to export it, but it would combine some of the Amber's best features with some from his little Gnat trainer. The chord of the new drone's wing at the root (its width from front to back, where the wing met the fuselage) measured 750 millimeters, so Karem named his new product the Gnat 750.

*   *   *

General Atomics had attracted some favorable attention at the Air/Space America 88 show, but Tom Cassidy, like Abe Karem, was getting no joy from his attempts to sell unmanned aerial vehicles to the armed services. In late 1988, the former admiral persuaded a bevy of Army and Navy officers to meet him and the Blue brothers at dawn on a chilly Army test range near Yuma, Arizona, to witness a demonstration of the prototype Predator, the kit plane Bill Sadler was trying to turn into a UAV. Among those attending was the director of plans, policy, and doctrine for the U.S. Joint Special Operations Command, Rear Admiral Cathal Flynn—an impressive “get.” Sadler was in the cockpit of the little plane and flew it during takeoff and landing, but he let the Predator's GPS-guided flight control system fly the semi-drone through a programmed, U-shaped, thirty-five-mile course of tethered weather balloons. The Predator navigated to within ten to twenty yards of three balloons designated as mock targets.

“This system illustrates a new family of weapons which will outdate more expensive weapon systems,” Neal Blue told a
San Diego Union
reporter invited to observe. “It's a fire-and-forget system. Once you fire it, you can walk away.”

Cassidy also spoke to the reporter and told him that the Predator would be able to slam into targets at ranges of three hundred miles while carrying three hundred pounds of explosives or a small nuclear warhead, yet each plane would cost just thirty thousand dollars.

The reporter noted in his article that General Atomics had exhibited but not flown its Predator at the air show the previous May, and that the company had been getting “calls from U.S. allies in Europe and the Middle East, but not from the Pentagon.” The article contained no comments or reaction from Admiral Flynn or any of the other military officers present.

After the demonstration of the prototype in Arizona, Cassidy and his boss hoped their contacts in the military would call back expressing interest. What they got was silence. As Neal Blue put it years later, “They came. They saw. They left.”

*   *   *

Even as Karem continued to clash with his handlers at the JPO, DARPA remained impressed with the Amber's growing capability. In the February 1989 issue of
Aerospace America
, a magazine published by the American Institute of Aeronautics and Astronautics, the agency's Ronald Murphy noted that the Amber's “order of magnitude increase” in flight time over previous drones had already led the Joint Chiefs of Staff to establish a new “endurance” category in the RPV master plan demanded by Congress. But in a separate article in the same issue, a DARPA deputy director provided a reality check. Despite support in Congress, an “unquestioned need” for such a drone “on the battlefield,” and the technology's demonstrated capability, “DARPA's decision to turn Amber over to the services could prove fatal to the program,” Robert A. Moore wrote. “The services are having difficulty finding adequate funding for field evaluation of Amber while simultaneously meeting the expense of fielding Pioneer.”

When Karem read the article, his heart sank: Moore might as well have invited the Navy to cancel the Amber. But Abe Karem wasn't a quitter. Getting a shock from the light switch on his uncle Ezra's bed hadn't stopped him from taking things apart when he was a toddler. Seeing his drone proposals undermined by his former colleagues in Israel hadn't stopped him from pursuing his aviation dreams. Nor did giving up occur to Karem now. Instead, he became a man possessed.

For the next two years, Karem spent nearly every waking moment trying to save the Amber and Leading Systems. In early 1989, the JPO invited contractors to compete for a contract to produce a UAV for the Army and Marine Corps, asking for a drone that could loiter over an area as much as ninety miles from its base for five to twelve hours. Karem offered the Amber, and Leading Systems was one of three bidders. Mullowney's office announced that two bidders would be selected to compete for the final award—a potential billion-dollar deal. The winner would be commissioned to build an expected four hundred drones and fifty systems needed to fly them (ground control stations and related gear) within five years.

The Amber clearly could perform the mission, but the JPO also made it clear that the finalists would have to prove they had the experience, facilities, manpower, and “organizational structure” to produce aircraft in significant numbers, and provide parts and supplies to the services later on. Karem's deputy, Frank Pace, told his boss that Leading Systems needed to team with a much bigger company to have a chance, but Karem was reluctant.

“He didn't really want to team,” Pace mused years later. “He didn't want anybody to tell him what to do.”

