131. Letter From the Assistant Secretary of Defense for International Security Affairs (Ellsworth) to Prince Sultan ibn Abd al-Aziz Al Sa’ud of Saudi Arabia1
The importance of the PEACE HAWK V program to the modernization plans of the Kingdom of Saudi Arabia is well understood by the United States Government. The program has been subjected to close scrutiny within the Department of Defense because of its size as well as the major role which it has in your plans. The cost of the program will depend, of course, upon the extent of contractor support and facilities construction desired by Saudi Arabia.
You should be aware of two particular features of the cost estimate for the program. First, the Letter of Offer includes a $50 million line item for contingencies. The purpose of including this line item is to avoid the need to process additional requests for funds for program additions or price increases not foreseen at the time of contract definition. As these items occur, they will be submitted to you in detail, and fully documented.
Second, in addition, the Letter of Offer includes approximately $45 million to cover costs involving the Agent’s Fee Agreement between the Northrop Corporation and the Triad Financial Establishment. The Department of Defense is not in a position to assess the appropriateness of this item, and therefore is informing you.
I wish to assure you that the United States Department of Defense will provide continuous top level management attention to the PEACE HAWK V Program. Please feel free to bring any program problems to my personal attention.
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Summary: Ellsworth informed Prince Sultan of the $45 million commission fee payable to Adnan Khashoggi’s Triad Financial Establishment as part of the Peace Hawk V program.
Source: Washington National Records Center, OASD/ISA Files: FRC 330–78–0038, Saudi Arabia, 1975, 461–702. No classification marking. Copies were sent to Ellsworth and Jordan.
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