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Government responsibility and private sector participation in the United States space program

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Title:
Government responsibility and private sector participation in the United States space program
Creator:
Whitbeck, Philip H
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English
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xi, 368 leaves : ; 29 cm

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Astronautics and state -- United States ( lcsh )
Astronautics and state ( fast )
United States ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Bibliography:
Includes bibliographical references (leaves 358-367).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Doctor of Public Administration, Graduate School of Public Affairs.
General Note:
Typescript.
Statement of Responsibility:
by Philip H. Whitbeck.

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University of Colorado Denver
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Auraria Library
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All applicable rights reserved by the source institution and holding location.
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10841413 ( OCLC )
ocm10841413
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LD1190.P86 1983d .W44 ( lcc )

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RESPONSIBILITY AND PRIVATE SECTOR PARTICIPATION IN THE .UNITED STATES SPACE PROGRAM by Philip B.A., University of Minnesota, 1947 M.A., University of Houston at Clear Lake City, 1976 A thesis submitted to the Faculty of the Graduate School of Public Affairs of the University of Colorado in partial fulfillment of the requirements for the degree of Doctor of Public Administration Graduate School of Public Affairs 1983

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PHILIP H. WHITBECK All Rights Reserved

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This thesis for the Doctor of Public Administration degree by Philip H. Whitbeck has been approved for the Graduate School of Public Affairs Date. 18 February 1983

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Whitbeck, Philip H. (D.P.A., Public Administration) Government Responsibility and Private Sector Participation in the United States Space Program Thesis directed by Professor Jay M. Shafritz Major research and development programs conducted by the federal government represent an important area of public activity. All such programs involve the use of industry under contractual arrangements with the government. Federal agencies have employed various approaches to This study deals with the unique policies adopted by the National Aeronautics and Space Administration (NASA) designed to retain control of basic decision making within the government while making maximum use of industry. The study outlines basic factors during NASAs early formative years which resulted in the decision to pursue a new policy in terms of government-industry relations. Methodology employed in the study includes a review of general literature, NASA documents, and interviews with former NASA officials who occu pied key positions at the time the policy was adopted. NASA policy was in sharp contrast to the practices followed by other major research and development agencies such as the Army, Air Force, and the Atomic Energy Commission. These agencies either relied almost totally on in-house development or delegated exten sively to industry. The policy adopted by NASA reflected a middie

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iv ground which utilized industry to perform detailed design and manufacturing functions but retained in-house government capability to perform program planning, supervise ongoing industrial activities, and make necessary program trade-offs. The study finds that the evolution of the NASA policy on government-industry relations was based on several main factors: a review by NASA officials of the experience of other research and / development agencies; the influence of the National Advisory y-(Committee for predecessor agencyi)and the desire of senior NASA officials to make maximum utilization of industry while assuring that the public interest was protected by maintaining a high degree of government management and technical competence. The decision-making process involved might be termed a consensus approach. It does not appear to fit commonly accepted decision models01fhis suggests that further research may be necessary to explore the value of this type of policy model. The form and content of this abstract are approved. I recommend its publication.

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CONTENTS CHAPTER I. INTRODUCTION .................. .; . . . . . . 1 B ackground. . . . . . . . . . . 1 Questions of Definition ... 3 The Federal Government--A Patron of Science................................. 4 The Importance of R&D. . . . . . . . . 7 The Establishment and Early Hi story of NASA............................... 9 Methode 1 ogy. . . . . . . . . . . 11 NASA Technical Control and Management of R&D Programs .......................... 14 The Conduct of Interviews with Former NASA Officials ............................... 15 Interviewing Techniques............................... 16 Plan of Presentation ................................. 19 II. R&D CHARACTERISTICS AND THEIR IMPACT ON MAJOR GOVERNMENT PROGRAMS. . . . . . . . 31 Background. . . . . . . . . . 31 A Description of R&D Activities ...................... 32 Risk and Uncertainty: The Primary Characteristics of R&D ............................ 37 Causes of Failure to Achieve Schedule, Cost, and Performance Objectives .................... 41

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vi III. RESEARCH AND DEVELOPMENT CONTRACTING PRACTICES AND PROCEDURES ................... 51 Background.. . . . . . . . . . . 51 Federal Procurement History ........................... 53 Types of R&D Procurements ............................. 56 Program Definition .................................... 57 The Procurement Process ............................... 59 Cost-Plus-Fixed-Fee Contracting ....................... 66 The of Incentives ................................. 68 Government Supervision of Contracts ................... 72 Summary and Conclusions ............................. 74 IV. THE HERITAGE OF THE PAST ................................ 78 The NACA Transfer and Its Impact on NASA.................................. 78 The Early History of Flight ........................... 79 The Establishment and Growth of NACA ................. 84 NACA between the Wars................................. 90 NACA and World War II ................................. 92 NACA in the Postwar Era ............................... 93 The NACA Organizational Culture ....................... 96 NACA's Last Attempt at Survival ....................... 98 V. THE ATOMIC ENERGY COMMISSION MANAGEMENT BY CONTRACT ................................ 104 Introduction. . . . . . . . . . . 104 The Prewar Peri ad..................................... 105 Early Administrative Structure ........................ 109 Establishment of the National Defense Research Committee ................. 110

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vii Establishment of the Office of Scientific Research and Development ................. 115 Enter Genera 1 Groves. . . . . . . . . 116 Production Facilities Constructed at Oak Ridge and Hanford ............................ li9 Establishment of the Weapons Laboratory ............ .. 120 The First Nuclear Explosion ........................... 121 The Postwar Period--Civilian versus Mtl itary Control ............................. 123 Government/Contractor Relationships under AEC. . . . . . . . . . . 128 Summary and Conclusions............................... 134 VI. THE ARMY MISSILE PROGRAM THE ARSENAL CONCEPT ................................... 143 Introduction ........................................... 143 The Early History of Rocket Development ............... 144 Early German Rocket Development ....................... 150 Allies Raid Peenemunde ............. ; .................. 154 Von Braun and His Team Surrender to the American Forces .................... 155 German Scientists Assist the United States Army. .. .. . . . . .. 153 The Army Missile Program Moves to A 1 abama. . . . . . . . . 162 Interservice Rivalry in the Ballistic Missile Area .............................. 163 The Army Continues to Seek a Space Mission ............... ; ................ 165 The Vanguard Program ................................. The Von Braun Team Launches First American Satellite ............................ 170

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viii Army Management Philosophy in Missi 1 e R&D ......................................... 171 Armys Contribution to Space and Missile Programs .......................... 177 Summary and Conclusions ............................... P9 VII. THE AIR FORCE MANAGEMENT BY INCORPORATION........................... l85 Introduction. . . . . . . . . . . 185 Background. . . . . . . . . . . 186 The Last Days of World War II and the Postwar Period .............................. 187 Problems Limiting the Development of Ballistic Missiles .... i 191 Rationale for the Committees Recommendations..................... . . . . 194 Securirig Needed Technical Competence .................. 197 The His tory of Ramo-Woo 1 dri dge ....... . . . 202 Formation of the Millikan Committee .................. 207 The Creation of Aerospace ............................. 210 Implications for the Federal Service of the Air Force Postion ........................... 213 Air Force Rationale for the Contracting of Technical Functions .................. 215 Criticism of the Air Force Use of Special Contractors .......................... 217 The Armys View Contracting for Technical Competence ............................ 220 The Be 11 Report. . . . . . . . . . 220 Summary and Cone 1 us ions. . . . . . . . 222

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. i X VIII. SPUTNIK AND ITS IMPACT .................................. 231 Introduction .......................................... 231 Public and Congressional Response to the Soviet Achievement ........................... 232 The President and His Administration React to the Soviet Success ......................... 234 United States Space Exploration: 1957-1958 ............................................ 236 Congress Investigates Space ........................... 239 The Administratfon's Proposed Space Legislation ........... ....................... 244 Congress Acts on the Administration Propos a 1 . . . . . . . . . . . 247 Transfer Authority Granted to the .................................. 258 Summary and Conclusions ............................... 259 IX. THE EVOLUTION OF NASA'S GOVERNMENT-INDUSTRY POLICY ............................ 266 Background .... . . . . . . . . . 266 The Appointment of NASA Key Officials ................................. 267 NASA Becomes an Operating Entity ...................... 270 John D. Young and the McKinsey Connection ............. 275 Management Approaches of the Top Team ................. 276 Transfer of DOD Facilities to NASA .................... 282 Management of JPL........... . . . . . . 285 The Approval of Project Mercury ....................... 286 McKinsey's First Study ................................ 287 NASA Acquires Army Facilities ......................... 292

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X The McKinsey Contracting Study Proposes a New Course for NASA ...................... 299 NASA Seeks Outside Evaluation of Its Organization and Policies ..................... 305 The Kimpton and McKinsey Studies: A Means of Containing Von Braun and JPL ............. 308 Approval of the McKinsey and Kimpton Reports .......... 310 Absence of Political Pressure ......................... 310 Evaluation of NASA Policy Development ............... 312 X. SUMMARY AND CONCLUSIONS .......................... 321 Background ........................................... 321 Summary. . . . . . . . . . . 323 Early Federa 1 Support of Science and Technology ............................ 323 World War II The Beginning of Modern R&D. . . . . 325 Characteristics of R&D .............................. 326 The German V-2 Experience and Its Impact on the U.S. Military ................... 327 Legislative History of NASA ........................ 329 Establishment of NASA ............................ 331 Organizing the New Agency ........................... 332 The Transfer of Personnel and Facilities to NASA ............................... 334 Goals of NASA Officials ............................ 336 The Transfer of the Von Braun Group ................ 337 Studies of NASA Organization and Policies ........... 338 Establishment of Basic Policy ....................... 340

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xi Conclusions ...................................... 341 NASA as a New Agency. . . . . . . . 341 The Unique Nature of NASAs Policy ................. 343 Advantages of NASA 344 Theoretical Implications ............................. 345 Final Conclusions ..................................... 352 SOURCES CONSUL TED. . . . . . . . . . . . 358 Books. . . . . . . . . . . . . 358 Reports. . . . . . . . . . . . 362 Yearbooks . . . . . . 363 Period i ca 1 s. . . . . . . . . . 363 Letters and Papers ............................ 364 Pub 1 i c Documents. . . . . . . . . 364 Interviews. . . . . . . . . . . 367

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TABLES Table 1. Research and Development: Steps, Activities, and Promises for the Future. . . . . . . 34 2. U.S. Aircraft Production, 1909-1913 ....................... 81 3. Government Responsibility for the Conduct of Major R&D Programs. . . . . . . . 344

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CHAPTER I INTRODUCTION Background This is a study of the basic approach taken by the National Aeronautics and Space Administration (NASA) in the conduct of very large and complex research and development (R&D) projects. It deals with the policy adopted by the agency in carrying out some of the most complex programs ever undertaken by man. These programs are the product of the work of highly capable individuals applying a sophisticated technology in the development of systems and machines to penetrate what at the time was an unknown and hostile environment, space. In conducting these new and original programs, the government needed to harness the capabilities of the government, universities, and industry. In the exploration of space, two groups, government and industry, were of primary importance in the development of space hardware. The use of industry by government in the conduct of major R&D programs is a longstanding practice in the United States. The relationships between the government and industry in the conduct of major technological programs have varied substantially, dependent on the agency charged with program responsibility. This study examines the basic policy adopted by NASA at the time of the inception of the agency on the use of industry in the accomplishment of the national

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2 space program. The policy adopted by NASA was significantly different from that utiiized by other federal agencies charged with R&D responsibilities. This study will examine the nature of that policy, the forces and factors which led NASA to adopt the policy, and the implications of that policy in terms of public responsibility and accountability. The focus of the study can be stated as follows: What policy did NASA adopt governing the use of industry in accomplishing space programs? What experience of other agencies did NASA consider and how did that experience influence NASA decision makers? What other forces and factors in the environment influenced NASA decisions on the use of industry? This explanation of NASA policy is significant for two rea sons. First, it relates to basic government responsibility for the expenditure of public funds for the conduct of major public programs. Second, it considers the NASA policy on the use of industry in contrast to the policies followed by other federal agencies charged with major R&D responsibilities. The NASA policy on the use of industry was adopted in the early days of the space agencys existence. The policy itself evolved during a two-year period beginning at the time the agency was established in October 1958 and ending approximately two years later in the fall of 1960. During this short span of time, NASA evolved a unique approach to government-industry relations. That policy, adopted over twenty years ago, has continued to guide NASA from that time to the present.

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3 The generally accepted success of NASA is a product of many factors. These include the technical and administrative personnel of the agency, the support of Congress and the president, and con tinued public support of the space program. One must assume, however, that this policy on the use of industry has been of significant importance to the success which NASA has enjoyed. The fact that NASAs policy on the use of industry has remained unchanged through successive administrations suggests that the policy itself was well-founded to meet the agencys needs. This administrative history is not designed either to evalu ate the impact of other possible approaches to the use of industry or to draw conclusions about its application to other agencies or other programs. The experience of NASA, however, in structuring its relationships with industry could prove valuable to government ad ministrators charged with the responsibility of conducting new, complex, and original R&D programs in the future. Questions of Definition This study must of necessity deal with the definition of the terms, 11research11 and 11development.11 Although precise definitions are not commonly used in the literature, there is general agreement as to their meaning. Perhaps the most comprehensive attempt at defining the terms was made by Lord Rothschild in 1972. vlriting in Nature, Lord Rothschild presented a tabulation of forty-five terms describing these areas.! For the purpose of this paper, the definitions published by the Subcommittee on Science, Research, and Development of

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the House Committee on Science and Astronautics will be utilized.2 The subcommittees definitions are based in large measure on the work of Rothschild. Scientific research is defined in the following manner: Scientific Research is Research conducted in accordance with the scientific method. It is systematic intensive study directed toward fuller scientific knowledge or understanding of the subject studied.3 Deve 1 opment is defined by the subcommittee as fo 11 ows: ... any intensification in the use of technology, whether to raise the economic level of a geographic region, or to provide a concrete means of improving the performance of a function or program. As distinguished from Research_ ( q. v. ) Deve 1 opnieiit is the emp 1 oyment of available information in the construction of a piece of operating hardware or a useful physical or social.4 4 Chapter II discusses these terms in more detail and describes the unique characteristics of R&D. The Federal Government-A Patron of Science Support of science and technology is not a new concept of the twentieth century. The emergence of large government-supported R&D projects since World War II has led many to believe that governments relationships with science and technology are of recent origin. Since the beginning of the Republic, science, technology, and explor ation have been closely linked to federal encouragement and support. A. Hunter Dupree, in his analysis of Science in the Federal Government, states: From the beginning the federal government has rendered honor to science and profited from it. Almost as early, the sup port given by the government was a significant source of strength to science in America. The institutions that grew

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up in and near the federal structure have been prominent 1n all periods of the nations history. Indeed, before the rise of theuniversities, private foundations, and industrial laboratories, the fate of science resteg more exclusively with the government than it did later. Initial concern with relationships of science and technology to the federal government arose at the time the Constitution was being framed. The concept that a special relationship should exist between-government and science was understood by participants at the Constitutional Convention. Dupree indicates that "the idea that the federal government should become the patron of science was easily within the grasp of the framers of the Constitution. "6 The earliest concern with federal support of science took the form of demands that the government establish a "national" university. This question was to remain as an active issue until the beginning of the twentieth century. Of immediate importance were more mundane matters. A patent law was passed in 1790 to provide protection to inventors in the exclusive use of their in ventions.? This was the earliest involvement of the federal gov-ernment with scientific and technical pursuits. The history of direct federal support of science, tech nology, and exploration can be traced to early efforts to chart coastal waters. Both commercial and government interests led Congress to authorize a coast survey in 1807. Congress appropri ated the unusually large sum for that period of $50,000.8 The combination of both government and civilian interest in technical applications of this type was to characterize much of the early support of science and technology by the federal government. It 5

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6 remains a force today where both civilian applications and possible military use combine to rally support for NASA1s space shuttle program. The establishment of the Naval Observatory, the Coast Survey, and land exploration and mapping activities of the Army combine to demonstrate the continued support of science by the fed eral government. The late 1800s witnessed a strong federal participation and leadership in agricultural research which continues to the present. While the history of federal sponsorship of science and technology demonstrates that current activities in space and related areas are but a part of a historic process, any detailed review of this area is beyond the scope of this study. What is demonstrated is that the government link with science and technology has its roots in historic precedent. Although government has long served as the patron of science and technology, the nature of that relationship has changed markedly since World War II. In the prewar period. the federal government was involved to only a limited extent in R&D. Traditional support of science and technology existed, but as a low priority. The total expenditures of the federal government for R&D in 1940 are estimated to be less than one hundred million dollars.9 The first modern large-scale R&D project, the development of the atomic bomb, was supported by the federal government during World War II. At the same time, the development of radar through the joint efforts of the British and Americans represented a second

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major R&D program. Both efforts were outstandingly successful and made major contributions to the successful conclusion of the war. They also established a precedent for government support of large, complex, and costly R&D programs in the postwar period. The development of ballistic missiles in the fifties and the space program in the sixties represented a continuation of the federal governments commitment to large-scale R&D activities. Programs in the postwar years have shared common characteristics: All are seen as critical to the national defense and security of 7 the nation; all are extremely complex; and all are costly as to preclude their development by the private sector. These characteristics are the hallmark of modern R&D programs and help to shape the relationships between various government agencies responsible for these programs and the industrial contractors who support their activities. The Importance of R&D The importance of R&D to the security of the nation can be viewed from two perspectives, military and economic. The military security of the nation is linked closely with R&D. Since the development of the first atomic bomb during World II, the United States has tended to base its security on sop histicated weapons systems. The development of ballistic missiles during the fifties:.and.-the .. development of newer weapons systems in the sixties and seventies have tied our military survival to complex technical weapons. All of the modern weapons of war including missile systems, nuclear submarines, and sophisticated military 11spy11

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satellites represent the most advanced types of technology. In turn, each of these systems represents a major R&D effort under written and directed by the federal government. If R&D plays a critical role in our defense and survival 8 as a nation, it plays an equally important role in our economic well-being. Since World War II, our civilian economy has benefited significantly from our major R&D activities. The development of the electronics industry followin'g World War II was a direct result of the technology developed durihg the.war and associated with the development of radar. The rapid expansion of computer capability and the computer industry was without doubt accelerated by the missile and space use of computers. While these are dramatic and very major consequences of R&D activity, a host of less significant, but important, "spin-offs" are reported annually.lO Major R&D activities are the "seeds" which result in major advancements in our civilian economy. The worldwide leadership in civilian aviation enjoyed by this nation since World War II has its roots in our requireme-nts for military aviation. Few would argue that the contributions of major R&D programs to our civilian economy have not been substantial. In view of the importance of R&D to the nation, both from a military and a civilian viewpoint, one would expect a high degree of interest to exist in terms of public policy issues relating to the government use of industry. As will be demonstrated at a later point, this is not the case.

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The Establishment and Early History of NASA 9 NASA came into existence on 1 October 1958 as the result of the passage of the space act. Its creation was a direct consequence of the first successful space flight by the Soviet Union of an artificial satellite. The Russians had flown their Sputnik I on 4 Octo ber 1957.11 The repercussions of the flight were instant and worldwide in scope. Although the United States was in the process of developing an earth-orbiting satellite of its own, it had not been launched. The United States effort was directed toward the development of a very small satellite that would be launched as a part of the 1958 Geophysical Year. little emphasis and low priority had been given to this effort. The low priority assigned to the Vanguard Project was demonstrated by limitations established at the time the project was approved. The project must be accomplished in such a manner that 11minimum delay to military projects .. would occur.12 The successful flight of Sputnik I created a wave of near hysteria in the United States. Americans had prided themselves on their advanced scientific and technological capabilities. Many Americans believed that the Soviet Union had at best second-rate competence in these areas. The Russian achievement therefore had a tremendously negative impact on American pride and prestige. At the same time, questions existed as to the possible military potential of earth satellites. The public quickly demanded that space re-search and development be expanded and given a high national

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10 priority. In addition, Americans began to question the effectiveness of American education. To the public and to many congressmen, the failure of the United States to launch the first man-made satellite appeared to reflect a basic weakness in our educational system. Congress expressed concern in two areas: First, the development of a space capability which was addressed through the passage of the National Aeronautics and Space Act of 1958; second, the improvement of American education and an increase in the numbers and quality of scientists and engineers, addressed through extensive debate and action to improve the quality of American scientific education.l3 The passage of the space act came after extensive study by Congress. Debate focused on whether or not United States space activities should be assigned to the Department of Defense or established as an independent civilian agency reporting directly to the president. In this sense, the congressional debate associated with space was reminiscent of the deQate on tbe organization of the Atomic Energy Commission (AEC) in 1946 when a broader variety of questions had arisen.l4 These included a concern for the future support of science by the federal government, possible international control of the atom, and the role of the military in peacetime weapons development. The concerns associated with the space act were simple by comparison. They related more exclusively to the role of the military and the question of civilian control. Unlike the decision made in the case of atomic energy, Congress elected to split responsibility for space exploration and utilization. The

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Department of Defense was assigned responsibility for military utilization of space while the new civilian space agency was assigned responsibility for the conduct of civilian space applications. Methodology 11 Gathering data for research purposes normally. involves the use of one or more of three methods: Participant observation, review of documentary evidence, or the interview of personnel asso ciated with the research topic. As the events reviewed in this work occurred over twenty years ago, participant observation was not a feasible alternative. Reliance was therefore placed on a review of existing documentation and on interviews with those individuals who either observed or directly participated in the decision-making process. It was known that some of the key participants were deceased while others were in poor health. If NASA decisions on government relationships with industry were to be examined, this study may represent the last opportunity to interview many of those participants. The nature of policy establishment frequently results in written documentation being incomplete or at times misleading by its lack of explanation for decisions reached. For this reason, interviews with personnel involved in the decision-making process were consid ered to be critical to the study. The basic subject matter of this dissertation has been briefly addressed by Robert L. Rosholt in his early study of NASA,

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12 An Administrative History of NASA, 1958-1963.15 Rosholts work is an excellent general administrative history of that period. His work describes the management questions facing NASA, reviews con gressional relationships, reports on the-status of NASA programs, and covers a wide range of NASA activities. Unfortunately, the development of NASA policy on relationships with industry is given only summary treatment, and many of the factors considered by NASA officials are not evaluated by Rosholt. This study focuses ort this one substantive area, NASA relationships with industry, and evalu ates it in much greater depth than does Rosholt. Although Rosholts history is incomplete in some respects, it provides useful information on the general management climate and identifies NASA personnel involved in making general policy for the agency. As a result, this early history is a useful document for identifying NASA official who served as key decision makers on government-industry policy matters. A preliminary search of existing documentation revealed a limited amount of relevant information. A more detailed review of available data was undertaken to identify any additional primary or secondary sources of information which could shed light on the NASA decision process. Written reports covering this period have been assembled by the NASA History Office. A review of this information produced several significant documents dealing with this subject. These included a report by a special committee on organization ap pointed by the NASA administrator in 1960. In addition, NASA had contracted with McKinsey and Company for several studies of NASA

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13 organization and operations during the first two years of its existence. Copies of all of these reports have been obtained and have provided useful information on the establishment of NASAs government-industry policy. Standing alone, however, these reports not only fail to reveal the full range of consideration taking place at that time but were to some degree misleading; but extensive in. terviews with the key decision makers have clarified what at first appeared to be inconsistencies in the background documentation. These interviews, discussed in detail at a later point in this chapter, proved invaluable in both clarifying and bringing to light fresh information not covered in available written documentation. Preliminary investigation of NASA1s policy on the use of industry and early discussions with former NASA officials revealed that NASA had considered the government-industry policies adopted by the Army, Air Force, and AEC. While this was recognized, it was not believed necessary to understand the reasons for the development of the unique policies adopted by the three agencies involved. Further consideration, however, suggested the need for a more comprehensive understanding of the background associated with the de velopment of Army, Air Force, and AEC policies. For this reason, much more extensive research than originally contemplated was con ducted dealing with the development of government-industry policies in these three agencies. Fortunately, the history of these agencies is well documented in both general 1 iterature and in government reports. It was thus possible to identify the factors which were associated with the development of each agencys policy and practice

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14 in the use of industrial contractors. This information is presented and evaluated in Chapters V, VI, and VII. NASA Technical Control and Management of R&D Programs The policy on government-industry relations involves the control of technical program decisions and the overall management of major technical programs. In NASA, industry is used extensively to perform detailed design and manufacturing activities, but overall management and technical decision making is retained by the agency. This study outlines the procedures followed by other federal agen cies charged with the conduct of major R&D programs and the management of those programs is compared and contrasted with that pursued by NASA. Government technical control over programs involving the ex penditure of very large public funds focuses on the basic question of public responsibility and public accountability of government officials. This broad area, however, has not been explored in the literature of public administration or R&D management. For the most part, existing studies deal with procurement techniques, management techniques in terms of program or matrix management, and similar areas. In spite of this dearth of literature, the basic question of whether or not primary responsibility for the conduct of critical national programs should be delegated to industry through contracts is an important question for the public administrator.

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The Conduct of Interviews with Former NASA Officials 15 It had been contemplated from the outset of this study that discussions with former NASA officials who had been in positions of responsibility and had been directly involved in the establishment of NASA policy on the use of industry would be essential. A review of the existing documentation strongly reinforced the need for such interviews. As has been noted, apparent inconsistencies in the de velopment of NASA policy required explanation which could come only from those directly involved in the policy-making process. These interviews were critical in understanding how and why NASA came to adopt the policies it did. Seeming inconsistencies were fully ex plained by those involved in the decision-making process. As a result, no loose ends or unexplained differences remained at the conelusion of the study. Without full cooperation of those early NASA officials, it would have been impossible to understand the total process and the twists and turns which the evolution of NASA policy took .. Rosholts administrative history provided identification of key agency officials at the time the agency was established. His preliminary organization chart dated 14 November 1958 revealed that there were five line officials at that time.16 1. NASA Administrator, T. Keith Glennan 2. Deputy NASA Administrator, Hugh Dryden 3. Director of Business Administration, Albert F. Siepert 4. Director of Space Flight Development, Abe Silverstein 5. Director of Aeronautical and Space Research, John W. Crowley, Jr.

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16 Dryden and Crowley are deceased; the other three officials have been interviewed in depth as a part of this study. In addition to these line officials, two other individuals were in a position to make major contributions to the study: Wesley L. Hjornevik, administrative assistant to Glennan; and John D. Young, at that time a senior staff member of McKinsey and Company, a national management consulting organization. Hjornevik was an important participant in NASA1s early operations; he directly participated in and observed much of the activity which led to the evolution of NASA policy on the use of industry. Young was the McKinsey staff member who conducted a number of studies involv ing NASA organization and contracting policies. Both of these individuals were interviewed on at least two or more occasions, contributing substantially to this study. Interviewing Techniques Since interviews would be of critical importance to this study, the approach to the conduct of the interviews was studied. The decision to utilize highly structured, predetermined interview questions or to use a more open unstructured interviewing approach was considered. Every researcher involved in the use of interviews for data collection must face a choice between these two approaches. Structured interviews utilizing predetermined questions make it possible for the researcher to determine his questions prior to the interview. If a large sample is involved, standardized ques tions make statistical analysis possible.

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17 The use of the unstructured interview also offers distinct advantages. Richardson, Dohrenwend and Klein, in discussing un-structured interview techniques, suggest that the interviewer may guide the respondent to particular topics so that 11information will be obtained on the predetermined dimensions of the research problem ... I7 If the sample being interviewed is small, the ability to treat interview results statistically is not a consideration. The nature of this study involves the interviewing of NASA officials who were directly involved in the decision-making process. As such, they meet the criteria for what Lewis Anthony Dexter defines as 11elites.11 Dexter defines this group as 11genuinely prominent people or the prestigious well-informed .. and notes that as a group these individuals 11are unwilling to accept the assumptions with which the investigator starts; they insist on explaining to him how they see the situation, what the real problems are as they view the matter.ulB Dexter points out: In the standardized interview, the typical survey, a devi ation is ordinarily handled statistically; but in an elite interview, an exception, a deviation, an unusual interpretation may suggest a revision, a reinterpretation, an ex tension, a new approach. In an elite interview it cannot at all be assumed -as it is in the typical survey thig persons or categories of persons are equally important. Dexters comments appear to be particularly valid for the interview ing which was conducted as a part of this study. The number to be interviewed, which included all key decision makers, was small. The individuals themselves were well-informed. The use of an unstructured interview was the most effective method of securing needed information.

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Aberback, Chesney and Rockman, in describing the use of open-ended interviewing techniques in the conduct of research on elite political attitudes state: Open-ended procedures emphasize the contextual richness of response and allow for the exploration of subtlety and nuance; they enable an investigator to assess not just the surface content of a but also the rea-. soning and premises underlying it.20 18 In addition to these views, interviewing procedures were discussed with several historians who have written recognized histories in the field of science and technology. Harvey M. Sapolsky, author of The Polaris System Development, indicated that the use of standardized appears most useful when the researcher is unfamiliar with the area under study and is attempting to identify key players and key issues.21 In this study, Rosholts history and available documentation make it possible to identify decision makers without elaborate survey techniques. Sapolsky further suggests that the use of unstructured interviews appears to be more effective in developing information and is likely to be better ac cepted by those being interviewed. He indicates that the use of sturctured interview procedures may tend to inhibit those being interviewed, thus securing less complete and useful information. E. C. Ezell, author of The Partnership: A History of the Apollo-Soyuz Test Project, confirms this viewpoint.22 Ezell, an historian specializing in research and development history, suggests that unstructured interviews may be most appropriate for developing historical information dealing with science and technology subjects.

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19 For these reasons, an unstructured interview procedure was followed in the conduct of this research. As suggested by Dexter, interviewees seemed comfortable with this approach and perfectly willing to discuss in detail the events and circumstances which led to the development of NASA policy on the use of industry. Where interview comments appeared to be in conflict with written docu mentation, efforts were made to clarify such conflicts or apparent conflicts. In each case, discussion of these matters with senior officials provided clarifying insight. As a result, the informa tion developed outlines in detail the evolution of NASA policy and provides explanation for the twists and turnswhh:h>.the devel9pmeri.t of this policy entailed. Chapters VIII and IX outline in detail the factors and forces which resulted in the policy which NASA adopted and which has continued in force from 1960 to the present. Plan of Presentation The study is divided into chapters, each of which reviews a major area of importance leading to the development of NASA's policy on the use of industry. Each of these chapters is outlined below. Chapter II describes the unique character and nature of R&D. Since the early research activities of Joan Woodward, many students of administration have believed that work technology strongly influences organization.23 While those involved in the early development of NASA policy may not have been familiar with Woodward's work, they were aware that the unique nature of R&D would strongly influence policies which the new agencywould

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20 Major research and development programs have common characteristics. R&D activities are those which involve the development of new technology, novel uses of existing technology, or some combination of both. The single most important feature of R&D activity is that it cannot be defined in detail at the inception of the project. This inability to develop definitive specifications means that projects must normally be defined in terms of performance characteristics. The detailed design of systems and subsystems can only occur during the development process. These characteristics of R&D in turn influence, in fact control, how the government contracts for the conduct of R&D activities. Chapter III outlines the impact which the nature of R&D has on government procurement. The inability to define R&D projects in detail requires the government to utilize performance specifications in contracting for R&D activities. As these the use of new technology, it is impossible to predict with any high degree of accuracy the time required -to complete the development or the costs which wi 11 be incurred in carrying out the pr_ogram. Merton J. Peck and Frederick M. Scherer, in their study of the weapons acquisition process, have indicated that 11risk and uncertainty .. are the hallmarks of major programs.24 The inability to prepare definitive specifications and the presence of a high level of risk and uncertainty as to outcome, require a special approach to contracting for major R&D projects. With these uncertainties, no type of traditional fixed-price contracting is possible. No company would undertake development of a

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21 multi-million or multi-billion-dollar project unless its financial position were guaranteed. As-a result, cost-reimbursement contracting is uniformly utilized in the conduct of major R&D projects. These contracts assure the contractor that he will be reimbursed for all reasonable costs incurred and paid a predetermined fee for his efforts. Chapter IV reviews the history of the National Advisory Committee for Aeronautics (NACA). NACA was established during World War I and performed aeronautical research in support of both the military aviation programs and the civilian aviation industry from the time of its establishment until it was abolished by congres sional action and absorbed into the new NASA organization. Policy in any organization is influenced by the culture of that organization. Although NASA was a new independent agency of the government, it inherited personnel and facilities from other existing organ-izations. The largest by far of these groups was NACA. Over eight thousand employees and three major and two minor NACA facilities were transferred to NASA at the time of its estab lishment.25 Chapter IV will identify the influence which these various groups had on NASA policy development. Chapter V reviews the history of AEC. Established as a civilian agency reporting directly to the president in 1946, AEC was the successor agency to the Armys Manhattan Engineering District (MED).2 6 MED had been the organization responsible for the design and manufacture of the first atomic weapons in the history of mankind. These weapons, used in the waning days of World War II at

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Nagasaki and Hiroshima, created an entirely new set of conditions, which would dominate world thinking from 1945 to the present. All of us live under the threat of possible world destruction through atomic war. If anyone were to believe that government R&D is not of critical importance, he need only think of the bomb. 22 In developing atomic weapons, MED had made extensive use of industry and the universities. Its role as the responsible government agency had been primarily in financing the activity and carry ing out various administrative resp6nsibilities.27 This arrangement of utilizing universities and industry was to continue unchaged by the new civilian AEc.2 8 AEC made basically the same use of contractors as had MED and performed basically the same administrative role as that performed by the Army. MED was the first major modern R&D organization. As such it was to influence all postwar government development projects. Chapter VI traces the development of the Armys policies for the management of major R&D programs. The Armys philosophy can be seen as a combination of the traditional arsenal mode of Army operations and the unique experience which Wernher von Braun brought to the Army after World War II. The development of the V-1 and V-2 rockets by the Germans in the closing days of the war verynearly changed its outcome. Had this development occurred several years earlier, history indeed could have been significantly different. The group of German rocket scientists responsible for the development of these weapons was headed by von Braun. Immediately after the defeat of Germany, von

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23 Braun and approximately one hundred of his key staff were brought to the United States by the Army and became the nucleus of the Armys missile program. The policies followed by von Braun in the conduct of the missile program were substantially different from those followed by AEC. While AEC had relied heavily on contractors in conducting its program, von Braun made extensive use of in-house government person nel. The work of missile development von Braun was conducted in government facilities utilizing civil service personnel. NASA1s review of the von Braun type of operation was another significant input to its policy development. Chapter VII is a study in delegation by the Air Force Ballistic Missile Division (BMD). The BMD had been established in 1960 and replaced the Western Development Division, established in 1954.29 BMD, like the Western Development Division, was headed by Major General Bernard Schriever. This Air Force organization was responsible for the development of intercontinental ballistic missiles. had delegated extensive authority to contractors who operated laboratories and production facilities. The Army in its missile program had relied heavily on in-house development with government employees performing basic engineering and manufacturing .. functions. The Air Force utilized a third approach. At the time the Air Force established its missile program, Schriever strongly believed that civil service employees could not carry out critical technical management functions associated with

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24 the program. He believed that the government could not attract and retain the necessary competent specialists required by the program.30 At the same time, he recognized that technical management functions were critical to the success of the program. Contracting for func tions such as systems engineering and technical management with aero space contractors would be undesirable. A conflict of interest would exist between a contractor performing these management func tions and, at the same time, bidding on future Air Force work. The Air Force therefore found itself on the horns of a dilemma. Having rejected the use of government employees to conduct technical management and recognizing the conflict of interest if aerospace firms were to accomplish these functions, the Air Force sought a third approach. The solution reached by the Air Force was to contract with a specially created private organization whose sole function would be to carry out these technical management functions. This special private organization would provide the systems engineering, tech nical advice, and technical management functions necessary for the program. Space Technology Laboratories (STL), a wholly owned subsid iary of Ramo-Woodridge, was created to perform such functions. Under the initial arrangement with the Air Force, STL was barred from bidding on other government contracts through a 11hardware exclusion11 clause in its contract.31 Thus, STL became a 11captive11 contractor totally dependent on the Air Force for its survival. In spite of this, Air Force relationships with STL were still not well

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accepted by the aerospace industry Although STL was a separate corporate entity, it was still wholly owned by Ramo-Woodridge. 25 As a result, a new organization, the Aerospace Corporation, was cre ated as a not-for-profit corporation, chartered as a .. specialpurpose Air Force sponsored corporation to take over the job STL had been doing.n32 This approach to the management of Air Force missile activity was strongly supported by Chet Holifield of the House Government Operations Committee.33 As Chapter VII indicates, NASA officials who reviewed this Air Force management approach were concerned about the delegation of government authority to a private industrial concern. One of the NASA officials involved in the review commented, 11lt was clear that a 'captive' relationship existed between the Air Force and STL. It was unclear, however, whether STL was a captive of the Air Force or whether the Air Force was a captive of STL."34 Chapter VIII reviews the impact of the first Soviet space launch on the American public and the consequences which that early Russian success had on the establishment of the United States space program. President Eisenhower was later to refer to this period as a time when the public was in a state of near hysteria. Under such turbulent conditions, Congress immediately began to consider how the United States should organize to meet the Soviet challenge. Congress had faced a problem in establishing the United States atomic energy program more than a decade earlier. At that time, Congress had been divided between assigning responsibility for atomic energy to the military and establishing a new civilian agency. Congress

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resolved this problem by the establishment of a new independent agency, AEC. In the arena of space, a similar dispute developed. Should space be assigned to the military in view of its work in the missile field or should a new civilian agency be established? Congress reached a different conclusion regarding space than its earlier decision in the field of atomic energy. In atomic energy, all responsibilities, civilian and military, were assigned to AEC; in the space program, responsibility was divided. Military space activities were assigned to the Department of Defense, while purely civilian space programs were assigned to the newly created NASA. The congressional hearings and resports on the problems associated with a national program for space research and exploration shed considerable light on the problems facing the new NASA organi zation. A review of congressional deliberations is essential to an understanding of the development of NASA policy on the utilization of industry. Chapter IX considers in detail the forces and factors which helped shape NASA's policy on the use of industry. Policy formula tion is a complex undertaking that is influenced by a wide variety of factors. In the case of the development of NASA policy on the use of industry, a number of significant factors can be identified. These include the background and experience of senior NASA officials who participated in the policy-making process; the values which were inherited from NACA; and the evaluation which NASA made of the ex perience of other agencies in the conduct of major R&D 26

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27 Chapter X provides a summary and conclusion of the study. It explains how the policy which evolved during the first two years of NASA reflected the variety of factors which existed at that time. In addition, Chapter X is an attempt to evaluate in brief fashion the development of NASA policy on the use of industry in terms of generally accepted policy models. This examination would appear to reveal that none of the existing models adequately ex plains the evolution of NASA policy. This in itself suggests the need for further study of the policy-making process with the recommendation that consideration be given to the further investigation of what might be termed a consensus model of policy formulation.

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NOTES-CHAPTER I 1Lord Rothschild, 11Forty-five Varieties of Research (and Development), .. Nature, 13 October 1972, pp. 373-378. 28 2u.s., Congress, House, Committee on Science and Aeronautics, Subcommittee on Science, Research and Development, Science Policy, A Working Glossary, 93d Cong., 1973. 3Ibid., p. 46. 4Ibid., p. 11. 5A. Hunter Dupree, Science in the Federal Government (Cambridge, Mass.: Belknap Press of Harvard University Press, 1957), pp. 1-2. 6Ibid., p. 3.' 7Ibid., pp. 11-14. 8Ibid., p. 30. 9Ibid.' p. 373. 10u.s., National Aeronautics and Space Administration, Spinoff 1982 (Washington, D.C.: Government Printing Office, Apri 1 1982) 11u.s., National Aeronautics and Space Administration, An Administrative Histor of NASA, 1958-1963, by Robert L. Rosholr D.C.: Government Printing Office, 1966), p. 3. 12u.s., National Aeronautics and Space Administration, Office of Technology Utilization, Scientific and Techical In formation Division, Vanguard: A History, by Constance Mclaughlin Green and Milton Lomask (Washington, D.C.: National Aeronautics and Space Administration, 1970), p. 49.

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29 13u.s., Congress, Toward the Endless Frontier, History of the Committee on Science and Technology, 1959-1970, Committee Print (Washington, D.C.: Government Printing Office, 1980), pp. 13, 129. 14u.s., Atomic Energy Commission, The New World: A History of the United States Atomic Energy Commission, vol. 1, 1939-1946, by Richard G. Hewlett and Oscar E. Anderson, Jr. {Washington, D.C.: Atomic Energy Commission, 1972). 15Rosholt, Administrative History of NASA. 16Ibid., p. 336. 17stephen A. Richardson, Barbara Snell Dohrenwend, and David Klein, Interviewing: Its Forms and Functions (New York: Basic Books, Inc., 1965), p. 140. 18Lewis Anthony Dexter, Elite and S ecialized Interviewin (Evanston, Ill.: Northwestern University Press, 1970 p. 6. 19Ibid. 20Joel D. Aberback, James D. Chesney, and Bert A. Rockman, 11Exploring Elite Political Attitudes: Some Methodological Lessons, .. Political Methodology 2 (February 1975): 3. 21Telephone interview with Harvey M. Sapolsky, Cambridge, Massachusetts, 18 March 1981. 22rnterview with E. C. Ezell, Houston, Texas, 10 1981. 23Joan Woodward, Management and Technology (London: Her Majesty's Stationery Office, 1958). 24r4erton J. Peck and Frederick M. Scherer, The Weapons Acquisition Process: An Economic Analysis (Boston: Harvard University, Graduate School of Business Administration, Division of Research, 1962), pp. 17-54. 25Rosholt, Administrative History of NASA, p. 44. 26Hewlett and Anderson, New World, p. 651.

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30 27u.s., Atomi-c Energy Commission, Atomic Shield: A History of the United States Atomic Ener Commission, vol. II, 1947-1952, by Richard G. Hewlett and Francis Duncan Washington, D.C.: Atomic Energy Commission, 1972), p. 19. 28Ibid. 29u.s., Congress, House, Committee on Government Operations, Organization and Management of Missile Programs, House Report 1121, 80th Cong., 1st sess., 1959, p. 30. 30Ibid., p. 77. 31william Leavitt, 11Aerospace Corporation: USAF's Missile/ Space Planning Partner,11 Air Force/Space Digest, October 1967, p. 78. 32Ibid. 33Ibid. 34Telephone interview with Wesley L. Hjornevik, Austin, Texas, 3 December 1978.

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Background CHAPTER II R&D CHARACTERISTICS AND THEIR IMPACT ON MAJOR GOVERNMENT PROGRAMS R&D activities conducted by the federal government have long been crucial to the security and well-being of the nation. Since the development of nuclear weapons by the Army during World War II, R&D has been a major area of importance to the federal government. Billions have been invested in military weapons systems, space sys tems, and atomic energy. In addition, a number of more socially oriented agencies such as the Department of Transportation and the Department of Housing and Urban Development have been engaged in R&D activities. Kenneth F. Gordon, formerly of the Department of Commerce, observed in a 1976 symposium on technological innovation: Historically there has been a close interrelationship among international economic competitiveness, military strength, domestic welfare, and technological innovation. The United States ability to maintain a position of international leadership is closely tied to the nations success in sus taining the development of innovative technologies.! In spite of the ever-increasing importance of R&D to the United States, the study of it has been neglected for the most part by American universities. As a result, the field of R&D has been little understood by the public. This lack of interest on the part of the university community is in marked contrast to what can only

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32 be termed an explosion in interest in science policy. It is estimated that over one hundred Ameritan universities have either courses or programs involving the study of science policy.2 The current emphasis on science policy is undoubtedly beneficial in pro viding a broader understanding of how science policy is formulated. These studies have focused on questions ranging from the fluorida tion of water at the local level to studies of major national public health issues. Included in the study of science policy have been a limited number of technological policy decisions, such as the decision on the supersonic transport.3 Useful as this policy emphasis has been in providing a much needed understanding of the development of science policy, few studies have touched on the basic problems or nature of R&D manage ment. One authority in the field has indicated that less than a dozen universities are engaged in teaching or research in the field of R&D.4 Even in these institutions, research and teaching frequently represent the interests of a single scholar rather than an organized program. Programs in R&D management such as those at George Washington University and Northwestern University are, there fore, relatively unique in exploring issues associated with the conduct of major R&D programs. 5 Description of R&D Activities In Chapter I, the definitions of "research" and "development" first developed by Lord Rothschild and later utilized by the SubCommittee on Science, Research, and Development of the House

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33 Committee on Science and Astronautics were cited. These definitions, while generally acceptable, require further elaboration. Most projects undertaken by the federal government that deal with application of advanced technology are termed and development .. projects. By definition, they involve a range of activities covering the entire spectrum from basic research to development and more applied research activities. For this reason, it is necessary to explore in greater detail the nature of R&D. R&D has_traditionally difficult to define with precision. Some authors have found the most expedient solution to the problem one of simply ignoring the entire matter. Blake in his book, Managing for Responsive Research and Development, observes that R&D 11defies detailed definition, and yet everyone is intuitively familiar with the general nature of research and development.116 This approach too easily dismisses the entire problem. Difficult or not, some discussion of the nature of R&D is essential to an understanding of the problems which R&D presents in terms of government-industry relationships. One of the most frequently quoted discussions of R&D is that provided by David Novick of the Rand Corporation over twenty years ago in the California Management Review.7 His definitions were included in Senate hearings in 1960.8 Novick identifies four steps or stages of R&D, which range from Step I which includes 11basic research, experimental research, basic development .. to Step IV which includes 11product applications, research, applied testing, applied evaluation ... g Table I outlines his categorization of R&D activities.

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TABLE 1 RESEARCH AND DEVELOPMENT: STEPS, ACTIVITIES, AND PROMISES FOR THE FUTURE Activity Step I. Basic research. Step II. Applied research. advanced development, basic evaluation, basic testing. Step III. Product development, product testing, product evaluation, pilot production. Step IV. Product application, application research, applied testing, ap applied evaluation. Promise Understanding of universe and organization of knowledge about it to: a. Permit major changes in ways of looking at phenomena and activities, b. Create new devices and methods for accomplishing scientific objectives, c. Identify phenomena and activities which permit revolutionary changes in existing products, methods, and approaches. Its promise is great but not identified as to specific purposes, and the possibility of fulfillment is highly uncertain. Singling out or identifying specific potentials or applications with a view to developing devices or methods for utilizing the new general knowledge obtained in Step I. Scientific application or usefulness is identified, but the economy, efficiency, and acceptability of the pro posals remain uncertain. Promise is for great new things. Specific devices or methods appear as likely solutions but must be brought reasonably close to final application to determine effectiveness, economy, and acceptability. Doability has been established, and major advances are promised. New uses and applications or modifications of existing uses or applications are sought for existing methods, products, or components; may result in substantial benefits to users or producers. Some success is reasonably assured since it is evolutionary rather than revolutionary. SOURCE: David Novick, 11What Do We Mean by Research and Development?11 California Management Review 2 (Spring 1960): 21. w

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35 Novicks definitions are open to some criticism in terms of combining basic research with experimental research and basic development in his definition of Step I. These activities are substantially different. Their inclusion in a single 11step11 of the R&D process unnecessarily confuses the relationship of basic research to all other more applied activities. Regardless of this confusion, it is necessary to point out that R&D involves activities that cannot be defined in detail at the time that a decision is made to undertake them. A project that entails various degrees of basic research, advanced development, as well as more restricted efforts at product application research and applied evaluation clearly cannot be defined in detail. Much of the R&D activity once a project is undertaken will in fact be devoted to efforts to define the exact nature of the systems and sub-systems which will constitute the total project. It is this inability to define the specifics of projects, an inability to write the specifi-cations, which leads to much of the popular confusion on R&D programs and the responsibilities of major R&D contractors. Herman 0. Stekler, writing in The Structure and Performance of the Aerospace Industry, indicates: The difference between this industry and most others is that at the time of the competition for sales not even a proto type of the product is usually available. The Armed Services and NASA want an airplane, rocket, or space vehicle which has some operating characteristics. Only time will tell whether these specifications actually can be translated into an operati ana 1 system. Requests for propos a 1 for.'reductng these specifications into an operational system are submitted to the aerospace firms which th!B suggest alternative tech niques of performing this task.

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36 Stekler properly identifies the government's request for R&D proposals as containing "specifications"; however, he also identifies these specifications as basic performance specifications rather than hardware specifications. The actual design of systems which will meet these performance specifications is what R&D is all about. The vast majority of government purchases entail products which are specified in detail by the government at the time industry is solicited. When this is possible, specifications are prepared and contractors submit fixed-price bids; this is the traditional and preferred method of procurement in government jurisdictions. At the federal level, any other type of procurement arrangement is an exception to this fixed-price bid procedure. (See Chapter III for a discussion of contracting practices and procedures.) When specifications cannot be prepared, as is the case in all true R&D projects, different procurement procedures are utilized. Practically all major R&D projects sponsored by the federal government and conducted in whole or in part by industry make use of what is known as cost-reimbursement contracts. These contracts, frequently referred to as simply cost-type contracts, are those wherein the government guarantees to pay all reasonable costs incurred by the contractor in the conduct of the project. The contractor agrees to make his best effort to achieve the desired program objectives as specified in his contract and is paid an agreed-upon fee of the success or failure of his effort. NASA procurement regulations, like those of all other federal agencies, that the choice of contract type can be

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influenced by a number of different factors, such as: .. the nature of the work, the usual lack of definitive requirements, the inability to measure technical objectives, the inability to measure risk, the amount of government technical direction and control desired, the lack of competition.ll 37 In view of the inability of the government to define projects in detail and establish specifications for desired hardware, the cost-reimbursement contract has evolved as the only feasible means of contracting for these R&D activities. Cost, schedule, and technical performance cannot be made binding conditions for the contractor as neither the nor the contractor can understand at the outset what the program will ultimately entail or what the system will ultimately cost. For these reasons, along with a host of others, R&D projects frequently fail to be completed either on schedule or within cost limits. Although the entire subject of the acquisition of military space systems is an extensive field for investigation and beyond the limits of this paper, the basic nature of procurement procedures and practices is discussed in Chapter III. Risk and Uncertainty: The Primary Characteristics of R&D What are the consequences of the fact that R&D projects cannot be defined in detail at the time of their inception? Merton J. Peck and Frederick M. Scherer, in their classic economic study of the R&D process, identify risk and uncertainty as the primary characteristics of major R&D projects. They state: A major thesis of thi$ study is that the weapons acquisi tion process is characterized by a unique set of.uncertainties which differentiates it from other economic

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activity. To be sure, uncertainty is a pervasive feature of economic activity, and most of the uncertainties in weapons acquisition have their commercial counterparts. But there is uniqueness in both the magnitude and diverse sources of uncertainty in weapons acquisition.12 38 The authors define "uncertainty" as "the relative unpredic-tability of the outcome of a contemplated action." "Risk" is de fined as "the level of consequences of a wrong predictfon." 1 3 A second, but similar, definition is provided by Mary Ellen Magee of the Science Policy Research Division of the Library of Congress. She defines risk and uncertainty in the following manner: Risk and uncertainty are terms used to refer to the high chance of failure that exists in innovation. They re present different degrees of a chance of failure. Risk is the probability of failure and as such can be calcu lated by statistical methods. Uncertainty, on the other hand, describes situations where the probability of suc cess or failure cannot be Uncertainty dominates the innovation process. Magee as well as Peck and Scherer agree on the nature ofrisk and uncertainty in innovative developments. Risk and uncertainty are two of the primary characteristics of all R&D endeavors; they apply to all three parameters of the project: 1. The technical performance requirements for the project. R&D projects, although they cannot be defined in terms of written hardware specifications, are defined in terms of desired performance characteristics. Thus, in the production of a new type of advanced aircraft, the performance specifications will indicate the desired rate of climb of the aircraft, the desired speed of the aircraft, the maximum altitude at which the aircraft can operate, weapons-carrying capacity, and similar performance characteristics. Risk

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39 and uncertainty exist in terms of the ability of the contractor to achieve these technical performance objectives. During the conduct of the program, it may become apparent that a 11 desired performance specifications cannot be achieved without incurring undue schedule delay or cost overruns. Achieving some performance objectives may necessitate modifying or abandoning other desirable performance objectives. These trade-offs can only be identified during the actual development process. 2. The schedule for completion of the project. The sched ule represents a second area where once again risk and uncertainty are high. Schedules are normally developed based on a set of as sumptions which are frequently overly optimistic. Delays in sched ules automatically result in increased costs because workers must be kept longer on the job to accomplish the planned level of work. Schedules are a second dimension in the project management equation which cannotbe known before the project is undertaken. 3. The cost of the project. Cost is obviously a product of the complexity of the project, the time required to solve these complex problems, and the need to meet performance specifications. If performance specifications remain firm and unchanged, and the planned schedule for the project isequally inflexible, any problems encountered will result in cost overruns. Cost, like schedule and technical performance, represents a variable in the R&D equa tion and one in which uncertainty is practically always high. The three major facets of all R&D projects--technical requiremements, schedules, and cost--are, therefore, interdependent.

