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SAFSL-1 

MEMORANDUM FOR GENERAL FERGUSON 

DR. MC LUCAS 

SUBJECT: MOL Systems Office Post Termination Report 

1. The attached report will be the final report submitted during my tenure 

as Deputy Director, Manned Orbiting Laboratory. 

2. The report has been structured to reflect the continuity of activity 

and the results thereof which began with the public announcement of the 

termination of the MOL Program by the Secretary of Defense on 10 June 1969. 

My primary concern on that date was to disengage the Government from its 

contractual commitments in the most orderly and cost effective manner 

while simultaneously maximizing residual Program benefits. 

3. Immediate notifications were forwarded to all contractors directing 

complete termination, partial termination, or stop work as was appropriate, 

and terminations of agreement were forwarded to other Government agencies. 

Internally, actions were initiated to fully support the designated 

Termination Contracting Officers and to reassign MOL SO personnel expeditiously. 

4. The first post termination funding requirement documents received for 

the MOL SO contractors indicated a requirement for $140M, a requirement 

considerably in excess of the $125M programmed for MOL during FY 70. 

Consultations were held with both contractors and TCOs. Continued emphasis 

on cost reduction and rapid inventory disposition has reduced the stated 

funding requirements to $128M effective 30 September 1969. Because of our 

continuing efforts, I anticipate that the ultimate requirement will fall 

within the authorized $125M level. 

5. I have outlined in Part V of the report those actions and assignments 

of responsibility which I consider appropriate during the period between 

my retirement on 1 December 1969 and 30 June 1970. Part VII outlines the 

assistance required by the MOL SO both prior to and following 30 June 1970 

on which date the MOL SO will cease to function as an office. 

J: § TER, Maj Gen, USAF 1 Atch 

Deputy Director, MOL MOL Systems Office Post 

Termination Report 

Cy to: SAFSL, Col Ford 

fiAkikk slug DYNAN 

MN/Vol: SYSTEM co."- 

DORIAN 71" erf— 

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• MOL SYSTEMS OFFICE 

POST TERMINATION REPORT 

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TABLE OF CONTENTS 

PAGE 

TABLE OF CONTENTS 

PART I - Outline 1 

PART II - Plan for Termination and Contract 

Termination Status 3 

PART III - Dorian Security Status 14 

PART IV - Status of MOL Real Property 

(sLc-6) 19 

PART V - MOL Systems Office Personnel and 

Responsibilities 28 

PART VI - Official Financial History 34 

PART VI - A - Financial Highlights 34 

PART VI - Bl - Financial Analysis 40 

PART VI - B2 - Variance Analysis 52 

PART VI - C - Termination and Funds for "LOGO" 55 

PART VI - D1 - Final Termination 58 

PART VI - D2 - Final Estimated Total Government 

Liability 61 

PART VII - Assistance Required and Recommendations for the Future 63 
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PART I 

INTRODUCTION 

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PART I - INTRODUCTION 

In the time since the public announcement of the termination of the MOL, 

considerable progress has been made to close out the program. 

Although the announcement was made on 10 June 1969 that the MOL was 

officially terminated, in reality, the announcement constituted termination 

only of the manned aspects of the program. The direction concerning MOL 

termination was further complicated when specific instructions were issued 

to continue certain manned related work until NASA could determine what work, 

if any, would be continued under their funding and control. Also, the 

commonality of the T-III family (B, C, D) with the T-IIIM (MOL) dictated that 

certain T-IIIM development efforts were scheduled to be incorporated in other 

T-III models. Additional time (until 18 July 1969) was required to define 

the most economically advantageous method of continuing the necessary T-II1M -

effort in order to finalize a plan by which final contractual coverage was 

issued and responsibility for continuing the effort was assigned to SAMSO's 

T-III SPO. 

As a consequence of the aforementioned circumstances, complete tezn►ination direction on all MOL contracts was issued 31 July 1969. 

