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Electronic Industries Association, "Congressional Responsibility in Defense Planning, Washington, DC, March 15, 1960
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Electronic Industries Association, "Congressional Responsibility in Defense Planning, Washington, DC, March 15, 1960
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The original documents are located in Box D15, folder "Electronic Industries Association,
"Congressional Responsibility in Defense Planning, Washington, DC, March 15, 1960" of
the Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D15 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
EINEIA
ISOURI
EST. 1924
SOCIATIO
W
EEKLY
contents
R
EPORT
Vol. 16 Number 12.
to the ELECTRONICS INDUSTRY
Governmental-Legislative (A)
FOR INFORMATION
NOT FOR PUBLICATION
New patent bill
NIKE-ZEUS funds
highlights
Proprietary rights hearings
Officer-hiring bill
Engineering drawings study
Industrial security bill
EIA Conference speeches cite vital role of electronics; 4-day
Washington meeting draws record attendance. (Green Lead Story)
Engineering (B)
President Hull to get Association's Medal of Honor; nomination
lauds contributions to industry's progress, (Green Lead Story)
Triode capacitance values
Storage tube symbols
400 attend Defense Market Planning Seminar; hear ideas on how to
New measurement standard
get more defense value from better planning. (Yellow Lead Story)
Dean resignation from R-20
Power supply cords OK
New bill covering basic research patents introduced by O'Mahoney;
gives government firm hold on patent titles. (Section A)
Supplemental Information (c)
York indicates that Army may get $25 million in frozen NIKE-ZEUS
funds to launch miniature parts fabrication. (Section A)
Texts, Seminar speeches
Sprague
Ford
House schedules hearings on problem of proprietary rights and
Texts, Conference speeches
data; to stress effects on small businesses. (Section A)
Quesada
Nelson
RADIO-TV PRODUCTION FOR THE WEEK ENDING MARCH 11: TELEVISION
102,939; RADIO, 350,468, INCLUDING 149,147 AUTO RECEIVERS.
March 22, 1960
#60-292
ELECTRONIC INDUSTRIES ASSOCIATION
1721 De Sales Street, N.W., Washington 6, D.C.
UPCOMING EVENTS
EIA
Eastern Credit Committee Mar. 22 -- Hotel Manger-Vanderbilt, New York City.
Western Credit Committee - Mar. 23 -- Hotel Bismarck, Chicago, Ill.
Terminations Committee - Mar. 24 Plaza Hotel, New York City.
1st Annual Semiconductor Marketing Forum -- April 5-6 -- Hotel Roosevelt, New
York City.
36th Annual Convention - May 18-20 -- Pick-Congress Hotel, Chicago, Ill.
Second EIA Conference on Value Engineering -- Sept. 7-8 -- Los Angeles, Calif.
Fall Conference Sept. 13-16 -- French Lick-Sheraton, French Lick, Ind.
Radio Fall Meeting - Oct. 31 - Nov. 2 -- Syracuse Hotel, Syracuse, N.Y.
Winter Conference - Nov. 29-30 and Dec. 1 -- Fairmont Hotel, San Francisco, Calif.
Third Conference on Maintainability of Electronic Equipment -- Dec. 5-7 -- San
Antonio, Texas.
Government-Miscellaneous
IRE International Convention - Mar. 21-24 -- Coliseum & Waldorf Astoria Hotel, New
York City. (IRE)
1st Annual Symposium on Human Factors in Electronics Mar. 24-25 -- Auditorium,
Bell Telephone Laboratories, New York City. (IRE)
6th Nuclear Congress -- Apr. 3-8 -- N.Y. Coliseum, New York City. (IRE)
Army Symposium on Static Relays -- Apr. 12-13 -- U.S. Army Signal Research and
Development Laboratory, Fort Monmouth, N.J.
Conference on Automatic Techniques -- Apr. 18-19 -- Sheraton Cleveland Hotel,
Cleveland, Ohio. (IRE)
National Aeronautical Electronics Conference -- May 2-4 -- Dayton, Ohio. (IRE)
Western Joint Computer Conference -- May 2-6 -- San Francisco, Calif.
PGMTT National Symposium - May 9-11 -- Hotel Del Coronado, San Diego, Calif. (IRE)
Electronic Components Symposium May 10-12 -- Washington, D.C.
Electronic Parts Distributors Show -- May 16-18 -- Conrad Hilton Hotel, Chicago, Ill.
1960 Conference on Standards and Electronic Measurements (IRE and NBS) -- June
22-24 -- NBS Boulder Laboratories, Boulder, Colo.
National Convention on Military Electronics -- June 27-29 -- Washington Hotel,
Washington, D.C.
WESCON Aug. 23-26 -- Ambassador Hotel, Los Angeles, Calif. (IRE)
National Electronics Conference Oct. 10-12 Hotel Sherman, Chicago, Ill.
Mid-America Electronics Convention -- Nov. 14-16 -- Kansas City, Mo. (IRE)
Eastern Joint Computer Conference Dec. 11-14 New Yorker Hotel, New York
City. (IRE)
Exhibits
IRE National Convention - Mar. 21-24 -- Coliseum & Waldorf Astoria Hotel, New
York City. (IRE)
6th Nuclear Congress April 3-8 -- New York Coliseum, New York City. (IRE)
Electronic Industry Parts Show -- May 16-18 -- Conrad Hilton Hotel, Chicago, Ill.
WESCON - Aug. 23-26 -- Ambassador Hotel, Los Angeles, Calif. (IRE)
Mid-America Electronics Convention -- Nov. 14-16 -- Kansas City, Mo. (IRE)
Eastern Joint Computer Conference -- Dec. 11-14 -- New Yorker Hotel, New York
City. (IRE)
Vital Role of Electronics Cited
By Government Spokesmen at EIA Conference
President Hull to Get Medal of Honor; Record Attendance at 4-Day Washington Parley
The vital role of the electronics industry in national defense, safety in the
air, and the development of Signal Corps communications facilities provided the theme of
EIA's spring conference in Washington last week before a record-breaking attendance of
members and Government guests.
During four days of industry meetings at the Statler Hilton Hotel several hundred
members of EIA heard outstanding Government and military spokesmen discuss the importance
of electronics and the responsibilities of industry, while all five divisions and major
committees reviewed problems and programs designed to broaden membership services and
activities to keep abreast of the industry's growth.
Highlights of the conference, March 15-18, were:
1) President David R. Hull was selected by the Board of Directors
to receive the 1960 EIA Medal of Honor for "distinguished service con-
tributing to the advancement of the electronics industry" at the Associ-
ations' convention dinner on May 19th in Chicago.
2) E. R. Quesada, Administrator of the Federal Aviation Authority,
praised the electronics industry for its part in the tremendous develop-
ment of aviation and the vital communication, navigational, and safety
facilities required by today's air craft.
3) Defense officials, a member of Congress, and industry executives
discussed means of getting "more defense for the dollar" at an all-day
seminar sponsored by the Military Products Division.
4) Major General R. T. Nelson, Chief Signal Officer, cited the
technical progress of electronics at a membership luncheon marking the
one hundredth anniversary of the Signal Corps.
Selection of President Hull as EIA's "man of the year" climaxed the industry
conference and Board of Directors meeting on Friday. In nominating Mr. Hull as recip-
ient of the Medal of Honor, Chairman H. Leslie Hoffman, of the Annual Award Committee,
pointed out that the honor is a recognition of his long service and many contributions
to the progress of the electronics industry both in the Navy Department and industry.
Mr. Hull is serving his second term as President of EIA. (See detailed story following.)
Tribute to Industry
Before an audience of more than 500 members and guests from Government and
the Military Services, Mr. Quesada reviewed FAA's plans and programs designed to provide
safer and more efficient aviation facilities for the nation.
"Electronics has had its impact on the growth of the aviation industry," he
said. "Likewise the electronics industry has benefited from the inexhaustible market
generated by the Air Age. Manual and mechanical systems and devices in aircraft have
been replaced by smaller, lighter, less expensive and more efficient electronics
packages.
FORD WBRAR
2.
"The remarkable progress in electronics in the last decade is a tribute to
engineers and scientists of the world who have dedicated their efforts to research and
development. And, I might add, a tribute to the electronics manufacturers for their
efficiency in producing the products of research and development for distribution to
the users. In this regard, your organizations have promoted, not only our nation's pro-
ductivity but have furthered the well-being of its individual citizens as well.
"As we look now to the future, aviation will rely on the efforts of men such
as you to an increasing extent to provide the necessary airborne devices, navigational
aids, and communications equipment that are the life's blood of a safe and efficient
air traffic system. Your steady growth over the past several years reflects the in-
creasing dependence that we are placing upon your industries in helping us reach our
objectives. And I would say, without hesitation, that the electronics industries, big as
they are, are only beginning to tap their productive potentialities. Your greatest years
still lie ahead.'
(The text of Mr. Quesada's address is included as a supplement to this Weekly
Report.)
President Hull, in introducing Mr. Quesada and head table guests, cited the
growth of the electronics industry since 1950 and pointed out that half of its sales
today are to Government. Among the 150 guests of EIA were members of Congress, high-
ranking Government officials, and military officers.
The Defense Planning Seminar on March 15 drew about 400 representatives of
Government agencies and industry representatives to hear Government and industry spokes-
men at an all-day and evening session. Among the speakers were Representative Gerald
Ford, Jr., (R. ,Mich.) ranking member of the House Armed Forces Appropriations Subcommittee;
John M. Sprague, Deputy Assistant to the Secretary of Defense; and President Hull.
(A detailed report on the seminar follows and text of the talks by Messrs.
Ford and Sprague are included as a Weekly Report supplement.)
Scientific Advance Noted
Reviewing the progress of communications during the 100 years of the Signal
Corps' history, General Nelson said:
"In no area of human endeavor have changes been more marked than in our
scientific pursuits
And in no area of scientific endeavor has change and
progress been more notable than in this total field we call electronics. The advances
of the past 10 years in electronic science and in the development and application of
electronic devices, which increased man's capabilities manyfold have been phenomenal.
Their effect is cumulative. The technological gains that can be expected in this
relatively young and imaginative science during the next few years are such that few
would attempt to predict them. Invention -- in a sense -- has become the mother of
necessity."
The Signal Corps has built an airborne radar that can produce a radar map
with almost the quality of a photograph, General Nelson revealed. A prototype of the
"aerial surveillance platforms" will be demonstrated next month.
(The text of General Nelson's address is included as a Weekly Report sup-
plement.)
3.
Culminating the four days of industry meetings, the Board of Directors endorsed
recommendations of the Legislative Policy Committee for more vigorous support of the
Associations' legislative program. This includes proposals to require identification
of foreign-made electronic components, repeal or modification of the Walsh-Healey Act,
and enactment of a law to encourage foreign investments.
At the same time the Board approved the Committee's recommendation that EIA
oppose legislative proposals which would authorize the Federal Communications Commission
to establish performance standards in the manufacture of television receivers and would
give the Secretary of Labor broad authority to investigate industry's costs and profits
before recommending higher tariff rates to offset lower wage levels in countries shipping
goods to the United States.
Chairman Robert C. Sprague, of the Electronic Imports Committee, reviewed EIA's
efforts to obtain limitations on Japanese shipments of electronic products to this
country and said there are indications that Japan is considering the adoption of voluntary
quotas on its electronic exports to the United States. He pointed out EIA's complaint
that growing imports of Japanese semiconductor products are threatening national security
is being investigated by the Business and Defense Services Administration of the Depart-
ment of Commerce.
Chairman Hoffman, of the EIA Spectrum Committee, informed the Board progress
also is being made in the Association's efforts to bring about a more effective adminis-
tration of the radio spectrum despite an apparent stalemate in legislative developments.
Government officials are in the process of reorganizing and strengthening the process of
allocating Government channels to the military services and executive departments, he said.
Change in By-Laws Proposed
The Membership and Scope Committee recommended to the Board of Directors that
EIA's By-Laws be amended to define more clearly an electronic manufacturer and eligibility
requirements of Associate and Special members. Definite recommendations will be sub-
mitted to the membership at the EIA convention in Chicago May 18th.
President Hull also nominated past Presidents Sprague, Hoffman, and Leslie F.
Muter as a Nominating Committee to recommend EIA officers for the next fiscal year, and
appointed Mr. Muter and Charles M. Hofman as Co-Chairmen of the 1960 Convention Committee.
Upon recommendation of the Parts Division, H. F. Bersche, of the RCA Tube
Division, was elected one of two Association representatives on the Board of Directors
of the Parts Show Corporation. Mr. Bersche will succeed Jack Hughes, of Littelfuse,
whose term of office is about to expire.
All five divisions met on March 17 to review and act upon their respective
programs.
Chairman Ben Edelman, of the Educational Coordinating Committee, informed the
Board of Directors that the TV Educational Guidebook, which has been under preparation
for several months, has now been completed and will be published as soon as arrangements
can be made with one of several interested organizations.
The Consumer Products Division, under Chairman Marion S. Pettegrew,
authorized EIA to prepare and obtain cost estimates on a standard seal which all phono- FORD
graph manufacturers may use if they wish to indicate compliance with EIA's "music power
output" standard for stereophonic phonographs.
GERAL
LIBRARY
4.
The division reiterated its opposition to the FCC proposal which would empower
the Commission to establish performance standards for television receivers and decided
to select an industry witness to testify if and when hearings are held on the bill by
either the Senate or House Interstate and Foreign Commerce Committees.
The Division Executive Committee also authorized informal protests to the FCC
that manufacturers and distributors of foreign-made radio and TV sets are not filing
certificates, as required of all manufacturers by the FCC, indicating compliance with
the radiation limits established by the FCC in cooperation with EIA. The Committee was
told that only one Japanese manufacturer to date has complied with this requirement.
The Consumer Products Division reviewed two proposed promotion programs and
decided to forego this year a television merchandising program because plans could not
be completed in time for mid-summer distributor meetings. A report was received from
Chairman L. M. Sandwick, of the Phonograph Section, indicating that the proposed high
fidelity stereophonic phonograph advertising campaign is still under consideration by
individual manufacturers. If enough manufacturers agree to participate, he said, the
program will be initiated in early fall.
Military Officers Guests
The Military Products Division, under Chairman Sidney R. Curtis, was host to
a number of guests from the Military Services and the Defense Department including the
following: RADM Edward G. Metzger, Assistant Chief for Contracts, Bureau of Naval
Weapons; Brg. Gen. Walter R. Graalman, Deputy Director Procurement, Directorate of
Procurement & Production, Hqs., Air Materiel Comman; Ralph Clark, Assistant Director of
Defense Research & Engineering (Communications); Cdr. J. M. Malloy, Staff Director, ASPR
Division, OASD (Supply & Logistics); and William H. Moore, Executive Assistant to the
Assistant Secretary of the Navy (Material).
At an afternoon session members of the Military Products Division heard Colonel
C. C. Segrist, Deputy Commander of the newly-established Electronic Systems Center at
L. G. Hanscom Field, Massachusetts, describe the organization and its functions. Colonel
Segrist said that ESC will be responsible for all major Air Force electronic and com-
munication systems and would operate on a par with the Ballistic Missile Center and
Aeronautical Systems Center. William Sen, Technical Advisor to the Commander of ARDC's
Comman and Control Development Division, described responsibilities of the Hanscom Field
operation.
Upon recommendation of the Military Systems Management Committee, which met on
March 16 under Chairman C. F. Horne, the Military Products Division took under con-
sideration establishment of a new divisional committee to consider problems arising under
the weapons systems concept, particularly between prime and subcontractors and large and
small electronic manufacturers. The Policy Committee was asked to develop a recommendation
for action at the May meeting of the Division.
The Parts Division, under Chairman W. S. Parsons, decided to employ a staff
engineer who will deal exclusively with the standardization activities of parts manu-
facturers in the EIA Engineering Department. The division also reviewed the current
Walsh-Healey proceeding for the electronic components industry and plans for the Inter-
national Electro Technical Commission conferences in New Delhi, India, this fall. The
division also discussed plans for expanding its membership and recommended to the Board
of Directors the employment of a staff member to spend full time soliciting new EIA
members.
5.
Members of the Parts Division Executive Committee on March 16 toured the
Naval Research Laboratory in Washington.
Chairman J. A. Milling reported that the Distributor Relations Committee is
cooperating with the Electronic Representatives Association in the implementation of
EIA's Unit Territory Plan. Wilfred L. Larson, one of the EIA representatives to the
ERA, reported on his conferences with the Electronic Representatives Association and its
plans for regional industry conferences.
The Tube and Semiconductor Division, with Vice President L. Berkley Davis
presiding, reviewed current proceedings involving tube and semiconductor products under
the Walsh-Healey Act, and received reports on the operations of the EIA Standards
Laboratory.
Foreign Marking Asked
The division also reviewed the problem of increasing Japanese shipments of
semiconductor products to the United States and adopted a resolution recommending that
the Board of Directors act to obtain legislation which would require the permanent
marking of all imported tube and semiconductor products. Members also reviewed the
recently established policy whereby the Air Force acts as a single service procurement
agency for common electron tubes.
Meetings were held, prior to the session of the Executive Committee, by the
Cathode Ray and Allied Tube Section, Receiving and Allied Tube Section, Semiconductor
Section, and Transmitter Tube Section.
The Industrial Electronics Division, with Irving Koss acting as Chairman,
decided to establish a Statistical and Marketing Data Committee to develop more accurate
reports on the growth of industrial electronic products. The Division received a report
on its first marketing conference held in New York in January and decided to hold another
such seminar within the next six months.
Proposals for establishing new sections, including Instrumentation, Educational
TV, Citizens' Radio, Navigational Aids, and Medical Electronics, were discussed, but
action was deferred. The division decided to schedule an organizational meeting of
instrument manufacturers in the near future.
Reports were received from the Amplifier and Sound Equipment, Broadcast and
Closed Circuit, Land Mobile Communications, and Microwave Sections which had met the
previous day.
Among other committees which met during the conference was the Service Committee
which had as its guest speakers managers of TV-radio manufacturers. Chairman S. R.
Mihalic reported that the writing of the customer relations manual for service technicians
had been awarded to the McGraw-Hill Writing Service.
#####
President Hull's Electronic Career
Began with Service in Navy During World War II
President D. R. Hull, who on May 20 will receive EIA's Medal of Honor, was
selected by the EIA Board of Directors and Annual Award Committee for his long military
and industry service and many contributions to the advancement of the electronics industry.
LIBRARY
6.
While leading many industry activities during the past two years as President
of EIA, Mr. Hull's affiliation with electronics covers more than a quarter of a century.
He has been an executive of the industry since his retirement from the Navy in 1948 with
the rank of captain. He is now Vice President of the Raytheon Company in charge of its
defense programs with headquarters in Washington. Before joining Raytheon in 1950, he
was with International Telephone and Telegraph Corporation as Vice President and Director
of Capehart-Farnsworth Corporation.
Following graduation from the Naval Academy in 1925, Mr. Hull specialized in
underwater sound and radar development prior to World War II. When war began, he became
head of the Electronics Design Branch of the Navy Department. He then advanced to Deputy
for Electronics and finally to Assistant Chief of the Bureau for Electronics, the senior
Navy position in electronics materiel.
In 1943, for his pre-war work, Mr. Hull received a Navy commendation ribbon
and citation from the then Secretary of the Navy, Frank Knox, "for his outstanding
service in coordinating the entire Navy's radar research and development program while
serving as Assistant to the Director of the Naval Research Laboratory." For his service
during the war he also was awarded the Legion of Merit.
Mr. Hull was born in 1903 in Newton, New Jersey. In addition to a Bachelor of
Science degree from the Naval Academy, Mr. Hull holds a Master of Science degree from
Harvard University. He has been awarded fellowships by the Institute of Radio Engineers
and the Acoustical Society of America. He has been a Director of EIA since March, 1956,
and President since May, 1958.
#####
13 New Members Admitted to EIA
The EIA Board of Directors admitted 13 new members on March 18, bringing the
membership to 342. The new members are:
Electronic Consultants, Inc., Hempstead, N. Y.
Electronics Investment Management Corp., San Diego 1, Calif.
Harman-Kardon, Inc., Westbury, Long Island, N. Y.
McDonnel & Co., Inc., New York 5, N. Y.
McDonnell Aircraft Corp., St. Louis 66, Mo.
Polytronics Laboratories, Inc., Clifton, N. J.
Ruder & Finn, Inc., New York 22, N. Y.
Standard Rectifier Corporation, Santa Ana, Calif.
Stanford Research Institute, Menlo Park, Calif.
Syntron Company, Homer City, Pa.
Tucor, Inc., South Norwalk, Conn.
U. S. Transistor Corp., Syosset, L.I., N. Y.
Vought Electronics, Div. of Chance Vought Aircraft Inc., Dallas 22, Texas.
Membership of Wiltec Electronics, Inc., South Norwalk, Conn., was merged
with Tucor, Inc., South Norwalk, Conn.
The following memberships were terminated:
Midwest Speaker Company, McGregor, Iowa
Oak Electronics Company, Buffalo 3, N. Y.
Pan-Electronics Corp., Griffith 1, Georgia.
#####
EIA
Vol. 16, No. 12
March 22, 1960
400 Attend Last Week's Defense
Market Planning Seminar
Hear Government and Industry Ideas on More Defense Value from Better Planning
More than 400 representatives of government agencies and electronic firms
last week attended a full day of speeches and panel discussions on how to stretch
the national defense dollar by better market planning.
The Defense Market Planning Seminar was conducted by the Marketing Data
Committee of EIA's Military Products Division. It was held in the Statler Hilton
Hotel in Washington on the day prior to the start of the Association's 3-day Spring
Conference.
EIA President David R. Hull, in the keynote speech, stated the seminar's
theme of More Defense Per Dollar and expressed the hope that the event would result
in the formation of closer government-industry ties "in an area where we lacked them."
John M. Sprague, Deputy Assistant Secretary of Defense (Comptroller) and
one of the seminar's two principal speakers, told the luncheon meeting that greater
industry participation in weapons systems planning is complicated by the rapidly chang-
ing nature of the Defense Department's technological needs.
Rep. Gerald Ford, Jr. (R., Mich.), the second major speaker, outlined at
the seminar dinner nine ways in which Congress could assist defense agencies and
industry in getting more out of money appropriated for defense.
(Full texts of the addresses by Mr. Sprague and Rep. Ford appear in the
Supplemental Information section of this Weekly Report.)
The panel which discussed military service programs and planning was head-
ed by Sidney R. Curtis, Senior Vice President of Stromberg-Carlson and Chairman of
the EIA Military Products Division. Members of the panel were Rear. Adm. L. D. Coates,
Director of Development Planning, Chief of Naval Operations; Brig. Gen. Elmer L.
Littell, Commander, Army Signal Supply Agency; Col. Eugene C. LaVier, Air Research
and Development Command; and Dr. Howard Wilcox, Deputy Director, Defense Research and
Engineering.
The Panel discussing industry programs and planning was chaired by Vice
Adm. John H. Sides, Director, Weapons Systems Evaluation Group, DOD. Panelists were
L. Eugene Root, Vice President of the Missiles and Electronics Division, Lockheed
Aircraft Corp.; Dr. Richard C. Raymond, Manager of Technical Military Planning, General
Electric Co.; J. H. Richardson, Marketing Director, Hughes Aircraft Co., and Dr. N. I.
Korman, Advanced Military Systems Director, Radio Corporation of America.
Some highlights from talks by the seminar panelists follow:
Adm. Coates saw a possible increase of 20 percent in the electronic
industry's share of the defense budget during the next 10 years. He said this would
amount to $2.4 billion worth of new business to the industry, even if the total defense
budget were to remain at its present level.
Gen. Littell proposed adherence to "5 R's" to facilitate pooling of the
efforts of the military services and industry to gain better defense planning. They
were: Requirements, Resources, Realism, Reciprocity, and Responsiveness.
GERALD
LIBRARY
Col. LaVier described the recent reorganization of the Air Research and
Development Command and the consequent reorientation of R&D planning philosophy and
operation. One new program, he said, will result in the publication of Technical
Forecasts which industries can use to determine what ARDC is supporting in their
fields, who the responsible agencies are, and what research goals are in future years.
Dr. Wilcox said the addition of mobile, airborne, and ocean-borne weapons to
the Nation's defense structure will place the country at a "static point in the strategic
weapons race" within the next few years. At this point, he said, there should be a
tapering off of strategic weapon requirements which will permit a bigger buildup of
requirements for limited wars.
Mr. Root called for increased government-industry cooperation. "It seems to
us that in many respects the defense industry is an integrale part of the over-all U.S.
defense establishment. It may well make sense for planners in the DOD and industry
to cooperate even more closely in the task of matching defense needs with timely systems
in order that our country might achieve the maximum defense for the resources expended,"
he declared.
Dr. Raymond stressed the importance of studying each promising new idea.
"It is probably more economical in the long run to tolerate some degree of over-lapping
and duplication than it is to argue out each case and then to build obsolete equipment
on the basis of the agreement, he pointed out.
Mr. Richardson said that marketing is essential to a defense industry to
accomplish representation of military needs and requirements to the company and representa-
tion of the company's applied technology to the military. Modern marketing practices
are needed, he said, to enable industry to "properly put its skills at the disposal of
DOD and, in the end, help provide for the national security."
Dr. Kroman defined the separate areas in which the military services and
industry should handle systems planning. With its research development, design, pro-
duction and service agencies, he said, industry "is more acutely aware of possibilities
for weapons and military devices which arise out of technology, engineering and
production. It has greater insight as to what might be done with weapon characteristics,
performance, lead times, costs, and dates of obsolescence, " he stated.
#####
to
Page 2A
GOVERNMENTAL and LEGISLATIVE
Section A
O'Mahoney proposes new patent legislation - Sen. Joseph C. O'Mahoney
(D., Wyo.) has introduced a bill (S 3156) which he said would provide for the protec-
tion of interests of the United States in basic research with respect to patent
rights arising from research sponsored by the government.
Sen. O'Mahoney, who is chairman of the Senate Subcommittee on Patents,
Trademarks and Copyrights, said the measure was aimed at determining whether patents
resulting from government sponsored research should be allowed to become the pro-
perty of private contractors "who are themselves the beneficiaries of government
subsides."
The bill would require the National Science Foundation, which coordinates
basic research throughout the government, to determine the possible adverse impact
on basic research of patent and technical information clauses contained in research
contracts let by government agencies. It also would provide for review of contracts
by both the Foundation and the Justice Department. Formal expression of their views
would be required before a patent and technical information clause giving exclusive
commercial rights to the contract could be included in important basic research contracts.
The bill was sent to the Senate Judiciary Committee for referral to the
Subcommittee on Patents. Hearings have not yet been scheduled, a subcommittee
spokesman told the Weekly Report.
Sen. O'Mahoney said a subcommittee investigation of the Science Foundation
found the agency "suprisingly indifferent to the kind of patent and technical in-
formation provisions used in its own research grants as well as in contracts and
grants let by other government agencies."
The investigation also disclosed, he said, that Foundation Director Alan
T. Waterman "was not even aware that there were being widely used in government
research contracts patent and technical information clauses which encourage the
contractors to maintain undesirable secrecy with respect to basic research."
Commenting on the bill, he said: "If there is to be any patenting at all
of the products or by-products of government basic research, it would seem desirable
for the government, rather than private contractors, to hold title to the patents
and for the government to have freedom of accessibility and the right to disseminate
the resulting scientific and technical information."
Army may get $25 million of NIKE-ZEUS fund - The Army may get $25 million
from frozen NIKE-ZEUS antimissile funds to be used to set up production lines for
small electronic components, Dr. Herbert York, Director of Defense Research and
Engineering, indicated last week.
The money, part of $137 million designated for preproduction work on NIKE-
ZEUS but withheld from the Army by the Administration, would be used to set up
automatic production lines for fabrication of miniature electronic parts used in
the antimissile system.
Dr. York also said that more research is required on NIKE-ZEUS. This was
taken to mean that release of the $25 million would not mean immediate release of
the entire preproduction sum.
The Army first asked the Department of Defense for the preproduction funds
last month in testimony before the House Science and Astronautics Committee. Pro-
duction lines for the small components were described as the most important part of
the preproduction program.
EIA
Vol. 16, No. 12
March 22, 1960
Hearings begin next week on proprietary rights -- Three days of hearings
will begin March 29 on the problem of proprietary rights and data and its effect on
small business, Rep. Abraham J. Multer (D., N.Y.), Chairman of the Subcommittee on
Government Procurement of the House Small Business Committee, announced last week.
Rep. Multer said in a statement that complaints to the committee have
indicated that a small business concern under subcontract to a prime contractor or
on direct procurement with the Department of Defense is required to submit com-
plete proprietary data on products or techniques which it has designed and developed
with its own resources.
Some small businesses have complained, Rep. Multer said, that this re-
quirement might cause them to disclose "invaluable technological data as well as
trade secrets."
The committee will hear testimony from prime contractors and officials of
DOD in response to the complaints. Defense and industry officials will also testify
on the Armed Services Procurement Regulations concerning proprietary rights and
related matters, Rep. Multer said.
Committee approves officer-hiring bill -- The House Armed Services Com-
mittee last week approved a bill which would withold retirement pay from retired
military officers working for defense contractors.
The bill (HR 10959) would also require ex-officers to register if they
joined a firm doing business with the Department of Defense. Contractors would be
required to report such hirings.
Dropped from the bill was requirement of stiff criminal penalties for
officers selling to DOD within two years of their retirement. The requirement,
supported by Subcommittee Chairman F. Edward Hebert (D., La.), was removed by a sub-
committee vote of 28-4.
The final draft of the bill was approved by the full committee by a vote
of 34-1.
DOD establishes new committee on engineering drawings -- The Department of
Defense has established a special committee to aid in development of a program for
unification and standarization of engineering drawings.
The Defense Drawing Practice Industry Advisory Committee will advise the
director of the Armed Forces Supply Support Center in formulating the program. It
will consist of 15 industrialists and educators and one member and an alternate
member from each military service.
New bill requires security decisions to be on record -- Legislation which
would require decisions involving government contractors or Federal workers under
security or loyalty programs to be made on the record was introduced in the House
last week.
Introduced jointly by Reps. James Roosevelt (D., Cal.) and Frank Thompson,
Jr. (D., N.J.), the bill (HR 11151) adds a single paragraph to section 12 of the
Administrative Act. The amendment reads:
"Notwithstanding any other provision of law, the decision or adjud-
ication by any agency as to its officers, employees and agents in
the course of the administration of any Federal employee loyalty or
security program or law and as to officers, employees and agents
of any contractor with the United States in the course of the
administration of any industrial security review program or law
shall be made on the record as contemplated by this Act and shall
be subject to all other provisions of this Act."
Its sponsors said the bill was designed to strengthen the President's
February 20 executive order revising industrial security procedures. The order
has "run into a barrage of criticism" for not establishing enough safeguards for
employees whose loyalty is questioned, they said. The measure was referred to
the House Judiciary Committee.
Page 2
ENGINEERING
Section B
Group sets capacitance values for triodes - Review of 6FH5 capacities
has brought agreement that grid-to-plate capacitances of triodes used in neutralized
high frequency applications should be rated as bogey values rather than maximums,
according to a report of a recent meeting of the JT-5.4 Subcommittee on Radio-TV
Ratings of Low Power Electron Tubes.
In another action the subcommittee, meeting under Chairman A. J. Haley
of Westinghouse Electric Corp., recalled for minor corrections re-registrations
for the 1B3GT, 1U5, 3V4 and 6BR8 prepared by JT-5.4 and issued with a letter of
ballot by JT-5.
A copy of the JT-5.4 working draft of the "Low Voltage Rectifier Manual
of Practice" was sent to the British Valve Association in reply to a request for
exchange of information of construction on retifier rating charts.
The progress and current status of noise figure measurement standardiz-
ation was reviewed by the chairman of the Advisory Group. The subcommittee decided
to request permission through JT-5 to have the EIA laboratories undertake a noise
source evaluation program.
Symbols approved for storage tubes - The JT-6.12 Subcommittee on Storage
Tubes. D.W. Davis of International Telephone and Telegraph, Chairman, recently
completed agreement on symbols to be used in electrical in-visual out-storage tubes.
Detailed review of Performance Characteristics 72.4-4375 was completed
at the same meeting. Essential concurrence existed on both the characteristics to
be measured and the method of measurement.
Committee drafts measurement standard - The JS-9 Committee on Industrial
Signal Transistors recently completed the first draft of a measurement for Re ("ie).
The Committee, C. D. Simmons of Lansdale Tube Co., Chairman, also discussed
vb'cc and a first draft of a standard on minimum requirements for collector-to-emitter
voltage rating for RF-IF transistors. A first draft of tunnel diode Registration
Data Format was also drawn up.
The Committee reported that the Low Power Audio Registration Data Format
is complete and is being held pending Council action on the RF-IF Format, now on
letter ballot.
Other Registration Data Formats in various under preparations are High
Power RF Oscillators and Amplifier Transistors, RF Mixer and Connector Transistors,
and switching Transistors, the Committee reported.
Dean resigns R-20 chairmanship - William W. Dean recently resigned as
Chairman of the EIA Engineering Committee R-20 on Packaged Audio Equipment. The
action was made necessary because of a change of his responsibilities in the General
Electric Co.
Under Mr. Dean's chairmanship, the Committee formulated the newly issued
Standard RS-234 on Power Output Ratings of Packaged Audio Equipment for Home use.
Harris Wood, Chairman of the Entertainment Receiver (R) Panel, was expected
to appoint a new chairman soon.
UL okays power supply cords - The Underwriters' Laboratories, Inc.
announced on March 4 that flexible power supply cords type SP-2 and SPT-2 are accept-
able for commercial use if the length of the cord does not exceed eight feet. Type
SJ and SJT cord will continue to be required if the length is more than eight feet.
EIA
Vol. 16 No. 12
March 22, 1960
SUPPLEMENTAL INFORMATION
Section C
REMARKS OF
MR. JOHN M. SPRAGUE
DEPUTY ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER)
BEFORE THE ELECTRONIC INDUSTRIES ASSOCIATION
"DEFENSE MARKET PLANNING SEMINAR"
WASHINGTON, D.C., MARCH 15, 1960
Mr. President, Members of the Defense Market Planning Seminar, and Guests:
We in the Defense Department always welcome these opportunities to meet
and discuss with our partners in industry the mutual problem of national defense. I
couldn't help but wonder, however, why anybody would want to spoil the luxury of
relaxing after a good lunch with a discussion of so contentious a subject as the de-
fense program and budget.