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40 If performance requirements can be relaxed while still meeting program objectives, schedule time can be saved and costs reduced. Similarly, the ability to increase the proposed budget for the project may make it possible to meet enhanced performance without a sacrifice of schedule. The ability to forecast accurately these schedule, cost, and performance factors is a product of two critical elements: l. The degree to which an R&D project will make use of new technology not previously perfected. The more the project pushes the state of the art the greater the risk and uncertainty and the more difficult it becomes to predict performance, schedule, and cost accurately. 2. The degree to which experience and data from similar R&D programs previously conducted exist and provide useful and valid information in attempting to predict the success of new R&D projects. The more similar the newproject and the completed project are, the more valid the comparisons which can be made. Extrapolation of previous performance, cost, and schedule experience to a new project will depend in large measure on how similar the projects are and the extent to which the new project pushes the tech nology. In discussing the use of previously completed projects as a basis for projecting performance, cost, and schedule for a new project, Peck and Scherer warn that 11comparisons of this type are properly viewed with considerable reservation, for there are extreme difficulties in obtaining satisfactory data ... 15

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41 If risk and uncertainty are general characteristics of R&D, what specific factors contribute to schedule delays, cost overruns, and difficulty in achieving desired performance objectives? Causes of Failure to Achieve Schedule, Cost, and Performance Objectives R&D projects attempt to push the state of the art and attempt to utilize advanced technology before it has been fully de veloped and proved. While this accounts for many of the problems associated with R&D projects, other factors also complicate the R&D picture and make it difficult to determine the true causes of cost overruns, schedule delays, and hardware that fails to accomplish desired objectives. Each of these areas is discussed below. The frequent understatement of costs of projects at the time of their inception can be attributed to several factors. Government agencies sponsoring major R&D projects have a vested interest in seeing the project approved. Once a project is approved and work is under way, cancellation is extremely unlikely. The sunk costs involved in the project normally argue for its continuation. Frequently the budgetary process tends to place pressure on the agency to understate the cost of the project at the time it is being. proposed to the Office of Management and Budget and to Congress. Agencies may believe that it is better to understate the cost and hope that some miracle will make it possible to achieve the understated cost than risk disapproval of the project. (This is a varia tion of what Wildavsky terms 11the wedge of the camels nose.11)16 There are few pressures on the agency for stating accurate costs

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and large pressures on agencies to view the cost picture 110ptimis tically.11 W. Henry Lambright, writing in Governing Science and Technology, discusses this problem and notes that NASA in the case of the Apollo program was able to estimate costs realistically at the 11front end11 of. the program: NASA, because of the high priority of Ape 11 o, was ab 1 e to avoid an overrun by estimating realistically. Hence, when Apollo came in at a figure which was approximately that suggested almost a decade before, NASA was heralded for its "good management." Good management, in this case, was merely cost realism in an environment in which costs were not a very important consideration in the decision to initiate Project Apollo. The pace of the program was far more important to President Kennedy than the cost.17 A second factor which contributes to understated costs is the procurement process. Contractors are asked to propose technical approaches to the project and to estimate total costs. There is, therefore, a natural tendency for the contractor to understate costs since low proposed costs may be an important factor in the selection of the contractor to carry out the project. Peck and Scherer note that contractors proposals frequently .. un-derstated costs: Like quality uncertainties, these development time and cost prediction errors arise both from technical and nontechnical factors. With respect to the latter, most of the time and cost estimates used in program decisions are obtained, either directly or indirectly, from contractor sales proposals in which there is a natural tendency toward optimism. Government technical agencies and scientific advisers frequently attempt to adjust the estimates to a more realistic basis, but since they seldom have as complete a knowledge of all the technical, financial, and managerial considerations involved as the contractor, there remains considerable uncertainty as to the reliability of the adjusted program decision data.l8 42

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43 The practice followed by some contractors of intentionally understating costs is recognized by the government. Agencies have attempted to discourage the practice of intentionally understating costs by_developing contractual provisions which penalize the contractor for failing to accomplish the project at the contractors estimated cost. In the space shuttle orbiter project, for example, NASA established an award-fee arrangement for the design and development of the orbiter. As a part of that plan, the contractors fee is influenced by the total cost of the program as compared to his estimated cost at the time the contract was awarded.19 To the extent that the contractor successfully completes the development within the range of his estimated cost, he receives a higher fee; to the extent that the contractor overruns costs, his fee is lowered. While this type of award fee arrangement undoubtedly contributes to some improvement in contractors estimates, it is not foolproof. It becomes extremely difficult during the life of a major R&D project to determine with exactitude the reasons for changes in cost. Clearly, the contractor cannot be held account able for changes which are beyond his control, changes in performance objectives as an example. Assigning the relative impact of these changes therefore becomes a difficult job for the government and a difficult negotiation with the contractor. In spite of these difficulties, however, senior NASA personnel associated with the management of the shuttle orbiter project believe these fee provisions contributed to securing more realistic cost estimates from companies bidding on the orbiter project.20

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44Another factor which is frequently believed to increase the cost of R&D projects is what is known as 11gold-plating.11 Peck and Scherer in discussing the process of 11gold-plating11 indicate: Nevertheless, there is also evidence of inordinate emphasis on 11quality11 especially in the thousands of minor optimiza tion decisions. All too frequently unnecessary refinements and features have been designed into U.S. weapons. This occurs particularly when development cost or time pressures are not acute ... As a result, there were frequent development excursions in pursuit of technical perfection .. which cost far more than it was worth. This tendency has been observed to a greater or lesser extent in most of the twelve programs comprising our weapons system sample.21 The problems outlined above make it difficult to predict R&D costs for major development. Government agencies may intentionally adopt overly optimistic estimates of costs; contractors may understate their projected costs in an attempt to secure a competitive advantage; and contractors, acting alone or with government knowledge, may 11gold-plate11. their hardware. All of these factors contribute to the difficulty in predicting R&D costs and some of them, such as gold-plating, may result in unnecessarily high costs for R&D projects. These factors, however, are only part of the total picture. Government agencies in planning R&D projects attempt to plan them in the most cost-effective manner possible. This means that, depending on the nature of the project, manpower buildups will occur based on a predetermined and optimized schedule. The entire project will be planned trying to optimize every stage of design, test, evaluation, and production. The total costs developed by the agency and submitted to the Office of Management

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and Budget and Congress will be based on this type of detailed program plan.22 45 To implement the plan requires that the dollars projected be available on the time schedule used by the planners. Although the president and Congress may approve such plans at the initiation of the project, at a later stage Congress may fail to appropriate the funds required by the plan.23 When this happens, it is impossible for agencies to pursue the optimized project based on the base-line plans. The result is pure havoc: programs must be re planned, contractors and subcontractors are required to lay off employees, and new subcontractor delivery schedules must be developed. The result is a failure to meet the original program schedules and cost estimates. Congress may elect to restore funds in later fiscal years, but by this time the damage is done to the program. The history of the shuttle orbiter program is replete with examples of where failure to secure needed funds at the time re quired resulted in this type of very substantial program replanning and in delays in the delivery of orbiters. NASA executives directly responsible for the management of the shuttle program attribute a major portion of the delay in the delivery of the first orbiter to the failure of Congress to fund the program in accordance with the originally approved program plans.24 Critics of the government frequently assume that R&D cost overruns, schedule delays, or performance problems are unique to the government. As industry conducts few projects of the same advanced nature as the government, comparisons with industry are

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46 difficult. A. J. Large, writing in the Wall Street Journal, noted: "In recent years, private sector research and development has concentrated on low-risk, short-term projects directed at improving existing products."25 Peck and Scherer, however, did make a limited comparison in their study of the weapons acquisition process: The better performance of commercial developments in staying within budgets, meeting schedules, and achieving performance objectives is explained largely by the fact that most commercial product developments are not initiated until major state of the art and marketing uncertainties have been resolved. Under extraordinary competitive pres sures, a commercial development occasionally does push the state of the art in a weapons-like way. On such occasions, weapons-like problems tend to occur; cost targets are ex ceeded, schedules are slipped, and the product fails to meet its performance promises. This would suggest that comparison of weapons and typical commercial developments is hardly a fair index of relative efficiency, and that the direct transfer of business practice to weapons efforts is not, in and of itself, a meaningful solution for ving the acquisition of technically advanced weapons.26 A final factor which significantly influences the cost of R&D projects is a decision by the government to purchase fewer articles than originally planned at the time cost estimates were de veloped. Development costs for new space and military systems frequently represent a large portion of the total program cost. If the Department of Defense, for example, revises a plan to purchase one hundred of a new model aircraft and actually procures only half that number, unit costs will rise substantially. Peck and Scherer state: There are many reasons for the inaccuracy of these early production cost estimates. Predicting weapon system production costs five or ten years into the future in volves uncertainties, not only concerning the proposed weapon's final technical configuration, but also about the volume of production to be sustained (determining the extent to which economies of scale will be realized),

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the degree to which sequential learning will permit cost reduction, the extent to which wages and material prices will change, and the degree of 29ptimism embodied in original contractor estimates. [Italics mineJ Peck and Scherer's study, made approximately twenty years 4-7 ago, found that the technical performance of the weapons systems studied was generally good. They noted that, while actual technical performance varied from twenty percent below to about one hundred percent above what was originally predicted, "The central tendency was on the favorable side; that is, actual performance more frequently exceeded original promises than fell below them. "28 The ability of the nation to undertake large and complex systems developments successfully has been. demonstrated repeatedly in both the military weapons program and in NASA's space program. It is important to recognize that these programs are unlike any counterpart in the civilian sector, that risk and uncertainty for such programs will remain high, and that the unique nature of these programs must be understood if we are to appreciate the management and policy decisions that agencies make as to how these programs are to be managed. These factors will be explored at a later point in the study.

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NOTES-CHAPTER II 1u.s., Energy Research and Development Administration, Proceedings on a Symposium on Techological Innovation, Technolri ical Innovation and Develo ment: Has the United States Lost the Initiative? ed. Kenneth F. Gordon Washington, D.C.: U.S. Department of Commerce, 19-20 April 1976), p. i. 2 walter Hahn, acting director of George Washington Uni versitys Graduate Program in Science, Technology, and Public Policy, reports that approximately 105 universities throughout the country are either teaching courses or have established programs in science policy. Telephone interview with Walter Hahn, 22 November 1982. 3M. Horwich, 11Managing the U.S. Supersonic Transport (A & 8),11 Cases in Public Polic and Mana ement 1980 (Boston: International Case Clearing House, 1980 p. 2. 4Lowell H. Hattery, editor and publisher of R&D Management Digest, is a leading authority on the status of education for R&D in the United States. Telephone interview with Lowell H. Hattery, 24 November 1982. 5Telephone interview with Dan Roman, director of the Program in the Management of Science, Technology, and Innovation, George Washington University, 22 November 1982. 6 stewart P. Blake, Managing for Responsive Research and Development (San Francisco: W.H. Freeman and Co., 1978), p. vii. 7David Novick, 11What Do We Mean by Research and Develop California Management Review 2 (Spring 1960): 1-24. 8u.s., Congress, Senate, Hearings on Administered Prices (Part 18), 86th Gong., 2d sess., 1960. 9Novick, California Management Review, p. 21.

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49 10Herman 0. Stekler, The Structure and Performance of the Aerospace Industry (Berkeley, Cal.: University of California Press, 1965) p. 58. 11u.s., National Aeronautics and Space Administration, NASA Procurement Regulations, Pubn." NHB 5100.2C (1981), p. 3.402 12Merton J. Peck and Frederick M. Scherer, The Weapons Acquisition Process: An Economic Analysis (Boston: Harvard University, Graduate School of Business Administration, Division of Research, 1962), p. 17. 13Ibid., pp. 17-18. 14u.s., Congress, Joint Economic Research and Innovation: Develo in a D namic Nation, Special Study on Economic Change, vol. 3 Washington: D.C.: Government Printing Office, 1980), p. 176. 15Peck and Scherer, Weapons Acquisition, p. 19. 16Aaron Wildavsky, The Politics of Budgetary Process, 3d ed. (Toronto: Little, Brown and Co., 1979), p. 111. 17w. Henry Lambright, Governin Science and Technolo (New York: Oxford University Press, 1976 p. 55. 18Peck and Scherer, Weapons Acquisition, p. 301. 19Interview with James L. Neal, director of procurement, Johnson Space Center, National Aeronautics and Space Administration, Houston, Tex., 6 June 1982. 20Ibid. 21Peck and Scherer, Weapons Acquisition, p. 475. 22Interview with Robert Hood, assistant manager, Space Shuttle Orbiter Project Office, Johnson Space Center, Hous.ton, Tex. 8 June 1982. 23such approvals may result from normal budget submissions made to the Office of Management and Budget and the President and Congress or may result from special studies or reviews conducted by the executive and/or legislative branches.

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50 24Interview with Christopher C. Kraft, Jr., director of the Johnson Space Center, National Aeronautics and Space Administration, Houston, Tex., 8 June 1982. 25A. J. Large, "Carter Will Turn to Executives for Advice on Ways to Foster Innovation by Industry, .. Wall Street Journal, 14 September 1978, p. 12. 26Peck and Scherer, Weapons Acquisition, pp. 8-9. 27Ibid., p. 302 28Ibid., p. 23.

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Background CHAPTER III RESEARCH AND DEVELOPMENT CONTRACTING PRACTICES AND PROCEDURES This study focuses on how NASA determined what its relationships with the private sector would be in the conduct of the space program. Did the public interest require NASA to perform certain functions with government personnel rather than to contract these functions to industry? Since World War II the question has never been one of either contracting a major development program or conducting that program in.government facilities utilizing government personnel. The policy since the end of World War II has consist ently been one of utilizing industry to the maximum extent feasible. The question, therefore, is a much more subtle one: what is the 11maximum extent feasible11 when weighed against the publicJnterestt Inherent, therefore, is the extent of the use of private industry by government agencies in the conduct of major R&D programs; also inherent are questionsrelating to how the public interest can be protected while, at the same time, carrying out this contracting mandate. For these reasons, it is necessary to discuss the contracting practices and procedures utilized by the federal government. No attempt is made to give a detailed description or analysis

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52 of procurement procedures; such an undertaking would be both unnecessary and beyond the scope of this paper. However, some basic understanding of procurement practice is necessary to place major policy questions regarding government-industry relationships in R&D programs in proper perspective. Contracts are the legal device for binding two parties in the conduct of an activity or enterprise and, as such, establish mutual obligations on the part of both parties. Contracting for the purchase of generally supplies and equipment is a relatively simple matter. Contracting for the development of new sophisticated and untried technological systems is quite a different matter. In the conduct of contracting programs of the latter type, the contract is indeed the tie that binds together the gov-ernment and the contractor in an intimate and unusual relationship. This chapter will discuss the method by which major R&D contractors are selected and the problems associated with the administration of such contracts. The major government agencies responsible for the conduct of most federal R&D programs have been the Department of Defense, the Department of Energy, and NASA. These three agencies spend the vast bulk of all federal R&D dollars, and the practices developed in these agencies constitute basic approaches to R&D procurement. While management practices may vary within an agency, l_egal requirements make general procurement procedures consistent and uniform. 1 The regulations governing procurement in the Department of Defense are outlined in the Armed Services Procurement Regulations

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53 as established by the Armed Services Procurement Act of 1947 as amended. Procurement regulations for other agencies of the federal government are currently established by the General Services Administration. Early on, NASA adopted the basic Armed Services Procure ment Regulations with only minor modifications and has followed them since that time. 2 In 1949 the General Services Administration was granted authority by the Federal Property and Administrative Services Act of 1949 to establish procurement regulations for the civilian agencies of the federal government.3 These regulations established by the GSA are similar to those followed by the armed services in most important respects.4 NASA still basically follows the Armed Services Procurement Regulations although, in some cases, GSA regulations take precedence. In short, differences among procurement regulations for the three primary R&D agencies are not of significance and, since 1947, have generally been consistent. Federal Procurement History The procurement of goods and services from industry is a practice dating back to the earliest days of the nation when there was the purchase of military supplies and equipment during the Revolutionary War. Prior to World War II, little research and development was procured from the private sector. In 1940, for example, on-ly sixty-seven million dollars were expended by the government on R&D.5 Most R&D in the prewar period was accomplished in governmentowned facilities using civil service employees. Early federal procurement consisted primarily of goods and services that were readily available in the marketplace. Typical

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54 supplies and materials purchased by the government included and blankets for the Army; and desks, paper, and office sup plies for civilian agencies. Prior to World War II, procurement of federal supplies was governed by a series of statutes which dated back to the Civil War. In 1860, Congress passed legislation which provided: All purchases and contracts for supplies or services in any of the Departments of the Government, except for personal services, when the public exigencies do not require the immediate delivery of the article or articles, or performance of the shall be made by advertising a sufficient time previously for proposals respecting the same. When immediate delivery or performance is required by the public exigency, the articles or services required may be procured by open purchase or contract at the places, and in the manner in which such articles are usually bought and sold, or such services engaged between individuals. No contract or purchase shall hereafter be made, unless the same be authorized by law or be under an appropriation ade quate to its fulfillment, except in the War and Navy De for clothing, subsistence, fuel, quarters, or transportation, which, however, shall not exceed the necessities for the current year.6 These provisions of the 1860 act meant that all goods and services should be procured through procedures which involved: 1. The public advertising by the government for the goods or services; 2. The submission of sealed, firm fixed-price bids by the competitors; 3. The public bid-openings at a specified time and place; 4. The contract award to the lowest responsible bidder who complied with the terms and conditions of the advertised procurement.

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55 Danhof, in his excellent history of government contracting, points out that this 1860 statute was amended by an act in 1901 which .. redefined the exception to the general policy of purchases by advertising to apply to cases of emergency, or where it is impractical to secure competition.n7 While many of the products required by the federal government could be readily bought from industry using these standard purchasing procedures, other items were unique to the military services and not readily available in the commercial market. These included rifles for the Army and naval guns for use by the Navy on shipboard. Danhof indicates: 11There applied to these a policy almost as old as the nation: that some active capacity to produce these items should be maintained at all times within Army or Navy establishments.118 As a result, the Army operated arsenals, such as the Springfield Arsenal, for the manufacture of small arms; the Navy operated the Naval Gun Factory at Washington, D. C., for the pro duction of naval guns. Both facilities existed and were in opera tion in World War II, and only after the war did the traditional arsenal function disappear. Today, the military services rely almost exclusively on industry for the production of these types of weapons. Congressional requirements for advertised, fixed-price bids as the normal process in federal procurement were clearly desirable in the period prior to World War II. The government was primarily procuring goods readily available in the commercial market. For this type of purchase, firm, fixed-price procurement is desirable

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56 because the government can specify in detail what it wishes to buy and can inspect material upon delivery to assure that it meets specifications. All federal procurements other than advertised firm fixed-price procurements still constitute an exception to basic federal procurement regulations. These advertised procedures are possible only when detailed specifications can be prepared and when commercial sources are willing and able to make bids for the provision of such services. The procurement of advanced technology systems fails to meet this criteria and, as a result, cost-type contracts are extensively used in their place. The characteristics of these procurements are discussed below. The use of advertised firm fixed-price procurements, however, is still extensively used by the federal government where it is feasible and is the most generally used procurement practice at the state and local level. Types of R&D Procurements R&D programs frequently make use of two types of industry support. The first is the acquisition of major advanced techno logical systems. The second, while not of importance to this study, deserves at least mention. These are what are termed 11support service contracts.11 Each of these two types of contract ing is briefly described below. Hardware systems procured by the federal government, primarily by the Department of Defense, NASA, and the Department of Energy, are applications of advanced technology, are considered of critical importance to the national security or the future of the

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nation, are extremely costly with the total R&D costs running from hundreds of millions of dollars to billions of dollars. Examples of such systems include the satellite systems and the space shuttle of NASA; advanced aircraft and missile systems of DOD; and advanced nuclear weapons, nuclear submarines, and power reactors of the Department of Energy. 57 Any agency of the federal government may procure support services from industry; these consist of the provision by industry of support to ongoing government operations. Examples include the provisionof guard services, computer services, street maintenance and repair, and a host of other support activities. Support services are normally provided to the government agency at or near the site of its ongoing operations. The agencies involved in the procurement of major R&D systems also contract for support services. A major DOD or NASA installation may have a wide range of support contractors providing a variety of services. In this area, federal policy once again encourages the maximum feasible use of industry. Program Definition The first step in any procurement process is defining the hardware to be procured. While wartime R&D projects may be launched without such careful review and analysis, it is uncommon for peacetime projects to be undertaken without substantial initial study. Exceptions do exist in peacetime--the establishment of the Apollo program in 1961 by President Kennedy received less prior study than would typically be the case. Apollo, however, was approved during a period when the public was extremely concerned with Russian

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58 achievements in space and, as a result, a much greater sense of national urgency existed than is typically true with the establishment of new projects. In the 1970s the next major space advance, the space shuttle, was approved only after lengthy study and analysis within NASA and by the Office of Management and Budget (OMB), the White House, and Congress. The agency will often make use of contracted studies as well as in-house studies to help scope the proposed project. NASA, as an example, contracted for three studies prior to the initiation of the space shuttle program.9 These technical studies are typically conceptual in nature and are used to develop basic approaches to the new R&D program and to establish technical direction and objectives for the program. After studies of the type outlined above have been con ducted, the agency is in a position to make basic program decisions and to begin the bargaining process with the OMB, the White House, and Congress. Usually a variety of programs are competing for agency approval. The agency is never able to pursue all profitable lines of development and must eleci the most promising and politically appealing program for support. Discussions with the OMB, the White House, and Congress frequently result in the redefinition of the program. Modifications must be made to accommodate available funding, to move schedules to fit within financial envelopes," and for other similar reasons. Once these approvals have been secured, the agency is in a position to begin the systems acquisition pro cess. The steps involved in the solicitation of industry, evalua tion of proposals, and ultimate decision are discussed below. These

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procedures are those followed by NASA in the acquisition process and are outlined in the NASA Source Evaluation Board Manual; however, they are substantially the same as those employed by other R&D agencies.lO The Procurement Process The Request for Prop a sa 1 ( RFP) is the means utili zed by the government for securing proposals from industry to undertake major R&D programs. The RFP provides potential proposers with all of the information necessary to submit a proposal. Included in the RFP are detailed instructions for the physical preparation of the proposal (page size, typeface to be used, page limitations, and similar matters) as well as proposed contracting arrangements, incentive objectives (if any), and proposed contract terms. In addition, the RFP contains the 11Statement of Work11 which is the most critical part of the RFP and which describes what the government wishes to buy in as much detail as is available given the R&D nature of the procurement. The Statement of Work outlines all of the known technical re-quirements of the program and identifies technical directions which the government may have predetermined to pursue. The RFP is sent to all contractors who either request the proposal or are considered potential bidders on the procurement. For major R&D procurements, agencies frequently will hold preproposal conferences to which all potential proposers are invited. These conferences are normally held after the interested companies have had an opportunity to review the RFP. The purpose of the conference is to elaborate further on the desires of the

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government in the procurement and, in particular, to give all con-tractors an opportunity to raise questions concerning areas which they do not fully understand in the RFP. Questions are typically submitted in writing and answers to such questions are prepared in written form and submitted to all companies expressing interest in the procurement. The goal of the government during this stage of the process is to try to provide the maximum amount of information to all interested companies. To the extent that companies planning to propose fully understand the governments desires and intentions, the better the final proposals should be. Most agencies procuring large R&D systems make use of some type of board or committee to review and evaluate industry proposals. A common name for these boards is the Source Evaluation Board (SEB). The SEB is composed of senior technical and business management personnel from the agency who are familiar with the system to be procured. The board is normally appointed by either the agency head or other senior agency management personnel. In addition to agency members, the board may include knowledgable individuals from other federal agencies as members or supporting personnel. For ex ample, NASA has included military and civilian personnel from the Air Force on some of its SEBs. The board is an ad hoc group, not subject to supervision or influence by any personnel within the agency, that performs its work for the senior agency staff member who initially appointed the board. NASA1s Source Evaluation Board Manual describes the role of the SEB in the following manner: The solicitation, receipt, and evaluation of proposals are carried out by a Source Evaluation Board as provided in this Manual. It is important that a Boards processes of

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evaluation be the Board's alone, uninfluenced by outsiders, either within NASA or without. The Board, equipped with special status and safeguarding procedures, is staffed with qualified people competent to identify the merits and de merits of the various proposals. The Source Evaluation Board is to assist the Source Selection Official in his de cision making. Its part is to see to it that there are produced for consideration by the Source Selection Official suitable expert analyses covering the factors likely to be pertinent to the source selection decision.ll Source boards or committees may or may not make recommenda-tions to the selection official (the agency official charged with actually determining to whom the contract will be awarded). As noted above, within the NASA procedures, SEBs do not recommend se lection to the selection official. The actual selection process will be discussed in greater detail at a later point in this chapter. The job of the SEB, at least within NASA, is to receive and review proposals and to evaluate the relative standing of various proposers in terms of their technical merit, probable cost, and other factors deemed pertinent to the selection. The review of contractor proposals and the entire source evaluation job is a major undertaking on a large-scale R&D program. The board will work full time for months conducting its deliberations. Committees and panels will be established by the board composed of supporting technical and business management personnel. The board operates in a very formal manner and the procedures followed by the board (other than those established in NASA regulations) are adopted prior to the time the board opens proposals. The board will determine such matters as voting pro cedures and how minority views will be handled before the board actually begins its formal operations.

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62 The results of board operations are of course critical to companies proposing on the program. (At times, success or failure on a given proposal may well mean survival for individual companies depending on the status of the market at the time the award is made.) The size of SEBs varies depending on the size and complexity of the procurement. Smaller procurements may involve a board of seven to nine members supported by twenty to thirty other specialists. Very large and complex procurements, such as the space shuttle orbiter procurement, will involve a much larger number. The SEB for the space shuttle orbiter consisted of a board of nine teen members supported by a staff of approximately four hundred and fifty .12 Boards normally review a number of areas within the propo sal including the technical proposal itself (how the company pro-poses to approach the program in terms of design, manufacturing, test, reliability, and other related factors), cost, management arrangements proposed for the program, and a variety of other criteria. In some areas, the board will actually rate each proposal and assign a numerical score. Mission suitability factors are usually rated and scored; these include the technical aspects of the proposal including design approach and manufacturing proce dures. In addition, organization and management arrangements are also normally scored as part of what NASA terms "Mission Suitability Factors." The final scored elements of the proposal nor.mally add up to a maximum possible score of 1,000. While this

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scoring procedure in terms of total points is not prescribed by agency regulation, it is the normal NASA practice. In addition to scored elements which are evaluated, the board will also review and evaluate certain unscored factors. 63 These unscored factors include the financial stability of the company, the company's equal employment opportunity plan, labor relations, and various other elements the proposal. The most important unscored factor is cost. In this case, the board will exhaustively review the contractor's proposal to try to determine a realistic overall cost to accomplish the program proposed by the contractor. Each contractor will propose his estimated cost to accomplish the program. As noted earlier, there may be a clear advantage to the contractor to try to understate this cost. As a result, the government's cost evaluation will make every effort to estimate realistically the cost of the contractor's program. Eventually the source selection official will be provided with detailed information on the "proposed" costs as submitted by the contractor and the "probable" costs as developed by the government. Without such an adjustment, the validity of cost data sub mitted by the contractors would be highly questionable. Because of the risk and uncertainty associated with R&D programs, even the best efforts of the government do not necessarily produce reliable cost projections. Ernest W. Brackett, former director of procurement for NASA, observes: Most of the NASA research and development contracts are the cost-plus-fixed-fee type where costs are at best an edu cated estimate and a comparison of cost estimates is not a good basis for contractor selection .... there.is so little

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cost history in the areas in which NASA is contracting that it is difficult to arrive at fair cost targets.13 In addition to the traditional problems associated with forecasting development costs, the tendency of Congress to change previously agreed upon plans in supporting development programs adds considerably to the problem of dealing with costs in an ac curate fashion. The objectives of the cost analyses of proposers costs is described in the following manner: The principal aims of the SEB in its analysis of costs are to advise the Source Selection Official concerning (a) the validity of the costs as proposed by proposers within the competitive range; (b) the probable cost to the Government of accepting each proposal within the competitive range; (c) the probable cost differences among the proposers within the competitive range ... ; and (d) its level of confidence in its analyses and projections costs as they pertain to each fully evaluated proposal. The SEB, after its initial evaluations of the proposals, will establish what is known as a 11competitive range ... The competitive range consists of those proposals 11Which have a reason able chance of being selected for final award.ulS In consider ing establishment of the competitive range, the board will consider all factors associated with the evaluation including the technical proposal (known in NASA as mission suitability factors), cost, experience and past performance, and other factors such as the financial position of the company, labor relations, equal employment opportunity, etc. 64 Once the competitive range is established the board con ducts written and oral discussions with those proposers within the competitive range. The board may send questions to proposers in advance of the meeting, may ask spontaneous questions at the meeting,

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65 and frequently does both. The purpose of these discussions is twofold: first, to provide the board with additional clarifying in formation on the proposal; second, to evaluate the key personnel from the proposors organization in terms of their experience, qualifications, and knowledge of the proposed procurement. After the board has completed all of its analysis of the proposals, determined a competitive range, and conducted written and oral discussions with companies within that competitive range, it is prepared to make its findings known to the source selection official. This information is contained in an extensive formal report which details all of the actions of the board, outlines its procedures for analysis, and contains the final findings of the board. In addition, the board (at least in NASA) will make a pre sentation of its findings to the sou.rce selection official and his key advisors. Although the selection decision is the unilateral decision of the selection official, he normally consults with his senior advisors before making that decision. Within NASA, these senior advisors include the general counsel, the assistant administrator for procurement, and the associate administrator responsible for the program area.16 Although the selection official is free to make any deci sions he wishes on the selection of a company, the extensive na ture of the source evaluation process acts as a constraint on his freedom of choice. It would be highly unusual for a source selection official to ignore the work of the SEB and select a company for negotiation which had been found seriously deficient by the board.

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66 Cost-Plus-Fixed-Fee Contracting The procedures followed in the procurement of R&D through cost-plus-fixed-fee (CPFF) contracts are the result of the unique nature of R&D. Unable to write detailed specifications for the hardware to be acquired and needing to push ahead in the design and development of these systems, the government is forced to adopt these procedures. Students of government procurement have long recognized the special problems inherent in the use of cost-type contracts. The normal competition existing in the marketplace and serving as an incentive for efficient performance is absent. Under firm fixed price contracting, the government is assured the lowest possible price based on competition within the civilian commercial market. Major R&D contracts lack this competitive aspect and, therefore, pose special problems to the government in its attempt to secure efficient and low-cost production of hardware systems. During earlier periods, when the government procured items under cost-type contracts, a procedure was followed which consisted of guaranteeing the contractor reimbursement of all costs incurred plus a percentage of those costs in the form of a fee. This served as a positive incentive for the contractor to perform in as inefficient and costly a manner as possible. This type of contract has been illegal for some years.17 The typical CPFF contract does not in itself serve as a major motivation for the contractor to perform in an efficient manner. Ralph C. Nash, Jr., in discussing CPFF contracts, indicates

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67 that 11this type of contract gives a contractor the minimum incentive to closely manage his costs on a program.ul8 If R&D procurement represented only minor expenditures and involved a limited number of companies, these problems would not be as significant. Federal procurement of R&D, however, is substantial and the problem cannot be ignored. John H. Rubel, at that time assistant sec retary of defense for research and engineering, outlined the extent of R&D contracting in his department and finds: In the current fiscal year our budget for defense Research and Engineering exceeds $7 billion, of which $5.5 billion wi 11 be expended by 'private industry under contract to the Defense Department. There are over 40,000 prime contracts in effect at any particular point in time, and every year approximately 6,000 are discontinued as new ones are ne gotiated. Thousands of first-tier sub-contracts stem from these prime contracts, especially the larger ones. The sheer volume and diversity of the contracting activity represents an enormous management and administrative chal lenge.l9 If efficiency cannot be encouraged throughnormal opera tions of the marketplace, the government must attempt to find a substitute for normal market operations. To accomplish this, the government may attempt to secure greater efficiency by adding incentive provisions to the contract, may closely monitor the con tractors operations, or may use both of these approaches. Incentive arrangements and supervision of contractor operations involve: 1. The introduction of special incentive arrangements into R&D contracts to attempt to replace market competition with con tractual incentives which will recognize superior performance and penalize poor performance; and,

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_68 2. The extensive supervision of the contractor by the government during the conduct of the R&D program. Under this assumption, if the government cannot provide a self-operating means of promoting efficiency through incentives, it must in its stead control contractor operations to a degree to assure that the funds on the program are appropriately spent. This supervision will nor mally take the form of extensive progress reviews, approval of specific actions to be taken by the contractor prior to their imple mentation, and other forms of review and approval of contractor actions. Of these two approaches to substitute some governmental activity to replace the competition normally found in the marketplace, government supervision of the contractor is the approach with the longest and most extensive history. The Use of Incentives The use of.incentives to try to influence contractor performance need not be restricted to CPFF contracts. Incentives can be coupled with firm fixed-price procurement in an attempt to influence contractor performance. In fact, the first incentive con-tract used in the field of technology was employed by the Army when it purchased its first airplane from the Wright brothers in 1908. Maj. Gen. W. Austin Davis describes the terms of this first incentive contract in the following manner: This was the contract signed in 1908 between the Wright Brothers and the Aviation Division in the Office of the Chief Signal Officer. It was a fixed price contract with a performance incentive. It called for an .airplane

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with a speed of 40 miles per hour, a range of 125 miles, and a payload of 350 pounds. In addition, the Signal Corps Specification No. 486 .included incentives for performance up to_ 140% of the price for 44 miles per hour and down to 60% of the price for the minimum acceptable performance of 36 miles per hour. The price was $25,000. The Wrights were paid $30,000A or a 20% incentive, for a 42 mile per hour 69 In an effort to provide incentives, the early 1960s wit nessed a major shift to incentive contracts by federal R&D agencies. Under these incentive arrangements, the contractor would be guaranteed reimbursement for all reasonable costs in the same manner as would occur under a regular CPFF contract. His fee, however, at least in theory, would be a product of how well he performed. Effective and efficient performance would result in higher fees; poor performance would result in lower fees. On the surface, this appears to be a desirable goal; however, the goal is easier to discuss as a theoretical concept than to accomplish in practice. Incentive contracting, in spite of the problems inherent in making it work, has great appeal. It is in line with our traditional view of rewarding efficiency and penalizing inefficiency. As a result, the use of incentive contracts has greatly expanded since the 1960s. Davis commented on the use of incentives almost twenty years ago: As practical business men, we realize that most development efforts for new weapons systems enta-il more risk than most contractors can afford to take under a fixed price type contract. Therefore, the cost-plus-incentive-fee contract, including performance incentives, will probably become the pre valent type used for weapon system development. This type of contract limits the risk of the contractor but still provides adequate cost, performance, and delivery incentives which we feel will help fulfill our objective of paying a realistic price for of necessary quality, delivered when it is needed.

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'10 Incentive contracting procedures have continued to enjoy support by many agencies involved in R&D contracting and today a large number of incentive contracts are written by the Department of Defense and NASA. At the currenttime, NASA estimates that for major hardware development, approximately 86.9% of all funds spent for R&D activities are covered by incentive provisions.22 It is difficult to argue against the use of incentive contracts; in practice, they do appear to motivate the contractor toward more efficient operations. The problems. inherent in suecessfully using incentive contracts are not fundamentally different from the basic problems found in regular CPFF contracting. The risks and uncertainties associated with major complex technological developments are not influenced by the presence or absence of incentive contract provisions. All of the problems associated with R&D contracting are present when incentives are introduced into the contracting process. As a result, the development of complex hardware systems will involve many false starts, changes in originally con ceived approaches, and a variety of difficulties impossible to fore see at the onset of the project. During the development of the space shuttle orbiter, NASA made major efforts to attempt to reduce the number of formal change orders associated with the development of the orbiter. In spite of these efforts, to date 1,167 changes have been issued to the con-$ 23 tractor valued at 420,000,000. It is extremely difficult for anyone, either the contractor or the government, to determine if these changes are a product of a failure to perform on the part of

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71 the contractor, the desire of the government to improve the system, or circumstances beyond the control of either party. The failure of Congress to fund R&D projects in accord with previous plans can also have a devastating impact on program plans and program costs. All of these changes, including the technical changes made in the system and changes in work scheduling due to funding limitations, impact the performance of the contractor. Under an incentive contract, the impact of all of these changes must be assessed in trying to determine how well the contractor has carried out his agreedupon development activities. These factors cloud the ability of the government to use incentive contracts and to assess fairly and impartially the work of the contractor against the incentive provi sions of the contract. In the space shuttle program, the most serious problems have arisen becaue of funding limitations and the associated requirement for replanning the program numerous times since contract go-ahead. It is currently estimated by NASA1s Johnson Space Center that the cost of program readjustments resulting from failure of Congress to meet agreed-upon funding .. plans :to be on the order of three hundred million dollars.24 For all of these reasons, incentive contracting is not the panacea that some have predicted. Those intimately involved in very large-scale developments do not believe that the use of incentives has been effective. Christopher C. Kraft, Jr., director of the Johnson Space Center, speaking about the use of incentive contracts, expressed the view that 11Incentives arent worth the cost of the

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72 administration.n25 Krafts views on the ineffective nature of in centive arrangements are shared by other senior officials who have had extensive experience in the management of major R&D contracts. Neil Hosenball, general counsel of NASA, indicates: 11the unknowns throw out totally the realistic use of incentives for true R&D pro jects.n26 James P. Neal, director of procurement for the Johnson Space Center,comments: 11there are always unknown unknowns and for this reason it is practically impossible to make incentives really work.n27 If incentives fail to provide a means of protecting the governments and assuring low-cost development costs, how effective has been close supervision of the contractors in meeting these objectives? Government Supervision of Contracts The controls normally present in the competitive market do not apply in CPFF contracting. One approach to substitute for the lack of market competition has been the use of incentive contracts as outlined above; a second approach has been to protect the public interest through the imposition of government controls over contractor operations. (Frequently, both approaches are simultaneously followed.) The specific approaches which the Air Force, the Army, and AEC have employed in the supervision of their contractors are the subjects of later chapters. This section of the study, however, will summarize the general administrative procedures commonly followed by most R&D agencies.

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Danhof notes: Once a contract is signed, the program management function is essentially one of maintaining a flow of technical and financial data sufficient so that the agency can hold the contractor or contractors responsible for performing as proposed, and can consider recommending courses of action for coping with deviations.28 73 The procedures followed by different agencies vary widely, but all R&D agencies tend to make special efforts to assure that the contractor is both performing in an acceptable manner technically and that his costs are reasonable and justified. The ability of the government to perform either or both of these functions is the subject of later discussion in this study. In discussing common criticisms of CPFF contracts, Ralph C. Nash, Jr. indicates: The CPFF contract ... creates high administrative costs for both the contractor and the Government and is therefore inher ently one of the most expensive forms of contract that can be used. Such costs consist of auditors and accountants, contract administrators and technical personnel doing work which would not be required on a firm fixed price contract and which could be limited on other types of contracts.29 Nash further points out that the types of controls normally exercised by the government over CPFF contractors include the following: For instance, on the normal CPFF contract the contractor will have to obtain prior approval from the Government to (1) incur overtime costs, (2) to sub-contract work over a specified dollar amount, (3) to make a change in his 11make or buy11 structure, or (4) to make an engineering change in the product or a manufacturing or test procedure. In addition, he is subjected to close scru tiny on all of his costs and may have to undertake a effort to justify certain costs as being allowable. 0

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74 The procedures outlined above result in a major effort by the government to monitor, supervise, and oversee contractor operations. The effectiveness of these efforts can be assumed to vary from government agency to government agency. Summary and Conclusions CPFF contracting is normally employed in the procurement of R&D advanced technology systems. The use of these procedures is necessary, given the inability of the government (or anyone else) to specify these systems with sufficient detail to make firm fixed price procurement possible. The use of CPFF contracting is and always has been an exception to the formal procurement procedures of the federal government which require advertising and the use of firm fixed-price contracts. In view of the fact that fixed-price bids cannot be made for R&D-type procurements, the government has utilized a system which is competitive in nature but which results in negotiated contracts. These procurements provide for the description of the procurement by the government and the soliciation of industry through the use of RFPs issued by the government. Industry responds with as much detail as it can provide in terms of describing its technical ap proach, development proposals, estimated costs, and similar matters. The government reviews these proposals using boards of experts who consider all aspects of the proposal including its technical merit, management plans, and business practices. Selection of contractors is normally made by senior agency officials based on the findings and analyses of the source evaluation board.

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75 The implementation of programs with contractors selected in this fashion and operating under CPFF contracts has resulted in attempts to use two procedures to.replace the co.mpetition nor mally found in the marketplace. The first of these approaches, the use of incentive contracts, has undoubtedly proved useful but has not provided a solution to the basic problems inherent in the development of sophisticated advanced technological systems. The second approach has been to establish monitoring over the contrac tors operations coupled with a number of controls over the freedom of the contractor to plan and conduct the development of the system independently. This supervision by the government of the contractor has resulted in special and unique relationships de veloping between the government and its contractors. It is evident that problems inherent in the conduct of ma .jor R&D programs through contract reflect the basic nature of the R&D process. The inherent risk and uncertaintly associated with these advanced systems dominate the development process and make management control of contractor operations difficult. In spite of these problems, the government, in its role of protecting the public interest and as the customer of these systems, must.take those steps deemed necessary to monitor, oversee, and supervise contractor operations.

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NOTES-CHAPTER III 1 Interview with Henry Flagg, Jr., chief counsel, Johnson Space Center, Houston, Tex., 6 June 1982. 2Arnold L. Levine, "Managing NASA in the Apollo Era," paper to become one of the NASA history series, National Aeronautics and Space Administration, Washington, D.C., undated, p. 157. Services Act of 1949, u.s. 4 clarence H. Danhof, Government Contractin and Technolo ical Change (Washington, D.C.: The Brookings Institution, 1968 p. 51. 5u.s., President's Scientific Research Board, A Program for the Nation, vol. 1, Science and Public Policy, by John R. Steelman (Washington, D.C.: Government Printing Office, 1947}, p. 11. 6 oanhof, Government Contracting, p. 17. 7 Ibid., p. 18. 8 Ibid. 9 rnterview with James L. Neal, director of procurement, Johnson Space Center, Houston, Tex., 4 June 1982. 10u.s., National Aeronautics and Space Administration, Source Evaluation Board Manual, NHB 5103.6A (Washington, D.C.: NASA, 1975). 11rbid., pp. 1-3, 1-4. 12Neal interview. 13Ernest W. Brackett, "Methods of Contractor Selection," in R&D ed. Conference on Government R&D Contracts (Washington, D.C.: Nat1onal Law Center of George Washington University and Federal Publications, Inc., 1963), p. 75.

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14source Evaluation Board Manual, p. 2-7. 15Ibid., p. 4-10. 16Ibid., p. 1-3. 77 17 The Armed Services Pr.ocurement Act of 1947, U.S. Code, vol. 41, sec. 153 (1981), provides that 11The cost plus a percentage of cost system of contracting shall not be used.11 18Ralph C. Nash, Jr., 11Cost Plus Fixed Fee Contracting,11 in R&D Contracting, p. 109. 19John H. Rubel, 11R&D Contracts: Policies and Problems,11 in R&D Contracting, p. 19. 20w. Austin Davis, 11Incentive Contracting,u in R&D Contract pp. 99-100. 21Ibid., p. 99. 22Neal interview. 23rnterview with Robert C. Hood, assistant manager, Space Shuttle Orbiter Project Office, Johnson Space Center, Houston, Tex., 8 June 1982. 24rnterview with Christopher C. Kraft, Jr., director, Johnson Space Center, Houston, Tex., 8 June 1982. 25Ibid. 26Telephone interview with Neil Hosenball, general counsel, National Aeronautics and Space Administration, Washington, D.C., 18 June 1982. 27Neal interview. 28oanhof, Government Contracting, p. 168. 29Nash, 11 CPFF Contracts ,U p. 110. 30rbid., pp. 110-111.

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CHAPTER IV THE HERITAGE OF THE PAST The establishment of the new space agency in 1958 resulted in the abolishment of one of the nation's oldest and most pres tigious scientific organizations, the National Advisory Committee for Aeronautics (NACA). NACA had been established forty-four years earlier to be the research arm of the federal government in the field of aeronautics. It was transferred intact to the.new space agency. This transfer involved over 8,000 employees, 300 million dollars in equipment and facilities, and 5 major field research laboratories.! The NACA Transfer and Its Impact on NASA The personnel from NACA became the dominant group in the new space agency. While very small numbers of personnel from the Army Signal Corps and the Navy were also transferred to NASA and made a significant contribution to the agency, their size and ultimate impact proved to be relatively small when compared to that of theformer NACA employees. As an organization with a long and successful history of research, NACA had an important bearing on the policies which the new NASA organization would adopt. NACA had developed its own

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79 organizational philosophy and its own character and values. These intangible qualities were to have an important influence on the emergence of NASA management policies. This chapter traces the history of NACA and outlines the evolution of its organizational. philosophy. The Early History of Flight Chapter I briefly covered the history of the federal government as a patron of science and technology. The development of the science of flight was no exception. Although man had dreamed of flight since the early myth of Icarus, it was not until the late 1800s that flight became a practical possibility. In Europe as well as in the United States, engineers and experimenters sought to master the art of heavier-than-air craft. Randolph P. Kucera, in reviewing the history of aeronautics in the United States, notes: 111n 1896 Samuel Langley's aerodrome, and unmanned model aircraft, made its first successful flight.112 In line with its tradition of supporting science and technology, the federal government provided Langley, secretary of the Smithsonian Institution, with $50,000 to continue his experiments with what at that time was known as 11mechanical flight." Significantly this early support of Langley came from the Board of Ordnance and Fortifications of the War Department; even at this early date, possible military applications of aircraft were appreciated.3 Although Langley was the leading experimenter in the country and had made major contributions to the science of flight, his effort at manned flight was to prove a disaster. On 3 December

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8') 1903, Langley launched his first manned airplane which promptly crashed into the Potomac River. He was publicly ridiculed, and the notion of mechanical flight was questioned. However, only nine days later the Wright brothers accomplished the first powered flight at Kitty Hawk, North Carolina. 4 This first successful flight by man fired the imagination of the entire world. The potential of aviation was quickly recog nized throughout western Europe, and the military use of the airplane played a dominant role in hastening its development. Although the United States had accomplished the first mechanical flight and provided the stimulus for the early development of the airplane, the federal government was slow to pursue this advantage. During the next ten years, Britain, Germany, France, and even smaller European nations moved quickly to support the development of aviation with government-sponsored research facilities or other support to the fledgling industry. Although the United States placed its first order for an airplane in 1907 with the Wright brothers, it failed to establish a mechanism to assist the devel-opment of aviation. Herman 0. Stekler, in his study of the aerospace industry, indicates: 11Before World War I no real aircraft industry as we would define an industry existed. Rather a type of backyard pro duction process existed.115 Howard Mingos, in his essay, 11Birth of an Industry, .. discusses this early period and states: Perhaps a half-dozen small shops were building airplanes, their products wholly experimental, their customers limited to a few exhibition pilots and sportsmenG with an occasional small order from the Army and Navy.

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The total production of aircraft in the United States between the Wright brothers flight and the beginning of World War II was ex tremely limited. Table 2 shows United States aircraft production from 1909 to 1913. -='-..... ? s t""\. '""---. J --2 81 U.S. AIRCRAFT PRODUCTION, 1909-1913 '5 f t :i._(..--, Year Total 1909 1 1910 1911 11 1912 45 1913 43 Number of Aircraft Military 1 11 16 14 Civil 29 29 Source: Aeros ace Facts and Fi ures, 1962 (Washington: American Aviation Publicat1ons, 1962 p. 6, and Aviation Facts and Figures, 1945 (New York: McGraw-Hill, 1945), p. 7. J J 5 Great Britain, in contrast, established an 11Advisory Com-mittee for Aeronautics11 in 1910.7 At the beginning of World War I, many European nations had relatively large numbers of military aircraft. Arthur L. Levine indicates: On the eve of World War I, France was reported to have 1400 airplanes, Germany 1,000, Russia 800, Great Bri tain 400, and the United States 23. In appropriations for aeronautics, the United States with $435,000 in the period 1908-1913, not only ranked below these nations, but also Japan, China, Bulgaria, Greece and Brazil.8 Support for a Federal Research Laboratory Recognizing the inadequacy of American military aviation at this time, a number of prominent national leaders urged the

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82 establishment of an effective aeronautical research arm in the fed eral government. Levine indicates the leaders of this group were Alexander Graham Bell and Charles Doolittle Walcott, secretary of the Smithsonian Institution. Their efforts resulted in a 1911 pro posal by W. I. Chambers, officer in charge of Naval Aviation Experiments, and supported by Walcott to establish an aeronautical laboratory as a part of the Smithsonian Institution. However, this proposal was held up by the Committee on Economy and Efficiency as a result of objections from the secretaries of War and Navy.10 As interest in aviation continued and as pressure for the establishment of a national laboratory grew, President Taft ap pointed a nineteen-man commission to consider the matter. The commission was chartered to consider the organization and cost of such a laboratory and to make recommendations to Congress.11 The commission appointed by Taft represented a wide range of interests and included representatives of the Army, Navy, Weather Bureau, National Bureau of Standards, and the Smithsonian In-_ stitution. The commission reported its findings in 1913 and recommended the establishment of an aeronautics laboratory in Washington under the supervision of the Smithsonian. Neither the president nor Congress, however, supported this proposal; no action was taken.12 Those interested in the development of aviation continued to advance plans for such a laboratory although little happened until the outbreak of World War I. World War I brought home to Congress and the executive branch how poorly prepared the United States was in terms of

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83 military aviation. Several actions were taken by Congress to strengthen the United States position including the establishment of an aviation section in the Army Signal Corps. By September 1915 Congress had appropriated in excess of thirteen million dollars for Army aviation. The political considerations surrounding the establishment of NACA and the final organizational arrangements established by Congress for that agency make it a unique case study in government organization. The problem quite simply was how to establish an organization to develop new and exotic technology. The interested groups included the military agencies who at that time had the greatest stake in aviation, other agencies with legitimate interest in the field, the small and struggling aircraft industry, and citizens who were enthusiastic about the development of an aviation in dustry. The immediate question for consideration was how government support in this new field should be organized. The following concerns were considered: 1. What role should the military play? Aviation to a large extent was associated with the Army and Navy. Throughout the world the primary developer of aviation and its major user was the military. The Army and Navy could. be expected to have both a strong vested iriterest and great influence in shaping United States policies and organization to carry out aeronautical research. 2. The aviation industry, although small and struggling, was a second group with special interests in a new aviation research organization. The industry was weak and could use all the

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help it could get, particularly in the field of new technology development. 34 3. Those in the general public, particularly the university community, who saw the development of aviation as potentially important to the country and were eager to see the establishment of .. a viable research arm to develop the technology required for the industry to grow. The groups identified above were in the vanguard of those supporting the establishment of a new research laboratory for aero nautics. Levine indicates that the military 11Was a strong supporter of the need for the agency.ul4 Almost equally enthusiastic in supporting the creation of a new agency were scientists both inside the federal government and in the universities. This group saw aviation as an important development for the nation and strongly supported the creation of a national research capability. The aircraft industry, although without great political influence, .also provided support. All of these forces, for reasons relating to their special interests, supported creation of a new federal organization for aeronautical research. The Establishment and Growth of NACA The expansion of the war in Europe brought increased inter-est on the part of Congress in American aviation. Gray indicates: In the late winter of 1915 it passed an act (attached as a Rider to the Navy Appropriations Bill, which President Wilson signed on March 3) creating a government organization to be known as the National Advisory Committee for Aeronautics.lS

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35 In view of the wide range of special-interest groups which had supported the new agency, the organization of NACA represented a novel approach to accommodate all of these interests. Rather than being headed by a single administrator or a full-time commission, the new agency was headed by a twelve-man committee, none of whom was involved on a full-time basts in the management of the agency. Included were both federal employees and outside members of the public. While the NACA was later to cite this unique arrangement as a strength of the agency, it defied all conventional wisdom on the management of a public agency. The bill establishing NACA further provided that all of the special-interest groups most interested and influential in its establisnment would be represented on the committee. Under-the provisions of the bill, the president was required to select two members each from the Army and Navy and single representatives from the Smithsonian Institution, the Weather Bureau, and the National Bureau of Standards. The remaining five members were to be chosen from the ranks of those 11acquainted with the needs of aero nautical science, either civil or military, or skilled in aeronautical engineering or its allied sciences.1116 Twelve years after the United States had pioneered manned flight and after the rapid expansion of government support to aviation in many European nations, the United States established its national capability in aeronautical research. The support for an independent government aeronautical research organization by the diverse special interest groups is an

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86 interesting phenomenon. Why did the military, with the largest interest in aviation, vigorously support the establishment of an independent NACA? Available information provides no real clue as to why the Army and Navy elected to throw their support behind an independent NACA. It can be argued that the novel nature of avia tion at that time led the armed services to believe that it could best be developed by a civilian agency. Twenty-five years later, however, the Army assumed responsibility for the development of a much more exotic technology, the atomic bomb, without hesitation. Following World War II, the military sought control of atomic en ergy rather than to have control shift to a civilian agency. During the si"xties the.:Air Force strongly beHeved 'i:t :should .be. res ponsible for space development and operations. Sixty-six years after the event, it is impossible to establish the rationale that led the military to support a civilian NACA. Perhaps the fact that the agency would be headed by a twelve-member committee of users dominated by the military led to the position of the armed services. At any rate, the support of the military was undoubtedly critical to the establishment of the NACA, and that support was not withheld. After NACA was established, the first step was to build the long-awaited aeronautics laboratory. The first NACA facility was a research facility built on land acquired from the Army at Hampton, Virginia. The original plan was that the Army, Navy, and NACA would use Langley Field for airplane research and test activities. This concept never became a reality because, with the

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37 American entry into World War I, the Army elected to use Langley Field as a training school for Army aviators. When the Army eventually established aeronautical research facilities, they were built at Wright Field in Ohio.17 The Navy never utilized Langley Field, and the only research facilities constructed at Hampton became NAcAs Langley Research Center .. For a number of years the Langley Center was the only field laboratory of NACA. Not until the approach of World War II was NACA to expand its operations to two new locations. A standard tool for aviation research was the wind tunnel, and NACA immediately constructed such a five-foot chamber.18 This together with the recruitment of a small staff made NACA a viable research organization by 1920. The work of NACA from that time until the beginning of World War II was to focus on aerodynamics. Clarence H. Danhof indicates: Congress reached a decision in 1915 that the government would support basic research in aerodynamics and estab lished the National Advisory Committee for Aeronautics. In the congressional view, the development of operat tional aircraft, including the application of work of the NACA, could be left to private industry. The new NACA had a general charter for the conduct of aero nautical research; in fact, the law directed NACA to: supervise and direct the scientific study of the problems of flight, with a view to their practical solution, and to determine the problems which should be experimentally attacked, and to discuss their solution and their appli cation to practical questions.20 Within this broad charter early leaders of the agency needed to de termine on what areas to focus and what relationships should be established with those outside the agency.

