Proton Rocket

MEMORANDUM TO THE FILE FROM KAREN A. TRAMONTANO COUNSELOR TO THE CHIEF OF STAFF SUBJECT MEETING WITH VANCE KAUFMAN AND JOE O'NEIL DATE MAY 21, 1999 On May 20, 1999 Vance Kaufman, CEO Lockheed Martin and Joe O'Neil, representing Lockheed Martin met with John Podesta, Chief of Staff. Kaufman and O'Neil requested the meeting to discuss the Proton quota. Kaufman began the meeting by providing background to Podesta about their joint venture with Krunichev & Energia on Proton Launch Vehicles. He explained that this joint venture employs approximately 20,000 workers directly and over 80,000 workers through subcontractors. This partnership began in 1993 and in his opinion provides a substantial benefit by bringing Russia into the world economy Kaufman explained their joint venture markets both Proton and Atlas launch vehicles. He further explained that 16 protons have been approved through the fourth quarter. However, this quota was limiting, if not eliminating, their business opportunities and adversely effecting their business base. Kaufman and O'Neil explained to Podesta that GE was ready to launch another set of satellites and their decision to select a company for the launch was imminent. As a result of the quota, Lockheed Martin, Krunichev & Energia could not give GE any assurance that they could provide the launch vehicles. Kaufman explained that the solution to the Proton quota problem could not be minimal. He stressed that the problem could not be addressed by simply adding one or two additional launches. Such a solution, according to Kaufman, would not alleviate the problem because planning had to take place at least a year in advance and financial investments are significant. To plan only for one or two additional launches did not meet the need and would not be cost efficient. Kaufman stated that Lockheed Martin understood that proliferation was an important issue but that this issue was holding their joint venture hostage. He expressed his underlying view in three ways: he did not believe a quota theory-i.e. putting pressure on an industry through a quota system to effect public policy-would actually impact a change in Russia's proliferation policy; because their business relied on at least one year advance planning, if the quota were not expanded immediately, the joint venture's business opportunities would be eliminated; and he believes that punishing a joint venture-which has not been engaged in proliferation-would push their Russian partners to seek other partners e.g. French companies, or go out on the open market alone. Kaufman expressed that either result would be the more harmful to our proliferation concerns.