The Electronic Industries Association members, like all contractors servic-
ing the Department of Defense and the Military Assistance Programs, are understand-
ably interested in the immediate and long-range future -- the weapons and level of
effort of tomorrow which will grow out of today's research and development.
I am sure you will agree that the world of electronics, more than many
other industries, can look forward to expanding civilian markets as well as increased
use of its products and know-how by the military and space programs. The level of
defense buying is, of course, directly related to the assessment of the threat which,
for the immediate future will probably mean, as Mr. Gates told the House Appropria-
tions Committee, continued high defense budgets. The electronics share of these
budgets is forecast to increase over the next several years as the aircraft share,
for example, declines.
Admittedly, it would be desirable to be able to lay out longer range de-
Ense programs so that industry could more fully participate in the planning of future
weapons systems. But, today's military planning, both contemporary and long range,
presents a constantly changing spectrum. While the useful life of many of the con-
entional hardware items can be forecast with considerable confidence, the military
life expectancy of some of the more sophisticated follow-on items is greatly in-
fluenced by the rapid changes in the state-of-the-art which may obsolete an item
even before test and evaluation is completed. This greatly complicates the task of
detailed long range planning with industry.
With respect to over-all defense planning, it seems to me that a thorough
understanding of the major factors which determine the size and character of the
annual defense program and budget is an essential prerequisite.
To begin with, defense programming and budgeting consist of much more
than an assessment of the military threat, a determination of the military require-
ments, the costing of those requirements and the adding up of the costs. Certainly,
the defense program and budget must, in total, not only be equal to the assessment
of the threat but must also provide an adequate margin of safety. But military re-
quirements, like the assessments of the military threat, are not susceptible to pre-
cise determination. Furthermore, the defense budget cannot be planned and formu-
lated in isolation. It must be developed within the framework of the entire Federal
budget, the entire government economic and fiscal policy and, indeed, the entire
national strategy.
EIA
Vol. 16, No. 12
March 22, 1960
Today's threat to our national security, as many experts on this subject
have pointed out before, is not only military. It is also political, economic and
even psychological. To cope successfully with such a multi-sided threat, we must
have a balanced national strategy wherein the military, political, economic, and
the psychological aspects are all welded together into an integrated whole. The
risks inherent in each of the threats must be carefully weighed and brought into
proper balance, recognizing that security can never be absolute and that a certain
degree of residual risk must be accepted in each area.
Nor is this composite threat ever static. The world moves on, circumstances
change, and the degree of risk inherent in each element of our national strategy also
changes. Thus, the national strategy must be constantly reassessed and the relative
emphasis placed on each element adjusted to conform with the new challenges of ever-
changing circumstances. The defense program and budget, therefore, must not only
provide adequately for the national security but must also be tied in with all the
other considerations affecting the total national budget and the total national
strategy.
We all understand that military policy cannot be separated from foreign
policy and that military policy must be the strong right arm of foreign policy. Our
treaties, commitments and peaceful objectives around the world all have an important
bearing on the size and composition of our defense forces.
But is it not always understood that military policy is also related to
economic policy and that economic factors have an important, although secondary,
influence on the over-all level of the defense effort at any particular time.
While it is true that the U.S. economy, today, could support a larger de-
fense program, that is not the real issue. Experience has shown that the defense
program is enmeshed in a whole array of interrelated economic factors -- the his-
torical dangers of inflation; the tax burden in relation to economic incentives; the
size of the national debt in relation to interest rates and monetary policy changes
in the balance of payments, etc. From a national point of view, all of these factors
have a bearing on the over-all level of defense expenditures.
I need not belabor the reasons why the Government must be ever alert to
the dangers of inflation -- the inequity to those on fixed incomes, the distortion
of values, the weakening of our competitive position in world markets, and the under-
mining of the strength of the dollar. But, in a free enterprise economy in peace-
time, the Government's role in the fight against inflation is indirect. Its most
important weapon is a balanced budget or, if at all possible, a budget surplus.
The national debt is now at an all-time high. Within the last two years,
the average yield on long-term Government bonds has gone from 3.1 percent to 4.3 per-
cent, and the cost of shorter term borrowing to as high as 4½ and 5 percent. Interest
on the national debt has gone up from $7.7 billion in fiscal year 1959 to an estimated
$9.4 billion for 1960 -- well in excess of total Federal expenditures as late as
1940. Here, again, is an urgent reason why the Federal budget should be balanced and,
indeed, if at all possible, a surplus achieved.
More recently we have encountered a problem new to our generation of
Americans -- a large adverse balance of payments. In calendar year 1958 the United
States suffered a balance of payments deficit of $3.4 billion. Part of this deficit
was offset by the withdrawal by other countries of $2.3 billion from our gold stocks,
the largest single one-year loss of gold in the history of the U.S. The rest of the
deficit was, for the most part, added to foreign short-term dollar holdings in the
United States, thus increasing the liabilities against our gold stocks at the same
time these stocks declined.
Page 2
In 1959 the balance of payments deficit totaled $3.7 billion, and another
$1.1 billion was withdrawn from U.S. gold stocks, bringing the total down to $191/2
billion, the lowest point in twenty years. At the same time our short-term liabilities
to foreigners have reached an all-time high of well over $19 billion, compared with
less than $7 billion at the end of World War II.
These trends, like the increasing cost of the national debt, point to the
need for a conservative fiscal policy; that is, a balanced Federal budget and, if at
all possible, a budget surplus. This would be a major contribution to the maintenance
of confidence in the stability of the dollar, as well as to strengthening our com-
petitive position in world markets.
There is one aspect of this balance of payments problem that is even more
directly related to the defense program. Defense expenditures abroad entering
the balance of payments total over $3 billion a year and are, in large part, asso-
ciated with the deployment of U.S. forces overseas. They include spending by our
military and civilian personnel overseas; pay of foreign nationals employed by U.S.
forces; and purchases of materials, supplies and services of all types. Thus the
defense program directly contributes to the unfavorable balance of payments situation.
It may be argued that the Federal budget problem could be solved by
increasing present tax rates. Let me simply point to the fact that the total tax
take of Federal, state, and local governments is higher today than it has ever been
in our history -- including World War II and the Korean War.
But perhaps more important is the relation of the tax burden to economic
incentive at almost all income levels. In our kind of economic system, we must rely
on the efforts of private individuals to strengthen and expand the U.S. economy. A
constantly growing economy is, of course, something we would want for its own sake.
But there is now another reason why we must ensure the continued growth of our
economic strength. The Soviet leadership has chosen to make economic competition an-
other arena in the struggle between Freedom and Communism, and we must be prepared
to meet this aspect of the total threat.
If the military threat were of temporary duration, we would perhaps be
justified in setting aside consideration of these economic factors until more tran-
quil and less troubled times. But I think we can all agree that the kind of threat
we face today is likely to continue for many years to come. Already, almost ten
years have elapsed since the Nation explicitly recognized the long term nature of
the Communist threat and adopted the policy of defense for the "long pull". This
policy, first enunciated by General Marshall in December 1950, envisaged an in-
crease in the defense effort to an adequate level and one which would be sustained
indefinitely if need be.
By and large, we have followed this policy fairly consistently since
that time. For example, the general level of the defense effort was not increased
during the Lebanon and Quemoy crises. Neither has it been decreased as a result of
all the talk about disarmement. Even the recent Soviet announcement of a one-third
reduction in the numerical strength of their active forces has not seriously sug-
gested a deviation from this "long pull" policy.
Our policy of maintaining a steady, stable level of effort over the "long
pull" is, of course, complicated by increasing costs, more importantly, by very ra-
pid technological changes in military hardware.
While the general price level appears to have stabilized somewhat in the
last year or so, there is still some upward drift in many price indices of im-
portance to the defense program.
Page 3 (Section C)
More directly, even without a general pay increase, the cost of military
personnel goes up about two to three percent a year. This comes about from a some-
what higher grade structure; increased longevity pay; an increased number of depend-
ents and, therefore, dependents allowances; the new program of enlisted proficiency
pay; and a steady increase in military retired pay.
Even while numbers of men, military units, military installations, and
inventories of older conventional weapons gradually decline, operation and main-
tenance costs continue to increase each year. The costs per flying hour, per steam-
ing hour, for an overhaul of a ship, an aircraft, or an engine, continue to go up,
due largely to the more complex weapons being incorporated into the forces.
But most important of all is the increased procurement cost of these new
and more complex weapons. The cost of a fighter airplane, for example, has in-
creased by over thirty times since World War II; the cost of a submarine (POLARIS),
twenty-fold. A modern supersonic bomber costs nearly one hundred times its World
War II predecessor, the B-17. The Navy's nuclear-powered carrier which is cur-
rently under construction will probably cost eight times as much as the carrier
which fought the Battle of Leyte Gulf.
Staggering sums have been invested in our presently operational weapons
systems. To date, our B-52 strategic bomber fleet alone represents a capital in-
vestment of nearly $9 billion, excluding supporting tankers, air-to-ground missiles,
etc. Through the present fiscal year, investment in our continental air defense
system for protection against just manned bombers amounts to more than $17 billion.
The weapons systems of tomorrow will require additional billions of
dollars of investment before a substantial operational capability is achieved. For
example, through June 30, 1959 we had committed to the ballistic missile program --
ATLAS, TITAN, MINUTEMAN, POLARIS, THOR and JUPITER -- a total of more than $7 billion.
An additional $3 billion will be put into these big missiles this year, raising the
total to $10 billion. The investment in all our missile programs -- both big and
small will reach over $31 billion by next June. Even in terms of unit costs, the
amounts involved are staggering. Last year the President mentioned that the average
cost of the first nine squadrons of ATLAS worked out to about $35 million per missile
on launcher.
These cost increases are, of course, related to the rapidly increasing
complexity of new weapon systems, as you in the electronics industry well know. But
it should not be overlooked that these new weapons systems also have much greater
combat effectiveness than the systems they replace. Therefore, they are not needed in
the same numbers. We have seen this trend operating for some time and it is bound to
continue into the future.
The defense budget process is further complicated by the fact that military
technology is moving so fast that whole weapons systems are being obsoleted while
still in production -- and, in some cases, even while they are still under develop-
ment. You are no doubt all familiar with some of the major cancellations in the last
year, such as the SEAMASTER jet-power seaplane, the boron fuel program, and the
F-108 long-range interceptor aircraft.
Thus, we are constantly faced with the problem of reviewing all of the
weapons systems in the program to reassess their relative importance and to eliminate,
as promptly as possible, those which have been overtaken by events. This is not an
easy or one-time task. As Secretary of Defense Gates stated recently to the House
Appropriations Committee:
Page 4
"These changes are coming fast and are drastic. The
defense program must be kept under continuous review. Programs
which looked promising only a short while ago have become mar-
ginal in importance in the light of technical advances. This
compels a continued shift in emphasis and resources from older
to newer programs, and the outright termination of some pro-
grams."
Now as to the mechanics of planning and formulating a budget program
under these difficult circumstances
The crux of the problem within the Executive Branch of the Government is
to strike a proper balance, in terms of priorities, among military requirements,
space exploration, civilian needs, future economic growth, the tax burden, debt
management, etc.
The heart of the problem within the Defense Department is to provide
adequately for the national security by achieving, within the resources that are
available, the best possible balance among combat forces-in-being, the procurement of
hardware for these forces, and the research and development of new weapons systems
for the future.
Now there are no doubt many different ways in which a defense budget can
be formulated within these parameters. Since any one year's defense budget is
essentially just. another annual installment on a continuing program, it is not un-
reasonable to take as the starting point in this process the budget level of the pre-
ceding year.
In order to provide some flexibility in the review process, it was agreed
this year that the Services would submit what we call basic budgets aggregating
about $40.1 billion in new obligational authority and $40.6 billion in expenditures.
In addition, they were to submit other desirable programs as an addendum budget,
bringing the total submissions to $43.7 billion in new obligational authority and
$41.8 billion in expenditures.
It was contemplated that the basic budget submissions would represent the
hard core of top priority requirements for combat ready forces, military hardware,
and new weapon systems development, together with the related construction.
The addendum to the basic budgets were intended to provide, regardless of
past individual Service funding levels, a means of achieving the necessary flexibility
to increase the emphasis on selected top priority programs, and to finance other
high priority projects or promising developments which could not be accommodated
in the basic budgets.
However, the Services were not precluded from submitting items over and
above these limits, and the Army, Air Force, and the Advanced Research Projects
Agency did SO.
This approach was quite similar to that used in the development of the fis-
cal year 1960 defense budget. Then, too, the Services were requested to submit a ba-
sic budget plus an addendum. In fact, this approach is very similar to that used even
before the Korean War. Here is how the Director of the Bureau of the Budget, Frank
Pace, described the preparation of the fiscal year 1951 budget some ten years ago.
He said: (and I quote)
Page 5 (Section C)
"We would provide the President with certain factual
information as to where certain policies would lead. From that
the President set a ceiling on the armed services, which was
last year, I think, generally known as $15 billion.
"There is also the proviso that if within that limitation
it is impossible to include certain programs which the Secretary
of Defense considers of imperative importance to the national
defense, they shall be included in /order/ of priority in what
is termed the 'B' list."
The FY 1961 budget requests, totaling $43.9 billion in new obligational
authority and $42.6 billion in net expenditures, as actually submitted, were then
subjected to the careful scrutiny of the staff of the Office of the Secretary of
Defense to trim out any "soft" items which might appear therein and to make rec-
ommendations on other items requiring priority attention. Following the presentation
of the staff evaluations to the Secretary and Deputy Secretary of Defense, discussions
at both the Secretarial and the staff level were held with the Military Departments
in order to resolve outstanding problems. This review laid particular stress on major
weapon system programs which were considered on a Defense-wide basis -- without regard
to Service sponsorship. In this way it was hoped to focus attention on the missions
to be performed rather than on the Service budgets as such.
A special effort was made this year to assure that all the responsible
officials of the Department of Defense -- particularly the Service Secretaries,
and the Chiefs of Staff, both in their individual capacities and in their corporate
capacity as the Joint Chiefs of Staff -- participated in the review of the annual
military program. Although the members of the Joint Chiefs of Staff, in their capac-
ity as the military heads of their respective services, are intimately acquainted with
the details of their own budgets, they must also, in their corporate capacity as the
Joint Chiefs, consider the defense program as an entity.
To facilitate this aspect of their work, the staff of the Joint Chiefs was
furnished the budget submissions of each of the Services, together with various ana-
lyses and evaluations prepared by the staff of the Office of the Secretary of Defense.
The staff of the Joint Chiefs, which was substantially increased by the Defense Reorgan-
ization Act of 1958, was therefore in a position to analyze and evaluate -- from an
over-all military point of view -- the programs submitted by each of the Services.
The Department also had the benefit of the active participation of the
Office of the Director of Defense Research and Engineering similarly established by
the Defense Reorganization Act of 1958. I am sure it is obvious to all of you
that because of the increasingly difficult technical problems involved in modern
weapon systems, the Defense Research and Engineering staff has a major role to play
in the formulation of the defense program and budget.
In all of these ways the Secretary of Defense sought to bring to bear on
the fiscal year 1961 defense program and budget the collective knowledge and judgement
of the entire top command, both civilian and military, of the defense establishment.
The defense budget developed in this manner was then presented by the
Secretary of Defense to the President at Augusta. The major issues related to the
to the composition and size of our military forces, to the priority of weapons systems,
to the timing of procurement, and to the composition of the defense research and
Page 6
development effort -- were all thoroughly reviewed with the President. The Service
Secretaries and the Chiefs of Staff were then invited by the President to present
directly to him their individual views and comments on the defense program and budget
proposed for fiscal year 1961.
As a final step in the process, the defense budget was discussed in the
National Security Council. Here the Secretary of State, the Secretary of the Treasury,
and the Director of the Budget, as well as the Secretary of Defense, and others, joined
with the President in giving final consideration to the defense program and budget in
context with the total national strategy.
From this long and painstaking review process, extending from early September
to early December of last year, there evolved a defense budget totaling $40,927 million
in new obligational availability, and slightly less than $41 billion in net expenditures.
Of course, the Services started their planning long before their September submissions.
I think it can be fairly stated that every one of the major issues raised
in the Congressional hearings and in public discussion of the Defense budget since
it was transmitted to the Congress in mid-January, was thoroughly and carefully con-
sidered during the budget review. In fact, virtually every argument made, pro and
con, on these issues had been heard during the budget review. But as former Secretary
of Defense McElroy stated before the Senate Appropriations Committee last year:
"In the defense program we are dealing with extremely
difficult problems for which there are simply no pat solutions --
no simple answers. In many areas -- looking into the future --
we are dealing largely with assumptions, calculations, estimates,
judgments. It is not surprising then, that there are differences
of opinion even among experienced, professionally competent men.
"Nevertheless, the fact remains that the responsible officials
-- military and civilian -- still have the task of studying these divergent
points of view and arriving at a specific program
No one
would advocate trying to do everything that every individual would
like to see done. This would not only be beyond our resources
but would simply dissipate our efforts and weaken rather than
strengthen our military power. So, we are faced with the necessity
of making decisions among various alternatives -- in other words,
of exercising judgment, of making 'hard choices'
There is no question but that the 1961 budget reflects some very hard
choices. But in the judgment of the President and the Secretary of Defense the
1961 defense budget does provide for those programs which are essential to our national
security.
Page 7 (Section C)
REMARKS OF
THE HONORABLE GERALD R. FORD, JR.
REPRESENTATIVE IN CONGRESS FROM MICHIGAN
BEFORE THE ELECTRONIC INDUSTRIES ASSOCIATION
"DEFENSE MARKET PLANNING SEMINAR"
WASHINGTON, D. C., MARCH 15, 1960
CONGRESSIONAL RESPONSIBILITY IN DEFENSE PLANNING
Mr. Chairman, participants in the Seminar, on Defense Market Planning, and
guests. It is a high honor and a rare privilege for me to have the opportunity to
participate in this function this evening. But first I think I ought to set the record
straight.
It is always dangerous for anybody in political life to appear under false
colors, or to participate in an unfamiliar area.
I have strong aversion toward those in political life who place a halo over
their heads and march down the road pushing people aside, just because of a reputation.
I had an experience a few years ago, when I first became a member of the
House Committee on Appropriations, which certainly set the record straight as far as
I was concerned.
Back in 1951 I was member of the so-called River, Harbor and Flood Control
Subcommittee, better known as the "Pork Barrel Subcommittee" on Appropriations. Back
in those days, we were trying to curtail and reduce spending in so-called non-military
areas, so that we could devote a greater part of our appropriations to the military
effort in Korea.
The five of us on this subcommittee, both Democrates and Republicans,
took a very stern and I think justifiable viewpoint that no new projects would be
inaugurated in this next fiscal year.
We came to the floor of the House with an Appropriation Bill that was, to
put it mildly, austere, and we thought our handwork was well done and something that
would be universally acceptable.
Lo and behold, when we hit the floor of the House with this very tight budget,
we were met with not universal support, but overwhelming condemnation by our colleagues.
Each of the five of us took our turn in trying to defend our handiwork.
Being the junior member of the minority side on this particular subcommittee,
I came last in trying to justify our action. I took lots of books and papers down to
the floor of the House to make this erudite exposition of why we had done what we had
done. After speaking thirty minutes or so with considerable self-satisfaction and pride
in my own comments, I walked up the center aisle. I got about halfway up, and a good
friend of mine, a Texas Democrat, reached over and grabbed my arm. He Said:
"Jerry, that is the best Texas longhorn speech I ever heard."
Quite frankly, I was apprehensive as to what he had in mind. But I asked him:
"Ken what do you mean by a Texas longhorn speech?"
And he smiled very sweetly and he said:
"Jerry, down in Texas a longhorn speech is one that has two points far,
far apart, with plenty of bull in between."
I can assure you I have been somewhat self-conscious and apprehensive about
any speech I have made subsequently.
Now, to be honest with you, from past experience I would feel much more at
home here this evening if I were making a purely political speech. Not that I nec-
essarily do too well in that kind of an arena, but I can assure you I am more accustom-
ed to that atmosphere.
I might say that, bearing in mind the tenor of this seminar, I resisted
some temptation and rejected any such kind of a speech, because it is my impression
and my feeling that you people here are in this seminar for other purposes.
However, I would also feel much more at home making a speech if I were
presenting, as one of the members of our subcommittee, the Defense Department budget
to the other members of the House of Representatives -- not because I am any real
expert, but on a relative basis, I might know a bit more than some of my colleagues.
But I am a little apprehensive here this evening, because in talking to you
people, I am faced with a very sophisticated, a very knowledgable audience, on issues
that are certainly highly technical and very comprehensive in their scope.
I might also say that I feel a bit uneasy because I have met some of you
in this distinguished audience and know others who represent a substantial portion of
one of America's great industries.
In checking the facts and the records during the last week or so, I have
found that the electronics industry is the fifth largest manufacturing industry in
America. Secondly, it is an industry which, in the short span or relatively short
span of fifty years, has grown from the invention of relatively simple vacuum tube to
the phenomenal sales record of about eight billion dollars in production in a single
year.
The magnitude of the electronics industry really does not hit the public
with the impact that it should. Even some of us deal with military appropriations
on a day-to-day basis, year after year, five or six months each year, do not apprec-
iate the situation as we should.
Just yesterday, Lieutenant General Authur Trudeau, Chief of Research and
Development for the Department of the Army, said to our Subcommittee something which
really opened my own eyes, and I quote.
"Electronics in general has seen a ten-fold increase since World War II and
another ten-fold increase can be expected by 1970. This is the fantastic area of
development where the old vacuum tube circuits are now being micro-miniaturized to
one-tenth, one-hunderdth, and one-thousandth of their original size and volume. This
means a tremendous savings in bulk, weight and power requirements for an across-the-
board application to all types of Army equipment."
This statement was highly significant to our Subcommittee and to me.
This was followed by another statement by General Trudeau's deputy, which
made a tremendous impression on me.
Page 2 (A)
"We know that if we go to war today, an Army Corps will have 23,000
electromagnetic emission devices in an area sixty miles on a side, whereas there were
something like 9,000 such emissions or devices in use in 1958, in the same area." n
These kind of facts and figures in very technical sense certainly make
me apprehensive and a little bit uneasy when I try to talk to an audience such as this.
It seems to me, as I have read this summary of the history of the electronics
industry, that it is truly an Horatio Alger industry. And furthermore, in my opinion,
the industry could not have grown as it has by leaps and bounds unless there had been
among you, before and now, individuals who in their own right are Horatio Algers.
It is my judgment and opinion that the electronics industry could not have
grown with such spectacular success to the point where, one, it is one of the most
vital contributors to our national security, or, two, it is one of the most essential
elements in America's industrial growth and efficiency, or, three, it is one of the
most helpful and beneficial contributors to our day-to-day enjoyment of the fabulous
sixties -- without, one, the inventive and scientific geniuses that are with you, and,
two, the management wizards which I am sure must have been before and present today,
and, three, the 700,000 skilled workers who produce the products of those who invent
them and manage them.
I might also say that I feel a bit ill at ease tonight because in this
distinguished audience there are members of the Army, the Navy and the Air Force team,
who together make up the most powerful, the most versatile and the most alert military
force in the history of the world.
The military history of the United States covers more years and more pages
in our record books than the history of the youthful, or relatively youthful, electronics
industry. Each of the military services has had its renowned leaders and its periods of
greatest glory. Never once, to my knowledge, have our military leaders failed us in a
time of crisis. I am confident that our military leaders of this era will give America
the preparedness to maintain our national security in the months and years ahead.
Now, although I am a bit self-conscious in such a group of experts from two
groups with distinguished records, I can say with conviction I am bolstered a bit by
the fact that I speak to you tonight as a representative of the freest and, I believe,
the finest legislative body in the history of the world. It should be obvious to all
of you that the Congress has its odd and sometimes time-consuming ways of doing things,
particularly at the present time. But in our nation's history, I say with all the
vigor at my command, that it has made its full share of contributions to our nation's
progress and success. I can say without hesitation or qualification that in comparison
to all other legislative bodies in the history of man, its record is unmatched.
Now, thus far in my comments I have tried to be generous and complimentary
to the electronics industry, the United States Armed Forces, and the executive branch
of the government generally, and to the Congress.
In the past, each group or organization has met every challenge with a
response that has overcome the obstacles of the day.
However, each of you know, as I do, that such success in the past does not
insure victory in the future. We only win the battles of tomorrow, or the battles
ahead, if we do the following things.
One. Admit our weaknesses and errors.
Two. Come up with some new ideas once in a while.
Page 3 (A)
Three. Work together on mutual problems.
Four. Work just a bit harder.
Five. Dedicate ourselves ever increasingly to our American System.
Now, today in the series of seminar or discussion groups that you have part-
icipated in, covering a period of about twelve hours, as I figure out the schedule,
you have attempted to seek methods of obtaining more defense per dollar through
planning.
In all sincerity, I wish it could have been my privilege to be a listener
in some of your discussions during the morning and afternoon sessions. I could have
benefitted immeasurably by being in those discussion groups and listening to the
comments made by you experts.
I am confident that whatever is accomplished by this meeting, or others
comparable to it, will be derived from cooperative or joint effort.
My part of the program today involves what Congress can do to get more
defense per dollar through planning.
As I sat thinking about what contribution I could make here today, I
wondered how a Congressman could make a contribution in military planning. When
I think of planning, I think of the long-range program that should be laid out
and carried on. Now, in the House of Representatives, we have a two-year term,
which is somewhat restrictive in how we can participate in a long-range project.
That reminded me of a story that was told to me by an older member of
Congress the first year I served in the House, back in 1949. He had been in the
House for thirty years, or thereabouts, and he came over and he sat down beside me
on the floor of the House one day and he said, "Jerry, do you know the definition
of a Congressman?"
Being very deferential to someone with all that seniority, and with my
lack of it, I said, "No, I do not."
He said, "Well, the definition of a Congressman is the shortest distance
between two years."
I can assure you that is true. And anybody who has that term of office
can hardly in many respects make commitments on a long-range planning program.
But I do think that Congress as a whole, regardless of individuals, can
make a contribution so that we can get, in my judgment, more defense per dollar
through planning.
First, there should be a stabilization of funding at an adequate level.
Anybody who studies military approprations over the last fifty years in
the United States cannot help but be struck with the fact that our policy up until
recent years was one of funding the military programs on a feast-or-famine, peak-
and-valley basis.
Before World II there relatively limited appropriations made for the Army
and the Navy. From that low level of funding, we went to the astronomical heights
of $70 billion or $80 billion a year during World War II. At the end of World War
Page 4 (A)
II we went down to the valley of about $13 billion in military appropriations. The
Korean War awakened us to the problems at our doorstep, and we zoomed back upward to
an annual appropriation figure in the neighborhood of $60 billion or $70 billion
per annum.
I think anybody who is objective will come to the conclusion that this
feast-and-famine, peak-and-valley program of military funding is costly in time, it
is costly in dollars, and, unfortunately, it is costly in American lives.
Such a program was abandoned in 1953, and since that period of time, a
relatively high and relatively stable military appropriation program has been in
being. I for one subscribe to and wholeheartedly endorse such a policy. Fortunately,
the Congress has bought such a policy, although we seem to have from time to time some
differences of opinion within limited areas as to what is enough or what is too much.
But nevertheless, compared to the days before World War II, and compared to the days
before Korea, our military appropriation program today is infinitely superior, both in
stability and as to adequacy. This is a good program.
Now, this relative stability and relatively high rate of spending does
not mean, in my judgment, that a military appropriation bill should be immune from
Congressional investigation and Congressional action. As a matter of fact, under the
Constitution, that is our responsibility -- those of us both in the House and in
the Senate.
It is my judgment that in the main those directly responsible in the
House and the Senate make a conscientious effort to exercise good judgment in this
area.
I might also say that the threat or the reality of Congressional invest-
igation of proposed funding programs helps to sharpen up a bit the programs that have
been approved by the executive branch of the government.
I have talked individually with witnesses who have come before over
Committee, and they have said that this experience of being interrogated by some
of the sharper and more incisive members of our Committee makes them become more
certain of the justification of what they are proposing to the Congress.
And so, through this process, I think we do get more defense per dollar
in the United States.
Secondly, I think Congress can get more defense per dollar through prompt
Congressional action on the annual appropriation bill for the Army, Navy and Air Force.
Most of you know that the President submits to the House and the Senate
the budget in January of each year. It would be expected that this appropriation
bill would become a matter of law by the beginning of the fiscal year, July 1.
In checking the history of recent appropriation bills for the Department of Defense,
I find this to be the case - that only one out of the last ten military appropriation
bills from fiscal year 1951 through fiscal year 1960 was enacted into law by the
beginning of the fiscal year involved.
It was October in one year when the appropriation bill became law. And
it seems to be traditional that the military appropriation bill will become law
in either late July of August.
This, of course, puts the military appropriation bill well into the next
fiscal year. As a matter of fact, it almost overlaps the preparation of the military
appropriation bill for the next fiscal year, as far as the executive branch of the
government is concerned.
Page 5 (A)
It is my strong feeling that Congress could do a service to the executive
branch of the government, the military and industry, if we would get the military
appropriation bill out of the way, into law, by the beginning of the fiscal year.
It has been done as an exception. I can say to you that it looks like it
will be done for fiscal year 1961 -- not because of the urgency of military matters,
but because of the urgency of certain political matters.
Thirdly, I think Congress can get more defense per dollar if it would remove
the requirement for annual authorizations, in addition to annual appropriations. As
most of you know, in three areas today we require an annual authorization as well as an
annual appropriation. One is in military construction. This has been traditional for
some time. Since 1958 we have had this requirement as far as the National Aeronautics
and Space Administration is concerned. Thirdly, since 1959 we have been faced, I might
say, with the threat that this onerous task will be thrust upon us in the area of
operational aircraft, missiles and ships.
I am a little prejudiced and I may be treading on dangerous ground, so I
should not speak too lenthily on this subject. But for the life of me, I cannot see
the necessity or the requirement for an annual authorization, in addition to the
annual appropriation. I am positive that this double analysis and action by the Congress
in these three vital areas - military construction, National Aeronautics and Space
Agency, and aircraft, missiles and ships - will extend and expand the lead time in
getting the job done.
A good example of that is the experience we had during the last session of
the Congress, when the budget, the actual obligation authority for the National
Aeronautics and Space Agency, did not get approved until the last days of the Congress.
The reason for the delay in appropriations was the delay in approval of the authorization
bill.
In the area in which the National Aeronautics and Space Agency operates, at
least at the present moment, time is of the essence, and Congress, in my opinion, was
negligent in imposing this dual submission on the executive branch of the government.
I hope that we see the wisdom of removing this requirement in the days ahead.
Now, this requirement not only extends lead time, which many of you people are
trying to reduce, but it also adds to the cost of getting the job done.
I happened to be reading a trade publication the other day which reported
some testimony before one of the House committees on this problem by Brigadier General
Robert J. Friedman, Air Force Budget Director. I suspect that General Bill Lawton of
the Army and Admiral Lot Ensey of the Navy would concur in these observations. But
let me read what Bob Friedman had to say about this dual requirement.
"We cannot identify which dollars applied to a given aircraft procurement
are new appropriations, which are recoupment dollars, or which are reimbursement dollars.
In fact, any attempt to do so would require a complex and costly additional accounting
system and would serve no useful purpose. Instead, the Air Force hopes to retain
flexibility to increase or cut amounts applied to given line items of the program to
allow for changes in requirement, changes in priorities, or technological development."
It seems to me that this annual authorization and appropriation action
certainly is bound to add cost to our defense and related programs.
Page 6 (A)
Tt is obvious, of course, that having to appear before four committees of
the House and the Senate, rather than two, places an undue burden on those who have
the responsibility of justifying and executing the programs. This is a waste of manpower,
in my judgment, without any compensating benefit in the long pull.
So on the basis of lead time, cost and effort, it seems to me Congress could
help in this area by doing away with the requirement for annual authorizations plus
appropriations.
Fourthly, I think Congress can get more for the defense dollar by closer
contact or liaison between industry and the legislative branch of the Congress.
Those of you who are familiar with the process that we go through each year
know that the respective members of the House and Senate, in committee, get primarily
the justifications given to us by the witnesses from the military and executive branch.
I do not quarrel with the competence or the integrity of those who testify. But I do
not think all the wisdom in these areas resides in those who come before us.
It seems to me that we, on a committee such as the one I serve, could benefit
immeasurably from some assistance from industry.
Now, unfortunately, because we have had in the past some long and extended
sessions of the Congress, it is not practical for us on the committee to get out and have
opportunities to meet with industry as I think we should. And I do not believe that our
committee, for example, should bring in industry to testify before it, but we can accompli
the same result by a different method.
It would be my hope that if we have shorter sessions and more concentration,
it will mean that our committee, and others, could individually and collectively visit
industrial facilities, talk with those in industry, so that we get more than a one-
sided or single-sided viewpoint. I think it would be helpful and beneficial to those
of us on the committee who go through this process every year.
Fifth, I thing Congress can get more defense per dollar if it would forget
local goegraphical pressures.
Now, I admit at the very outset this is an idealistic and utopian prescription.
But looking at the way the system operates, I find that in too many instances local
interests are more interested in keeping a plant going that they are in the Defense
Department getting the most for its money. And I also find that local interests
and I admit they may be well-intentioned are sometimes interested in the continued
production of products, despite the fact that those products in the rapidly changing
world we are in may be obsolescent or obsolete.
It seems to me that in reaching for the new military objectives which we
must consider our national surrvial will be the foremost and, I hope, exclusive
prerequisite.
It is obvious to you, as it is to me, that Congress, on occasion, disrupts
sound military planning and inevitably adds to defense costs if it succumbs to local
pressures.
Sixth, Congress can get more defense per dollar if it would eliminate partisan
policies for the consideration of defense policies, programs and fundings.
Again, I must admit that this may be a bit idealistic and utopian, part-
icularly in a presidential election year. But I must say, and I say this with deep
conviction and sincerity, that the chairman of our Subcommittee, Congressman George
Page 7 (A)
Mahon of Texas, in my judgment approaches the problems of defense spending and
the problems of defense programming and planning as objectively as any member of
Congress that I know. I do not always agree with him. But I can say that he sets
a high standard that could well be followed by others in either the House or the
Senate. And if such a standard were maintained, I am certain and positive we
would get more defense per dollar from the money that the taxpayers make available
for these programs.
Seventh, Congress can get more defense per dollar if we do not hamstring,
by inflexible legislation, the full utilization of knowledgable personnel, either
civilian or military.
