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Chapter XIV - NEW FINANCIAL AND SCHEDULE PROBLEMS 1967-1968<br />

145<br />

system could not in any case reduce<br />

schedule slip since other elements<br />

would be out of balance. 8<br />

After reading this pessimistic report, Flax wrote to<br />

Stewart: “There must be some schedule slip at which<br />

it is cheaper to stop some efforts, but we are informed<br />

that this is impossible because it would preclude ‘orderly’<br />

development of everything.” 9 After the two men discussed<br />

the situation, General Stewart sent a message to the<br />

<strong>MOL</strong> Systems Office advising that a meeting would be<br />

held in Washington on 11 May “to attempt to reach some<br />

understanding and agreement” on the program schedule<br />

and the ‘’near-term contractual actions to be taken.” The<br />

Systems Office would have to justify its unequivocal<br />

assertion that “all possibilities have been examined<br />

and nothing further can be gained” toward retaining the<br />

objective of a first all-up manned flight by the end of<br />

calendar year 1970. Stewart said that Dr. Flax desired<br />

the Systems Office’s views on “the maximum reasonable<br />

curtailment of Martin and McDonnell work in FY 1968,<br />

short of termination, which would permit the continuance<br />

of minimum essential engineering interfaces and the<br />

maintenance of the minimum essential supervisory and<br />

technical teams for each.” 10<br />

Further, he stated that while he and Dr. Flax appreciated<br />

the Systems Office’s desire to have an “orderly<br />

development of the total system” and a balanced funding<br />

approach, the program “is now in a financial/schedule<br />

constraint not of our making and is in for more jeopardy<br />

than I seem to have impressed on you.” If there was<br />

any feasible way in fiscal year 1968 to work toward<br />

a first manned launch by the end of 1970, he said, “it<br />

must be identified and pursued, recognizing its possible<br />

effect on ‘orderly development of the total system.’” For<br />

their information, Stewart provided them the latest OSD<br />

planning NOA figure for fiscal year 1969—$661 million. 11<br />

This message apparently finally convinced both the<br />

contractors and the <strong>MOL</strong> Systems Office that $480<br />

million was all that would be made available in fiscal<br />

year 1968. At the 11 May 1967 management meeting,<br />

they agreed they could live with it. However, $480 million<br />

was still $50 million shy of the amount the President<br />

requested from Congress. Dr. Flax indicated that at least<br />

a portion of the sum ($10 million) would be obtained<br />

from Air Force internal reprogramming action and the<br />

balance sought from the congressional appropriations<br />

committees. Concerning the two alternative schedule<br />

slips—12 or 15 months—Brown, Flax, and Stewart the<br />

next day—12 May— decided to proceed with a “compact<br />

12” schedule, pointing toward the first all-up manned<br />

flight in December 1970 and working against fiscal year<br />

1968 and 1969 “Bogeys’’ of $480 and $661 million. The<br />

three officials agreed that the Phase II contracts and<br />

appropriate supplements should be signed as soon as<br />

possible to put the program on a sound basis. Instructions<br />

to this effect went out to the <strong>MOL</strong> Systems Office the<br />

same day. 12 On 22 May—after all the contracts had been<br />

signed—the Department of Defense announced to the<br />

public a total award of $855,072,744 to the McDonnell-<br />

Douglas Corporation for <strong>MOL</strong> engineering development<br />

work ‡‡ . The Douglas contract was for $674,703,744 and<br />

covered work on the manned laboratory vehicle; the<br />

$180,469,000 award to McDonnell covered preliminary<br />

design, development, and production of the Gemini<br />

B. On 29 May the contract award of $110,020,000 to<br />

General Electric for <strong>MOL</strong> experiment integration work<br />

also was announced.<br />

Even as this important milestone was reached, OSD<br />

and Air Force officials became increasingly concerned<br />

over the effects of the war in Southeast Asia on the DoD<br />

budget. At a meeting of the <strong>MOL</strong> Policy Committee on 1<br />

June 1967, Secretary Brown mentioned the possibility<br />

the Air Force would face severe cuts in its research and<br />

development funds. General Stewart interjected that,<br />

based on comments made to him during his recent<br />

<strong>MOL</strong> briefing to the chairman and staff of the House<br />

Appropriations Committee, he did not think Congress<br />

would reduce the <strong>MOL</strong> budget request. However, in<br />

reviewing for the Policy Committee the status of the<br />

program, he noted that overall program costs had risen<br />

to $2.35 billion. 13<br />

McNamara Visits Eastman Kodak<br />

During the summer of 1967 <strong>MOL</strong> officials began planning<br />

a proposed visit by McNamara to Eastman Kodak. An<br />

orientation and briefing on sensor development and the<br />

overall program was scheduled. To insure there would<br />

be no press coverage of his visit to Rochester, <strong>MOL</strong>,<br />

and other security personnel made extensive advanced<br />

preparations. One” cover” action was release of a short<br />

news item to the press stating that the Secretary of<br />

Defense would be inspecting various military installations<br />

over several weeks. The actual flight to Rochester was<br />

to ‘be made under tight security wraps.<br />

Also, to help make a case for continuation of the<br />

program, Colonel Battle and <strong>MOL</strong> Program Office<br />

personnel prepared a two volume report, titled “High<br />

Resolution Photography,” to be provided the defense<br />

chief. The report analyzed the results of all G-series<br />

of unmanned reconnaissance satellite flights and the<br />

expected <strong>MOL</strong> product. The best photos from the KH-7<br />

‡‡ During 1966 Douglas Aircraft ran into financial difficulties. McDonnell<br />

offered to merge with it and the corporate marriage was formally consummated<br />

late in the year.

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