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88 Levine points out that the early leadership of NACA from its establishment until the beginning of World War II rested with university and government scientists and engineers.21 These early members of the NACA included Walcott, secretary of the Smithsonian Institution, who had been .acti've iri securing the establrishment of the agency; Joseph S. Ames, a physicist who served on the committee from its inception until 1939 and who eventually became president of Johns Hopkins University; and George W. Lewis who was director of aeronautical research for NACA from 1919 to 1947.2 2 Levine is critical of this group of early NACA leaders because he believes they viewed the role of NACA from too narrow a perspective. Levine indicates that this group saw the role of the NACA as 11a research agency, and little else.n23 Levine believes that had the agency viewed its functions as a broader coordinating group for the entire field of civilian aviation in the United States, NACA would have been a more effective government agency. The new NACA tended, however, to stress research above all other factors and to leave economic and other aspects of the development of the United States aviation industry to others. Levine attributes these policy deci sions made by early NACA leadership to the environment from which the early leaders emerged, the university community: In exercising this leadership, the scientists and engineers at the helm of NACA consistently sought to further a goal which their brethren in government and in university life, the scientific and engineering communities, traditionally have placed as one of their highest values--the goal of con ducting autonomous research. To try to insure that the NASA research program would not be directed by non-science engineer interests, the NACA leaders sought to insulate their from 11political11 control and from 11.politics11 generally.

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89 il e Levine is crit i ca 1 of the decisions made by NACA 1 ead ership in terms of embracing this nonpolitical research role, it is not at all clear what the consequences of a different organization al strategy might have been. NACA was established as a very small and independent research organization which existed in the center of large and competing forces. The Army and Navy both had immeasurably more power and influence than did NACA. The aircraft industry, as it emerged from its infancy in the twenties to become a major industry, also exercised considerable political influence. The decision which Levine attributes to the early founders of NACA (to present a low profile, nonpolitical, research image) may not have been politically naive. In fact, this approach may have resulted in insulating NACA from political attack and providing the agency with strong and influential defenders. The politics of these decisions therefore may have proved to be highly effective and astute rather than the naive decisions of a university-based elite. Arriving at conclusions concerning the impact of a different set of policies is impossible today. The direction which NACA might have taken with different leadership and different policy assumptions cannot be known. The policies NACA did adopt, however, had a major influence on the agency in shaping its culture and values; Chapter IX will examine their continuing influence on the new NASA organization. During the 1920s, NACA encouraged the president to expand both civilian and military aviation activities. In 1920, NACA ::>re posed that a Bureau of Aeronautics be established in the Department

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of Commerce for the regulation and promotion of civil and commercial aviation, that a Naval Air Service be established under a 90 Bureau of Aeronautics in the Navy Department, and that an Air Mail Service be established under the Postmaster Genera1.25 While pro posing this expansion of the activities of other departments, NACA recommended that its function remain scientific research. These recommendations were consistent with the desire of NACA to with-draw from any broad economic or regulatory role. No immediate ac tion was taken, but in 1926 Congress passed the Air Commerce Act of 1926 which made the Secretary of Commerce responsible for regula tion and promotion of the civil aviation industry. NACA between the Wars The period from 1920 when NACA became operational until the beginning of World War II marked a highly productive and creative period for the new agency. Its work was considered to be highly effective and essential to the development of civilian and military aviation. Rae, in his book on the history of United States aviation, reports that after regulating and economic functions were transferred to the Commerce Department, "the NACA was able to de vote itself to research. Consequently the flow of technical information from the NACA to the aircraft industry increased markedly after 1926 ... 26 George W. Gray quotes a 1929 English authority on the work of the NACA: By 1929 the status of aircraft research in the United States was so far in advance of that of any other nation that a distinguished English engineer, writing in The Aeroplane of London, felt moved to say: "The only people so far who have been able to get at something like accurate results from

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wind-tunnel experiments are the workers at the experimental station at Langley Field, which is run by the National for Aeronautics of the United States of Amer1ca. 91 The work of the NACA, coupled with military and civilian interests in aviation, resulted in the development of a very strong aviation capability in the United States. Gray states that by the mid1930s 11American aircraft led the world. They were not only serv ing the air transport systems of the United States, but were to be found as the preferred cargo and passenger carriers of many European and Oriental .1 ines.n28 While the combination of a strong research arm of the fed eral government, NACA, and a strong civilian aviation industry resulted in the United States leading the world in aviation during the 1920s and well into the 1930s, the experience of World War I was to be repeated. Prior to World War I the United States had pioneered in the development of aviation, but the government had failed to exploit this advantage and by the outbreak of World War I the United States lagged behind every European nation in military air power. During the 1930s, with the rise of Hitler and the remilitarization of Germany, the German government invested in the development of new aircraft and a vastly expanded air force. The United States, enamored as it had also been prior to World War I with the concept of isolationism, failed to develop its armed forces. As a result, the United States entered World War II with an air force inadequate in terms of available front-line aircraft and trained personnel. In 1939, the United States produced only 2,195 military aircraft.29

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92 NACA and World War II Given the inferior position of the United States in terms of military aviation when it entered World War II, NACA's main function became one of improving existing military aircraft rather than the development of new and advanced types of airplanes. One of the first actions taken to strengthen NACA occurred immediately before the outbreak of the war. With war in Europe a reality, Congress acted to broaden NACA's capabilities by authorizing two new NACA facilities: a research facility located at Moffett Field, California (later to become the Ames Research Center) and the Lewis Laboratory at Cleveland, Ohio, which was to specialize in aircraftpropulsion systems.30 This expansion of facilities put NACA in a much better position to support improvements in American military aircraft when the United States entered World War II. The expansion of NACA in the World War II period resulted in a vast increase in personnel, from 500 employees in 1939 to 6,800 during the war years. 3 1 Hunsaker reports that between December 1941 and December 1944 NACA's research centers worked on 115 different airplane types.32 The work of the agency during World War II was widely recognized and acclaimed by the military departments and by industry. Without question, NACA played a leading role in the necessary improvement of American military aviation. Secretary of Navy Frank Knox is quoted by Hunsaker as saying, 11The_ great sea victories that have. broken Japan's expanding grip in the Pacific would not have been possible without the contributions of the NACA.1133

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93 NACA in the Postwar Era The postwar period found NACA with expanded facilities, a large competent staff, and an excellent reputation. The wartime development of the jet engine provided the opportunity to increase substantially the speed of flight. As Hunsaker indicates: At the end of World War II, the most urgently sought goal was attainment of practical flight at supersonic speed. It was realized that success in this effort required new knowledge which could be obtained only with new tools and new techniques.34 NACA aggressively expanded its research and developed new tech niques designed to solve the problem of supersonic flight. These included the mounting of models on the leading edges of airplane wings and the use of rocket-propelled models. Research of this type led to the development of airplanes which could fly at super sonic speeds, such as the Bell X-1 which flew on 14 October 1947; the Douglas 0-558-II which flew in 1953; and the Bell X-1-A which flew a short time later.35 While NACA was busily engaged in producing the research and design data necessary for the development of modern high-speed aircraft, a new field of missiles and rockets had become important to the nation. Chapter VI traces the first United States efforts at development of ballistic missiles when German rocket scientists were brought to the Un1ted States and installed in research facilities immediately after the war. During the forties and fifties, NACA provided extensive research support to the missile programs of the military services through the conduct of various tests and

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94 experiments. NACA did not, however, actively enter the field of ballistic missiles, nor did it regard research in this area as a long-term or key agency objective. NACA continued to engage in aircraft research and to conduct further supersonic studies with the result that, by the time NASA was established in 1958, NACA was not considered a major factor in the new field of missiles and rockets. What were the characteristics of NACA immediately preceding the first successful Russian flight of Sputnik I which shaped the values and organizational culture of the agency? NACA had existed for forty-four years as the primary aeronautical research group in the United States and one of the most distinguished aeronautical research organizations in the world. While achieving this eminence, NACA had always been a small organization which existed to a large degree through the sufferance of its more powerful associates. Since the initial establishment of NACA, its leaders had sought a special place for the organization in the structure of United States aviation. The role created by the NACA leadership involved: 1. The conduct of research to support the military and the aircraft industry. NACA crafted an organization which would be seen as non-threatening by its clientele. Thus NACA never engaged in any development activities (which could be perceived as a threat by the military and the aircraft industry). Support to the military was available without reimbursement and NACA assured that the military agencies had a high priority in terms of NACA research activities.

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95 2. NACA sought a non-political position within the national aviation field. NACA carefully restricted its activities to the conduct of research. Years earlier the agency had opted out of the more controversial areas of regulation and promotion of civilian aviation. 3. The unique organizational arrangement whereby NACA was managed by a part,;.;.time coll11iti".ttee :effectively co-opted a 11 of tee clientele groups. The result was that each group had a strong hand in the actual management of NACA and particularly in providing direction to its research activities. These arrangements, perfected over the years, assured NACA of maximum freedom in its research activities. At the same time, however, it qid not provide NACA with a base of experience in deal ing with broad public policy issues nor in the development of lead ership capable of managing large-scale development activities. The characteristic of NACA research was that it was a collection of relatively small and inexpensive research projects conducted in government-owned facilities by civil service engineers and scientists. The conditions created by NACA leadership made it possible for the agency to proceed with its own program of independent research; the nature of the agencys operations tended to make it very conservative in dealing with other agencies and outside groups. Scientists and engineers were given great encouragement and maximum freedom in the conduct of research activities but were closely monitored in any contacts outside the agency. Maxime Faget, a

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96 young engineer at that time who later became the director of engin eering and development at NASAs Johnson Space Center, indicates that NACA carefully controlled all outside contacts by its employees.36 Any telephone conversations with those outside NACA were promptly reported to higher levels of management. Travel was infrequent, but when a professional staff member did travel to a meeting or conference, he filed a very complete trip report with his supervisors identifying all information discussed with those outside the agency. As a result of these policies, NACA tended to operate in a vacuum. Always protecting its research function and concentrating on this area, the agency was poorly prepared to undertake a broader and more political role in the conduct of a major national space program. The NACA Organizational Culture The policies outlined above resulted in the development of a unique organizational culture. At the time NACA was transferred to the new space agency, the values and culture of NACA had an important influence on the development of NAsAs management policies. The nature of NACA values and culture can be summarized as follows: 1. Research was the most important function that a technical organization could perform. Research should be accomplished directly by employees of the organization working in government facilities rather than contracted out to universities or to industry. 2. The government was able to attract and retain highly competent technical personnel to discharge these research

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97 responsibilities. The model followed by NACA was one of recruiting new college graduates, developing them, and retaining their services for their entire careers. This type of career service was at the heart of the NACA_operation. 3. Controversy should be avoided. While researchers should be free to conduct independent research, members of the or ganization were to focus attention on in-house research activities and avoid controversy. 4. The agency should be careful not to compete with constituent agencies. NACA would therefore not seek new areas of activity which might lead to conflict and threaten their research position. 5. Development activities should not be undertaken. Development activities could lead to.competition with constituent groups as noted above, but equally important was the fact that development tended to demand a large volume of resources. The na ture of a development project made it difficult to deny such demands, and such demands could interfere with the orderly conduct of research. These values were both a strength and weakness in the NACA organitation. They gave the agency a single-minded focus on research resulting in outstanding accomplishments, but they tended to make the organization insular in its views and less able to cope with major public policy issues and competition with outside groups.

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98 NAcAs Last Attempt at Survival At the time the Russians launched the first Sputnik, it became evident to the NACA leadership that major national moves would be made to develop a United States capability in space operations. The nature of its functions made it evident that NACA could absorb these new space responsibilities, be absorbed into a broader aeronautics and space program, or seek some special accommodation to the new situation. The reluctance of NACA to embrace new areas of activity, particularly those of a development nature, has been out lined above. In spite of this, it was evident to the NACA leader ship that the future of the agency was in doubt. The director of NACA during this period was Hugh Dryden, a distinguished government scientist who had entered federal service with the National Bureau of Standards in 1917 and became director of NACA in 1947.37 Dryden epitomized those view$ and values out lined above and had been a principal architect of many of them. He had been a leading influence with NACA on retaining the agencys traditional role of aeronautical research in the postwar period. Although his enthusiasm for the new field of space appeared to be limited, he began to consider absorbing at least some space respon-sibilities into the NACA organization as a means ef preserving the agency. Rosholt summarizes Drydens role in this manner: Dryden came to realize that the future of the agency was possibly at stake. If NACA concentrated solely on aero nautical research, it would lose many of its best employees to whatever agency would emerge with the Nations space program; on the other hand, if NACA were to take on the Nations space program it would face radical changes.38

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99 Faced with this decision, NACA opted to try to absorb some of the new space activities while at the same time maintaining its traditional relationships with clientele groups. Dryden's plan for dealing with the need for a new and major national space effort was an interesting reflection of the traditional views of NACA. First, the Dryden plan did not call for the establishment of a new space agency, but rather recommended that responsibilities be divided among existing organizations, as follows: NACA would expand its space research program by enlarging its staff, building a new space research laboratory, and increasing its contract researth program; it would also step up its flight program, while limiting it to basic research. Large scale flights associated with military requirements would be under DOD with appropriate NACA inputs. The National Academy of Sciences and the National Science Foundation waul d assume responsibility for the nature and planning of experiments to mostly by the private scientific community. Dryden's proposal was the classic response of NACA to a major new government program. It preserved the special province of NACA, research, while assuring the agency would not be contaminated by either development activities or made vulnerable to conflicts with the military or other agencies. The plan was the perfect NACA appreach to a solution, not of the nation's position in space, but rather to the problem of preserving NACA with its values intact. Dryden's proposal apparently was never seriously consid ered by the Eisenhower administration. Rosholt indicates: "the idea of total authority and responsibility in one agency under one man was considered by the administration as the best solution to a problem requiring urgent action."40 Homer E. Newell, who participated in the early space work of the Naval Research _Laboratory and

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100 joined NASA at the time of its inception, viewed the position of NACA somewhat differently. Writing about the position of NACA immediately prior to the establishment of NASA, Newell stated: Over the years the agency had acquired a reputation of cau tion and conservatism. This conservatism may have caused NACA to miss out on a number of important aeronautical ad vances, the most significant of which was jet propulsion, where Britain and Germany took the lead. At any rate, be cause of such missed opportunities, NACA in the 1950s no longer had the unqualified endorsement of the r.1il itary and industry that it once had, and in the view of at least one historian might well hav. 1 died had not the space program come along to revive it. Unlike the views of Newell expressed above, General James H. Doolitle, last chairman of NACA, saw the role of NACA in a differ-ent light. In the last and final report of NACA before it was ab sorbed into NASA, Doolittle stated: Perhaps the most accurate assessment of the effectiveness of the NACA organization ... came on July 29, 1958, when President Eisenhower signed the National Aeronautics and Act of 1958 that created the National Aeronautics and Space Administration. That act provided that the new agency be built upon the NACA as its nucleus. In. this way, the lawmakers made sure that the country gained a running start on its bold, exciting ventures in space exploration for peaceful purposes for the benefit of all mankind.42 Whether the transfer of NACA to the NASA organization saved it from oblivion as suggested by Newell, or whether, on the contrary, it was a recognition of the outstanding capabilities of NACA as suggested by Doolittle, is immaterial. Although NACA ceased to exist, many of its values were to influence the management policies adopted by the new NASA organization, particularly in the area of government relationships with industry.

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NOTES-CHAPTER IV 1u.s., National Aeronautics and Space Administration, An Administrative History of NASA, 1958-1963, by Robert L. Rosholt (Washington, D.C.: Government Printing Office, 1966), p. 29. 2Randolph P. Kucera, The Aerospace Industry the Militar : Structural and Political Relationshi s (Beverly Hills, Calif.: Sage Publications, 1974 p. 11. 3George W. Gray, Frontiers of Flight (New York: Alfred A. Knopf, 1948), p. 9. 4Ibid., p. 10. 5Herman 0. Stekler, The Structure and Performance of the Aerospace Industry (Berkeley, Calif.: University of California Press, 1965), p. 2. 6Howard Mingos, 11Birth of an Industry, .. in The History of the American Aircraft Industr ed. G. R. Simonson (Cambridge, Mass.: The MIT Press, 1968, p. 25. 7 Rosholt, Administrative History of NASA, pp. 19-20. 8Arnold L. Levine, 11United States Aeronautical Research Policy, 1915-195811 (Ph.D. dissertation, Johnson Space Center History Office, Houston, Tex., 1963), p. 5. 9Ibid.' p. 8. 10Ibi d. llibid. 12Levine, .. Aeronautical Research Policy, .. p. 10.

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13Ibid., p. 11. 14Ibid., p. 14. 15Gray, Frontiers of Flight, p. 11. 16Ibid. 17Ibid., p. 13. 102 18u.s., Smithsonian Institution, 11Forty Years of Aeronautical Research, .. by J .. D. Hunsaker, in Smithsonian Report for 1955 (Washington, D.C.: Smithsonian. Institution, 1956), p. 251. 19c1arence H. Danhof, Government Contractin and Technolo ical Change (Washington, D.C.: The Brookings Institution, 1968, p. 24. 20The basic legislation establishing NACA was in the form of a rider to the Naval Appropriations Act, Public Law 271, 63d Cong., 3 March 1915. 21Levine, 11Aeronautical Research Policy, .. p. 21. 22Ibid. 23Ibid. 24Ibid., p. vii. 25Ibid., pp. 25-26. 26John B. Rae, Climb to Greatness (Cambridge, Mass.: The MIT Press, 1968), p. 24. 27Gray, Frontiers of Flight, p. 16. 28Ibid. 29Aviation Facts and Figures, 1962 (New York: McGraw-Hill, 1962), p. 7. 30Gray, Frontiers of Flight, pp. 24-25.

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1981. 103 31Hunsaker, 11Forty Years of Aeronautical Research, .. p. 266. 32Ibid., p. 267. 33Ibid. 34Ibid., p. 268. 35Ibid. 36Interview with Maxime Faget, Houston, Tex., 30 November 37 Hunsaker, .. Forty Years of Aeronautical Research, .. p. 268. 38Rosholt, Administrative History of NASA, p. 34. 39Ibid., p. 35. 40Ibid. 41u.s., National Aeronautics and Space Administration, Beyond the Atmosphere, by Homer E. Newell, The NASA History Series (Washington, D.C.: U.S. Government Printing Office, 1980), p. 91. 42u.s., National Advisory Committee for Aeronautics, Forty Fourth Annual Report (Washington, D.C.: Government Printing Office, 1959), p. 31.

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Introduction CHAPTER V THE ATOMIC ENERGY COMMISSION MANAGEMENT BY CONTRACT The giant mushroom cloud that rose above Hiroshima, Japan, on 6 August 1945, marked the beginning of a new era. From that day forward, the threat of total destruction through atomic war would dominate world consciousness. David E. Lilienthal, first chairman of AEC, commenting in 1963, reflected: In the whole of history, no single force has cast a greater terror over all mankind than the Atom. Since Hiroshima, the image of final catastrophe has seized on the minds and hearts of men. The Atom has so heightened the desperate problems of a world in turmoil that it seems to have fused them all together into one single universal issue: can an atomic holocaust somehow be avoided? The bomb can be seen as representing either a spectacular achievement for science and technology or an example of technology gone mad. However atomic weapons are there can be no ques tion that the construction of the bomb repre.sented a tremendous technological achievement, the beginning of a new era of world insecurity and the first large-scale modern R&D project. The work on the development of the bomb was a highly complex and costly undertaking which served as a model for later government R&D activities. The nature of the scientific and technological problems as sociated with the creation of the bomb shaped how this vast

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105 undertaking was managed. In turn, the management procedures followed in developing the bomb strongly influenced other major R&D projects in the postwar period. For these reasons, an understand ing of how the bomb came into existence is important to an under standing of modern R&D practice. The experience of the Army in the development of the bomb and the continuation of Army management practices by the AEC when it assumed responsibility from the Army were to influence NASA decisions on how the nation1s space program would be managed. The Prewar Period The rise of Hitler and his persecution of the Jews was to have a profound impact on the development of atomic weapons by the United States. During the mid-thirties, many European Jews realized that remaining in Europe could only result in their imprisonment or death. As a result, many of the leading European scientists emigrated to the United States. One of the first was Albert Einstetn,.the best known and most widelyrecoanized scientist of that day.2 He was soon followed by a large number of other promi nent scientists: Enrico Fermi of Italy who was to a critical role in the development of the bomb;3 Leo Szilard of Hungary who was instrumental in getting government support for the development of the atomic bomb projett;4 and Edward Teller, another Hungarian, who made critical contributions to the development of the atomic bomb and was later to become the 11father11 of the hydrogen bomb.5 The United States had been relatively slow in achieving a high order of competence in what was then known as the 11new11

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106 physics. The movement of these refugee scientists thus provided the United States with outstanding competence in nuclear physics. Had Hitler not embraced his mad theories on race, the history of the world since World War II might well have been written in quite a different fashion. During the period that European scientists were fleeing Hitler to come to the United States, the concept that a chain re action was a possibility was common knowledge among the world1s leading scientists. European scientists were quickly placed in major universities in the United States and continued their research almost uninterruptedly. These Europeans, keenly aware of the military potential of the atom, sought means to both restrict publication of information on the atom and to secure government sup port for a program of accelerated military research. Henry D. Smyth, in his definitive history of atomic energy, reports: At that time American-born nuclear physicists were so unaccustomed to the idea of using their science for mili tary purposes that they hardly realized what needed to be done. Consequently the early efforts both at restricting publication and at getting government support were stimu lated largely by a small group of foreign-born physicists centering on L. Szilard and including E.6Wigner, E Teller, V. F. Weisskopf, and E. Fermi. Recognizing the military potential of the rapidly developing information on the possibility of a chain reaction, this group enlisted the assistance of Niels Bohr, a distinguished and widely respected Danish physicist, in an attempt to restrict publication voluntarily.7 Leading American and British scientists quickly agreed; however, Frederic Joliet-Curie, the most famous French physicist, refused to cooperate.8 As a result, unrestricted

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107 publication of research in this critical area continued for another year, although some scientists voluntarily withheld publication.9 Although this early attempt at self-censorship had failed, the scientists continued to be concerned with the consequences of airing this highly sensitive information. Smyth indicates: At the April 1940 meeting of the Division of Physical Sciences of the National Research Council, Breit proposed formation of a censorship committee to control publication in all American scientific journals.10 Ultimately, the National Research Council did act to control publi cation in all fields of possible military interest. By March 1939, Fermi, working at Columbia University, had demonstrated that a chain reaction probably could be achieved. Scientists believed that the United States government should be immediately advised of these developments and of the military potential of atomic energy. Richard G. Hewlett and Oscar E. Anderson, Jr., in their official history of AEC, indicated that the government was first contacted in 1939: On March 16, Dean Pegram wrote Admiral Stanford C. Hooper, technical assistant to the Chief of Naval Operations, to say that Fermi, who was traveling to Washington on another matter, would be glad to tell Hooper of the experiments at Columbia. It was possible, Pegram wrote, that uranium might be used as an explosive that would 11liberate a mil lion times as much energy per pound as any known explo sive." Pegram thought the probabilities were against this but that even the barest possibility should not be ignored.11 The Navy representatives expressed interest in the experi-ments which had been conducted by Fermi and requested that they be kept advised of his work in this area. Representatives of the Naval Research Laboratory were particularly interested in the possible use of atomic energy as a power source for the .Navy.

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Several months earlier, staff of the Naval Research Laboratory had contacted the Carnegie Institution to learn more about 108 atomic energy developments. After the meeting with Fermi, the Naval Research Laboratory recommended that the Navy Bureau of Engineering help to finance the investigation of the power potential of atomic energy and allotted $1,500 to the Institution for this purpose. Carnegie agreed to cooperate in developing additional information but declined the. funds for 11reasons of in ternal policy.nl2 A key figure in trying to secure federal support for the development of atomic energy was Szilard. He continued to seek assistance from the Naval Research Laboratory but was told that "the government had no administrative provision for such sup port."13 Szilard learned that Alexander Sachs, a Lehman Corpora tion economist, was known to have access to the White House. Szilard contacted Sachs who agreed that the matter should be brought to the attention of President Roosevelt. Sachs suggested that, to receive appropriate attention, a letter to the president should come from a well-recognized scientist. He suggested Albert Einstein. Before the letter could be prepared and delivered to Roosevelt, war broke out in Europe. The letter from Einstein was written and Sachs secured an audience with the president. The meeting included representatives of the Army and the Navy, and, after a discussion of the contents of Einstein's letter, Roosevelt indicated his support.14

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109 Early Administrative Structure Following the meeting with Sachs, the president appointed an Advisory Committee on Uranium to investigate possible development of atomic weapons; chairing the committee was Lyman J. Briggs, the director of the National Bureau of Standards. The committee was composed of five members and included Szilard and Teller.15 Reporting to the president on 1 November 1939, the committee indicated that if a chain reaction were explosive, 11it would provide a possible source of bombs with a destructiveness vastly greater than anything now known.1116 During the remainder of 1939 and into 1940, experimenta tion continued in an effort to demonstrate the feasibility of build ing an atomic bomb. As work progressed, a number of university scientists throughout the country became involved in various aspects of the research. Following a meeting of the American Physical So ciety, where the use of atomic energy was discussed among the senior physicists present, Admiral Harold .G. Bowen of the Naval Research Laboratory asked Harold Urey of Columbia University to organize an advisory committee to 11Counsel the Presidents Committee on Uranium.n17 Urey agreed and the committee was established. The presidents Advisory Committee on Uranium recommended the purchase of four tons of graphite and fifty tons of uranium ox ide to be used in further research. The Army and the Navy provided $6,000 for the purchase of these materials, the first federal ex penditure in support of atomic research.18 By April 1940, it was

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known in the United States that a large section of the Kaiser Wilhelm Institute in Berlin had "been set aside for research on uranium."19 This information speeded work on the development of atomic weapons. 110 A special advisory group was called together by Briggs at the National Bureau of Standards on 15 June 1940. Work up to this time had been highly satisfactory, and Briggs sought advice on what further action should be taken by the government.20 The advisory group recommended that "experiments with amounts of uranium and carbon equal to about one-fifth to one-quarter of the amount that could be estimated as the minimum in which a chain reaction would sustain itself" be undertaken.21 Smyth quotes a memorandum resulting from this meeting: It was estimated that about $40,000 would be necessary for further measurements of the fundamental constants and that approximately $100,000 worth of metallic uranium and pure22 graphite would be needed for the intermediate experiment. Establishment of the National Defense Research Committee During 1939 and 1940, when it became evident that the United States might well be involved in World War II, scientists throughout the country had begun to consider how science might best be harnessed to support the war effort. Early in 1940, Vannevar Bush, president of Carnegie Institution, convinced the president that action needed to be taken to prepare scientists to contribute to the war effort. In June 1940, the president appointed Bush as chairman of a National Defense Research .Committee (NDRC). The new organization was to "supplement the work of the service laboratories

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111 by extending the research base and enlisting the aid of scientists. Even more important, it was to search for new opportunities to apply science to the needs of war.11 23 Bush was familiar with operating in a political and bureaucratic environment. He had served as vice-president of the Massachusetts Institute of Technology and during that time also served as chairman of NACA. He had resigned his university post to become president of the Carnegie Institution. Bush had long demonstrated a capability to serve as a bridge to the scientific community. In early 1940, Bush acted to involve the NDRC directly in atomic research. At the presidents request, he reorganized the Committee on Uranium and added to it four scientists including Harold Urey. This committee now became a subcommittee of the NDRC, reporting to Bush. Although the leaders of the research efforts on atomic en ergy were largely Europeans, none was placed on the committee for fear his membership would alienate either the military departments or Congress.24 By 1941, substantial initial progress had been made in atomic research. Briggs believed that an overall review of the program was desirable and suggested to Bush that he appoint such a committee. Bush responded to Briggs suggestion but, rather than personally appoint such a committee, requested Frank B. Jewett, president of the National Academy of Sciences, to undertake the review. Jewett agreed and appointed a committee for this purpose consisting of Arthur H. Compton of the University of Chicago, chairman, and five other distinguished scientists. The committee met in May

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112 1941 and submitted a report to Bush. This report, together with additional information supplied by Briggs, resulted in an allocation of $267,000, approved by the NDRC on 18 July 1941.25 Bush then asked the National Academy of Sciences to prepare a second report emphasizing engineering problems associated with the development of atomic weapons. As a result of this request, 0. E. Buckley of the Bell Telephone Laboratories and L. W. Chubb of the Westinghouse Electrical and Manufacturing Company were added to the committee.26 Establishment of the Office of Scientific Research and Development The NDRC had been a major step forward in securing the coop eration of the scientific community in support of the war effort. The emphasis of the committee had been on research, however, while wartime demands tended to focus on development activities. The NDRC had also been established to operate on a parallel level with government research laboratories. It became evident, particularly to Bush, that this arrangement was no longer effective in pursuing wartime R&D activities. As a result, Bush proposed and the president agreed to the establishment of an Office of Scientific Research and Development (OSRD), located within the Office for Emergency Management of the Executive Office of the President.27 OSRD was headed by Bush who reported directly to the president. The NDRC was retained; James B. Conant, who had served as president of Harvard and had worked with Bush in the establishment of the NDRC, became chairman. The NDRC reported to the OSRD but no longer assumed responsibility

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113 for atomic energy research. The Committee on Uranium was renamed the S-1 Committee and also reported to the OSRD. Although Conant was not directly responsible for atomic research, he continued to work closely with Bush on matters relating to atomic energy.28 In 1949, Bush discussed the establishment of the NDRC and the OSRD. Reflecting on the establishment of these two new organizations, Bush said: Abraham Lincoln had set up the National Academy of Sciences during the Civil War, and Woodrow Wilson had authorized the National Research Council during the First World War. Both did good work, and their histories are illustrious, but neither was given large funds or authority. In the National Defense Research Committee and the Office of Scientific Research and Development in the Second World War, scientists became full and responsible partners for the first time in the conduct of the war.29 The establishment of the OSRD and Bushs appointment as its director gave him direct access to the president and other key ad ministrative officials. In the fall of 1941, Bush met with Presi dent Roosevelt and Vice-President Wallace to review the status of atomic energy research and at this time also informed the president on discussions hel9 with the British. Smyth reports: The President agreed that it was desirable to broaden the program, to provide a different organization, to provide funds from a special source, and to effect complete interchange of information with the British. It was agreed to confine discussions of general policy to the following group: The Vice President, Secretary of War, Chief of Staff, Bush and Conant. This group was often referred to as the Top Policy Group.30 Since the beginning of research on the bomb, responsibility for all activities associated with the project had been vested in scientists. The research nature of the problems and the background of participating scientists had resulted in the program being

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114 managed through a series of committees. This type of structure was one with which the scientists were comfortable; committees were the usual technique for exchanging data and securing cooperation among scientists. The use of committees was, therefore, a logical and probably an efficient approach to the management of a project of this type, particularly during the early stages of research. The primary job initially was to coordinate the large amount of research being conducted at a number of universities located throughout the nation. As more intensive work was done on the technical problems associated with the actual production of the bomb, it became evident that the university committee structure could not sustain necessary large-scale production of fissionable material. Isotope separation would require large production plants, and the universities and the OSRD lacked background and experience in large industrial operations. Bush recognized these problems and, in the fall of 1941, recruited Eger V. Murphree, a chemical engineer from the Standard Oil Development Company, to bcome chief of a newly created Planning Board.31 In addition to facilities planning, one of the major responsibilities of the new board was the procurement of raw materials including uranium oxide. It was obvious to Bush and others that the construction of these large production facilities would require that some outside group assume responsibility for the design, construction, and opera tion of the facilities. Hewlett and Anderson state:

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In fact, Bush and Conant had assumed that they would have to transfer the gigantic task of design and construction to the Army. Bush had mentioned this possibility to Roosevelt in 1941 and had included it in his March 9 report.32 l15 Roosevelt concurred in Bush's recommendations and indicated that he had no objection to such a move if. Bush were satisfied that adequate provisions were made by the Army to assure secrecy. Follow; ng the president's approva 1 Bush contacted .the Army, and Genera 1 George C. Marshall, chief of staff of the Army, appointed Brigadier General Wilhelm D. Styer, chief of staff of the newly created Ser vices of Supply, as the Army's contact on the project. The Army lo cated its headquarters for work on the bomb in New York City and named its office responsible for atomic research, the Manhattan Engineering District (NED). This name for the Army's atomic activities was retained the As soon as the OSRD began working with the Army, questions immediately arose in terms of availability of critical materials needed to construct the atomic production plants. The Army, acutely aware of the shortage of critical materials necessary for national defense production, suggested that only a single production plant be constructed. Conant strongly argued that each of four possible methods of producing U-235 be pursued: gaseous diffusion, centrifug ing, electromagnetic separation, and thermal diffusion.34 At this time, it was unclear if any of these methods would be successful, but Conant believed that all four approaches should be pursued to guarantee the success of the project. As no actual decision was to be implemented at that time, the plan was adopted. Conant believed

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116 that when the time came to construct facilities all four approaches should be pursued, and he held fast to this view. In addition to the use of Uranium 235 in bombs, plutonium (U-239) could also be utilized in their construction. The only known method of producing plutonium was through the use of very large reactors. Ultimately, both materials were produced and used for atomic weapons. In spite of the involvement of the Army, Bush still believed that overall management of the project should continue to be vested in the OSRD. Under arrangements worked out with the Army, the OSRD continued to assume responsibility for pilot-plant studies while the Army was assigned responsibility for engineering development and plant design. This division of responsibility proved both frustrating for the Army and basically unworkable.35 Eventually, the Army assumed responsibility for the design and construction of all major production facilities. Enter General Groves On 17 September 1942, the Secretary of War announced the as signment of Brigadier General Leslie R. Groves of the Corps of Engineers to be in charge of all activities relating to the building of the bomb.36 Groves was a career army officer with an excellent reputation. He had managed a number of major construction projects for the Corps of Engineers, including construction of the Pentagon. His appointment had been delayed a few months until his promotion to brigadier general. Moving quickly to establish his position within the-project, one of his first steps was to arrange to have the highest materials prforities assigned to the atomic energy

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117 enterprise. He next determined that both the production of Uranium 235 and plutonium should be undertaken. Groves 11Wanted the dual as surance, even though this meant two major production centers.u37 The two sites selected were a large area of land located in Tennessee which became known as the 11Clinton Works11 and a second large section of land in the state of Washington which became known as the 11Hanford Works.11 The requirements for both sites were simi-lar: isolated areas and very large amounts of electricity. The Tennessee site could rely on the TVA for electrical power; the Washington site could secure large quantities of power from the Grand Coulee and Bonneville power dams. In addition, the Hanford Works would require very large quantities of clean, cool water; its loca tion on the Columbia River provided this resource.38 Each of the processes to be followed in the production of fissionable material was so complex as to boggle the imagination. While a discussion of the technical problems associated with the production of these materials is unnecessary to this study, one illustration may prove useful. The gaseous diffusion plant construeted at Oak Ridge, Tennessee, involved the construction of a series of barriers, each containing a large number of very small holes. Uranium hexafluoride gas (U-235) will diffuse through these holes at a different rate than U-238. The advocates of gaseous diffusion recognized that they faced formidable obstacles. The barrier--filter might have been a better name--would need billions of holes with a diameter less than one-tenth the mean free path of a molecule, about one ten-thousandth of a millimeter.39

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113 The complexities involved in the gaseous diffusion process were of the same order as the complexities involved in the other processes which were utilized to produce fissionable material: the electromagnetic separation process and the plutonium production reactors. The extreme complexity of problems associated with the entire atomic energy project did not discourage the participants. Research continued at a number of universities throughout the country but centered at Columbia, Princeton, and the University of Chicago. The organization structure to direct research efforts continued to be a series of committees with overall supervision vested in .the OSRD. Groves focused his attention on the problems associated with the construction of necessary production facilities. Recognizing that neither the university community nor the Army had the necessary experience to design and build large production facilities, Groves immediately moved to bring an industrial contractor into the program. He had worked with the Du Pont company in the construction of military explosives plants and believed that Du Pont would be an excellent choice. 4 0 Senior officials of Du Pont were contacted by Groves, and after some discussion Du Pont agreed to assume this res-ponsibility. By 10 November 1942, the Du Pont participation was practically assured, and Groves and Conant: were ready to decide on the uranium 235 separation processes. They agreed to bypass the electromagnetic pilot plant in favor of the immediate development of at least a portion of the full-scale plant. They had already agreed to a similar approach on gaseous diffusion.41 Although the Du Pont company had no experience in the field of atomic it was a well-respected company with an extensive

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background in large-scale process operations.42 Its ability to build and operate these highly technical facilities was accepted with a high degree of confidence by Groves. 119 With the addition of Du Pont to the 11team,11 the organiza tional arrangements which would be utilized throughout the project were in place. The scientific community, s'till working through a series of committees, and primarily university-based, would perform the necessary scientific work; industry would build and operate the necessary plants; the government, represented by Groves and MED, would be primarily responsible for funding the project and for the conduct of various administrative activities. These arrangements were logical at the time, given the lack of competence on the part of government participants in the nuclear field. The government lacked the scientific skills and the industrial experience to carry out directly either of these two critical elements of the program. As a result, the government was cast in the role of administrative overseer of the project and provided funds to support the activities of the other two partners in the enterprise. Production Facilities Constructed at Oak Ridge and Hanford The facilities constructed at Hanford and Oak Ridge included the most complex production facilities ever designed and built to that date. At Oak Ridge, the following facilities were constructed: 1. an electromagnetic separations plant which produced the first shipment of weapons-grade U-235 for the Los Alamos weapons center,

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120 2. a thermal diffusion plant which was immediately closed at the end of the war, and 3. a gaseous diffusion plant which proved to be a primary method of producing fissionable material.43 In addition to the facilities constructed at Oak Ridge to produce fissionable material, the very large production reactors built at the Hanford Works were highly successful in the production of plutonium. Establishment of the Weapons Laboratory Originally, responsibility for studies associated with the actual construction of a bomb had been assigned to the Metallurgi cal Laboratory of the University of Chicago. In the summer of 1942, J. Robert Oppenheimer of the University of California at Berkeley met with a small group to consider further research necessary to construct the bomb. When Groves became the head of MED in 1942, 11it was decided to expand the work considerably, and, at the earliest possible time, to set up a separate laboratory.n44 The site selected was located at Los Alamos, New Mexico, thirty miles from Santa Fe, primarily because of its isolated location and because Oppenheimer, who was to become director of the Weapons Laboratory, was familiar with and like the desert area.45 Oppenheimer was named director of the new laboratory and arrived at the site in March 1943. Staff was gathered by Oppenheimer from a number of universities including Princeton, Chicago, California, Wisconsin, and Minnesota.46

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121 Hewlett and Anderson report that the initial plan envisioned the laboratory to be staffed with only military personnel. To achieve this, civilian scientists and technicians would be given commissions as army officers. Opposition from the scientists, however, resulted in this idea being dropped, and the laboratory was established and maintained as a civilian laboratory. The role of the Army was "to maintain suitable living conditions for civilian per sonnel, prevent trespassing, and maintain what internal secrecy pre cautions Oppenheimer considered necessary."47 The constr-uction of the weapons laboratory was pushed for-ward on a priority basis, and personnel and facilities were soon in place to conduct the actual research necessary to design and build the first atomic bomb. Smyth reports that the weapons laboratory: improved the theoretical treatment of design and perform-ance problems, refined and extended the measurements of the nuclear constants involved, developed methods of purifying the materials to be used, and, finally, designed and constructed operable atomic bombs.48 The First Nuclear Explosion The dual activities which would determine if an atomic bomb could be built went forward in tandem. Scientists at the production facilities at Oak Ridge and Hanford were working feverishly to produce the necessary amount of material to make a bomb while their counterparts at the Los Alamos laboratory were proceeding with studies on the actual design and construction of the bomb. In the spring of 1945, adequate material was available and scientists rushed to complete their plans for the first atomic bomb. On 16 July 1945, the first atomic bomb in the history of the world was

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122 exploded at Alamogordo, New Mexico.49 This bomb, code-named Trinity, met or exceeded the expectations of the scientists who had developed it. An immediate concern to many of the scientists present was the consequences of the development of this terrible weapon of des truction and how to control its use. At a later time, atomic scien-tists would become politically active to try to achieve this objec-tive. While they were unable to achieve a system of international control, they did strongly influence how the United States was to carry out atomic research. The news of the successful test of the bomb was immediately reported to President Truman and Secretary of War Henry Stimson. After some soul-searching, the president made his decision to drop the bomb on Japan in order to forestall the planned invasion of the Japanese home islands by American forces. On 6 August 1945, the bomb was dropped on Hiroshima, Japan, with devastating effect: 60,000 were instantly killed and another 60,000 were injured. The devastation was almost beyond what American scientists creating this weapon could have imagined. The failure of the Japanese to surrender resulted in the second use of the bomb. On 9 August 1945, Nagasaki was bombed and the Japanese government surrendered. The objective of producing an atomic bomb of tremendous destructive ca0 pacity first proposed in Einstein's letter to President Roosevelt in 1939 had been achieved. The development of the atomic bomb was the product of a partnership which included the United States government, the

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123 scientific community, and American industry. These arrangements re-sulted from the urgency created by the war, the highly complex nature of the project, and the lack of knowledge and experience in the atomic area of the governments agent in the undertaking, the Corps of Engineers. The mode of operation of MED was to have a significant impact on its civilian successor, AEC. The Army had operated on the concept that the role of the government would be principally ministerial. Would the agency which ultimately succeeded MED, AEC, adopt a similar method of operation? Allardice and Trapnell summarize the arrangements developed by MED, as follows: All of the wartime work, that is, the production and development operations, was done under contract with academic or industrial organizations. Only the over-all policy guidance and direction, the maintenance of security, and the acquisition and handling of special nuclear materials were kept directly in government hands.SO The Postwar Period--Civilian versus Military Control With the conclusion of World War II, a question immediately developed as to the future of atomic research. Although some of the atomic scientists involved in the development of the bomb had hoped that control of nuclear weapons could be achieved by some type of international organization, it soon became apparent that this would not happen. The rapidly developing distrust between the So viet Union and the United States made international control of atomic energy impossible. This impossibility made it necessary for Congress to consider other alternatives in determining how peacetime operation of

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124 the two-billion-dollar atomic energy enterprise should be managed. The immediate question was whether these facilities and personnel should continue as a part of the Army or under civilian contro1. 5 l There was no question of the Army's view of the future of atomic energy; the Army believed that military control of the atom was es sential and proceeded on that basis. The Army drafted a bill to continue control of atomic energy and, working with the military affairs committees of both houses of Congress, pushed for passage of this legislation. The bill was introduced by Senator Edwin C. Johnson of Colorado and Congressman Andrew May of Kentucky. Supporters of the Army in Congress hoped to pass the May-Johnson bill as quickly as possible and to settle the argument of military as opposed to civilian control of the .atom before those with oppoSing views could mobilize to support their position. Attempts at speedy passage of the May-Johnson bill resulted in quick and strong opposi tion from the scientists who had developed the bomb and were opposed to peacetime military control of atomic research.52 Rapid mobilization of scientists throughout the country in opposition to military control of the atomic energy program resulted in greater deliberation by Congress than might otherwise have been the case. The May-Johnson bill was not speedily passed as its auth ors had hoped, and the entire question of military versus civilian control of atomic energy was debated in detail by Congress. Following lengthy congressional debate, the McMahon Act es tablishing AEC was passed by Congress. The act, named for its author, Senator Brien McMahon of Connecticut, provided that the new civilian agency would be headed by a five-man, full-time civilian

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125 commission.53 Commissioners would be nominated by the president and confirmed by the Senate. The new act made international cooperation extremely difficult and stressed security measures requiring that all who worked for AEC or its contractors be investigated by the FBI prior to employment. The victory for civilian control of the atom was to have a parallel twelve years later when .congress was faced with a similar decision in regard to space research and development. At that time, Congress, however, elected to split responsibility between the military and the new civilian agency, NASA. President Truman nominated the five individuals who were to become the first AEC commissioners; rather surprisingly, four were Republicans and one, the proposed chairman, listed as an In deper.dent. The chairman, David Lilienthal,5 4 had served as the head of the Tennessee Valley Authority and was considered by many conser vative members of Congress to be a socialist who had favored public power and would probably favor further expansion of the role of government in the field of atomic energy. 5 5 The transfer of MED facilities and personnel to the new AEC took place on 1 January 1947. The Atomic Energy Act provided that the government was to cdrry out 11a program of federally conducted research and development.1156 Definition of 11federally conducted11 was not contained in the act, and the commission quickly elected to continue in effect the contracting policies originally established by the Army. Harold Orlans, writing in Contracting for Atoms, indicated that this policy represented:

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continuation by the peacetime commission of the basic wartime policy of General Leslie Groves and the Manhattan Project, that contracting with a few of the nation's largest and best qual ified companies and universities was the most expeditious and way to develop, design, and produce atomic bombs. In effect, the new civilian commission swallowed in one 126 very large gulp the entire set of management arrangements which had been initially established by the Army. The reasons for this deci sion are unclear and available documentation sheds little light on the basis and rationale of this critically important decision. The decision itself is somewhat surprising given Lilienthal's background and previous experience as head of TVA. One of the purposes of TVA had been to serve as a "yardstick11 in order to establish the costs of generating electric power. The concept had been that direct government construction and opera tion of electrical generating and power distribution systems would provide information on the costs incurred which would be useful as one tool in regulating the electric utility industry. Why was Lilienthal so quick to continue a policy of contracting out practically every aspect of AEC operations? One possible explanation may lie in the circumstances surrounding Lilienthal's confirmation by the Senate. He had been strongly opposed by some conservative members of Congress who considered him to be a left-wing radical who favored expansion of the government's role in the economy. While his confirmation was probably never in doubt, the strong opposition Lilienthal had faced may have influenced his position regarding contracting of AEC activities. He may have decided that a continuation of the Army's policy of using private

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127 industry and the universities was a more prudent course of action than a reconsideration of the entire management scheme inherited from MED. To open the question of government operation of AEC facilities would undoubtedly have created a number of major problems. Orlans notes: 11government operation of major installations was never favored by a majority of the commission or the Congress ... SB He sug gests that the reason for opposition to government operation of AEC facilities sprang from several sources:. scientists opposed such a step because they felt that government operation would result in a bureaucratic control of their activities, which they opposed. Industry also opposed government operations believing that private organi zations could operate AEC facilities more effectively. The motives of both groups are subject to some question: scientists working on the program would not only enjoy more freedom and prestige as employees of universities but would also enjoy higher salaries; industry would be able to show a profit on the operation of AEC facilities and, more importantly, enjoy a competitive advantage should atomic energy prove to have useful civilian applications. These assumptions, however, may represent a cynical assessment of the motives of the scientists and the industrial organiza tions involved in the atomic energy program. Many who took a posi tion on the continuation of the contracting form of organization may have simply believed that this approach had worked well forMED and, therefore, should not be changed by AEC. Hewlett and Duncan, in their official history of AEC from 1947 to 1952, point out that MED had practiced two management concepts: decentralization and

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128 contractor operation of all facilities. In reviewing the commis sions decision to continue the practice of contracting, they indicate: Even before the Commissioners assumed responsibility on January 1, they had decided to retain both principles. For one thing, they had enough problems without trying to modify the fundamental structure of the enterprise. Secondly, and more important, Lilienthal and his col leagues accepted decentralization and tion as good practices in public administration. No detailed explanation of why the commission elected to continue MEDs contracting policies in force exists in writings this period nor is there tb support the conclusion that contracting government operations was considered to be a particularly good administrative practice in the minds of the commissioners. Lilienthals journals covering this period do not discuss the deci sion made by AEC to contract practically all of its research and operation activities.6 For whatever reasons, the commission elected to continue MED management practices intact; and the .. partnership11 which had existed among the government, universities, and industry was to continue unchanged throughout the life of AEC. Government/Contractor Relationships under AEC Although the government had decided to use contractors to operate all AEC facilities, this decision did not delineate the role I of the government. Agencies using contractors to carry out opera tions may play a very critical role in establishing policy and pro-grams, reviewing and evaluating contractor performance, making technical trade-offs, and in overall management of programs. MED had not viewed the role of the government in this light and had not