Many of you may not be familiar with the fact that last year, during the
consideration of the appropriation bill for the Army, Navy and Air Force, on the
floor of the House, an amendment was offered which read as follows, and I quote:
"None of the funds contained in this title may be used to enter into a
contract with any person, organization, company or concern which provides compensation
to a retired or inactive military or naval general officer who has been an active
member of the military forces of the United States within five years of the date of
the enactment of this Act."
That was offered on the floor of the House, without prior warning to our
Subcommittee.
The first vote was 130 in favor of it and 131 opposed. That was a fairly
close margin. On a subsequent vote, it was 125 in the affirmative and 147 in the
negative.
It is almost incomprehensible to me to visualize the harm and damage that
would have been done to our defense effort if such legislation had been enacted into
law. But I say to you that Congress apparently, or at least one branch of the Congress,
was somewhat tempted to enact such legislation last year.
The net result of the introduction of this amendment to the appropriation
bill was the Hebert study and proposed action in the same area.
I am not an authority on what Representative Hebert and his subcommittee
have proposed, but I say to you, as I have said to people elsewhere any restrictive
legislation which limits the utilization of knowledgable people in my judgement would
be harmful and detrimental to the defense program of the United States.
I am familiar with some of the arguments which have been made that certain
things would result because of past contacts, friendships and so on. I happen to
have more faith in the Americal people, in all areas, and consequently I have no
fear of this threat as far as we are concerned.
Eighth, in my opinion, Congress can get more defense per dollar if we encourage
invention, not roadblock it by restrictive legislation. The most recent area where
Congress has, in my judgment, roadblocked progress, was in the National Aeronautics and
Space Act of 1958. I trust this provision in the law will be amended.
At the outset, let me make this thought clear. No one can conceivably
object to the normal procurements where proprietary rights are freely given by a
company in those cases where the government supports all or a major portion of the
research and development program. However, our individual scientists and our small
businessmen need the protection of patents to give them both the incentive and the
opportunity to prosper and to grow, to invest their time, their money and their
prestige in enhancing our country's progress.
Page 8 (A)
Our large industrial organizations need the protection of their proprietary
rights to give them the full incentives required to cause them to make large invest-
ments in well-equipped private laboratories, manned by highly skilled, trained and
well-paid scientists.
Those people who propose the exclusive control and use of the patents by
the government in commercial fields are mistakenly evoking the principle that the
state should control basic rights, the know-how and the means of production.
The bald, cold facts of life are that if we wish to deter the Communists
from overt military action, if we wish to defeat the Communists in the market
places of the world, then we must fully implement our free enterprise system. We
must provide every reasonable and proper incentive in profit and prestige to pro-
vide both technological advancement and high volume-low cost production.
My. final point is that Congress can get more defense per dollar, perhaps,
by the establishment, by legislation if necessary, of an independent and con-
tinuing National Defense Planning Group, which would encompass or have within it
knowledgable representatives from industry, from the executive and military branches
of the government, and the legislative.
Perhaps this again is utopian and idealistic, but it seems to me, as we
face the threat that we do face, we must come up with something that could be help-
ful in the days and months and years ahead.
We know, perhaps in this group better than in others, that this country faces
a full spectrum of challenges -- education, the growth and strength of our economy,
our military posture. This challenge, it seems to me, can be met, but I do not think
it can be met by sunshine soldiers or summer patriots. And you cannot make foot-
prints in the sands of time by sitting down.
As we face the challenge, those of us here and our fellow citizens can be
confident that if we rededicate ourselves to the principles that have brought us
in America to the high level of success that we have today, we should have no fear
for the future tomorrow.
Page 9 (A)
ADDRESS BY E.R. QUESADA, ADMINISTRATOR,
FEDERAL AVIATION AGENCY, BEFORE THE
ELECTRONICS INDUSTRIES ASSOCIATION
GOVERNMENT-INDUSTRY DINNER, STATLER
HILTON HOTEL, WASHINGTON 25, D.C.,
6:30 P.M., MARCH 17, 1960
ELECTRONICS AND THE FUTURE
AIR TRAFFIC CONTROL
I am indeed happy to be with you tonight and to discuss some of the more
challenging problems facing us in the aviation community. This evening I hope to
give you an up-to-date report on our plans and programs to provide safer and more
efficient aviation facilities for the nation.
Aviation and electronics have come of age during the lifetime of many of us
here tonight. What's more, the two industries have grown up together. The years
following Orville Wright's historic 12-second flight at Kitty Hawk have been years
of phenomenal progress for both aviation and electronics. Electronics has had its
impact on the growth of the aviation industry. Likewise the electronics industry
has benefited from the inexhaustible market generated by the Air Age. Manual and
mechanical systems and devices in aircraft have been replaced by smaller, lighter,
less expensive and more efficient electronics packages. The remarkable progress in
electronics in the last decade is a tribute to engineers and scientists of the world
who have dedicated their efforts to research and development. And, I might add, a
tribute to the electronics manufacturers for their efficiency in producing the pro-
ducts of research and development for distribution to the users. In this regard,
your organizations have promoted, not only our nation's productivity but have
furthered the well-being of its individual citizens as well.
As we look now to the future, aviation will rely on the efforts of men
such as you to an increasing extent to provide the necessary airborne devices,
navigational aids, and communications equipment that are the life's blood of a safe
and efficient air traffic system. Your steady growth over the past several years
reflects the increasing dependence that we are placing upon your industries in help-
ing us reach our objectives. And I would say, without hesitation, that the electronics
industries, big as they are, are only beginning to tap their productive potentialities.
Your greatest years still lie ahead.
Now what are the objectives of the Federal Aviation Agency? There are many,
but there is one that takes number one priority; Air Safety.
We must attain air safety to the most absolute degree possible, for every
type of aircraft that uses the navigable airspace, whether large or small, jet or
piston-engine, whether flying under visual or instrument flight conditions, from take-
off to touchdown.
I believe we have made excellent progress in the field of safety, through
more and better navigational and communications equipment, through research and devel-
opment activities, improved flight standards and air traffic control regulations and
procedures, higher medical standards and pilot qualification, and many other related
factors. This progress has been due to the efforts of not one agency or one group,
but rather to the cooperation and hard work of the entire aviation community.
The aviation picture today is rapidly becoming more complex. The airspace,
which was more than adequate when I started my flying career 35-odd years ago, is
literally shrinking as the result of increasing air traffic and the introduction of
bigger, faster, and higher-flying transport planes and thousands upon thousands of
business and private aircraft. Today we have over 100,000 active aircraft in the
United States. Of this number 70,000 are civil. We estimate that by 1965 we will
have 83,000 civil aircraft in our national inventory. In terms of hours flown, we
expect general aviation aircraft to jump from its current rate of 12 million hours
per year to 16 million by 1965. This will be an increase of 33 percent in the next
five years. These statistics are staggering in themselves, but when we consider the
fact that next year we will have 225 jet transports operating in our system, the
immensity of the task we face strikes home with stark reality. Now then, what are
some of the specific problems associated with modernizing our national system of
aviation facilities? First, to accommodate increased numbers and complexity of air-
craft in smaller blocks of airspace, and still maintain safe separation between air-
craft, we must provide a measure of flexibility in our air route structure to per-
mit the more efficient utilization of our precious commodity -- airspace. This
requires improved navigation devices both on the ground and in the air. Our ultimate
goal is to provide a navigation reference throughout the airspace from the ground to
the highest altitude at which aircraft will fly. This means that we must provide
facilities which will permit aircraft to be flown off-airways -- off the established
air routes -- a system in which aircraft are not necessarily required to fly from
navigation aid to navigation aid.
There are available today, in various stages of development, many navigation
systems that will permit off-airways, point-to-point flight. At our National Aviation
Facilities Experimental Center, in Atlantic City, we are currently experimenting with
Doppler navigators, pictorial displays, self-contained dead-reckoning computers and
other techniques to determine how this equipment can be used in a system based on
ground-referenced devices. The accuracy of position information required for air
traffic control demands at this time that self-contained airborne navigation systems
be updated periodically by reference to a ground navigation facility. The VORTAC
network being implemented throughout the country will provide accurate azimuth and
distance information to facilitate this updating.
I would emphasize here that radar, our primary surveillance tool, plays a
most important role in increasing the number of aircraft that can be safely flown in
a given block of airspace. In addition to our own radars, the FAA has controllers
at 38 Air Defense Command sites to provide radar advisory service under a joint
use arrangement.
So far, my discussion has been pretty much directed to separation prob-
lems in the lateral plane. Of no less importance, and of at least equal complexity,
are the problems associated with maintaining vertical separation between aircraft.
The ground-determined height of aircraft has long been a missing dimension
in air traffic control. We are currently developing an air height surveillance radar.
A "receiver only," passive system, it uses an S-Band air surveillance radar as the
target illuminator. The antenna system is a 160-foot high structure, consisting of
three antenna arrays, arranged to form an equilateral triangle, 60 feet on each side.
The height-finding radar is designed to furnish comparative heights of aircraft
within 50 miles of the airport complex.
We also need altitude information on aircraft that are in the enroute area,
beyond the reach of our height-finding radar. There are several possible means of
obtaining this information. One method we are investigating involves the use of the
radar beacon system. A radar beacon, of course, is by nature a data link. The radar
beacon system can provide the four essential bits of information required for
positive air traffic control: range, bearing, altitude, and identity. The beacon
Page 2B (Section C)
system which the FAA is implementing presently provides three of the four, and we are
now in the early stages of developing the capability of obtaining aircraft derived
altitude information via the radar beacon link. Although our operational beacon
capability today is limited, we are rapidly implementing beacons in our high density
areas. By July of 1962, we should have operational coverage of the navaigble air-
space over the entire country, with over 50 beacons operational.
Another difficult problem facing us today is the ever-increasing demand for
radio spectrum utilization. As more and more aircraft are introduced into the system,
the overcrowded air traffic control and air navigation frequency bands will reach
saturation in high density areas. We do not foresee any significant increase in
aviation's share of the spectrum. We must live with what we have and to do this,
the FAA will do everything possible to insure that the bands of the spectrum allocated
to aviation are assigned and used effectively. We are modernizing voice procedures
and seeking ways to improve voice intelligibility. We are working to achieve im-
proved techniques and better frequency stabilization.
We are well aware of the fact that the communications bottleneck must be
overcome. We have developed and are currently testing a high-speed, automatic
ground-air-ground communication system known as AGACS. AGACS is an experimantal tool
with which we will determine the design characteristics for a two-way data link
adaptable to the requirements of all users of airspace. Within a two-minute roll
call cycle, AGACS handles up a 500 two-way messages. These messages are contained
within a single-frequency channel, as is presently used for voice communications.
Routine flight instructions and advisory information from pilot or controller are
transmitted to the aircraft or control station. Here they are converted into direct
reading displays. Voice radio will still be used for non-routine and emergency com-
munications.
Implementation of radar beaconry, data link, VORTAC, and the host of other
improvements to the overall air traffic control environment will provide the air
traffic controller with the information he needs to move air traffic safely and
expeditiously. To be of maximum value to the controller, this information must be
correlated and applied swiftly and efficiently. The FAA is developing a Data Pro-
cessing Central designed to relieve the controller of many of his routine clerical
chores and allow him to spend more of his time in his decision-making capacity. The
Data Processing Central will automatically print and update flight progress infor-
mation. It will probe for, detect, and display potential conflicts between aircraft
in the system. It will assist the controller in scheduling aircraft for landings.
The Data Processing Central will be available for use in the New York area in 1963.
Another extremely important area in which we are making progress is the
development of a blind, or all-weather, landing capability.
Last year alone, the airlines forfeited $23 million in revenue because they
were not always able to deliver their passengers and cargo to destination airports.
The military needs the all-weather landing capability to insure a full retaliatory
combat potential. We are currently evaluating systems developed by the Navy and
Air Force for their applicability to civil operations.
The introduction of this all-weather landing capability must, of course,
be an evolutionary process. Our program is divided basically into three phases.
In the first phase, our attention is directed to the improvement of the present
instrument landing system (ILS) and the ground control approach (GCA). The second
phase of the program involves the testing of an all-weather landing system for interim
application where the need is urgent. And, finally, we will develop new techniques
for a landing system suitable for the future air traffic environment.
Page 3B (Section C)
Our National Aviation Facilities Experimental Center is today a full-fledged
experimental facility complete with instrumented laboratories, high capacity computer
and simulation facilities, and is staffed by a dedicated group, and technically
recognized experts in all fields of the informed aviation world. We are in the final
phases of the development of improved standard airport lighting. We are evaluating
five different visual glide slope systems. We are actively investigating aircraft
arresting devices. We are making excellent progress in our program to automate
weather measurements and provide for their automatic transmittal to forecast centers.
We are actively pursuing a program to collocate high altitude air traffic control and
air defense function in the SAGE Super Combat Center.
In our long range planning, we must envision the effects on our control
system of the eventual introduction of supersonic and ultrasonic aircraft in the air
carrier inventory. When this takes place the human limitation of pilot and crew to
control their aircraft will become more apparent. It will be necessary to turn to
automatic devices for the airborne environment to achieve maximum safety in flight.
The quantity and the complexity of the electronic gear that will go into future air-
craft will be greater than what they are today.
Future flight environments will require electronic equipment with greater
operating extremes to cope with the variety of new problems created by supersonic
speeds. This will not necessarily present new problems in design because much work
in this area has been done in the missile programs. It will involve application of
known principles and techniques to new equipment.
Powerplant performance and structural fatigue under high temperature con-
ditions will have increased importance to safe operation. These problems will re-
quire close monitoring. Sophisticated electronic recording devices may be necessary
to accomplish this monitoring.
Control of a supersonic airplane by a so-called autopilot, requires more
precise and rapid sensing of airplane deviations from the flight path. Greater speed
and accuracy will be demanded in the performance of the necessary corrective actions
by the autopilot than are required in the autopilots of current turbine-powered air-
planes.
Since the performance of a supersonic airplane is so critical and its
instrumentation and control systems are so complex, the pilot will need information
on flight parameters faster than can humanly be determined or computed. Therefore,
the pilot will need assistance from sensing systems fed into a computer. The com-
puter in turn will provide rapid answers to the pilot.
It is conceivable that ultimately the pilot will only monitor control of
the airplane. The intelligence from the computer will be harnessed to provide actual
control of the plane. All the parameters for a given flight might be fed into a
computer before the take-off and the entire flight to the end of the landing roll
would be controlled automatically. The airborne portions of the VOR and DME systems
would furnish some of the intelligence used in such a flight control system.
Coupled with flight control, would be automatic control of the various
systems in the aircraft, such as engine fuel management, pressurization, anti-icing
and deicing systems. This would appear to be the ultimate and will not all come at
once. There will need to be intermediate stages in which only a portion of such
control is utilized.
Since the take-off of a high speed aircraft is perhaps the most critical
portion of a flight, information to show whether to continue the take-off or to
abort is very important. This involves sensing of engine power, aircraft speed,
Page 4B (SectionC
outside temperature, and so forth. The computer will compare this data with ideal
parameters and give the pilot information needed. This might logically be one of the
first steps in the intermediate stage.
It is easy to see that systems such as I have just described would have
to have extreme reliability and fail-safe performance. FAA will determine minimum
performance and reliability standards. The equipment will have to meet the standards
originally and be maintained so as to continue to meet them.
As you can see, electronic needs for future aircraft will be great.
In addition to the automatic control systems mentioned, the present day
navigation equipment such as VOR, DME, LORAN, and DOPPLER will have to give way to
more sophisticated electronic equipment to handle future navigation problems. This
does not mean that the basic system will change, but rather equipment of those types
will need to be redesigned to take advantage of improvements in the state of the art --
to increase reliability and simplicity and to reduce size, weight, and cost.
Our progress to date is in large part attributable to the outstanding con-
tributions of the electronics industries to our programs. Our continued progress and
leadership in aviation will require sustained and imaginative research, development
and productivity. They will require vitality, creativeness, and the application of
new skills and techniques on the part of science, management, and government.
As a regulating agency we cannot cope with the problems which will confront
us in the future without your continued help and guidance. I urge that you continue
to assist us in whatever manner that is at your command. We will require advice and
assistance on performance standards for the new types of equipment. Such standards
in the past have been prepared to a great extent under the auspicies of the Society
of Automotive Engineers and the Radio Technical Commission for Aeronautics. Many
of your member companies have furnished technical assistance on the working com-
mittees of those organizations. Continued technical support by working either
directly with us when we ask for collaboration or as members of SAE or RTCA will be
of great assistance. Knowing of your past record, I look forward to your future
support with confidence.
Page 5B (Section C
ADDRESS BY MAJOR GENERAL R.T.
NELSON, CHIEF SIGNAL OFFICER,
BEFORE THE ELECTRONICS INDUSTRIES
ASSOCIATION LUNCHEON, STATLER
HILTON HOTEL, WASHINGTON, D.C.,
MARCH 16, 1960
President Hull, Members and Friends of the Electronic Industries Association:
When I was invited to speak to this distinguished audience representing
the American electronics industry, I wondered what I might say that would be novel
or interesting to you gentlemen who, in effect, live and breathe communications and
electronics.
I quickly dismissed the idea that a kind invitation of this nature might
have anything to do with me personally. I suspect that I am somewhat like the human
cannonball who had been quite indispensable in his peculiar way to the carnival for
a number of years. He finally decided he'd had enough of being fired out of a can-
non and went to the carnival owner and told him he was going to quit. He had
thought it over a long time and was simply tired of being shot from a cannon twice a
day. The owner paused and shook his head. "Well, I'm awfully sorry you've made the
decision to leave us. I just don't know where we'll get another man of your caliber."
Since I ruled out any personal connection, my only alternative was subject
matter which might be familiar to you. But I was encouraged by remembering an old
professor at one of the midwest colleges. He mimeographed his examination questions
and gave the same test every year. One of his friends asked him if everyone wasn't
getting better grades each year. "You've been giving them the same set of questions
for ten years, he said.
"No," the old professor answered. "you see, I keep changing the answers."
So it is, as we look about us and take stock of the world in this year of
1960, we find the answers keep changing. One must believe that we are living in the
most remarkable and swiftly-changing age in the history of mankind. The philosophy
of constant and revolutionary change has become an accepted way of life.
In no area of human endeavor have changes been more marked than in our
scientific pursuits. Sparked by dire necessity and the will to survive in the
great struggles of our world during these past two decades, our scentists and engineers
have made massive assaults on the frontiers of human knowledge. Their successes
have exceeded our wildest dreams in other days of not so long ago.
The "state of the art" might be more accurately termed the "race of the
art." Breakthroughs are often greeted with mild interest and a question: "What
else is new?"
And in no area of scientific endeavor has change and progress been more
notable than in this total field we call electronics. The advances of the past
ten years in electronic science and in the development and application of elec-
tronic devices, which increase man's capabilities many-fold, have been phenomenal.
Their effect is cumulative. The technological gains that can be expected in this
relatively young and imaginative science during the next few years are such that
few would attempt to predict them. Invention -- in a sense -- has become the mother
of necessity.
Certain it is that technological advances have followed upon advances in
swift succession. While our future course cannot be accurately predicted, we can re-
view the past occasionally, survey our present position, and project our future course
insofar as present knowledge will allow us.
This seems a particularly appropriate time for such a review. This year is
the United States Army Signal Corps' Centennial Year. On June 21 of this year we
mark our 100th Anniversary a century of U. S. Army Signals.
Both as a combat arm and as a technical service, the Army Signal Corps has
had a proud and illustrious history. This record is counterpointed by the long and
productive teamwork given us by American industry. I consider it an honor to have
been a part of it and a privilege particularly to be the Army Chief Signal Officer
during our Centennial Year. As I tell you something of the history of the Corps I
Know you will forgive me if I exhibit more than an ordinate amount of pride, and may-
be a little prejudice -- and maybe even a little sentiment.
The contributions of the U. S. Army Signal Corps and industry to increased
Army combat capability and to our national welfare over the years have been numerous --
and of such variety as to seem almost unrelated: The Myer flag and code system, his
Flying Telegraph Trains, the Beardsley magneto telegraph, the nation's first weather
service, the Alaskan Communications System, first military airplane, the first
American radar, the first operational electronic air defense system for Army missile
batteries, the first weather satellite, and the first communications satellite.
In these contributions there has been a curious progression from the simple
to the complex -- a progression so marked and a result so complex as to bear little
resemblance to the nature of its origins. There has been also the continuing, un-
flagging support of American business and industry. From a simple flag and code
system for passing signals from one hilltop to another, it is a giant step to voice
and teletypewriter signals by radio relay from outer space.
It has always seemed unique to me that it all should have stemmed from
one man an Army surgeon -- and his interest in helping the deaf. This man, as
you may know, was Major Albert J. Myer.
Major Myer was born in Newburgh, New York, in 1827. As a youth, he served
an apprenticeship as a telegraph operator, and then went through college and medical
school. His graduation thesis was on "A Sign Language for Deaf Mutes. While ser-
ving as an Army surgeon, he applied his interest and knowledge of the communications
problems of the deaf to the problems of communications on the battlefield.
Drawing upon this and borrowing from methods of signaling used by the Indians,
he devised a flag and code system which materially improved Army communications
capabilities.
As a consequence, he was designated Signal Officer for the Army on 21
June 1860 and became director of the first full-time signaling function of a national
army. The services of his signalmen during the Civil War proved so invaluable that
his Signal Department was elevated to the status of a Corps by an Act of Congress
in March of 1863. Many signalmen he had trained before the War had Southern allegiance
and joined the Confederate Army. The Civil War is probably one of the very few con-
flicts in history where both sides could read the other's signaling system. It
occurs to me that the communications intelligence people of both sides must have had
sine waves of alternating enthusiasm and despair that maintained a classic 180 degree
out-of-phase relationship, depending on who was reading whose signals.
We all recognize that the methods and techniques of communication have
undergone profound changes since the adoption of Major Myer's simple "Wig-Wag"
system. One wonders what might have been the course of history had not Major Myer
been so inspired. Perhaps his greatest contribution to military communications lay
not so much in his highly-advanced methods and techniques, but in the fact that his
efforts focused attention upon the improved combat capabilities which improved com-
munications made possible.
Page 2C (Section C)
It is axiomatic that ground forces, to win on any battlefield, must have
the means to move, to shoot, and to communicate more effectively than their opposing
forces. These three prerequisites are most often referred to as mobility, firepower,
and command control. The necessity of effective communications, or in the broader
sense command control as a prerequisite to victory has long been acknowledged.
But the relationship between improved command control capabilities and improved com-
bat capabilities has only begun to be fully understood during the past one hundred
years.
In this era of powerful new weapons of tremendously increased ranges,
informed command control assumes a greater importance than ever before. Dispersal
and rapid movement of military forces over a large area is the key to survival and
to victory on the modern battlefield. Without the advances that have taken place
in the art of communications, command control of forces on the move and so widely
dispersed would not be possible, Without these advances also, many new weapons
would be unusable in most tactical situations.
By a slowly developing process over this past century, the Army Signal Corps
has become what might be called the form and substance of the nervous system of the
Army. Beginning on the level of mere sight perception -- that is, the use of the
"wig-wag" from hilltop to hilltop, or tower to tower the means of communication
have been expanded to include practically all of the senses. In developing signal
equipment to provide command and control of our modern Army units on the battlefield,
the efforts of the Signal Corps are today primarily directed toward these principal
mission areas: strategic and tactical communications, combat surveillance and target
acquisition, electronic warfare, avionics for Army aircraft, and the broadening field
of space and satellite electronics and communications
In the particular area of combat surveillance and target acquisition, for
example, propeller-driven and jet surveillance drones equipped with a wide variety of
sensors, such as radar, automatic cameras, infrared, and television devices, are being
adapted to the mission of penetrating enemy lines and sending back information of the
enemy. We plan to demonstrate a prototype new high-resolution airborne radar next
month which can produce a radar map of near photographic quality. New types of mobile
and portable ground radars complement these aerial surveillance platforms. In this
same area we are working on automatic data processing systems to sort and evaluate
enemy and friendly information so that the commander will have the intelligence he
needs for a rapid decision.
Through the Fieldata concept for applying mobile computers and data pro-
cessors to the Field Army, we are developing extended applications of these tech-
niques for vital functions of the Field Army in combat. The first model of MOBIDIC,
the largest of these new mobile computers, was delivered early this year to the
Army Signal Research and Development Laboratory at Fort Monmouth for evaluation and
testing. Others, going down to a minimum tactical computer weighing 175 pounds, are
under development.
Some of the early highlights of the remarkable evolutionary process by
which Major Myer's early Signal Department brought us to this modern electronics
posture in the Army may be of interest to you.
The flag and code system was shortly supplemented by the electric tele-
graph for communications requirements of the Army in the field. The telegraph it-
self is an early example of civilian or industry effort in the cavalcade of American
electronics. Also, it was because this telegraph system derived from civilian
effort -- offered a ready and inexpensive means of simultaneous weather reporting
from coast to coast that the Army was authorized by Congress in 1870 to establish
a national weather service. This service grew rapidly and regular weather reports
and storm warnings were in popular demand. Exchange of weather data with foreign nations
Page 3C (Section C)
led to international cooperation in large-scale scientific efforts. The first of
these of consequence was the First Polar Year, in fact the first geophysical year,
and involved two Arctic expeditions lasting from 1881 to 1883. The Department of
Agriculture took over the weather service as the Weather Bureau in 1891 after
twenty-one years under Army Signal Corps administration. The Corps has continued in
military meteorology. The rocket-sonde which helps us to obtain weather data at
higher altitudes than the balloon-borne radiosonde, and the recently developed storm
warning network are representative of current efforts in this field. VANGUARD II and
TIROS are progressive examples of weather satellites.
About the time the Weather Bureau took over the civilian weather respon-
sibility, the heliograph and the telephone -- added examples of early Army-industry
partnership -- were being adapted by the Signal Corps to Army use. Extensive tele-
phone as well as telegraph lines were provided on the combat front in Cuba in 1898
during the Spanish-American War. Radio was first introduced in the military at this
same time. The success of the Signal Corps in providing communications facilities
during that War led to installation of extensive wire lines not only in Cuba but
also in Puerto Rico and the Philippines. In this latter area a great deal of under-
seas cable was also laid to link up the major islands. Successful accomplishment of
these tasks led logically to assignment of responsibility for communications to and
within the territory of Alaska in 1900. This initially included cable and wire lines
serving not only military garrisons there but all civilian needs as well, to the
benefit of mining and fishing interests and other settlements scattered throughout
the Territory. As radio, or wireless telegraphy, was introduced into the Army by
the Signal Corps, this new technology was also employed to great advantage in the
Alaskan Communications System.
Military uses of photography were initially introduced on the Arctic
expeditions I mentioned previously. Signal Corps photographic services were first
provided on a large scale in the Spanish-American War. Today, the Army Signal Corps
serves major still and motion picture as well as television missions in the Army.
Aeronautics and military ballooning could not be pursued as a Signal Corps
activity during the Civil War because of a shortage of funds and personnel. But the
logical pursuit of activities in this area could not long be denied. Balloons were
in reality elevated observation and signal platforms. Aeronautics thus officially
became an Army Signal Corps responsibility in 1892.
The success of the Wright airplane in 1903 led to the formation of the
Aeronautical Division in the Signal Corps in 1907 and a contract with the Wright
brothers for an airplane to meet Army specifications. Thus the U.S. Army Signal
Corps became the "marsupial" parent of a famous son -- and what a large competent
boy he turned out to be! I am speaking of that service now known as the Department
of the Air Force.
Other developments, which in a sense have even more profoundly affected
the course of human and scientific events, were radio and radar. Development of the
radio by industry and adaptation of it to military communications by the Signal
Corps soon revolutionized Army communications in combat. The Signal Corps added
its significant refinements, too -- such as development of the superheterodyne cir-
cuit and still later the invention of frequency modulation by Major Edwin H. Armstrong.
Colonel William R. Blair, Director of the U.S. Army Signal Corps Labora-
tories at Fort Monmouth, New Jersey, from 1930 to 1938, is considered the "father
of radar" and holds the fundamental and basic American patent. From the Signal Corps'
pioneering in the development of our country's radar have evolved the many radars used
in the military and those employed in numerous civilian applications such as navigation,
storm tracking and air lines flight direction and control.
Page 4C (Section C)
In this exhibition of proud paternity, I do not mean to imply tht the
Army Signal Corps has stood alone throughout this past one hundred years -- that it
alone has provided the effective command control for today's modern Army.
I am too well aware of the historical dependence of the Signal Corps upon
the American communications and electronics industry for technical knowledge and skills
and for quantity production. We in the Army Signal Corps pride ourselves on having
a close, cooperative relationship with industry -- from concept to hardware in the
field. We know these accomplishments of the past 100 years would not have been pos-
sible without the assistance of civilian invention and private industry.
With the alternating periods of expansion and retrenchment that have
characterized the activities of our armed forces throughout their history, it has
been basic Army policy to maintain a nucleus or token-force in peacetime which can be
expanded as needed in time of emergency. From the standpoint of quantity production
of communications and electronics equipment, we depend primarily upon private in-
dustry.
WE are, within available funds and resources, developing quick reaction
electronic capabilities through such activities as those carried on at the Electronic
Defense Laboratory in California to further utilize the know-how and skill of American
industry. The core of our preparedness policy is predicated upon Army-Industry
teamwork.
The soundness of such a policy was well demonstrated in World War II.
Numerous examples of record production in record time against superhuman odds are
well within the memory or knowledge of all of us here. Partly because of this policy
and partly because of the nature of the electronics business, this teamwork between
the Army Signal Corps and Industry has become a tradition. Civilian inventors dur-
ing Civil War days assisted Major Myer in the development of the Army's first elec-
trical communication device, the Beardslee magneto-electric telegraph set. The very
first military balloon was developed by a civilian -- Professor Thaddeus Lowe. The
Signal Corps looked to Industry for the airplane, for the telephone, for the radio,
adapting these items to military needs and improving them where possible. Our new
family of tactical radios, including small belt or helmet versions and the mobile
radio switching central, the 4-wire communications system and the push-button tele-
phone are development examples of some current improvements of these means.
A remarkable adaptation of electronics research to Army needs, and one of
vast significance to military operations, is that embodied in our micro-module pro-
gram. Full application of this concept -- the ultimate in current miniaturization
technique -- will go far toward reduction of Army logistical problems, increasing
Army mobility, and reduction of cost and maintenance of our electronic equipment.
Or perhaps even greater significance is the impact of this program upon
the future electronic design and capabilities of satellites, rockets and missiles.
The implications of size reductions ranging between ten and twenty to one is obvious.
Compression of radio assemblies to the size of sugar cubes means great savings in
critical space and weight -- thus permitting either higher payloads and increased
ranges or, where desired, smaller missiles.
Experiments in space communications have been aided greatly by the micro-
module concept and earlier micro-reduction techniques. Project SCORE, the first mil-
itary experiment in space communications, a year ago last December demonstrated for the
first time that voice, teletypewriters, and even multiple teletypewriter signals could
be received, stored, and then retransmitted by a satellite orbiting in space. Pro-
ject SCORE -- the initials stand for Signal Communications by Orbiting Relay Equip-
ment -- was a development of the Army Signal Corps and industry, under the juris-
diction of ARPA, the Advanced Research Projects Agency of the Defense Department.
Page 5C (Section C)
The first communications satellite -- in which the Army-developed com-
munications "package" was aboard a satellite placed in orbit by an Air Force ATLAS
missile on December 18, 1958, was the forerunner of several other types now being
developed.
These developments of this so-called "Space Age" offer inspiring new vistas
in the communications and electronics business. They offer the possibilities of
tremendously improved global and space communications. Where these trails will
eventually lead us, no one can say -- no one knows -- just as none could, have fore-
seen that the trail blazed by Major Myer could have led to where we find ourselves
today.
As we stand now upon the threshold of our second centry, it is evident
that the future presents many challenges and many opportunities. The way ahead
will not be easy. True, the nature of the game keeps changing, but the composition
of the team and the goal we seek remains the same. Our energies will continue to be
directed toward keeping our country's Army progressively modern and in a high state
of combat readiness. "Teamed-up" with industry and working together in that spirit
of partnership which has become a tradition, I am confident we in the Army Signal
Corps will accomplish our mission -- and that we will share with you a golden new
era for Army communications and civilian communications as well.
Page 6C (Section C)
PROCEEDINGS
of the
DEFENSE MARKET PLANNING
SEMINAR
March 15, 1960
Washington, D.C.
EIA EST. 1924 INDUSTR
ELECTRONIC INDUSTRIES ASSOCIATION
BERALD R.FORD
PROCEEDINGS
of the
DEFENSE MARKET PLANNING
SEMINAR
March 15, 1960
Washington, D.C.
EIA INDUSTRY INDUST
ASSOCIATIO EST. 1924
ELECTRONIC INDUSTRIES ASSOCIATION
GERALD LIBRARY
STATEMENT BY EIA PRESIDENT
On March 15, 1960, the Electronic Industries Association held its
first Seminar on Defense Market Planning. These Proceedings are the
papers presented by the distinguished representatives of the electronic
industries, the Armed Services, the Executive, and the Legislative
branches of Government.
EIA is proud to have sponsored this unique Seminar with its timely
theme of "more defense per dollar through planning". We have received
much favorable comment on bringing together the planners of both
industry and government where understanding was improved by the give
and take of forthright commentary. The number and variety of the
questions posed to the Panel members reflected a keen interest in this
type of activity.
The common interest of all the participants in achieving more
defense per dollar should be emphasized. Industry is no less interested
than the Military Services, or the Congress, or the Executive Departments,
in achieving this goal. I believe that all those who have a responsibility
in defense planning agree with Representative Ford when he observed that
.Congress can get more defense per dollar, perhaps,
by the establishment, by legislation if necessary, of
an independent and continuing National Defense
Planning Group, which would encompass or have
within it knowledgable representatives from industry,
from the executive and military branches of the govern-
ment, and the legislative.
Whatever the final solution, EIA will continue its efforts to contribute
to achieving more and better defense for this country for each dollar spent.
DR Hull
D.R.HULL
President, Electronic Industries Association
GERALD FORD LIBRARY
AIR Y8 тизматата
INDEX
COMMITTEE FOR DEFENSE MARKET PLANNING SEMINAR
Page No.
Washington, D. C.
March 15, 1960
MsM
по
U. S. Navy View of the
RADM L. D. Coates, USN
9
to bedaiugnijeib
Marketing Problems of
David R. Hull
the Electronics Industry
Vice President, Raytheon Corporation
The 5 R's for Sound
Brig. Gen. Elmer Littell, USA
12
and
President, Electronic Industries Association
Defense Planning
James
Secrest
buota
Bi
AI3
ARDC Development
Col. E. C. LaVier, USAF
21
D.