For months, Karem dithered. In the end, though, he had no choice—Leading Systems was running out of cash. In August 1989, he signed a teaming agreement with Hughes Aircraft Company, a far larger and richer defense contractor with extensive manufacturing experience. Hughes agreed to help produce the short-range UAV if Leading Systems and its Amber were chosen, and to take charge when the program reached full production. Hughes also agreed to help Karem pursue export sales of his Gnat 750, mainly by guaranteeing bank loans to Leading Systems. Hughes would guarantee up to five million dollars initially and as much as twenty-five million if their team won the short-range UAV contract. The collateral for the loans would be Karem's company—lock, stock, and barrel. If Leading Systems later proved unable to repay its borrowings, Hughes could foreclose and take ownership of all physical and intellectual property that didn't belong to the government.

Karem sent the JPO a copy of the teaming agreement on August 17, 1989, the day he and Hughes signed it. Less than a month later, the JPO narrowed the competition for the short-range UAV contracts to the other two competitors.

Stymied once again by the JPO, Karem pinned his hopes on the Gnat 750. Within days of losing the short-range competition, he was in Turkey, then Germany, then Washington, talking with possible export agents and foreign manufacturing partners. A planned Gnat 750 flight in Kuwait on October 20 “was cancelled by the Kuwaitis when they were told I am an ex-Israeli,” Karem reported to a Hughes official. But he also expressed hope that he could find a Turkish manufacturing partner, and he said that Pakistan, another Muslim nation, had shown some interest in the Gnat 750. He was optimistic that Israel might buy some Gnats as well.

As Karem scrambled to rescue his dreams, Leadings Systems dutifully transferred ownership of his company's six Ambers to the JPO as required—seven had been built, but one had crashed due to engine failure. Then, knowing the JPO would put the Ambers in storage and forget them, Karem tried to get someone in the armed forces to use them and keep the project alive. With help from his old DARPA sponsor Bob Williams, now an adviser to the U.S. Southern Command in Tampa, Florida, Karem and Hughes proposed that SOCOM, as the command is known, use the Ambers to search out drug traffickers in the jungles of South America. On March 30, 1990, a Hughes official briefed the SOCOM commander and described the idea.

But time was running out. The very same day, the Defense Contract Audit Agency refused to honor a Leading Systems invoice for $1,340,000—a devastating financial blow for Karem, who was near the end of his line of credit. By September 14, Leading Systems owed Hughes almost $5 million and couldn't pay an overdue phone bill of $1.81. In October, Leading Systems filed for bankruptcy. In November the JPO ordered Leading Systems to send the six Ambers it had to Naval Air Weapons Station China Lake, in the western Mojave Desert, to be warehoused. Later that month, the JPO officially terminated the Amber program.

“They didn't really want our airplane around, and Abe was actually told his airplanes wouldn't see the light of day after that,” Pace recalled sadly years later. “And true to their word, they took our airplanes and sealed them up, shipped them to China Lake … They had six perfectly flyable airplanes. They closed down our support contract and drove us out of business.”

*   *   *

Ira Kuhn, the physicist and advanced technologies consultant who had served as a conduit for DARPA to fund the Albatross when Karem was working in his garage, wanted to help Abe, and not just for friendship's sake. Kuhn had never taken money from Karem, nor had a financial interest in his projects, and he never would. But after more than a decade of association, Kuhn firmly believed, as he was fond of telling others, that Karem was a “national asset,” a genius whose work could be invaluable to America's defense. During the Amber's deep political stall, Abe had leaned on Ira heavily for advice, sending him drafts of his plans, proposals, and letters and calling Kuhn almost daily on the phone. Now, with the Amber dead and buried, Kuhn wanted to help Karem salvage what he could of Leading Systems.

Hughes foreclosed in late 1990, taking legal possession of all Leading Systems' property. At first, the big defense company told the bankruptcy court it might establish a UAV subsidiary and hire Karem as a consultant, but that plan fell through when Karem's chief supporter at Hughes was struck down by a sudden illness. By January 1991, Hughes was trying to sell the assets of Leading Systems, and Karem was trying to help find a buyer—ideally someone with money who would appreciate the value of what he had accomplished, take possession of all his physical and intellectual property from Hughes, and then bankroll Karem and the core of his team in a fresh start, with the Gnat 750 as their base. Kuhn made some calls, talked to some friends, and came up with an idea: what about the Blue brothers, Neal and Linden, the owners of General Atomics?