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129 developed the capability necessary to provide the type of technical supervision of contractor activities this relationship would require. How would AEC view its role and to what degree would AEC actually supervise contractor operations? Orlans raises this question in his study of AEC contracting policies: More important than costs is the matter of program, for surely one of the most important questions that can be asked about the AECs contractual operations is: Have they been directed to public or private objectives? Have ub c or rivate interests ultimatel been in control? 1talics mine. Orlans finds that no simple answer can be given. A review of the Naval Reactors Program administered at that time by Admiral Hyman Rickover would reveal that the Rickover staff, who represented both AEC and the Navy on this program, closely supervised contractor op erations.62 In other areas, however, it is far less clear that AEC had on the government rolls sufficient technical competence to su pervise contractor activities. Orlans points out that in theory AEC exercised program direction, surveillance, and control over the operations of its contractors. He states, however, "In practice, program direction of major R&D contractors has been more sporadic than this statement might lead one to expect." Quoting a scientist at one of AEcs weapons laboratories, Orlans continues: "You try to keep them (the DOD and AEC) abreast of what youre doing and (yet) most of the time they dont realize what youre doing for six or nine months." 6 3 Orlans comments suggest that, while AEC did effectively manage the naval reactor program, in other areas the.degree of

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.130 supervision of contractor operation is open to question. He coneludes: While the AEC has increased its administrative and cost controls and sheer paperwork in recent years to a point that many contractors consider excessive, it has generally not held a tight rein over the technical aspects of R&D programs. The principal exceptions have been the naval reactors and space propulsion programs, but the fact that these have been exceptions is suggested by the frequency with which the Joint Committee has to them as models other AEC programs should emulate. The AEC bureaucracy viewed its operations in a different light from outside observers, such as Orlans, who have studied AEC operations. One of the best statements of AEC operations from the commission point of view appears in the hearings conducted by the Subcommittee of the Committee on Government Operations of the House of Representatives on Systems Development and Management.65 These hearings were an attempt by the subcommittee to secure the opinions of the military departments, AEC, and NASA on the recommendations of a special executive branch study of government contracting for .research and development. The executive branch committee, appoint-ed by President Kennedy, was chaired by the director of the Bureau of the Budget, David E. Bell, and included the Secretary of Defense, RobertS. McNamara; the chairman of AEC, Glenn T. Seaborg; the ad ministrator of NASA, James E. Webb; the director of the National Science Foundation, Alan T. Waterman, thespecial assistant to the president for science and technology, Jerome B. Wiesner; and the chairman of the Civil Service Commission, John W. Macy, Jr. The hearings of the subcommittee were designed to secure the reactions of the executive departments and agencies to the Bell Committee report and to provide Congress with necessary information

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131 and understanding of the entire field of R&D contracting. In testifying before the subcommittee, officials of AEC demonstrated a different understanding of the role of AEC in supervising contractors than had been suggested by Orlans and others. Seaberg identified AEC responsibilities, as follows: Overall management of research and development programs is accomplished by AEC employees, including the development or approval of long-range program plans; budgeting; establishment of basic policies and program objectives; overall program management and direction; establishment of cost ceilings; and continuing evaluation of program execution.66 Seaberg goes on to delineate in greater detail the responsibilities of AEC in carrying out the atomic energy program. 1. What needs to be done and on what time schedule (long and planning); 2. How much of the necessary work should be sponsored by the government (budgeting); 3. Who shall perform the government-sponsored work (that is, by direct government activities or by contracting out and, if so, to whom); 4. The conditions or standards under which the work will be performed (this is, the standards necessary to protect the public health and safety); and 5. Continuing evaluation of program execution including both the effectiveness and the economy of contractor efforts during the course of the contract as well as evaluation of results ach ieved.67 Clearly, AEcs mode of operation differed greatly from that observed by Orlans and other students of AEC management. It would

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132 come as something of a shock to that group that AEC made determina tions on whether work should be performed directly by the government or contracted out. Since practically no operations of significance were carried out directly by AEC, it would appear that all such policy questions, after due deliberation, had been resolved in favor of contracting out. Seaborg, in further discussing the commissions policy of contracting out, does identify some problems: 11Valuable experience and technological advances may be initially in the hands of a few contractors.11 However, the chairman did not see this as a significant problem because the contractors involved were frequently university contractors and at any rate, 11most AEC research and development is published.n68 The fact that advanced information was in the hands of contractors suggests that supervision of these same contractors by the government, without immediate access to and familiarity with this information, was impossible. The fact that the contractors con cerned were university contractors appeared, in the minds of AEC people, to remove the curse from the fact that the government was not in a position to manage its own programs effectively. By the same token, the fact that ultimately information was published did not help the government in the ongoing process of technically supervising its contractors. Seaberg discusses the advantages in the use of contractors such as the greater flexibility contractors have in attracting and compensating employees and in adjusting their organizations to meet changing conditions. Undoubtedly, the ability to pay scientists

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133 competitive rates above that paid to government scientists is a very real advantage of contracting. Whether or not industrial bureaucracy is more flexible than government bureaucracy in changing organizations to meet changed circumstances is a position subject to considerably more argument. There are no inherent reasons to believe this is the case and there are no known studies which sug gest that large industrial bureaucracies, particularly in a noncompetitive environment such as the AEC contractors, are more flexible or innovative than are similar government organizations. Seaberg indicates that basic AEC program and technical de cisions were made within AEC headquarters. He states: "In the basic and much of the applied research programs, including the weapons program, field offices essentially have no responsibility for technical performance and evaluation.1169 Seaberg suggests that basic program decisions of this type were made by the very small staff located at AEcs headquarters in Washington. In outlining this mode of operation, Seaberg notes, however, that in the reactor program, field offices responsibilties extend to 11management of the techni cal performance and participation in evaluation of resultS.1170 While Seaberg is not specific about the reactor programs he is referring to, we have already noted that Rickovers administration of the naval reactors program did indeed involve a real government supervi sion of contractor activity. From this discussion one can conclude that, while AEC did not have a single unified approach to contractor supervision, for the most part AEC did not have the capability 11in house" to manage

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134 contractor operations effectively. Exceptions to this policy were primarily in the field of reactor development and in the joint program that in the 1960s existed with NASA to produce space power. Summary and Concl usi.ons The development of the atomic bomb represented up to that time the largest and most costly program ever undertaken by man and involved both scientific research and extremely complex technology development. The total cost of the program from its inception through World War II was in excess of two billion dollars. The initiative for developing an atomic weapon arose with scientists who recognized the devastating potential of an atomic bomb. These scientists, many of whom were European refugees, convinced the president that such a project was both feasible and necessary. The fact that German scientists were also working on the development of the bomb made it imperative that the United States pursue nuclear research. Early scientific efforts were, therefore, primarily the con cern of scientists working in university laboratories throughout the country. The means used to coodinate this research effort was a series of committees, at first under the supervision of the NDRC and later reporting to the OSRD. The use of committees to manage research efforts was a normal procedure with scientists who were comfortable with committee arrangements for coordinating information exchange and scientific projects. As the work of the scientists pro gressed, it became evident that large full-scale production facilities would be required in order to produce the necessary amount of

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135 fissionable material required for a bomb. The Army was brought into the program with its initial job the creation of necessary pro duction facilities. The Army established a special office, MED, located initially in New York City to carry out its responsibilities for atomic research. Groves of the Corps of Engineers was named to head MED and moved to bring major industrial contractors into the program. The Corps of Engineers, lacking competence in both industrial production and nuclear physics, contracted with the Du Pont company for the construction of atomic energy production plants at Oak Ridge, Tennessee, and Hanford, Washington. These plants were responsible for the production of weapons-grade uranium-235 and plutonium and were successful in achieving these objectives. During the time these vastly complex plants were being constructed, MED also developed a scientific weapons laboratory at Los Alamos, New Mexico. This facility was responsible for the actual design and construction of the bomb and was developed under the su pervision of the University of California. The management scheme.developed by MED therefore represented what might be termed a partnership with three active partners. These partners and their responsibilities included: 1. the universities, primarily responsible for scientific research and the staffing and operations of the weapons laboratory; 2. industry, responsible for the design, construction, and operation of production facilities; and 3. the government, responsible for funding the other two

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136 partners and for carrying out necessary administrative arrangements including security, auditing, and housekeeping activities. In 1945, the atomic bomb was used at Hiroshima and Nagasaki with devastating results. The use of the bomb undoubtedly shortened the war and made invasion of the Japanese home islands unnec essary. In the immediate postwar period, the future of atomic energy was debated and, although the military sought to retain control of atomic energy, Congress rejected this approach and established control in a civilian agency, AEC. The commission had an early decision to face: to continue the contracting arrangements of MED or to exercise greater direct government control over atomic energy. The commission opted to continue in place the entire management philosophy of MED with the result that all operations of AEC were contracted. Havingmade this basic decision, a question existed as to whether AEC would seek to exercise greater supervision and control over its contractors than had MED. In practice, AEC did not adopt a uniform policy in this regard; the degree of supervision and control exercised over contractors became more a product of the personalities of major program directors than a conscious government policy. In the case of the naval reactor program, Rickover exer cised strong direction over all contractor activities; in other areas, AEC exercised a limited degree of control over the work of its contractors. For the most part, the close supervision of contractor activities by Rickover was an exception to the normal AEC method of operation.

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137 The history of the development of atomic energy is important to an understanding of the decision NASA made on the use of contrac tors in carrying out the space program. AEC was the first modern R&D program and it strongly influenced other R&D programs in the postwar period. Early NASA decision makers were, therefore, particularly interested in the AEC mode of operation and its applicability to the space program. While the decisions made by NASA differed from those made by AEC, they did provide an important model for NASA to review and consider. Chapter IX will discuss NASAs review of AEcs contracting policies and the reasons why NASA rejected the AEC mode of operation in favor of a greater degree of government control over contractor operations.

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NOTES-CHAPTER V 1David E. Lilienthal, Change, Hope and the Bomb (Princeton, N.J.: Princeton University Press, 1963), p. 9. 2For biographical information, see leopold Infeld, Albert Einstein--His Work and Its Influence on Our World (New York: Charles Scribner's Sons, 1950). 3For biographical information, see Enrico Fermi, Collected Papers of Enrico Fermi, ed. Emilio Segre et al (Chicago: Univer Slty of Ch1cago Press, 1962). 4For biographical information, see Leo Szilard, The Collected Works of Leo Szilard, ed. Bernard T. Feld and Gertrude Weiss Szilard (Cambridge, Mass.: MIT Press, 1972). 5For biographical information, see Stanley A. Blumberg and Gwinn Owen, Ener and Conflict--The Life and Times of Edward Teller (New York: G. P. Putnams Sons, 1976 6Henry DeWolf Smyth, Atomic Energy for Military Purposes, the Official Report on the Development of the Atomic Bomb under the Ausices of the United States Government, 1940-1945 {Princeton, N.J.: Princeton University Press, 1945 p. 45. 7For biographical information, see Ruth Moore, Niels Bohr-The Man, His Science and the World They Changed (New York: Alfred A. Knopf, 1966). 8 For biographical information, see Pierre Biquard, Frederic Joliet-Curie--The Man and His Theories (New York: Paul S. Erikkson, Inc., 1966. 9 smyth, Atomic Energy for Military Purposes, p. 45. 10Ibid. Gregory Breit at that time was a professor of physics at the University of Wisconsin.

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139 11u.s., Atomic Energy Commission, A History of the United States Atomic Energy Commission, vol. 1, 1939-1946: The New World, by Richard G. Hewlett and Oscar E. Anderson, Jr. (Washington, D.C.: Government Printing Office, 1972), p. 15. George Pegram at that time was chairman of the Physics Department at Columbia University. 12Ibid. 13Ralph E. Lapp, The New Priesthood (New York: Harper and Row, 1965), p. 46. 14Hewlett and Anderson, The New World, p. 17. 15Ibid., p. 19. 16Ibid., p. 20. l7 Ibid., p. 24. 18smyth, Atomic Energy for Military Purposes, pp. 47-48. "19 Ibid., p. 48. 20Ibid. The committee was composed of Briggs, Urey, M. A. Tuve, Wigner, Breit, Fermi, Szilard, and Pegram. 21Ibid., p. 49. 22Ibid. 23Hewlett and Anderson, The New World, p. 25. 24Ibid. 25smyth, Atomic Energy for Military Purposes, p. 51. 26Ibid., pp. 51-52. 27Hewlett and Anderson, The New World, p. 41. 28Ibid.

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140 29vannevar Bush, Modern Arms and Free Men (New York: Simon and Schuster, 1949), p. 6. 30smyth, Atomic Energy for Military Purposes, pp. 53-54. 31The National Academy of Science had recommended the estab lishment of a planning board to make engineering studies necessary for future large-scale production efforts. Hewlett and Anderson, The New World, pp. 49-51. 32Ibid., p. 71. 33Ibid., pp. 72, 81. 34corbin Allardice and Edward R. Trapnell, The Atomic Energy Commission (New York: Praeger Publishers, 1974), p. 12. 35Hewlett and Anderson, The New World, p. 75. 36For biographical information, see Leslie R. Groves, Now It Can Be Told, The Story of the Manhattan Project {New York: Harper and Brothers, 1962). 37Allardice and Trapnell, The Atomic Energy Commission, p. 15. 38Hewlett and Anderson, The New World, pp. 130, 189. 39Ibid., p. 31. 40Ibid., p. 105. pp. 107-108. 42E. I. Du Pont de Nemours & Co. The Autobiography of an American Enterprise (Wilmington, Del.: E. I. DuPont de Nemours & Co., 1952). 43Allardice and Trapnell, The Atomic Energy Commission, p. 17. 44smyth, Atomic Energy for Military Purposes, p. 207. 45For biographical information, see Robert Oppenheimer, Robert Oppenheimer--Letters and Recollections, ed. Alice Kimball Smith and C. Charles Weiner (Cambridge, Mass.: Harvard University Press, 1980).

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46smyth, Atomic Energy for Military Purposes, p. 207. 47Hewlett and Anderson, The New World, p. 232. 141 48smyth, Atomic Energy for Military Purposes, p. 222. 49Hewlett and Anderson, The New World, pp. 378-379. 50Allardice and Trapnell, The Atomic Energy Commission, p. 19. 51Harold P. Green and Alan Rosenthal, Government of the Atom (New York: Atherton Press, 1963), p. 2. 52Allardice and Trapnell, The Atomic Energy Commission,.p. 27. 53H. Peter Metzger, The Atomic Establishment (New York: Simon and Schuster, 1972), p. 19. 54For biographical information, see David E. Lilienthal, The Journals of David E. Lilienthal, val. 1: The TVA Years 1939-1945---and val. 2: The Atomic Energy Years 1945-1950 (New York: Harper and Row, 1964). 55Allardice and Trapnell, The Atomic Energy Commission, p. 33. 56Atomic Energy Act, Statutes at 60, sec. 755, (1946), U.S. Code, val. 42, sees; 1801-1819 (1976). 57Harold Orlans, Contracting for Atoms (Washington, D.C.: The Brookings Institution, 1967), p. 58Ibid., p. 5. 59u.s., Atomic Energy Commission, A History of the United States Atomic Energy Commission, val. 2, 1947-1952: Atomic Shield, by Richard G. Hewlett and Francis Duncan (Washington, D.C.: Government Printing Office, 1972), p. 19. 60Lilienthal, Atomic Energy Years. 61orlans, Contracting for Atoms, p. 133. 62For biographical information, see Norman Palmar and Thomas B. Allen, Rickover (New York: Simon and Schuster, 1982);

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142 63orlans, Contracting for Atoms, p. 137. 64Ibid., p. 139. 65u.s., Congress, House, Committee on Government Operations, Systems Development and Management (Part 5), Hearings before a subcommittee of the House Committee on Government Operations, 87th Gong., 2d sess., 1962, pp. 1643-1694. 66Ibid., p. 1645. 67Ibid. 68Ibid. 69Ibid., p. 1648. 70Ibid.

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Introduction CHAPTER VI THE ARMY MISSILE PROGRAM THE ARSENAL CONCEPT The development of the atomic bomb by MED resulted in a unique partnership among the universities, private industry, and the government. This approach to the management of a major R&D program was the product of a set of special circumstances asso ciated with the manner in which the project came into being and the background of the principal contributors to the project. Similarly, the development of the Armys approach to the management of major R&D programs was a product of the history of the Army in the conduct of its programs and the experience of German rocket scientists who became the Armys primary technical experts in its ballistic missile program. Unlike the experience of those developing atomic energy, the Army had a long history of the development and manufacture of weapons. Weapons had long been developed in government arsenals, relying on civil service employees for both the conduct of neces sary R&D and the actual manufacture of weapons. In the closing days of World War II, in an ingenious scheme, the Army captured German rocket parts and equipment and the German scientists who had developed the V-1 and V-2 rockets. These scientists were to

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.144 become the Army1s major technical competence in developing ballistic missiles. Rocket development in Germany was the product of two primary elements: first, a general interest during the late 1920s and early 1930s in the development of rockets for the propulsion of vehicles, possible space travel, and similar purposes; and second, the German military who saw rocket development as a means of avoid ing the limitations imposed on a defeated Germany by the Treaty of Versa i 1l es. The combination of the Army1s reliance on arsenals for weapons development and the use of German scientists who also came from an environment of government laboratory operations meant that the Army, unlike the Air Force or the Atomic Energy Commission, would build its missile capability based on in-house government personnel working in government-owned laboratories. The Early History of Rocket Development Utilizing rockets in warfare is an idea which goes back hundreds of years. The Chinese, having developed gunpowder during the first or second century, A.D., eventually were to use it to propel missiles. Such missiles were batteries of arrows, propelled by powder, in use by the tenth century.1 One of the first uses of rockets in the West occurred in the early 1800s when Sir William Congreve began his development of rockets for the English Army. He started his work in 1801 arid the rockets he developed were used at Copenhagen, Bologna, and the Potomac River. By 1806, over 13,000 rockets had been built by Congreve,

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145 which were fifteen.feet in length, weighed forty-two pounds, and were used at ranges of four to five thousand yards.2 The British use of rockets against American forces in 1812 was memorialized in Francis Scott Key's reference in the national anthem.of the United States to the 11rocket's red glare11 in the shelling of Fort McHenry by the British.3 The modern era of rocketry began in the later 1800s when a Russian, Constantin Eduardovitch Tsiolkowsky, proposed the use of liquid propellants to provide greater thrust than could be achieved by using gunpowder.4 In the United States, Robert H. Goddard began his rocket research at the end of World War I and continued the development of rockets until his death in 1945. Goddard, a quiet, unassuming scientist, worked for many years in the development of rockets, but his withdrawn personality resulted in a failure to ach ieve the fame and recognition that came to later rocket pioneers. In 1919, Goddard published the results of his early work under the title, A Method of Reaching Extreme Altitudes, which was to influence strongly the work of rocket scientists throughout the world. 5 In the postwar period of the 1920s, strong interest existed in Germany in the development of rockets. This interest, which had actually started prior to the war, was vastly accelerated after Germany's defeat and was based on two factors: 1. The Germans had been the leaders in the development of technology. Their commitment to science and engineering could be traced back to the nineteenth century. Rockets represented a new and exciting field of technology which quite naturally appealed to German scientists and engineers and, in turn, had popular appeal, and

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146 2. The Germans had been precluded by the Treaty of Versailles from the development of long-range weapons. Bergaust reports, 11Rocketry offered an approach to a long-range weapon unrestricted by the Treaty of Versa i 11 es whose authors had no thought of rocket development at the time the Treaty was drawn up.116 These reasons tended to spur interest in rockets in Germany, and that nation became a world leader in the development of this new means of propulsion. Prior to World War I, Bergaust indicates that 11Mueller, a German pyrotechnic maufacturer, had sent his powder rockets to vertical altitudes of nearly a mile.117 Although the French during World War I did make use of small rockets mounted on Farman and Newport fighter planes as a means of attacking German zeppelins, little rocket research and development took place. The leading German rocket scientist following World War I was Hermann Oberth. In 1923, while still a student, Oberth published With Rockets into Interplanetary Space, which spurred interest in postwar Germany in rocket research and applications. 8 Popular interest in rocketry in the Germany of the 1920s was demonstrated by the formation of several rocket societies, the largest and best known of which was the 11Verein fur Rauschiffahrt11 (Society for Space Travel) formed on 5 July 1927 at Breslau. The first president of the new society was Oberth. The society grew and, by 1929, could boast 870 members, one of whom was to achieve fame as the leading rocket scientist in the world, Wernher von Braun. At that time, von Braun was a nineteen-year-old student. The Society was known by its initials, VfR.

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147 In addition to the VfR, several other rocket societies were later formed: the Rocket Study Society founded in Frankfurt in 1928, the Society for Rocket Research formed in 1931, and the Society for Space Research established in 1937. These societies, made up primarily of amateurs interested in the concept of rocketry and space travel, demonstrated the continuing widespread interest of the German public in rocket research. These early groups were primarily interested in rockets for non-military uses, particularly in the possibility of space trave1. 9 The concept of using rockets for space flight was only one of several areas being explored in Germany. In 1928, Max Valier aroused public interest in rocketry by developing sleds and automobiles powered by powder rockets. Valier also 11Visualized and des cribed rocket planes and space ships.1110 During this same period, Fritz von Opel developed a rocket car using twenty-four solid rockets which speeds of 120-140 miles per hour. While interest in rockets was great, the use of powder as a propellant was severely limiting; greater thrust was required than could be achieved through the use of powder. Tsiolkowsky had proposed the use of liquid propellants to secure higher thrust at the turn of the century, but by the late 1920s no one had successfully developed liquid-powered engines. In spite of these limitations, public interest in rocketry remained at high level and was further stimulated by the release of a film in 1930, entitled 11The Girl in the Moon.11 Oberth served as the technical consultant to the company producing the movie and, as a publicity stunt, attempted to

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143 launch a liquid rocket of his own the night of the movie premiere.11 Unfortunately, the lack of adequate time and money prevented the development of the rocket. A key figure in the development of modern missiles and rockets was a German scientist who was later to develop the first opera tional rockets used in World War II, Wernher von Braun. He began his fascination with rockets in the late 1920s while still a young technical student. His work was stimulated by meeting Oberth early in his career. In the summer of 1930, Rudolph Nebel, an assistant to Oberth, secured the use of an abandoned German ammunition storage depot near Reinickendorf, a suburb of Berlin. He was able to se cure a free lease for the property for an indefinite period of time, and this base became the seat of German rocket research.12 Although Nebel lacked any financial support, he and a few enthusiastic volunteers continued to work on the development of rockets. Von Braun was a member of that early team of rocket scientists. Bergaust reports: In the spring of 1932, Nebels enthusiastic salesmanship brought the Raketenflugplatz to the attention of certain members of the Ordnance Department of the Reichswehr. Rocketry offered an approach to a long-range weapon unrestricted by the Treaty of Versailles.13 The representatives of the Army included Walter Dornberger, later to play a key role in the development of the V-1 and V-2 ro.ckets. Nebel signed a contract with the Army Ordnance Department con tingent upon a successful firing of the Mirak II, the rocket which he was attempting to develop. The rocket failed its tests, however, and the contract never materialized. At this time, von Braun at-tempted to persuade the Army to support rocket research and

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149 development. The Army agreed, providing the research group was pre pared to work in an Army facilitiy and to perform its work in secre cy. Nebel, not wishing to subject himself to Army supervision, rejected this proposal; however, he agreed that von Braun should take such a position if he wished to do so. Von Braun accepted the ap pointment and became a civilian employee of the Army Ordnance Department and its chief (and only) rocket scientist. Thus, on 1 October 1932, von Braun, while still a university student, became responsible for the German Army's rocket development program.1 4 Von Braun's relationships with Dornberger were to continue throughout World War II. Dornberger, writing in V-2 in 1955, re-calls his first impressions of von Braun: I had been struck during my casual visits to Reinickendorf by the energy and shrewdness with which this tall, fair, young student with the broad mass.i ve chin went to work, and by his astonishing theoretical knowledge.15 Dornberger hired von Braun and immediately arranged for him to attend Friedrick-Wilhelm University for a continuation of his studies; he received his Ph.D in physics on 16 April 1934.16 The decision by the German Ordnance Department to set up rocket research in government facilities was to establish a pattern followed by the Germans until their defeat in 1945. Why did the Germans elect to conduct rocket research "in house" rather than to contract with industry for this activity? Dornberger, writing about the development of German rockets in 1964, comments: It remains to be explained why the German Army later became its own contractor in the rocket field, doing the research and development work in a military installation without letting big private industry in on this new business. Up to 1930, all development divisions of the German.Army car ried on their developmental work, as in the United States,

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with the assistance of competent industries. Only for the development of solid and liquid-fuel rockets did the Army set up its own engineering staff and its own workshops and facilities. There were two reasons: (1) no competent industry was interested; and (2) secrecy. If the German military wanted a truly secret weapon, they had to develop it within military facill"ties where strict security regula tions could be enforced. 7 Early German Rocket Development 150 Von Braun's first efforts at rocket development involved the design and manufacture of what was designated the A-1 rocket. The first rocket built exploded within a half second of launch, but in December 1934 two A-2 rockets were successfully launched from the island of Borkum in the North Sea and reached an altitude of one and one-half miles. The successful launch of the A-2 rockets led to in-creased funding by the Army, and von Braun immediately moved to de velop a new and improved A-3 rocket. By this time, von Braun's rockets had become much more sop hi sti cate d and the A-3 11Was. to have a full-fledged, three-dimensional gyro control system, jet rudders and rudder actuators, and was to lift a considerable load of recording instruments.1118 Von Braun's rocket work received increased attention and new emphasis in 1935 when Major Klaus von Richthofen,_:who \'las in charge of aircraft development for the German Air Force, visited von Braun's rocket establishment. He requested that the rocket scientists de velop an aircraft power plant. Von Braun later reported: No obstacles were placed in the way of our accepting the job, and within a week the energetic and forward-lookin Dr. Ernst Heinkel sent a party of engineers to install our in a Heinkel 112.119

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151 The rocket airplane engine produced 2,200 pounds of thrust and was fueled with alcohol and liquid oxygen. The development of this experimental engine so impressed von Richthofen that he urged von Braun to continue his rocket research and made available five million marks for building more ample facilities. The fact that the German Air Force had recognized the importance of von Brauns work stimulated the interest of the Army Ordnance Department, the orga nization responsible for von Brauns research. Army Ordnance immediately allocated an additional six million marks to the rocket research effort. Bergaust reports: 11ln this manner von Brauns modest effort, whose yearly budget had never exceeded 80,000 marks, in the 1big time. Thenceforth million after million flowed in as needed ... 20 The substantial funds made available to von Braun resulted in the establishment of new facilities at a location more ideally suited for rocket research. After consideration, von Braun selected Peenemunde on the North Sea as a favorable location for rocket research. This location made it possible to launch rockets into the sea in order to avoid populated areas. The construction activities were carried out by the German Air Force, and the move to Peenemunde was made in April 1937. In addition to the physical plant, addi tional personnel were hired to staff the new research facility. The commanding officer of Peenemunde was Walter Dornberger who had con tinued to work closely with the rocket research program and was now a colonel in the Army.

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152 In spite of continued support from the military, Hitler personally had little initial interest in rocket development. He visited Peenemunde and met von Braun for the first time March 1939 but expressed no strong interest in the development of military rockets. 2 1 During the next two years, the German rocket scientists con tinued to develop the A-5, and approximately twenty-five were launched during this period. Work continued in perfecting control systems and developing other aspects of the rocket. The A-4 (which was actually to be developed after the A-5) was later to become the first operational rocket of the German Army and renamed the V-1. In early 1939, the Luftwaffe, busy with their own direct missions, had withdrawn their support. The job of completing the physical plant at Peenemunde was assigned to the German industrial genius, Albert Speer. Speer immediately embraced the concept of making Peenemunde the leading rocket and space research center in the world. Ordway and Sharpe report: Peenemunde was to become to rocketry, upper atmospheric research, and space exploration what Friedrichshafen had become a decade earlier, a well-organized scientific and industrial community devoted to research and development in aerostatics and the manufacture of dirigibles. Speer's plan22rs envisioned a city of some thirty thousand people. Although the grand schemes of Speer did not reach reality, the Peenemunde facility was completed by 1942 and staffed with 1,960 scientists and technicians and 3,852 support personnel. The new facility, known as the Army Research Center Peenemunde, had all of the equipment and facilities required by a modern rocket research facility including laboratories, test stands, and

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153 As the war progressed and as the British and Americans gained control of the skies over Europe, Hitlers interest in the possibility of new rocket weapons grew substantially. Following the loss of the Battle of Britain in 1941, Peenemunde was given the highest priority to accelerate its work. The increased emphasis on rocket research necessitated expanding the existing staff, and in 1942 approximately 1,000 military personnel with scientific and technical backgrounds were added to the Peenemunde group. The high priority assigned to rocket research in 1941 was to be later revised. Approximately one year after establishing the initial urgent priority for rocket research, the battle of the Soviet Union resulted in a higher priority being assigned to that area of conflict. Meanwhile, the development of an operational capability continued and, in June 1942, the first A-4 was tested; the first attempt failed, the second exploded after launch. After two successive failures, however, the third test of an A-4 went smoothly with the rocket following its programmed trajectory and successfully reaching its target 192 kilometers away. Von Braun was awarded the War Service Cross, First Class, as a result of the success of this launch. As Germany continued to experience military setbacks on the eastern front, the value of the military rockets being developed at Peenemunde was once again reconsidered, and the high priority given to this work earlier was restored.24 In July 1943 Dornberger and von Braun met with Hitler and Speer at Hitlers headquarters at Berchtesgaden. At this time, Hitler reviewed the work of the rocket scientist, congratulated von

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l54 Braun on his accomplishments, and awarded him the title, 11Professor11 (an honorary title conferred by the state).25 Allies Raid Peenemunde German efforts at perfecting their rockets were interrupted in August 1943 when the Royal Air Force 11razed Peenemunde with some 600 four-engined bombers escorted by 45 night fighters. Bombs rained down on the relativelysmall area for three solid hours ... 26 There were BOO casualties, over half of whom were Russian prisoners of war. The remaining victims included engineers, technicians, and their families. In spite of the size of the raid, most of the tech nical facilities r.emained intact. As a result of this major raid on German rocket facilities, Hitler ordered the entire rocket-production activity to be placed underground. To implement this order, he appointed Heinrich Himmlers construction superintendent to be in charge of the new construction. The SS general in charge, Hans Kammler, converted an oil depot south of the Harz Mountains into the new factory. This became the largest of the German underground manufacturing establishments. The new factory (called the Mittelwerk) was in operation by the spring of 1944 and was producing 300 V-2s a month. This production rate was later to increase to approximately 900 V-2s a month.27 The importance of German rocketry grew as German military. successes faded on both the eastern and western fronts. In early 1944, the SS moved to take over the rocket program, and von Braun was ordered to meet with Himmler. Von Braun supported the Army and his superior, Oornberger, in this interview in which.Himmler implied

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155 that the SS would take over the program and give it greater support. A few weeks later, von Braun was arrested and faced a court of SS officers who charged him with lack of support of the German war effort. The SS also claimed that von Braun was planning to flee to Britain with important rocket research data. In the midst of the trial, Dornberger entered the room, presented the court with docu ments, and left taking von Braun with him. Dornberger had reported to Hitler's headquarters: 11If von Braun was not immediately set at liberty, there would be no V-2 ... 28 In the summer of 1944, the A-4 was still experiencing difficulties; however, research work continued and by September 1944 the Germans were ready to launch their first operational rocket. The first launch was made near The Hague and operated successfully, exploding at Chiswick-on-Thames, near London. In the next ten days, the Germans fired a total of twenty-six rockets, all targeted for London. The name, 11V-2,11 was coined by Goebbels when he announced the use of the weapon and referred to it as 11Vengeance Weapon No. 2.11 The bombing of England continued, and, by March 1945, 1,500 V-2s were launched successfully, most of them hitting the London area. Eisen-hower wrote: It seemed likely that, if the Germans had succeeded in per fecting and using these new weapons six months earlier than they did, our invasion of Europe have proved exceed ingly difficult, perhaps impossible. 9 Von Braun and His Team Surrender to the American Forces As the end of the war was clearly approaching, von Braun and his associates began to consider what action the group should take in

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156 terms of surrender. They were aware that Peenemunde was to be cap tured by the Russians, and the entire group wished to avoid capture by Soviet soldiers if possible. In January 1945, von Braun met secretly with his key staff. Bergaust reports that von Braun told the staff: Germany has lost the war but let us not forget that it was our team that first succeeded in reaching outer space. We have never stopped believing in satellites, voyages to the Moon and interplanetary travel. We have suffered many hardships because of our faith in the great peacetime fu ture of the rocket. Now we have an obligation. Each of the conquering powers wi 11 want our knowledge. The ques tion we answer is: To what country do we entrust our heritage? Whether or not this statement, which ignored the civilian destruction caused by the V-2s, was actually made, one decision was clear--the German rocket scientists wished to surrender to the English or Americans and not place their fate in the unsympathetic hands of Russian soldiers. Perhaps the best and most carefully documented account of this surrender and the initial work with the German rocket scientists is contained in The Rocket Team, written by Ordway and Sharpe.31 As they explain, the Armament Ministry in Berlin had ordered the rocket group to move. their most. important research equipment south to a town named Bleicherode, near the Harz Mountains. This placed the scientists in the path of the advancing American Army. On 2 May 1945, two days after Hitler committed sui cide, von Braun's group surrendered to the Americans. The group which first met with the Army and surrendered included von Braun, Dornberger, and von Braun's brother who spoke some English.

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157 Prior to the surrender of the von Braun group to the Army, the American military had been intensely interested in the development of weapon systems by the Germans. During the war, the Army had assigned personnel to the European theater of operations to develop information on German weapons. One of the military personnel with this assignment was Col. Holger H. Toftoy, whose job during the war was to inspect captured German equipment to determine if the United States Army could learn from these weapons and to send samples of the equipment back to the United States or to the British government for evaluation. The Army had instructed Toftoy to secure German V-2 rockets if possible for evaluation in the United States; however, this objective could not be accomplished. During the closing days of the war, it became evident that the German under-ground rocket plant at Nordhausen would be in the zone of Germany to be occupied by the Russians. Toftoy assigned one of his men, Maj. James P. Hamill, to get to the rocket plant before the area was transferred to the Russians and to secure all movable rockets, parts, and equipment. Under the Potsdam Agreement, President Truman had agreed not to evacuate plants in Germany.32 As a result, the assignment to Hamill was marginal in terms of keeping faith with the Russians. Hamill, however, accomplished his mission, and the fruits of his sweep of the German rocket plant filled sixteen Liberty ships. These were loaded with V-2 parts, equipment, and any other materials which appeared to be useful. The Army then moved all of this material to the White Sands Proving Ground in New Mexico.33 At about the time Hamill was engaged in securing all availa ble V-2 rockets and associated equipment, Toftoy was notified that

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158 a group claiming to be the key German rocket scientists had surrendered to the American Army. Toftoy recommended that the captured German scientists be brought to the United States. Shortly thereafter Toftoy was to Washington, D.C., to become the chief of the Rocket Division in the Office of Research and Development of the Office of the Chief of Ordnance and given the job of implementing the Army's guided missile program. German Scientists Assist the Un1ted States Army The urgent need for German scientists to interpret the documents, diagrams, blueprints, and other captured German rocket materials was obvious. If the tons of rockets, rocket parts, and materials were to be useful, a need existed for some German scientists to interpret the data. As a result, on 19 July 1945, the Joint Chiefs of Staff approved a secret memorandum which established "Project Overcast." Its purpose was to set up a "project of exploiting German civilian scientists, and its establishment under the Chief, Mili tary Intelligence Service, on an island in Boston Harbor at a camp formerly known as Fort Standish. n34 This initial plan was clearly understood to be a temporary arrangement to bring German scientists to the United States for a period of six months to interpret German documents and explain German weapons. Ordway and Sharpe relate the circumstances surrounding the change in the name of this operation from "Project Overcast" to "Project Paperclip." German dependents living in special facilities provided at Lanshut apparently began to refer to their facility as

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159 "Camp Overcast." In view of the secrecy surrounding this project, the Army, abashed at the leak in security, renamed the project, 11Paperclip" on 16 March 1946.35 Toftoy again moved to bring the German scientists to the United States to provide information on the development of the German rocket program. After some discussion both within the Army and with the State Department, approval was given to bring one hundred scientists to the United States. However, Toftoys discussions with the scientists and engineers of the von Braun group soon revealed that none of them would wish to come to the United States unless some arrangements were made to provide for the families who were required to remain in Germany. ln order to meet this require ment, Toftoy set up three camps where the dependents of the Germans would be housed and fed. In the immediate period after the war, when the destruction in Germany made survival difficult, the arrangements made by Toftoy provided exceptional living conditions for the dependents of those specialists brought to the United States. After much discussion, Toftoy arranged to have 127 of the von Braun group brought to the United States. The people selected in this process represented the top talent from the Peenemunde group. and all were uniquely qualified experts in their fields. Under Toftoys plan, the first seven German scientists arrived in the United States on 20 September 1945.36 The initial group of Germans, including Wernher von Braun, were taken to the Ordnance installation at Aberdeen Proving Ground, Maryland, where they began to sort through captured German rocket documents.

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160 Shortly after arriving at Aberdeen, von Braun was moved to Fort Bliss in El Paso, Texas, where the Army planned to establish a rocket research facility. In charge of the new facility was Hamill who had played a key role in stripping Germany of V-1 and V-2 parts and equipment. Toftoy continued to exercise overall supervision of the program from the Ordnance Department in Washington. Initially, the German scientists had three primary missions: to establish an interrogation center for Army, Navy, Air Force contractors, to save time in guided missile development; to assist 'in the firing of the V-2s that were brought to White Sands Proving Ground fro evaluation and to carry instruments aloft for an upper atmosphere research program; to do work on a new weapon or components of a new weapon, the Hermes II missile--a V-2 boosted super sonic ramjet vehicle. The German scientists continued to live at Fort Bliss where they were paid six dollars a day per diem. Their basic salaries were paid to dependents in Germany. The salaries which had been es tablished prior to leaving Germany ranged from $2.20 to $11.00 per day.38 During the period from 1946 to 1951, the Army fired over seventy V-2 rockets. A V-2 Upper Atmosphere Research Panel was es tablished which identified major areas of upper atmospheric physics for study.39 These tests provided data in the following areas: 1) Aerodynamic data. 2) Atmospheric properties and temperature effects. 3) Atmospheric composition at high altitudes. 4) Atmospheric ionization and the propagation of radio waves. 5) Radiation phenomena including cosmic ray and X-ray measure ments. 6) Earths magnetic field. 7) Parachute ejection mechanisms.

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1 .i.O ... 8) Atmosphericmeteor content and bombardment by meteoric dust. 9) Photography. 10) Television transmission. 11) Speed of sound and shock wave measurements. 12) Spectroscopical analysis. 13) Rocket technology in general.40 The tests at te Sands provided va 1 uab 1 e data to Army Ordnance on all aspects of missile design and operation. In addi tion to the scientific data gathered, the von Braun group developed new information on the design and operation of rockets and perfected many of their techniques in guidance, control systems, manufacturing techniques, and related technology. Evidence of the increased sophistication of the missile program was the launch in February 1949 of a V-2 rocket which utilized a Wac Corporal second stage. (The Wac Corporal was a small rocket developed for Army Ordnance by the California Institute of Technology in 1945.) The two-stage rocket achieved an altitude of more than 244 miles on 24 February 1949, sufficient to place an object in earth orbit.41 Army Ordnance had been attempting to develop guided rockets during the closing days of World War II without success. Supporting this effort, the Army had negotiated contracts with the Jet Propul sion Laboratory (operated by the California Institute of Technology), the General Electric Company, and the Bell Telephone Laboratories. These contracts were negotiated late in the war, and time did not permit the development of any guided rockets for use during the war. However, the work with these companies did provide an in-place competence at the time that the von Braun group was brought to the United States. This meant that industrial support and some techno logical capability did exist in American industry to support the

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162 Armys early missile programs. Consistent with current practice, any new weapons developed by the von Braun group working in government laboratories would be mass-produced by American industry. The development of this industrial base was important to the future pro duction of operational missiles. The Army Missile Program Moves to Alabama Locating the von Braun group at White Sands had provided the Army with immediate facilities and with a range where new weapons could be tested. The growth of other programs at White Sands and the increased size and of the von Braun group meant that space was not available to house the necessary laboratories and test stands needed by the rocket program. Toftoy, responsible for rocket research, realized that a new site was essential to the program. In addition, Toftoy believed that the missile program had grown to the point where it could no longer be managed from Washington. A search began for new facilities to house the expanded missile program with Toftoy finally settling on the Redstone Arsenal in Huntsville, Alabama. The Redstone Arsenal was selected because its location on the Tennessee River gave it access to the power resources of the Tennessee Valley Authority. Additional factors included the mild climate and the location relatively close to Cape Canaveral where a long-range proving ground was established. Von Braun and Ordway indicate that: The transfer was formally approved by the Secretary of the Army on 28 October 1949: between April and November 1950 the move was made. More than sao military personnel, 130

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members of the original von Braun team, several hundred General Electric employees and 120 government civilian workers moved to Huntsville, where they would write a new chapter in rocket history.42 163 Responsibility for all Army missile programs was centered in the Guided Missile Laboratories at the Redstone Arsenal with Toftoy, transferred from Washington, assigned as the chief of the new or ganization. In 1956, further reorganization occurred; the Army Ballistic Missile Agency (ABMA) was formed, commanded by Maj .. Gen. John B. Medaris with von Braun as technical director.43 The first missile developed at the new facility in Alabama was the Redstone, which was based on the modification of a liquidpropellant engine developed by North American Aviation. The missile originally was designed to have a 500-mile range but this was subsequently reduced to 200 miles. The von Braun group built the first sixteen Redstone missiles in their Huntsville facilities. The Chrysler Corporation was selected by the Army to manufacture operational Redstone missiles, which were deployed to United States Army units stationed in Germany in June 1958.44 Interservice Rivalry in the Ballistic Missile Area Since the closing days of the war, the Army Air Force had been interested in securing control of the new field of missiles. In 1947, when the Air was established as a separate department, the three services began to compete for missile roles. A New York Times story of 12 May 1946 reported 11Rocket Program Splits Services; Army Air Force Seeking Control.1145 Each service saw mis-siles as the wave of the future, and each group believed that

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164 unless it could secure a clear mandate in the missile field its future was uncertain. After the Air Force was separated from the Army, the Army focused all of its missile activites in the Bureau of Ordnance. This group had shown remarkable initiative in bring ing the German rocket scientists to the United States and, in the early 1950s, had a clear lead on either the fledgling Air Force or the Navy in the missile area. This situation, however, was highly dynamic with all three services pushing for control of the missile program or, if not outright control, at least the assignment of a major mission. This political struggle began in the later 1940s and was to continue for over ten years. In 1948, Secretary of the Army Gordon Gray had proposed that each service be a 11 owed to deve 1 op the missiles it would use operationally.46 This policy was adopted by the joint chiefs of staff and continued in force for a period of years. However, the decision did not settle the issue of responsibility for missile development. As missiles became more complex, vastly more powerful, more critical to the national defense, and more costly, this policy could clearly not be continued. In a 15 March 1954 article entitled 11Missile Program Depends on What U.S. can Afford,11 Aviation Week concluded that, 11We cannot afford to produce all the missiles now in several stages of development through out the country. We cannot afford to keep all the research and development establishments going to back up all the projects .1147 In the struggle for dominance in the missile area, the Army suffered from one major liability. Defense planners saw the mission

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165 of the Army in the field of missiles as primarily an adjunct (or perhaps a replacement) for artillery. If this logic were to prevail, this meant that the role of the Army would be limited to extremely short-range, tactical missiles. The Air Force conversely was seen as providing long-range offensive military capability. Long-range bombers were clearly designed to deliver atomic payloads anywhere in the world; intercontinental missiles would be a logical extension of this Air-Force-type mission. This simple logic probably spelled the doom of Army hopes for a role in the intercontinental missile field although the final decision would not be made for a decade, The Redstone provided the technological base for the development by the Army of its next generation missile, the Jupiter. The Jupiter was designed to be an intermediate-range ballistic missile (IRBM) which would substantially increase the range and effectiveness of the Armys missile capability. The range of these IRBMs was approximately 1,500 miles. Initially, the Jupiter was a joint Army/ Navy project, designed for both land-base launches and use aboard ship; however, in 1956, the Navy withdrew from the program. On 26 November 1956, the Secretary of Defense established new roles and missions for the three military services in the area of missile de velopment. Under the terms of this directive, the Army was limited to developing surface-to-surface missiles with ranges of 200 miles or less. The Air Force had won its struggle with the Army for control of all long-range missiles, and the Army was reduced to the development of tactical missiles. The Army was authorized to complete

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16.6 the development of the Jupiter and then to turn it over to the Air Force as an operational missile. More than sixty Jupiter missiles were eventually deployed to Turkey and Italy.48 The loss of a long-range missile mission by the Army was an extreme blow to its hopes for the future. The Air Force, seeking since the closing days of World War II to achieve dominance in long range missiles, had achieved its objective. While the Navy had authority to develop its own submarine-launched missiles, the Army was no longer a contender in terms of ICBMs. The wisdom of the Department of Defense decision can be questioned. The Army had dempnstrated significant capability in the missile field and in many ways had substantially greater competence than the Air Force. The development of missiles designed to serve the same military objectives was a luxury even the Department of Defense could not afford. The development of redundant missiles in the early stages of missile development made a great deal of sense if the nation wished to assure that at least one of the competing systems would prove effective. As costs increased substantially with the development of very large and sophisticated IRBMs and ICBMs, the competition between the Army and the Air Force had to be termi nated. It was essential that the country develop a single group of missiles to meet its military needs, not duplicate families of missiles.49 The termination of a long-range missile role for the ABMA was to have significant importance when NASA was established. As

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167 will be discussed at a. later point, the von Braun team was to transfer to the new space agency and to provide that organization with the capability it lacked in the development of large launch vehicles. Having lost the decision on long-range missiles, the Army continued to attempt to secure a new and significant mission in terms of IRBMs or ICBMs. The basic decision which had been made by the Secretary of Defense was not reversed by subsequent administra-tions. However, when NASA was established in 1958, the Space Act gave the president special authority to transfer to it personnel and facilities of other government agencies. 5 The new NASA organiza tion lacked competence in large launch vehicles and immediately con sidered the ABMA as a group that could fill this vacuum. Approaches to the Army in 1959 were unsuccessful because the Army still assumed that a new and important military mission might be assigned to the von Braun group. By 1960, the position of the Army had changed, and the von Braun team was transferred to NASA. The Army Continues to Seek a Space Mission Regardless of the technical competence or the achievements of the Army in the development of long-range missiles, the decision had "been made by the Secretary of Defense and sustained by subsequent administrations to restrict the Army's role to short-range, tactical missiles. The Army continued to attempt during the late fifties to have a long-range mission added to their statement of roles and mis sions; however, all such efforts failed. By 1959, the die had been cast; the Army was never again to have the opportunity to pursue the

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I I 1'68 development of intercontinental This decision, while a shock to the Army, was devastating for the von Braun group. These German rocket scientists who had been the first group to achieve operational rockets and who had dreamed of the opportunity to place satellites in orbit and to probe the universe were no longer to de velop other than very limited tactical missiles. One event, however, gave the Army the opportunity to demonstrate its capabilities to a greater extent than it could have hoped for up to that time. The von Braun group for some years had urged that their missiles be used to place an artificial satellite in orbit. They were unable to convince higher management levels of the desirability of this objective until the Soviet Union placed its first satellite in orbit in 1957. Some of the first work that the German rocket scientists were engaged in after moving to the United States was t .he probing of the atmosphere and the use of scientific instruments to measure and report temperature, pressure, density, and composition of the upper atmosphere. The early V-2 rockets fired at the White Sands Proving Ground carried scientific payloads to conduct such types of scientific measurements. Exploring the upper atmosphere in this fashion was uniquely different from the later use of scientific satellites placed in orbit. The early probes of the atmosphere were made with what were termed 11Sounding rockets11 and their purpose was to secure a 11Vertical slice11 of scientific data. The sounding rockets were an important means of providing highly useful data at relatively cheap cost.

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169 The use of the V-2s were subsequently replaced with sound ing rockets developed for this purpose. The Naval Research Labora tory was the leading group within the United States in conducting this type of upper atmospheric research investigation. The Navy developed its own sounding rocket, the Viking, for this purpose which was derived in large measure from V-2 technology. 5 1 Follow ing the development of the Viking, the Navy developed several other boosters to be utilized as a part of its program of upper atmos pheric research. The development of sounding rockets did not lead to the ap proval of scientific satellites. The concept of placing a satellite in orbit was still considered difficult if not impossible, very costly, and of limited practical application. As a result, no attempt was made in the early 1950s to exploit space in this way. The Vanguard Program On 29 July 1955, President Eisenhower announced that plans had been approved for launching a small satellite, the Vanguard, into orbit. This effort was associated with the International Geophysical Year, and the Vanguard was not to receive high priority during this period. The decision made at that time was to separate the program entirely from the military hardware which had been de veloped. As a result, the Vanguard program was to develop not only its own scientific satellite, but its own launch vehicle as well. The program was placed under the direction of a government management team made up primarily of scientists from the Naval Research Laboratory. Heading the Vanguard project was John P. Hagen, in

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170 charge of the Nava1 Research Laboratorys radio physics program.52 The rationale for the development of a new civilian launch vehicle rather than the use of an existing military booster such as the Jupiter was not well explained at that time; for whatever reason, the use of a.;new a:nd untr.i.ed launc.h v.ehi:c}e substantially slowed the development of the Vanguard program. Had a military booster been selected for the launch vehicle, there is every reason to believe that the United States would have launched the first artificial satellite into earth orbit prior to the Soviet Union.53 The Von Braun Team Launches First American Satellite Although the von Braun team had sought authority to launch an American satellite for some years, it was not until the Soviets successfully launched Sputnik I that such approval was granted. On 8 November 1957, the Army was authorized to launch an artificial satellite with a planned launch date of March 1958. date was subsequently changed to January 1958. The Army ballistic missiles agency moved quickly to attempt to achieve this early launch date. Six Juno 1s were manufactured, and working arrangements were developed with the Jet Propulsion Laboratory (JPL) which was another Army Ordnance facility operated by the California Institute of Technology. JPL was to provide the scientific payload. The new satellite, the Explorer, was successfully launched on 31 January 1958, becoming the first American satellite in orbit.54 After more than twenty years, the von Braun team accomplished what had been one of its major long-term objectives.