Executive Vice President
Planning
and Col. Thomas Love, USAF
Electronic Industries Association to
Text Not Available
Dr. Howard Wilcox
Lionel H. Orpin
Fiscal Operations and
Hon. John M. Sprague
29
Chairman, Military Marketing Data Committee
Military Planning
Radio Corporation of America
Systems Planning in
Dr. N. I. Korman
39
Seminar Subcommittee
Industry - "The Link
Between Military and
Robert E. Peterson, Chairman
Industrial Planning"
Radio Corporation of America
Product Planning in
Dr. Richard C. Raymond
43
General Electric
Stahrl Edmunds
Gerald Busch
Hughes Aircraft Company
Lockheed Aircraft Company
Marketing and Market
Mr. J. H. Richardson
48
L. G. Becker
Planning in the Defense
and Mr. Stahrl Edmunds
W. Earl Trantham
Market
Hughes Aircraft Company
Philco Corporation
E. P. DiGiannantonio
Company Planning in
Mr. L. Eugene Root
56
Dr. Paul E. Weaver
Raytheon Company
the Defense Industry
and Mr. Gerald Busch
IBM Corporation
Congressional Responsibility
Hon. Gerald R. Ford, Jr.
71
V. W. McMahill
Westinghouse Corporation
in Defense Planning
EIA Staff Assistants
Kenneth L. Baker
Robert T. DeVore
Military Economist, EIA
Director, Public Relations, EIA
Tot bas stom
leub ЯБ
GERALD FDRD ALBRARY
EIA Defense Market Planning Seminar
Washington, D. C.
March 15, 1960
Morning Session
Military Panel
"Service Programs and Military Planning"
Chairman
Sidney R. Curtis
Senior Vice President
Stromberg-Carlson Division
General Dynamics Corporation
and
Vice President
Electronic Industries Association
FORD LIBRADI
A U.S. NAVY VIEW OF THE MARKETING PROBLEMS OF THE
ELECTRONICS INDUSTRY
Presented By
Rear Admiral L. D. Coates, USN *
This is a defense market planning seminar, and certainly, with almost
60% of total electronics business done with the military, the trend of military
spending is vitally important. Nevertheless, I believe the remaining 40% is
important too, and without confining myself to defense electronics, would like
to offer some observations on trends in general.
First a note on pessimism and the dangers of prediction: when I was a
high school boy I used to put together radio sets and read a magazine called
Radio News. I remember in 1924 being disheartened by an article predicting
that the growth of broadcasting would mean the end of the ham operator. I
don't know how many broadcast stations there were then, but by 1934, the first
year of the FCC, there were 600, and now there are over 10, 000, including
AM, FM, and TV. This growth must have been even more than Radio News
expected. What became of the ham operator Last year - in one year - his
numbers increased by 18, 099 to reach a new total of 204, 280.
Bad news often gets attention while good news goes unnoticed. Many of
you were caught in last year's cancellations of the Regulus II missile, the
Goose decoy, and the P6M, F8U-3, and F108 airplanes. While these newsworthy
events were happening, the number of radio station licensees grew quietly by
85, 000 and the number of licensed transmitters by 300, 000 in the same year.
Now for some trends. In order to set the framework let's look at the
size and mix of the present market: For 1959, the total electronic industry
market was $10. 131 billion. This was split $5.935 or 58.5% military; $1. 648
or 16. 3% industrial; $1.585 or 15.7% consumer; and $. 963 or 9.5% replacement
parts.
The $5.935 billion that was the electronic industry's share of last year's
defense dollars is up from $560 million in 1950; a better than ten-fold increase!
I will not attempt to guess what future defense budgets may be, or even whether
they will continue to rise, but even a very conservative extrapolation of the
trend in electronics share of the total, would lead to a very substantial increase.
Electronics accounted for only 4% of all defense expenditures in 1950.
Last year electronics' share was 14%. Does a further increase to 20% in the
next ten years seem too optimistic? This much percentage increase would
amount to $2. 4 billions of additional business to the electronics industry, even
if the total defense budget remains constant; more if it grows.
* Director, Development Planning, Chief of Naval Operations
ERALD -9- FORD VIBRARY
Anti-submarine warfare is a field of the highest importance to the Navy,
wherein there is urgent need of new ideas in electronics, including sonar,
For similar reasons it seems obvious that there must be further growth
radar, infra-red, magnetometers, fire control systems, sonobuoys, bathy-
and expansion in the non-military market for electronics, both in consumer
thermographs, and related communication, navigation, data processing, and
products and industrial use. It is here that I would like to urge the electronic
display equipment. ASW electronics involves shore bases, submarines, sur-
industry to increase its efforts in marketing, not only to develop the potential
face ships, and aircraft.
for the additional business that certainly exists in these areas, but also for
healthy diversification to spread the risks and hazards of business. There are
With the growing probability of a nuclear stalemate, our ability to wage
too many companies that are too narrow in their range of products and too
non-nuclear limited war is receiving greater attention. So far, few new
easily hurt by minor readjustments in military programs or by changing technol-
weapons are involved and the application of new electronics is limited, but the
ogy. I also urge more strenuous efforts to diversify within defense business.
renewal of interest in this kind of warfare is recent, the need for improvements
This would do us both good. If you expand the range of your talents in defense
and new ideas is great, and the potential for new electronics will develop.
electronics you run across new ideas, and increase not only your chances of
picking up new business, but also your ability to do a good job for us.
Electronic warfare, that is, countermeasures and counter countermeasures,
is another important field that has had insufficient attention in the past and is
New business is not found just by wearing out shoe leather looking for
now beginning to get increased emphasis. It includes passive detection, direction
it. You have to develop it yourself by research; by spending company funds
finding, and analysis of enemy signals; jamming and deception of all kinds, the
on investigations that may or may not pay off, and by initiating developments.
protection of our own equipments from enemy efforts to detect, analyze, jam,
I know of no logical way to arrive at a "correct" ratio of research to sales,
or deceive; and the proper counter-reactions to such enemy efforts.
but you should ask yourself whether you are doing enough. The national trend
is sharply upward. National Science Foundation estimates that the total funds
The technical and marketing potentials in computer technology are so
for all scientific research and development in the U.S., government and pri-
obviously vast and widespread, with so many military and industrial applica-
vate, are now about $12 billion, up $7 billion from 1953.
tions already in operation or under development, and they have been so much
discussed recently, that I mention them only to avoid being accused of over-
In suggesting diversification within the military I was naturally thinking
looking this most rapidly growing of all electronic technologies.
of the tremendous range of electronic interests of the Navy. Let me name a
few, and point out areas of potential future growth.
No talk on electronics would be complete without an appeal, for greater
reliability, and I would like to add my plea for more attention here, please.
The communications needs of the world are growing at an accelerating
However, I believe reliability comes more often from careful design and good
rate, and the available frequency spectrum cannot grow. There is an ever
workmanship than from lavish expenditure of dollars. We must have reliability
more urgent need for more efficient use of available frequencies to increase
at a price we can afford. We have some time paid too much for it, or worse
traffic capacity, requiring large scale research and engineering effort. The
yet, paid for it without getting it. This is a competitive world, and we have
Navy will use tactical data links carrying digitalized information among ships,
got to keep improving the product and beating down its price.
aircraft, and ground forces. Very low frequency, long used in communicating
with submerged submarines will become increasingly important with further
In closing, I would like to suggest three ways to keep in touch with
development. We are already using the moon for long range communications,
advanced planning in naval programs. They are:
and will soon be using artificial satellites for this purpose, as well as for
accurate navigation of ships by electronic means.
(1) Use your bureau contacts. All of the bureaus have programs for
encouraging industry cooperation and they will be glad to help you.
Further great expansion of missile range instrumentation is to be expected,
together with improvements in telemetry and automatic data reduction.
(2) Increase your visits to Navy laboratories, particularly during
sponsor's days when detailed program information is given to visitors.
You have read recently how the ARPA satellite tracking complex known as
the SPASUR System developed and operated by the Navy detected an unknown
(3) Read what the Services have told Congress. I particularly recommend
non-radiating satellite later identified as the re-entry body from Discoverer
the following title:
V, launched on 13 August. Detection of this object was not definite until the
2nd of February and positive identification was not made until 19 February.
Department of Defense Appropriations for 1961
Earlier detection and identification was hampered by the fact that this experi-
Hearings before the Subcommittee of the Committee on Appropriations
mental Dark Fence installation produces over a mile of tape per day, all of
House of Representatives 86th Congress
which must be visually scanned and manually interpreted. Checking back for
Part 2 - Policy Statements, Service Secretaries and Chiefs of Staff
identification involved the re-examination of many miles of stored tape. This
U.S. Government Printing Office
remarkable achievement, and the difficulty of its accomplishment, point up the
need for further improvement and automation of the means for detecting and
This is a limited printing not on sale to the general public, but your
tracking satellites. The number in orbit probably will increase radically, and
Congressman might help get you a copy or your Washington representative can
manual methods will not serve.
go to the Library of Congress and read it for you.
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THE 5 R's FOR SOUND DEFENSE PLANNING"
before wearout, due to technological obsolescence, and in some cases so quickly
become obsolete that they have no usefulness left at all. This costs money and
may be considered by some to be wasteful. Others look at this as the price we
Presented By
must pay for assurance that our Army remains continually modern. It is now
more important than ever that the procurement of equipment be planned most
carefully. This logistical aspect is perhaps less dramatic and impressive than
Brigadier General Elmer L. Littell, USA *
the research and development itself, but we who are involved in the planning
feel that it is equally important nonetheless. Development of new and startling
combat materiel is of little use to troop units unless ways are found to allocate
scarce dollars for its timely production in useful amounts, as well as support
and maintain it. In short, the aim of Army planning is to obtain the greatest
Distinguished guests and ladies and gentlemen, it is indeed a privilege
possible return from the taxpayer's dollar investment so that the Army's
for me to be included in this distinguished panel, and to have this opportunity
inventory of equipment will not only be the most modern, but the most effective
to speak to you on behalf of the Army concerning a theme which is of vital
in combat. The military posture of the Army its modern capability.is linked
interest to all of us here today
"More Defense Per Dollar Through
to the equipment posture of all divisions of our combat organization. One good
Planning." Now, what does this theme mean to you? Does it mean our present
weapon or electronic system can't be divided among a number of combat divisions.
planning is linadequate
?
Too little?
The wrong kind?
In need of revision?
That we are not getting the maximum defense for our
Electronics is becoming more essential to all aspects of military activity.
tax dollar
or does the theme very simply point to planning as the road or key
How does the Army manage its electronics program? The over-all program with
which will open the door and provide the military services, industry and the
minor exceptions coincides with and falls within the mission and responsibility
nation with the maximum defense possible within the limited budgets made
assigned to the Chief Signal Officer of the Army.
available to the military by Congress.
This year the U.S. Army Signal Corps celebrates one hundred years of
What is the Army outlook on planning? Why is defense planning most
Army signals 1860-1960. We now stand together on the threshold of the next
difficult in spite of all the planning that takes place, starting from the Joint
100 years. The men and women in the military, in industry, in our educational
Chiefs of Staff, down to the supply manager who must live in a searching and
and scientific institutions, and in our civilian Government have made substantial
inquiring environment, constantly seeking better, faster, and less costly ways
contributions to our growth. Their vision, skill, and teamwork during the past
to utilize our defense resources.
100 years, have produced an outstanding record in communications-electronic
achievement not only for the military but for our civilian economy as well.
I want to propose a 5-R approach to sound defense planning more about
that later but first, I'd like to assess the scope and environment of the planning
About 85 percent of the communications-electronic end items and compon-
problem from an Army standpoint.
ents used by the Army are planned and managed by the U.S. Army Signal Corps.
This percentage does not include electronic equipment utilized in the Army
The wide range, complexity, and size of the Army's responsibilities and
missile programs these are primarily handled by the Ordnance Corps.
activities pose a challenge to Army planners and managers. The Army operates
The remaining 15 percent of the communications-electronic items although
the largest supply system in the world which includes handling certain re-
managed by other Army Technical Services, are developed, procured, tested,
quirements for the Navy, the Air Force, and the Military Assistance Program
and issued to troops, in basically the same manner.
and manages a bulk stock inventory of approximately $20 billion.
Based on present known requirements, a field Army of the 1960's will
We in the Army supply business must maintain a constant awareness that
be equipped with upwards of 75, 000 Army-operated electronic emitters
our sole reason for being is to provide logistical support to our national defense
as compared with 30, 000 electronic emitters used by an Army at the end of
effort. We are also aware that we can not accomplish this goal alone, that in
World War II. It is therefore essential that these equipments be compatible
order to achieve our objectives, we must increase our planning and coordination
this requires advance planning and testing.
with industry and with such important industry groups as represented here today,
the Electronic Industries Association.
The rate of technological change in conventional communications equipment,
the utilization of transistorization, modular construction, miniaturization, new
One of the Army's most pressing problems is to keep its equipment modern
multiplex techniques, single side-band, and electronic telephone central office
in these days of steadily rising costs and mushrooming changes in technology.
switching brings us face-to-face with a costly modernization problem. In
Once when the troops were furnished a piece of equipment, it could generally be
addition to this, we find that we need more and more equipment to provide new
planned that it would last until worn out or that it could be utilized for training
capabilities unthought of only a few years ago
For
example,
electronic
even after being replaced. Now, more and more equipments are replaced long
fire coordination of air defense missiles, detection and location of weapons and
moving targets on the ground, detection and measurement of radiation, high
*Commanding General, U. S. Army Signal Supply Agency
quality data transmission and automatic data processing.
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These new items are enormously expensive and our requirements studies
will be based upon the best, competent estimates of what both the troop program
must be thorough and good to convince Congress to provide the funds to buy
structure and the Troop Equipment Allowance Tables are going to look like at
them. However, we appreciate that there must be a limit to the amount of
the end of the 5-Year planning period. The troop structure is an ever-changing
money Congress can make available to the services to do their particular job.
thing, reflecting developments in combat techniques many of which are as
One sure way to get more defense for our dollar is to adopt keener and more
revolutionary as new equipment, and equipment planning must reflect these
efficient buying habits. We must be more and more selective in our buying
changes as best as can be forecast. Here again, we see constant improvement
and buy only the most critical and most essential items. We can't afford to
in our ability to coordinate our equipment planning.
buy unnecessary frills on equipments. We must analyze our requirements
realistically and invest in systems and equipments whose performance is
Our determinations concerning how much of each item we are going to
adequate for a particular mission accomplishment and made available by
buy or dispose of, and when, affect more than the items of equipment themselves.
Equipments have a long "logistical tail" of supporting repair parts, supplies,
industry at the lowest possible cost.
dry batteries, installation units, test sets, and training and maintenance
We must look for the best buy possible this is rarely the most expensive.
literature. In some cases, this tail costs more than the dog.
The "best buy" may lack certain features which are "nice to have" but which are
We assign various status codes to the end items which have application to
not really essential to filling most needs.
start up or shut off, as appropriate, buying and disposal actions for the items
Allocating resources and deciding which programs should be supported
making up the tail. As we improve our ability to plan for the end items, we
and which abandoned is a very difficult task for military planners - especially
correspondingly improve our planning for all of these other items which, though
since there are more items available for procurement than the Army has
smaller, are just as important insofar as the Army's combat effectiveness is
money to buy. We are placing more and more premium on making earlier
concerned. Similarily, we use our equipment planning data to plan the extent
decisions on big problems. We're examining our projects and stopping, not just
to which we must finance industrial preparedness measures such as development
of production sources and the maintenance of production tools and facilities
slowing down, non-profitable ones.
in layaway.
We plan over a 5-year period in item detail for the orderly acquisition,
overhaul, and disposal of assets of equipment. When we study an item of
The Army's 5-Year planning system which is used by our troop planners,
equipment, we assemble all of the best available information not only for the
our research and development planners, and our supply planner provides a
item now in the hands of troops and doing the job, but also for the development
tool for getting the best balanced combat posture from the funds made available.
item which will replace it, and for any substitute items. We at the Army Signal
Each year this tool is made sharper and more effective by improvements in our
Corps inventory control point in Philadelphia see a steady improvement over the
detailed planning procedures.
years in the coordinated planning that goes into equipment studies. Let me tell
The Department of the Army's logistical research effort our value
you something of what goes into these plans.
engineering includes studying many projects to insure Army responsiveness
Our supply planners work closely with research and development people
to growing strategic and tactical operational requirements. Our study of
to forecast as accurately as possible when a new item will be ready to put into
logistical cost factors is directed toward attaining more hardware for fewer
production. This not only enables us to budget the necessary funds for its
dollars. We are studying the long-range impact of electronic equipment design
production, but enables us to plan exactly how many more of the current item
trends upon logistical concepts and future logistical planning we are seeking
we must buy. Depending upon its relative essentiality and other considerations,
ways to increase reliability ways to shorten or control the Army's lead time
such as the availability of funds, we must often take a calculated risk and not
reducing the span of time from concept to capability which now averages about
procure the current item to meet our full requirements.
12 years.
There are many facets to our relations with industry in our defense
Sometimes the relationships between development items and existing
planning program. The Army is very proud of its efforts of sharing with
items become rather complex and complicate our supply studies greatly by
industry its future plans and the enlistment of industry in future problem-
requiring studies to be made by what we call "families" of equipment. At
solving activities. The qualitative development requirement information pro-
best, forecasts of when new items will complete their development and testing
gram, known to many of you as Q-D-R-I, initiated by the Ordnance Corps is
and become "ready-to-buy" are speculative because they are subject to set-backs.
rapidly being adopted by other Army Technical Services. This program has
Each year we are making further improvements in our ability to pin down these
been designed togassist participating organizations in conducting their volun-
new item phase-in dates, and thus improve our overall planning.
tary efforts effectively. The qualitative development requirements information
program includes information regarding current and future requirements for
Our supply planners work very closely with what we call the "users" of
development of new items, components, materials, or techniques which effect
the equipment notably the Continental Army Command at Fort Monroe,
earliest feasible exploitation of new knowledge. Army research & development
Virginia, representing the field armies, and the Army Air Defense Command
and procurement & distribution activities are organized to allow for a constant
at Colorado Springs, Colorado. This is so that our quantitative requirements
two-way relationship with industry.
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The Army's procurement operation, as it exists today, is both complex
and involved. This is due in part to the numerous laws, regulations and
To facilitate planning by industry, the U.S. Army Signal Supply Agency is
controls which have been established to assure full protection of the interests
planning to recommend to higher authority in the Department of the Army that
of both the Government and industry. It is, therefore, of the utmost importance
a digest of its procurement program be released in the near future. The
that through appropriate and intelligent forward planning on the part of both
recommendation will provide for making the release as detailed as possible
parties, we detect and resolve potential problem areas, thus effecting economies
within the limits of security regulations. It must be recognized that this pro-
in effort, time, and monies.
posed listing will be subject to various uncertainties, such as changes in re-
quirements, fund limitations, and item substitutions. It is hoped, however,
The Army looks at large and small firms as teammates in our defense
that industry can thereby be furnished a basis for determining areas of bidding
program. Big and small businesses are dependent on one another for tasks they
and production planning.
cannot economically handle themselves.
The Army is continuing to emphasize planning in several areas which will
We must be and are responsive to policies which provide for awarding
minimize delays in delivery of materiel and reduce costs. These include
contracts to small business and depressed labor areas.
advance planning so that Government furnished equipment is received in good
condition and in adequate time to permit their being incorporated into the end
Total net Army procurement expenditures for FY-59 with business
items; planning timely provisioning of spare parts to assure concurrent delivery
firms only amounted to $4, 957, 065, 000. Of this amount, awards to small
of spare parts with the end equipment; and holding preproduction planning con-
business firms on a prime contract basis amounted to $1, 740, 121, 000 or 35. 1%.
ferences with the contractor promptly after award of contracts on major items
to clarify any technical, eontractual, or production problem areas. Further,
One of the most significant gaps that exist in military-industry relations
the Army is increasing its use of indefinite delivery type requirements contracts,
is one that I would like to call the intelligence gap. It is in this area that we
thus providing the contractor with information on the maximum and minimum
need more avenues of communication both horizontal and vertical so that we
quantities he can plan on producing during a 12 month period.
may better pool our resources, our know-how, our creativity and productivity.
We must seek ways to cut through the fog of words and conflicting opinions.
In turn, contractors can do much in the area of planning to improve
We must capitalize on the unique abilities of each member of the defense team.
procurement operations to our mutual benefit. For example, it is most
We must consider the momentum of going organizations and include in our
important that contractors plan to deliver drawings concurrently with shipment
planning the time considerations necessary to start, stop or reverse the chain
of the first production item. Where all such drawings are delivered promptly,
of actions and reactions to current operations and plans. We must not be like
industry will benefit from the wider opportunity for bidding afforded by good
the man winking in the dark - he knew what he was doing but no one else did.
procurement data. Where Government owned tooling is required to be utilized
on other contracts, contractors should plan to deliver any such tooling held by
In our long-range planning program we must be peace planning as well as
themselves or their subcontractors in good condition promptly to the Government
defense planning. Therefore, we must try to find the basis for a sound planning
upon completion of their orders.
program.
Planning all actions necessary to meet contractual delivery requirements
My primary recommendations for improving military-industry planning
are always of the utmost importance to the Army, since any delay in deliveries
can be highlighted by what I would like to again refer to as the 5 R's.
can seriously jeopardize overall military planning and preparedness. There
are also instances where deliveries on one contract are to be used for Government
(Figure 1) Just as the scholastic 3 R's epitomize the abasis for a sound
furnished property on another and the slightest delay by the initial contractor may
education I am proposing adoption of the 5 R's as essential considerations
cause serious repercussions in the ultimate deliveries to the using forces. Thus,
for sound defense planning.
the importance of forward planning by contractors to meet delivery schedules
cannot be overstressed.
(Figure 2) The 5 R's are requirements, resources, realism,
We need industry's help in designing equipment for simplified maintenance,
reciprocity, and responsiveness.
for facility of transport, and for maximum interchangeability.
(Figure 3) ----requirements both qualitative and quantitative, form the
The Army invites industry to participate in exercises and maneuvers where
basis or beginning of any planning program. Requirements establish the targets
they may share with the Army in the evaluation and use of their manufactured
for defense planning. Within the Army, obtaining and releasing information on
equipment under simulated combat conditions.
our current requirements presents no major problem. However, in the areas
of specific requirements for long range planning there are real problems due to
Through a reciprocal training and visiting program designed to strengthen
ever-changing conditions and the restraints necessary to prevent security
the civilian-military team, members of industry and the Government each have
violations. We in the Army are constantly seeking ways to express our require-
an opportunity to become better acquainted and more understanding of each other's
ments more accurately, so that both military and industry planners might better
mission and problems.
aim their talents at the requirement targets.
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(Figure 4) The next R--is resources. Here I include all resources of
the military, industry, scientific, and educational team. Included are not only
financial resources of each but also their physical facilities, scientific, tech-
nical and administrative skills. All these resources must be loaded into the
planning gun which is aimed at the requirements target.
(Figure 5) The third R is realism. Here I refer to the need for
realistically evaluating our requirements and resources to insure the planning
R's
I REQUIREMENTS
gun and our resource bullets are powerful enough to hit our requirements target.
Let's not try to shoot a lion or bear with a water pistol. Let's not try to hit the
2 RESOURCES
moon with a B-B gun--or on the other hand, don't use a cannon to kill a fly.
(Figure 6) My fourth R is reciprocity. Here I mean the reciprocal
3 REALISM
obligation or action of defense and industry planners to share their observations,
their determinations, their skills, their plans within the bounds of security
FOR
and proprietary rights with each other. We must each contribute to making
4 RECIPROCITY
the national defense pie better and less costly by more sharing.
SOUND
(Figure 7) The last R and one that I consider most essential for defense
5 RESPONSIVENESS
planners is responsiveness. Here I mean the ability of planners to react quickly
to change. To be organized for it and be ready, willing, and able to accept
change as an inevitable component of progress. Here lies the greatest challenge
to planners. We must not grow so fond of our present plans that we become
static and inflexible to the ever-changing demands of the future. We must be
DEFENSE
PLANNING
constantly molding the present to meet the challenges of tomorrow: But, we
must remember there is always the time when we must "freeze" our plans and
go ahead with them even though some more changes might be more helpful.
Responsiveness flexibility is essential in modern military-industry
planning just as it is in military operations. Management processes too, must
be equally pliable.
Just as in tennis, we never know where our opponents will hit the ball
next, (Figure 8) or like chess
each move counts
except that in national
REQUIREMENTS
RESOURCES
defense we are playing for big stakes and there is no prize for second place.
In summary, might I say there has never been a man-made plan so perfect
that couldn't be improved upon. We must always be striving to do better to
improve what already is good. It is my sincere hope that today at this EIA
symposium we can find ways to improve our defense planning. May the 5 R's
for defense planners which I have proposed requirements, resources, realism,
reciprocity, and responsiveness serve as the basis for further discussion. May
INDUSTRY
EDUCATION
our discussions and the defense plans that follow insure that we get the maximum
defense perdollar through planning.
$
FINANCE
MILITARY
SCIENTIFIC
TECHNICAL
ADMINISTRATIVE
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TARGET
REALISM
RECIPROCITY
MILITARY
ARDC DEVELOPMENT PLANNING
RECIPE
THIS
TECHNICAL
BEATER
Presented By
INDUSTRIAL
EDUCATIONAL
FLOUR
Colonel E. C. LaVier and Colonel Thomas Love*
DEFENSE
NOT THIS
MIXING
EGGS
SALT
BOWL
APPLES
WATER
CONTRIBUTING TO MAKING OUR
Gentlemen: As you know, the Air Research and Development Command
has been recently reorganized. Under the guidance of Lt. General B. A.
MOON
NATIONAL DEFENSE PIE
Schriever, ARDC Commander we have reoriented the research and development
BETTER AND LESS COSTLY
planning philosophy and operation. It is my purpose today to acquaint you with
THIS
BY
our new approach and the implications it will have on applied research in the
ROCKE
MORE SHARING
electronics industries area. Actually the identical approach is being taken in
all applied research areas.
In the designation of the Air Force Ballistic Missile Division, Wright
Air Development Division, and the Air Force Command and Control Develop-
NOT THIS
ment Division as product-oriented divisions, we have posed for us a problem
B-Bs
similar to that of the industries represented here, of, "how does one achieve
NATIONAL DEFENSE PIE
a capability of producing certain desired products and at the same time orient
a sufficient amount of effort in the future to be competitive?" Competition in
our business is a very serious requirement!
RESPONSIVENESS
The ARDC Development Planning philosophy consists of three main areas.
These are the weapon systems studies, the analysis which encompasses the
Technological Force Structure Plan, and the Planning Objective Structure.
RESPONSIVENESS
Elaborating on the weapons systems study area,
close Air Force-Industry
partnership unites their combined scientific talents toward broad conceptual
?
studies and toward specific weapons systems studies. As one of the outputs
of broad conceptual studies, we have proposed weapons systems. These
OPPONENT
proposed systems may go far into the future and represent future capabilities
that the USAF might desire. To find out whether such is the case we subject
these proposed systems to analysis by the use of a tool called the Technological
OPPONENT
YOU
Force Structure Plan.
This is a force projection for at least two decades containing all existing
?
and all conceivable weapon systems. It doesn't make any difference where these
proposed systems originate. They could fall out from the Weapon Systems
YOU
Studies programs, from contractors, from in-house work, and many other
sources. These proposed systems include the time they are desired in the
operational inventory. We have adopted the philosophy that it is easy to add
a proposed system to the Technological Force Structure Plan, but, it takes
analysis to remove it. So far we have a rather large collection of proposed
systems. They are analyzed first as to the basic laws of the physical sciences.
CHESS
If the proposed system passes this test, then we have something which is not
?
impossible, but not necessarily probable. In other words, it has a certain
slight degree of firmness. We do not intend to schedule or predict breakthroughs
in the basic laws of science. If we have one, we will redo the entire plan,
DEFENSE
*Office of the Deputy Chief of Staff/Plans, Air Research and
DEFENSE
Development Command
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LIBRARY
The second step is to group in any particular time period the mix of
vehicles or concepts that have similar theoretical capabilities. This grouping
which a technical capability should be attained. This capability means that
now lends itself to a more comprehensive analysis and a selection. Results
from here on out it is an engineering integration problem to bring this hypo-
will lead to a second degree of firmness and to the definition of the Planning
thetical system into being. Our desire is to set into motion the required effort
Objective. In other words it is now a hypothetical or potential system that
ahead of this maturity date so that the decision to develop will arrive simul-
has survived the test of analysis and which is now a promising candidate for
taneously with the capability to do so. In order to do this we preceed the
applied research support. Of course, such candidates also will be within the
maturity date by one to two years with the initiation of a weapon system study.
framework of the Air Force guidance documents.
Thisstudy will survey the total effort in all technical areas supporting this
Planning Objective and, depending on the number of weapon systems contrac-
Now that we have some idea of how we arrive at a Planning Objective,
tors engaged, will give the Air Force a number of different approaches to
let's look at it in more detail. A Planning Objective carries two dates. The
the operational achievement of that Planning Objective. The selection of the
first is the date that the applied research in the many areas of concern should
optimum approach will start the development cycle. At this time the Air
mature. The second is the date that the system is desired in the operational
Force decision to develop will have entailed several analyses, operations
inventory. It also contains such items as a description, the military objective
research, cost effectiveness studies and should represent the best possible
or capability desired, the desired performance characteristics, and finally
technical approach at the earliest possible time.
the technical references.
The Planning Objective approach to the Air Force applied research
These Planning Objectives are assigned to one of the product-oriented
program will go into effect in the 1962 fiscal year.
divisions, to become a portion of the ARDC technical plan. This division will
now complete the technical plan by listing the required technology that makes
The product-oriented divisions have received the Planning Objectives
this hypothetical system a reality at some specified time in the future. It is
and are presently preparing the Technical Plan for their achievement. A
through this medium that we derive the applied research effort of the command.
month from today the Air Force technical people will meet as a group and
The definition of the effort within each technical area that spells out "what" we
start hammering out the combined, coordinated, applied research program.
want to do is called an Applied Research Objective (ARO). Such applied re-
The technical release program is expected to occur the last quarter of this
search objectives establish the technical goals that must be accomplished.
calendar year.
After the survey of the ARO's on "what" must be done, we will survey what
is being done. Thi S survey will not only cover those elements being performed
by the entire ARDC but will take cognizance of the research being performed
by other services and government agencies.
After surveying what must be done and what is being done, in each of the
technical areas that support a Planning Objective the balance is itemized and
this becomes the Air Force applied research schedule. Of course, the elements
of research to be done may be carried under several Planning Objectives. To
make this useful, these elements will be collated according to technical area
and will be released as the "Technical Forecast" to industry and the scientific
community. These releases will be in a manner similar to the Technical
Program Planning Document and Applied Research Planning Document Release
Programs which these "Technical Forecasts" replace. Some of the ones that
may be of particular interest to those industries represented here will be the
Technical Forecasts of : Navigation and Guidance, Communications,
Electronics Techniques, Materials and several others. Since these Technical
Forecasts will be the summation of research to be done in a particular technical
area, programmed by years, they should be of great value to industry. The
electronics industries for example could see what research we are supporting
in their areas, who the responsible agencies are, and what research goals
(ARO's) we hope to attain in future years. This should provide an input into the
future planning of industry as to the functions, the facilities, the manpower,
and other plans that are required to secure the optimum functioning of the
industry-military team effort.
So far I have discussed how we obtain Planning Objectives and how they
are used to initiate the Air Force applied research program, The date
mentioned in the Planning Objective such as PO65K is the maturity date at
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ARDC TECHNICAL PLAN
THE TECHNICAL FORECAST for MATERIALS
PART I: Planning Objective: (No.
)
A. Hypothetical System: (Brief descriptive title)
PRESENT
RESPONSIBLE
B. Military Objective: (Brief description of specific military
RD
STATUS
AGENCY
capability desired)
C. Desired Performance Characteristics: (Range, altitude, speed,
payload, CEP, etc.)
by 62
D. Reference Documents: (Intell, WS Studies, NAS, SAB, etc.)
PO 62A
WADD
PART II: Technical Analysis:
PO 62C
WADD
TECH AREA
ARO
PRESENT STATUS
PO 62E
Propulsion
A.
A.
CCDD
Materials
A.
A.
by 63
B.
B.
PO 63A
BMD
PO 63F
WADD
Weapons
A.
A.
PO 6.K
BMD
Etc.
PART III: Technical Possibilities:
TECHNOLOGICAL FORCE STRUCTURE PLAN
60
63
65
TO
80
WEAPON SYSTEM
MATURITY
OPERATIONAL
STUDY
INVENTORY
SASTEMS
PLANNING
PROPOSED
SYSTEMS
SYSTEMS
08
OL
09
EXISTING
08
OL
09 ONISIX3
TECHNOLOGICAL FORCE STRUCTURE PLAN
TECHNOLOGICAL FORCE STRUCTURE PLAN
HYPOTHETICAL SYSTEMS
PLANNING OBJECTIVES
PLAN
DEVELOPMENT PLANNING PHILOSOPHY
FORCE STRUCTURE
TECHNOLOGICAL
ARDC
SYSTEM STUDIES
WEAPON
ARDC
Luncheon Address
Hon. John M. Sprague
Deputy Assistant Secretary
of Defense
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Remarks of
John M. Sprague
We in the Defense Department always welcome these opportunities to
meet and discuss with our partners in industry the mutual problem of national
defense. I couldn't help but wonder, however, why anybody would want to
spoil the luxury of relaxing after a good lunch with a discussion of so conten-
tious a subject as the defense program and budget.
The Electronic Industries Association members, like all contractors
servicing the Department of Defense and the Military Assistance Programs,
are understandably interested in the immediate and long-range future --
the weapons and level of effort of tomorrow which will grow out of today's
research and development.
I am sure you will agree that the world of electronics, more than many
other industries, can look forward to expanding civilian markets as well as
increased use of its products and know-how by the military and space programs.
The level of defense buying is, of course, directly related to the assessment
of the threat which, for the immediate future will probably mean, as Mr. Gates
told the House Appropriations Committee, continued high defense budgets. The
electronics share of these budgets is forecast to increase over the next several
years as the aircraft share, for example, declines.
