Complex sentence: The entire operation would be observed by Lt. Gen. McNair; his report to the US War Department, and ultimately Eisenhower, would do much to decide the success or failure of the exercise.
Split into simpler sentences: The entire operation would be observed by Lt. Gen. McNair. His observations and reports to the U.S. War Department, and ultimately Eisenhower, would do much to decide the success or failure of the exercise.