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171 The success of the first American satellite was not to re-sult in a space mission for either the Army or the von Braun group. After substantial debate, the president and Congress agreed on the establishment of a new civilian space agency, NASA. The new agency attempted to secure the transfer of ABMA to NASA in 1959 but was unsuccessful. By 1960, the Army revised its position, and the von Braun team, together with facilities and supporting were transferred to NASA to become the George C. Marshall Space Flight Center of NASA. This transfer and the impact the von Braun management philosophy was to have on NASA are discussed in Chapter IX. Army Management Philosophy in Missile R&D The management philosphy of the Army was in marked contrast to that of AEC or the Air Force. To a large degree, this philosophy was probably a product of two factors: first, the historic use of arsenals by the Army; second, the background and experience of the von Braun group which formed the basis of the Armys missile program. The Army had historically made use of arsenals, manned with civil service employees and housed in government facilities, for the design, development, and manufacture of weapons. The concept of the arsenal was one that was deeply embedded in the thinking of many of the senior Bureau of Ordnance personnel. During World War II, the Army had procured weapons from a large number of civilian suppliers, but by the end of the war the arsenal concept had not as yet died

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172 within the Army. The use, therefore, of a technically skilled inhouse competence to _manage missile R&D development was entirely consistent with Army experience up to that time. World War II had resulted in a new partnership of universities, industry, and the government in the development of the atomic bomb. In the postwar period, the thrust of both the executive branch and Congress was to be toward greater and greater reliance on industry. In 1945, however, when the German rocket scientists were brought to the United States, the full impact of this policy change was not apparent. The Army was under no pressure to rely more heavily on contracting R&D and was relatively free to establish the German rocket scientists within government facilities in an approach similar to the typical government arsenal. A second major contributing factor in the development of the Army's in-house missile competence was the nature and make-up of the German rocket scientists. The secrecy associated with rocket development in the 1930s had led the German Army to favor an inhouse approach as opposed to one which would rely on industry to develop its new weapons. As a result, the von Braun group was familiar with and had the experience of functioning as a team working for government salaries in government facilities. This practice seemed both normal and logical to them and one which was continued when they reached the United States. In addition, the Germans were a special group, a remnant of the defeat of Germany, who undoubtedly wished to remain together as a cohesive unit once they reached the United States. The establishment of the German

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scientists and technicians as an organized group within Army research facilities suited their objectives in a unique fashion. 173 These two factors then contributed to the establishment of an Army in-house R&D competence for the conduct of its miss i 1 e R&D activities. This was in marked contrast to management approaches of AEC and of the Army's primary rival in missile development, the Air Force. Hearings conducted by the subcommittee of the Committee on Government Operations of the House of Representatives in 1959 pro vide a clear outline of the Army's position in the management of R&D. Secretary of the Army William M. Brucker testified that the Army's arsenals, laboratories, test facilities, and proving grounds were essential to weapons development. Indicating the importance of these facilities to Army R&D, Brucker commented: Our arsenal concept has resulted in the evolution of the method now employed by the Department of the Army to establish, develop, and maintain a technical and business competence commensurate with the rapidly changing requirements of weapons and weapons systems. The primary purpose of the Army research and engineering centers, sometimes called arsenals, is to manage and control new items, produce experimental models, and provide engin eering capability with the end purpose of assisting in dustry in quantity production. They further sup port the Army procurement and administrative team with knowledgeable technical and production experts who are qualified to review objectively the development and pro duction plans of industry to insure technical competence, reasonableness of cost, adequacy of testing, inspection and evaluation procedures and the quality and reliability of the finished prqduct.55 Brucker's statement on the role of the in-house military and civilian personnel of the Army describes the technical management of industrial activity. The arsenals, such as the Redstone Arsenal

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174 which housed von Brauns Army Ballistic Missiles Agency, were de signed to provide the in-house competence necessary,to direct the contractors technically. This was in marked contrast to Air Force .and.AEC practice, where contractors were relied on to provide necessary technical competence in the development of R&D programs under their jurisdiction. The comparison with the Air Force is particularly appropri ate in view of the fact that both the Army and Air Force were deal ing with identical technology in the development of ballistic missiles with similar objectives. The Air Force had, at an early stage, elected to secure needed technical competence through a series of contracts beginning with Ramo-Wooldridge and continuing until the present time with Aerospace Corporation. The Army had relied on in-house competence of civil servants working in government facilities to direct contracted operations. In addition to this difference in supervision of contractors, it must be observed that the Army went much farther than other services in the actual manufacturing process. The von Braun group not only conducted conceptual design and technical supervision of industrial contractors, they actually manufactured the early missiles in house using government personnel and facilities. In the case of the Redstone missile, the Army produced the first sixteen in house, turn ing the program over to contractors only after the missile had been designed, developed, tested, and proved. Industry was then given the job of mass producing the missile.56 Attempting to clarify the philosophy of the Army in terms of the use of government personnel in the management of R&D, Congressman

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175 Chet Holifield, conducting hearings on missile organization and management, asked Medaris to explain why he believed it was important for civil servants rather than contractors to perform these tech nical functions. Medaris responded at length, the substance of his comments being that the civil service employees could be more objective in their judgments than contractors. Medaris maintained that contractors might be influenced to continue a project that the company had an economic interest in, while the civil servant was not subject to this influence. Medaris went on to indicate that government employees are "solidly and permanently part of a team with a single interest, and this is the protection of the two people con cerned--the user and the Medaris implied criticism of the Air Force appears to be faulty when the actual contractors used by the Air Force to provide technical competence, are examined. The "captive" contractors used by the Air Force, like the government employees of an arsenal such as Redstone, were tied to no single program. These contract employees supported the Air Force in all of their missile activities and, therefore, had no greater interest in any single system than did the Army personnel of whom Medaris spoke. If an argument was to be made in terms of the use of government versus contractor employees, it seems appa.rent that the argument would need some other rationale than the one offered by Medaris. While the arguments made by Medaris could be applied to the industrial contractors hold ing a contract for the development of a single and specific missile,

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176 these same arguments could not be applled to a corporation such as Aerospace which had a continuing and ongoing responsibility to sup port the Air Force in all of its missile activities. Medaris, in his testimony, challenged other positions which the Air Force had taken to support the need for hiring contractors to provide technical capability rather than civil servants. The Air Force had suggested that. scientists of high competence would not wish to work for the government, and that government salaries could not compete with private industry for highly talented scientists and engineers. Medaris took exception. In terms of the restrictive nature of government employment, he indicated: Also, strangely enough, and quite different from what many people believe, there is a freer rein .to ,the .ima.ginati"on and ingenuity of scientists and technicians in the government service, I believe, than there is in industry, be cause we have more far-ranging demands for imagination. We have a greater demand for visualizing things that have never happened and how they can be applied; and so there is always a challenge to the this brings outstanding people to us and holds them. Medaris view of the greater scope of work in federal R&D agencies than in industry undoubtedly. has merit. Many of the major R&D programs conceived in the period since World War II have been generated within government laboratories, not by industry. NAsAs manned space flight program did not originate in industry, for example, but came from government engineers work.ing at the NASA Langley Research Center. Medaris also defended the ability of the government to re-cruit and retain scientists even though government salaries were traditionally lower than those paid in industry. He testified:

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I am not ashamed of the civil service pay rates when they are properly administered for scientists and engineers except in the levels of very high responsibility, the few top levels where .the breadth of responsibility is great; and there because we cannot compete with top industrial salaries, we have to create a climate that is so challeng ing that it makes up for it.59 177 There are those who might challenge Medaris views on the adequacy of government salaries, particularly in 1959 at the time of his testimony. The more challenging and wider range of responsibilities open to government employees applied to junior staff members as well as to senior executives. This factor, probably more than any equity in salaries, may account for the ability of many government agencies to attract and retain highly competent personnel. Whatever the reason, Medaris statements concerning the ability of the government to recruit and retain competent technical personnel was clearly demonstrated by the Army, NACA, the Naval Research Laboratory, and other federal R&D organizations. Armis Contribution to Space and Missile Programs By 1959, when NASA first attempted to secure the transfer of a part of the von Braun team to NASA, the Army had lost any significant role in either intercontinental ballistic missile programs or in space exploration. The von Braun group, which had actively been pursuing missile and rocket research in the United States the close of World War II, no longer would have a significant role to play as a part of the Department of Defense in the future. The contributions of the von Braun team, however, had been substan-tial. Von Braun reviewed those contributions in The History of

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178 Rocket Technology. He listed the following as major contributions made by the Army to missile and space research: Use of the first U.S. inertial guidance system (Redstone in 1953). First successful U.$.-developed large ballistic missile (Redstone in 1953). First long-range firing of a U.S. ballistic missile (Jupiter C on September 20, 1956). First successful launch of a U.S. IRBM (Jupiter, on May 31, 1957). First recovery intact of a man-made object from space, demonstrating ablative solution of the aerodynamic re-entry heating problem (Jupiter C, on August 8, 1957). First Free World earth satellite (Explorer I, launched by Juno I on January 31, 1958). First recovery of a full-scale IRBM nose cone (Jupiter on May 17, 1958). First deep-space radiation experiment (Pioneer III, launched by Juno II on December 1958). First deep-space telemetry success to 400,000 miles (Pioneer IV, launched by Juno II on March 3, 1959). First successful U.S. launching of animals into space with suc cessful recovery (Monkeys "Able" and "Baker," by Jupiter on May 28, 1959). First American launched in space (Astronaut Alan B. Shepard, Jr., by Mercury-Redstone on May 5, 1961).60 It should be noted that,.while a Redstone booster was used for the launch of animals in space and for the first American man launched in space, these programs were not under the direction of von Braun or the Army. Both programs were planned and conducted by NASA1s Space Task Group, Participation by the Army was limited to providing the Redstone booster; the development of the spacecraft and

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179 total systems responsibility for the Mercury Project were vested in the Space Task Group. Summary and Conclusions The development of the management policies followed by the Army in the conduct of major R&D programs had been influenced by several factors. The Army had historically utilized Army arsenals in the development and manufacture of advanced weapons systems. Following a long tradition, it was natural for the Army to use the arsenal concept in the development of missiles in the same fashion that arsenals had been used in the development and manufacture of small arms in the past. Associated with this traditional Army approach to R&D management, and perhaps equally important, was the approach which the German rocket scientists had utilized in Germany in the development of the V-1 and V-2 rockets. When rocket research was first under taken by the German Army in the early 1930s, the development of rockets was seen as a means of avoiding the restrictions of the Treaty of Versailles by developing a new weapons system which had not been envisioned by that treaty. The German military believed that it was essential for this new system to be developed in the greatest secrecy. To accomplish this, it was believed that secrecy would be best assured by developing rockets in government-owned facilities staffed by German civil servants. This practice was followed with the result that the extensive rocket facilities at Peenemunde on the North Sea were developed as a weapons laboratory devoted to the creation of military rockets.

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180 Chance played a major role in development of the Army's missile program. Had the von Braun group been captured by the Soviet Army, the development of American missiles would have been substantially delayed. Similarly, had the Army not cut normal red tape and brought the German scientists to the United States as soon as possible in 1945, the development of American missiles would have been substantially slower. The contributions of the German group to the development of the American missile programs were substantial. Had the Department of Defense authorized the von Braun group to launch an artificial satellite in the mid-1950s, there is little doubt that the German scientists could have accomplished th1s objective. In addition to the scientific and technical contributions of the Army, the management contributions of that group were also significant. Unlike AEC and the Air Force, the von Braun group demonstrated that management of major R&D programs by government personnel operatjng in government facilities could be a highly effective means of accomplish ing program objectives. The von Braun group was to have two significant impacts on the development of NASA management philosophy: first, the Army missile development was to be considered as one model in determining NASA policy; second, the von Braun group was to become a part of NASA during the period when agency policy was being formulated. The influence of these factors will be considered in Chapter IX.

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NOTES-CHAPTER VI 1David Baker, The Rocket (New York: Crown Publishers, Inc., 1978), p. 10. 2wernher von Braun and Frederick I. Ordway III, History of Rocketry and Space Travel (New York: Thomas Y. Crowell Co., 1966), p. 30. 3 Baker, The Rocket, p. 13. 4 Walter B. Hendrickson, Jr., Who Really Invented the Rocket? (New York: G. P. Putnams Sons, 1974), pp. 24, 26. 5Heinz Gartmann, The Men behind the Space Rockets (New York: David McKay Co., 1956), p. 41. 6Erik Bargaust, Reaching for the stars (Garden City, N.Y.: Doubleday & Co., Inc., 1960), p. 56. 7 I bid p 44 Ley, Rockets, Missiles, and Men in Space (New York: The Viking Press., 1968), p. 96. 9 Frederick I. Ordway III and Mitchell R. Sharpe, The Rocket Team (New York: Thomas Y. Crowell, 1979), p. 16. 10Bergaust, Reaching.for the Stars, p. 45. 11Beryl Williams and Samuel Epstein, The Rocket Pioneers (London: Lutterworth Press, 1957), p. 148. 12Erik Bergaust, Wernher von Braun (Washington, D.C.: National Space Institute, 1976}, p. 41. 13sergaust, Reaching for the Stars, p. 56. 14John C. Goodrum, Wernher von Braun, S ace Pioneer (Huntsville, Ala.: The Strode Publishers, 1969 p. 49.

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182 15walter Dornberger, V-2 (New York: The Viking Press, 1958), p. 27. 16ordway and Sharpe, The Rocket Team, p. 19. 17walter R. Dornberger, 11The German V-2,11 in The History of Rocket Technology, ed. Eugene M. Emme (Detroit: Wryne State Uni.: versity Press, 1964), pp. 30-31. 18Bergaust, Reaching for the Stars, p. 61. 19Ibid., p. 64. 20Ibid., p. 65. See also, Von Braun and Ordway, History of Rocketry, p. 74. 21oornberger, V-2, pp. 64-68. 22ordway and Sharpe, The Rocket Team, p. 31. 23Ibid. 24Ibid., p. 43. 2 5 I b i d p 44 26Bergaust, Reaching for the Stars, p. 88. 27oornberger, V-2, p. 240. 28Bergaust, Reaching for the Stars, p: 92. 29Ibid., p. 97. 30Ibid., p. 106. 31ordway and Sharpe, The Rocket Team, pp. 1-11. 32Bergaust, Reaching for the Stars, p. 119. 33see 11We Went with the West,11 Time, 9 December pp. 67-70, for a full account of the seizure of rockets, equipment, blueprints and the capture of German rocket scientists.

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34ordway and Sharpe, The Rocket Team, p. 287. 35Ibid., p. 292. 36Bergaust, Reaching for the Stars, p. 126. 37Ibid., p. 134. 38 .. Nazi Scientists Aid Army on Research, .. New York Times, 4 December 1946, p. 35. 39von Braun and Ordway, History of Rocketry, p. 123. 40B f ergaust, Reach1ng or the Stars, p. 140. 41von Braun and Ordway, History of Rocketry, p. 125. 42Ibid., p. 127. 43Ibid., pp. 127-128. 44Ibid., p. 127. 183 45 .. Rocket Program Splits Services; Army Air Forces Seeking Control, .. New York Times, 12 May 1946, p. 1. 46Bergaust, Reaching for the Stars, p. 164. 4711Missile Program Depends on What U.S. Can Afford, .. Aviation Week, 15 March 1954, p. 78. 48von Braun and Ordway, History of Rocketry, p. 129. 49For a discussion of the conflict between the Air Force and the Army as viewed by the Army, see John B. Medaris, Countdown for Decision (New York: G. P. Putnam's Sons, 1960), pp. 62-85. 50u.s., National Aeronautics and Space Administration, An Administrative Histor of NASA, 1958-1963, by Robert L. Rosholr Washington, D.C.: Government Printing Office, 1966), p. 15. See also The National Aeronautics and Space Act of 1958, U.S. Code, vol. 42, sec. 2451.

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134 51von Braun, History of Rocketry, p. 150. 52Ibid., p. 160. 53For a more complete discussion, see Von Braun and Ordway, History of Rocketry, pp. 150-160. Von Braun quotes John P. Hagen as saying that he received clear instructions from the start that he was not to interfere with the ballistic missiles programs by requesting technical assistance from them. 54Ibid., p. 163. 55u.s., Congress, House, Committee on Government Operations, Organization and Management of Missile Programs, Hearings before a subcommittee of the House Committee.:on Government Operations, 86th Cong., 1st sess., 1959, p. 249. 56von Braun and Ordway in History of Rocketry, p. 127, report that the first sixteen Redstone missiles were produced by the Redstone Arsenal before the contractor, Chrysler Corporation, began production. 571959 Hearings, p. 261. 58Ibid., p. 265. 59rbid., pp. 265-266. 60wernher von Braun, "The Redstone, Jupiter and Juno," in The History of Rocket Technology, ed. Eugene M. Emme, p. 108.

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Introduction CHAPTER VII THE AIR FORCE MANAGEMENT BY INCORPORATION During World II, German scientists were successful in developing the first operational military rockets, V-1 and V-2, which were used with a high degree of success against the British. The introduction of rockets earlier in the war might have significantly altered the outcome of the war and, at a minimum, would have created even greater devastation in England than did conventional bombing. The development ef these new was to change military weapons systems for decades to come. The possibility of combining the tremendous destructive power of atomic weapons with the use of missiles, for which there was at that time no defense, represented a concept as appealing to military planners as it was horrifying to most civilians. This chapter outlines the development of intercontinental ballistic missiles and reviews the management system evolved by the Air Force in the condutt of these major R&D programs. Because the Air Force was one of the agencies which NASA considered at the time it adopted its basic management policies, a review of how and why the Air Force manages as it does is appropriate to this study.

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136 Background The development of atomic weapons by MED during World War II represented the first major modern R&D program undertaken by the United States. In the postwar period, it was clear that R&D would be of considerable importance to the nation from both an economic and national security viewpoint. Congress, the presidents in office at the time, and most students of R&D saw the atomic bomb development as the prototype for future R&D programs of similar size and scope. In the postwar period, the next major R&D programs sponsored by the federal government' were those dealing with the development of ballistic missiles. Air Force missile management is one of the best recorded, studied, explained, and evaluated management systems of any federal agency. The Air Force evolved a unique approach to the management of its missile programs, and the approach utilized was the subject of a number of very comprehensive congressional committee hearings and reports. These are the primary sources of material contained in this chapter and explain not only how the Air Force manages its missile programs but how this peculiar and unique management arrangement came into being. The Air Force became enmeshed in using a private organiza tion as a prime government vehicle in the conduct of its ballistic missile programs. When it no longer became feasible to use this organization, the Air Force directly participated in organizing and establishing a new private corporation to perform these funGtions.

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187 For those who have suggested that an unhealthy militaryindustrial complex exists, the use of this private corporation by the Air Force would indeed provide cause for questioning.1 In every respect, the private corpora.tion created by the Air Force to perform these functions appears to be a government entity. It was created by the Air Force, it works exclusively for the Air Force, and it provides the primary technical competence to the Air Force for the management of the ballistic missiles program. Its person nel are paid for by the Air Force as were its facilities. One could indeed believe that the corporation is simply another 11division11 of the Air Force but one which holds a unique position--it is a non-governmental organization. The Last Days of World War II and the Postwar Period Late in World War II, it became evident to both members of Congress and the United States military that rockets and missiles would be a major factor in the postwar period. During the hearings conducted by the House Appropriations Committee in May 1945, Gen. L. H. Campbell, chief of Ordnance for the War Department, was questioned by members of the committee on the nature of rockets and 11buzz bombs11 employed by the Germans. While no requests for rocket research were contained in the 1946 Military Establishment Appropri ation Bill, these discussions foreshadowed the growing interest on the part of the United States in the development of missile systems.2 The tension which developed between the United States and the Soviet Union following World War II focused continued attention

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138 on military preparedness. The period of relaxation of conflict and competition which might have been expected following the defeat of Germany failed to materialize, and military weapons systems and capability remained an important issue. Although Army Ordnance, the Army Air Force, and the Navy were strongly interested in the development of missiles and rockets, in 1946 this effort did not receive top priority. The United States had emerged from World War II as the strongest military and economic nation in the world; the devas-. tation of much of Russia and the death of many of its soldiers left the United States as the unchallenged military power in the world. In addition to the tremendous strength of the United States in con ventional weapons of war, the United States enjoyed a monopoly in atomic weapons. This tremendous military strength made the development of missile and rocket systems a matter of interest but not one of urgency for the United States. In spite of this, the Army Ordnance bureau, the Army Air Force, and the Navy recognized that future wars would be dependent on missile systems, and each service immediately began to push the development within its service of missile capability. While the term, "missile," includes weapons ranging from short-range, air-to-ground, ground-to-air, and ground-to-ground missiles, major interest and attention was given to what came to be known as intercontinental ballistic missiles (ICBMs). Short-range missiles were tactical in nature and made use of conventional ex plosives in their warheads; the ICBMs were intended to attack a potential enemy in his homeland and would be fitted with nuclear

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139 warheads. Those first atomic bombs exploded at Nagasaki and Hiroshima had changed forever the concept of the 11Ultimate11 weapon. From the time of the use of the atomic bomb, no military planner could consider ICBMs without automatically assuming that they would be equipped with nuclear warheads. As was to be expected, the desire of Army Ordnance, the Army Air Force, and the Navy resulted in a fierce competition among the services. Kucera points out that this rivalry existed both within individual departments and among all three services. He states: Beginning in the 1950s the interservice rivalry of the 1940s turned into both interservice and intraservice program rivalries. Navy carrier aviation, for instance, found itself competing with the Air Force for a bombing mis sion and at the same time competing with the fledgling 11Polaris11 missile/nuclear submarine program for the same mission. The 11Polaris11 program, in turn, was competing with the Air Force ICBM program which, in turn, was competing with the Air Force manned bomber program, thus completing the circle .3 Army Ordnance initially enjoyed a clearly superior position. Acting during the closing days of World War II, Army Ordnance had collected practically all of the key German rocket scientists who had developed the V-1 and V-2 rockets and had installed them in the United States at the Armys White Sands Missile Range in New Mexico. This group of scientists, headed by von Braun, were continuing to develop and improve military rockets except that the customer was now the United States Army rather than the Hitler military machine. They brought with them existing German rockets, and rocket development proceeded in an almost uninterrupted fashion.

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190 As was discussed in Chapter VI, the initial advantages en joyed by Army Ordnance were to be shortlived. The Army Air Force immediately moved to try to secure a monopoly on long-range missiles. As early as 22 April 1946, the Army Air Force represented by Gen. Carl Spatz, commander of the Army Air Force, and Lt. Gen. Curtis LeMay were reported by the New York Times as urging that all rocket and guided missile research and operations be confined to 11those responsible for the nations defense in the air, the Army Air Force.114 The Air Force, while not completely achieving this objective, was able to have the Armys program limited to missiles with a two-hundred-mile limit. This effectively removed the Army from the field of intercontinental missiles by 1956.5 The Army Air Force (to become a separate department in 1947) and the Navy had to acquire their own specialists in the technology of missiles and rockets. Although the United States had not been a leader in rocket technology, some technical competence did exist in the laboratories and industrial plants in the country. Simple rockets without guidance had been used in the closing days of World War II. Although these were relatively unsophisticated systems as compared to the German rockets, they did provide at least a starting point for the services in the development of new missile systems. The government laboratories on which the military services tended to rely for basic research and advanced development also lacked any substantial experience in missile research. The laboratories of NACA as an example had a highly developed capability in aerodynamics, an important area for missile research. However, they

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191 had not worked in the missile or rocket field and did not have experience and familiarity with rocket engines, rocket fuels or highly sophisticated guidance and navigation systems. Problems Limiting the Development of Ballistic Missiles Although the lack of technical competence on the part of the Army Air Force was a major problem in the development of its ballistic missile program, a second problem was of even more significance. As has been noted, the use of ballistic missiles was predicated on the assumption that these missiles would make use of atomic warheads. The atomic bombs dropped on Japan in 1945 were relatively crude weapons whose size and weight made their use as ICBM warheads an impossibility. The existing and projected guidance for ballistic missiles was far from the pinpoint accuracy known today. For this reason, it was important,for the ICBMs to be equipped with atomic warheads where such pinpoint accuracy would not be required. The warheads themselves had to be dramatically reduced in weight if a_n ICBM were to be able to 1 i ft them and deliver them to a target. Operational ICBMs would be dependent on two primary factors: 1. the development of the necessary technical competence to design, develop, and manufacture reliable missiles; and 2. the development of a new generation of atomic weapons, light enough to be delivered by a missile and at the same time with high enough explosive power that pinpoint accuracy would not be required by the missile guidance system.

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192 Because of the military strength of the United States in conventional weapons, serious consideration and high priority were not assigned to missile systems immediately after the war. Secre tary of the Air Force James H. Douglas stated: In 1947 and again in 1949 long-range ballistic missile projects were cancelled when the necessity for maintaining the deterrent bomber force dictated use of all available resources for the Douglas indicated that the first serious efforts of the Air Force to develop an ICBM began in 1951 with a study project designated as Atlas. Because of the problems identified above, particularly the heavy weight of atomic warheads, work on the Atlas was not progressing at a rapid pace. The low priority given to the ICBM program by the Air Force in 1951 was reflected in a lack of public interest in the possib-ility of intercontinental missiles. A review of Aviation Week, the primary American journal dealing with aviation, missiles, and space, reveals that not a single news article or report appeared in 1951 dealing with ICBMs. In the 7 May 1951 issue, an article outlined the proposed Air Force budget for the 1952 fiscal year. The budget totaled $19.8 billion but included only $130 million for all types of 11guided missiles.11 That figure of $130 million was reduced from an actual fiscal year 1951 expenditure of $150 million. 7 In 1953, this situation was to change dramatically. Tensions between the United States and Russia had continued to grow; the cold war was at a high level of intensity. Thus, the urgency assigned to missile development also increased. Secretary Douglas

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indicates that a major breakthrough by AEC in the development of nuclear warheads significantly altered the entire picture: In 1953 scientists working for the Atomic Energy Com mission forecast thermonuclear weapons of greatly reduced weights, and subsequent tests bore out their prediction. This thermonuclear breakthrough not only made possible the use of smaller rocket engines and missile bridies to deliver the lighter warhead required, but permitted the relaxation of accuracy requirements. The advent of lighter and more devastating nuclear warheads made modern ICBMs a feasible and highly attractive weapons system. 193 The Air Force immediately moved to have an in-depth study made of the ballistic missile program. A Strategic Missiles Evalu ation Committee was set up, chaired by John von Neumann.9 The committee, reporting on 10 February 1954 made a number of recommendations which were to have long-range significance for Air Force management, about-which Douglas testified in 1959: The report, among other things, emphasized the newly es tablished practicability of an ICBM and recommended that its development be vigorously pursued. The report further noted that the existing ballistic missile program, the Atlas, required complete reorientation to capitalize on the new development in thermonuclear warheads. Finally after a comprehensive study of the management capabilities that were available and an assessment of the technical problems yet to be solved, the Committee stressed the urgent need for establishing a special development-management agency to reorient the program, supervise research, and exercise general technical and mana ement control over all elements of the ro ram.IO Underscoring adde It is difficult to determine from available information the degree to which these recommendations were the product of the in fluence of Air Force officers or civilian employees. The recommendations may have sprung entirely from the committee itself.

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Without regard to how these recommendations came into being, there is no question that their implementation was to the distinct ad vantage of Air Force personnel who would be involved in the management of the Air Force's ICBM program. Rationale for the Committee's Recommendations The recommendations of the Strategic Missiles Evaluation Committee were based on the assumption that the development of ICBMs would require: combination of industrial organizations, Government and private laboratories, and universities ... to assure success in this program and that the organization managing this group would have to possess unquestioned technical competence and authority to unift' direct and control all elements of the working team. The committee believed that this management capability would have to be of a unique order of competence and found that such an organiza tion did not exist within the Air Force. The result was that the committee proposed establishing a special division within the Air Force for the management of ballistic missile programs to be sup ported by 11the services of a contractor to assist this division with respect to technical direction and systems engineering for ballistic missiles.1112 It is important to understand that the actual detailed de sign and manufacture of Air Force ballistic missiles was not the subject of these recommendations. It was a foregone conclusion (as discussed in Chapter II) that the aerospace industry would perform detailed design, manufacturing, and testing of missiles. This would be accomplished either by a single prime contractor

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195 responsible for the entire development program or by several prime contractors, each supported by a large number of subcontractors and suppliers. If several prime contractors were utilized, the work of these primes would need to be integrated, and this integration would normally be accomplished by the government. From a and administrative viewpoint, the committee had focused its attention on two questions: first, the special organizational arrangement needed within the Air Force to accomplish the missile program effectively; and, second, a need for the Air Force to secure needed technical competence to supervise and manage the program. Each of these two problems is discussed below. The von Neumann committees recommendations for a new Air Force organization to be responsible for the ballistic missile program were implemented in 1954 when the Air Force established the Western Development Division. This organization, reporting to the Air Research and Development Command (ARDC), would be responsible for the management of the Air Force missile program. The commander of the Western Development Division, Maj. Gen. Bernard Schriever, also served as deputy commander for Ballistic Missile Systems of ARDC. The Air Force believed that placing Schriever in this dual capacity would strengthen the missile development program and give greater emphasis to it.13 Because of the nuclear breakthrough described above and the of the cold war, the ballistic missile program became the high priority program of the Air Force. In spite of the estab lishment of the Western Development Division (later named the

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196 Ballistic Missile Division) and the new emphasis and priority placed on missile development, problems in management continued to exist. In 1955, the Air Force established another committee for the evaluation and simplification of management of the missile program. The committee was headed by Hyde Gillette and was generally known as the Gillette Committee. He was the deputy for Budget and Program Management for the Air Force, and his committee was composed of Air Force military and civilian personne1.14 All of the committee mem-bers were involved in various aspects of Air Force R&D, procurement, logistics, and other staff and line functions which would affect the management of the ballistic missile program. The committee members were intimately familiar with Air Force administrative and manage-ment procedures and were in a good position to recommend changes in procedures to improve the efficiency of the Western Development vision's operations. Secretary of the Air Force Douglas, in discussing problems which gave rise to the establishment of the Gillette Committee, testified: it became apparent the special management structure provided at the working level was hampered by the administrative pro cesses of review and approval through the higher echelons of the Air Force and the Department of Defense. When the Western Development Division was created, it was made a component of the Air Research and Development Command. Its commander, Maj. Gen. Bernard Schriever, was made a deputy commander of ARDC for ballistic missile systems to shorten lines of communication and to permit his direct access to assistance from the other ARDC centers. However, decisions reached promptly at the project level and reflected in recommendations to higher authority were to many levels of review.15 The Gillette Committee believed that the normal review procedures within the Air Force were hampering the operations of the

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197 Western Development Division and recommended new special arrangements for the operations of the missile program, chief among which were the following: 1. an annual development planto be developed by the Western Development Division, 2. the annual plan to be reviewed and approved by a single management committee at the Chief of Staff and Secretary of the Air Force level, 3. the plan, after approval, to be reviewed by a similar committee reporting to the Secretary of Defense. After approval of the annual plan, operating elements were free to pursue the plan without referral to higher authority; changes in the plan, however, required a review from the established committees. Douglas testified that this plan was effective in accomplish ing Air Force management objectives.16 In effect, the changes recommended by the Gillette Committee and adopted by the Air Force were in the direction of achieving the objectives of the von Neumann Committee recommendations for special management arrangements to be established to assure priority development of ballistic missiles. Securing Needed Technical Competence Prior to the atomic energy breakthrough in 1953, which ap peared to make intercontinental ballistic missiles much more feasible, the Air Force had already been pursuing the development of ICBMs. The program, which had taken form in the late 1940s, was termed Atlas. High priority had not been given the program because of the

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198 technical problems associated with making ICBMs practical. During this period, the prime contractor for Atlas had been the Convair Division of General Dynamics Corporation. In 1946, the Air Force had signed a contract with Consolidated Vultee (later to become the Convair Division of General Dynamics Corporation) to 11Study stabilization, guidance and power plant problems for a missile with a range of 1,500 to 5,000 miles ... 17 These studies were the early R&D activities which led to the Atlas program. In 1951, the Air Force awarded a new contract to Convair for further study and development work. Convair continued its development efforts and was the prime contractor responsible for Atlas at the time the von Neumann Committee made its recommendations. The recommendations of the von Neumann Committee included the need for a reorganization of the internal Air Force management of the ballistic missile program (which has already been discussed) and a second major management recommendation: that the Air Force consider means to secure needed technical competence required in the management of the program. As has been noted earlier, the traditional method used by the Air Force in conducting a major development program was to assign systems engineering to the prime contractor. The government itself normally provided, through in-house resources, technical capability for overall management and technical direction. The von Neumann Committee, however, had suggested that such a procedure would be inadequate for the management of the ICBM program.

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199 During the early period of ICBM development, beginning with the first studies in 1946 and continuing to 1953, the Air Force had relied for technical competence on the Wright Air Development Center at Dayton, Ohio. This center consisted of thousands of Air Force and civilian employees working in a variety of technical laboratories. The center, as described by Douglas in 1959, had 11histor ically managed aircraft development from the earliest days of the U.S. Army Air Corps.nlB It would appear that the very large Air Development Center could have provided needed technical competence or could have been used as the base on which to build new and addi tional technical skills which apparently the center did not have. Although hundreds of pages of testimony exist on the management of the Air Force ICBM program, and although the question of the method used by the Air Force to secure technical competence is exhaustively reviewed, the simple question of why the Air Force did not build this competence in house is not discussed. It has been noted earlier that both interservice and intraservice rivalries existed within the Department of Defense. The Wright Air Development Center had traditionally worked closely with those Air Force groups involved in manned aircraft. The new missile group within the Air Force may have believed that the Air Development Center was too closely tied to manned aircraft to give priority attention and support to the infant missile program. For whatever reasons, after 1954 the Air Force moved to develop its own contracted technical competence and no longer relied on the Wright Air Development Center.

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In order to acquire technical competence, Schriever con sidered four alternative courses of action: (1) A single prime contract to orte industrial organiza tion to manage and provide complete development, as recommended by Convair; (2) the creation of a new large laboratory within a university; (3) the existing (tentative) organization, criticized by the Scientific Advisory Committee and Mr. Quarles, whereby Ramo-Woodridge acted in a technical staff capacity to the WOO commander, but systems responsibility would more or less reside in the prime contractor; and (4) placing full responsibility in Ramo-Wooldridge as a line organization for systems engineering and tech nical direction of a group of contractors while retaining staff relationship to WDD Headquarters. 200 The Air Force, after of these four alternatives, selected the fourth alternative for implementation. It is interesting to observe that at the time this decision was made, it was not reported by either Aviation Week or The New York Times. This may reflect the fact that either the decision was not announced by the Air Force, or that these two influential publications did not consider the decision newsworthy. At the time Ramo-Wooldridge 11was inclined to favor the third alternative ... 20 The final decision on how to secure needed technical competence was apparently made by Schriever. In making this decision, he carefully considered each of the four alternatives outlined above. His analysis of the strengths and weaknesses of each of these approaches is discussed below. Quite naturally, Convair favored a plan whereby it would perform systems engineering for the entire project. (As was noted

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earlier, this would be consistent with normal practice on large scale development projects.) Under this plan, Convair would be responsible for: functional design and systems engineering; detailed project estimates, evaluation of procurement specifications; administration of subsystem designs, schedules and the like; and integration of the subsystems and the weapon system as to performance, environment and flight testing, and production.21 201 Schriever rejected this proposed Convair pJan on the basis that Convair did not have the depth of technical competence required and would have difficulty in acquiring necessary scientific and engin eering talent. The second alternative, creating a large university labora tory to provide technical capability, was rejected by Schriever on the ground that a university was not 11Suitable for a project that would involve hardware development and production by a large and widespread industrial team.n22 The concept of using a special contractor (Ramo-Wooldridge) as a technical staff to the Western Development Division with systems engineering being performed by Convair was also rejected by Schriever after careful study. This was a plan which Ramo-Wooldridge had proposed but which had been criticized by both Quarles and the Strategic Missile Evaluation Committee as being 11Unclear and unwieldy ... 23 A final considered and adop ted by Schriever was to vest both systems engineering and technical direction in the new Ramo-Wooldridge organization. The early history of this new corporation are important to an understanding of the Air Force decision and are discussed below.

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202 The History of Ramo-Wooldridge was a new corporation which had been estab lished in 1953. At the time of the von Neumann studies, the corpor ation was very small and in the process of being organized. Simon Ramo, who was to become executive vice president, and D. E. Wooldridge, who was to become president, worked for the Hughes Aircraft Corporation to the establishment of the new corporation. Both men were brilliant scientists who had made major individual contributions to Air Force programs while working for Hughes. Aviation Week reported that Ramo and Wooldridge left Hughes Aircraft to form a new company 11When the two scientists left top spots at Hughes Aircraft Co. after sharp disagreement with Howard Hughes.u24 In 1953, they joined together to form the Ramo-Wooldridge Corporation. Financing of the new corporation was based on several sources. Ramo and Wooldridge each invested $6,750, and, to secure additional funding, Thompson Products Company made an investment of $165,000. This provided the capitalization of Ramo-Wooldridge and allowed them to move ahead to become the organization which provided technical competence for the Air Force ICBM program. Initially, RamoWooldridge was a separate corporation in which a controlling interest was held by Thompson Products .. The relationships between Thompson Products and RamoWooldridge were to become more than simply financial as the companys operations grew. In a special report on Air Force ballistic missile management, entitled 11Formation of Aerospace Corporation, .. the House Committee on Government Operations found:

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Another interested party was Thompson Products, Inc., finan cial backer and majority stockholder of Ramo-Wooldridge. Relationships between the two companies were knit even more closely by interlocking directorates and sizable intercorporate sales of equipment.25 At a later date, Thompson Products and Ramo-Wooldridge were to merge and form the TRW Corporation. 203 In 1953, when Ramo-Wooldridge was a new corporation with few employees and not established as the major corporation it would be-come, the company received a contract from the Air Force to provide technical assistance to the von Neumann Strategic Missiles Evalua tion Committee. This was the committee, as outlined above, that was to find the Air Force needed to turn to a special contractor outside the government to provide needed technical competence. Ramo and Wooldridge, in their roles as consultants to the von Neumann Com mittee, provided more than simply technical advice. Secretary Douglas of the Air Force indicated in 1959: Drs. Ramo and Wooldridge served the committee as technical experts under Air Force contract with their corporation, but for all practical purposes could be considered to have been members of the Strategic Missiles Evaluation Committee.26 Thus, Ramo and Wooldridge, serving for "all practical purposes" as members. of the special Air Force committee, joined in the recommendation that the Air Force contract with their organization to provide technical competence in systems engineering and technical direction. To the uninformed, this might appear to have been a major conflict of interest, but apparently this was not the case. At any rate, the Air Force had no problem in implementing this re-commendation.

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204 As we have noted, Schriever did determine that the group selected to provide this technical competence to the Air Force would be Ramo-Wooldridge. What was the status of the corporation at the time this highly significant and precedent-making decision was made? Congressionai hearings are vague on the size of Ramo-Wooldridge at the time the Air Force awarded them the contract to become its chief ICBM technical manager. The number of RamoWooldridge employees may have been as small as eighteen or as large as one hundred and fifty. The size of Ramo-Wooldridge, however, was not significant; what the Air Force was contracting for was really the services of the two individuals, Ramo and Wooldridge. It was assumed they could acquire necessary technical talent to staff the operation. Thus, the Air Force was prepared to place major reliance for the success of the ICBM program in the hands of two men representing a new and untried corporation. It should also be noted that the corporation did not follow the pattern of many special corporations serving the agencies of government in the sense of being a non-profit organization; Ramo-Wooldridge was very definitely a for-profit organization and, in fact, very profitable. The Air Force during the 1959 hearings testified that the profit was substantial. Congressman Holified, who chaired the hearings, commented: It is a very impressive success story. I am deeply impressed by the fact that with an original investment of $6,750, a person can multiply it up to about $3 million in 4 years1 time, and during the same time enjoy salaries in the neighborhood of $37,500, starting in September 1953 to $50,000, in December of 1957.27

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The outstanding financial and technical success of RamoWooldridge wasnot unaccompanied by some problems and controversy. The story of Ramo-Wooldridge from its formation in 1953 to the es-tablishment of the Aerospace Corporation some years later needs to be understood if the degree to which the Air Force became involved in the establishment, organization, and operation of a private corporation is to be comprehended. The special functions assigned to Ramo-Wooldridge were to Rlace the corporation in a uniquely advantageous position were it I to pursue other government business. RamoWooldridge would be involved in developing initial specifications, would have a special and unique understanding of the requirements, and would therefore be in a highly advantageous competitive position. .The Air Force, while not having displayed great sensitivity to the problems of conflicts of interest in establishing RamoWooldridge, was required to give special attention to this problem. The nature of the problem would be one to create concern among other aerospace firms and therefore required attention. The Air Force faced this problem through the establishment of a special "hardware exclusion" clause in the Ramo-Wooldridge contract. This clause provided: The contractor agrees that due to its unique position in the administration and supervision of the program contemplated hereunder, the Ramo-Wooldridge Corp. will not engage in the physical development or production of any components for use in the ICBM contemplated herein except with the express approval of the Assistant Secretary of the Air Force (Materiel) or his authorized representative. 2 8

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206 Although the hardware exclusion clause had been made a part of the contract between the Air Force and the Ramo-Wooldridge Corporation, the question was far from settled. Ramo-Wooldridge did bid on hardware for Air Force programs and was awarded contracts, but, apparently, the procedures outlined above were not followed. When questioned by a congressional committee on the decision to make this contract award, Schriever testified, 11The answer is, it was not referred to the Assistant Secretary. I made the decision myself.1129 Schriever maintained that the subject contract, a hardware sub contract with the Arma Company,, fell outside the scope of the hardware exclusion clause. Whether or not this was a correct interpretation of the exclusion clause, it was clear that Ramo-Wooldridge wished to enter the hardware field and that the Air Force would experience difficulty in preventing it from doing so. The major group within Ramo-Wooldridge most closely tied to Air Force ICBM activities was the Space Technology Division. Because of the desire of Ramo-Wooldridge to pursue hardware produc tion activities, the Space Technology Division was established as a separate firm in 1958, renamed Space Technology Laboratories (STL), and became the group responsible for providing systems engineering and technical management to the Air Force. 3 0 A 25 August 1958 report in Aviation Week, 11Ramo-Wooldridge to Sever Ties with Space Technology Division, .. explains that the separation of the Space Technolngy Division from Ramo-Wooldridge was designed to 11divorce STL1s technical management efforts from Ramo-Wooldridges own activities in the aviation-avionics field.31

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In spite of this action, criticism of these arrangements did not cease. The Air Force/Space Digest reports: The separation was only a half-measure. STL was still a wholly owned subsidiary of Ramo-Wooldridge, which in the shuffle became-Thompson Ramo-Wooldridge as a result of a merger.32 Conti.nue:d :cti:ti:ctsm .of re lati onshi ps with .RamoWooldridge led the Air Force to decide on the creation of yet 207 another new corporation to perform technical management functions formerly assigned to STL. It may appear odd that an agency of the federal government should be so actively engaged in the creation of a private corporation which would be the recipient of non-competitive, sole-source contracts from that same government agency. Strange or not, however, this was the situation which re-sulted in the creation of the new corporation, Aerospace. Formation of the Millikan Committee Continued criticism of STL centered around the concern of members of the aerospace industry that STL continued to enjoy (or at least appeared to enjoy) and advantage in bidding on Air Force projects. As already indicated, the relationship between STL and Thompson Ramo-Wooldridge was one that also created concern because of the overlapping organizational relationships between the two organizations. An Aviation Week story of 7 July 1958 reported: Of the 1958 Ramo-Wooldridge sales, approximately $10 million will come from production work, the remainder from research and development efforts. These are the number of military contracts which the company holds outside Space Technology Laboratories.33

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In September 1959, Douglas established a new committee, chaired by Clark B. Millikan, director of the Guggenheim Aeronautical Laboratory of the California Institute of Technology, 208 11for the purpose of examining and evaluating the Air Force ballistic missile management organization.u 3 4 Membership of the new committee was decided on by Douglas after consultation with Schriever. The committee was formed with representation primarily from industry and included Henrick W. Bode, vice-president for military development of Bell Telephone Laboratories, Inc.; Ferguson, president of Bendix Aviation Corporation; and other distinguished representatives of the aerospace industry. Included on the committee was Charles A. Lindbergh. The Millikan Committee found that the initial Ramo-Wooldridge-STL arrangements were of an emergency nature and were adapted to meet urgent needs. The committee recommended that STL1s role and mission should be reoriented to allow it to continue to perform essential functions. It also proposed 11the establishment of continuing management institutions rather than an expedient tailored to a pressing problem ... 35 The House committee studying this question concluded that the Millikan Committee believed: STL had extended the reach of its work unduly by (a) con tinuing to direct particular missile programs longer than was necessary, (b) designing or developing boosters, pay loads and other space machinery as a 11Sole source11 contractor for the Air Force, (c) being a ready and convenient instrument for conduct of Air Force advanced studies and other technical chores as the occasion demanded, and (d) performing administrative support and other miscel laneous duties unrelated to the technical requirements.36

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As has been noted above, a continuing criticism of STL was the fact that it continued to be engaged in the design, fabrication, and assembly work rather than in systems engineering and technical direction. As a result, the 11 i kan Committee observed that it was a potential 11arsenal11 for the Air Force. The Millikan Committee, apparently concerned with the scope of STL's manufacturing and design activities, recommended: 11all projects, functions, or other work assignments currently performed by STL should be identified and budgeted 37 The committee also recoMmended that any work being performed by STL which was suitable for transfer to aerospace contractors be transferred as quickly as possible.38 It is important to understand what appears to have been the area of major concern to the Millikan Committee. The committee, made up primarily of representatives of the aerospace industry, was not concerned with the fact that the Air Force contracted for these technical functions. It was concerned with the Air Force practice of using a special Air Force contractor created for this purpose rather than utilizing the services of existing aerospace firms. No consideration apparently was given to the feasibility of conducting systems engineering and technical oodirection functions in house utilizing civil service personnel. In spite of the committee's criticisms of STL and the Air Force use of that corporation, the committee was perfectly willing to recommend that the Air Force make use of a 11Civilian contractor organization11 which would be made responsible for the following areas of ballistic missile and military space activities:

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(a) Advanced planning and evaluation of.new ideas. (b) 11Broad-brush11 initial system design. (c) Technical evaluation of contractors proposals. (d) Technical monitoring of program progress.39 The committee indicated that such a new corporation should be 210 basically 11non-competitive.11 The congressional committee studying these recommendations interpreted this specific recommendation to mean that such a new corporation 11Working so closely with the Air Force should offer no competition to industry, now, nor build up a capability to do so in the future.u40 The Millikan Committee, in spite of its concerns with STL, did not recommend that a 11nonprofit11 organization be established. The Air Force accepted the recommendations of the committee as a way to avoid the current problems with STL, as indicated in the congres sional committee report: The Air Force seized upon the Millikan Committee recommendations to sidestep the difficult problem of converting STL into a nonprofit organization. Rather than with that formidable task, the Air Force created a new corporation to coexist with, and even supervise, STL. The Creation of Aerospace The Air Force quickly moved to establish yet another special contractor to provide technical competence to the Air Force. In order to organize such a new corporation, Schriever convened an informal group as an organizing committee. The group included Jerome Wiesner and Gen. John McCormack, both of whom had been members of the Millikan Committee as well as several other prominent industrial officials. The role played by the Air Force was_one of planning the

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211 organization, structure, and legal status of the new corporation. The report of the Committee.on Government Operations indicates: The organizing committee was asked by the Secretary of the Air Force to submit a list of possible members for the board of trustees. The committee also was authorized to draw up the charter of the new organization. The slate of trustees and the terms of the Charter were reviewed and approved by the Secretary of the Air Force.42 In due course, the organization as planned by the Air Force was legally established. The House committee r-eported: California became the home state of Aerospace Corporation. The articles of incorporation and bylaws were filed according to California law on June 4; 1960. The principal office for the transaction of business was to be located in Los Angeles County. Aerospace came into existence as a nonprofit corporation and immediately became an Air Force contractor. The Air Force con-tract issued to Aerospace provided that the new corporation would be responsible to: aid the U. S. Air Force in applying the full resources of modern science and technology to the problem of achieving those continuing advances in ballistic missile and mili tary which are basic to the national secur1ty. More specifically, the Aerospace Corporation was to provide analysis, planning, initial systems engineering, initial technical direction, and general technical supervision for the Air Force. The Air Force immediately acted to provide Aerospace with a contract and on 9 June 1960 signed a contract with the new company. Because the company had no employees, it was obvious that the Air Force expected no immediate contract support from Aerospace. The contract made it possible for the Air Force to provide Aerospace with working. capital of $5 million in the form of advance payments under the contract.45

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212 The creation of Aerospace did not result in the severance of the Air Force-STL relationship. Aviation Week reported: It's unlikely that the committee hasrecommended, or that the Air Force will agree, to sever STL's systems engin eering and technical direction services in relation to existing ballistic missile programs, because of the delay involved in such action, coupled with the expense of contract termination and assembling a comparable capability in another contractor.4b It is interesting to observe that Aviation Week, like the Air Force, could not conceive of an arrangement where the Aii Force would provide these technical management functions using their own personnel and facilities rather than relying on a contractor. STL continued to serve the Air Force in the management of ongoing missile programs, while Aerospace picked up work with the Air Force on new missile and space projects. Personnel from STL were recruited by Aerospace to form the cadre of the new company. The New York Times reported the estab 1i shment of the Aero-space Corporation and indicated: The new arrangement devised to resolve three-sided dissatisfaction with the set-up that grew out of the Air Force's original quick plunge into the missile and space business while 7it lacked the specialized manpower to do all the work.4 The Times story quotes an Air Fprce press release which identifies the role of the new corporation: concern itself with advanced systems analysis ana planning, research, experimentation, initial engineering, initial technical direction and general technical supervision in the complete field of ballistic missiles and space systems.48

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The establishment of Aerospace as an operating entity con tinued to be an area of concern for the Air Force. The House committee report indicates: To provide suitable quarters and equipment for Aerospace, the Air Force decided that STL1s Research and Development Center should be purchased with Government funds and turned over to the new corporation. Prompt acquisition was emphasized. The Research and Development Center had laboratory, computer, and other specialized facilities which were needed by the new organization and, the Air Force believed, would aid in attracting scientific personne1.49 Although Aerospace is a nonprofit corporation, it receives fees for its contract work. At the time of the congressional review fee was $1,500,000 on its basic contract of $31,610,000 for fiscal year 1961.50 Implications for the Federal Service of the Air Force Position The creation of Air Force captive contractors was accom-plished in the name of providing technical competence, which the Air Force alleged it did not have and could not develop in house. If this position correct, it had substantial implications for the government as a whole. If the Air Force could not develop and maintain in-house technical competence, it would be unlikely that other agencies, particularly high technology agencies, could do so. This would suggest that the government might be forced to contract for basic technical management of many of its ongoing programs in a wide range of fields including science, engineering, medicine, and others.

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214 The question should be clearly stated; the problem addressed does not deal with whether or not the government should engage in routine manufacturing activities. The basic question is whether or not the government should have the capability on its own rolls to make basic technical decisions concerning major critical programs undertaken by the government. The first area which needs to be examined is whether or not the Air Force was correct in its assumption that the government could not attract and retain the highly competent personnel required by the program. In this regard, it is important to note that the issue is not one of whether the contract method employed by the Air Force is more easily accomplished than the creation of in-house capability. The question is simply one of whether or not the government must contract to achieve necessary technical competence. During the same period that the Air Force was engaged in creating a private contractor, other federal agencies were engaged in the conduct of equally complex technical programs. Problems cited by the Air Force that made the development of government capability difficult applied equally to other agencies, such as the Army, Navy, Bureau of Standards, and NACA. At the time the Air Force was engaged in the creation of special contractors, the Army was conducting its missile program using in-house civil servants. Admittedly, the Army had acquired the German rocket scientists who provided expertise in the missile area; it was able to retain this group and to use them as the core on which to create a very sizable in-house capacity. The Navy,

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21!5 like the Air Force, could not utilize an existing group of tech nical missile specialists. The Navy elected to build technical competence in house with which it achieved a great deal of success in its Polaris program. NACA was research rather than development oriented; however, it relied exclusively on civil servants to staff its government laboratories. One of the oldest and best establlished laboratories in the country was the National Bureau of Standards. Like the Navy and NACA, it was an in-house operation staffed with civil service and engineers. All of these examples suggest that the Air Force had the option of developing in-house technical competence rather than relying on the establishment of special contractor organizations. The Air Development Command provided what would appear to have been a satisfactory nucleus on which to build the additional competence needed. Why did the Air Force elect to contract to achieve technical competence? Air Force Rationale for the Contracting of Technical Functions The Air Force used two main arguments in explaining its de cision to contract. The first was that the ICBM programs had high priority and that there was, therefore, no time available to develop an in-house capability. The second argument was that the salary structure and government red tape inherent in government operations made it difficult to establish an in-house competence.51 The urgency of the program did not result in the Air Force making use of an 11in place11 contractor to carry out technical

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216 functions. Contracting with Ramo-Wooldridge a short time after its establishment, that company was required to start from practically a zero base in building its organization. Had this capability been developed within the Air Force, it too would have had to develop a new aapability. The argument, therefore, that the urgent nature of the program required contracting with a private concern appears to be weak. The second argument advanced by the Air Force in support of its use of a private contractor was that the government would not be able to attract and retain competent personnel. This, however, was not true of the Army, Navy, NACA, or the Bureau of Standards. It is therefore difficult to believe that the Air Force could not as effectively establish an in-house capability as other federal agencies. Although the given by the Air Force for contracting for technical functions appears to be weak, the problems associated with government operations should not be dismissed as completely unreal. The use of civil service employees to perform technical functions would undoubtedly have made the job more difficult for the Air Force and would have presented the following problems: 1. Inadequate salary levels. Traditional civil service salaries have lagged behind industry; this is particularly true among highly skilled technical personnel.