Admittedly, it would be desirable to be able to lay out longer range defense
programs so that industry could more fully participate in the planning of future
weapons systems. But, today's military planning, both contemporary and long
range, presents a constantly changing spectrum. While the useful life of many
of the conventional hardware items can be forecast with considerable confidence,
the military life expectancy of some of the more sophisticated follow-on items
is greatly influenced by the rapid changes in the state-of-the-art which may
obsolete an item even before test and evaluation is completed. This greatly
complicates the task of detailed long range planning with industry.
With respect to over-all defense planning, it seems to me that a thorough
understanding of the major factors which determine the size and character of
the annual defense program and budget is an essential prerequisite.
To begin with, defense programming and budgeting consist of much more
than an assessment of the military threat, a determination of the military re-
quirements, the costing of those requirements and the adding up of the costs.
Certainly, the defense program and budget must, in total, not only be equal to
the assessment of the threat but must also provide an adequate margin of safety.
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But military requirements, like the assessments of the military threat, are
to 4.3 percent, and the cost of shorter term borrowing to as high as 4 1/2
not susceptible to precise determination. Furthermore, the defense budget
and 5 percent. Interest on the national debt has gone up from $7. 7 billion
cannot be planned and formulated in isolation. It must be developed within
in fiscal year 1959 to an estimated $9. 4 billion for 1960 well in excess of
the framework of the entire Federal budget, the entire government economic
total Federal expenditures as late as 1940. Here, again, is an urgent reason
and fiscal policy and, indeed, the entire national strategy.
why the Federal budget should be balanced and, indeed, if at all possible, a
surplus achieved.
Today's threat to our national security, as many experts on this subject
have pointed out before, is not only military. It is also political, economic
More recently we have encountered a problem new to our generation
and even psychological. To cope successfully with such a multi-sided threat,
of Americans -- a large adverse balance of payments. In calendar year 1958
we must have a balanced national strategy wherein the military, political,
the United States suffered a balance of payments deficit of $3. 4 billion. Part
economic, and the psychological aspects are all welded together into an inte-
of this deficit was offset by the withdrawal by other countries of $2. 3 billion
grated whole. The risks inherent in each of the threats must be carefully
from our gold stocks, the largest single one-year loss of gold in the history
weighed and brought into proper balance, recognizing that security can never
of the U.S. The rest of the deficit was, for the most part, added to foreign
be absolute and that a certain degree of residual risk must be accepted in each
short-term dollar holdings in the United States, thus increasing the liabilities
area.
against our gold stocks at the same time these stocks declined.
Nor is this composite threat ever static. The world moves on, cir-
In 1959 the balance of payments deficit totaled $3.7 billion, and another
cumstances change, and the degree of risk inherent in each element of our
$1.1 billion was withdrawn from U.S. gold stocks, bringing the total down to
national strategy also changes. Thus, the national strategy must be constantly
$19 1/2 billion, the lowest point in twenty years. At the same time our
reassessed and the relative emphasis placed on each element adjusted to con-
short-term liabilities to foreigners have reached an all-time high of well over
form with the new challenges of ever-changing circumstances. The defense
$19 billion, compared with less than $7 billion at the end of World War II.
program and budget, therefore, must not only provide adequately for the national
security but must also be tied in with all the other considerations affecting the
These trends, like the increasing cost of the national debt, point to the
total national budget and the total national strategy.
need for a conservative fiscal policy; that is, a balanced Federal budget and,
if at all possible, a budget surplus. This would be a major contribution to the
We all understand that military policy cannot be separated from foreign
maintenance of confidence in the stability of the dollar, as well as tostrength-
policy and that military policy must be the strong right arm of foreign policy.
ening our competitive position in world markets.
Our treaties, commitments and peaceful objectives around the world all have
an important bearing on the size and composition of our defense forces.
There is one aspect of this balance of payments problem that is even more
But it is not always understood that military policy is also related to
directly related to the defense program. Defense expenditures abroad entering
economic policy and that economic factors have an important, although secondary,
the balance of payments total over $3 billion a year and are, in large part,
influence on the over-all level of the defense effort at any particular time.
associated with the deployment of U.S. forces overseas. They include spending
by our military and civilian personnel overseas; pay of foreign nationals em-
While it is true that the U.S. economy, today, could support a larger
ployed by U.S. forces; and purchases of materials, supplies and services of all
defense program, that is not the real issue. Experience has shown that the
types. Thus the defense program directly contributes to the unfavorable balance
defense program is enmeshed in a whole array of interrelated economic
of payments situation.
factors the historical dangers of inflation; the tax burden in relation to
economic incentives; the size of the national debt in relation to interest rates
It may be argued that the Federal budget problem could be solved by in-
and monetary policy changes in the balance of payments, etc. From a national
creasing present tax rates. Let me simply point to the fact that the total tax
point of view, all of these factors have a bearing on the over-all level of defense
take of Federal, state, and local governments is higher today than it has every
expenditures.
been in our history including World War II and the Korean War.
I need not belabor the reasons why the Government must be ever alert to
But perhaps more important is the relation of the tax burden to economic
the dangers of inflation - the inequity to those on fixed incomes, the distortion
incentive at almost all income levels. In our kind of economic system, we must
of values, the weakening of our competitive position in world markets, and the
rely on the efforts of private individuals to strengthen and expand the U.S.
undermining of the strength of the dollar. But, in a free enterprise economy in
economy. A constantly growing economy is, of course, something we would
peacetime, the Government's role in the fight against inflation is indirect. Its
want for its own sake. But there is now another reason why we must ensure
most important weapon is a balanced budget, or, if at all possible, a budget
the continued growth of our economic strength. The Soviet leadership has
surplus.
chosen to make economic competition another arena in the struggle between
Freedom and Communism, and we must be prepared to meet this aspect of
the total threat.
The national debt is now at an all-time high. Within the last two years,
the average yield on long-term Government bonds has gone from 3. 1 percent
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If the military threat were of temporary duration, we would perhaps
The weapons systems of tomorrow will require additional billions of
be justified in setting aside consideration of these economic factors until
dollars of investment before a substantial operational capability is achieved.
more tranquil and less troubled times. But I think we can all agree that the
For example, through June 30, 1959 we had committed to the ballistic missile
kind of threat we face today is likely to continue for many years to come.
program ATLAS, TITAN, MINUTEMAN, POLARIS, THOR and JUPITER
Already, almost ten years have elapsed since the Nation explicitly recognized
a total of more than $7 billion. An additional $3 billion will be put into these
the long term nature of the Communist threat and adopted the policy of defense
big missiles this year, raising the total to $10 billion. The investment in all
for the "long pull". This policy, first enunciated by General Marshall in
our missile programs both big and small will reach over $31 billion by
December 1950, envisaged an increase in the defense effort to an adequate
next June. Even in terms of unit costs, the amounts involved are staggering.
level and one which would be sustained indefinitely if need be.
Last year, the President mentioned that the average cost of the first nine
squadrons of ATLAS worked out to about $35 million per missile on launcher.
By and large, we have followed this policy fairly consistently since
that time. For example, the general level of the defense effort was not in-
These costs increases are, of course, related to the rapidly increasing
creased during the Lebanon and Quemoy crises. Neither has it been decreased
complexity of new weapon systems, as you in the electronics industry well
as a result of all the talk about disarmament. Even the recent Soviet announce-
know. But it should not be overlooked that these new weapons systems also
ment of a one-third reduction in the numerical strength of their active forces
have much greater combat effectiveness than the systems they replace.
has not seriously suggested a deviation from this "long pull" policy.
Therefore, they are not needed in the same numbers. We have seen this trend
operating for some time and it is bound to continue into the future.
Our policy of maintaining a steady, stable level of effort over the
"long pull" is, of course, complicated by increasing costs, more importantly,
The defense budget process is further complicated by the fact that mili-
by very rapid technological changes in military hardware.
tary technology is moving so fast that whole weapons systems are being
obsoleted while still in production and, in some cases, even while they are
While the general price level appears to have stabilized somewhat in the
still under development. You are no doubt all familiar with some of the major
last year or so, there is still some upward drift in many prices indices of
cancellations in the last year, such as the SEAMASTER jet-power seaplane,
importance to the defense program.
the boron fuel program, and the F-108 long-range interceptor aircraft.
More directly, even without a general pay increase, the cost of military
Thus, we are constantly faced with the problem of reviewing all of the
personnel goes up about two to three percent a year. This comes about from a
weapons systems in the program to reassess their relative importance and to
somewhat higher grade structure; increased longevity pay; an increased number
eliminate, as promptly as possible, those which have been overtaken by events.
of dependents and, therefore, dependents allowances the new program of
This is not an easy or one-time task. As Secretary of Defense Gates stated
enlisted proficiency pay; and a steady increase in military retired pay.
recently to the House Appropriations Committee:
Even while numbers of men, military units, military installations, and
"These changes are coming fast and are drastic. The
inventories of older conventional weapons gradually decline, operation and
defense program must be kept under continuous review.
maintenance costs continue to increase each year. The costs per flying hour,
Programs which looked promising only a short while ago
per steaming hour, for an overhaul of a ship, an aircraft, or an engine, continue
have become marginal in importance in the light of technical
to go up, due largely to the more complex weapons being incorporated into the
advances. This compels a continued shift in emphasis and
forces.
resources from older to newer programs, and the outright
termination of some programs.
But most important of all is the increased procurement cost of these new
and more complex weapons. The cost of a fighter airplane, for example, has
Now as to the mechanics of planning and formulating a budget program
increased by over thirty times since World War II; the cost of a submarine
under these difficult circumstances
(POLARIS), twenty-fold. A modern supersonic bomber costs nearly one hundred
times its World War II predecessor, the B-17. The Navy's nuclear-powered
The crux of the problem within the Executive Branch of the Government
carrier which is currently under construction will probably cost eight times as
is to strike a proper balance, in terms of priorities, among military require-
much as the carrier which fought the Battle of Leyte Gulf.
ments, space exploration, civilian needs, future economic growth, the tax
burden, debt management, etc.
Staggering sums have been invested in our presently operational weapons
systems. To date, our B-52 strategic bomber fleet alone represents a capital
The heart of the problem within the Defense Department is to provide
investment of nearly $9 billion, excluding supporting tankers, air-to-ground
adequately for the national security by achieving, within the resources that
missiles, etc. Through the present fiscal year, investment in our continental
are available, the best possible balance among combat forces-in-being, the
air defense system for protection against just manned bombers amounts to more
procurement of hardware for these forces, and the research and development
than $17 billion.
of new weapons systems for the future.
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GERALD -33-
Now there are no doubt many different ways in which a defense budget
can be formulated within these parameters. Since any one year's defense
Military Departments in order to resolve outstanding problems. This review
budget is essentially just another annual installment on a continuing program,
laid particular stress on major weapon system programs which were considered
it is not unreasonable to take as the starting point in this process the budget
on a Defense-wide basis - without regard to Service sponsorship. In this way
level of the preceding year.
it was hoped to focus attention on the missions to be performed rather than on
the Service budgets as such.
In order to provide some flexibility in the review process, it was agreed
this year that the Services would submit what we call basic budgets aggregating
A special effort was made this year to assure that all the responsible
about $40. 1 billion in new obligational authority and $40.6 billion in expendi-
officials of the Department of Defense - particularly the Service Secretaries,
tures. In addition, they were to submit other desirable programs as an
and the Chiefs of Staff, both in their individual capacities and in their corporate
addendum budget, bringing the total submissions to $43.7 billion in new obli-
capacity as the Joint Chiefs of Staff -- participated in the review of the annual
gational authority and $41. 8 billion in expenditures.
military program. Although the members of the Joint Chiefs of Staff, in their
capacity as the military heads of their respective services, are intimately
It was contemplated that the basic budget submissions would represent
acquainted with the details of their own budgets, they must also, in their
the hard core of top priority requirements for combat ready forces, military
corporate capacity as the Joint Chiefs, consider the defense program as an
hardware, and new weapon systems development, together with the related
entity.
construction.
To facilitate this aspect of their work, the staff of the Joint Chiefs was
The addendum to the basic budgets were intended to provide, regardless
furnished the budget submissions of each of the Services, together with various
of past individual Service funding levels, a means of achieving the necessary
analyses and evaluations prepared by the staff of the Office of the Secretary
flexibility to increase the emphasis on selected top priority programs, and to
of Defense. The staff of the Joint Chiefs, which was substantially increased
finance other high priority projects or promising developments which could not
by the Defense Reorganization Act of 1958, was therefore in a position to
be accommodated in the basic budgets.
analyze and evaluate from an over-all military point of view - the programs
submitted by each of the Services.
Nowever, the Services were not precluded from submitting items over
and above these limits, and the Army, Air Force, and the Advanced Research
The Department also had the benefit of the active participation of the
Projects Agency did so.
Office of the Director of Defense Research and Engineering similarly estab-
lished by the Defense Reorganization Act of 1958. I am sure it is obvious to
This approach was quite similar to that used in the development of the
all of you that because of the increasingly difficult technical problems involved
fiscal year 1960 defense budget. Then, too, the Services were requested to
in modern weapon systems, the Defense Research and Engineering staff has a
submit a basic budget plus an addendum. In fact, this approach is very similar
major role to play in the formulation of the defense program and budget.
to that used even before the Korean War. Here is how the Director of the Bureau
of the Budget, Frank Pace, described the preparation of the fiscal year 1951
In all of these ways the Secretary of Defense sought to bring to bear on
budget some ten years ago. He said: (and I quote)
the fiscal year 1961 defense program and budget the collective knowledge and
judgment of the entire top command, both civilian and military, of the defense
"We would provide (the President) with certain factual
establishment.
information as to where certain policies would lead. From
that the President set a ceiling on the armed services, which
The defense budget developed in this manner was then presented by the
was last year, I think, generally known as $15 billion.
Secretary of Defense to the President at Augusta. The major issues relating
to the composition and size of our military forces, to the priority of weapons
*******
systems, to the timing of procurement, and to the composition of the defense
research and development effort were all thoroughly reviewed with the
"There is also the proviso that if within that limitation
President. The Service Secretaries and the Chiefs of Staff were then invited
it is impossible to include certain programs which the
by the President to present directly to him their individual views and comments
Secretary of Defense considers of imperative importance to
on the defense program and budget proposed for fiscal year 1961.
the national defense, they shall be included in (order) of
priority in what is termed the 'B' list."
As a final step in the process, the defense budget was discussed in the
National Security Council. Here the Secretary of State, the Secretary of the
The FY 1961 budget requests, totaling $43.9 billion in new obligational
Treasury, and the Director of the Budget, as well as the Secretary of Defense,
authority and $42. 6 billion in next expenditures, as actually submitted, were
and others, joined with the President in giving final consideration to the
then subjected to the careful scrutiny of the staff of the Office of the Secretary
defense program and budget in context with the total national strategy.
of Defense to trim out any "soft" items which might appear therein and to make
recommendations on other items requiring priority attention. Following the
From this long and painstaking review process, extending from early
presentation of the staff evaluations to the Secretary and Deputy Secretary of
September to early December of last year, there evolved a defense budget
R.FORD
Defense, discussions at both the Secretarial and staff level were held with the
totaling $40, 927 million in new obligational availability and slightly less than
$41 billion in net expenditures. Of course, the Services started their planning
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long before their September submissions.
LIBRARI
35
I think it can be fairly stated that every one of the major issues raised
in the Congressional hearings and in public discussion of the Defense budget
since it was transmitted to the Congress in mid-January, was thoroughly and
carefully considered during the budget review. In fact, virtually every argu-
ment made, pro and con, on these issues had been heard during the budget
review. But as former Secretary of Defense McElroy stated before the Senate
Appropriations Committee last year:
EIA Defense Market Planning Seminar
"In the defense program we are dealing with extremely
difficult problems for which there are simply no pat solutions --
Washington, D. C.
no simple answers. In many areas -- looking into the future --
March 15, 1960
we are dealing largely with assumptions, calculations, esti-
mates, judgments. It is not surprising then, that there are
Afternoon Session
differenses of opinion even among experienced, professionally
competent men.
"Nevertheless, the fact remains that the responsible
officials -- military and civilian -- still have the task of
Industry Panel
studying these divergent points of view and arriving at a
specific program
No one would advocate trying to do
"Industry Programs and Defense Planning"
everything that every individual would like to see done. This
would not only be beyond our resources but would simply
dissipate our efforts and weaken rather than strengthen our
Chairman
military power. So, we are faced with the necessity of making
decisions among various alternatives -- in other words, of
exercising judgment, of making 'hard choices'."
Vice Admiral John H. Sides, USN
Director, Weapon Systems Evaluation Group
There is no question but that the 1961 budget reflects some very hard
choices. But in the judgment of the President and the Secretary of Defense
the 1961 defense budget does provide for those programs which are essential
to our national security.
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SYSTEMS PLANNING IN INDUSTRY
The Link Between Military and Industrial Planning
Presented By
Dr. N. I. Korman *
In this country, we have arrived at the stage in our development where
there is little question as to the desirability of advanced planning. The
question is no longer whether we should plan, but how. This morning's dis-
cussion has attempted to portray how planning occurs within the Defense
Department. This afternoon's discussion will concern itself with how planning
occurs within industry.
I should like to take as my main thesis how industry does its systems
planning and how this can be the major link between military and industrial
planning. A great debate has been raging for the past year or so as to whether
systems planning and management should reside primarily with industry or
primarily with the military services. It is not my intention to take up one side
or the other in this debate, but rather to show that the military services and
industry are each uniquely fitted to handle certain aspects of this planning and
that coordination of their individual planning efforts can be most helpful and
productive.
Let us review first the areas of planning information in which the Defense
Department and its military services are and should be preeminent. They are
best informed as to the enemy's power, capabilities, and intentions. They are
also most acutely aware of our own nation's military posture. They can best
judge what the enemy's total resources are and how these resources might best
be used to greatest advantage against us. They are also the best judges of
what our own resources are and how these resources might be used to give us
the best possible defense posture for the future.
On the other hand, industry, with its research, development, design,
production, and service agencies, is more acutely aware of possibilities for
weapons and military devices which arise out of technology, engineering, and
production. It has greater insight as to what might be done with weapon
characteristics, performance, lead times, costs, and dates of absolescence.
I want to make myself perfectly clear as to what I mean. The decision for
strategic offense as to the proper mix of B-52's, B-58's, Atlas', Titans,
Minutemen, Polaris', etc., is properly and strictly a Defense Department
decision, subject to the policies laid down by the President and Congress.
However, we in industry can and do provide valuable information for this
decision making by advising not only as to jequipment-characteristics and per-
formance, lead times, and cost, but also as to how equipment life and perform-
ance may be extended by re-engineering and refitting, and when obsolescence
makes such re-engineering and refitting unwise.
*Director, Advanced Military Systems, Radio Corporation of America
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With this introduction, let us proceed now to see how industry carries
Since the utilization of the scientific, engineering, and industrial know-how
out its systems planning.
of the planners' organization to solve the equipment and systems problems of
the military services is in essence the main job of the systems planner, let us
What is Systems Planning? First, let us see how we obtain our source
examine in more detail how the systems planning function is carried out.
material for systems planning. Useful source material is of several sorts and
is gathered in various ways. The main problem here is with the tremendous
Let us look first at the planners themselves what kind of menare they?
amount of material available; assembling, collating, and interpretation consti-
first and foremost, they are creative technical men with the broadest possible
tute the main problem. The planner must continually guard against accepting
outlook. They are mature and known for their excellent judgment. They do
one-sided opinions; he must avoid forming an early opinion on fragmentary
not particularly aspire to the running of large organizations because they prefer
data because it is so easy to verify almost any point of view if one looks primarily
not to be burdened with the associated administrative load. They are familiar
for confirming data.
with the skills, capabilities, strengths, and weaknesses of their company. They
have personal abilities and reputations which enable them to tap and utilize the
Let us see what sorts of information we need and how we gather it.
skills which reside in their company. They are very active in seeking an under-
standing of military problems in a way which will enable them to utilize the fruits
There is general background information status of the cold war; U.S.
of technology in the solution of these problems. Collectively, they should possess
strengths, weaknesses and intentions vs. enemy strengths, weaknesses, and
skills which cut across the entire scope of the technology which they hope to
intentions; U.S. strategy vis-a-vis enemy strategy; relative importance of
utilize in the solution of the military problems.
strategic offense, strategic defense, limited land warfare, sea warfare, etc.
Here we find our material in numerous periodicals and books, published
Now the study projects, how are they selected? A typical study project
statements by our political and military leaders, and analyses by several of
should not last longer than three to six months without re-examination. After
our University Institutes for Foreign Affairs.
that period, it should be redefined if it is to continue. Projects are selected
based upon their importance to the defense effort and upon the likelihood that
There is information on specific weapons and equipment in being, under
they can be solved with the knowledge and skills of the company. Suggestions
development and study. Here we find that the trade magazines and newspapers
for likely projects come from the military services who are usually quite
are excellent sources not only for their day-to-day recording of events, but for
happy to discuss their problems with industrial concerns whom they think might
the summaries and analyses which they publish from time to time. Of course,
be helpful to them, from suggestions from within the company, and, most im-
security considerations limit the thoroughness, accuracy, and timeliness of
portant, from the system planners themselves. This last source is most
their coverage; but they are excellent for the purpose of general guidance
important because it is a truism that proper definition of a problem is almost
which can be augmented in the proper way for those who have a "need-to-know".
tantamount to its solution and the true skill of the systems planners is largely
in their ability to define their systems problems.
When we come to acquiring knowledge as to the capabilities, limitations,
and problems with specific weapons, equipment, and systems, we find that the
In the establishment of a systems study project, the appropriate experts
three services have information available for those who can establish the proper
in the Defense Department must be consulted to obtain the military viewpoint as
level of security clearance and "need-to-know." The Air Force's SR's, the
to what they consider to be important attributes of a solution. This military
Army's QDRI's are excellent examples. Here, we find that the industrial
viewpoint need not be taken too literally or adhered to too slavishly. The mili-
planner obtains information in proportion to his willingness to give information
tary people usually are only too happy to hear to what extent the industry system
in return. The quality and quantity of information he can receive in the long
planner thinks his requirements can or cannot be met. In some cases, the
run is in proportion to the quality and quantity of work he does on the problems.
military viewpoint may be acquired informally; in other cases, security con-
The sponge who seeks to soak up information and give nothing in return soon
siderations dictate the proper degree of clearance and 'need-to-know. In
dries up his sources. The planner who comes back with ideas, suggestions,
all cases, the quality and quantity of the information obtained is dependent
and searching questions is rewarded with being taken more and more into the
primarily upon the degree of confidence with which the military people believe
confidence of the armed services.
that they will get ideas and suggestions in return for their information.
The knowledge as to scientific, engineering, and industrial possibilities
Proper backing must also be obtained from the appropriate functions in the
and innovations must come primarily from the planners' own organization.
system planners' company. Failure to obtain such backing can result in lack of
It can be supplemented and checked by information gleaned from consultants,
support during the system study phase and, worse, lack of enthusiasm to pickup
the proceedings of technical societies and in other ways, but unless the bulk
the results of the study for further implementation.
of the experts in these fields are indigenous to the planners' own organization,
this or ganization stands little chance of surviving in the intense competitive
The systems planners, in addition to acquiring a background as to the
struggle. The problem of the planner is to recognize, utilize, and exploit the
military necessities, must also acquaint themselves with the technological facts
skills inherent in his company. However, he must be alert to gaps in the
which may bear upon possible solutions. To this end, they consult with the ex-
knowledge and skills of his organization and be ready to fill them by association
perts in their companies, employ expert consultants, and peruse the literature.
with a company that does have the missing attributes or by acquisition in some
other way.
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In the next phase, he attempts to generate and evaluate as many ideas as
he can which might be pertinent to his problem. Here, a combination of solitary
and group action isbeneficial. "bull sessions" with bright young idea men from
within the organization are interspersed with the introspective deliverations of
the mature creative experts of the systems planning function.
PRODUCT PLANNING IN GENERAL ELECTRIC
The ideas which survive the process are used in the synthesis of possible
systems. Such systems are then subjected to analysis for reliability, perform-
ance, effectiveness, cost, lead time, enemy countermeasures, and many other
Presented By
factors, to determine whether any of them can indeed help solve the military
problem and, if so, which solution might be best.
Dr. Richard C. Raymond*
As I have outlined it, the system planning function sounds very orderly and
straightforward. In real life, it is seldom so. It goes by fits and starts. The
various steps are intermingled with each other and many times we arrive at
Having been associated with military product planning in an increasingly
tentative solutions while we are still trying to state the problem. Many times,
direct fashion over the last fifteen years, it is a real pleasure for me to dis-
important military constraints on the solution can only be seen as the solution
cuss the subject before such a distinguished audience.
itself is being formulated. Many times, a systems study only serves to high-
light other problems which need solutions.
I shall discuss the purposes of product planning within General Electric,
the kinds of people who do this work, the over-all effectiveness of the work
Assuming, however, that a systems study serves to highlight an important
from the Company standpoint, and some ways in which it could be improved.
military problem and to indicate a solution to it; what do we do next, how do we
implement our solution?
As you realize, product planning is only one important phase of business
planning. The word product, as I shall use it here, means anything we make
To implement the results of a system study, the system planners must
for delivery to the military, from a piece of wire to a large weapon system.
first secure corporate endorsement of their work. They must establish to
what extent their company will continue further studies, to what extent it will (
Purposes of Planning
go in reorganizing to prosecute further work, and whether it will commit itself
to produce the requisite equipment in the time and for the cost indicated.
I believe that the major purpose of product planning at any level in any
organization is to provide the executive at that level with factual information
Having established these points, the study results may be presented to
which will allow him to place his resources in a pattern of bets which will im-
appropriate parties in the Defense Department along with its recommendations.
prove his expected payoff.
In important studies, usually a number of different presentations must be made,
each emphasizing those points in which the particular audience is interested.
The fact that military product planning is done in the face of very large
Operations people are interested in somewhat different aspects than R&D people,
uncertainties is obvious to anyone who reads the newspapers. If planning were
who, in turn, are interested in different aspects than the training and maintenance
a certain deductive technique leading to precise conclusions, it would not be
people. Oftentimes, questions arise for which ready answers are not available;
necessary to carry on a public debate regarding the exact size of military
this makes necessary auxiliary studies with subsequent exposition of their
force necessary to guarantee security. Our planners could compute the exact
results.
numbers.
As an example, in connection with the studies which preceded the BMEWS
Planners have thus fallen rather easily into the languages of gambling and
program, over fifty presentations were made by my organization alone over a
insurance. These languages are designed to cope with uncertainties. In de-
period of a year before a decision was made to proceed. Other competing
fense the major uncertainties we face are those of the military threats which
organizations probably made as many presentations as we did.
will be levelled against us, the technological developments around which we can
build new weapon systems, the economic support available for our defense
Finally, with acceptance of the study results may come action in the form
effort and, certainly not least, the political decisions which will govern our
of reoriented research, initiation of development, creation of new organizational
needs for weapons.
alignments within the company, etc. These and many other points will be covered
by the succeeding speakers.
To give a better understanding of the purposes of product planning in
General Electric, I should like to digress a moment and discuss decentraliza-
tion of management.
*Manager, Technical Military Planning Operation, General Electric Company
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GERALD
-434
General Electric is a large technical business. It is probably as
TEMPO's Environment Operation is a small interdisciplinary group of
diversified as the Department of Defense, although only one-tenth as large.
social and physical scientists who make a continuing study of the world of the
Some years ago, the General Electric Company under the leadership of
future, in terms of fundamental factors such as population and economic and
Mr. Ralph J. Cordiner, whose name is familiar to many of you, undertook a
scientific resources. This study has resulted over the last two years in a
program to decentralize the management of the Company. Stated briefly,
number of conclusions which have served to give us broad general guideposts
decentralization is achieved by assigning responsibility and authority for each
in thinking about future systems. It has also revealed the nature of some speci-
management decision to the lowest level in Company organization where an
fic requirements and has provided reasonable backgrounds in which to evaluate
adequate scope of information is available for that decision. Responsibility
future systems. This year we are examining the prospects for international
is placed on the individuals who will feel the greatest pain in the event of bad
stability through 1975.
decisions. Appropriate rewards are available to these same individuals for
consistently good decisions.
In the Synthesis Operation we do feasibility studies of new technical
devices and we integrate these into compatible systems. Our equipment
In General Electric's decentralized structure, the basic building block
descriptions are carried only far enough to permit performance estimates and
is a component we call the Product Department or Operating Department.
rough cost estimates. The people in the Synthesis Operation include physicists
There are over a hundred of these, and each operates with considerable
and several kinds of engineers.
autonomy, carrying on all business functions from planning, research, and
development through design, manufacture, and marketing of one or more lines
The Evaluation Operation is peopled by economists and mathematicians,
of products. Product planning is done both inside the Product Departments and
operations research specialists, and experts in particular fields such as logis-
at higher levels. In the typical Product Department there is a marketing section
tics and reliability. These people are responsible for comparing various ways
which includes a few people devoted specifically to the product planning function.
of accomplishing specified defense missions in the future. They reflect these
There are also technical planning groups who serve some of the Division general
comparisons in terms of the requirements for scarce items, such as dollars
managers. A Division in G. E. is a cluster of perhaps three to eight Departments
in the Federal budget. Devices or systems which show up well in the evaluation
whose businesses and markets ar very closely related. There are also plan-
process naturally take their places in our future environmental predictions.
ning groups in the "Services" or staff organizations attached to the Executive
Office.
At the corporate level there are a number of services or staff officers
who have organizations of experts in the functions common to all of our
My own group, the Technical Military Planning Operation (TEMPO) is
businesses, such as finance, employee relations, research, engineering,
a part of the Defense Systems Department. It serves primarily the Defense
marketing, and so on. Some of these functional experts also participate in
Electronics Division which consists of five Departments oriented toward
planning and their services are available not only to the corporate executive
defense requirements. Some service is also rendered to other Divisions and
office and staff, but also at the Operating Department level when a particular
to the officers at the corporate level.
competence is needed in depth.
People Who Do It
In addition to these regular employees, we maintain consulting agreements
with recognized experts in many highly specialized fields. These people are
Product planning is decentralized in General Electric in a way which
called in for specialized advice and counsel in their particular subject areas.
goes with the management decentralization scheme. In our Product Departments,
product planning people are usually expe rienced in the equipments and markets
Over-All Effectiveness
of the particular Department in which they work. They are interested in the
products lying within the product scope of that Department and lying in time
A measure of the effectiveness of product planning at the Department
immediately beyond the items which are currently being developed. This
level lies in the fact that product planners are still hired and maintained by
means that they are normally looking two to five years into the future.
most of the Departments of the Company, including those in industrial and
consumer commercial businesses as well as those in the defense area. I
In the Defense Electronics Division, we in TEMPO support the product
believe that this fundamental economic test shows that product planning is a
planners in several Departments with a team oriented at the five-to-fifteen-year
recognized and needed function. My own organization is probably not old enough
future period. We have no restriction as to product scope and no ties to any
as yet to permit a reliable reading on its performance from the mere fact of
particular product line. TEMPO now has about one hundred and fifty people
its existence. We have been growing steadily since August of 1956. We now
professionally qualified for the substantive work of the organization. We
see planning operations of various sizes being organized in other Divisions of
attempt within this group to cover all of the major fields of human knowledge
the Company, and we see somewhat analogous organizations in other companies.
which are applicable to defense problems. The work is divided roughly into
We are probably the largest industrial venture in this function, although we are,
three phases. These are, first, prediction of the five-to-fifteen-year future
of course, still fairly small compared to several organizations of the non-profit
global situation; second, synthesis of preliminary system and equipment designs
variety which do this work for the Government.
to operate in this future environment; and third, evaluation of proposed equip-
ments and systems on a cost-benefit basis.
I am perhaps prejudiced in this matter, but I believe that TEMPO has
been able to contribute a great deal of significant information to our customers.
-44-
-45-
in Government and to managers at many levels in the Company. As our com-
Another point which would allow us to improve defense planning
munication ability grows and our experience deepens, we shall be able to do a
considerably would be a public recognition that defense expenditures are
much better job. As I said earlier, we see the major purpose of planning as
like insurance premiums and not like a dole or a WPA project. Defense
that of calculating relative risks, or in other words providing better odds for
expenditures should not be used to keep a particular set of companies in
the bets which our managers must make in the presence of very great uncertain-
business or to benefit the labor surplus areas of the Country. The costs
ties. It is often difficult to make a precise evaluation of our work. This is
associated with a modern weapon system are so fantastically high that we
rticularly true when we must tell a very busy manager that his particular
cannot afford to buy less than the best. It is a major fallacy to buy our de-
product line is apt to be very short-lived because of forces beyond his recogni-
fense insurance on a basis of price alone when a small improvement in per-
tion and control.
formance or in the rate of system obsolescence far outweighs the cost advantage
of going to a cheaper supplier. Competence, innovation, and follow-through
General Electric believes that it is a part of good corporate citizenship
of the equipment into the field are individually expensive, but they are necessary.
to participate with the Government in the selection, development, manufacture,
In the long run they are economical.
and installation of defense products. We seek to provide those which promise
the best chance of giving rational, workable, economical defense of the Nation.
Even with all of the improvements we can make in the next few years,
We enjoy responding to Government requirements. We also believe that we
it is hard to see how human organizations are going to keep up with the rapid
must contribute our own ideas through the paths which the Military Services
advance of our national situation and our technologies. Planning will help some,
have established for this and through unsolicited proposals. We believe that
but it does not offer a panacea. It cannot be effective unless it is coupled with
the problems of national defense are so numerous and so complex, and that the
intelligent and dedicated management, with good engineering, with good work
need for continuous progress is sogreat that the Nation must not turn down any
on basic science and technology, with responsible manufacturing and product
promising idea without some exploration. Further, we believe that the com-
service, and perhaps not least, with a little bit of luck.
munication and decision time required to establish a complete, agreed-upon
centralized approach to most defense problems cuts very seriously into the
useful service life of defense systems. It is probably more economical in the
long run to tolerate some degree of overlapping and duplication than it is to
argue out each case and then to build obsolete equipment on the basis of the
agreements.
