NRO-MOL_2015

Chapter XI - BUDGET, DEVELOPMENTAL, AND SCHEDULE PROBLEMS—1965 - 1966
107
BUDGET, DEVELOPMENTAL, AND SCHEDULE
PROBLEMS—1965-1966
Even as Air Force officials were reacting to PSAC’s
insistence that they incorporate an unmanned
configuration into the MOL program*, a severe financial
problem arose that threatened and finally delayed early
system acquisition. Some 60 days after the President
authorized the Air Force to go ahead with the program,
Daniel J. Fink, Deputy Director (Strategic and Space
Systems), ODDR&E, asked the MOL Program Office to
review and substantiate its fiscal 1967 and 1968 budget
requirements for Phase II engineering development. This
review was the beginning of a critical OSD evaluation of
the Air Force’s budget requests. Apparently anticipating
an OSD rejection, Dr. Flax in early November 1965 cut
$20 million from the Air Force 1967 MOL request, bringing
the total down from $395 million to about $374 million.
Schriever later remarked to Evans that, while he could
not quarrel with the Assistant Secretary’s cut, “because
it is arbitrary,” he disagreed with the procedure. 1
The MOL Program Director, however, soon had much
more to worry about than a $20 million reduction.
From the Secretary of Defense’s office came word
that McNamara intended to limit the MOL program in
1967 to $150 million—the same sum provided in 1966.
Secretary Brown immediately wrote to the defense
chief to voice concern. He pointed out that the original
MOL plan had projected the first manned flight in late
calendar year 1968, based on a schedule requiring
the start of engineering development in January 1966.
Dr. Brown reviewed several alternate schedules which
might be adopted to reduce fiscal year 1967 funding
requirements. But these, he advised Mr. McNamara,
would have the effect of slipping the first manned flight
three to 12 months. He said a development schedule
with a goal of a first manned launch in April 1969 would
require about $294 million during the year. He further
stated that a $230 million budget would be “the lowest
fiscal year 1967 funding compatible with maintaining
continuity of contractor efforts already under way” and
an early manned flight. 2
On 18 November, analyzing the MOL funding problem
for DDR&E, Deputy Director Fink expressed agreement
with the above arguments. That is, he said that if $294
million were provided, the first manned MOL could be
flown in early calendar year 1969. If an additional slip of
three to six months was considered acceptable, funding
could be reduced to approximately $230 million. Fink
* See pp 164 ff.
recommended to Dr. Foster that the MOL budget not be
reduced below the $230 million level. (Endnote 3) These
arguments failed to convince McNamara, who, in the final
thrashing out of the fiscal year 1967 DoD budget request,
concluded that $150 million was sufficient for MOL † .
This severe cut in 1967 spending plans was a main topic
of discussion between Brown, McConnell, Schriever,
Paul, Flax, Marks, and Ferguson on 30 November 1965
at a meeting of the MOL Policy Committee. Dr. Brown
reported that Foster and Flax were working on alternate
plans to slip the program either six or nine months, with
fiscal year 1967 funding needs to be calculated in each
case. Flax said that DDR&E was in agreement that $150
million would not be enough to support the program
during the year. However, Assistant Secretary Marks
advised the Committee that there was little hope for
reinstatement of the bulk of the requested MOL funds. 4
Marks’ view was soon borne out as OSD rejected an Air
Force reclaim and the $150 million total was incorporated
into the President’s defense budget for submission
to Congress in January 1966. On 9 December Evans
informed Berg of MOL’s unhappy financial prospects.
He said there was a possibility that the final budget
might provide a slightly higher level but, in any event,
the Systems Office should ‘’cost out alternative MOL
programs” based on various funding levels, which in
each case would insure a balanced program. 5
Subsequently, on 29 December 1965, General Berg
reported to the MOL Program Office on possible actions
that might be taken to minimize MOL expenditures in
fiscal year 1967. His plan called for completing Phase IB
studies by 1 May 1966 and initiating Phase II engineering
development by 1 September. This could be done, he
said, within a total 1967 budget of $237 million “plus the
$100 million carryover of fiscal year 1966 funds.” He
indicated, if only $150 million were provided, there would
be a further stretch-out of the program. 6
† The fiscal year 1967 budget, prepared in late calendar year 1965, was
the first to feel the impact of the accelerating war in Southeast Asia. In the
years that followed, the Vietnam War came to require enormous sums to the
detriment of many defense projects including MOL.