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217 2. Lack of flexibility in hiring. Civil service procedures can result in lengthy delays in the hiring process. 3. Future uncertainties. The civil service is always sub-ject to government-wide personnel freezes, salary freezes, and inadequate salary adjustments. These factors do make it more difficult to retain high-quality scientific and engineering personnel. In addition to the above factors relating to hiring and retaining personnel, government regulations controlling such matters as travel, per diem, procurement, and other administrative areas generally are more restrictive than private industry. The use by the Air Force of a private contractor made it possible to avoid all of these problems. The point is not if it is less restrictive to make use of a contractor than to build an in-house capability, but whether or not it is possible to develop capable government personnel to perform these functions. The answer, based on the experience of other agencies, appears to be clearly, "yes.11 A second, and substan-tially more important question, is whether or not it is appropriate for the government to utilize a contractor to perform these vital governmental functions. Criticism of the Air Force Use of Special Contractors The Air Force use of special contractors has not been uni formly well received by those who have evaluated it. One outside review was conducted by the General Accounting Office in 1960. In its annual report to Congress for the fiscal year 1960, the General

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2l8 Accounting Office found that a need existed for the Air Force to 11develop in-house capability to provide systems engineering and technical direction for its ballistic missile program.1152 This recommendation was based on an audit made of the management of the Air Force ballistic missile program released on 19 May 1960. The audit found that the Air Force decided in 1954 to contract with a private corporation for the systems engineering and technical direction of the missile program because of urgent conditions in that year. The comptroller general concluded: This decision appears to have been appropriate as an emergency measure. However, although more than 5 years have elapsed, the Air Force has not developed an in-house capability to carry out the functions to the contractor, Ramo-Wooldridge Corporation. The comptroller general believed that an important question existed in terms of the use of such a private firm in view of the significance of the program to the nation and the importance of these functions which were delegated to a private corporation. The audit report also concluded: By delegating the technical aspects of this management to a contractor, the Air Force has, to a significant degree, removed itself from the direct management of the program, and, as a practical matter, has shifted a portion of its res onsibilit for the success of this crucial ro ram to a contractor. rtalics mine ... The comptroller general goes on to state: We believe that a program of this importance should be con ducted under the direct leadership and responsibility of the Government agency to which it is entrusted. Furthermore, a function which so significantly affects a major segment of our industry more appropriately should be performed by a Government agency rather than a particularly when the program is continuing in nature.

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219 The comptroller general also directs his attention to the Air Force contention that it was unable to recruit and retain high quality technical staff to perform these functions. He finds that this can be done if 11appropriate salaries and incentives are provided.n56 The final recommendation of the comptroller general is that the Air Force 11should take appropriate steps to develop in-house capability within the Air Force to provide systems engineering and technical direction for its ballistic missile program ... s7 It is interesting to note that, although the comptroller general was critical of the Air Force for contracting these essential management functions to private industry, he did not find the contract illegal. Danhof, in commenting on this decision, observes: In the case cited, as in most others of this nature, the General Accounting Office rendered an opinion without recommending such action as the cancellation of a contract, refusal to make payment, or the recoupment of funds.SB Danhof goes on to indicate: In the absence of action by the Congress or protests from the Civil Service Commission, the General Accounting Office has contributed modestly to establishing specific limits of contracting out. In view of the pragmatic attitude of the Congress and the absence of guidelines, the General Accounting Offices defense of the boundaries of .. work traditionally persrmed by government employees ... has been highly permissive. The Armys View of Contracting for Technical Competence One of the severe critics of the Air Force practice of contracting for systems engineering and technical direction was the Army group responsible for the Army missile program. Medaris,

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220 commanding general of the Army Ordnance Missile Command, in testifying before Congress, took strong exception to the position of the Air Force concerning the use of private contractors such as Aerospace. The approach utilized by the Army in the management of its missile programs has been discussed in Chapter VI. The Army, unlike the Air Force, relied on in-house government employees in the conduct of its missile programs. Medaris disagreed with the Air Force position that government civil service employees could not manage major missile programs without the technical assistance of private contractors. He maintained that government employees could be more objective in their analysis of problems arising in the R&D phase of a program and that they represented a greater de gree of continuity than did contractors. Medaris' opinion is summarized by his statement: We must have technically competent people on the Government payroll who have no conflicting interests, and who therefore can afford to be objective--and I select my words who cannot afford to be other than objective.6 The Be 11 Report On 31 July 1961, President Kennedy appointed a special committee on "Government Contracting for Research and Development." The committee was one of the most prestigious of its type and in cluded as members, Robert S. McNamara, secretary of defense; James E. Webb, NASA administrator; John W. Macy, Jr., chairman of the Civil Service Commission; Glenn T. Seaberg, chairman of AEC; Alan Waterman, director of the National Science Foundation; and David

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221 Bell, director of the Bureau of the Budget. Bell served as chair-man, and the committee has s i nee been known as the 11Be 11 Committee. 11 The committee 11reviewed the experience of the government in using contracts with private institutions and enterprises to obtain research and development work for public purposes.n61 The committee report was submitted to the president on 30 April 1962. The committees findings and-recommendations are lengthy and will not be repeated here. An important finding, however, which bears on the Air Force management approach of using a contractor to provide technical management deserves consideration. The committee found: We consider it a most important objective for the Government to maintain first-class facilities and equipment of its own to carry out research and development work. This observation applies not only to the newer research and development agencies but to the older agencies such as Commerce, Interior and Agriculture. No matter how heavily the Government relies on pri-_ vate contracting, it should never lose a strong internal competence in research and development. By maintaining such competence it can be sure of being able to make the difficult but extraordinarily important program decisions which rest on scientific and technical judgments. Moreover, the Governments research facilities are a significant source of management personnel.62 In its transmittal letter to the president, the committee summarized its views by stating: The basic purposes to be served by Federal research and development programs are public purposes, considered by the President and the Congress to be of sufficient national importance to warrant the expenditure of public funds. The management and control of such programs must be firmly in the hands of full-time Government officials clearly responsible to the President and the Congress. With programs of the size and complexity now common, this requires that the Government have on its staff exceptionally strong and able executives, scientists, and

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engineers, fully qualified to weigh the views and advice of technical specialists, to make policy decisions con cerning the types of work to be undertaken, when, by whom, and at what cost, to supervise the execution of work undertaken, and to evaluate the results.63 222 The recommendations of the General Accounting Office and the findings of the Bell Committee cast some doubt on the wisdom of the Air Force in delegating to a private contractor basic governmental responsibilities in the management of the nation's ICBM program. Summary and Conclusions In summary, the Air Force determined early in the ICBM program that it would contract for systems engineering and technical direction functions with a private contractor rather than develop this competence in house. The basis for this decision is unclear other than statements by the Air Force that it lacked and could not secure such technical competence within the service. In seeking to secure this technical capability, the Air Force initially contracted with a new organization, Ramo-Wooldridge. That company, however, became interested in entering the hardware field and, as a result, the Space Technology Laboratories of Ramo-Wooldridge were 11Spun off11 as a new and separate corporation. Although STL's contract with the Air Force contained a 11hardware exclusion clause11 which prevented STL from entering the hardware field, STL began to engage in the design and manufacture of certain hardware items. The Air Force found it difficult to enforce its hardware exclusion clause, and criticism was raised by the aerospace industry concerning what it considered to be the unfair competitive advantage of STL. Faced

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223 with this condition, the Air Force created still another new corporation, Aerospace. In the creation of Aerospace, the Air Force served as much more than a mere midwife--the Air Force itself sired the new orga nization, arranged for its incorporation, selected members of its board of directors, and immediately signed a contract with the in fant company. This procedure provided Aerospace with needed working capital. In addition, the Air Force purchased facilities from STL to provide Aerospace with government-owned facilities. Aero-space, unlike Ramo-Wooldridge and STL, was incorporated as a nonprofit corporation. Since its establishment, Aerospace has continued to serve the Air Force as its primary source of technical competence in the management of its missile and space programs. The use of this type of specially created "captive" contractor has been criticized by those outside the Air Force. The General Accounting Office, in a 1960 audit, recommended that the Air Force develop its own in-house capability to perform these functions. The Bell Committee, in 1962, found that government R&D agencies required their own in-house capability to manage major R&D programs properly. Commenting on the Air Force practice of using private contractors to perform technical management activities, Arnold L. Levine, wrote: The case for hiring systems contractors to manufacture and integrate the components was not open and shut: the Army, at its Huntsville Arsenal, was quite as capable of devel oping weapon systems (e.g., Jupiter) as complex as the Air

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Force's Thor intermediate rangeballistic missile. In essence, the Air Force turned to private contractors because it had neither the depth of competence found in Army laboratories nor the time to recruit engineers.64 224 In his analysis, Levine fails to note that the Air Force use of such a special contractor was a major deviation from stand ard government practice and that Ramo-Wooldridge was required to develop its organization from scratch before it could effectively serve the Air Force. The question was not one of using a contrac. tor to integrate the work of others but of using a contractor to provide the basic needed technical competence to the government in the management of the overall missile program. The role of Aerospace was to provide technical management to the Air Force. Steckler observes that 11Management companies perform the government's function of supervision and coordination and often suggest to the contractors, through the appropriate government agency, an alternative approach to a technical problem.n6S The use of contractors to perform these basic governmental func tions is at the root of the public policy issue involved in the Air Force creation and use of the Aerospace Corporation. In discussing the laws which relate to the performance of governmental functions, Robert F. S. Homann, writing in the Federal Bar Journal, states 11In buying a development program, the Service must retain its responsibilities for major decisions, with approval and veto power over important actions of the contractor."66 It appears that the Air Force failed to retain this responsibility when it contracted with a private industrial concern to provide itstech nical competence in the field of ballistic missiles.

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225 Danhof summarized what appears to be a generally held view: The variety of arrangements which exist among the agencies prohibits any broad generalizations regarding the optimal relationship of R&D performance to R&D management within the government. It is clear, however, that none of these considerations is well met unless the quality of the staff of the overnment's R&D or anizations is com arable to that available to private institutions. Italics mine] In conclusion, it is obvious that the approach utilized by the Air Force in the administration of its new ICBM programs was radically different from traditional R&D management within the fed eral sector. This approach also raised serious questions as to whether or not it was appropriate to delegate such critical gov-ernmental functions to a private contractor. The Air Force approach, developed during the mid-1950s, existed at the time NASA was established. This model was one of those reviewed by NASA at the time it established its basic policies on the use of the private sector in accomplishing the space program. Chapter IX outlines the factors NASA considered at that time and the conclusions it reached in evaluating the Air Force's management approach.

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NOTES-CHAPTER VII 1u.s., President, Public Papers of tha Presidents of the United States (Washington, D.C.: Office of the Federal Register, National and Records Service, 1953-), Dwight D. Eisenhower, 1961, pp. 1035-1040. 2u.s., Congress, House, Committee on Appropriations, Military Establishment Appropriation Bill for 1946, Hearings before a subcommittee of the House Committee on Appropriations, 79th Cong., 1st sess., 1945, pp. 666-667. 3Randolph P. Kucera, The Aeros ace Industr and the Military: Structural and Political Relationships Beverly Hills, Calif.: Sage Publications, 1974), p. 29. 4"Jet Plane Flies to Capital from New York in 29 Minutes, 15 Seconds," New York Times, 22 April 1946, p. 1. 5u.s., Congress, House, Committee on Government Operations, Organization and Management of Missile Programs, Hearings before a subcommittee of the House Committee on Government Operations, 86th Cong., 1st sess., 1959, p. 6Ibid., p. 5. 711Revolt on USAF Budget Looms in Senate, .. Aviation Week, 7 May 1951, p. 12. 81959 Hearings, p. 5. 9Ibid., p. 19. 10Ibid., p. 5. 11Ibid. 12lbid.' p. 6. 13Ibid., p. 7.

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14Ibid., p. 20. 15Ibid., p. 7. 16Ibid., p. 8. 227 17u.s .. Congress, House, Committee on Government Operations, Organization and Management of Missile Programs, H.R. Rept. 1121, 86th Cong., 1st sess., 1959, p. 69. 181959 Hearings, pp. 4-5. 19 H.R. Rept. 1121, p. 76. 20u.s., Congress, House, Committee on Government Operations, Air Force Ballistic Missile Management, H.R. Rept. 324, 87th Cong., 1st sess., 1961, p. 3. 21 H.R. Rept. 1121, p. 76. 22Ibid. 23Ibid., p. 77. 24"Program for Merger Drafted by Thompson, Ramo-Wooldridge," Aviation Week, 7 July 1958, p. 28. 25 H.R. Rept. 324, p. 5. 261959 Hearings, p. 19. 27Ibid., p. 46. 28Ibid., pp. 33-34. 29Ibid., p. 35. 30william Leavitt, "Aerospace Corporation, USAFs Missile/ Space Planning Partner," Air Force/Space Digest, October 1967, p. 78.

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31"Ramo-Wooldridge to Sever Ties with Space Technology Division," Aviation Week, 25 August 1958, p. 24. 32Leavitt, 11Aerospace,11 p. 78. 33"Program for Merger," p. 28. 34 H.R. Rept. 324, p. 10. 35Ibid., p. 11. 36Ibid., p. 12 37Ibid., p. 13. 38Ibid. 39tbid., p. 14. 40Ibid. 41Ibid. 42Ibid., p. 15. 43Ibid. 44Ibid., p. 17. 45Ibid., p. 25. / 46"New Agency May End STL Controversy," Aviation Week, 14 March 1960, pp. 32-33. 228 47"Air Force Forms New Missile Unit--Civilian Agency to Manage, Develop and Do Research for All Space Programs," New York Times, 26 June 1960, p. 29. 48Ibid. 49 H.R. Rept. 324, p. 35.

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229 50Ibid., p; 41. 51Ibid., p. 4. See also Joseph Campbell, Comptroller General to President Richard M. NiXon, 19 May 1960, General Accounting Office Law Library, B-133042, Washington, D.C. 52u.s., Congress, House, Annual Report of the General Accounting Office, H.R. Doc. 212, 87th Gong., 1st sess, 1961, p. 80. Change 53campbell to Nixon, p. 1. 54Ibid., pp. 1-2. 55Ibid., p. 2. 56 Ibid. 57 Ibid. 59Ibid., pp. 111-112. 601959 Hearings, p. 254. 61u.s., Congress, House, Committee on Government Operations, Systems Development and Management, Hearings before a subcommittee of the Committee on Government Operations, Appendix I, 87th Gong., 2d sess., 1962, p. 191. 62Ibid., p. 242. 63Ibid., p. 192. 64Arnold L. Levine, "Managing NASA in the Apollo Era," paper to become one of the NASA history series, National Aeronautics and Space Administration, Washington, D.C., undated, p. 153.

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65Herman 0. Stekler, The Structure and Performance of the Aerospace Industry (Berkeley, Calif.: University of California Press, 1965), p. 53. 66Robert F. S. Homann, System Concepts and Their Pattern in Procurement,11 Federal Bar Journal 17 (1957): 414. 67oanhof, Government Contracting, p. 129. 230

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CHAPTER VII I SPUTNIK AND ITS IMPACT Introduction On 4 October 1957 a new technological age began for the world at large and particularly for the United States. The suc cessful launch by the Soviet Union of the first artificial satellite was to have a tremendous inffuence on how this nation viewed the role of technology in a free society. Today, over twenty-five years later, it is difficult to appreciate the tremendous impact that first Russian space success had on the United States. Public and congressional concern was at a high point, and a belief existed that somehow American technology had failed--the United States had fallen behind its most dangerous enemy--the Soviet Union. This lost prestige led many senior members of Congress to push forward to occupy key positions on the special committees established by the House of Representatives and the Senate to consider the nation's response to the Soviet challenge. The result of both executive branch and congressional deliberations was the establishment of the new space agency, NASA. In this chapter, the reactions of the public and Congress will be reviewed; the response of the president and Congress will be examined, and major factors associated with the establishment of the

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232 new space agency identified. The passage by Congress and approval by President Eisenhower of the National Aeronautics and Space Act on 29 July 1958 established the new space agency. 1 This act pro vided the legal framework for the United States space program; its provisions and the political considerations which led to its enactment will be outlined in this chapter. Public and Congressional Response to the Soviet Achievement The reaction of the public to Sputnik was one of concern with the failure of the United States to place the first artificial satellite in orbit. The public had long accepted the dominant posi tion of the United States in technology and was totally unprepared when the Russians launched the first satellite into orbit. Congress, like the general public, expressed shock and concern. A Democratically controlled Congress was to look with alarm at this situation, particularly when the executive branch, controlled by the Republican Party, had been slow to move in space. Responding to the Soviet achievement, Lyndon B. Johnson, then Senate majority leader and chairman of the Preparedness Investigating Subcommittee of the Armed Services Committee, stated: One of the witnesses, yesterday, compared the present situation to the challenge that faced America after Pearl Harbor. In some respects, I think it is an even greater challenge. In my opinion2 we do not have as much time as we had after Pearl Harbor. This dramatic statement by Johnson reflected the attitude of many members of Congress and the public. While the threat to American security was never as great as some believed, the techno logical and, by implication, military capability of the Soviet Union

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233 could not be questioned. (In fact, both Soviet and American space technology was at an infant stage. It would be some years before this technology could be developed to the point where it was as use ful and as threatening as it was believed to be in 1957.) Johnson indicated that 11lt would appear that we have slipped dangerously behind the Soviet Union in some very important fields.113 Reviewing his participation in the space program a number of years later, he reflected: Most Americans shared my sense of shock that October night, which now seems so far back in our history. Today people have become accustomed to American superiority in space. Thrilling and dramatic as the first voyage to the moon was, the feat did not stun the nation with surprise. We expected it. There was even some question as to whether the trip was worth it. Whenever I heard such doubts expressed, I recalled that time in October when Sputnik had plunged the American. of 1957 into spiritual depression. I wondered what the reaction would have been in the American of 1969 if Soviet cosmonauts had planted their red flag on the moon.4 Another assessment of American public reaction is contained in the history of the Committee of Science and Technology of the House of Representatives which characterizes public response in the following manner: The beep-beep of the Soviet Sputnik I, launched in October 1957, sent shock waves through the American public. Sur prise, fear, humiliation, and anger were intensified less than a month later when Sputnik II went into orbit with the space dog Laika. How could those ignorant Bolshevik peasants surpass good old American technological know-how? ... These questions were on the lips of Congressmen, officials in charge of our missile and satellite programs, and other national leaders. But even more important, the ques tions were repeated throughout the land by people high.and low who were deeply distyrbed.5

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234 The fear of the Soviet achievement went beyond space explor ation; the Russian success was viewed as having implications in other areas. The House Science and Technology Committee indicates: [This concern] ran deeper than who could put the biggest payload into orbit. There was a wide-spread uneasiness about our educational system and why we werent turning out the scientific and engineering talent to meet the Soviet challenge. Fear of Soviet space missiles gripped the nation.6 The response to the Soviet accomplishments in space was to be reflected in the establishment of a new space agency supported by Congress with priority funding and by a serious. reconsideration of education in the United States. While the public and Congress were expressing deep concern about Soviet achievements in space, what was the reaction of the executive branch? The President and His Administration React to the Soviet Success Unlike the public and Congress, the administration expressed no fear or uncertainty about the Russian success; on the contrary, every attempt was made to down-play the Soviet achievement. The Eisenhower administration had not given emphasis to space research. Alison Griffith, writing in The National Aeronautics and Space Act; A Study of the Development of Public Policy, reports: The Congressional hearings unveiled a pattern of Presi dential complacency, rivalry among the branches of the Armed Services, and governmental red tape which collectively had brought the country to a of serious and perhaps critical disadvantage. In view of the failure of the administration to push space research, it was not surprising that the president and key members

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235 of his administration would seek to deemphasize the importance of the Soviet success. The president, in a news conference held on 9 October 1957, responded to a question by Robert B. Clark, International News Service: (Clark:] Mr. President, do you think our scientists made a mistake in not recognizing that we were, in effect, in a race with Russia in launching this satellite, and not asking you for top priority and more money to speed up the program? [President Eisenhower Q We 11 no, I don t, because even yet, lets remember this: the value of that satellite going around the earth is still problematical, and you must remember the evolution that our people went through and the evolution the others went through. From 1945, when the Russians captured all of the German scientists in Peenemunde, which was their great laboratory and experimental grounds for the production of the ballistic missiles they used in World War II, they have centered their attention on the ballistic missile.B Apparently Eisenhower did not know that, although the Russians had indeed occupied Peenemunde, they had not captured the German scientists who had developed the German rockets. Von Braun and more than one hundred of his key staff had been busily at work in the United States since the end of World War II developing Army ballis-tic missiles. The Russians did bring several hundred rocket specialists to the Soviet Union following the war, but only one of these was a key leader in the German V-2 program.9 The reaction of other administration leaders was in a sim-ilar vein. Sherman Adams, Eisenhowers chief of staff, referred to the Soviet accomplishment as an 11outer space basketball game; .. Clarence Randall, the presidents special advisor on foreign economic policy, termed Sputnik a 11silly bauble ... lQ The Secretary of

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236 Defensei Charles Wilson, also sought to deride the Russian accomplishment by stating, 11Nobody is going to drop anything down on you from a satellite while you are sleeping, so dont start to worry about it. nll The reaction of the Eisenhower was undoubt edly directed at both soothing the public and mitigating a strong public criticism of the administration for failure to develop a space R&D program. Eisenhower learned only on 8 October 1957 that the United States had had the capability to launch a satellite earlier than had the Russians. Deputy Secretary of Defense Donald Quarles informed the president, 11There is no doubt that the Army Redstone, had it been used, could have orbited a satellite a year or more earlier ... 12 Eisenhower was to acknowledge that his state-ments at this time, at least in part, were directed at 11affording perspective to our people and so relieve the current way of near hysteria.n13 The administrationts :e'fforts,:however, .. failed .to .ach ieve their purpose, and the public concern for the failure of the United States to pursue space research and exploration aggressively was to continue. United States Space Exploration: 1957-1958 The capability of the United States to place a satellite in orbit appears to have existed as early as 1949 or 1950. In 1949, the Army missile program, headed by von Braun, had launched a V-2 rocket and, with the use of a Wac Corporal second stage, reached an altitude of approximately 250 miles, sufficient to place a satellite in orbit. The German scientits who led the Army ballistic

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237 missile program had long been eager to explore outer space. This had been the goal of"this group of rocket experts since the midthirties and probably earlier. This desire to enter the field of space exploration continued to be a goal of the group in the 1950s. In 1955, President Eisenhower announced that the United States planned to participate in the 1957-58 International Geophysical Year through the launch of a scientific satellite into earth orbit. The Army made numerous proposals for placing a satellite in orbit using the Jupiter C with an added fourth stage. Von Braun, in reviewing the history of the Armys efforts at securing approval to place a satellite in orbit, reported: 11During 1956 and 1957 the Army was turned down again and again. ABMA was not arguing against Vanguard but for Jupiter C (with a fourth stage that made it Juno I) as a back-up.1114 In spite of the best efforts of the Army and von Braun, they were unable to secure Department of Defense approval for a proposed satellite. After the success of the Russians in launching Sputnik I, the Army once again renewed its attempt to secure Defense Department approval to launch a satellite. In the aftermath of the Soviet success, approval came quickly. On 8 November 1957 the secretary of defense authorized the project. Under this authorization, the Army was given authority to prepare two satellites for launch with a target date of March 1958. Along with these approvals, was authorized $3.5 million for the cost of the mission. Shortly thereafter, the target date for launch was moved up to 30 January 1957. The Army, working with Jet Propulsion Laboratory (another

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238 Army Bureau of Ordnance contractor who assumed responsibility for the satellite) quickly built six Juno I launch vehicles. The target date of 30 January 1958 was not achieved, but the Army, one :aay later; launched the first American satellite into orbit--Explorer !.1 5 The early satellites launched by the United States suffered in comparison with the satellites previously launched. The House Select Committee on Astronautics and Space Exploration compared the weight of American-launched satellites with those launched by the Soviet Union: The difference in achievements is essentially the difference in weight between the Soviet sputniks and American satellites Explorers and Vanguard. Weight is an ac curate index of the rocket thrust available for both space exploration and the purely military ICBMs .... Our 1 successful launchings to date have put 65 pounds of payload into orbit. Their 3 have put up 4,223 pounds of payload.l6 The vast difference between the weight of the Russian satellites when compared to the American Explorers and Vanguard made the United States appear to be even farther behind the Russians than was actually the case. The Russians had used military boosters to place their satellites into orbit as had the United States in the case of Explorer satellites. A strange circumstance led to the fact that the Russian boosters were larger and had greater thrust than the United States military boosters at that time. The purpose for which military missiles had been designed was to deliver an atomic warhead to a potential enemy. The greater sophistication of American technology had resulted in smaller and less heavy nuclear warheads. The Russians, lacking this sophisticated technology, were

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239 required to develop larger boosters with greater weight-lifting capability. When the Russians turned to space activity, their military boosters were therefore able to lift much heavier satel-lites into orbit than could American boosters. Medaris, former commander of the Army missile program, indicated that the Russians at that time: began -with no fear of size, as such, and were quite willing to build big missiles when the state of their nuclear weapons demanded big missiles. Thus was laid the the foundation for capability in large, powerful rocket motors.! The ability of the Soviet Union to place much larger pay-loads in orbit led many Americans to believe that the Russian technology was even more advanced than was actua.lly the case. Because of this strange circumstance which led to larger Russian boosters, the Soviets were to continue to enjoy an advantage in lift capability for almost ten years. At that time, the Saturn booster, developed by the von Braun group for the NASA Apollo program, provided the United States with the capability to place Americans on the moon and return them safely to earth. Congress Investigates Space The widespread interest and concern expressed by the public and members of Congress led both houses of Congress to mobilize immediately to investigate space activity. On 5 March 1958, the day before the House of Representatives reconvened, House Majority Leader, John W. McCormack, offered House Resolution 496, which read: Resolved, That there is hereby created a Select Committee .on Astronautics and Space Exploration to be composed of 13 Members of the House of Representatives to be appointed

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by the Speaker, 7 from the majority party and 6 from the minority party, one of whom he shall designate as chairman.l8 The purpose of the committee was to: ... conduct a thorough and complete study and investigation with respect to all aspects and problems relating to the exploration of outer space and the control, development, and use of astronauti.cal resources, personnel, equipment, and facilties.19 240 The House considered the resolution briefly and passed it unanimously, thus establishing the select committee. The Speaker of the House, Sam Rayburn, appointed McCormack as chairman and Joseph W. Martin, Jr., House minority leader, as vice chairman. The appointment as chairman and vice-chairman of the majority and minority leaders of the House provides fnsight into the seriousness of the situation as viewed by that body. Unlike the administration, which was busily involved in down-grading the importance of the Soviet achievement and the value of space research and operation, the House of Representatives was giving space a very high priority. In the Senate, greater priority had been assigned to the study of space and the need for a response to the Soviet Union. Majority Leader Johnson, on hearing of the successful Russian launch of Sputnik I, had immediately contacted key Senate members. Based on discussions with Senator Richard Russell, chairman of the Armed Services Committee, Johnsons Preparedness Subcommittee was asked by Russell to begin hearings immediately on the status of the United States space research and operations programs. Johnson opened the hearings on 25 November 1957 by stating:20

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We are here today to inquire into the facts on the state of the Nation's security. Our country is disturbed over the tremendous military and scientific achievements of Russia .... With the launchings of Sputnik I and II, and with the information at hand of Russia's strength, our supremacy and even our equality has been challenged. We must meet this challenge quickly and effectively in all respects.21 241 The Preparedness Subcommittee hearings provided theSenate with a base of information not available to the House. The sub-committee continued its hearings until January 1958. Following the work of the subcommittee, the Senate in February 1958 estab lished a Special Committee on Space and Astronautics to investigate space activities further and to develop a proposed position for the Senate on the future of United States space exploration. This committee paralleled the House Select Committee on Astronautics and Space Exploration which was to be established the following month. The Senate committee held its hearings 6-15 May 1958.22 These hear ings were conducted after the administration had submitted a proposed bill to establish the National Aeronautics and Space Agency. As a result, it focused more closely on the administration's propo sals for a new space agency than had the earlier Preparedness Sub-committee hearings. Both the House select committee and the special committee of the Senate included as members sane of the most powerful legislators serving at that time. The work of both committees was of unique .importance in paving the way for the passage of the space act.23 The work of the select committee of the House of Representa tives resulted in the preparation of a most thorough and comprehensive report on the status of United States space .activities. (The

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242 Senate special committee did not produce a final report.) The findings of the House select committee can be summarized as follows: 1. The establishment of a national space program is a matter of the highest urgency. The United States is behind the Soviet Union and hard work will be required to reach parity with the Russians.2 4 2. 11National space policy is too important to leave exclu sively to military authorities or to scientists alone.n25 3. 11The control of our national astronautics program must be in civilian hands, and oriented toward the broadest interests of the Nation.1126 4. II .. coordination and cooperation between the Depart-ment of Defense and the new national agency (must] be thoroughgoing and specifically provided for by law, not left to the chance good intentions of particular administrators.u27 5. The Advanced Research Projects Agency of the Department of Defense was established to coordinate the many astronautics pro grams of the armed services. 11lt should continue to carry primary responsibility for those projects which are principally military in character.n28 6. Disagreements between the space agency and the Department of Defense over space jurisdiction or particular programs should be resolved by the National Security Council, with an opportunity for both the Defense Department and the new space agency to be heard. 2 9 7. The new national astronautics agency should be a 11policy .making organization of broad scope.n30

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243 8. The staff and facilities of NACA should be absorbed into the new agency. In this respect, the committee observed: It is no criticism of the present NACA and its past ac complishments to raise the question whether by tradition and experience it is qualified to take such a tremendous jump in responsibilities. The new astronautics organization is more than a simple enlargement of the NACA. It is to coordinate an entire national effort of the gravest importance. :n [Ita 1 i cs mine:) 9. 110ur space exploration programs will need sustained and intensive work for many years if they are to bear useful fruit.u32 10. ..Freedom of information is not only important interna-tionally, but can play a vital role in directing astronautics toward peaceful applications throughout the world.u33 11. The overall conclusion of the select committee is contained in the following statement: ... it is clear the decision to enter into the space age is not one the United States can ignore or defer. Our national survival requires it. If we meet the chal lenge, we will only then have the option of directing the useof outer space toward peaceful purposes for the benefit of all mankind.34 The conclusions reached by the Senate special committee were similar to those of the House. Both groups appeared convinced of the importance of space research and operations, the fact that such a program should be established as a civilian program, and the necessity to give high national priority to space activities. Both the special committee of the Senate and the House select committee recognized that space exploration involved much more than a simple competition with the Soviet Union and that the scope of the program went beyond possible military applications. Johnson, speaki-ng on the Senate floor, discussed the relationship between military

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weapons systems and space exploration in the following manner: It became apparent that the new weapons were an offshoot of the tremendous scienti.fic advances of the past two decades, which had brought us to the threshold of ex ploring outer space. The compelling facts of the international scene require that we pursue the development of those new weapons. But it seems to even more compelling that we not allow the development of the new weapons to 3 glind us to the existence of the mainstream itself. 244 The Senate and the House were convinced of the importance of space and the need to move aggressively forward as a nation in the exploration of this new frontier. The findings of both houses, however, cast doubt on the desirability of entrusting this new program to the existing NACA. The basis for this concern will be reviewed at a later point in this chapter. The Administration1s Proposed Space Legislation On 2 April 1958, in a 11Special Message to the Congress Rela-tive to Space Science and Exploration,11 President Eisenhower pro-posed the establishment of a new civilian agency, the National Aeronautics and Space Agency, to carry out the United States space and aeronautical research programs. The president noted that his Science Advisory Committee had listed four factors which made exploration of space an urgent requirement: (1) the compelling urge of man to explore the unknown; (2) the need to assure that full advantage is taken of the military potential of space; (3) the effect on na tional prestige of accomplishment in space science and exploration; and (4) the opportunities for scientific observation and experimentation which will add to our of the earth, the solar system, and the uni verse.

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245 The president's message went on to indicate that the space science activities of the United States should be established as a civilian agency "except for those projects primarily associated with military requirements."37 The p_resident also proposed that the existing NACA be abolished and its personnel and functions transferred to the new space agency. Thus, NASA would be responsbile for both the new fOnctions as well as the traditional aeronautical research functions formerly assigned to NACA. NACA, in its attempts to secure responsibility for space research, had recommended_ -that its role be expanded. The NACA proposal continued the NACA organization in that it would be headed by a part-time board made up of both governmental and non-governmental members. The president had rejected this suggestion but did propose that the new space agency director should be advised by a National Aeronautics and Space Board to be appointed by the president. The board, as proposed by the administration, would include both government officials and nongovernment representatives. It would be advisory in nature and would not exercise control over the operations of the agency.38 The legislative proposal made by the president represented a stronger and more centralized agency than had existed under NACA. Two significant changes were proposed in organizational structure: 1. The new space agency proposed by the administration would be headed by a single individual to be termed the director; and 2. An advisory board would be established to aid the director in consideration of policy questions. The board would be composed

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246 of seventeen part-time members representing government agencies, in dustry, and outside groups. The reasons for the change to a single director as opposed to a board were identified by Hugh Dryden, at that time director of NACA, in his testimony before the House. Dryden indicated: It is my understanding that there were two why the administration preferred that authority for operation of our national space be in the hands of a single man, the director of N.A.S.A., appointed by the President with the advice and consent of the Senate. These two reasons are: (1) to for quicker, more direct action on the space program and (2) to insure that one man could be held fully responsible if the program wasn't going the way it should.::s9 The bill as proposed by the administration met many objec tions from various members of the House select committee and the Senate special committee. The bill appeared to be modeled on the existing NACA. The large advisory and the use of the title, "director," rather than the more common "administrator," appeared to be holdovers from the NACA organization. Both within Congress and from outside the legislative branch, a concern existed that the new aqency might tend to operate in the same manner as NACA. Von Braun testified, voicing a concern that the new agency should be substantially different in its operational mode from the existing NACA organization: I feel that the charter of the N.A.C.A. requires some rather drastic changes to enable the N.A.C.A. to take care of the administration and the extensive managerial problems of an ambitious space program. From its present status as an advisory committee and a group of loosely connected institutes for supporting research, it must be transformed into an executive management agency capable of handling large contracts and supervising the allotment of large sums of money for them.40

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247 The concept of the use of some type of advisory group was not opposed by Congress; the nature and structure of such a body were, however, questions of grave concern. Congress Acts on the Administration Proposal The question which had early been of major concern was whether or not the new space agency should be incorporated in some way into the military. Two major factors influenced congressional thinking in this regard. First, the AEC precedent was still quite fresh in the minds of Congress. The military versus civilian argument in terms of atomic energy had been debated by Congress approximately ten years earlier. The result had been a decision to place atomic energy under the control of a civilian agency. The second factor was the importance that members of Congress believed space would have for the military. The obvious uses of space in cluded various types of military satellites as well as the possibility of launching weapons, particularly missiles, from space platforms. Johnson was initially undecided on this question. In re-fleeting on the establishment of NASA some years later, he indicated: The legislation submitted to the Congress called for an independent civilian agency. There were deep misgivings about this move both in our special committee and in the country at large. Space and defense were closely linked, and the military services had the missiles and the experts. In the beginning, I expressed no firm conviction either way. But by the time the hearings were over, I had made up my mind. All that I learned during those first few months of the space age persuaded me that our best hope for the peaceful development of outer space rested with a civilian agency. I was impressed by whatI had been hearing about the nonmilitary applications of

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space hardware--how it could eventually be used to forecast weather and speed communications. I concluded that the military organization should control _space activities necessary for the nations defense, but that all non space efforts should be handled by an independent c1v1l1an agency. .248 The decision by Congress to establish an agency to carry out civilian space activities while vesting military space applica tions in the Department of Defense had been proposed by the administration. It should be noted, however, that this did not follow the pattern established over a decade earlier in the control of atomic In the case of atomic energy, all GOntrol was placed in the civilian AEC. Thus, AEC was responsible for the pro duction of fissionable material, the design of atomic weapons, and the manufacture of all atomic weapons required by the Department of Defense. The establishment of NASA was an important victory for civilian versus military control, but in effect divided space activities rather than vesting all such activities in a single federal agency. The critical nature of the Soviet achievements in the launch of an artificial satellite initially led some members of Congress to believe that a department of science should be established which would incorporate the new space activities. One of the leading ad vocates of such a department was Senator Hubert H. Humphrey, who concluded: Government organization for scientific activities is exten sive and very complex. Of the approximately 80 departments, agencies, and other bodies which comprise our executive branch, some 38 are engaged, to some extent, in scientific activ.ities. For the most part, these activities result from their efforts to carry out Congressionally assigned functions

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which may be specifically scientific in nature or may require scientific activity incidental to their performance. Thus, at the present time, there is no single executive branch agency which is responsible for the planning, coordination, and centralization of all of the civilian, or non-military, scientific and technological activities of the Federal government.33 249 Humphrey was not alone in his concern that governmental scientific activities should receive greater attention and occupy a more important place in the federal hierarchy. The views of those supporting this position are summarized by the House select committee in the following manner: They [those supporting an enhanced role for science in the federal bureaucracy] cite two embarrassing practical arguments for their theory: First, the success of the Soviet missile program ... and second, the cor responding uncertainties of our own, prior to 1958.43 One of the senior military witnesses appearing before the House committee, Adm. John T. Hayward, argued in the following way: The National Presidium of the Soviet, which is the cabinet level, sits opposite the national academy of Soviet science. Back in the 1940s-1945, 1946-it was at this level that the Soviets decided to go into the ballistic-missiles field. Now in our country this work was decided at much too low a level. The Department df say this although I am in the military--is too low a level. I feel that we have to have competent technical people at the highest level to sit in on these basic decisions, policy decisions.44 The support for the establishment of a department of science, or for having space activities represented on the National Security Council, demonstrated the critical importance that high-ranking government officials, both in and out of Congress, attributed to the new field of space.

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250 Arguments against a department of science primarily centered on the fact that research and development were integral functions of the activities of many agencies. It was not considered feasible therefore to separate out research and development activities and centralize all of them in a single agency. In addition, the administration did not support the establishment of a new department of science.45 Although the concept of centralizing all science functions into a new department was rejected as was the concept of making the head of space activities a member of the National Security Council, Congress continued to be concerned with how space policy questions should be handled within the executive branch. The solution reached by Congress in the passage of the space act was to establish a National Aeronautics and Space Council. The importance attached to space activities is shown by the fact that the president was named in the act to head this council. The .question of the most suitable organization for the space activitiesof remained an important consideration in con gressional deliberations. If a department of science (including space functions) was not established, then it was clear that space would be established as a new and separate independent agency. If this were the case, what should be the organizational structure of that agency? Some argued that rather than be headed by a single administrator (or director as proposed in the administration bill) the new agency should utilize a commission form of organization. The

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251 establishment of AEC-assigned responsibility for all research, pro duction, and manufacturing activities associated with atomic energy provided a precedent which many considered applicable. Two separ ate bills were introduced in the House of. Representatives to establish an "Outer Space Commission."46 Although the concept of utilizing a commission form of organization modeled on AEC received some small support, particularly from the scientific community, the Congress as a whole did not look with favor on this proposal. In addition, the executive branch strongly opposed the establishment of a commission to carry out space functions believing that the program should be under the direction of a single director. Rejecting a commission form of organization, Congress was required to determine whether or not space activities should be added to the functions of an existing organization (as had been earlier proposed by NACA) or assigned to a new agency. NACA, responsible for federal aeronautical research, was considered by some to be the appropriate home for new space-related activities. NACA itself had proposed that space research activities be assigned to NACA while other space functions outside the research area be as signed to the Department of Defense, the National Academy of Science, and the National Science Foundation. Although NACA was supported in its efforts to secure the new space research functions by various individuals and groups, the administration had rejected this concept. The administration be lieved that space activities, rather than being splintered among four different agencies, should be consolidated under the direction

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252 of a single executive agency. Groups outside the administration continued their efforts to see space activities joined to the existing NACA. In an editorial appearing in Aviation Week, that influential magazine endorsed the NACA bid for becoming the home of the new space functions.47 The expansion of NACA to become the new space and aeronautics agency was not an illogical idea. NACA had worked successfully in aeronautical research since its establishment in 1915. It had existing laboratories and personnel who were actively involved in aeronautical research. In addition, it had support from the aircraft industry and the Department of Defense. All of these ad vantages might have led to the assignment of space responsibilities to NACA; however, Congress rejected this concept. The factors which defeated NACA in its goal to assume new space functions and which resulted in the demise of the agency, include the following: 1. NAcAs efforts at securing new space responsibilities had been ill-conceived and clumsy. The concept of dividing responsibility for space activities among four different agencies (as proposed by NACA) could hardly be accepted as a logical response to what many considered to be a national crisis. NACAs inability to understand and appreciate the importance of the new space programs meant two things: first, the organizational approach which NACA proposed was rejected by Congress; and, second, the fact that NACA could propose such an ill-conceived and awkward scheme argued that they were a poor group to be entrusted with the new space research and development programs.

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253 2. Members of Congress, although appreciating the out standing work NACA had done as a research organization, also recog nized the limited nature of the NACA experience. The House select committee found: NACA, as now constituted, is a research agency, with the traditions of a research agency. It has acted through the years as a sort of extraordinarily valuable problem-solver for the services and for civilian aviation. But all of the problems it has solved have been technical. Although NACA is very definitely, as Dr. Dryden put it, an operating ganization, its operating traditions have all been consultative, advisory, mediatory .... Specifically, the long history of NACA1s relationship with the military has been the relationship of a trusted supplier to an active orderer. At the present 90 per cent of the NAcAs work is done either directly with the military or through military contractors.48 Thus, the House select committee found that NACAs experience was extremely narrow and limited and believed that this type of insti-tutional experience failed to provide an adequate framework for undertaking the broader and more demanding requirements which would be imposed by the new space program. 3. A third and closely related question concerned what many considered the very conservative nature of the NACA leader ship. The NACA directorand his principal staff appeared to lack an appreciation of the impact which the Russian space success had had on the public and Congress. Hhen Dryden, director of the NACA, appeared before the House select committee on 16 April 1958, he responded to a question about manned space flight by statinq, "Tossing a man up in the air and letting him come-back had about the same technical value as the circus stunt of shooting a young lady out of a cannon."49 This attitude led the House committee and

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254 other members of Congress to believe that NACA should neither assume responsibility for space-related activities nor provide lead ership to the new space agency. At a later point, after legislative action and presidential approval had established NASA, influential members of Congress would advise the White House that they opposed Drydens appointment as its administrator.50 All of the above factors led Congress to believe that, while the NACA should be a part of the new space agency, it should be ab sorbed by a new organization rather than have space functions added to the existing NACA organization. This is a major distinction which is not necessarily obvious to those studying the establishment of NASA. Because NACA was transferred to NASA and became the nucleus of the new agency, it was assumed by some that NACA had ab sorbed NASA. Although the personnel and facilities of NACA became the basis of NASA, and although ma.ny former NACA employees rose to leadership positions in NASA, the new organization represented a substantially different agency in its operations. These differences will be analyzed in Chapter IX. Many of the NACA employees who rose to positions of 1 eadershi p in NAS-A represented the 11young Turks11 of NACA. This group looked with favor on the establishment of an organization which would be less conservative than NACA. Among those young employees who assumed senior positions with NASA were George M. Low, who was to serve as deputy administrator of NASA; Christopher C. Kraft, Jr., who became director of the Johnson Space Center; and Maxime Faget, the individual primarily responsible for the design of the Mercury spacecraft, who became director of engineering and development for the Johnson Space Center.

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255 The deliberations and concerns of both the House and Senate have already been outlined. With hearings having been conducted by both houses, Congress was now prepared to pass specific legislation dealing with space. Not surprisingly, the bills which were passed by the two houses varied to some degree. Both houses believed it essential to establish a new space agency reporting directly to the president. Neither house, however, proposed that the civilian space agency assume responsibility for military space activities. Both houses believed that military and civilian space activities should be split, with the military retaining responsibility for military programs. In most particulars, the functions and powers which both houses proposed to assign to the new agency were not unlike the legislation proposed by the Eisenhower administration. At the same time, it was clear that viewed the new space agency as occupying a much more important place in the affairs of the nation than did the administration. This was best illustrated by a concern of the Senate that space was so important that policy and coordina tion questions within the executive branch would require the highest level of deliberation. In this regard, the Senate and House bills differed and the resolution of these differences was the result cf Johnsons personal efforts. The specific functions which were assigned to NASA included the fa 11 owing:

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(1) Plan, direct, and conduct aeronautical and space activities; (2) arrange for participation by the scientific community in planning scientific measurements and observa tions to be made through use of aeronautical and space vehicles, and conduct or arrange for the conduct of such measurements and observations; and, (3) provide for the widest practicable and appropri ate dissemination of concerning its activities and the results thereof. 256 The powers granted to the new space agency were substantially the same as those which had been proposed by the administration. These included the power to make rules, hire employees, acquire property, enter into agreements with other agencies, utilize advisory committees, and perform other normal administra-tive activities associated with most departments and executive agencies.53 Differences between the bills passed by the House and Senate were, for the most part, insubstantial and were referred to a conference committee for resolution. The questions to be resolved by the committee involved only one major area of dispute between the two houses. The House bill had provided for a liaison committee to assure effective coordination with other agencies, particularly the Department of Defense. The Senate bill, however, provided for a National Aeronautics and Space Council which was a substantially higher level group. (The original proposed legislation as submitted by the administration had provided for an ad visory committee reporting to the director of the new. agency.) The council contained in the Senate bill had initially been proposed by Johnson, with membership to consist of the.follow ing officials:

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257 1. the president, who would chair the council, 2. the secretary of state, 3. the secretary of defense, 4. the administrator of NASA, and 5. the chairman of AEC. The proposed council was an inter-agency committee paral-lel in level of membership and prestige to the National Security Council. The level and nature of the council illustrate the im-portance of space in the minds of many members of Congress. Johnson had conceived of the idea of the council and had talked to President Eisenhower to secure his support for the proposal.54 Griffith reports that members of the conference committee representing the two houses felt strongly about the question of whether a council or a liaison committee (as proposed by the House) was most appropriate: There was an apparent deadlock over the Council provided for in the Senate bill and the Liaison Committee provided for in the House bill. Although the aim in each case was coordination, the two committees were intent on retaining their respective provisions. This apparently was the one major subject on which conferees bargained.55 Other differences between the two houses of Congress were not substantial; changes proposed and adopted in the two bills dealt primarily with relatively routine matters concerning patent and property rights, security provisions, contributions for inven-tions, and similar matters. The conferees met on 15 July 1958 with Johnson presiding. In spite of what many had believed would be a struggle between

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258 the representatives of the two houses, the conference committee 11agreed on a compromise measure with surprising rapidity, a single session proving sufficient.u5 6 The measure included the contraversial proposal of a National Aeronautics and Space Council initially advocated by the Senate. Although the administration had proposed a National Aeronautics and Space Agency, the final act passed by both houses changed 11agency11 to 11administration.11 The reasons for this m1nor name change are not identified in the legislative history. The act was signed by the president on 29 July 1958. NASA had now been established; the important next step would be the selection by the president of its first administrator. Chapter IX will dis-cuss the appointment of the first NASA management team and the im-pact of that team on the development of NASA policy. Transfer Authority Granted to the President An important power granted to the president in the space act related to the transfer of personnel and facilities from other agencies to NASA. Section 302 of the act provided: Subject to the provisions of this section, the Presi dent, for a period of four years after the date of the enactment of this Act, may transfer to the Administration any functions (including powers, duties, activities, facilities, and parts of functions) of any other department or agency of the United States, or any officer or organizational entity thereof, which relate primarily to the functions, powers, and duties of the Administration as prescribed by section 203 of this Act. In connection with any such transfer, the President may, under this sec tion or other applicable authority, provide for appropriate transfers of records, property, civilian personnel, and funds.57

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Under the provisions of section 302, if the transfer were made prior to 1 January 1959, Congress need only be informed. Subsequent transfers required that the president submit them to Congress and a sixty-day period must pass before the transfer would be approved. During this sixty-day period, Congress could in effect veto the proposed transfer. The original bill submitted by the ad ministration had incorporated a similar plan, but with significant differences. The administration plan provided a ''less restrictive 3-year transfer period, but placed more emphasis on bilateral agreements between NASA and the affected agency."58 This provision was important to the new NASA organization and was a power which was utilized by the administration and NASA in secur ing needed competence from other agencies of the government. Summary and Conclusions The Soviet success in the launch of the first artificial satellite came as a major blow to the confidence and prestige of the American people. While panic may be too strong a word to characterize the reactions of the American public, something closely akin to it did exist. The response of the Eisenhower tion was a concerted effort to down-plan the Soviet achievement. This effort, carried out by the president and some of his senior advisors and cabinet officials, failed to allay the fears of the American people. A Democratically controlled Congress moved rapidly to examine how the United States could best mobilize its resources to overcome the admitted Soviet lead in space. Congress

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260 saw the Soviet challenge in space as one of the most significant problems facing the nation since World War II. While the threat to the nation by the Soviet satellites was probably never as great as that perceived by Congress and the public, there could be no question that the United States government and its citizens had seriously underestimated the technological capabilities of the Soviet government. The hearings conducted by Congress and subsequent debate revealed: 1. That Congress believed that it was urgent that the United States aggressively pursue space research and operations on a priority basis. 2. That responsibility for civilian space activities should be established in a new civilian space agency, and that responsibility for military space programs should continue to be vested with the military. 3. That NACA, although an outstanding research organization, should not be assigned responsibility for the new space activities. 4. That the president be given authority to transfer to the space agency programs, facilities, and personnel from other government agencies. 5. That the importance of policy and coordination requirements necessitated establishing a National Space Council with a role and membership similar to the National Security Council. The act resulting from these hearings deliberations was immediately signed by President Eisenhower. NASA had been given a

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261 broad charter for operations; the policies and operating practices of the new agency would now be up to the new NASA administrator and his senior advisors. Chapter IX will outline the development of policy by the new space agency relating to government-industry relationships and the major factors influencing these decisions.

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NOTES-CHAPTER VIII 1u.s., National Aeronautics and Space Administration, An Administrative Histor of NASA, 1958-1963, by Robert L. Rosholt Washington, D.C.: Government Printing Office, 1966), p. 13. 2u.s., Congress, Senate, Committee on Armed Services, Inquiry into Satellite and Missile Programs (Part I), Hearings before the Preparedness Investigating Subcommittee of the Senate Committee on Armed Services, 85th Gong., 1st and 2d sess., 1957 and 1958, p. 3. 3Ibid., p. 2. 4Lyndon Baines Johnson, The Vantage Point (New York: Holt, Rinehart and Winston, 1971), p. 272. 5u.s., Congress, House, Toward the Endless Frontier, History of the Committee on Science and Technolo 1959-79, Committee Print Washington, D.C.: Government Printing Office, 1980), pp. 2-3. 6Ibid., p. 3. 7 Alison Griffith, The National Aeronautics and Space Act: A Stud of the Develo ment of Public Polic (Washington, D.C.: Public Affairs Press, 1962 p. 2. 8u.s., President, Public Papers of the Presidents of the United States (Washington, D.C.: Office of the Federal Register, National Archives and Records Service, 1953-), Dwight D. Eisenhower, 1957, p. 722. 9 Interview with Eberhard Reese, Huntsville, Alabama, 11 August 1982. He was Wernher von Braun's former deputy, both in Germany and the United States, who succeeded von Braun as director of NASA's George C. Marshall Spaceflight Center. 10Johnson, Vantage Point, p. 273.