How Could Planning Be Improved
Planning is primarily a matter of generating, collecting, handling, and
analyzing information and drawing probabilistic conclusions. These must then
be prepared, stored, and communicated to others. It would be easy to conclude
that anything which will speed up the flows ofinformation would be of great help
in the process. Unfortunately, however, this simple approach does not give the
expected results. There are, of course, certain revisions in the industrial
security procedure which would greatly expedite this flow and reduce the over-
all cost considerably, but we now have available so much information that a
simple increase in the flow will not be much help. Instead of concentrating on
quantity, we need to develop processes for storing, retrieving, and routing
this information in accordance with the needs and abilities of people. A man's
rate of information transfer is naturally and fundamentally very limited. The
situation in science and technology, as well as insociology and politics, is such
that no single human being has the power to grasp a large situation in detail and
to make all of the necessary decisions. If we increase the flow of information,
we must also have an improved organization and understanding on the part of the
people who deal with it. This is accomplished in part through management de-
centralization, but it also requires a training and attitude on the part of the people
operating the planning force which is difficult to develop among rugged individual-
ists. There is considerable room for improvement both in the mechanisms by
which we handle information and in the organizations and training of the people
who do the work, both in and out of the Government.
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MARKETING AND MARKETING PLANNING
intercontinental ballistic missiles and space units was virtually nothing ten
IN THE
years ago. However, fiscal 1961 finds these as major items of expenditure.
DEFENSE MARKET
For aircraft companies, the changed product mix has meant a transformation
in their fundamental functions. Formerly, the airframe was the most signifi-
cant element of aircraft cost, and integration of all parts of the aircraft was
Presented By
the responsibility of the airframe manufacturer. In the new military market
of missiles and space units, electronics and propulsion take on strikingly
greater significance and become, in fact, the main segment of the market.
John H. Richardson* and Stahrl Edmunds**
Technological Pace, rapid enough in every modern market, reaches
unparalled heights in the military market. Technological changes have pro-
ceeded so rapidly that we have rather calmly accepted the jump from air
Let us begin by examining the salient characteristics of the defense
travel at 620 miles per hour to satellites and 18, 000 miles per hour. This
market in order to determine the kind of market place with which we are
awesome rate of change, which sets our times apart from all others, serves
dealing and to indicate the need for modern business practices. There are
to emphasize the absolute necessity for understanding and putting into practice
nine such characteristics.
the most advanced business systems, methods and attitudes if our present
structure is to survive in the technological revolution.
First, it is a fluctuating market. The volatility of sales in the defense
market typically has far exceeded that of the non-defense markets, even in
Changed Research-to-Production Mix is characteristic number six.
comparison wo such durable-goods areas as primary metals and machinery,
In the modern defense market, technological changes, as we have mentioned,
normally considered among the most volatile. We do not anticipate a per-
proceed so rapidly that the ratio of production expenditures to research
petuation of such violent fluctuations to the contrary, we look upon this
expenditures will continue to shift toward heavier research and development
market as becoming more and more stable
yet
past
patterns
should
not
expenditures. It has been stated that the age of mass production is being
be ignored.
killed off by space. This has important implications for the economical
utilization of current production facilities. In addition, as this mix shifts
Second, the military market is very large --- currently about $41 billion
favorable consideration must be given to increasing profit rates applicable
when viewing the Department of Defense budget as a whole and some $17 to 18
to research and development to finance facility modernization required to
billion when considering major procurement and research and development
meet the technological challenge.
expenditures. To grasp the magnitude of these figures, compare this market,
for example, to chemical and allied products, which constitute about a $25
Contract Continuity is a seventh salient characteristic- or problem-
billion market. Petroleum represents a $35 billion market, rubber products
of the defense market. It is sometimes argued that the defense business is
about a $6 billion market, tobacco manufacturers about a $4 billion market,
relatively less risky because even on terminations the contractor is reimbursed
textile mill products about a $15 billion market. Thus the national defense
for costs and profit on costs. However, the big risk in defense business arises
market represents one of the largest segments of spending in the entire U.S.
from a firm's inability to maintain a continuity of contracted effort. Due to the
industrial spectrum.
very complexity of their product, defense contractors must maintain an abnormally
high percentage of technical competence both staff and facilities the
The third feature to consider is future growth rate. The growth rate in
sound perpetuation of which can only be realized by reasonably stable contract
the military market since the end of World War II, has represented a rate of
support.
growth of eleven percent per annum. However, recent projections suggest
that the military market will be fairly stable or grow at an average rate of
The eighth characteristic: Specialized Production Operations.
some three percent per year for the next decade, depending upon international
Defense contractors are geared to produce final products that have the most
conditions.
exacting performance requirements in technological history. As a consequence,
their production operations and processes are highly specialized that is,
Thus while the total Department of Defense market has grown at a very
geared to the product's needs. Thus, as his loading fluctuates, the defense
rapid rate in the last decade, its rate of growth will slow down for the next
contractor is not in a competitive position for he cannot readily adapt or divert
ten years. A slowing down in the rate of growth in any market raises important
either his staff or his plant to other products of less exacting performance
problems for a firm operating in that market. The fact that the total opportuni-
characteristics for sale in commercial fields.
ties are growing at a decreased rate makes it much more difficult to maintain
an individual firm's rate of growth in a changed environment.
Finally, consider competition. It is interesting to note that competition
has become one of today's most pressing challenges. We have witnesseda
Changed Product Mix is the fourth factor to consider, for vast changes
complete transition from the relative lack of interest in defense business that
in the military market have taken place in the last decade. Spending on
existed before Korea to the emergence of well managed, capable companies
now clamoring to do business in this market place. No longer does any organi-
zation have a "corner" on any segment of military technology.
*Director, Marketing, General Offices, Hughes Aircraft Company
**Manager, Market Analysis, Hughes Aircraft Company
-48-
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whether this funding is possible within the limits of available budgets.
THE ESSENTIALS OF A MARKET PLAN
Frequently, the budget constraints force program cancellations or stretch-
The nine characteristics of the defense market may be summed up
outs a fact of which, I am sure, all of here are painfully aware.
simply as constituting a market of inordinate change. When a market is
The second step in developing the market plan is program selection.
characterized by inordinate change it must, of necessity, be carefully studied
The problem here is to align the skills and capabilities of the company with
to be understood. This process of study requires (1) the organization of data
appropriate programs identified in the market overview.
and (2) the summation of the data into a market plan.
A hypothetical illustration of such program selection is shown in the
The organization of data to understand the defense business is no small
next chart which shows the addition of new program areas to existing product
task. One purpose of this seminor is to consider the need for and availability
lines. Obviously this program selection is based upon a preliminary market
of data required to do the planning job in both the military services and defense
analysis indicating ability to contract for the program and technical
industries. Such an effort is of great significance to both the quality and cost
assessment to determine the ability to design the system.
of planning that can be done. We are in the early stages of data organization
and handling in the defense area, with all of its consequence of duplicate effort,
The third element of the Market Plan is to formulate the action steps
false starts, and inadequate knowledge on all of our parts.
needed to consumate the program. On the technical side this means pre-
liminary design and specifying and scheduling the follow-on research,
Despite all of these problems of getting adequate adata, all of us ---
design, and development to be done. On the marketing side it means carrying
military and industry planners alike must make the best plans we can with
the message to the customer in such a manner that it will enable him to under-
the data presently at hand. Let me describe how this is currently being done
stand and prefer the operational effectiveness and cost of your proposal versus
in our company. The first step has been a very undramatic one, that is, the
his alternate choice. The organization of actions needed for two-way communi-
creation of a central file for all the data that the company obtains in its ordinary
cation with the customer is a substantial task. We at Hughes have enumerated
course of business. Into this file go such things as (1) clippings from news-
some 397 marketing decisions which are made implicitly or explicitly in order
papers and periodicals, (2) trip reports, (3) published budget documents and
to provide the customer with sufficient knowledge to make an intelligent evalua-
Congressional hearings, and (4) copies of planning documents for which the
tion of a proposal. Seen in this light I believe you will agree that marketing is
company has established a need to known The operation of such a file over
a formidable and necessary task, one that deserves the same careful, scientific
time can accumulate an impressive body of data, at least impressive in quan-
effort that engineers apply to design problems.
tity. The real problem is to make some sense out of the scattered bits of data,
that is, the summation of the data into some pattern. The studious examination
The last element of the market plan is to carry out the action steps that
of the materials in this file is the beginning of a market plan. The results of
have previously been determined in the plan. This is the doing or operating
such study provide an overview of the market, which is in our minds the first
side of marketing; and the key element is managerial skill in arranging all the
element of a market plan.
elements that make up the "Marketing Mix.' To make this statement clear,
let me discuss more fully what I mean by the "Marketing Mix.
At this point let me enumerate all four elements of a market plan to help
keep this discussion in perspective. The four elements of a market plan are:
THE MARKETING MIX
1. An overview of the market.
The "Marketing Mix" encompasses all those company functions which
2. Program selection.
have been integrated in the interest of accomplishing marketing objectives.
In order for the Mix to be most effective, it is necessary to analyze its
3. Formulating the action steps.
functional elements to be sure that, first, the necessary elements are
all present; second, that they are individually strong; and third, that they are
4. Carrying out the actions.
blended together in an optimum manner in the support of the Market Plan.
The overview of the market is constructed simply by using specific
Mr. Robert Hills, President of the consulting firm, Marketing Dynamics,
customer requirements as building blocks to put together a picture of the
Inc., speaks of the marketing mix as the "seeing, planning and doing functions."
total market. As an example of this type of effort I would like to show you
It is not feasible here to discuss each of these functions in detail but only to
our view of NASA requirements and funding over the next decade. Notice the
treat them with sufficient pertinent comments to place them in proper perspective.
emphasis on the booster program in early years. This emphasis shifts to
space probes in the later years with consequent new requirement in payload
The seeing and planning functions have already been discussed, so let
and instrumentation. Similar charts can be constructed for the various military
me just summarize the nature of their assignment in the Marketing Mix. What
and commercial requirements. The sum of all psuch programming of customer
about the first function: "seeing"? The Seeing function is performed by an
requirements is the overview of the market.
Information Processing Activity tailored to the needs of each company.
After identifying all the funding needed to finance future requirements for
NASA, and the total Department of Defense, it is important to determine
BERALD -51-
-50-
Market analysis most assuredly is charged with the responsibility for
The "doing" functions typically include advertising, contracting, sales,
accumulating and analyzing data pertaining to immediate customer desires and
public relations and service.
needs, but it also has infrequently practiced responsibility for searching
the long-range total behavior of the market. It is fundamental, it seems to me,
Advertising, SO aptly put by Mr. Merck of Merck & Co., "is a paid
that the gross present and future dimensions of any market must be envisioned
message delivered by someone else to influence an audience toward a profitable
as clearly as possible before long-range objectives, plans, short-range objectives
sale of your product." Advertising should be considered and treated as an
investment rather than as an expense and should receive the same careful
and programs can be offered for consideration.
planning that is afforded the product itself to insure that product, institutional
The "planning" function of the marketing mix is usually termed product
and recruitment benefits are realized to the extent and in the proportions
desired.
planning, however, for our discussion of "planning" we will be referring to
the all-encompassing requirement for marketing planning.
Contracting has become more and more a major contributor to the welfare
of the enterprise. The day of "administering the paper work" is far behind us.
Marketing planning in its broadest sense has two purposes:
Government and industry experts have properly collaborated to elevate the
1. To evaluate marketing opportunities available to the company
contracting process to a level where "businessmen" are essential to its ful-
fillment.
and to select those which are best in relation to the strategic
objectives of the company.
Sales, more commonly referred to as Market Development, Applications
2.
To develop plans which insure capture of each opportunity
Engineering, Advanced Program Development and the L like contributes im-
selected, based upon study of the requirements for success.
portantly to the market analysis and product planning functions. This organizatio
does not perform in the typical salesman fashion of presenting wares for sale,
Modern marketing planning is thorough, bold, creative, and objective.
however, responsibility for complementing customer needs and requirements
It leaves nothing to chance if prior study is possible. Planning forces
and company capabilities is centered here. Sales is charged with the responsi-
consideration and analysis of all aspects of a problem or opportunity. It
bility for representing the enterprise to the customer in the development of a
weighs alternatives. It identifies risk. It compares results with cost to
business relationship, for assuring that the enterprise is responsive to all re-
achieve. Planning encourages creative thought. It invites innovation.
quirements contributory to the finalization of a joint endeavor and for main-
It gives purpose to marketing actions. Planning brings order, efficiency
taining constant customer and enterprise satisfaction with the product or service.
and confidence. Lack of it leads to disorder, improvisation, and actions based will
While sales and contracting are often considered to be a single function, in
on expediency. Without imaginative and dynamic planning, the enterprise
reality they are two distinct responsibilities, each requiring special skills.
That is not to say that in some cases members of either organization could not
flounder and must accept mediocrity, if not decay.
make equal contributions to the other, just as individuals in engineering,
Planning begins with the defined objectives of management. It develops
production, sales and contracting, for instance, complement each other as
strategy and tactics shaped to these objectives. It orients marketing actions
members of a sales team.
to the future, rather than to the past. It is in the future where opportunities live.
This kind of planning mobilizes power and capability behind each marketing
Public Relations, as envisioned here, refers to that responsibility the
program. It brings profit and growth to the company skilled in its use.
enterprise has for attending to customer and general public needs which
usually fall outside of the more direct channels which exist between the customer,
Customer needs and wants must be anticipated since the responsibility
on one hand, and contracting, sales and services on the other. Of primary
of a leading supplier does not end with the capacity and ability to meet the
importance is the link which Public Relations provides between the company
customer's known needs, but rather includes actual assistance to the customer
and the portion of the public which directly or indirectly affects its future to
assure that accurate and timely coverage of the company's activities is dissemi-
in determining what his needs are going to be in the future.
nated. This function should be established with its specific charter as an
The "doing" function is crucial to success in modern marketing systems.
integral member of the marketing mix.
This is where the product or service meets the buyer. This is the action phase
The final "doing" function is service. Responsibility for the product, of
of marketing. This is where plans are executed, where This function advertising aims appears, at more
course, does not cease when delivery is made to the customer. On the con-
and where products ar seen and purchased.
than today's sale. It goes after respect and confidence from each buyer. and It
trary, complete customer satisfaction can only exist when the product is
builds customer loyalty not alone to the product but also to the company its
expertly and continuously supported even after it is in service. In truth, the
It wants to create repeat business for the future as it makes valuable each
product is the company in the minds of those using it, and therefore in the
purposes. sale today. Satisfied, loyal customers have never been more than of
service area, more than in any other function of the marketing mix, the
today. Confidence and loyalty, although intangible in character, are assets Actions
corporate image receives its most challenging test.
enormous value to any company when they prevail in customer minds. it.
taken within this basic function will enhance customer loyalty, or reduce
This indicates its importance.
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SYNTHESIS OF THE MARKETING ELEMENTS
3. The company establishes a more continuing relation to serve the
We have not reviewed all of the elements that one could include in the
military well. The recognition of the modern marketing concept by manage-
ment, from the first "seeing" of a new requirement to the final "doing" of
marketing mix, but those mentioned are particularly worthy of consideration
field service and support, commits the company to devote all of its energies
by our industry. We might have added sales promotion, sales training, dealer
to providing the military services with systems that will be effective and
relations, warehousing, production scheduling and, in fact, finished goods
reliable in operational use.
inventory control. But whatever the elements one may include in the marketing
mix, the important point is that there must be a complete understanding and
4. Company effort which is market or customer oriented achieves lower
an effective synthetis of these functions or "modern marketing" will not exist
in the enterprise.
costs because it is selective, because it aligns customer needs with company
skills, and because the final test of its effort is a usable product and a satis-
fied customer.
CONCLUSION
For these reasons, I submit that modern marketing practices including
Now some of you here, particularly in the services, may well ask:
dynamic marketing planning are far from being non-essential. Instead --- only
What difference does it make if modern marketing exists in a defense enter-
if these modern business practices are employed can industry properly put its
prise? I am well aware of the solidly entrenched idea in government that
skills at the disposal of the Department of Defense and, in the end, help provide
for the national security of the United States.
the military services are never "sold" anything, rather--they "buy" systems
that they know they want. From this viewpoint, marketing is regarded as
nonessential, if not useless.
If the military establishment and the defense industries were small,
I would agree with this. But they are not small. The number of people and
dollars are, in fact, enormous. For the same reason that the town hall form
of democracy in the United States had to evolve to representative government
with the increase in size, so too have we had to move toward a representative
form of liaison between government and industry. We are gathered here to
improve that representation and liaison, to make it more factual, more orderly,
and more objective. This, too, is exactly the purpose of marketing in the
defense industries. It is a form of representation: first, the representation
of military needs and requirements to the company, and secondly, a representa-
tion of the company"s applied technology to the military. I submit that when this
task of marketing or representation is done in a factual, orderly and objective
way, it produces several real advantages in the defense, effort.
The benefits to the military services of an orderly marketing approach
are:
1. More depth of effort is concentrated by the supplier on selected
requirements of the services. That is, an overview of the market enables the
supplier to select those future requirements most in line with company skill
and capability. Having made a judicious selection, the company can concentrate
technical effort on a few well-executed design studies, rather than scattering
inadequate technical efforts across a host of requests for proposals as they
happen to arrive in the mail.
2. The military service obtains a more factual statement of product
advantages under an orderly marketing approach. When a company has a
market plan, its "marketing mix" is organized to carry a more effective
message of its technical recommendations to the customer. This effort takes
the form of improved proposals and explanations which enable the services to
do a better job of evaluation.
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Controlling Parameters of Company Planning
COMPANY PLANNING IN THE DEFENSE INDUSTRY
Turning to the matter of over-all company planning, let's ask our-
selves: How can planning be used to assist management in guiding the
over-all course of a defense contractor's business? Fig. 1 suggests
Presented By
that there are several separable, but interacting planning functions typically
at work. To focus these functions on the controlling parametersof over-all
company planning, namely return on investment and growth, we have called
L. E. Root* and G. A. Busch**
out on the chart the sales forecast on the one hand and the programming and
coordination of the company's resources on the other.
A good sales forecast depends upon planning that is both outwardly and
Challenges to the Defense Planner
inwardly oriented. Here, the outwardly oriented planning is concerned with
the environment in which the company will compete. The results of such
At the outset of this discussion, we would observe that the job of a
environmental planning manifest themselves in the form of projections of
planner in the defense industry (and certainly within the military establish-
the potential demand in each of the company's product/market areas, and
ment itself) is an exceedingly tough one these days. To point up this obser-
in the assessment of the likely characteristics of competition. On the inward
vation, we might examine some of the more important challenges that the
side, planning is concerned with the projection of the company's capabilities
planner faces:
to effectively capture a proper share of the potential demand in the face of
the expected competition.
Right at the top of the list is the state-of-the-art, which seem to be
changing, in fact is changing, at an ever-increasing rate; on the basis
Turning to resources planning, we are here concerned with the pre-
of this factor alone, a company's over-all plan cannot remain fixed
ferred deployment of the company's technical resources, of its production
for long, but must be regularly and frequently looked at and updated.
base, of its marketing organization and its finances.
Another challenge, and one that is surrounded with the greatest un-
certainty, is the future trend in the East-West conflict. The complex
Company Planning Must Consider Both Military and Non-Military Business
intermingling of sabre rattling, of disarmament negotiations, of
notorious scientific advances, of summit conferences, and the vola-
It is not uncommon in the defense contracting business, for con-
tile shifts in the domestic political situations in certain members of
tractors to have both military and non-military product lines. In such
this world's family of nations tempts one to plan by ground rule rather
cases, as the figure suggests, over-all company planning must recognize
this fact and take account of the market opportunities, competitive situation,
than by rationale.
and resources requirements of both the defense and non-defense market
Then there is the challenge of projecting military requirements.
sectors, in order to arrive at an optimal balance in terms of return on
Responsive to the vagaries of the East-West conflict, and to the
investment and growth.
changing state-of-the-arts, estimates of future military requirements
oftentimes tend to be short-lived.
With respect to the defense sector, in facing up to the task of over-
all company planning, the changing requirements of the military customer
Finally, there is the matter of the state of the budget. Here is a
and the advancement of technology indicate that marked changes in the
factor which, by contrast to the others, is stable; but this very
characteristics of the company must be considered. In the traditional air-
stability in the face of changing technology and changing requirements
frame manufacturing industry the shift in emphasis from manned aircraft to
creates a highly competitive aura within the defense establishment
missiles and space vehicles has caused the typical company to noticeably
add to and reshuffle its kit of skills. The aircraft-oriented weapon systems
and within the defense contracting industry that the planner cannot
of a decade and more ago are being replaced with systems where technical
afford to overlook.
excellence in fields like electronics and propulsion is every bit as important
as the flight sciences. To remain competitive, the "airframe company" of
So, from a company that has engaged in defense planning for a number
yesteryear has found it mandatory to diversify its capabilities in consonance
of years, to any of you who may more ecently have joined the ranks, may we
with the diversified requirements of its traditional customer, the military
say earnestly and sincerely that there is no "tried and true", or easy, or
services. In simple terms one could coin an applicable phrase to express the
infallible pattern to be followed. But one can say with fair assurance that to
situation: "Diversify or Die!"
be reasonably successful, a program of defense market planning must be a
continuing program, and it must include a realistic appraisal of the technical
Another factor of great import to over-all company planning stems
outlook, an understanding of military needs, and an assessment of likely
from the fact that, barring a "hot war", the effective demand for the defense
economic constraints. We shall return to this subject later.
-56-
*Group Vice President, Missiles & Electronics, Lockheed Aircraft Corp.
**Director of Market Research, Lockheed Aircraft Corporation.
September 1959. Lockheed was revealed as the principal contractor
industry's products is likely to grow at a somewhat lower rate than that for
for three leading U. S. satellite systems, Discoverer, Midas, and Samos,
the U. S. economy as a whole. Accordingly, many defense contractors of have
all using our Agena orbiting vehicle.
diversification in non-military product/market areas at the same that
seen fit, in their over-all company planning, to undertake programs time
October 1959. Lockheed Nuclear Products began National Aeronautics
they are building up diversified skills to better compete in the defense market.
& Space Administration study of radiation at space temperatures.
Let's consider the case of the Lockheed Company, which for the
December 1959. We agreed to buy a substantial minority interest in
past several years has been following what our board chairman, Robert E.
Aeronautica Macchi, Italian aircraft-shipbuilding-motor vehicle firm.
Gross, has referred to as a "concentric" growth policy.
December 1959. Lockheed Electronics Company was formed to
Under this policy, our basic skills as an aircraft manufacturer have
integrate our acquired and in-house electronics interests and further
been progressively enhanced through several paths along the traditional skills,
penetrate military and industrial markets.
three-way of products and new markets, and acquisition of
route to diversification: broadening of our in-house new skills de-
January 1960. We began reconstructing a Navy ship for advanced
velopment and experience. new And in our acquisitions, have aimed at such non-military complemen-
oceanographic surveys, a step toward our underseas research goal.
tary skills as are necessary for us to take greater advantage of
situations that hold some affinity for our traditional skills.
January 1960. NASA selected our advanced Agena B for series of
orbital flights that will put Lockheed for first time in the deep space probe
call synergistic. In other words, the return on the combined skills and the can be
When such opportunities are realized, the return is what we might
business.
made larger than the sum of the separate returns on the parent five"
February 1960. Lockheed agreed to purchase a 50% interest and
acquired skills. This has been called the "two plus two equals effect.
provide management assistance to Grand Central Rocket Company, the
nation's fourth largest producer of rocket motors and solid fuels.
which Lockheed may has taken in the last year or so of interest in terms the
You find the following brief review of the diversification steps of
February 1960. We acquired Colby Steel and Crane companies
subject of over-all company planning. Here they are in chronological
adding to our abilities in steel fabricating, shipboard and land cranes,
and materials handling.
sequence:
November 1958. We began civilian production of the JetStar, first
Now you should not get the idea that just taking such steps as these
small corporate plane we have built since the 1930s.
leads automatically to growth, or to diversification, or to a payoff in pro-
fits. None realizes this better than do we as we start the immense job of
December 1958. With Mexican industrialists, we formed an
digesting these expansion moves. We know that we have a big job ahead in
affiliate, Lockheed-Azcarate, to build light utility planes in Mexico.
integrating these new activities, nurturing them to substantial size, making
them profitable, and unifying them so that they contribute to an improved
March 1959. Lockheed Electronics & Avionics Division was
return for our shareholders.
created.
We expect the major part of our sales and earnings in the next few
facture F-104G Starfighters under license. Canada, the Netherlands, and Japan,
March 1959. We signed an agreement for West Germany to manu-
years to come from aircraft, missiles, and spacecraft -- the more tradi-
tional fields for our company -- but we hope that our diversification steps
and Belgium, subsequently selected the Starfighter for defense use
constitute a foundation for future growth. This is a tough league, and we
manufacture in their countries.
are approaching it with deep humility -- "running scared".
March 1959. Lockheed bought Puget Sound Bridge & Dry Dock
In Figure 2 we show schematically how the structure of the Lockheed
Company, Seattle shipbuilding, ship repair, and heavy construction firm.
company is changing as a result of these recent moves. The inner ring is the
March 1959. Lockheed's role in Project Argus high altitude that nuclear
traditional area of our company's business: By far the largest part of our
volume is in the manufacture of commercial and military aircraft. In 1959
detonations was revealed. We later participated in space probes
this was 48% of our volume -- but for the first time the proportion fell to
identified and measured radiation in the Van Allen belt.
less than half the total. Add to this percentage another 9% or so for air-
April 1959. We formed Lockheed Aircraft International as a wholly
craft modifications, repair, and services of various kinds.
owned subsidiary to develop and expand foreign opportunities.
In the next expansive ring is 39% of our business -- in missiles,
1959. Lockheed announced an agreement to acquire Stavid
satellites, and space research. And inthe outer ring is the remaining per-
Engineering, May versatile military electronics firm. Stavid became a wholly
centage represented by shipbuilding and general heavy construction
owned subsidiary in September.
GERALD
TIBRERY
-59-
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work a field that we entered less than a year ago and other peripheral
activities.
In 1957 our Policy Committee decided to markedly expand the di-
You will notice, too, that our chart shows progress toward diversifica-
versification studies underway in the Corporate Development Planning
tion even in our traditional fields. Aircraft manufacturing and service is
Department, and so a Diversification Task Force was organized in the
diversifying into scientific and industrial products of various kinds, nuclear
late summer of that year. More recently, the company has found it timely
research and products, and electro-mechanical devices and instrumentation.
to augment the market research activities of the Corporate Development
And there is increasing emphasis in foreign aircraft sales and manufacturing
Planning Department through the establishment of a Market Research De-
programs to the point that we now have a substantial backlog in this area
partment under the Vice President-Sales. In addition to company planning
and are active in a dozen or so foreign countries.
at the headquarters level, defense planning in a somewhat narrower sense goes
on throughout much of our line organization.
And our newer ventures are diversifying. From the missile field
we are moving into electronics, both military and industrial, and into
propulsion. And in shipbuilding we are spreading into steel fabrication,
Two Applications of Company Planning at Lockheed
cranes, and oceanography.
Against the backdrop of this brief description of the evolution of com-
We fully understand that to bring these new activities to the full
pany planning at Lockheed, a couple of examples of how the results of such
realization of their potential will take considerably money, management,
planning have been applied will be presented. Our first example concerns
technical effort, and time.
the Lockheed Missiles and Space Division. In World War II days, Lockheed
began a program of research, development and engineering in the field of
But the changing nature of our business has made such risk-taking
pilotless aircraft and their control systems. By 1953, when the Corporate
necessary, we believe, if our company is to grow. Our goal in over-all
Development Planning Department was established, the Company had estab-
company planning has been to select these diversification steps carefully
lished a competence in this new field. One of the very first projects under-
so that they eventually, along with perhaps other new moves, will fill in a
taken by the Development Planning Department was a review of the U. S.
reasonably complete spectrum as we see it.
guided missile situation, and a qualitative estimate of the outlook for this
product/market area. Partly on the basis of the resulting recommendations
Clearly, non-military opportunities are of increasing interest these
of the Development Planning Department, and partly on the basis of manage-
days to those concerned with over-all company planning in the defense
ment's intuitive recognition of the ultimate importance of a bolder approach
industry. But, in keeping with the theme of this seminar, we shall con-
to this new product/market area, Lockheed established a Missiles Systems
centrate on the defense side of the house as we discuss the evolution of
Division in November of 1953. In the words of Mr. Gross's announcement,
company planning at Lockheed, and describe two selected applications of
the "immediate effort of the new division will be in research and development,
such planning.
but our long-range objectives cover the design, development and manufacture
of pilotless guided missiles and their systems." He further called for
"expansion at once on all fronts of missile system research and development."
Evolution of Company Planning at Lockheed
Another example of the application of company planning at Lockheed is
It is fair to say that over-all company planning has always gone on
manifested in the new corporate entity known as Lockheed Electronics Com-
within the Lockheed organization as in all companies; however, prior to
pany. As in the case of missiles, Lockheed has been engaged in military
1952 such planning was done informally by the Company's key operating
electronics activity for many years. Our competence in electronics had its
executives. As their operating duties permitted, these executives would
beginnings in the 1940's when we procured and installed large volumes of
from time to time discuss our industry's problems and prospects with
electronics systems in military and commercial aircraft. Such activity led
government, military, and civilian people. From such exchanges, and
to the design and redesign of a variety of electronics gear for practical
from their depth of experience in our business, these senior operating people
application. In those early days we adapted electronics into a rocket-firing
planned and guided the affairs of Lockheed. However, late in 1952, recog-
radar-lautopilot combination that made possible the F-94 Starfighter series
nizing the need to "provide more effective management of our company
as an effective all-weather interceptor. Our P2V Neptune, introduced at
under new and changing conditions", Lockheed separated the over-all corporate
the end of World War II, has electronic devices that even today make it a
functional and policy-making responsibilities from operating responsibili-
prime Navy aerial weapon for locating and destroying submarines. Our
ties. This move toward decentralization reduced the operating load on the
RC-121C and WV-2 flying radar stations, built for the Air Force and Navy,
Company's senior officers, and permitted them, as the newly constituted
carry tons of radar and other electronic equipment to keep a look-out for
Corporate Policy Committee "to devote more time and effort to extensive
approaching enemies and to help guide fighters to the attack.
long-range planning and the determination of basic policies." The Corporate
Development Planning Department was established early in 1953, to provide
In the 1950's, as Lockheed's missile capabilities grew at an increasing
staff support to the Policy Committee's long-range planning responsibilities.
rate, so did our competence to undertake the research and development,
engineering and production of military electronics systems. Responding
to the apparent shift in the relative and absolute importance of electronics
-60-
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missiles, as well as systems and devices designed to improve human
productivity in processing of materials by utilizing automatic controls and
product programming. The Engineering Service Division will provide field
in the military product/market area, Lockheed's Development Planning
service on all LEC products and systems after the equipment becomes opera-
Department, Diversification Task Force and Missiles and Space Division
tional.
carried out a series of planning studies in the middle 1950's which led to
the establishment of an ad-hoc Electronics Task Force in 1958. As a result
of the work of this ad-hoc group, and of the continuing work of the Diversifi-
Some General Comments on Defense Market Planning
cation Task Force, Lockheed established a new Electronics and Avionics
Division in early 1959, and acquired the Stavid Engineering Company later
So much for the application of company planning at Lockheed. We shall
that year. As the Stavid acquisition was completed last September, we under-
conclude our remarks by presenting a few observations on the general
took several company-wide conferences, including all divisions and subsi-
subject of defense market planning.
diaries, for the purpose of finding ways and means to lessen duplication and
make our total electronics program more effective. Concurrently, we re-
Figure 3 graphically illustrates our view of the three pillars of success-
examined the historical characteristics and future outlook of the electronics
full defense planning:
market.
A realistic appraisal of the technical outlook
We look for a continued rapid expansion in the demand for the products
of the electronics industry, and we confidently expect that this market will
An informed understanding of military needs
double in size during the decade of the 1960's. Before discussing our present
view of the military electronics outlook, we would call your attention to the
A careful assessment of likely economic constraints.
industrial sector of the market shown on Figure 1. As you can see, we look
for the industrial] electronicsi business to turn up sharply in the middle '60's,
We submit that the important challenge to planners in both the DOD
and to exceed the military and space sector by the end of the decade.
and industry is the achievement of the preferred temporal phase-matching
of technical feasibility and military requirements within the constraints
It is our feeling that, reflecting the changing mix in weapons systems,
of the military budget.
during the next decade the level of procurement of electronics related to
aircraft will steadily decline, whereas expenditures for electronics related
The assessment of likely economic constraints on the Department of
to missiles and space vehicles and to their ground environments will increase
Defense is a many-sided task, and many very able men are wrestling with
by a factor of 2. During this period, research and development expenditures
it. For one thing, the economic outlook of the United States is of pertinence.
in the field of electronics are expected to increase by an order of magnitude,
Perhaps of even greater importance is the international political situation,
reaching an annual rate of moe than $1 billion by 1970. As missiles and
particularly the likely trend in the East-West conflict. As suggested earlier,
space systems become progressively more important, the share of the total
the inability of the best of planners to cope with the uncertainties in this
DOD and NASA procurement and research and development expenditures that
area sometimes inclines one to establish what he considers to be the most
are devoted to electronics is expected to rise, from about 1/5 of the total in
reasonable ground rules regarding this key variable in order to carry for-
1958 to perhaps 1/3 of the total by 1970.
ward the planning process. Then there is the U. S. domestic political situa-
tion which affects the resources available to the federal government, and the
As an outgrowth of this company-wide electronics planning, at the
disposition of these resources among competing non-defense, as well as
end of 1959 we combined Stavid Engineering and the Lockheed Electronics
defense needs.
& Avionics Division into our new Lockheed Electronics Company.