With Karem's encouragement, Kuhn called Linden, the brother Kuhn knew best, and told him about Karem—his brilliance, his team, and the promise of his drones. “You guys have been wanting to get into the unmanned vehicle business,” Kuhn told Linden. “Why don't you get serious and go up and buy the remains of Leading Systems? I'll try to talk Abe into bringing the residual team down to your company and continuing this thing.”

Kuhn's timing was excellent. Only a few weeks back, Linden had told Neal that they really needed to move on from their prototype Predator and develop a serious aircraft. The modified aluminum kit plane was proving the concept of using GPS to guide a drone, all right, but otherwise they were at a dead end. A year after the flight demonstration the company staged for the military at Yuma, Sadler still hadn't been able to automate the Predator sufficiently to fly without him in the cockpit. Besides, in Linden's view, the aluminum Predator couldn't hit the performance marks that would be required of a real military UAV.

If General Atomics wanted to get into the UAV business in a serious way, Linden argued, the company needed to build a drone made of composites, materials such as carbon epoxy, that could be baked into rigid forms to serve as lightweight but sturdy aircraft parts and structures and be less visible to radar than aluminum. As a top executive at Gates Learjet from 1975 to 1980, Linden had overseen experiments that used composites to make aircraft parts, and he knew a lot about the still-emerging technology. He also told Neal they needed to develop a UAV with a high-aspect-ratio wing, which would be essential to creating a drone with exceptional range and endurance. In other words, General Atomics needed to build the kind of drone Abe Karem had already designed.

Neal listened. By now it was clear that the military had no interest in using UAVs as cheap cruise missiles; moreover, the potential targets that had inspired his interest in the concept were gone. In Nicaragua the Sandinistas were out of power; in Europe, the Berlin Wall had fallen; the Soviet Union was collapsing. In the foreseeable future, at least, no Russian tanks would be pouring into Western Europe.

The Blue brothers began a series of conversations with Karem, and on Valentine's Day 1991 Karem faxed Kuhn copies of a “first-cut” proposal he had sent General Atomics and a counteroffer he had gotten back. Karem's proposal envisioned General Atomics buying his assets from Hughes, then investing nearly four million dollars over the next two years in a “separate entity” to build UAVs. General Atomics would put Karem, Pace, and other members of his core team on salary; in addition, the company would pay Karem and Pace royalties on all sales of Gnat 750s. Karem would be in charge of the entity, but “new faces” would market the product to the Defense Department and thus “shield Abe.”

The General Atomics counteroffer was straightforward and hard-nosed, reflecting Neal Blue's style and Karem's utter lack of negotiating leverage. General Atomics would settle with Hughes on a price for the assets of Leading Systems, and then hire Karem and his core team as regular employees. The team would report to Tom Cassidy in the General Atomics Advanced Technologies Group. “Abe will be chairman of this group as well as Chief Engineer. Operations of the activity will be under the direction of Frank Page [
sic
] as General Manager,” the counteroffer stipulated, misspelling Pace's name.

Hughes bowed to expediency and Karem to reality. Both accepted the offer from General Atomics almost overnight. In March, the company put Karem, Pace, Jim Machin, Jack Hertenstein, and seven other Leading Systems engineers and pilots on salary, reporting to Cassidy. With the exception of the El Mirage airfield, which Karem and his family had bought but still owed money on, the Blues bought all the assets of Leading Systems for a price negotiated solely with Hughes. They got a warehouse full of office furniture, several small Gnat trainers, a couple of Gnat 750s, some digital ground control stations, and a long list of other expensive aviation equipment. They also got all the intellectual property Leading Systems had created from 1980, when Karem incorporated the company, through 1990. As a court document catalogued it, this included all “patents, trademarks and trade names,” all copyrights, all “proprietary information, trade secrets, know-how,” all Karem's inventions, all export licenses approved by the State Department, all licenses to use intellectual property belonging to others, all “documentation, disks, tapes, computer software, blueprints, drawings, sketches, recordings, film, photographs or other tangible medium” used in “research, design, development, manufacturing, test, evaluation, operation, maintenance, training of personnel, repair or overhaul of products.” For all those assets, the Blues paid $1,850,000—about one-tenth the value of the physical property alone.