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263 12Dwight D. Eisenhower, Peace 1956-1961 (Garden City, N.Y.: Doubleday & Co., Inc., 1965 p. 210. 13Ibid., p. 211. 14wernher von Braun and Frederick I. Ordway, III, History of Rocketry and Space Travel (New York: Thomas Y. Crowell Co., 1966), p. 162. 15Ibid., p. 163. 16u.s., Congress, House, Report of the Select Committee on Astronautics and Space Exploration, H.R. Rept. 1758, 85th Cong., 2d sess., 1958, p. 2. 17John B. Medaris, Countdown for Decision (New York: G. P. Putnams Sons, 1960), p. 45. 18Toward the Endless Frontier, p. 1. 19Ibid., p. 2. 20Johnson, Vantage Point, p. 272. 21Inguiry into M-issile Programs, pp. 1-2. 22u.s., Congress., Senate, Special Committee on Space and Astro nautics, National Aeronautics and Space Act, Hearings on S. 3609, Parts 1 and 1, 85th Cong., 2d sess., 1958. 23Members of the Senate Special Committee on Space and Astro nautics were Lyndon B. Johnson, Texas, chairman; Richard B. Russell, Georgia; Theodore F. Green, Rhode Island; John L. McClellan, Arkansas; Warren G. Magnuson, Washington; Clinton P. Anderson, New Mexico; S. Stuart Symington, Hissouri; Styles Bridges, New Hampshire; Alexander Wiley, Hisconsin; Bourke B. Hickenlooper, Iowa;"Leverett Saltonstall, Massachusetts; John W. Bricker, Ohio; Karl E. Mundt, South Dakota. Members of the House Select Committee on Astronautics and Space Exploration were John W. McCormack, Massachusetts, chairman; Overton Brooks, Louisiana; Brooks Hays, Arkansas; Leo W. oBrien, New York; Lee Metcalf, Montana; William H. Natcher, Kentucky; B. F. California; Joseph W. Martin, Jr., Massachusetts; Leslie C. Arends, Illionois; Gordon McDonough, California; James Fulton, Pennsylvania; Kenneth Keating, New York; Gerald R. Ford, Michigan.

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24select Committee Rept 1758, p. 37. 25Ibid. 26Ibid. 27Ibid. 28Ibid. 29Ibid. 30 Ibid p 38 31Ibid. 32Ibid. 33Ibid., p. 39. 34Ibid., p. 40. 35Johnson, Vantage Point, p. 274. 36Eisenhower, Public Papers, pp. 269-270. 37Ibid., p. 270. 38Ibid., p. 271. 39Griffith, Space Act, p. 60. 40Ibid. 41Johnson, Vantage Point, pp. 276-277. 264 42u.s., Congress, Senate, Senator Hubert H. Humphrey speaking for a department of science, 6 June 1958, Congressional Record 103:10379-10382. 43select Committee Rept. 1758, p. 6.

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44Ibid. 45Griffith, Space p. 54. 46Ibid., p. 55. 47Robert Hotz, 11NACA, the Logical Space Agency, .. Aviation Week, 3 February 1958, p. 21. 48select Committee Rept. 1758,-p. 13. 49roward the Endless Frontier, p. 11. 50Ibid. 265 51rnterview with Maxime Faget, director of engineering and development, Johnson Space Center, Houston, Tex., 30 November 1981. 52National Aeronautics and Space Act of 1958, U.S. Code, vol. 42, sec. 2451 et seq. 53Rosholt, Administrative History of NASA, p. 14. 54Johnson, Vantage Point, p. 277. 55Griffith,Space Act, p. 90. 56! bid. 57National Aeronautics and Space Act of 1958, Section 302, Statutes at Large 72, sec. 426 (1958). 58Rosholt, Administrative History of NASA, p. 15.

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Background CHAPTER IX THE EVOLUTION OF NASA1S GOVERNMENT-INDUSTRY POLICY This chapter outlines the development of NASA policy dealing with the use of industry in the accomplishment of space activities. It traces the initial key appointments made to the new space agency and identifies the experience and background of these individuals, how their backgrounds influenced decisions on the use of industry, and the approach to government-industry relationships which finally became NAsAs unique mode of operation. In previous chapters, the management approach of the Army, Air Force, and AEC has been reviewed. An understanding of the development of policy in each of these agencies is significant to this study from two viewpoints: first, NASA officials were familiar with the policies adopted by these agencies and, in each case, had reservations about the use of a similar policy in the new NASA organization; and, second, the development of each of these individual agency policies was a product of the unique circumstances existing at the time the policy was established. An understanding of the factors which influenced policy development in each of these R&D organizations provides a richer understanding of the policy process and provides insight to the NASA policy-making process.

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The Appointment of NASA Key Officials 267 During the spring of 1958, while Congress was considering space legislation, it was believed by many that Dryden, director of NACA, would be named as head of the new space agency. Dryden had a long and respected career as director of NACA and as one of the leading scientists in government. He also enjoyed the support of the military and of the aviation community. Dryden's testimony before Congress, however, had alienated many powerful members who notified the White House that they would be opposed to his appoint ment.1 If Dryden were not acceptable to key members of Congress as head of the new space agency, the president needed to identify a candidate for this important position. Eisenhower turned to his science advisor, James R. Killian, to find a competent head for the new NASA organization. Rosholt, in his administrative history of NASA, reports that several candidates including Gen. James Doolittle were either seriously considered or offered the position .. After .extensive consideration, Killian secured Eisenhower's approval to telephone T. Keith Glennan, then president of the Case Institute of Technology, and request that he meet with the president to discuss the position. Eisenhower met with Glennan and promptly offered him the position of NASA administrator; Glennan accepted.2 Glennan's credentials for the position were impressive. Lacking personal experience in either aviation or missiles, he had extensive and unique experience to prepare him for the position.

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268 He had graduated with a degree in electrical engineering from Yale University in 1927 and had been awarded five honorary doctorate degrees. Prior to World War II he had worked in the motion pic ture industry and during the war had served as the director of the Navy's Underwater Sound Laboratories. He had been appointed presi dent of the Case Institute of Technology in Cleveland, Ohio, in 1947.3 From 1950 to 1952, Glennan served as a member of AEC and, as a commissioner, had specialized in the work of the AEC National Laboratories.4 At the time of his appointment to NASA, he was a member of the board of the National Science Foundation and a member of the prestigious General Advisory Committee of AEC.5 In addition, he served as a member of the board of directors of other private corporations. This background provided him with an excellent understanding of the operations of large private and government technology programs. Although he lacked specific experience in aviation, his broad and extensive experience in research and development organiza tions gave him a good understanding of the problems associated with the launching of the new space program of the country. Glennan was nominated by the president on 9 August 1958, and hearings were held by the Senate Special Committee on Space and Astronautics on 14 August 1958. The hearings went smoothly; he was quickly approved by the Senate and sworn in as NASA administrator at a White House ceremony on 19 August 1958.6 Glennan's appointment to NASA brought an experienced and highly competent manager into the top position of the new space

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269 agency. The fact that Glennan had not previously worked in the field of aviation or missiles was to prove an advantage in the sense that he was not encumbered with any previous decisions that might prove an embarrassment in his new position. Although the new NASA organization was not officially established until 1 October 1958, Glennan immediately began to work on the problems of the new agency and began "to devote full time to NASA beginning in early September." 7 Although Dryden had not been acceptable to influential members of Congress, Glennan believed his long experience with NACA would be invaluable to the new NASA organization. Glennan requested Dryden to serve as deputy administrator; Dryden accepted and was confirmed on 15 August 1958, at the same time. as Glennan. Although some observers of NASA including some of the younger NASA employees had felt that Dryden was too conservative to serve as NASA administrator, his appointment provided the new agency with a deputy administrator who had both impeccable credentials and long experience in dealing with the Department of Defense, the aircraft industry, and the Washington establishment.8 Dryden proved to be extremely valuable to Glennan.9 After the election of John F. Kennedy in 1960, Glennan resigned as administrator and was replaced by James E. Webb.10 Webb requested that Dryden continue as deputy administrator, and Dryden remained in that position until his death in 1966.11

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270 NASA Becomes an Operating Entity The legislation establishing NASA provided that when the new space agency came into existence NACA would be abolished, per sonnel and facilities transferred to the new agency, and this would occur: ninety days after the date of the enactment of this Act, or on any earlier date on which the Administrator shall determine, and announce by proclamation published in the Federal Register, that the Administration has been organized and is prepared to discharge the duties and exercise the powers conferred upon it by this Act.12 Glennan determined that the new agency should be established as quickly as possible, and on 1 October 1958, he announced in the Federal Register that the new agency was in existence. Thus ended the long and illustrious history of NACA which had existed since 1915. Responsibility for responding to the Soviet challenge and for recouping lost American technological prestige was now vested in the new NASA. It was important for Glennan to move quickly in filling key executive positions within the new agency. During the month of September 1958, Glennan had been conferring with John Corson, manager of the Washington office of McKinsey and Company, a nationally recognized management consulting firm, about the organization and staffing of the new agency.13 Corson provided Glennan with recommendations on the appointment of certain key administrative person nel. In addition, Glennan arranged with Corson for conduct of a study of NASA headquarters organization to begin as soon as NASA was established. The study was assigned to John D. Young, a senior staff member of McKinsey, who was to conduct a number of studies of

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271 of NASA organization and policies during the next two years. Young was to play a critical role in the development of NASA1s policy on government-industry relationships. He worked closely with senior NASA personnel including the assistant to the administrator and the director of Business Administration. NACA was an ongoing organization of almost eight thousand employees; the management of its programs, once it was absorbed into NASA, meant that the new administrator was immediately in volved in a wide variety of activities. This left little time available to the new NASA staff to consider of long-range management policy. While the McKinsey study was being conducted, an interim organization had to be established. Glennan did so and began immediately to make key appointments. The interim line orga nization appears below: Director of Business Administration Administrator uty Administrator The key management officials serving in these positions would constitute Glennans principal staff and would assist him in leading the new space agency. In addition to these key line positions, the interim organization established a number of staff posi tions such as an Office of Program Planning and Evaluation, a General Counsel, a Public Information Officer, and other normal staff offices.

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2 ..,, /<... The interim organization was a simple and uncomplicated one which identified the three major areas of importance. The director of Space Flight Programs would assume responsibility for the critical space activities which had been the primary reason for NASA's establishment. The director of Business Administration would pro vide the business management capability to manage complex programs which had been lacking in the NACA organization. The director of Aeronautical and Space Research would continue the activities and programs which had formed the old NACA organization. Addition of the term, 11space,11 in the title of the aeronautics group was. designed to recognize the fact that the NACA centers had supported the military departments in their missile activities and in this way had become involved in space research. While NACA, when it had been trying to acquire responsibility for space acti-vities, had probably overstated its contributions to space research, the agency had provided valuable support to both the Air Force mis-sile program and the Army missile program. The problems associated with the design of a reentry nose cone for ballistic missiles were solved by NACA personnel at the _Ames Laboratory.14 Glennan did not wait until he was officially in office be fore beginning to search for the key personnel who would head these three major line offices. He quite naturally turned to former NACA personnel to head the two technical offices which were established. Dryden's assistance was useful in identifying competent people to head these two new technical offices.1 5

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273 In March 1958, Dryden had brought Abe Silverstein, associate director of NACA's Lewis Laboratory, to Washington to head a newly formed space-flight development program.16 Silverstein was generally credited with being a brilliant scientist; at the same time he was considered to be a hard-driving technical manager, but one who lacked any broad understanding of administration or management.17 Silverstein's intimate knowledge of NACA was to prove use ful in identifying many of the young engineers who were later. to become senior NASA managers.18 To head the Office of Aeronautical and Space Research, Glennan appointed John W. Crowley, Jr., also a long-term NACA employee. His areas of activity included aerodynamics and flight mechanics, structures and materials research, and power plant re-search. These were the traditional fields of NACA research activity. The filling of top technical positions had been a relatively easy matter; the professional excellence of NACA in technical areas was broadly recognized. Equally well recognized, however, was NACA's lack of competence in administration. Glennan realized he would have to build an entirely new capability in. administration to support the activities of the new agency.19 Prior to assuming office, Glennan had consulted informally with Corson of McKinsey and Company, who provided Glennan with suggestions for filling three administrative positions: the director of Business Administration, the administrative assistant to the administrator, and the general

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274 counsel. Rosholt reports that "the three individuals appointed, Wesley L. Hjornevik, Albert F. Siepert, and John Johnson, were all on Corsons lists."20 As director of Business Administration, Glennan appointed Albert F. Siepert, at that time serving as the executive officer of the National Institutes of Health (NIH). Siepert was the senior non-medical officer of NIH and was recognized as one of the key individuals who had helped to create the modern program and facilities there.21 He was a long-term government career employee, having entered public service as an intern with the National Institute of Public Affairs in 1939. His experience with NIH had equipped him for dealing with the Washington bureaucratic and political scene although he lacked experience in large-scale development programs. He had developed a good understanding and interest in basic issues in public administration and public policy. Unlike his two counterparts on the technical side of NASA operations, Siepert would be concerned about public policy issues throughout his as director of Business Administration.22 The position of administrative assistant to the administrator was filled by Wesley L. Hjornevik. Although a relatively junior staff member at the time, Hjornevik was later to serve as deputy director of Business Administration and associate director of the Johnson Space Center during the Apollo era. He left NASA in 1970 to accept a presidential appointment as deputy administrator of the Office of Economic Opportunity. During the early days of NASA, Hjornevik was assigned by Glennan to negotiate the agreement for the transfer of JPL from theArmys Bureau of Ordnance to NASA.23

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275 Hjornevik, like Siepert, was oriented to public administration and public policy issues. He had entered government service in 1949 in the first Civil Service Management Intern Program. He served as an analyst with the Bureau of the Budget and later as assistant to the under secretary of Health, Education and Welfare.24 The position of general counsel was filled by John Johnson, at that time the general counsel of the Air Force. Throughout his tour in NASA he was considered to be both a highly competent attorney and an unusually competent to the administrator on matters of general management.25 John D. Young and the McKinsey Connection As noted earlier, Glennan had sought Corson's advice in August 1958 before taking office as NASA administrator. In addition to suggesting candidates for key administrative positions, Corson and Glennan agreed that it would be desirable for McKinsey to con duct a study of NASA organization. Rosholt reports that Glennan 11Wanted greater opportunity to mold the new agency along lines of his own choosing, and he felt the need for outside evaluation of plans and proposals formulated by NACA ... 26 As a result, McKinsey and Company entered into a contract with NASA 11to make an organizational study of NASA which was to serve as the basis for the long-run structure of the agency ... 27 Assigned to head the study was John D. Young, a senior analyst with McKinsey. This study was but one of several that Young would con duct. In addition to his study efforts, Young was later 11borrowed11

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276 by NASA to serve as the leader of a task force which was assigned the responsibility of developing the NASA position for the transfer of the von Braun group from the Army to NASA in 1960.28 This transfer and its impact on NASA will be discussed at greater detail at a later point. Young became an informal but influential advisor to the ad ministrator and, more particularly, to Siepert and Hjornevik.29 Youngs background was in the field of public administration, spanning his early federal career at the Bureau of the Budget and then serving in other agencies before accepting a position with the Washington office of McKinsey and Company. His interests were in public and public policy, and his service in various agencies of the federal government had given him an opportunity to formulate his opinions on a number of management questions including problems associated with the use of contractors. As an analyst with McKinsey, Young had conducted a management study for AEC and was familiar with its mode of contract operation. He was to be an import ant figure in NAsAs organization and policy development process. Young later left McKinsey and accepted appointment as director of NASA1s Office of Management Analysis. When Siepert left NASA head quarters to accept a field position, Young became director of Business Administration. Management Approaches of the Top Team The most critical individual that would be involved in the establishment of NASA1s management policies would be the new administrator. As noted Glennan, although lacking experience in

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277 either aviation or missiles, had an extensive background in tech nology. How had his experiences as a university president, a former director of the Navys Underwater Laboratories, as an AEC commissioner, and a member of the industrial establishment influenced his thinking at:-the :time of .hi:s .appoi.ntmer.tt? -Di:scussions wi:th Glennan reveal that at the time of his appointment he had the following concepts relating to NASA operations: 1. He had no preconceived idea as to how NASA should manage the programs for which it would be responsible. 2. He had a strong belief that the agency, having inherited almost eight thousand employees from NACA, should be sufficiently large to undertake the agencys responsibilities without any significant increase in staff. (In fact, during his tour of duty as NASA administrator, the staff grew only slightly.) 3. He believed that manufacturing should be done by industry. (This was a concept in line with administration policy at that time; however, it undoubtedly was also a personal belief of Glennan. Siepert indicates that Glennans views in this regard represented 11good Republican philosophy. 4. His experience as director of the Navys Underwater Laboratories had led him to believe that it was important for the government to have the capability of overseeing the work of contrac tors in an informed and responsible fashion. 5. He believed that the NACA capability in business management was extremely weak, and that NASA would have to build this

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278 capability almost from a zero base. He was particularly concerned that the agency develop a high degree of capability in the procurement area.31 Glennan's experience as an AEC commissioner apparently did not influence his views in terms of the use of contractors. Re-fleeting on his AEC experience almost thirty years later, Glennan indicated that his primary field of specialization as an AEC commissioner was with the of the AEC National Laboratories.32 .When he became NASA administrator, he did not consider in any detail the merits of the almost total reliance on contractors practiced by AEC. This view was probably consistent with of others involved with the AEC operation who did not critically consider the nature of the contract operation but were much more concerned with how effectively the agency was operating and whether or not it was meeting its na tional objectives. (See Chapter V for a discussion of this attitude on the part of early AEC commissioners.) Glennan's approach to the new agency was described by Siepert as being one of keeping an 110pen mind11 on how the agency would operate. Siepert indicates that Glennan was exceptionally good at asking questions which would elicit the views of senior managers on the major policy and program problems facing NASA. Glennan formed his personal judgments only after critically reviewing the opinions of the staff. This is not to suggest that he lacked either a personal viewpoint or the ability to make up his own mind on the basic policy issues facing the agency. Rather, Glennan sought all

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available information before then digesting it, applying his own judgments, and making final decisions.33 279 The views of the technical staff were shaped by their long experience with NACA. Of the three top technical personnel of the agency, Dryden and Silverstein appeared to be the influential mem-bers of the technical team. Crowley apparently played no major role in the decisions relating to how NASA would manage its new responsibilities.34 This probably reflects the fact that Crowley was responsible for that part of NASA which consisted of the old NACA laboratories. When the new agency was formed, there appears to have been general agreement that the operations of the NACA research centers would not be significantly changed. Dryden, in particular, be lieved strongly that the "research" nature of the centers would be destroyed if major development activities were assigned to them. As a result, the new NASA organization tended to establish new field centers to carry out development programs rather than to assign them to existing research centers.35 Although Glennan had no preconceived idea on how NASA should manage .its programs, Dryden and Silverstein felt strongly on this issue. The experience of NACA in dealing with the Air Force had led these two senior officials to believe that the Air Force had failed to manage its industrial contractors adequately. Hjornevik reports that these officials believed that "Time and time again the old NACA had been able to pull the Air Forces chestnuts out of the fire by relying on the technical competence of the NACA laboratories."36 As a result, both Dryden and Silverstein believed it was essential for

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NASA to maintain technical control over the new space programs which would be contracted to industry.37 They believed that the following relationships should exist between NASA and industry: 280 1. NASA should plan the technical program, the implementation of which would be turned over to industry by contract. 2. NASA should retain in house the ability, in addition to planning the technical program, to manage the ongoing implementation of that program. This would require that NASA be able to make nec essary technical trade-offs during the life of the program. 3. NASA should use its technical laboratory facilities to study special problems which might arise and to test and evaluate hardware produced by the contractors. 4. NASA should contract with industry for the performance of detailed design and manufacturing activities. (NACA had never been involved in the manufacture of any hardware; Silverstein and Dryden saw no need for NASA to engage in manufacturing. To these two top technical leaders of the new organiiation, control of the technical program was the objective, not the development of a large staff to perform what they considered to be 11routine11 engineering or manufacturing activities.38) The new administrative personnel associated with NASA, Siepert, Young, and Hjornevik, did not begin their work with NASA with a preconceived position on how the agency should accomplish its programs. Of these three individuals, neither Siepert nor Hjornevik had prior experience with large-scale development programs. Young, however, had conducted studies for AEC as a McKinsey consultant and

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281 was familiar with the operations of that agency. He believed that it would be essential for NASA to manage its operations in such a way as to maintain a real control over the program and not simply become the funding agent for the industrial contractors.39 Siepert and Hjornevik, during the early months of the agency, also became concerned that the organization should be in a position to manage its technical activities and make basic judgments on the program without unduly relying on contractors in these areas. Siepert's background as executive director of NIH influenced him to believe that government in-house operations could be successfully accomplished and that undue reliance need not be placed on contractors to make basic technical decisions. Siepert did not envision a NASA organization with a large manufacturing capability; like Glennan and the top technical managers of the new agency, he saw no advantage to the government in undertaking the direct fabrication of hardware. He was concerned, however, with the ability of the agency to manage the technical program for which it was responsible. While the views of NASA's top management officials varied, it should be stressed that this question of technical management was not a priority matter. NASA had inherited from NACA an ongoing organization with ongoing programs; the new NASA organization immediately faced a variety of administrative and programmatic problems. Basic questions of policy tended to be subordinated to the requirements of the ongoing program.

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282 In two cases, however, this was not the case. The former NACA technical personnel were undoubtedly more concerned about staking out their claims to technical management than were other members of the top management team. Young, as a member of the McKinsey staff, was not involved in the myriad of day-to-day details of administration. which the NASA staff faced. The nature of his background and the management studies which he performed for NASA tended to focus his attention more on the question of cal management than was the case with either Siepert or Hjornevik.40 Transfer of DOD Facilities to NASA At the same time as Glennan was establishing an interim or-ganization and making key appointments, arrangements were being made for the transfer of certain existing groups to NASA. While argument would develop concerning the transfer of certain programs from the Defense Department to NASA, the Vanguard Project transfer was quickly agreed to by all parties. This project was solely concerned with the launch of a purely civilian scientific satellite and no disagreement existed as to its proper assignment to NASA. The transfer was accomplished by executive order on 1 October 1958.41 The transfer of the Vanguard Project preceded detailed agreements between NASA and the Department of Defense on a 11 factors in volved in the transfer. Rosholt reports that 11negotiations were finalized in an agreement signed by Glennan and Deputy Secretary of Defense (Donald A.) Quarles on November 20, 1958.1142 This agreement provided that practically all of the Vanguard personnel together with property, equipment, and supplies would be transferred to NASA.

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283 It was further agreed that the Vanguard Project would continue to use facilities of the Naval Research Laboratory in Washington, D.C. It was planned that Vanguard personnel would eventually occupy NASA facilities to be constructed at Beltsville, Maryland. The Naval Research Laboratory would continue to support the Vanguard Project until such time as NASA was able to assume this function, and NASA would reimburse the Naval Research Laboratory for its efforts. The formal transfer of all personnel took place on 5 November 1958 when 148 members of the Vanguard Project were transferred to NASA.43 Although the Vanguard Project provided leadership for NASA in the science area, former project personne1 had little influence on the development of NASAs government-industry policy. The former Vanguard personnel were highly valued in terms of their scientific competence, but were not considered leaders in the field of management. As a result, their influence was minimal in shaping how NASA would utilize industry in the conduct of NASA programs.44 The Vanguard Project, although a small group when compared to other transfers made to NASA, represented a strong capability in science which the agency had lacked. Many of the Vanguard scientists remained with and Homer Newell, who had served as Vanguards chief of satellite instrumentation, eventually was appointed deputy associate administrator of NASA.45 In addition to the transfer of the Vanguard group from the Department of the Navy to the new agency, NASA also sought to secure the transfer of a large segment of the Development Operations Divi sion of the ABMA and JPL, which was also a part of the Army Bureau

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284 of Ordnance. The logic behind these two proposed transfers was obvious: the von Braun group represented a strong capability in the development of large launch vehicles which would be essential to NASA and which the new agency lacked. JPL, a government-owned laboratory operated by the California Institute of Technology for the Bureau of Ordnance, had designed and built the first United States satellite to be placed in orbit, Explorer I. The two groups would greatly enhance NASAs ability to conduct the new space programs which were a key part of NASAs charter. Initial discussions with the Department of Defense revealed that the Defense Department was sympathetic to HASA1s desire to secure these two key technical organizations. The Army, however, while willing to allow the transfer of JPL, strongly opposed the transfer of the Development Operations Division. As a result, JPL was transferred to NASA but the Development Operations Division was retained intact by the Army. This decision was subject to later review and change, and the circumstances surrounding that reversal are discussed at a later point in this chapter. Based on this decision, negotiations were immediately started with the Army on the transfer of JPL to NASA. The NASA ad ministrator named Hjornevik to represent NASA in the negotiation of the transfer agreement. The Army was represented by General Lemnitzer, deputy chief of staff.46 With theArmy and NASA in basic agreement on the proposed transfer of JPL, negotiations went smoothly, and, on 3 December 1958,

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285 the president transferred all of JPL's non-military functions, per sonnel, and equipment to NASA.47 Management of JPL Having acquired JPL and its staff of university personnel, NASA was faced with a decision as to whether this contract mode of operation should be continued. All other NASA centers were government-owned and government-operated facilities. This was consistent with the thrust of the NASA technical staff that the government should not contract technical managemnt responsibilities. (This viewpoint was rapidly becoming the management model which NASA would employ.) In view of this, would NASA elect to change the operations of JPL from contractor to direct government operation? The answer was that NASA would continue to operate JPL as a contractor-operated organization. No serious consideration was ever given to changing the nature of the laboratory's operation. For the most part, NASA headquarters personnel were willing to ac cept this arrangement as an exception to NASA's normal management mode. Siepert indicates that NASA."had its hands full'' absorbing NACA; changes in JPL's status, therefore, were not considered. Glennan had close ties with personnel at the California Institute of Technology and had no desire to disrupt his relationships with those officials.48 Hjornevik, who had negotiated the transfer arrangements with the Army, remembers that, while some NASA officials discussed changing JPL to civil service status, this was never

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286 seriously considered. He states that NASA could not have matched JPL salaries and that such a change in JPL status would have been "highly disruptive."49 The Approval of Project Mercury The policies NASA adopted on government-industry relation ships did not come as the result of any single management study, policy decision, or individual judgment. These policies emerged over a period of time and without conscious direction. One of the first decisions made by Glennan as NASA administrator was the approval of Project Mercury.50 (Project Mercury was the first United States program to orbit a man in space.) The proposal for Mercury was made to Glennan a few weeks after he assumed the position of administrator. Robert R. Gilruth, at that time an assistant director of the Langley Research Center, met with Glennan, Dryden, Silverstein, and other key headquarters personnel and made a detailed presentation proposing Project Mercury. At that time, Glennan immediately decided to approve the project which would eventually lead to John Glenns first orbital mission.5 1 At the time this decision was made, no consideration was given to how NASA would manage the project. Neither Glennan nor Silverstein now recalls any discussion relating to the management of Project Mercury, other than the fact that Gilruth and his asso ciates would be responsible for the project.52 The fact that the program would be implemented by an industrial contractor was ac cepted by all of the officials present. Silverstein, Dryden, and

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287 perhaps others assumed the project would be technically managed by the responsible government officials drawn from the Langley Research Center. Silverstein, in recalling the approval of Project Mercury, indicates that, while there was no discussion of how the project would be technically managed, it was clear to all of those present that the government would provide such management.5 3 Thus, the first project approved by the new NASA management team was based on an underlying assumption that the government would assume technical responsibility for the program. There was clearly no consideration of the use of some other management model which might have been adopted for Project Mercury. One option available to the agency could have been to utilize a 11captive contractor11 in the manner of the Air Force; however, this was given no consideration by those involved in the decision making. As a result, NASA was beginning to move down a course toward technical management of its programs in a fashion different from that of the Army, Air Force, or AEC. While NASA had made a decision on the management of Project Mercury, the agency had not adopted any overall policy which would be applied to all future projects. The basic NASA policy on the use of contractors and the government role in supervision of contract acti-vity would evolve over the next two years of activity. McKinsey s First Studv The new administrator had contracted with McKinsey and Company for a study of how NASA might best organize its headquarters functions. The study, 110rgani zing Headquarters Functions, 11 .was transmitted to NASA from McKinsey on 31 December 1958.54

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230 The organizational study of NASA headquarters was primarily the work of Young. In the conduct of the study, Young had interviewed all of the key management team and had discussed organiza tion with staff of two of NAsAs major-centers, the Lewis Research Center and the Langley Research Center. As a result, the study tended to reflect the consensus of NASA1s key technical personnel as modulated by Youngs own views as to how the agency could best be managed. While the terms of reference for the study were limited to the organization of NASA headquarters, in determining the functions which would be performed at the headquarters level, the study in effect was establishing an approach to management and policy for the entire agency. In the area of aeronautical research, the study proposed to retain intact the old NACA centers which would continue to per-form their traditional functions. These centers would report to a director of Aeronautical and Space Research. The study endorsed Drydens theme that research centers would lose their effectiveness if they were assigned development responsibilities and recommended that 110rganizational arrangements must be developed and maintained that will ensure that the pressures to develop end item hardware, and employ it, do not engulf advanced research ... 55 Although the study recommended that the old NACA centers continue in their traditional modes of operation, of more interest were the recommendations dealing with the new elements of the agency responsible for the space flight program. In this regard, McKinsey recommended that 11Space Projects Centers .. (a name used for the

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proposed development centers which would be created at a later point) should perform the following functions: (a) the technical su ervision and servicin of research and development contracts, b the conduct of certain ground tests of contractor-furnished equipment, particularly space vehicles subassemblies, (c) conduct of related in-house research and development, (d) provi sion of technical assistance to the headquarters staff required for the detailed definition of projects, and, (e) preparation of and specifications for projects to be contracted. Litalics mine.] 239 Thus, the first study done of NASA organization outlined a policy which would mean that NASA would assume a responsibility for technical management which would be unlike that followed by the Air Force or the AEC. At the same time, the study specifically assumed that major projects would be implemented by industrial contractors rather than following an arsenal concept such as that practiced by the Army missile program. The recommendations of the study were consistent with the initial decisions made concerning the manage-ment of Project Mercury. Three months after its establishment, NASA was moving toward a policy which would be based on a strong inhouse competence in the management of NASA programs. Coupled with the technical-management decisions outlined immediately above, McKinsey recommended that NASA would have to build a business management staff which would have the capability to sup port large-scale contracting activities. The McKinsey study particularly stressed that the agency would require effective staff in order to:

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1. Administer large industrial contracts involving problems of CPFF, price analysis, interim payments, in dustrial security and relations (e.g., the contract for the million-pound thrust engine). 2. Budget and account for large sums of appropri ated funds, including the handling of involved, agency transfers of funds, equipment, and facilities. 3. Audit internal financial transactions and particularly audit industrial contracts.57 290 In addition to these recommendations dealing with how NASA would technically manage its activities and the supporting administrative staff which would be required, the McKinsey report pro vided for establishment of typical staff functions. These included an Office of Program Planning and Evaluation, an Office of International Relations, a General Counsel s Office, and an Office of Public Information. The organization proposed by McKinsey in its 31 December 1958 report was not in any respect dissimilar to the organization which NASA had adopted on an interim basis. The McKinsey study, in ratifying the interim organization, did several important things: 1. It provided a rationalization of the interim organiza tion which NASA had adopted. This was particularly true in terms of defining the role of the government in technically managing in dustrial contractors. 2. It was based on the experience of the agency during its first months of operation. It thus was able to assess the validity of the initial assumptions made by the administrator in August. 3. It provided a formalized statement of the functions and structure which would be required by NASA in the future, and

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4. It provided the administrator with an outside audit or review of the organization which he had adopted on an interim basis several months earlier. 291 In addition to these matters, the McKinsey. study dealt with several other administrative questions. Perhaps the most important of these was the establishment of the position of associate administrator for Operations. The purpose of this position was to assist the administrator and deputy administrator in the overall management of the agency. Glennan based on his AEC experience, strongly be lieved that the position of general manager was of critical import ance. Both the senior administrative and technical officials in the agency disagreed with this concept; however, Glennan was adamant. When McKinsey recommended that the position of associate administrator for Operations be established, it was probably influenced to some degree by Glennan's position. Glennan promptly adopted this recommendation and established the associate administrator position. The associate administrator became the general manager of NASA.58 In addition to the above recommendation, the McKinsey study considered the question of whether or not the position of comptroller should be established. Siepert, as director of Business Administration, opposed this move. The McKinsey study recommended that all financial activities continue to be the responsibility of the director of Business Administration. Glennan accepted this recommendation; however, some years _later NASA split the financial management responsibilities from general administration and established the position of comptroller.59

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292 The study also recommended the establishment of the posi tion of facilities coordinator. This position was considered nec essary at that time because of the large volume of facilities con struction required by the new space programs. The decision, however, was made that the position of facilities coordinator should remain under the director of Business Administration.60 NASA Acquires Army Facilities Although NASA did not plan to change the operations of JPL, it was concerned with assuring that the laboratory be appropriately supervised and that the contract with the California Institute of Technology be properly administered. McKinsey and Company was once again asked to review this situation, with Young again conducting the study. The results of this study (which was actually accomplished as a modification to the first contract with McKinsey for a study of NASA headquarters operations) was submitted to the administrator on 12 March 1959. The study, 11NASA-JPL Relationships and Role of the Western Office, proposed the establishment of an expanded NASA office in California with a primary mission to perform contract administration functions for the JPL contract. NACA had maintaineQ a small office in California to maintain liaison with aircraft companies there. The McKinsey study proposed that this function be absorbed into a substantially larger office whose primary function would be to administer the contract with the Calif ornia Institute of Technology. McKinsey proposed that twenty-eight people be employed for this purpose, expanding to forty in 1960.61

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293 NASA adopted the recommendations of the McKinsey study, and the Western Operations Office was established on 25 August 1959.62 In practice, JPL operated to a large degree in the same fashion as AEC operated its National Laboratories. The nature of NASA head quarters operation probably resulted in closer supervision of this laboratory than was true in the case of AEC laboratories; however, the basic relationship was not substantially different. JPL was quite simply an exception to NASA normal management practice. It remains an exception to the present day. Of the nine major field centers operated by NASA, only one, JPL, is a government-owned, facility. At the same time that NASA proposed the transfer of JPL from the Army Bureau of Ordnance to NASA, Glennan had also requested the transfer of a portion of the Development Operations Division of ABMA. The Development Operations Division was the heart of the Army's missile program and was made up of von Braun, who served as technical director, and his team of over 4,000 scientists, engineers, and technicians. In addition to the technical personnel of the Division, ABMA included procurement, fiannce, budget, and other administrative specialists. NASA did not seek the transfer of these personnel. The Army adamantly rejected the attempts of NASA to secure the transfer of a segment of the von Braun group. The Army, and particularly Medaris, commander of the ABMA, argued vehemently that the von Braun group not be "broken up" because it represented a national capability essential to the Army.63 Glennan, however,

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294 believed it essential to secure the capability represented by the Development Operations Division and continued to seek its transfer to NASA. The ABMA represented a strong competence in a field essential to NASA and one in which the new agency had no expertise, the development of large launch vehicles. The expansion of space flight activity would be dependent on the development of launch vehicles and particularly large boosters if NASA were to match or exceed the Soviet Union in space research and exploration. The existing NASA organization provided no capability in booster development. It was, therefore, imperative for NASA to secure this capability. The Army strongly resisted, insisting that the Development Operations Division was essential to the Army. In view of the fact that the Department of Defense in the mid-sixties had eliminated any IRBM or ICBM role for the Army, this decision appeared to be questionable. Glennan pursued the proposed transfer with the Department of Defense but was unable to secure its agreement to the transfer. Failing this, Glennan brought the question to the National Aeronautics and Space Council for resolution, which decided that 11JPL would be transferred to NASA and ABMA would be kept intact under the Army, with the proviso that it would be responsive to NASA1s needs.1164 The compromise was accepted by NASA as the only solution possible at the moment; however, the agency continued to believe that it was both logical and essential that a major portion of the Development Operations Division be transferred to NASA.65

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295 Although NASA had been rebuffed in its attempts to secure the transfer in 1958, just a year later the Department of Defense changed its position. In September 1959, Secretary of Defense Neil H. McElroy contacted Glennan to inquire if NASA were still in terested in the Development Operations Division. Glennan indicated a strong interest, and a meeting was arranged to discuss the transfer. Although McElroy had only proposed the transfer of ABMA in his initial discussions, at a later time the Department of Defense indicated it would be willing to transfer the Saturn Project for the development of a very large booster as well. On 7 October 1959, a meeting was held at the White House to discuss these transfers; and, on 20 October, an agreement was reached, transferring both the Saturn Project and the Development Operations Division to NASA.66 NASA immediately began to consider the impact on the agency of the transfer of the Development Operations Division. The transfer involved a large number of scientists, engineers, and techni cians, as well as extensive laboratory facilities, test stands, and associated equipment. The group to be transferred was approximately half as large as the total NASA organization; the absorption of ABMA would therefore be critical to NASA. In addition, ABMA rep resented an arsenal approach to R&D management which conflicted with the direction NASA management had taken. The Army had developed the Redstone, Jupiter, and Juno missiles, performing the design of these missiles in house and actually manufacturing early test vehicles in government facilities using

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296 civil service personnel. The first sixteen Redstone missiles, for example, were manufactured in the ABMA facilities at the Redstone Arsenal in Huntsville, Alabama.67 Only after a missile had been completely designed, manufacturing procedures developed, and all tests completed would the Army contract for the 11production run11 of the missile. This mode of operation was in marked contrast to the NASA practice of maintaining a strong in-house competence but relying on industry to perform detailed design and manufacture. Several problems were, therefore, present relating to the transfer: 1. In the short term, NASA would need to negotiate the transfer of personnel and facilities with the Army. As the Army in tended to 11rebuild11 ABMA, and as some ABMA activities were commingled with other Army activities at the Redstone Arsenal, exten sive negotiations would be necessary. The transfer of JPL had been a functional transfer of the entire laboratory including all personnel, facilities, and supplies; the transfer.of the Development Oper ations Division would represent a much more complex negotiation. This would require NASA to identify specific facilities and equipment which would be transferred. 2. A second and more long-range problem would be the need for NASA to absorb this new and very large organization into the NASA structure. ABMA would bring with it a significantly different management philosophy than existed within NASA and one that was in consistent with NASAs approach to government-industry relationships.

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297 To deal with the first problem, Glennan appointed Siepert to be NASA's principal negotiator; the Army named Major General Schomburg, deputy chief of Ordnance, to serve as its principal negotiator. The Army and NASA agreed to develop a transfer plan which would establish necessary procedures for the transfer. The plan, when developed, was to be submitted to the president no later than 15 December 1959 and was intended to serve as the basis for a presidential request to Congress for concurrence in the transfer as provided in the NASA Act. The forty-one-page plan was completed on 11 December 1959 and provided: 1. That the transfer would take place on 1 July, approxi mately seven months in the future; 2. that funding would be unchanged and that R&D funding for the Saturn Project would be transferred to NASA as of 1 July, con current with the transfer of personnel and facilities; 3. that NASA would provide its own technical and administrative support for the operations of the former Development Opera tions Division; the Army would provide such base support services as utilities, road maintenance, and fire protection on a reim bursable basis; 4. that all of the technical and engineering personnel of the Development Operations Division would be transferred to NASA (approximately 4,000 employees); however, the Army would be allowed to recruit up to 350 of these technical personnel to support Army weapons missions. (This was a part of the desire of the Army to rebuild ABMA after the transfer.) NASA would be allowed to recruit

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298 up to 815 Army civilian employees working at the Redstone Arsenal and not a part of the Development Operations Division. (These employees would be primarily administrative personnel working for ABMA, the Army Ordnance Missile Command, and the Redstone Arsenal.) 5. NASA would be granted long-term use permits by the Army on land, buildings, and other facilities located at both the Red-stone Arsenal and at Cape Canaveral, Florida. 6. Equipment and supplies which had supported the wotk of the Development Operations Division would be transferred to NASA on a non-reimbursement basis.68 To develop the transfer plan and to lead the actual negotia-tions, Siepert turned once again to Young. Young was not only invalved in the development of the transfer plan but also served as director of the NASA task force established to conduct necessary investigations and studies of the operations of ABMA and to develop a NASA position on the various aspects of the transfer.69 In addi tion to identifying the facilities, materials, and equipment which NASA would seek in the transfer, the task force was to 11determine the management and supporting technical services which the Development Operations Division would require after its severance from the Army.n70 The task force, consisting of twenty-four NASA specialists in various administrative and technical support areas, went to work immediately. The task force did a comprehensive job, under Youngs leadership, in developing and justifying the NASA position. As a result, the negotiations with the Army Bureau of Ordnance were relatively simple, and on 14 January 1960, President Eisenhower sub mitted the transfer plan to Congress.71

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299 The resolution of the short-range problem of the negotia tion of the transfer of ABMA to NASA did not influence the long range problem discussed above. NASA would need to fit the von Braun group into the NASA organization. At the same time, von Braun would need to be weaned from his arsenal concept of operation and integrated into the NASA management philosophy. NASA had been in operation for slightly over one year, and this would also serve as a convenient time for the agency to review its basic approach to utilizing industry in the space program. As a result, Glennan determined that another study would be in order. Previously, the studies done of NASA operations had been primarily directed at and dealt with government-industry relationships in only a tangential fashion. The study which Glennan now contracted for would deal with government-industry relations and the means of strengthening NASA project and contract management. Again Glennan turned to McKinsey and Company, and again Young served as the principal official from McKinsey responsible for the conduct of the study. The McKinsey Contracting Study Proposes a New Course for NASA The McKinsey study was contracted for in the early part of 1960, but the report was delayed for a number of reasons until 28 October 1960. Young's participation in the transfer of the Development Operations Division of ABMA undoubtedly was one factor in delaying submission of the final report. Unlike earlier McKinsey studies, this study was widely circulated in draft form within NASA

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300 with comments secured from senior headquarters and field officials. The circulation of the report and the evaluation of comments contributed to the time delay. The basic body of the study can be divided into two parts: first, the study considered basic relationships between industry and NASA. In this regard, the study focused on those activities which NASA should perform in house and those activities which should be contracted. The second part of the report considered means to strengthen NAsAs project and contract management activities. The McKinsey study discussed 11Factors That Condition NASAs Contracting Job11 and found: The high reliability requirements, plus the small number of similar units that are used, are central characteristics that d1stinguish and complicate NASAs procurement job. These characteristics mean that the normal cost and performance incentives are often not available to NASA and contractors. Therefore, NASA must substitute for the self-discipline of such 1ncentives continual and effective technical supervision of contractors efforts.YZ Italics mine. Thus, McKinsey began its analysis with the assumption that NASA would be required to exercise strong technical supervision over the work of its contractors. McKinsey also found that 11relatively few industrial concerns possess the engineering and scientific skills requisite to the suc cessful completion of a total space vehicle subsystem such as the launch or space vehicle.u73 This meant the balance of competence at this early 1960 period rested more with the government than with in dustry. The purpose of the McKinsey study would be to pursue the question of how NASA might best utilize industry given these two

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301 conditions: f.irst, the lack of normal incentives for economy and efficiency and, second, the lack of a well developed industry competence to take on the complete development of spacecraft or booster systems. In this regard, McKinsey study recommended: a. NASA should retain in house the conceptual and preliminary design elements of a major project, or its equivalent, in each major program. (Major programs were defined as (1) Applications, (2) Manned Space Flight, (3) Lunar and Planetary, (4) Scientific Satellite, (5) Sounding Rocket, and (6) Launch Vehicle] b. NASA's in-house efforts in the conceptual and preliminary design elements of space flight and launch vehicle projects should be supplemented extensively through the use of study contracts. c. NASA should retain in-house the detailed design, fabrication, assembly, test and check-out elements of a single advanced launch vehicle (or stage in the case of a project such as the Saturn Launch Vehicle, i.e., the S-I and spacecraft unique to each major program. d. Each center should contract out the detailed design, fabrication, assembly, test, and check-out elements of all launch vehicles and spacecraft except the relatively few required to meet the criteria set forth in item (c) above. e. NASA's centers should contract all production manufacturing efforts including the standard or relatively standard parts and components used for in-house launch vehicles and spacecraft of an advanced developmental nature. f. NASA should contract out total space vehicles in cluding the physical integration of subsystems, i.e., the launch vehicle and spacecraft. g. NASA should contract with.the external scientific community for a preponderant (70 to 85 percent) of all space flight experiments. McKinsey's proposals for the contracting out of "total space vehicles" was designed to achieve two objectives: 1. To offload NASA by providing a greater delegation to contractors of development responsibility than had occurred previously.

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302 (The point to be emphasized is that previously NASA had tended to contract out major portions of systems but retained in-house res ponsibility for the integration of these systems.) 2. To develop greater capability within industry to manage total systems and to be able to participate in future civilian ap plications of space.75 It should be recognized, however, that none of these recommendations a1tered the concept that NASA would be responstble for the strong technical management of these programs. In all cases, the McKinsey study assumed NASA would perform technical management and supervise the contractors technical performance. These recommendations reflected an entirely new view of how NASA should carry out its space responsibilities and the utilization of industry to that end. The study at the same time recommended both greater utilization of industry and the retention (or development in the case of many NASA centers) of the capability to perform detailed design and manufacturing activities in house. This concept was a radical departure from the management direction NASA had been pursuing up to that time. Glennans objectives from the outset had been to limit the staff, contract as much activity as feasible, and maintain technical control and supervision over contractor activi-ties. The senior technical staff had been motivated to retain technical control and decision making, while delegating to industry detailed design and manufacturing activities. Key administrative officials had also sought to retain control over technical decisions while delegating more routine activities to industry.

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303 The McKinsey proposal to perform detailed design and manufacturing of a system or major subsystem in house would require a substantial expansion of many of the NASA centers if it were to be implemented. While the von Braun group (which was named the Marshall Space Flight Center upon transfer to NASA) had large-scale manufacturing capability, development groups such as the Goddard Space Flight Center and the Space Task Group lacked such personnel and facilities. 7 6 The implementation .of this decision would have required a substantial increase in facilities, equipment, and per-sonnel for those centers. The scale of the impact of these recommendations can be seen from reviewing the amount of in-house as opposed to contracted activity performed by two of NASA1s centers. The Space Task Group, which retained technical management capability in house but con tracted detailed design and manufacturing spent ninety-five percent of its funds by contract anr! only five percent on in-house activities in fiscal year 1959.7 7 The Marshall Spaceflight Center (formerly ABMA), which operated under the arsenal concept, spent eighty-three percent of its funds in house in fiscal year 1959 and thirty-six percent OT its total program dollars in in-house activity in fiscal year 1960.7 8 While the McKinsey recommendations would reduce the dollar value of Marshall1s in-house activities, it would increase the dollar value of in-house activities for other NASA centers. In addition, it would require the acquisition of a large number of new manufacturing personnel, facilities, and equipment by Goddard and the Space Task Group to carry out these functions.

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304 What motivated this major shift in approach from what had been the mainstream of NASA management philosophy in the past? 1. NASA had been concerned about the arsenal mode of opera tion of ABMA. The McKinsey recommendations would tend to restrict the von Braun group to performing these detailed design and manufacturing activities for a single vehicle or stage rather than for all vehicles and/or stages developed by the organization. 2. The recommendations could also be considered to be a way of assuring the von Braun group that their mode of operation, while modified, would not be totally changed by NASA management. While the ABMA personnel would no longer be able to conduct R&D in the arsenal mode for all of their projects, they would retain this capability for at least one major vehicle or stage. In this sense, the recommendations might be considered a way to placate the_group being transferred to NASA. The operations of JPL were similar to those of ABMA. The same arguments outlined above would apply equally to JPL. It is difficult to understand how these recommendations could have been directed at the operations of the other two existing development groups in NASA, the Goddard Spaceflight Center and the Space Task Group. In neither case had NASA top management any desire to see these two groups increase their in-house activities. One can assume, therefore, that the impact on these two centers waul d be primarily a 11fa 11 out11 from the intended focus of this recommendation, the Development Operations Division.