Turning to the technical pillar of defense planning, it is probably fair
The Lockheed Electronics Company (LEC for short) has four operating
to say that technology, and its underlying basic and applied research,
divisions organized to develop further the military competence we already
is of dominant importance in the achievement of a superior military posture.
have, and to build along the most logical lines possible to meet the require-
It has been said that technical eminence is a never-ending race; as Figure 4
ments of government and civilian customers. The four divisions are
suggests, the pace of this race seems to be quickening. Advances in tech-
supported by an LEC headquarters staff which, as shown on the slide,
nology, spawned by the work of our, and our adversaries', basic and applied
includes planning as one of its five functional groups.
research laboratories, permits of the development of weapons of war of
ever-increasing effectiveness. At the same time such advances subject the
The Military Systems-Stavid Division of LEC will do research, develop-
existing inventory of weapons to a high rate of technical obsolescence.
ment, manufacturing and marketing of electronics systems and sub-systems in
the government market area. Among the areas of concentration of this divi-
For the moment entering the dream world, were it not for the fact of
sion will be air, ship and ground-based radar; ASW; fire control; and missile
economic constraints, the planners in the military establishment and the
guidance. The Information Technology Division will engage in the development
defense market planners in industry might create a reasonably satisfactory
and marketing of systems and products dealing with the transmission,process-
analytical model as a tool for coping with their problems. If cost were no
ing, storage, retrieval and display of data. The Avionics & Industrial Products
Division will develop, manufacture and market devices related to aircraft and
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object, the performance of the weapon systems in the active inventory could
be made to always closely approach the state-of-the-art limit, through the
costly processes of compressing design and production lead times and fre-
To sum up, this matter of planning in the defense area is clearly an
quently replacing the active inventory with brand new models.
iterative process. The key variables in the process are the state-of-the-art,
the defense requirements and the available resources. The key participants
But cost is an object a very compelling object these days which
are the military establishment and the defense contracting industry; indeed,
brings us back sharply to the statement that the key challenge to defense
it seems to us that in many respects the defense industry is an integral part
planners is the achievement of the preferred phase-matching of technological
of the over-all U. S. defense establishment. In the light of these closely
feasibility and military needs within the constraints of the DOD budget.
related, common interests, it makes sense for planners in the DOD and in
Figure 5 schematically illustrates this challenge.
industry to cooperate ever more closely and frequently in the task of match-
ing defense needs with timely systems in order that our country might achieve
Consider, if you will, that as a result of research programs underway
the maximum defense for the resources expended.
here and abroad the state-of-the-art available to the system designer is
inexorably advancing with time. The outlook for the state-of-the-art available
is critically dependent upon when the snapshot of the outlook is taken -- for
even the best of planners cannot foretell with certainty the trend in the normal
evolution of technology - much less the breakthroughs. Referring again
to Figure 5, let's assume that the situation presented there is as viewed today,
to" Based on our to assessment of the threat, of the trend in the state-of-the-
art available and of the economic constraints likely to prevail, we estimate that
a certain weapon system must be replaced by a new, advanced system at some
certain date in the future, let's call it toperational.
The military planner charged with laying the ground work for the intro-
duction of an advanced system at time toperational, or the defense contractor
hopeful of successfully competing to supply a system. to replace the existing
system at toperational, might visualize three alternative choices, let's call
them System A, System B and System C. Consideration of System A may
indicate that it offers performance characteristics noticeably superior to
those of Systems B and C; but upon further analysis it may be apparent that
the state-of-the-art required to bring System A into operation exceeds the
state-of-the-art "available" at toperational, and far exceeds the state-of-the-
art "available" at the time that the decision must be made to go ahead with
the design and production of the system to meet the operational date. In the
overly simplified situation thus described, the prudent planner would reject
System A. Similarly, he would likely reject System C on the basis that even
though it is superior in performance to existing systems, and requires a
state-of-the-art beyond that currently available, by the critical time toperational
the performance of System C will be significantly inferior to other systèms
(such as System B) which can, with reasonable design and production lead
times, be introduced by toperational. So, on the basis of this schematic
approach, a planner viewing the situation at to would likely conclude that his
best bet is System B, and that he should be ready to participate in competitive
study and proposal activity at t₁ with the goals of obtaining a contract at
tgo-ahead and providing an operational system at toperational.
It should be noted that such planning based on today's assessment of the
situation should be carefully reviewed at t1, and at intervening periods, in
order that it might be determined if the dynamic changes typical in the defense
business have markedly altered the situation as it seemed to exist at to"
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THE KEY PILLARS
OF DEFENSE PLANNING
COMPANY PLANNING AN OVERVIEW
FIRMS
FINAN-
N
CIAL
ARTS
EMB'S
SUCCESSFUL
PLANNING
TECHNICAL MILITARY ECONOMIC
OUTLOOK NEEDS CONSTRAINTS
PHYSICAL RESEARCH D.T.4E ENG'S RESEARCH ENG'O PRODUCTION ARESOURCES.COM R.O.1. GROWTH ASSESSMENT COMPETITION COMPANY FORECAST LIKELY $ PROJECTION- -COMPANY IMO COMBILITIES NEL FINANCE PLAN FUTURE BUDGET ING
941
Commox
INV.
PLANT
EQUIP'T
EMPLOYEES
TECHNICAL EMINENCE IS A
LOCKHEED
BUILDING
NEVER-ENDING RACE
AND
1960
BRIDGE
D
SATELLITES SPACE MISSILES
DRYDOCK
AND. SPACE
DIV.
SYSTEMS
STEEL
CRANE
LOCKHEED
LOCKHEED
CALIFORNIA
AIR
DIV.
D
0
TERMINAL
NUCLEAR
AIRCRAFT
STEEL
LOCKHEED
GEORGIA
LOCKHEED
LOCKHEED
NUCLEAR
AIRCRAFT
TECH
PRODUCTS DIV.
AIRCRAFT
STEEL
CORP.
SERVICE
FAB.
D
0
FINANCE
GRAND
NOLOGY
PACIFIC
AERO-
CENTRAL
FINANCE
AZCARATE
NAUTICA
ROCKET
co.
LOCKHEED
MACCHI
(MEXICO)
AIRCRAFT
THE BEST OF PLANNING
INTERNATIONAL
0
ELECTRONICS
IS FOR NAUGHT
ELECTRONICS
CO.
WITHOUT COMPETITIVE
0
OTHER
FOREIGN
TECHNOLOGICAL BASE
VENTURES
A KEY CHALLENGE TO DEFENSE PLANNERS:
PHASE MATCHING OF STATE-OF-ARTS
-REQUIRED and -AVAILABLE
TAVAILABLE
STATE-OF-ART "REQUIRED'":,SYSTEM A
STATE-OF-ART "REQUIRED":
SYSTEM B
PERFORMANCE
FIGURE 5.
STATE-OF-ARTS PARAMETER
STATE-OF-ART
"REQUIRED":
SYSTEM C
STUDY &
DESIGN &
PROPOSAL
PRODUCTION
LEAD
LEAD
TIME
TIME
to
t1
Go-ahead
Operational
GERALD
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19XX
19XX
19XX
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FORD
LIBRARY
Dinner Address
Hon. Gerald R. Ford, Jr.
(R. Mich.)
on
$
ГЛЯА-70-ЭТАТЕ
Ranking Minority Member of Armed Services Subcommittee
House Appropriations Committee
7
AKEA СНУГГЕИСЕ 10 DEŁENSE
GERALD -69- FORD LIBRARY
CONGRESSIONAL RESPONSIBILITY IN DEFENSE PLANNING
Presented By
Gerald R. Ford, Jr.
Mr. Chairman, participants in the Seminar on Defense Market Planning,
and guests. It is a high honor and a rare privilege for me to have the opportunity
to participate in this function this evening. But first I think I ought to set the
record straight.
It is always dangerous for anybody in political life to appear under false
colors, or to participate in an unfamiliar area.
I have strong aversion toward those in political life who place a halo over
their heads and march down the road pushing people aside, just because of a
reputation.
I had an experience a few years ago, when I first became a member of the
House Committee on Appropriations, which certainly set the record straight as
far as I was concerned.
Back in 1951 I was a member of the so-called River, Harbor and Flood Con-
trol Subcommittee, better known as the "Pork Barrel Subcommittee" on
Appropriations. Back in those days, we were trying to curtail and reduce spending
in so-called non-military areas, so that we could devote a greater part of our
appropriations to the military effort in Korea.
The five of us on this subcommittee, both Democrats and Republicans,
took a very stern and I think justifiable viewpoint that no new projects would
be inaugurated in this next fiscal year.
We came to the floor of the House with an Appropriation Bill that was, to
put it mildly, austere, and we thought our handwork was well done and something
that would be universally acceptable.
Lo and behold, when we hit the floor of the House with this very tight budget,
we were met with not universal support, but overwhelming condemnation by our
colleagues.
Each of the five of us took our turn in trying to defend our handiwork.
Being the junior member of the minority side on this particular subcommittee,
I came last in trying to justify our action. I took lots of books and papers down to
the floor of the House to make this erudite exposition of why we had done what we
had done. After speaking thirty minutes or so with considerable self-satisfaction
GEBALO -70- FORD LIBRARY
71- VIBRARY
Just yesterday, Lieutenant General Authur Trudeau, Chief of Research and
Development for the Department of the Army, said to our Subcommittee something
and pride in my own comments, I walked up the center aisle. I got about halfway
which really opened my own eyes, and I quote.
up, and a good friend of mine, a Texas Democrat, reached over and grabbed my
arm. He Said:
"Electronics in general has seen a ten-fold increase since World War II and
another ten-fold increase can be expected by 1970. This is the fantastic area of
"Jerry, that is the best Texas longhorn speech I ever heard."
development where the old vacuum tube circuits are now being micro-miniaturized
to one-tenth, one-hundredth, and one-thousandth of their original size and volume.
Quite frankly, I was apprehensive as to what he had in mind. But I asked
This means a tremendous savings in bulk, weight and power requirements for an
him:
across-the-board application to all types of Army equipment."
"Ken, what do you mean by a Texas longhorn speech?"
This statement was highly significant to our Subcommittee and to me.
And he smiled very sweetly and he said:
This was followed by another statement by General Trudeau's deputy, which
made a tremendous impression on me.
"Jerry, down in Texas a longhorn speech is one that has two points far, far
apart, with plenty of bull in between."
"We know that if we go to war today, an Army Corps will have 23, 000
electromagnetic emission devices in an area sixty miles on a side, whereas there
I can assure you I have been somewhat self-conscious and apprehensive
were something like 9, 000 such emissions or devices in use in 1958, in the same
about any speech I have made subsequently.
area."
Now, to be honest with you, from past experience I would feel much more at
These kind of facts and figures in very technical sense certainly make me
home here this evening if I were making a purely political speech. Not that I
apprehensive and a little bit uneasy when I try to talk to an audience such as this.
necessarily do too well in that kind of an arena, but I can assure you I am more
accustomed to that atmosphere.
It seems to me, as I have read this summary of the history of the electronics
industry, that it is truly an Horatio Alger industry. And furthermore, in my
I might say that, bearing in mind the tenor of this seminar, I resisted some
opinion, the industry could not have grown as it has by leaps and bounds unless
temptation and rejected any such kind of a speech, because it is my impression
there had been among you, before and now, individuals who in their own right are
and my feeling that you people here are in this seminar for other purposes.
Horatio Algers.
However, I would also feel much more at home making a speech if I were
It is my judgment and opinion that the electronics industry could not have
presenting, as one of the members of our subcommittee, the Defense Department
grown with such spectacular success to the point where, one, it is one of the most
budget to the other members of the House of Representatives not because I am
vital contributors to our national security, or, two, it is one of the most essential
any real expert, but on a relative basis, I might know a bit more than some of
elements in America's industrial growth and efficiency, or, three, it is one of the
my colleagues.
most helpful and beneficial contributors to our day-to-day enjoyment of the fabulous
sixties without, one, the inventive and scientific geniuses that are with you, and
But I am a little apprehensive here this evening, because in talking to you
two, the management wizards which I am sure must have been before and present
people, I am faced with a very sophisticated, a very knowledgable audience, on
today, and, three, the 700, 000 skilled workers who produce the products of those
issues that are certainly highly technical and very comprehensive in their scope.
who invent them and manage them.
I might also say that I feel a bit uneasy because I have met some of you in
I might also say that I feel a bit ill at ease tonight because in this distinguished
this distinguished audience and know others who represent a substantial portion of
audience there are members of the Army, the Navy and the Air Force team, who
one of America's great industries.
together make up the most powerful, the most versatile and the most alert military
force in the history of the world.
In checking the facts and the records during the last week or so, I have
found that the electronics industry is the fifth largest manufacturing industry in
The military history of the United States covers more years and more pages
America. Secondly, it is an industry which, in the short span or relatively short
in our record books than the history of the youthful, or relatively youthful,
span of fifty years, has grown from the invention of relatively simple vacuum tube
electronics industry. Each of the military services has had its renowned leaders
to the phenomenal sales record of about eight billion dollars in production in a
and its periods of greatest glory. Never once, to my knowledge, have our military
single year.
leaders failed us in a time of crisis. I am confident that our military leaders of
this era will give America the preparedness to maintain our national security in
The magnitude of the electronics industry really does not hit the public
the months and years ahead.
with the impact that it should. Even some of us who deal with military appropriations
on a day-to-day basis, year after year, five or six months each year, do not
appreciate the situation as we should.
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-72-
That reminded me of a story that was told to me by an older member of
Now, although I am a bit self-conscious in such a group of experts from two
Congress the first year I served in the House, back in 1949. He had been in the
groups with distinguished records, I can say with conviction I am bolstered a bit
House for thirty years, or thereabouts, and he came over and he sat down beside
by the fact that I speak to you tonight as a representative of the freest and, I believe
me on the floor of the House one day and he said, "Jerry, do you know the defini-
the finest legislative body in the history of the world. It should be obvious to all
tion of a Congressman?"
of you that the Congress has its odd and sometimes time-consuming ways of doing
things, particularly at the present time. But in our nation's history, I say with
Being very deferential to someone with all that seniority, and with my lack
all the vigor at my command, that it has made its full share of contributions to our
of it, I said, "No, I do not.'
nation's progress and success. I can say without hesitation or qualification that
in our comparison to all other legislative bodies in the history of man, its record
He said, "Well, the definition of a Congressman is the shortest distance
is unmatched.
between two years."
Now, thus far in my comments I have tried to be generous and complimentary
I can assure you that is true. And anybody who has that term of office can
to the electronics industry, the United States Armed Forces, and the executive
hardly in many respects make commitments on a long-range planning program.
branch of the government generally, and to the Congress.
But I do think that Congress as a whole, regardless of individuals, can
In the past, each group or organization has met every challenge with a re-
make a contribution so that we can get, in my judgment, more defense per dollar
sponse that has overcome the obstacles of the day.
through planning.
However, each of you know, as I do, that such success in the past does not
First, there should be a stabilization of funding at an adequate level.
insure victory in the future. We only win the battles of tomorrow, or the battles
ahead, if we do the following things.
Anybody who studies military appropriations over the last fifty years in
the United States cannot help but be struck with the fact that our policy up until
One. Admit our weaknesses and errors.
recent years was one of funding the military programs on a feast-or-famine,
peak-and-valley basis.
Two. Come up with some new ideas once in a while.
Before World War II there were relatively limited appropriations made for the
Three. Work together on mutual problems.
Army and the Navy. From that low level of funding, we went to the astronomical
heights of $70 billion or $80 billion a year during World War II. At the end of
Four. Work just a bit harder.
World War II we went down to the valley of about $13 billion in military appro-
priations. The Korean War awakened us to the problems at our doorstep, and
Five. Dedicate ourselves ever increasingly to our American System.
we zoomed back upward to an annual appropriation figure in the neighborhood of
$60 billion or $70 billion per annum.
Now, today in the series of seminar or discussion groups that you have
participated in, covering a period of about twelve hours, as I figure out the
I think anybody who is objective will come to the conclusion that this
schedule, you have attempted to seek methods of obtaining more defense per
feast-and-famine, peak-and-valley program of military funding is costly in time,
dollar through planning.
it is costly in dollars, and, unfortunately, it is costly in American lives.
In all sincerity, I wish it could have been my privilege to be a listener
Such a program was abandoned in 1953, and since that period of time, a
in some of your discussions during the morning and afternoon sessions. I could
relatively high and relatively stable military appropriation program has been in
have benefitted immeasurably by being in those discussion groups and listening to
being. I for one subscribe to and wholeheartedly endorse such a policy.
the comments made by you experts.
Fortunately, the Congress has bought such a policy, although we seem to have
from time to time some differences of opinion within limited areas as to what is
I am confident that whatever is accomplished by this meeting, or others
enough or what is too much. But nevertheless, compared to the days before
comparable to it, will be derived from cooperative or joint effort.
World War II, and compared to the days before Korea, our military appropriation
program today is infinitely superior, both in stability and as to adequacy. This
My part of the program today involves what Congress can do to get more
is a good program.
defense per dollar through planning.
Now, this relative stability and relatively high rate of spending does not
As I sat thinking about what contribution I could make here today, I wondered
mean, in my judgment, that a military appropriation bill should be immune from
how a Congressman could make a contribution in military planning. When I think
Congressional investigation and Congressional action. As a matter of fact, under
of planning, I think of the long-range program that should be laid out and carried is
the Constitution, that is our responsibility -- those of us both in the House and in
on. Now, in the House of Representatives, we have a two-year term, which
the Senate.
comewhat restrictive in how we can participate in a long-range project.
GERALD FORD -75- LIBRARY
-74-
It is my judgment that in the main those directly responsible in the House
I am a little prejudiced and I may be treading on dangerous ground, so I
and the Senate make a conscientious effort to exercise good judgment in this area.
should not speak too lengthily on this subject. But for the life of me, I cannot
see the necessity or the requirement for an annual authorization, in addition to
I might also say that the threat or the reality of Congressional investigation
the annual appropriation. I am positive that this double analysis and action by
of proposed funding programs helps to sharpen up a bit the programs that have
the Congress in these three vital areas military construction, National
been approved by the executive branch of the government.
Aeronautics and Space Agency, and aircraft, missiles and ships - will extend
and expand the lead time in getting the job done.
I have talked individually with witnesses who have come before our
Committee, and they have said that this experience of being interrogated by some
A good example of that is the experience we had during the last session of
by some of the sharper and more incisive members of our Committee makes them
the Congress, when the budget, the actual obligation authority for the National
become more certain of the justification of what they are proposing to the Congress.
Aeronautics and Space Agency, did not get approved until the last days of the
Congress. The reason for the delay in appropriations was the delay in approval
And so, through this process, I think we do get more defense per dollar in
of the authorization bill.
the United States.
In the area in which the National Aeronautics and Space Agency operates,
Secondly, I think Congress can get more defense per dollar through prompt
at least at the present moment, time is of the essence, and Congress, in my
Congressional action on the annual appropriation bill for the Army, Navy and Air
opinion, was negligent in imposing this dual submission on the executive branch
of the government.
Force.
Most of you know that the President submits to the House and the Senate the
I hope that we see the wisdom of removing this requirement in the days
budget in January of each year. It would be expected that this appropriation bill
ahead.
would become a matter of law by the beginning of the fiscal year, July 1. In
checking the history of recent appropriation bills for the Department of Defense,
Now, this requirement not only extends lead time, which many of you
I find this not to be the case that only one out of the last ten military appropriation
people are trying to reduce, but it also adds to the cost of getting the job done.
bills from fisca 1 year 1951 through fiscal year 1960 was enacted into law by the
beginning of the fiscal year involved.
I happened to be reading a trade publication the other day which reported
some testimony before one of the House committees on this problem by Brigadier
It was October in one year when the appropriation bill became law. And it
General Robert J. Friedman, Air Force Budget Director. I suspect that General
seems to be traditional that the military appropriation bill will become law in
Bill Lawton of the Army and Admiral Lot Ensey of the Navy would concur in these
observations. But let me read what Bob Friedman had to say about this dual
either late July or August.
requirement.
This, of course, puts the military appropriation bill well into the next
fiscal year. As a matter of fact, it almost overlaps the preparation of the mili- of
"We cannot identify which dollars applied to a given aircraft procurement
tary appropriation bill for the next fiscal year, as far as the executive branch
are new appropriations, which are recoupment dollars, or which are reimburse-
the government is concerned.
ment dollars. In fact, any attempt to do so would require a complex and costly
additional accounting system and would serve no useful purpose. Instead, the
It is my strong feeling that Congress could do a service to the executive
Air Force hopes to retain flexibility to increase or cut amounts applied to
branch of the government, the military and industry, if we would get the military
given line items of the program to allow for changes in requirement, changes
appropriation bill out of the way, into law, by the beginning of the fiscal year.
in priorities, or technological development."
It has been done as an exception. I can say to you that it looks like it will
It seems to me that this annual authorization and appropriation action
be done for fiscal year 1961 not because of the urgency of military matters,
certainly is bound to add cost to our defense and related programs.
but because of the urgency of certain political matters.
It is obvious, of course, that having to appear before four committees of
Thirdly, I think Congress can get more defense per dollar if it would remove
the House and the Senate, rather than two, places an undue burden on those who
the requirement for annual authorizations, in addition to annual appropriations. well As
have the responsibility of justifying and executing the programs. This is a waste
most of you know, in three areas today we require an annual authorization as
of manpower, in my judgment, without any compensating benefit in the long pull.
as an annual appropriation. One is in military construction. This has been tradi-
tional for some time. Since 1958 we have had this requirement as far as the
So on the basis of lead time, cost and effort, it seems to me Congress could
National Aeronautics and Space Administration is concerned. Thirdly, since 1959
help in this area by doing away with the requirement for annual authorizations plus
we have been faced, I might say, with the threat that this onerous task will be
appropriations.
thrust upon us in the area of operational aircraft, missiles and ships.
Fourthly, I think Congress can get more for the defense dollar by closer
contact or liaison between industry and the legislative branch of the Congress.
BERALD FORD -760 LIBRA
-77-
Those of you who are familiar with the process that we go through each
year know that the respective members of the House and Senate, in committee,
get primarily the justifications given to us by the witnesses from the military
and executive branch. I do not quarrel with the competence or the integrity of
certain and positive we would get more defense per dollar from the money that
the taxpayers make available for these programs.
those who testify. But I do not think all the wisdom in these areas resides in
those who come before us.
by inflexible legislation, the full utilization of knowledgable personnel, either
Seventh, Congress can get more defense per dollar if we do not hamstring,
It seems to me that we, on a committee such as the one I serve, could
civilian or military.
benefit immeasurably from some assistance from industry.
Now, unfortunately, because we have had in the past some long and extended
Many of you may not be familiar with the fact that last year, during the
consideration of the appropriation bill for the Army, Navy and Air Force, on the
sessions of the Congress, it is not practical for us on the committee to get out
and have opportunities to meet with industry as I think we should. And I do not
floor of the House, an amendment was offered which read as follows, and I quote:
believe that our committee, for example, should being in industry to testify
"None of the funds contained in this title may be used to enter into a
before it, but we can accomplish the same result by a different method.
contract with any person, organization, company or concern which provides com-
pensation to a retired or inactive military or naval general officer who has been
It would be my hope that if we have shorter sessions and more concentra-
tion, it will mean that our committee, and others, could individually and collectively
the date of enactment of this Act."
an active member of the military forces of the United States within five years of
visit industrial facilities, talk with those in industry, so that we get more than a
onesided or single-sided viewpoint. I think it would be helpful and beneficial to
those of us on the committee who go through this process every year.
Subcommittee. That was offered on the floor of the House without prior warning to our
Fifth, I think Congress can get more defense per dollar if it would forget
local geographical pressures.
The first vote was 130 in favor of it and 131 opposed. That was a fairly
negative. close margin. On a subsequent vote, it was 125 in the affirmative and 147 in the
Now, I admit at the very outset this is an idealistic and utopian prescription.
But looking at the way the system operates, I find that in too many instances local
interests are more interested in keeping a plant going that they are in the Defense
It is almost incomprehensibleto me to visualize the harm and damage that
would have been done to our defense effort if such legislation had been enacted
Department getting the most for its money. And I also find that local interests
into law. But I say to you that Congress apparently, or at least one branch of the
and I admit they may be well-intentioned - are sometimes interested in the con-
Congress, was somewhat tempted to enact such legislation last year.
tinued production of products, despite the factthat those products in the rapidly
changing world we are in may be obsolescent or obsolete.
The net result of the introduction of this amendment to the appropriation
bill was the Hebert study and proposed action in the same area.
It seems to me that in reaching for the new military objectives which we
must consider our national survival will be the foremost and, I hope, exclusive
I am not an authority on what Representative Hebert and his subcommitted
prerequisite.
have proposed, but I say to you, as I have said to people elsewhere any restrictive
legislation which limits the utilization of knowledgable people in my judgment
It is obvious to you, as it is to me, that Congress, on occasion, disrupts
would be harmful and detrimental to the defense program of the United States.
sound military planning and inevitably adds to defense costs if it succumbs to
local pressures.
I am familiar with some of the arguments which have been made that certain
things would result because of past contacts, friendships and so on. I happen to
Sixth, Congress can get more defense per dollar if it would eliminate
have more faith in the American people, in all areas, and consequently I have no
partisan policies for the consideration of defense policies, programs and
fear of this threat as far as we are concerned.
fundings.
Eighth, in my opinion, Congress can get more defense per dollar if we en-
Again, I must admit that this may be a bit idealistic and utopian; particu-
courage invention, not roadblock it by restrictive legislation. The most recent
larly in a presidential election year. But I must say, and I say this with deep
area where Congress has, in my judgment, roadblocked progress, was in the
conviction and sincerity, that the chairman of our Subcommittee, Congressman
National Aeronautics and Space Act of 1958. I trust this provision in the law will
George Mahon of Texas, in my judgment approaches the problems of defense
be amended.
spending and the problems of defense programming and planning as objectively
as any member of Congress that I know. I do not always agree with him. But I
At the outset, let me make this thought clear. No one can conceivably
can say that he sets a high standard that could well be followed by others in
either the House or the Senate. And if such a standard were maintained, I am
object to the normal procurements where proprietary rights are freely given by a
company in those cases where the government supports all or a major portion of the
FORD
research and development program. However, our individual scientists and our
GERALD
LIBRARY
small busine ssmen need the protection of patents to give them both the incentive
-78-
and the opportunity to prosper and to grow, to invest their time, their money and
FORD
their prestige in enhancing our country's progress.
-79-
LIBRARY
Our large industrial organizations need the protection of their proprietary
rights, to give them the full incentives required to cause them to make large
investments in well-equipped private laboratories, manned by highly skilled,
trained and well-paid scientists.
Those people who propose the exclusive control and use of the patents by
the government in commercial fields are mistakenly evoking the principle that
the state should control basic rights, the know-how and the means of production.
The bald, cold facts of life are that if we wish to deter the Communists
from overt military action, if we wish to defeat the Communists in the market
places of the world, then we must fully implement our free enterprise system.
We must provide every reasonable and proper incentive in profit and prestige
to provide both technological advancement and high volume-low cost production.
My final point is that Congress can get more defense per dollar, perhaps,
by the establishment, by legislation if necessary, of an independent and continuing
National Defense Planning Group, which would encompass or have within it
knowledgable representatives from industry, from the executive and military
branches of the government, and the legislative.
Perhaps this again is utopian and idealistic, but it seems to me, as we
face the threat that we do face, we must come up with something that could be
helpful in the days and months and years ahead.
We know, perhaps in this group better than in others, that this country
faces a full spectrum of challenges -- eduation, the growth and strength of our
economy, our military posture. This challenge, it seems to me, can be met,
but I do not think it can be met by sunshine soldiers or summer patriots. And
you cannot make footprints in the sands of time by sitting down.
As we face the challenge, those of us here and our fellow citizens can be
confident that if we rededicate ourselves to the principles that have brought us
in America to the high level of success that we have today, we should have no
fear for the future tomorrow.
GERALD FORD -80- LIBRAR
Procurement Trends
CONTRACT
STUDY GROUP ON 'SINGLY MANAGED' COMMUNICATIONS will
probably turn out to be one of the busiest groups of studiers going, is going to
have to work hard to come up with any results at all. Because of the basic nature
of communications to any sort of military operations, each of the services has
heavily vested interests, will be reluctant to let go of what they have.
TYPICAL ATTITUDE IS ONE OF SKEPTICISM, as expressed by one high-
ranking communications officer: "What we have so far is agreement in principle,
which isn't much of a trick to do. What is still needed is agreement in detail,
and this is going to be tough."
OTHER ROUGH SPOTS IN THE ROAD THIS IDEA MUST TRAVEL
include funding and dubious advantages to be gained. To make all existing long-
haul communications compatible is going to run up a considerable bill for retrofit
type work. Because communications use-rates in all three services are high—
even in peace time-the amount of duplication to be eliminated is not all that
it appears to be.
SMALL BUSINESS CONTRACTING IS AFFECTED under recent changes
in ASPR's, with the requirement for Defense Business Subcontracting Small
Business Clause now written into all contracts over $1-million which offer a
chance for subcontracting. Short-form settlements on terminations may now
be used for procurements up to $2500, instead of the former $1000.
MEASURE OF THE IMPORTANCE OF ASW TO THE NAVY is offered
by one flag-ranker with the Atlantic Fleet: Almost all of the submarines we have
in the Atlantic have anti-submarine warfare as their primary mission. This is
because they are the best means to date of finding other subs, are not affected
by so-called "thermal layers" in the water, which render sonar useless.
THE ERA OF SOLID-PROPELLED MISSILES comes nearer, with the Air
Force announcement of a 1962 operational date for Minuteman, with first actual
squadrons set for 1963. First Polaris is due this year, and by '62 the sub-carried
missile should be available in some quantity. In Army's arsenal, first limited-
range (35 mi.) test of Pershing announced as being successful.
LIGHT WEIGHT ITALIAN-MADE HOWITZER is generating wide interest,
throughout NATO nations, appears likely to be incorporated in the Marine Corps
inventory here. Weighing only 2,860 lbs., the weapon can fire an average 5½
rounds per minute, will disassemble to five man-carryable pieces.
EXCELLENT RATE OF RELIABILITY FOR BULLPUP is being claimed
by the Navy-in the neighborhood of 90-95%. This is even more remarkable
since the missile is unpacked, loaded and fired with no checkout. Navy claims
savings because of this in the area of $7-million a year, and may apply it to
other missiles. Air Force, meanwhile, has announced plans to put nuclear war-
heads on their version of Bullpup.
SHORT MILITARY LIFE FOR THE M1551 Ford-built aluminized jeep
seems to be in the cards, with no money to buy the vehicle in this year's budget.
On the other hand, the M38A1 version, built by Willys is working well with the
Marines, with negotiations now in process for an added Marine purchase. In the
same area, Marines seem to be paying more attention to the Mechanical Mule
as a handy combat tool to have around.
MARCH 1960
47
Procurement Trends
Flexible Spending Bid
ment dollars, or which are reimburse-
Congressional Economic Subcommittee.
ment dollars."
Endorsed by House Group
McGuire said GSA will probably
He continued, "In fact any attempt
buy about $650-million worth of DOD
House Armed Services Committee
to so would require a complex and
supplies in fiscal 1960. FY 1958 figure
members tend to go along with a
costly additional accounting system
was $354-million. These are mostly
strong Air Force bid for retention of
and would serve no useful purpose."
commercial items purchased under
flexibility in a new law requiring
"Instead," he said, "Air Force hopes to
formal advertised bidding procedures,
double spending checks on operational
retain flexibility to increase or cut
he said.
aircraft, missiles and ships.
amounts applied to given line items
But, McGuire said 68% of total pro-
The group recently heard closed-
(of the program) to allow for changes
curement expenditures in fiscal 1959
door arguments that new legislation to
in requirements, changes in priorities,
under major weapons categories will
place operational weapons under sepa-
or technological developments."
continue under negotiated contracting
rate authorizations apart from the ap-
Under the existing system, Air Force
procedures. McGuire said the increas-
propriations would require a complex
may reprogram up $5-million, or in-
ing amount of defense money going
and costly additional accounting sys-
stitute a new program of less than $2-
into R&D rather than production
tem.
million, without prior approval by the
means there will be no reversal of the
While the law will not take effect
Secretary of Defense. Quarterly repro-
trend to use of more cost-reimbursable
until fiscal 1962, this year Defense had
gramming reports are submitted to
type contracts.
to submit a preliminary report on all
Congress.
He said that such contracts now
major weapon systems procurement
To retain flexibility, Friedman urged
represent 40.9% of military contract
and plans for financing them. Also re-
that this process not be changed.
dollars. He added that it was defense
quested was a plan to permit advanced
policy to use this type of contract only
authorizations of programs including
DOD Common-Use Items
when "the nature and perplexity of the
long lead-time items.
procurement is such that the cost of
Will Transfer to GSA
Brig. Gen. Robert J. Friedman, AF
performance cannot be estimated with
Budget Director, warned of the prob-
Defense Department plans to trans-
reasonable accuracy."
lems in applying line-for-line authoriza-
fer up to a million dollars a year worth
tions on weapon systems. He said, "We
of common use procurement items to
cannot identify which dollars applied
General Services Administration within
the next few years, Assistant Defense
GAO Charges High Costs
to a given aircraft procurement are
new appropriations, which are recoup-
Secretary Perkins McGuire told a Joint
In Nike Procurements
General Accounting Office has told
Congress that "unreasonably high"
prices were paid on more than $2-
MUROGRAPH
a new concept in visual control!
million worth of purchase orders for
Nike missile parts. Specifically criti-
LOW-COST VERSATILE EASY-TO-USE MUROGRAPH
cized were buying practices of Doug-
CHARTING & SCHEDULING SYSTEMS SIMPLIFY YOUR
las Aircraft Co., Inc., a subcontractor
MAINTENANCE. PRODUCTION. SALES, PERSONNEL.
on Nike-Ajax and Nike-Hercules air
COST. INVENTORY & COMPUTER CONTROL. (AND MANY
defense missiles.
OTHERS!)
GAO charged Douglas with accept-
THESE NEW MODULAR, STEEL WITH WHITE ENAMEL
BASIC UNIT
000
FINISH BOARDS AND PRECISION MADE SUPPLIES
BRING YOU HIGHEST VALUE AT LOW COST.
20" X 20" WITH
125
ing prices that were unreasonably
SUPPLIES, ONLY
high when compared with previous
19 MOHAWK DRIVE
costs in ordering parts. As a result of
The VISUAL CONTROLS CO. NORWALK, CONNECTICUT
the audit, both Douglas and Army
For more facts request No. 115 on reply card.
have acted to tighten contract super-
vision, GAO said.
Three exclusive reasons why
Parts were purchased from Aerojet
General Corp., Radio Plane Co., and
J. C. Peacock Machine Co.
SIG-NA-LOK is best
Army has also revealed its original
For inventory or sales control, collection
request for fiscal 1961 Nike-Zeus pro-
or personnel records, Sig-Na-Lok is quicker,
gram was cut from $1.537-billion to
easier and more foolproof.
$302-million by the time it was in-
Perfect lay-back - both hands
cluded in the President's Budget. The
are free.
President's budget request includes
Fast, easy removal of
$287-million of a total of $328-million
pockets.
requested for research, development,
Locking signals that
test and evaluation, $15-million for test
won't cause errors.
facilities and nothing for either pro-
INC.
curement or military construction.
WASSELL ORGANIZATION, INC.