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305 Before attempting to evaluate the rationale for these recommendations, a second study of NASA's organization and operations should also be reviewed. This study was conducted during the same period as the McKinsey study and includes the same recommenda-tions on government-industry relations. NASA Seeks Outside Evaluation of Its Organization and Policies The study of NASA contracting by McKinsey and Company initiated in early 1960 was followed in March 1960 by the appoint-ment of an outside advisory committee to review NASA's organization and administrative arrangements.79 Rosholt reports that the com-mittee was suggested to the NASA administrator by Corson, head of the office of McKinsey and Company. The study which Corson proposed was a review of the organization and administrative arrangements of NASA. Corson suggested that such an advisory com-mittee should include men .. experienced in large-scale organization for research and development activities and in government opera tions ... 30 The advisory committee appointed by Glennan was chaired by Lawrence Kimpton, at that time chancellor of the University of Chicago. It became known as the Kimpton Committee. Members of the committee included the following: Elmer Lindseth, president of the Cleveland Electric Illuminating Co.; Morehead Patterson, chairman of the board of the American Machine and Foundry Co.; Nathan Pearson, vice-president ofT. Mellon & Sons; James A. Perkins,

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vice-president of the Carnegie Corporation; Charles Stauffacher, executive vice-president of the Continental Can Company; and Fletcher Waller, vice-president of Bell and Howe11.81 306 The purpose of the advisory committee was to provide NASA with an assessment of its organization and administrative arrange ments. This was a substantially broader charter than that encompassed by the McKinsey study which was limited to a study of NASAs contracting policies, organization, and At the same time, there was obviously a major overlap between these two studies. To assist the Kimpton Committee in carrying out its assign ment, NASA again contracted with McKinsey and Company to provide staff support. Young, not surprisingly, was once again the individual assigned by McKinsey to work with the Kimpton Committee.82 In view of the fact that Young was both conducting his own study of NASAs contracting activities and at the same time serving as staff to the Kimpton Committee, it was to be expected that the recommendations of both studies would be similar. In fact, the recommendations of the committee and the McKinsey study are practically identical. In this respect, it seems clear that the Kimpton Committee in effect accepted the McKinsey study recommendations relating to government-industry relations without change. Whether or not the committee considered these contracting questions in detail or whether they uncritically accepted the McKinsey recommendations is difficult to ascertain. Young recalls that the committee did review these areas in detail before accepting the position developed by McKinsey and Company.83

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307 The recommendations of the Kimpton Committee are identical with those of McKinsey, cited earlier in this chapter. (The only differences which occur are minor changes in wording.) In addition to adopting these recommendations concerning the division of res-ponsibility between NASA activity and those proposed for assignment to industry, the Kimpton Committee also adopted the McKinsey recommendations on the role of the NASA research centers. The Kimpton report proposed that some development work be assigned to the research centers and had suggested "the advanced research centers should be permitted and encouraged to carry on a limited number-of development projects.84 The McKinsey study proposed that 11NASA follow the practice of placing responsibility for 1 imited projects in the (research} centers. uSS Although the Kimpton Committee relied heavily upon Young and the McKinsey contracting study, it should not be assumed that the committee had been simply a group appointed to rubber-stamp NASAs pattern of operation. Siepert indicates that this was not the case, that at the time the Kimpton Committee was appointed: There was real concern that the Kimpton Committee might recommend that the Air Force model of R&D management be adopted by NASA. The selection of committee members was not based on the fact that they were committed to any particular view at the time of their appointment.86 Although the Kimpton Committee and the MicKinsey study reflected the same views on government-industry relationships, the report of the advisory committee was of positive value to NASA. The committee reflected the views of a distinguished-panel of out side experts who found:

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In appraising NASA's internal organization and management, the Advisory Committee has been impressed with the success the agency has achieved, within the present legislative framework, in planning and coordinating the nation's civilian space activities. In a short span of time, the agency, under capable leadership, has built an effective organization. We found no crises, no serious deficiencies; we did find opportunities for further improvements. Our recommendations constitute plans for improving a soundly conceived structure.87 308 Thus, the Kimpton Committee strongly endorsed NASA's manage-ment operations. Its recommendations on government-industry rela-tions, paralleling those of the McKinsey study, would necessitate decisions on the part of NASA management. The basic question which must be asked is why Young of McKinsey and Company proposed such a major departure to what had been NASA policy and practice up to that time. / The Kimpton and McKinsey Studies: A Means of Containing Von Braun and JPL An evaluation of these recommendations by Siepert explains and clarifies what appears to be a contradiction. Siepert indicates that the major problem which NASA faced in absorbing the von Braun group was to change their established pattern of conducting extensive manufacturing activities in house. As has been established, NASA's policy was to provide strong technical direction to industrial contractors but to retain in house technical decision making and technical supervision of the contractors. At the same time, NASA was committed to the concept of contracting with industry for detailed design and fabrication of space systems. Siepert indicates that a major concern of NASA was how the von Braun mode of operation

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could be altered without at the same time damaging the effectiveness of the Development Operations Division. Siepert suggests: NASA was smart enough to recognize that the strength of the von Braun team was in their ability to actually cut hardware and make it fly. NASA was willing to allow von Braun to continue to use his fabrication capability but wished to restrict the extent tQ which he carried out in-house manufacturing activities.B8 Siepert indicates that Young was particularly sensitive to the need to restrict von Braun's manufacturing activities while, at the same time, not destroy the effectiveness of the group by deny ing them any ability to retain their traditional approach to R&D management.89 As a result of this need to restrict von Braun's traditional arsenal approach to R&D, the recommendations of the McKinsey and Kimpton studies were developed. Siepert states that the assumption that centers such as the Space Task Group and the Goddard Spaceflight Center would develop manufacturing capability was never considered to be a problem. Both groups were completely wedded to NASA's philosophy that detailed design and manufacturing would be done by contract. Neither group had any intention or desire to expand their activities to embrace this type of in-house activity. As a result, while the policy would apply to the Space Task Group and Goddard, it would never be implemented at those centers. This meant that the effect of such a policy would be limited to the von Braun group (now called the Marshall Spaceflight Center) and JPL. Discussions with Young support Siepert's conclusions. He indicates that it was never planned for either the Space Task Group

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310 or the Goddard Spaceflight Center to engage in in-house manufacturing and design activities. The thrust of these recommendations was clearly directed at the Marshall Center and JPL. It was anticipated that this policy would provide a means of allowing both groups to continue their traditional in-house activities on one major project, while moving for other projects to the utilization of industry. The intent was that in all cases, NASA would assume responsibility for technical management and technical supervision of its contractors.90 Approval of the McKinsey and Kimpton Reports While no formal action was taken, the administrator approved the basic concepts of NASA-industry relationsh i .ps outlined in the Kimpton and McKinsey studies. The continuing effort of top management during the next years would be the attempt to enforce these concepts on JPL and the von Braun group. It was substantially easier to adopt such a policy than to enforce it on strong and independent field centers. This was particularly true in the case of the Marshall Spaceflight Center. In spite of constant pressure from NASA headquarters, this policy was not truly effected until personnel reduction in 1969 made continuation of the traditional arsenal approach to R&D impossible.91 Absence of Political Pressure The NASA policy on government-industry relations was developed without external pressure from either elected officials or the aerospace industry. When first considered, this fact may appear to

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311 be extremely unusual and possibly unbelievable. A careful analysis of all factors surrounding this policy and its development, however, explains why the establishment of the policy was not subject to political influence. These factors are as follows: 1. The basic question in the minds of many who might have a special interest would be, 110id NASA plan to contract out most of its activities or perform these activities in house?11 The answer was that NASA contracted eighty-five percent to over ninety percent of its entire program. The subtleties of government technical control of the program may have been initially lost on those con cerned primarily with who would secure the lion's share of the budget. Had NASA adopted an arsenal concept, it can be assumed that outside resistance to this policy might well have developed. 2. A second factor that may account for the lack of input from the aerospace industry or Congress may relate to the great national interest and concern expressed by the public about America's status in space. Given the deep concern with the fact that the United States significantly lagged behind the Russians in space, lobbyists and politicians may have felt reluctant to fish in what they considered to be 11troubled waters.11 Coupled with the fact that a vast majority of the budget would be spent with industry, this situation may have contributed to the lack of comment or attempted influence from those outside NASA. 3. A third factor may have been that, at the time these policies were being adopted, the government had substantially

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312 greater competence than did industry. Industry may have been in hibited from seeking an even greater role in the space program. Siepert and Young indicate that no political or industrial pressure was brought to bear on NASA during this.period.92 This testimony from key participants can be assumed to be valid, and the conclusion can be drawn that no political or industrial influence was exerted to attempt to influence NASA's policy decision in this area. Evaluation of NASA Policy Development Glennan took office at the same time NASA was established on 1 October 1958. By the fall of 1960, basic NASA policy on government-industry relations was firmly established. Although the policy would not be fully implemented at the Spaceflight Center for almost ten years, it remained the basic policy of NASA. Subsequent administrators since 1961, when Glennan resigned, have not significantly changed this approach to R&D management. The Apollo program, which began in 1961 and reached its objective of a lunar landing in 1969, was carried out based on this concept. The policy that NASA had adopted in the use of industry in the conduct of large-scale R&D programs differed significantly from the practice of other agencies. Basically, NASA had rejected the models which had been utilized for the conduct of major R&D programs in the past. These models included: 1. AEC, which followed a practice of contracing all activities to industry and universities using government-owned

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313 facilities. AEC, in most cases, lacked government technical competence to oversee and manage these contracted programs. 2. The Air Force had also sacrificed any in-house tech nical competence by choosing to rely on a captive contractor, the Aerospace Corporation, to provide technical management of its programs. 3. The Army had utilized an arsenal concept in the management of its R&D programs. This concept entailed substantial inhouse design and manufacturing activities, utilizing industry to mass-produce systems only after all development activity had been completed. The NASA approach was indeed an innovation in R&D management by retaining strong technical control and decision making in house while utilizing contractors for detailed design and manufacturing activities. NASA assumed responsibility for its projects and provided contractors with technical supervision throughout the life of the project. The development of such an approach to R&D management was a product of the times and the unique circumstances existing in 1958 when NASA was established. It was clearly not a foregone conclu sion that NASA would develop this particular approach to R&D management. Glennan, Siepert, and Young, who played critical roles in shaping NASA policy, agree that NASA might have adopted a different approach to R&D management.

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NOTES-CHAPTER IX 1 see Chapter VIII for a detailed discussion of Dryden's problems with Congress. 2u.s., National Aeronautics and Space Administration, An Administrative History of NASA, by Robert L. Rosholr (Washington, D.C.: Government Printing Office, 1966), p. 41. 3Who's Who in America, Vol. 31 (1960-61), s.v. Glennan, T. Keith. 4 Interview with T. Keith Glennan, Reston, Virginia, 16 August 1982. 5 Rosholt, Administrative History, p. 41. 6Ibid., p. 42. 7Ibid., p. 37. 8Maxime Faget, who was later to become the designer of the Mercury spacecraft and director of Engineering and Development for the Johnson Space Centers, stated that although Dryden was highly respected by most of the NACA professional staff, the young and aggressive engineers in NACA considered him to be very conser vative. As a result, this group looked favorably on the appointment of Glennan as NASA administrator. Interview with Maxime Faget, Houston, Texas, 30 November 1981. 9Glennan interview. 10James E. Webb was to become the best known of NASA's administrators. A lawyer, Webb had served in a variety of high-level government posts beginning in 1946 as executive assistant to the undersecretary of Treasury. He was the director of the Bureau of the Budget under President Truman from 1946-49, undersecretary of State from 1949-1952 and left government sevice when Eisenhower was elected president. Webb returned to government service in 1961 when appointed NASA administrator by President Kennedy. He served in this capacity from 1961 to 1968 when he retired from

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315 government service. Under Webbs leadership the Apollo program was approved and the capabilities created to send Americans to the moon. Webb resigned in 1969, however, before the first moon landing. His background as a lawyer-administrator did not provide him with the technical background which might have proved useful as NASA administrator. As a result, his appointment of Dryden as deputy administrator was logical in view of Drydens long service as a top level science administrator and his lengthy service with NACA and NASA. Whos Who in America (1982-83), s.v. Webb, James E. 11NASA has named its flight test facility at Edwards Air Force Base, California, the 11Hugh L. Dryden Flight Research Facility ... 12National Aeronautics and Space Act, U.S. Code, val. 42, sees. 2451 et seq. (1958). 13John D. Young, at that time a member of the McKinsey and Company Washington office, stated that Glennan had worked with the New York office of McKinsey while president of the Case Institute of Technology. This experience led him to discuss NASA organiza tion and staffing with Corson. Telephone interview with John D. Young, 10 October 1982. 14Faget interview. 15Glennan interview. 16Rosholt, Administrative History, p. 38. 17Telephone interview with Wesley L. Hjornevik, 5 October 1982; and Young interview. 18These included George M. Low, who later served as deputy director of the Johnson Space Center, Apollo Program manager, and deputy administrator of NASA. Other early Silverstein appointments were also to occupy key positions in .NASA. U.S., National Aeronautics and Space Administration, Orders of r4agnitude, a History of NACA and NASA, 1915-1980, by Frank W. Anderson, Jr., the NASA History Series (Washington, D.C.: National Aeronautics and Space Administration, Scientific and Technical Information Office, 1978), p. 29. 19Glennan interview. 20Rosholt, Administrative History, p. 42.

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316 21voung interview. 22siepert served in this position until 12 April 1963 at which time he transferred to Cape Kennedy and became deputy for Management of NASA launch operations at the Kennedy Space Center. Throughout Glennan's tour of duty as NASA administrator, he was to rely on Siepert as one of his key advisors on policy and management affairs. Glennan interview. 23Rosholt, Administrative History, p. 47. 24Hjornevik interview. 25Glennan interview. 26Rosholt, Administrative History, p. 42. 27Ibid. 28Telephone interview with Albert F. Siepert, 7 July 1982. 29Ibid. 30Ibid. 31Glennan interview. 32All AEC commissioners specialized in a given area of AEC operations. Glennan served as the commissioner specializing in the work of the AEC National Laboratories. Glennan interview. 33siepert interview. 34Ibid. 35Hjornevik interview. 36Ibid. 37Telephone interview with Abe Silverstein, 21 July 1982. 38silverstein, Hjornevik, and Siepert interviews.

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39y t oung 1n erv1ew. 40siepert interview. 41Rosholt, Administrative History, p. 44. 42Ibid. 43Ibid., p. 45. 44voung interview. 45u.s., National Aeronautics and Space Administration, Vanguard, A History, by Constance Mclaughlin Green and Milton Lomask, The NASA History Series (Washington; D.C.: National Aeronautics and Space Administration, Scientific and Technical Information Office, 1970), p. 73. 46Hjornevik interview. 317 47u.s., President, Executive Order 10793, Federal Register 23, 3 December 1958, 9405. 48siepert interview. 49Hjornevik interview. 50An exact date for the approval of Project Mercury has not been established. Glennan and other participants in the decision to approve Mercury could not recall an exact date. Glennan indi cated that approval was probably made the first week in which he was in office which would have been some time between 1 October and 8 October 1958. Glennan interview. See also, U.S., National Aeronautics and Administration, This New Ocean, A History of Project Mercury, by Lloyd S. Swenson, Jr.; James M. Grimwood; and Charles C. Alexander, the NASA History Series (Washington, D.C.: National Aeronautics and Space Administration, Scientific and Technical Information Office, 1966), chapter V, footnote 1. 51siepert interview. 52Glennan and Silverstein interviews. 53silverstein interview.

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3113 54McKinsey and Company, Organizing Headquarters Functions (Washington, D.C.: National Aeronautics and Space Administration, 1958). 55Ibid., p. 1-5. 56Ibid., p. 1-7. 57Ibid., pp. 1-9, 1-10. 58Albert Siepert believes that Glennans belief in the necessity for a general manager for NASA was one of the few times that his AEC experience appeared to influence his judgment as NASA administrator. Telephone interview with Albert F. Siepert, 8 October 1982. 59voung interview. 60Rosholt, Administrative History, p. 53. 61McKinsey and Company, NASA-JPL Relationships and the Role of the Western Coordination Office (Washington, D.C.: National Aeronautics and Space Administration, 1959). 62Rosholt, Administrative History, p. 96. 63John B. Medaris, Countdown for Decision (New York: G. P. Putnams Sons, 1960), p. 244. 64Rosholt, Administrative History, p. 47. 65siepert interview, 7 July 1982. 66Rosholt, Administrative History, p. 109. 67Interview with Eberhard. Reese, Huntsville, Alabama, 11 .August 1982. 68Rosholt, Administrative History, p. 111. 69siepert interview, 8 October 1982. 70Rosholt, Administrative History, p. 113.

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71H "k t JOrnevl 1n erv1ew. 72McKinsey and Company, An Evaluation of NASA's Contractin Policies, Organization, and Performance Washington, D.C.: National Aeronautics and Space Administration, 1960), p. 1-2. 73Ibid., p. 1-3. 74Ibid., pp. 1-7, 1-8. 75Ibid., p. 1-3. 76The Space Task Group was a special organization created by the NASA administrator in October 1958 to carry out Project Mercury. The Space Task Group was made up of engineers from the Langley Research Center and headed by Robert R. Gilruth. Rosholt, Administrative History, p. 69. The Goddard Spaceflight Center was established by NASA in August 1958. It was primarily staffed with employees of the Vanguard Project who had been transferred to NASA from the Naval Research Laboratory. The facility was responsible for all earthorbiting unmanned satellite programs and was located in Beltsville, Maryland. Rosholt, Administrative History, pp. 47, 79. 77McKinsey, NASA's Contracting Policies, p. 2-4. 78Ibid., p. 2-5. 79u.s., National Aeronautics and Space Administration, Report of the Advisory Committee on Organization, Transmittal Memo, Lawrence A. Kimpton, chairman, October 1960 .. 80Rosholt, Administrative History, p. 161. 81Ibid. 82Telephone interview with John D. Young, 17 November 1982. 83Ibid. 84NASA, Kimpton Report, p. 15. 85McKinsey, NASA's Contracting Policies, p. 2-17.

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320 86siepert interview. 87NASA, Kimpton Report, p. 1. 88siepert 89Ibid. 90voung interview. 91Reese interview. 92siepert interview and telephone interview with John D. Young, 22 November 1982.

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CHAPTER X SUMMARY AND CONCLUSIONS Background The primary purpose of this study has been to prepare an administrative history of the NASA policy on the use of industry. While NASA has prepared extensive program histories describing major NASA programs, only one administrative history of NASA has been prepared. 1 Robert L. Rosholt has written an extensive NASA administrative history covering the period from 1958 to 1963.2 This history is an excellent study of the many problems facing the agency during this early period. Rosholt chronicles major decisions on personnel appointments, organization changes, budget submissions, and relationships with Congress. The subject of this dissertation, however, is not dealt with by Rosholt. Many students of NASA and officials of the agency during the period when NASA policy on government-industry relations was evolving are not conscious of the fact that NASA was indeed developing a very fundamental policy which would guide the agency from that time to the present. To many, the policy adopted by NASA was seen as a logical approach to the management of the program. This inability to understand the importance of this policy decision can be attributed to two factors:

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322 1. The press of other ongoing decisions relating 2 to the technical program, budgets, organization, and congressional relations tended to push this question of government-industry relationships into the background, and 2. The fact that this policy was not made in the context of spirited debate, political intervention, or controversy dulled participants' understanding of the importance of the policy itself. The fact that NASA's policy on government-industry relations evolved over time contributed to this reaction. While some of the participants in the policy development process were unaware that the evolution of this policy was occur ring, other key officials, more schooled in public administration and public policy considerations, recognized the significance of this policy development. This study has been based on a review of the general literature available and on a search of NASA documentation dealing with the subject. In addition, it was possible to conduct interviews with all key NASA officials who were in positions of responsibility at the time and who either strongly influenced or actually made this important policy decision. These interviews are of critical importance for two reasons: 1. Many elements in the decision process have not been documented; in those cases where documentation exists, it can prove inadequate or misleading without clarification from the chief decision makers, and

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323 2. Most of the officials who were intimately involved in this decision are now in their sixties and seventies. This study may represent the last opportunity to gain their personal insight and perspectives on the subject. Summary The development of NASA policy occurred at a particular time in history and was influenced by the circumstances which then existed. The tremendous public concern which arose at the time of the launch of the first artificial satellite by the Soviet Union may be difficult to appreciate almost twenty-five years after the event. President Eisenhower was to describe the mood of the public as 11near panic11; Lyndon B. Johnson, at that time majority leader of the Senate, compared America's position to Pearl Harbor. Although this high degree of public fear and concern was an important element which resulted in the establishment of a new space agency, it should be remembered that federal involvement in science and technology was not a new development. Although public demand for action on the part of the federal government to meet what was perceived as a direct threat by the Soviet Union was important at the time, the space program in another sense represented a continuation of the long-term role of the federal government as a patron of science and technology. Early Federal Support of Science and Technology Government support of science and technology dates from the earliest days of the Republic. Initial areas of support focused on

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324 science and exploration. One of the first government-sponsored projects was the charting of the eastern seacoast. This project was followed by Army mapping and exploration of the western territories. Activities of a. more purely scientific nature include the establishment of the Naval Observatory. In the late 1800s, fed eral emphasis on science and exploration shifted to a greater support of research. This research thrust has continued to the present and has resulted in the most productive agricultural industry in the world. Federal support of more purely technological pursuits began with early support of the aviation industry in the early 1900s. At the beginning of World War I, the United States was in a weak posi tion in the development and manufacture of aircraft. Although the airplane had been invented in the United States, lack of federal support to the fledgling industry resulted in the United States falling behind most European nations in aviation. The National Advisory Committee for Aeronautics (NACA) was established in 1915 and played a key role in the subsequent development of both civilian and military aviation. NACA was abolished in 1958 and became a part of the new NASA organization. Former NACA personnel were to play an important role in the new NASA organization. NACA had earned an international reputation for its high technical competence and pro fessionalism in aeronautical research. Former NACA personnel brought this orientation and these values with them when they joined NASA and were to help shape NASA's policy on government-industry relationships.

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325 World War II The Beginning.of Modern R&D World War II marked a watershed in modern research and development. Prior to World War II most R&D activities were extremely limited in size, complexity, and cost. R&D conducted in the private sector was still of such a nature as to be done by a single individual or small group working with limited facilities and equipment. Within the federal government, R&D was similarly unsophisticated and was normally accomplished in government arsenals or laboratories. In 1940, the government expenditures in R&D were estimated to be only sixty-seven million dollars. The age of contracted R&D was not to arrive until the World War II period and, once utilized, was to dominate much of the government's R&D activity in the postwar period. The basic nature of R&D has been unchanged in terms of those characteristics which make this field of endeavor unique. R&D, by definition, consists of those technological activities that cannot be defined in detail at their inception. As a consequence, all R&D activities share common characteristics: a high degree of risk and uncertainty associated with the result to be attained. As the sophistication of R&D grew, the uncertainties associated with R&D activity also increased. Private institutions could not risk the very large sums necessary for the successful pursuit of modern R&D projects. This change in the nature of R&D is well illustrated by the first major modern R&D project, the development of the atomic bomb.

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326 This major national undertaking represented an investment of 2.2 billion dollars and was accomplished through a partnership of the federal government, the universities, and industry. Under this partnership, the federal government was to fund the entire project and provide certain administrative and housekeeping services; the universities provided the necessary scientific research to design production facilities and to design and build the bomb; industry was assigned the role of building and operating industrial plants necessary for the .production of fissionable material. The successful development of the atomic bomb provided a prototype of how industry, universities, and the federal government could work together in the accomplishment of highly complex R&D projects. Today, many questions exist in our society concerning the value of atomic energy, problems associated with the disposal of atomic waste, control of nuclear weapons, and similar matters. While a few similar questions were raised immediately after World War II, for the most part the development of atomic energy was per ceived as a major technological triumph based on this unique part nership of government, universities, and industry. The AEC exper ience was to serve as a model which was to influence all postwar R&D programs. Characteristics of R&D The major R&D programs undertaken after World War II shared certain common characteristics with the atomic energy program: 1. The projects undertaken were to be of substantially greater complexity than any R&D projects existing before the war;

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2. This complexity required a vast mobilization of re sources, similar to the scope and complexity of the atomic bomb project. 327 3. The size and complexity of projects made postwar R&D activities extremely costly. Costs were frequently in the hundreds of millions or in excess of one billion dollars. 4. Industrial and university participants were protected from the risks and uncertainties associated with these projects through the use of cost-reimbursement contracts. Under the terms of these contracts, participants were guaranteed that they would be reimbursed for all reasonable costs incurred and that they would be guaranteed an agreed-upon fixed fee for their efforts. 5. All of the major projects conducted in the postwar period were sponsored by the federal government and were considered to be essential to the security, safety, or well-being of the nation. The German V-2 Experience and Its Impact on the U.S. Military The cold war with the Soviet Union in the 1950s resulted in a United States commitment to the development of ballistic missiles. The experience of the Germans in World War II in the development and use of V-1 and V-2 rockets led most American military leaders to believe that missiles would be the key to any future conflict. Tensions with the Soviets provided a strong impetus to each of the military services to develop these new long-range weapons. The Air Force, from the period immediately following the war, had sought a

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328 monopoly on the development of long-range missiles. The Army, however, had brought to the United States over one hundred of the key German scientists who had developed the German rockets. This group, led by Wernher von Braun, were quickly installed in Army facilities at White Sands, New Mexico, and continued their rocket research for the Army. This special capability gave the Army a substantial edge in its competition with the other military services in the development of missiles. The Air Force, lacking the competence which the Army had acquired with the von Braun group, developed a different mode of missile management. While the Army focused its attention onthe inhouse develbpment of missiles using the arsenal concept, the Air Force chose to adopt a radically different approach. The Air Force elected to follow a management pattern somewhat similar to that of AEC in its use of private contractors. The development of the atomic bomb had required that entirely new facilities be constructed for the production of fissionable material and the design and manufacture of weapons. These government-owned facilities were operated exclusively by contract. In the case of missile development, however, a large aerospace industry exi?ted which had traditionally close ties to the Air Force. The Air Force determined that it would rely on industry to design and manufacture missiles. The Air Force, lacking in-house technical competence to manage the missile program and direct industrial contractors, determined that it would also contract this government management function. As a result, the Air

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329 Force made use of a private contractor to perform systems engineer ing and the technical management of its industrial contractors. These special contractors, normally referred to as .. captive contractors 11 because they, at least in theory, worked on 1:y 'for the Air Force, became the technical competence on hich the Air Force relied in the conduct of its missile programs. The first of these contractors, Ramo-Wooldridge, was later succeeded by Space Technology Laboratories, a company wholly owned by Ramo-Wooldridge. Criticisms of this arrangement eventually led the Air Force toestablish still another captive contractor, the Aerospace Corporation. Unlike its predecessors, Aerospace was a 11not-for-profit11 corporation. The Air Force argued that the government could not attract and retain competent personnel to perform these management functions. At the time NASA established in October 1958, these three major models existed for the conduct of very large and complex R&D programs by the government. Congress, while not dealing with the question of how the new space agency would manage its activities, was aware of the existence of these models .. Legislative History of NASA The Soviet Unions success in launching the first Sputnik resulted in a public demand for a United States response to this perceived threat. Congress immediately began to consider how the United States should organize to carry out new space research and exploration programs. Leading the examination of a proposed United States response to the Soviet threat in space was the leadership

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330 of both houses of Congress. Lyndon Johnson, then majority leader of the Senate, chaired the Senate Special Committee on Space and Astronautics. John W. McCormack, majority leader of the House of Representatives, chaired the House Select Committee on Astronautics and Space Exploration. An early question for congressional decision was whether the space program should be assigned to a civilian agency or made part of the Department of Defense. When considering this question in relation to atomic energy twelve years earlier, Congress had elected to place all atomic energy responsibilities in the hands of a new civilian agency, AEC. In considering a similar question of the location of space research and operations, Congress chose a different course. Responsibility for the conduct of space research and operations was split: the military to perform military space functions while a new civilian agency, NASA, to be assigned responsibility for the conduct of civilian space programs. The Eisenhower administration had proposed the establishment of a new space agency. The administrations proposal would abolish the existing NACA and transfer the personnel and facilities of that organization to the new space agency; for the most part, Congress concurred with these recommendations. The administration had considered the assignment of space responsibilities to an expanded NACA organization but rejected this approach. Congress also considered this possibility and, like the administration, also rejected the concept of an expanded NACA. Congress based its conclusions on two considerations. While

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331 Congress recognized that NACA had an outstanding record as a purely research organization, it understood that NACA had absolutely no experience in R&D and the development of large systems. Congress also believed that NACA had existed for too long a period in the shadow of the Defense Department and that it would be unable to take the lead in the new field of space exploration. Establishment of NASA The establishment of NASA on 1 October 1958 ended arguments about how the country should organize to accomplish the new space program. President Eisenhower appointed to the position of NASA administrator, T. Keith Glennan, at that time president of Case Institute in Cleveland, Ohio. Glennan had extensive experience in R&D having served during World War II as director of the Navy1s Underwater Laboratories and, in the early 1950s, as a commissioner of AEC. The new administrator selected as his deputy, Hugh Dryden, former director of NACA. Dryden was one of the most distinguished and well-recognized government scientists, and his experience with NACA provided the new administrator with experience he personally lacked in aeronautics and missile technology. NASA became an operating entity on 1 October 1958; NACA was abolished, its facilities and approximately 8,000 personnel transferred to NASA. Glennan had assumed his new position with no pre conceived ideas about how NASA would carry out its mission or about relationships with industry. He was, however, committed to three concepts:

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332 1. NASA should rely on industry to the maximum extent; the agency should not engage in manufacturing activities. 2. The personnel inherited from NACA should be sufficient to carry out NASA1s mission; any increases in staff should serve only to augment areas lacking necessary competence. 3. The government, while contracting the major amount of work associated with the new space program, should assure that funds were well spent; this would require technically competent in-house civil service personnel. Organizing the New Agency Glennans immediate task was to organize the new agency, at least on an interim basis, and to appoint key personnel to executive positions. John Corson, Washington manager of McKinsey and Company, a nationally recognized management consulting firm, suggested names for key administrative positions, and it was agreed that McKinsey would conduct a study of NASA headquarters organization. John D. Young, assigned by McKinsey to conduct this study, became an influential advisor to NASA in the development of its government-industry policy. In making the top appointments, Glennan worked closely with Dryden. As director of Space Flight Development, Glennan selected Abe Silverstein, a longtime NACA scientist. John W. Crowley, Jr., another experienced NACA engineer, was appointed director of Aeronautical and Space Research. These two line organizations encompassed all of the technical work of the new agency. Crowleys area

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333 consisted of a continuation of the traditional NACA areas of activity including supervision of all of the old NACA laboratories. Because his sphere of responsibility represented a continuation of traditional NACA activity, plg-yed.:no :si:grif1ii:cant r,ole ii.n ,es tablishing new NASA policy as it related to industry relationships. NASA decisions on relationships with industry would be strongly influenced by both Dryden and Silverstein. As former NACA officials, they had strong views on the use of industry in accomplishing the space program. Both of these officials had experience with the Air Force mode of management. Both believed that Air Force programs had suffered because the Air Force lacked in-house technical personnel competent to manage its programs. As a result, both Dryden and Silverstein would argue strongly that the new NASA organi zation should not follow the Air Force approach to R&D management. Glennan recognized that NACA, a small in-house research orga nization, lacked competent and experienced personnel in the field of administration. It was clear to Glennan that business management competence would be critical to NASA given the large contracting program that was projected, and he realized that he would need to search outside the agency to find this competence. To fill this void, he appointed as director of Business Administration (the third major line official of_NASA), Albert F. Siepert, at that time executive officer of the National Institutes of Health. Siepert, although lacking development experience, had an extensive background in managing technical activities and in working with the Bureau of

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the Budget and Congress. As his administrative assistant, Glennan appointed Wesley L. Hjornevik. At that time Hjornevik was serving as special assistant to the under secretary of Health, Education, and Welfare. Although relatively young, Hjornevik was to play a major role in the new NASA organization. With these appointments made, Glennan had picked his key management team; these individuals were to shape NAsAs government industry policy. The Transfer of Personnel and Facilities to NASA At the same time that Glennan was making key appointments and arranging for the McKinsey study, other actions were under way. NASA had sought the transfer of various groups from the Department of Defense to NASA to augment its capabilities. The Space Act had given the president power, for a limited period of time, to trans-fer personnel and facilities from other departments to NASA. Glennan sought to utilize this authority by requesting the transfer of the following three groups from the Department of Defense: 1. The Vanguard Project of the Department of Navy, which was responsible for the development of a civilian scientific satel-lite as a part of the 1958 Geophysical Year; 2. The Jet Propulsion Laboratory (JPL) of the Army Bureau of Ordnance, a government-owned, contractor-operated laboratory which had built the first American satellite placed in orbit, Explorer I;

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335 3. A portion of the staff of the Development Operations Division of the Army Ballistic Missile Agency (ABMA). This group, also a part of the Bureau of Ordnance, was the Armys technical competence in the development of Army long-range missiles. The group was headed by Wernher von Braun and included approximately 4,000 scientists, engineers, and technicians. Glennan gained Defense Department approval for the transfer of all three groups, but the Army was adamantly opposed to the transfer of the von Braun team or any major part of it. As a result, the Defense Department modified its position, and only the Vanguard Project and JPL were transferred at that time to NASA. In December 1958, McKinsey and Company submitted its study of the organization of NASA headquarters. This study, performed by Young, ratified the interim organization Glennan had adopted. The study also indicated that NASA should technically supervise its contractors and conduct tests of contractor-furnished equipment. Thus, in the earliest study of NASA operation, it was recommended that NASA rely on its own technical personnel to manage its programs in a different fashion than either the Air Force or AEC. The transfer of JPL and its continuance as a contractor operated facility was an exception to the normal practice of NASA. All other laboratories were to be government-owned and operated facilities. No serious consideration was given to any change in the contracted status of JPL. NASA officials believed that such a change would be impractical and disruptive. As a result, JPL contractor operation still exists as an exception to NASA practice.

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Goals of NASA Officials The goals and objectives of the key personnel initially occupying key management positions in NASA can be summarized as follows: 336 1. Glennans objective was to make maximum use of contractors and to limit the growth of government personnel. At the same time, Glennan believed that the government needed to maintain technical control over the program. 2. Dryden and Silverstein believed that it was essential for NASA to plan, manage, and supervise the program. Believing that the Air Force had been ineffective in managing its. contractors, they sought to assure that NASA maintain technical control. From the outset, Dryden and Silverstein were strongly moti vated to achieve this objective. They did not believe it was nec essary or wise for the government to perform detailed design or conduct arsenal-type manufacturing activities. 3. Siepert and Hjornevik had entered NASA without strongly held positions on how NASA should manage. They were aware, however, of Air Force and AEC practices in contracting technical management activities. Both of these key individuals came to believe that government employees should exercise overall program control and de cision making in the interests of public accountability. Thus, the objectives of each of these senior officials tended to merge, although their specific areas of concern were different. Out of this confluence of objectives was to come NASAs policy on the use of industry to accomplish the national space

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337 program. The policy, as noted by most of the key participants, was less of a conscious decision than an evolution over time. Even at this early time in the agency's history NASA officials were taking actions that were instrumental in developing basic policy. The Transfer of the Von Braun Group In the fall of 1959, the Department of Defense, which earlier had opposed the transfer of the Development Operations Division of the ABMA (the von Braun group) to NASA, contacted NASA and suggested that it would agree to such a transfer. The Development Operations Division represented a very major capability in the development of large launch vehicles; Glennan quickly agreed to the proposed transfer. Along with the transfer of von Braun, the Department of Defense proposed the transfer of the Saturn Project for the development of a very large booster. This transfer was negotiated with the Army Bureau of Ordnance with Siepert serving as NASA's principal negotiator. Young of McKinsey and Company served as the director of the task force which developed NASA's position on the transfer. The transfer, effective on 1 July 1960, presented NASA with a new set of management problems. Von Braun and his staff had utilized the arsenal approach to R&D management both in the United States as a part of the Bureau of Ordnance and prior to that time while developing the V-1 and V-2 rockets at Peenemunde in Germany. The German scientists were strongly committed to the arsenal ap proach and to change this orientation to coincide with NASA's emerging policy on the use of industry would be difficult. The von Braun

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338 group had developed extensive manufacturing capabilities at their home base in Huntsville, Alabama. Their approach to R&D management involved both the detailed design and the manufacture of missiles in house using civil service personnel. Under the philosophy which NASA had developed on the use of industry, both detailed design and manufacturing were activities which should be assigned to industrial contractors. Perhaps as a result of these problems associated with the Development Operations Division, Glennan sought outside advice on how NASA should manage its relationships with industry. Studies of NASA Organization and Policies Prior to the transfer of von Braun and his organization to NASA, Glennan arranged for two new studies to be made of NASA. The first, to be conducted by McKinsey and Company, was to deal with NASAs contracting policies, organization, and performance. The second, to be conducted by an outside group of experts, was to be a study of NASA1s organization. This second study was a more broadly based study which was directed at all facets of NASA organization and operations. This study was headed by Lawrence A. Kimpton, chancellor of the University of Chicago, and included a distinguished group of executives from industry. McKinsey was once again employed to provide staff assistance to the Kimpton Committee. Recommendations submitted by the two groups regarding the use of industry were similar. This probably reflected the fact that Young was both conducting the McKinsey study and serving as staff to the Kimpton Committee.

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339 The recommendations of these two studies proposed a radical change in the position which NASA had been following. Both reports proposed that each major NASA development center design, develop, and manufacture a complete system or major subsystem in house. Up to this time, the detailed design and manufacture of hardware had been seen as a function to be delegated to contractors. Why did this radical shift in what had come to be NASA policy occur? Siepert, in reviewing this question, states that it was never in tended for this policy to be implemented other than at the Marshall Spaceflight Center (the name given to the von Braun group upon its transfer to NASA). Siepert indicates that none of the other NASA development centers had any desire to perform detailed design or manufacturing in house. For this reason, Siepert indicates, such a policy could be favorably considered with the understanding that in practice it would apply only to the von Braun group. The goal was to wean von Braun away from the arsenal approach. Limiting von Braun to the development of a single system in house was seen as a method to move toward this objective. Young, author of the 1960 study, that this was the motive behind this recommendation. In addition to recommendations concerning contracting and use of industry, the Kimpton Committee reviewed the entire range of NASA's operations. The committee found that while operations could be improved in some areas, basically NASA was doing an outstanding job of carrying out its congressional mandate. The Kimpton Committee changed no NASA policies nor did it change the thrust of NASA management.

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340 Establishment of Basic Policy By October 1960, two years after its creation, NASA had established its basic policy on the utilization of industry in the conduct of the space program. This policy was never issued as a formal policy statement, but it was well understood by all participants. Under the arrangement which NASA had evolved in the management of R&D activities, the division of responsibility between the government and industry would be as follows: 1. The government would be responsible for the overall management of the space program. The government would directly perform long-range planning, would be responsible for the conceptual design of space hardware systems, would technically supervise contractors, and would perform test and evaluation functions on contractor-produced hardware. 2. The industrial contractors associated with the program would be assigned responsibility for the detailed design of hardware and for the manufacturing of these hardware systems. In addition, contractors would perform necessary test activities associated with the development and manufacture of hardware. This division of responsibility between the government and industry represented a different approach from that followed by other agencies responsible for the conduct of major R&D programs. Contrary to Air Force and AEC practice, NASA would be directly responsible for the technical management of all NASA Con trary to Army practice, NASA would not utilize an arsenal concept but would delegate to industry responsibility for detailed design

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341 and manufacturing. When compared to previous models for the conduct of major R&D programs, NASA had indeed developed a new and unique approach. Conclusions NASA as a New Agency A question which arises in reviewing the development of policy in NASA relates to the transfer of some 8,000 personnel from NACA to NASA: Was NASA a new organization or simply an enlarged and renamed NACA? If this were the case, was the policy on use of industry developed by NASA simply an extension of the NACA reliance on in-house technical competence? The answer to these questions is clear: NASA was indeed a new agency with new management and with a different mission from NACA. NACA had never engaged in any development activities, had never built a single aircraft in house during its long existence. While this transfer of NACA personnel to NASA represented the acquisition of a number of extremely capable engineers, it did not repre sent the acquisition of management talent skilled in the conduct of major development programs. The management team, appointed by Glennan, developed the policy which NASA would follow in the use of industry. There can be no question that the technical leadership of the agency, all former NACA officials, played a key role in these decisions. However, the administrative personnel appointed by Glennan and Glennan himself were key players in this decision making. Both Glennan and Siepert clearly saw NASA as a new organization.

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342 Siepert, in discussions about this early period of NASA1s existence, indicates that a major problem facing the new agency was absorbing the very large group of former NACA personnel ... Siepert would hardly choose these words if NASA represented merely a renamed NACA. Young and Hjornevik, both intimately involved during this period, saw the formulation of NASA as the establishment of a new organization. They believe that NACA personnel and NACA traditional opera ting practices had a strong influence on the development of NASA policy. Neither believes, however, that the new NASA organization was merely a continuation of NACA under a new name. If NASA was indeed a new organization, was the development of the policy which was ultimately adopted inevitable? It could be argued that even though NASA was a new the influence of former NACA personnel made the adoption of the policy of reliance on in-house NASA technical competence inevitable. Glennan and Siepert were questioned in this regard and indicated that the development of the policy which NASA evolved was far from inevitable.3 Siepert believes that the development of this approach to R&D management was the result of the unique factors occurring at that time. He suggests that a different NASA administrator, one with an Air Force background, for example, could well have reached a different conclusion on the use of industry. Young shares these views and in-dicates that in his judgment NASA could have gone in any one of sev eral directions in terms of policy at tt1e time it was established. 4 In view of these comments by the participants, and given the history

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343 of the evolution of NASA policy in this area, it can be concluded that the adoption of this NASA policy was neither inevitable nor a foregone conclusion. The Unique Nature of NASA's Policy If NASA policy was unique, did this policy deviate substantially from the adopted by other agencies? The answer to this must be that NASAis policy on the use of industry was substantially different from the Air Force, AEC, or the Army. The House Select Committee on Astronautics and Space Exploration, in considering the establishment of the new space agency, stated: problem with which a space agency deal is the argument between the contract system of production and the arsenal, the former used exclusively by the Air Force; the latter, thanks to the historical accidents of their development, by the Army and the Navy.S NASA, contrary to the assumptions of the Select Committee, selected neither the Air Force nor the Army model of R&D management. What emerged was a new and unique approach to the management of major R&D activities. The policy which NASA evolved appears to have the strengths of both of these management systems without the weak-nesses inherent in them. When comparing the approach to R&D management of ilASA Air Force, AEC, and the Army, the model shown in Table 3 may prove useful. This table depicts the extent of reliance by various R&D agenci on either indus try or government c i vi 1 servants in the con duct of major programs. The Air Force and AEC represent almost a complete reliance on industry with the government having no real capability for technically managing programs. At the same time, the

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344 Army arsenal approach represented a complete reliance on government personnel for the development of complex systems. (In the Army case, industry was used only for routine manufacturing activities after missile systems were completely designed, tested, and qualified for flight. As depicted in Table 3, the NASA approach reflected a system halfway between the two extremes represented by the Air Force ( and AEC on one hand and the Army on the other. /3 {l 'I TABLE 3 GOVERNMENT RESPONSIBILITY FOR THE CONDUCT OF MAJOR R&D PROGRAMS Government reliance on in-house capability rmy missile program (the von Braun group) J Z ;) S NA A Government reliance on industrial capability Air Force missile program AEC Advantages of NASA Policy J../-3 1. Compared to the Air Force and AEC, the NASA approach assured the government's ability to exercise technically informed management of its programs. All decisions relating to a program are made with the public interest fully in mind. The government agency responsible can be totally accountable for its decisions without reliance on those outside the government to perform critical govern-ment management functions. 2. Compared to the Army approach, NASA's policy relies on industry not just to manufacture production models after R&D is com but to share in the R&D process. While retaining critical

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345 program control, the NASA approach to R&D management allows the agency to 110ff 1 oad 11 more routine deta i1 ed design and manufacturing functions. In view of continued concern by both the executive and legislative branches on the size of federal employment, this policy approach allows the government, with a relatively small staff, to supervise contractor performance and to maintain the capability for informed decision making on critical problems. In this sense, the NASA approach may well represent the best of both worlds while, at the same time, adopting a policy which is viable in terms of con gressional and executive desires to restrict government employment. Theoretical Implications This dissertation has been directed at preparation of an administrative history of the development of NAsAs policy on the use of industry in the conduct of the United States space program. The intent of the study was never to consider NASA policy development as a case study in the application of policy-making or decision theory. It is reasonable, however, to analyze the NASA policy exper ience and compare it to accepted policy models. With this objective, NASA policy is compared to selected policy models to determine if NASA1s policy on government-industry relations conforms to the as sumptions of one of these r.Jajor r:Jodels. For the purpose of this analysis, NASA s po 1 icy wi 11 be considered in two phases: Phase I will review and evaluate the development of the NASA policy prior to the time negotiations began with the von Braun group. Phase II will consider NASA policy after the decision was made to transfer the von

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346 Braun team to NASA. (Phase I includes the period from the estab lishment of NASA in October 1958 to 1 January 1960. Phase II covers the period from 1 January 1960 through October 1960 when NASA policy can be considered to be established.) 1. The Rational Model. The most widely studied model of decision making is the rational model. This model has been exten sively described by numerous students of public policy. For the purposes of this paper, Grahm T. Allisons description in his article in the American Political Science Review will be utilized.6 Allison stresses the importance attached to the rational model by stating, 11Most analysts explain (and predict) the behavior of national governments in terms of various forms of one basic concep tual model, here entitled the Rational Policy Model ... ? Character izing this model, Ira Sharkansky identifies the steps normally associated with its application: A. Identify the problem. B. Clarify goals and then rank them according to their importance. C. List all the possible means or policies for achiev ing each goal. D. Assess all the costs and benefits that would seem to accrue from each alternative. E. Select the package of goals and associated policies that would bring the greatest8relative benefits and the least relative disadvantages. The preceding chapters which discuss how NASA arrived at its policy on the utilization of industry clearly indicate that the agency did not follow the rational model. At no point was the type of study and analysis contemplated by the rational model conducted by NASA. The agency did not consider the strengths and weaknesses

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or the costs and benefits of all alternatives in arriving at its policy decision. For these reasons, we can safely conclude that the rational model was not utilized in the NASA policy-making process. 347 2. The Organizational Process Model. The second model described by Allison is the organizational process model, which is based on an assumption that decisions are made 11less as deliberate choices of leaders and more as outputs of large organizations functioning according to standard patterns of behavior.119 This model presupposes that what influences policy choice are the operations of large bureaucratic organizations. In the NASA case, however, the agency was newly established, and a long established organization with its own approach to policy and problems did not exist. The NASA decision appears to have been much more influenced by a small number of key decision makers than by the operations df an orgaritzation. 3. The Bureaucratic Politics Model. Allison describes this model as one which features 11bargaining along regularized channels among players positioned hierarchically within the government.1110 Under this concept, policy is neither a product of organizational inputs or rationality but is created 11by the pulling and hauling that is politics.1111 Does this policy model explain the development of NASA policy during Phase I? The asnwer must be, 11n0.11 While the NASA policy was strongly influenced by inputs from key members of the management team, the 11pulling and hauling11 was absent. NASA's

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343 policy was not the product of diverse positions coming together during the bargaining process; it evolved and reflected basic agreement among key agency officials. While such officials may have sought different objectives, they could all agree on the NASA policy adopted as a means of meeting their individual objectives. For this reason, the bureaucratic politics model does not appear to explain the NASA decision-making process. If Allison's three major policy models are unsatisfactory in explaining NASA policy, other models can be examined. 4. The Incremental Model. One of the most widely used models in studying the development of policy is Charles Lindbloom's incremental model.12 This model assumes that the demands of the rational model for information, data, and the understanding of complex problems and interrelationships can seldom be met. Lindbloom proposes in his approach that 11successive limited comparisons .. represent the way that most policy is made. His view of policy is that it is primarily.an incremental process and that changes in policy tend to represent relatively modest movement away from existing policy. Does this approach contribute to our understanding of the development of NASA policy? Once again, this approach would not appear to be a good explanation of how policy was made. Several factors argue against the assumption that the incremental model can be useful in describing the NASA policy process. The agency itself was a new organization without existing procedures or policy. No policy existed which NASA could then change on an incremental basis; this model sheds no light on the NASA policy development process.

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349 5. Mixed Scanning Model. Amitai Etzioni, one of the critics of the incremental model, has proposed a mixed scanning model to explain the process of policy development. Harold F. Gartner describes Etzioni's model as follows: Under the "mixed scanning" process, the decision maker scans the total organization regularly but does not attempt to digest the overwheming amount of detail that is generated. As long as no in-depth examination appears to be necessary, the decisions of the organi zation can be made on an incremental basis; on the other hand, if any new, unexpected, or significant details appear while the perfunctory scanning is. occurring, the decision maker can zero in at a level of intimate detail in order to observe the occurrence and to make any basic decisions that are required.l3 Gartner sums up his explanation of Etzioni's theory by saying, "Etzioni believes that mixed scanning combines the best parts of both the economic, or rational, model and the incremental model of decision making."14 As has been indicated above, in its initial policy making, NASA relied on neither the rational nor the incremental model. If this is true, then obviously NASA's policy development experience could not be explained by the mixed scanning model. 6. The Satisficing Model. Herbert A. Simon, in developing the satisficing model, was rejecting the rational model as being unrealistic in terms of its demands for information and understanding of highly complex problems. Simon believed that the development of policy represented a much more simple approach to decision making. He argued that rational decision making was unrealistic in view of the fact: The number of alternatives he policy maker] must ex plore is so great, the informat1on he would need to evalu ate them so fast, that even an apgroximation to objective rationality is hard to conceive.l5

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350 Simon believed that the policy-making process in practice reflected a much more simple process. He suggested that policy was based on understanding the major aspects of a problem but without understanding all of the complexities and interrelationships which might exist. This model assumes that when faced with a problem and/or the requirement to establish a policy, the decision maker will search for a policy which satisfies him and then adopt the policy. Could this be an explanation of the NASA policy-development process? Participants and decision makers in NASA have stressed that the NASA policy on the use of industry evolved over a period of time. At no point did NASA decision makers identify the need for a po 1 icy on the use of indus try and then go forth in a search for that policy. The satisficing model appears to fail to explain the development of NASA policy. The above discussion indicates that none of the major policy models considered explains NASA policy making during what has been termed Phase I of the policy-making process. During the period beginning in October 1958 and ending in late December or early January.1960, the NASA policy on the use of industry had been in the process of formulation. By January 1960, this policy was in place. The advent of the impending transfer of the van Braun group created a need for assuring that the basic NASA policy regarding the use of industry be maintained in spite of the pressures of von Braun and his staff. Phase II of the NASA policy-making process does appear to compare to the bureaucratic politics model. Policy during Phase II

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351 was a product of the 11bargaining11 which took place, either formally or informally, between von Braun and key NASA decision makers. A change in NASA policy resulted, with NASA officials agreeing that von Braun could continue his in-house design and manufacturing activities, but for one major system only. This would seem to indicate that this policy was designed to accommodate von Braun and his operating mode to some degree while at the same time restrict the range of the app 1 i cation of von Braun s arsena 1 appro.ach. In. effect, those concerned with the development of policy during the 1960 period indicate that the change in policy was intended to apply only to von Braun. This seems to be an excellent example of the bureaucratic politics model. Although the change in NASA policy made in 1960 to accommodate von Braun and the goals of his organization can be explained by the bureaucratic politics model, that model does not explain the development of NASA policy during Phase I of the policy process. Phase I is the more important phase of NASA policy development. Phase II reflects a modification in the established policy designed to accommodate von Braun. It is significant, therefore, that existing policy models do not appear to explain the development of NASA policy during this early period. The inability to understand NASA policy making using existing models suggests a need for a new model which would account for the development of NASA's policy on government-industry relations. Such a model might be considered to be a consensus model of policy

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352 formulation. Such considerations are well beyond the scope of this dissertation, but the NASA experience in the development of policy may prove useful to future students of policy in their quest for models which could explain this type of process. Final Conclusions The following observations can be drawn from this history of the development of NASA policy on the use of industry in the accomplishment of the United States space program: 1. NASA, although inheriting approximately 8,000 personnel and major facilities from NACA, was indeed a new agency that developed its own unique policy for the conduct of major federal R&D programs. 2. The NASA policy was significantly different from the policy utilized by other government agencies in the conduct of major technology development activities. 3. The development of NASA policy was strongly influenced by the particular time at which this policy was formulated, and the establishment of this policy resulted from the convergence of the interests of various key participants. The policy adopted by NASA which provided for technical control and direction of the space program met the needs of various participants in the policy process. For this reason, it might be considered a consensus model of policy formulation. 4. NASA policy was purely a product of deliberations internal to NASA and was not influenced by either political pressure or

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353 the interests of such special-interest groups as the aerospace industry. This absence of political pressure undoubtedly reflected the fact that under this policy the major amount of program activity would be contracted to industry. At the same time, during the period when this policy came into being, industry lacked strong capability in the new technology required. In addition, public concern with the need for the rapid development of United States capability in space may have tended to restrict political interference with the policy process. 5. The NASA policy developed in the early period of space exploration has remained basically unchanged from 1960 to the pre sent. Under the application of this policy, NASA has conducted all of this nations space programs including Mercury, Gemini, Apollo, Skylab, Apollo-Soyuz, and the Space Shuttle. Subsequent administrations have accepted and continued to implement this policy basically unchanged. 6. The NASA policy has made it possible for the government to manage the. United States space program in an effective and informed manner, relying on government personnel to make what are basic government decisions on the allocation of resources, the development of new programs, and the management of the program. Major advances in the development of new, large, and complex hardware have and undoubtedly will continue to be a responsibility of the federal government. The experience of other agencies such as AEC and the Air Force indicate that programs can be successfully accomplished under various approaches to their management and

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354 under various policies governing the use of industry. It would be impossible to demonstrate that the policies adopted by any one of these agencies have been superior in terms of program success, schedule, or cost. A fundamental question exists, however, as to whether it is in the public interest for the government to contract basic government functions, such as program planning, technical decision making, and similar matters. Arguments made in support of these delegations of basic governmental functions to industry normally are based on the assumption that the government cannot attract and retain per sonnel competent to make these technical decisions and to manage these complex technological undertakings. The NASA experience demonstrates conclusively that the government can attract and retain the highly competent personnel necessary to manage these multi-billion dollar R&D projects. The NASA policy on the use of industry to perform most of the detailed engineering and manufacturing functions while retaining the capability of planning the program, making basic technical decisions, and supervising contractor activity in an informed manner indicates that the government can both discharge government responsibility for management and utilize industry to accomplish the major portion of the job. The NASA experience demonstrates that alternatives do exist to contracting out in a blind manner the development of major R&D programs. This experience should prove useful to other administra tors who in the future may be faced with the choice of contracting

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355 government management functions to industry or performing these functions utilizing government personnel. Agency accountability and the public interest would appear to require that government administrators stand ready to defend and justify their management of major programs based on the capabilities of the agency, not on the information supplied by industry. The NASA experience demonstrates that this objective can be achieved while accomplishing the most complex technological programs ever undertaken by man.

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NOTES-CHAPTER X 1NASA has prepared a series of program histories which des cribe and outline the conduct of the various manned space flight programs which NASA has conducted. These include This New Ocean, a History of Project Mercury, by Loyd S. Swenson, Jr.; James M. Grimwood; and Charles C. Alexander, the NASA History Series. 1966; On the Shoulders of Titans, a History of Project Gemini, by Barton C. Hackler and James M. Grimwood,the NASA History Series, 1977; and The Partnership, a History of the Apollo-Soyuz Test Project, by Edward Clinton Eze 11 and Linda Neuman Ezell, the NASA Hi story Series, 1978. (Washington, D.C.: National Aeronautics and Space Administration, Scientific and Technical Information Office). 2u.s., National Aeronautics and Space Administration, An Administrative Histor of NASA, 1958-1963, by Robert L. Rosholt D.C.: hlational Aeronautics and-Space Adninistration, 1966). 3 Telephone interview with Albert F. Siepert, 7 July 1982; and interview with T. Keith Glennan, Reston, Virginia, 16 August 1982. 4 Telephone interview with John D. Young, 9 October 1982. 5u.s., Congress, House, Report of the Select Committee on Astronautics and Space Exploration, H.R. Rept. 1758, 85th Cong., 2d sess., 1958, p. 16. 6Graham T. Allison, 11Conceptual Models and the Cuban Missile Crisis,11 The American Political Science Review 63 (September 1969): 689-718. 7Ibid., p. 690. gAllison, 11Conceptual Models,11 p. 698.

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10Ibid., p. 707. 11Ibid. 357 12charles E. Lindblom, 11The Science of Muddling Through,11 Public Administration Review 19 (Spring 1959): 79-88. 13Harold F. Gartner, Administration in the Public Sector (New York: John Wiley and Sons, 1977), p. 112. 14Ibid. 15Herbert A. Simon, Administrative Behavior (New York: The Macmillan Company, 1949), p. 79.

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