Dept. A-3' Westport, Conn., Phone: CApital 7-4111
Army had wanted $805-million for
procurement and $389-million for con-
For more facts request No. 116 on reply card.
struction. Also, Army is faced with an
48
ARMED FORCES MANAGEMENT
SEMINAR ON DEFENSE MARKET PLANNING
Congressional Responsibility in Defense Planning mr
Introduction - Texas Longhorn Story.
D
From past experience I would feel more at home if:
(a) making a purely political speech--not that I do so well in that area
but I'm more accustomed to that environment.
(b) making a presentation of Defense Department budget to the House of
Representatives because I've had that privilege seven years. This is a
more sophisticated audrence.
2810
2
Quite frankly, I'm ill at ease this evening because in this distinguished
audience there are:
(1) Representatives of one of America's great industries.
(a) An industry that ranks 5th in manufacturing.
(b) An industry which in the short span of 50 years has grown
from the invention of a vacuum tube to the phenominal sales
record of about $8 billion in products in a single year.
3
(c) Lt. General Arthur G. Trudeau, Chief of Research and Development,
Department of the Army, in recent testimony before the Defense
subcommittee on Appropriations had this to say:
"Electronics in general has seen a tenfold increase since World War II and
another tenfold increase can be expected by 1970. This is the fantastic area of
development where the old vacuum tube circuits are now being microminiaturized
to one-tenth, one-hundredth, and even one-thousandth of their original size and
volume. This means a tremendous savings in bluk, weight, and power requirements
for an across-the-board application to all types of Army equipment."
(d) Major General Wood, Gen. Trudeau's Deputy, had this to say:
"We know that if we go to war today, an Army Corps will have about 23,000
electro-magnetic emission devices in a square 60 miles on a side, whereas there
were something like 9,000 such devices in use in 1948 in the same area."
4
The Electronics Industry itself is a Horatio Alger story. Furthermore
there are many individuals in the industry who are Horatio Algers in their
own right.
The Electronics Industry could not have grown with such spectacular
success to the point:
(a) that it is one of the most vital contributors to our National
Security, or
(b) that it is one of the most essential elements in America's industrial
growth and efficiency, or
(c) that it is one of the most helpful and beneficial contributors to
our day-to-day enjoyment of the fabulous 1960s.
Without:
(1) Inventive and scientific geniuses;
(2) Management wizards;
(3) 700,00 skilled workers.
FORD i LIBRARY
5
Also, I'm ill at ease because in this distinguished audience there are:
Members of the Army, Navy, and Air Force team, who together make
up the most powerful, versatile, and alert military force in the history
of the world.
The military history of the U. S. covers more years and more pages
in our record books than the history of the youthful electronics industry.
Each of the military services has had its renowned leaders and its
periods of greatest glory. Never once have these military leaders failed us
in the past. I am confident our military leaders of this era will give
America the preparedness to maintain our national security in the future.
6
Although a bit self-conscious among such a group of experts from two
groups with such distinguished records, I am bolstered a bit by the fact that I
speak to you tonight as a representative of the freest and finest legislative
body in the history of man.
The Congress has its odd and sometimes time-consuming ways of doing things,
but in our nation's history it has made its full share of contributions to our
success. In comparison to all other legislative bodies in world history the
record is unmatched.
FUNDO is LiBRAR OFFALD
Thus for, in have my comments been
7
I complimentary to:
(a) Electronics Industry
(b) U. S. Armed Forces
(c) Congress.
In the past each group or organization has met every challenge with a
response that has overcome the obstacle of the day. However, such success in
the past does not insure Victory for tomorrow. We only win the battles ahead
if we:
(1) Admit our weaknesses and errors.
(2) Come up with new ideas
(3) Work together on mutual problems.
(4) Work harder
(5) Dedicate ourselves to the American system.
FORD & LIBRARY GERALD
8
Today
In a series of seminars and discussion groups, covering a period of about
you as
have been
twelve hours, the participants are seeking methods of obtaining "More Defense
Per Dollar Through Planning.'
Wish I could have been with you. 2 could have benefitted m a partragent
Desired
To ashin the This must be a JOINT EFFORT.
GERALD R.FORD LIBRARY
my part 1th Program What Can involves: Congress
Definition na Congressonar - Kortrot
Destaner between
Two years
Do To Get More Defense Per Dollar through Planning?
(1) Stabilized funding at an adequate level.
(a) Peak and Valley - Feast and Famine
Abandonment - costly in dollars, time, and lives.
(b) Doesn't mean immunity from Congressional review.
Congress has responsibility to challenge all expenditures.
Well conducted Committee hearings where members are the
Devil's Advocate can sharpen executive justification.
FORD & LIBRARY GERALD
10
Congress can get more Defense Pen Dollar
(2) Prompt Congressional action on legislation.
(a) Annual appropriation bill.
(1) Budget submitted in January
(2) Should become LAW by July 1st.
(3) Only one out of 10 of the Military Appropriations
bills from F. Y. 1951 through F. Y. 1960 were inacted
into law by the beginning of fiscal year. It was
October in one year with late July or August the
most likely.
FORD & LIBRARY GERALD
Congress can get more Deference Per Dollar
11
(3) Removal of requirement for annual authorizations and
appropriations.
(a) Military Construction
(b) NASA - 1958
(c) Operational aircraft, missiles, and ships. -1959
Objections - Lead time - F.Y. 1960 NASA pryon.
Additional cost - accounting system (Fredman)
Duplication of testimony -
FORD & LIBRARY QERALD
12
Congress can get more Deferm Pan Dollar
(4) Closer contact (liaison) between Industry and Legislative
Branch.
Semitation on Witners
(a) Present system - long, unnecessarily so, sessions of
the Congress preclude committee visits to laboratories
and production facilities.
(b) Alternative -
I do not advocate "outside witnesses" before the
Committee but the Committee individually and as a
group, should investigate by "on-the-spot" trips.
FORD is LIBRARY QERALD
13
Congress can get more Defense Par Dollar
(5) Forget local geographical pressures.
Idealistic and Utopian
Plants - Products - well intentioned local interests.
In reaching for new objectives we must consider first, foremost,
and I hope exclusively, the prerequisites for national survival.
Congress disrupts sound military planning and inevitably
adds to defense costs if it succumbs to LOCAL PRESSURES.
FORD LIDRARY
14
Congrass can get more Defence Per Dollar
(6) Eliminate partisan politics.
Again Idealistic and Utopian
Congratulate - George Mahon
Sub-committee as a whole.
FORD & LIBRARY GERALD
II.
Comples can get more Defere Pen Dollar
15
(7) Do not hamstring, by inflexible legislation, the
full utilization of knowledgeable personnel - either civilian
or military.
(a) Santangelo proposal
Dursion 32-131 age- 130 Teller Nays- - 147
years - 125
Santangalo amendment:
(Offered to "Procurement" title of bill)
1
"General Provisions
"Sec. 301. None of the funds contained in this
Title may be used to enter into a contract with any
person, organization, company or concern which provides
compensation to a retired or inactive military or
10RD is LIBRARY GERA
naval general officer who has been an active member
of the military forces of the United States within
5 years of the date of enactment of this act."
16
Compress Can get more Defear Per Dollar
(8) Encourage invention, not roadblock it by restrictive
legislation.
National Aeronautics and Space Act - 1958.
FORD LIBRARY
17
Complex can get more Deferer Per Dollar
(9) Establishment, by legislation, of an Independent and Continuing
National Defense Planning Group.
Executive
Would include -
Military
Legislative
Industry.
FORD is LIBRARY 0FRALD
Brig. Gen. Robert J. Friedman
Air Force Budget Director
"We cannot identify which dollars applied to a given aircraft
procurement are new appropriations, which are recoupment dollars,
or which are reimbursement dollars.
"In fact any attempt to do so would require a complex and
costly additional accounting system and would serve no useful purpose.
"Instead, Air Force hopes to retain flexibility to increase or
cut amounts applied to given line items (of the program) to allow for
changes in requirements, changes in priorities, or technological
developments."
FORD is LIBRARY GERALD
At the outset let me make this thought clear: No one can
conceivably object, to the normal procurements, where proprietary rights,
are freely given by a company, in those cases, where the government
supports all or a major portion, of the research and development program.
However, our individual scientists and our small businesses need the
protection of patents to give them both the incentive and the opportunity,
to prosper and grow----to invest their time, money and prestige in
enhancing our country's progress.
Our Large industrial organizations need the protection of their
proprietary rights, to give them the full incentives required--to cause
them to make large investments in well equipped private laboratories
manned by skilled highly trained, and well paid scientists.
Those people who propose the exclusive control and use of patents
by the government in commercial fields are mistakenly evoking the principle
that the state should control basic rights, the "know-how" and means of
production.
BERALD FORD LIBRARY
-2-
The bald cold facts of life are--if we wish to deter the Communist
from overt military action--if we wish to defeat the Communist in market
places of the world--then we must fully implement our free enterprise
system.
We must provide every proper and reasonable incentive--in profit
and prestige, to provide both technological advancement and high volume,
low-cost production.
GERALD R. FORD LIBRARY
September 15, 1960
Mr. L. H. Orpin
Industry Defense Planning
Electronic Industires Association
1721 DeSales Street, N.W.
Washington 6, D. C.
Dear Lee,
Have been back in Grand Rapids for about a week now trying
to get caught up on the necessary and essential aspects of
the political situation. As you can imagine, between now
and November 8 I andmost others in a similar situation will
be mighty busy.
The net result is that I can't in all honesty give the pro-
posed National Defense Planning Group idea the attention
that it deserves. I am most unhappy that I did not have the
time to follow through before adjournment, but it seemed as
though during that period there was far too little time for
anything but the necessary legislative and committee matters.
The net result of what I have said above is I just haven't
had and will not have the time to do what I promised you
and others I would, I am most apologetic. I only hope
your Mr. Baker, Mr. Peterson and Mr. Trantham will under-
stand.
After November 8 I will make a conscientious effort to really
do something about this idea.
Warmest personal regards.
Sincerely,
Gerald R. Ford, Jr., M.C.
GRF trm
FORD is LIBRARY 028410
Mr. Ford
and Frank
8/9/60
Lee Orpin of R.C.A.
0188118
Called to say "Hello"
rm
FORD & LIBRARY GERALD
ELECTRONIC INDUSTRIES ASSOCIATION
1721 DE SALES STREET, N.W.
ACTRONIC
WASHINGTON 6, D. C.
SSOCIATIO EST. 1924
June 30, 1960
Hon. Gerald R. Ford
Room 351
House Office Building
Mashington 25, D.C.
Dear Mr. Ford:
During your address to the EIA Defense Market Planning
Seminar, you proposed the establishment of a National Defense Planning
Group which would encompass the Legislative and Executive Branches of
the Government, the Military Services, and Industry. The response to
this suggestion from representatives both of industry and several gov-
ernment departments, has been most favorable.
The members of the EIA Military Marketing Data Committee,
sponsors of the Seminar, agreed to examine the feasibility of such a
group. I am happy to tell you that the report of our subcommittee is
favorable to the establishment of a National Defense Planning Group.
The report recognizes the presence of a void in national planning because
no communication link exists between industry, the Administration, the
Legislature, and the Services. The report emphasizes that the gap can
be effectively filled, and recommends a structure to channel planning
data.
The functions of such a group, in our opinion, should
encompass spheres much larger than those of any single trade association
or other group currently in existence. The members of this subcommittee
therefore stand ready to assist the formation of a defense planning group
as a matter of individual responsibility toward an improved defense effort.
I am attaching a draft memorandum setting forth in some
detail, proposed activities and membership for this organization. We
look forward to an early opportunity to discuss with you the appropriate
steps toward implementation of this plan.
Yours truly,
L.G. L. H. Orpin
Chairman, Seminar Follow-up Committee
Military Marketing Data Committee
CC: The Committee:
W. E. Trantham (Hughes Aircraft Co.)
R. E. Peterson (Philco Corporation)
K. L. Baker (EIA)
BERALD FORD BRAP
Informed opinion in the United States believes that the
Cold War will last for many years. Communism has marshalled its entire
strength - military, economic, political, and propaganda - for the attack
on the West. In order to meet this threat effectively the United States
must attain maximum utilization of its resources. The objective can best
be achieved through proper planning.
The Executive and Legislative Branches of the Government,
the Military Services, and American Industry, hold joint responsibility
for the maintenance and growth of a strong national defense. So great
an obligation can be effectively discharged only if complete understanding
and cooperation exist among these four groups. Introduction of the Industry
contribution at an early point in planning would shorten reaction time in our
total defense effort. Military requirements and industrial capability should
be melded firmly under the guidance of Legislative and Administration policies
at an early stage of development. Up to this moment, insufficient weight has
been given to the use of industry's planning and development capabilities as
a major asset of our national security program. The lack of formal communi-
cations between government and industry planners has left these important
relationships to haphazard personal contact instead of a stable professional
association. No link exists among the four responsible groups to ensure the
full flow of information at the planning level.
The real need of industry for authoritative planning information
is not recognized, yet the impact of national defense on American industry is
immense. For example, over half the annual $10 billion of factory output in
electronics is applied to military purposes. The aircraft and petro-chemical
industries are similarly effected by defense requirements.
BERALD FORD LIBRARY
- 2 -
Our economic and military future is tied directly to development of new
products evolved from research and development. Last year, $6.7 billion
was allocated for R & D by DOD, AEC, and NASA. Proper exchange of planning
information will lead to prompt utilization of our scarce research talent
and capability, and minimize the peaks and valleys so often encountered in
development activity. The cost to the nation of time, material, manpower,
and money in achieving improved national defense can be reduced by coordinated
forward planning. The establishment of a communication link among the four
responsible groups is the first and fundamental step toward the optimum use
of the nation's resources. We propose establishment of a National Defense
Planning Group wherein the four responsible groups can jointly develop and
implement plans to better achieve our national goals. Such a joint planning
body is unique in U. S. history but, we believe, reflects today's need for
optimum use of the nation's resources in the Cold War.
This organization might be chartered by the Congress and imple-
mented by a joint Congressional resolution. Its primary objectives should
be to increase efficiency of the defense effort by providing interchange of
planning data:
1. to direct the course of research and development
by industry.
2. to minimize the risk of misdirection of effort,
leading to wasteful overcapacity.
3. to eliminate violent production fluctuations which
contribute to higher dollar cost to the nation.
4. to promote speed and flexibility in meeting changing
military requirements.
5. to advise industry on best areas of investment of scarce
factors of production (plant, personnel, funds, etc.) to
meet military requirements.
6. to indicate levels of capacity and capability of industry.
7. to identify areas of industry strength to be exploited OFORD
weaknesses to be corrected for maximum economic strength. BERAL
LIBRARY
- 3 -
Membership should be drawn from the senior staff level of the
Army, Navy, and Air Force; from responsible top level defense industry man-
agement; from the Executive - State Department, Bureau of the Budget, National
Security Council; and from the Legislative - chairmen and minority party
leaders of the Armed Services and Appropriations Committees of the House and
Senate. Supporting panels, short-term in nature, would be formed as needed
to handle special projects. Representatives of the four major groups wi th
special competence in particular fields would comprise the panels. This
organization should be supported by a high-caliber permanent staff.
We believe that the planning gap can be filled, and urge the
establishment of a National Defense Planning Group at the earliest possible
moment.
GERALD FORD
June 30, 1960
Hon. Gerald R. Ford
Room 351
House Office Building
Washington 25, D.C.
Dear Mr. Ford:
During your address to the EIA Defense Market Planning
Seminar, you proposed the establishment of a National Defense Planning
Group which would encompass the Legislative and Executive Branches of
the Government, the Military Services, and Industry. The response to
this suggestion from representatives both of industry and several gov-
ernment departments, has been most favorable.
The members of the ETA Military Marketing Data Committee,
sponsors of the Seminar, agreed to examine the feasibility of such a
group. I am happy to tell you that the report of our subcommittee is
favorable to the establishment of a National Defense Planning Group.
The report recognizes the presence of a void in national planning because
no communication link exists between industry, the Administration, the L
Legislature and the Services. The report emphasizes that the gap can
be effectively filled, and recommends a structure to channel planning
data.
The functions of such a group, in our opinion, should en-
compass spheres much larger than those of any single trade association
or other group currently in existence. The members of this subcommittee
therefore stand ready to assist the formation of a defense planning group
as a matter of individual responsibility toward an improved defense effort.
I am attaching a draft memorandum setting forth in some
detail, proposed activities and membership for this organization. We
look forward to an early opportunity to discuss with you the appropriate
steps toward implementation of this plan.
Yours truly,
L. H. Orpin
Chairman, Seminar Follow-up Committee
ce: The Committee
Military Marketing Data Committee
W. E. Trantham (Hughes Aircraft Co.)
R. L. Peterson (Philco Corporation)
K. L. Baker (EIA)
June 30, 1960
Hon. Gerald R. Ford
Room 351
House Office Building
Washington 25, D.C.
Dear Mr. Ford:
During your address to the EIA Defense Market Planning
Seminar, you proposed the establishment of a National Defense Planning
Group which would encompass the Legislative and Executive Branches of
the Government, the Military Services, and Industry. The response to
this suggestion from representatives both of industry and several gov-
ernment departments, has been most favorable.
The members of the EIA Military Marketing Data Committee,
sponsors of the Seminar, agreed to examine the feasibility of such a
group. I am happy to tell you that the report of our subcommittee is
favorable to the establishment of a National Defense Planning Group.
The report recognizes the presence of a void in national planning because
no communication link exists between industry, the Administration, the L
Legislature and the Services. The report emphasizes that the gap can
be effectively filled, and recommends a structure to channel planning
data.
The functions of such a group, in our opinion, should en-
compass spheres much larger than those of any single trade association
or other group currently in existence. The members of this subcommittee
therefore stand ready to assist the formation of a defense planning group
as a matter of individual responsibility toward an improved defense effort.
I am attaching a draft memorandum setting forth in some
detail, proposed activities and membership for this organization. We
look forward to an early opportunity to discuss with you the appropriate
steps toward implementation of this plan.
Yours truly,
L. H. Orpin
Chairman, Seminar Follow-up Committee
ce: The Committee
Military Marketing Data Committee
W. E. Trantham (Hughes Aircraft Co.)
R. E. Peterson (Philco Corporation)
K. L. Baker (EIA)
Informed opinion in the United States believes that the
Cold War will last for many years. Communism has marshalled its entire
strength - military, economic, political, and propaganda - for the attack
on the West. In order to meet this threat effectively the United States
must attain maximum utilisation of its resources. The objective can best
be achieved through proper planning.
The Executive and Legislative Branches of the Government,
the Military Services, and American Industry, hold joint responsibility
for the maintenance and growth of a strong national defense. So great
an obligation can be effectively discharged only if complete understanding
and cooperation exist among these four groups. Introduction of the Industry
contribution at an early point in planning would shorten reaction time in our
total defense effort. Military requirements and industrial capability should
be melded firaly under the guidance of Legislative and Administration policies
at an early stage of development. Up to this moment, insufficient weight has
been given to the use of industry's planning and development capabilities as
a major asset of our national security program. The lack of formal communi-
cations between government and industry planners has left these important
relationships to haphazard personal contact instead of a stable professional
association. No link exists among the four responsible groups to ensure the
full flow of information at the planning level.
The real need of industry for authoritative planning information
is not recognized, yet the impact of national defense on American industry is
immense. For example, over half the annual $10 billion of factory output in
electronics is applied to mibitary purposes. The aircraft and petro-chemical
industries are similarly affected by defense requirements.
FORD is LIBRARY GERALD
- 2 .
Our economic and military future is tied directly to development of new
products evolved from research and development. Last year, $6.7 billion
was allocated for R & D by DOD, AEC, and NASA. Proper exchange of planning
information will lead to prompt utilisation of our scarce research talent
and capability, and minimize the peaks and valleys so often encountered in
development activity. The cost to the nation of time, material, manpower,
and money in achieving improved national defense can be reduced by coordinated
forward planning. The establishment of a communication link among the four
responsible groups is the first and fundamental step toward the optimum use
of the nation's resources. We propose establishment of a National Defense
Planning Group wherein the four responsible groups can jointly develop and
implement plans to better achieve our national goals. Such a joint planning
body is unique in U. 8. history but, we believe, reflects today's need for
optimum use of the nation's resources in the Cold War.
This organization might be chartered by the Congress and imple-
mented by a joint Congressional resolution. Its primary objectives should
be to increase efficiency of the defense effort by providing interchange of
planning datas
1. to direct the course of research and development
by industry.
2. to minimise the risk of misdirection of effort,
leading to wasteful overcapacity.
3. to eliminate violent production fluetuations which
contribute to higher dollar cost to the nation.
4. to promote speed and flexibility in meeting changing
military requirements.
5. to advise industry on best areas of investment of scarce
factors of production (plant, personnel, funds, etc.) to
meet military requirements.
6. to indicate levels of capacity and capability of industry.
7. to identify areas of industry strength to be exploited and FORD
weaknesses to be corrected for maximum economic strength.
GERALD
LIBRARY
- 3 -
Membership should be drawn from the senier staff level of the
Army, Navy, and Air Force; from responsible top level defense industry man-
agement; from the Executive - State Department, Bureau of the Budget, National
Security Council; and from the Legislative - chairmen and minority party
leaders of the Armed Services and Appropriations Committees of the House and
Senate. Supporting panels, short-term in nature, would be formed as needed
to handle special projects. Representatives of the four major groups at th
special competence in particular fields would comprise the panels. This
organization should be supported by a high-caliber permanent staff.
We believe that the planning gap can be filled, and urge the
establishment of a National Defense Planning Group at the earliest possible
moment.
FORD is LIBRARY
Washington Background
TOP PLANNING GROUP SEEN
ing information proves the worth of incentive contracting.
A single service National Defense Force has been pro-
But in spite of this, Vinson concluded the hearings with
posed by Lt. Gen. C. S. Irvine (ret.), former Deputy Chief
instructions to his staff to work out "guidelines" detailing
of Staff for Air Force Materiel.
limits on the use of incentive contracts. He said a way to
Citing rapid technological advances as opposed to tra-
inculcate real incentive provisions and eliminate "bonuses"
ditional military concepts, Irvine said such a National De-
that are now awarded merely because the target price was
fense Force would "provide operational and logistical flexi-
too high in the first place must be found.
bility so that the secretary of this defense force could assign
Stating the Defense Department position, Assistant De-
military missions to appropriate commands and know that
fense Secretary (Supply and Logistics) Perkins McGuire
reasonable compatibility and capability existed. It would
said DOD strongly opposes a clause to limit incentive pay-
help eliminate duplication and parochial rivalry."
ments to those contractors who can clearly demonstrate
Irvine said such a force would allow a 50% cut in present
cost savings are due to their "skill, efficiency or ingenuity."
DOD personnel and then "the 50% of the military in the
McGuire said DOD wants all possible reductions and not
just those described in the bill.
Pentagon headquarters that spend their lives in frustrating
coordination could then return to operations or logistics
He said, "If we limit our sharing of cost reductions to
with the combat forces."
those as to which such proof is possible, many other cost
reductions would never be made because there would be
Irvine said, "I am suggesting here that we have within
no incentive for the contractor to make them."
the Defense establishment a legally constituted board,
authorized by Congress and integrated within the total
McGuire said the Defense Department agreed with the
defense procurement setup, to plan, recommend and direct
subcommittee's proposal to establish as the intent of Con-
specific actions regarding weapon system research, develop-
gress that all purchases should be made by formal advertis-
ment, procurement and production."
ing whenever it is feasible and practicable. He said Defense
is now revising its regulations to this end.
J. Edward Welch, deputy general counsel for General
SINGLE MANAGER NAMED
Accounting Office, told the subcommittee that agency gen-
Secretary of the Army has been designated Single Man-
erally supports provisions of the Vinson bill (HR 12299).
ager for automotive supplies and for construction supplies.
He said the incentive contract is one type that "caused
Under the new assignment, Army will provide all three
considerable difficulty in establishing fair and reasonable
services with military automotive supplies which include
prices."
such items as vehicular supplies and repair parts, tires and
EMERGENCY FUNDS SEEN
tubes, engine components and the like, and will provide
military construction supplies which include repair parts
The Senate Appropriations Committee has reported out
for construction equipment, diesel engines and components,
a Defense money bill containing over $1-billion more in
lumber and related construction items.
money for the Defense Department than the Administration
Agencies carrying out these assignments will be set up
originally asked for.
1 June 1960, to become fully operational as soon as possible.
Recommended-and supported with funds-in the re-
Also under Army responsibility will come decisions to
port were: (1) re-instatement of the B-70 bomber program;
buy, purchasing, cataloging, standardizing, distributing,
(2) speedy development of a reconnaissance satellite;
and disposing of excess items in the system in these cate-
(3) emergency-type funding for Atlas and Titan-to be
gories.
used as needed-rather than increases in either of those
With the creation of these additional single managers, an
programs.
integrated distribution system and uniform operating pro-
Included in the Committee bill was $162-million in addi-
cedures are being developed to ease effective supply op-
tional funds for Army modernization, $66-million extra for
erations within the 8 single manager operations now estab-
Navy aircraft and missiles, and $613-million in extra
lished within the Defense Department.
money for Air Force procurement.
Part of Navy's development money will go for develop-
A-PLANE FUNDS RESTORED
ment of a Vertical Take Off and Landing assault transport
and further work on the Eagle/Missileer programs.
House Appropriations Committee has overruled the sub-
Advanced Research Projects Agency money amounted to
committee decision to delete $58-million from Atomic En-
$215-million, largely for Project Defender and propellent
ergy Commission's programed funds for aircraft nuclear
chemistry.
reactors. It is in the reactor work that the nuclear powered
In voting the money for the B-70 program, the commit-
aircraft program is having its greatest difficulties.
tee noted "This will be enough to provide the necessary
Committee spokesmen said "testimony taken by the com-
funds to progress with the development of a fully modern,
mittee shows that billions will be necessary to achieve
supersonic manned bomber. Without these funds as pro-
ANP objectives. Prospective date for acquiring a useful
vided by the committee this development program would
aircraft is probably five to eight years in the future."
have been delayed for several years."
Calling it a matter of national emergency to move for-
VINSON HEARINGS END
ward as rapidly as possible on a sound reconnaissance pro-
gram, Senators added $83.8-million to the Samos program.
Hearings before the Vinson special House Armed Serv-
This, in the committee's words, was enough to "accelerate
ices Procurement Subcommittee have come to a close, with
to the maximum degree possible research and develop-
Defense Department stating that the Vinson bill to amend
ment efforts on the Samos reconnaissance satellite program."
procurement laws would slow down military equipment
Senators felt that this money would be enough to chop
purchasing, increase costs and create confusion in the
nearly a year from the development time needed For an
weapons programs. DOD also said that detailed contract-
operational version of the sky-spy.
16
ARMED FORCES MANAGEMEN GERAT
BERARY
Jeny'
Speech
ADDRESS BY REP. GEORGE H. MAHON, OF TEXAS, CHAIRMAN OF THE
HOUSE APPROPRIATIONS SUBCOMMITTEE ON DEFENSE, AT THE ELECTRONIC
INDUSTRIES ASSOCIATION GOVERNMENT-INDUSTRY DINNER, STATLER
HOTEL, WASHINGTON, D.C., MARCH 20, 1958.
THE OUTLOOK FOR DEFENSE SPENDING
After World War II we, as Americans, felt pretty relaxed and secure. We more
or less took the attitude that there would not be another war, and even if one should
come we were so strong and everyone else was so weak it would not amount to much.
Defense programs and defense spending went down, down, down.
Some objected more or less strenuously, but the general trend was otherwise.
Our top civilian and military leaders, the printed records will show, were testifying
that we were spending for defense about all the economy would stand. Some said we
ought to spend a billion or so more per year, but there was nothing big or spectacular
in the picture.
Then came Korea and the disillusionment. Appropriations and spending sky
rocketed. A period of a greater degree of awareness of the danger set in and defense
spending on a more or less long range basis was raised to a higher plateau.
Last October 4 the first Soviet earth satellite was fired and a few days
later the second satellite began to orbit. We were humiliated and embarrassed, angry
and frightened. Actually, we didn't behave in a very mature manner, but most people
now agree that the shock was good for us.
The Democrats blamed the Republicans and the Republicans blamed the
Democrats and they both blamed the Pentagon. This is standard procedure -- always
in order!
Nearly everybody wanted to spend quickly about $100 billion, more or less
-- any necessary sum in response to the new danger which confronted us. We had
hearings galore from shore to shore and everybody was talking about outer space. The
interest in what is admittedly a desperately important problem was terrific for weeks.
On January 31, 1958, the Army bailed us out a bit by launching the Explorer
and this week the Navy breathed a sigh of relief heard round the world when it launched
the baby Vanguard. The little Vanguard wavered up the sky so calmly, climbing like a
golden bean stalk and with the speed of Silky Sullivan in the home stretch.
Things are getting back to normal, blood pressures are down now and people
would be talking about economy again and cutting the defense budget except for one
thing, the deepening recession.
Let's talk about that a bit. Yesterday we passed a resolution calculated
to speed up defense spending.
The object is to encourage the Defense Department to spend quickly, but
wisely, the defense funds already appropriated for essential national needs. The
by-product would be increased employment of labor and industry.
Our objectives are good but there is a danger here. Serious repercussions
would result if we should make it appear to our people and the people of the world
that we are using our defense program merely as a pump priming WPA sort of thing.
This would put us in a bad position before the world and give the Soviet Union a
psychological advantage. The Soviets would say that we have not been serious in
disarmament talks and in inspection policy demands. They would say we had been play-
acting for world opinion -- that we had to prepare for war in order to avoid internal
collapse.
There 18 always a trend toward change in any country. In a dictatorship,
inclosed in an iron curtain, the dictators can more or less maintain the status quo
through the control of propoganda. But in a democracy such as ours, where there is
complete freedom of thought and speech, there is public reaction to every major news-
paper headline. Changes in public opinion are precipitous and dramatic. Public
opinion has its ups and downs, highs and lows. It is "On again, off again, gone
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FORD & LIBRARY GERALD
again Finnegan." It is too bad that in the Soviet Union the forces of human nature
are not left free to react in a similar way -- one of the great hopes of the future
is that this may some day be true.
In this country we have to recognize the forces of our democracy and act
accordingly. To skyrocket our defense program into the clouds at this time would be
futile. ne are going to operate on a high plateau as long as the present danger
exists and that will probably be a very long, time, but a program born of fear and hysteria
could not exist for long. We love peace and we tend too much toward complacency. It
would be wasteful and hurtful to defense to go too far and too fast for a few months
and then come tumbling down in a slump of defense effort -- an even sustained program
on a somewhat higher-than-the-present level is our best hope.
We need a good healthy Pentagon reorgamization, but I am not so sure we are
going to get it. I hope so, because we could get more for our defense dollars and there
is always going to be, in peace time, ome sort of arbitrary limit or ceiling on
defense dollars.
Of course there will be changes in direction of the dollars. we are moving
toward smaller divisions, more reliance on missiles and less reliance on conventional
weapons. The Navy has mothballed the last battleship and the day of the super carrier
is probably numbered insofar as new construction is concerned. The Navy did not ask
Congress for a super carrier in the pending 1959 budget, though certain long lead
time items are requested -- the brightest spot in the Navy is the so-called Polaris
submarine. Congress has bought it lock, stock and barrel and the Navy will have no
trouble financing what appears to be the best deterrent weapon in the Navy arsenal.
Anyway you look at it the picture is bright for the electronics industry.
Of course, I am not in favor of the Pentagon giving anyone in the industry a contract
just to give industry a shot in the arm. Hard contracting and strictly business ought
to be the order of the day. We ought to let the weak operators fall by the wayside
and adequately reward initiative and good management in small business, and even in
big business. We need both kinds, but we do not need wasteful, slipshod operations
anywhere.
Is it true what they say about the multitudes in the Pentagon who can say
no and the very few who can say yes?
Is it true that committee is piled on committee, organization levels piled
on organization levels, and that the wheels of progress are thereby being slowed down?
Does it make sense for the fabricators of missiles and other weapons to boast
about the number of parts in a single weapon? Wouldn't it make a lot more sense to
boast about a reduction in the number of parts and a greater degree of reliability?
Is it true that if for every 1 million words spoken about reliability we had an
increase of 1/10 of 1% in reliability, the reliability rate would be over 100%
Is is true that the weapon system concept of procurement is as sound as the
defense people maintain that it is? Could it be that in contracting for a weapon
system the services could get more by using greater discretion in employing the best
people in each field of industry to produce the weapon system? Is there room for
improvement here?
It has been said that a politician can never admit a mistake. Is it true
that the Defense Department can never and will never admit mistakes and that an
abrupt slash in defense appropriations every few years is needed in order to give
defense officials an excuse for cancelling low priority projects that should have
been cancelled long before? Is it true that the Navajo project could have just as
well been cancelled at an expenditure level of 100 million dollars rather than 7
hundred million dollars at a later date?
Industry and the military have just got to get together and make weapons
and equipment simpler and cheaper. Even if Congress adopts the Cordiner Report, we
could never get enough people in the services to maintain and operate these complex
weapons toward which we are moving. Many of the people who are doing business for
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FORD i LIBRARY GERALD
the Department of Defense, the engineers and executives, do not know too much about
the requirement factor of competitive business. All of their working lives they have
been engaged in cost-plus or cost-is-no-object-as-long-as-we-get-results types of
engineering and production.
Maybe the Russians are unsophisticated and don't use as much chrome but some
say they are able to operate with less lead time. It has been said that the Russians
are unsophisticated and that they engineer simpler and cruder weapons.
I wish you people could find a way to communicate to Congress your best
thoughts on the matter of Defense, and procurement, and contracting, and the other
aspects of military preparedness. At dinners, people talk about what is wrong with
the Pentagon, but nobody does anything about it.
In your meetings you should draft ideas and suggestions and make them
available to us in Congress in order that we might work with you to get more for the
defense dollar.
$40 billions - the approximate fiscal year 1959 budget - is a lot of money
even to Americans and it should be spent with great care. All those persons connected
with defense spending can be told the best way in which to get the most for our money.
But this will take the concerted effort of our military suppliers - you in this room
tonight - to so inform the Pentagon and the Congress.
It was good you could be together this evening and exchange ideas. I am
honored and pleased that I could be with you on this occasion. We are all working for
this country and for the same ideals. In my judgment we will march forward having put
our shoulders together, and I want to congratulate you on the fine job your industry
has done in the past and will continue to do in the future. The Electronic Industries
Association and its member companies should be proud of its achievements. Its future
accomplishments will be even greater, I am sure.
FORD is LIBRARY GERALD
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