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ISOWmou SYSTEM °NIX 

PART II 

PLAN FOR TERMINATION 

AND 

CONTRACT ,TERMINATION STATUS 

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TABLE OF CONTENTS 

ENE 

A. MOL SO TCO 5 

B. Contracts Terminated 5 

C. Technical Evaluation 7 

D. Financial Management Activities, 7 

E. Inventory Disposition 10 

F. Associated Reports 10. 

G. Related Termination Activity 11 

H. Special Instructions and Guidance to TCOs 12 

FIGURES 

Pages 

1. Status of Actions in SAFSL Me$sage, Dated 

1 October 1969 

2. Personnel Charged to MOL by COntractor 1 

3. October 1969 Forecast Completion Dates 

4. Agencies and TCOs Responsible for Termination 1 

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PAR:Ii - F, ^a FOR ILTADIATION AND CONTRACT TERMLNATION STATUS 

Upon notification from higher Headquarters that the MOL Program was 

terminated, a careful plan was laid out to identify termination action that 

was to be accomplished by the Systems Office. The following is a chronology of those actions: 

Status from 10 June through 15 Oct 69 

A. Col Fred H. Dietrich was appointed Termination Contracting Officer 

(TCO) for the MOL SO on 10 June 1969. Mr. Thomas W. Rutter was appointed TCO 

vice Col Dietrich on 1 July 1969. 

B. Contracts terminated. TWX's were issued to the following Associate 

Contractors on 10 June 1969: 

1. TIIIM Family 

(a) Martin (AF04(695)-997) - Partial termination of contract on 

10 June with certain specified effort authorized to continue until 24 June 1969. 

On 24 June, the Contractor was advised that the contract was to be terminated, 

effective 10 July 1969, thereby completing the termination of said contract. 

(b) AC Electronics - Same as Martin. 

(c) Aerojet General (AF04(695)-941) - Same as Martin. 

(d) UTC - Partial termination of contract on 

10 June with certain specified effort authorized to continue until 24 June 1969. 

On 24 June, the Contractor was advised that the contract was to be completely 

terminated effective 10 July 1969. On 9 July, this direction was revised to 

reinstate UBS/TVC development effort to 18 July 1969, at which time said effort 

was terminated thereby completing the termination of said contract. 

2. MDAC - ED - Complete termination of contract on 

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10 June 1969. 

3. MDAC - WD (A) - Complete termination of contract on 10 June except for certain specified subcontractor effort that was 

placed on Suspension of Work until 24 June 1969, at which time said effort 

was terminated, thereby completing the termination of said contract. 

4. MDAC - WD (B) (AF18(600)-2956) - Complete termination of contract on 10 June 1969. 

5. GE (A) - Complete termination of contract on 

10 June 1969. 

6. GE (B) (AF18(600)-2955) - Partial termination of contract on 

10 June with certain specified effort placed on Stop Work for 30 days. Stop 

Work cancelled and complete termination of contract was issued on 30 June 1969 

thereby completing the termination of said contract. 

7. TRW (A) - Complete termination of contract on 

10 June 1969. 

8. TRW (B) (AF18600-68-C-0005) - Stop Work Order issued on 10 June 1969. 

and complete termination of contract issued on 16 JUne) thereby completing the 

termination of said contract. 

9. EK (A218(600)-2864) - Partial termination of contract on 10 June 

with certain specified effort authorized to continue) with complete termination to be effected as soon as possible after 24 June 1969. On 27 June, a TWX 

was issued terminating the contract effective 30 June 1969 thereby completing 

the termination of said contract. 

10. Hamilton-Standard - Stop Work Order issued 

10 June. Stop Work cancelled on 24 June and Contractor was directed to proceed on a minimal expenditure basis for certain specified effort up to 31 

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July 1969. On 31 July, a TWX was issued superseding the 24 June TWX and 

terminating the contract effective 31 July, thereby completing the termination of said contract. 

11. Whirlpool ,- Stop Work Order issued 10 June. • 

Stop Work cancelled on 24 June and Contractor directed to resume work. On 

11 July 1969, said contract was transferred to NASA. 

C. Technical Evaluation 

1. Immediately subsequent tothe dates of complete termination on 

the the various contracts, the MOL SO began the preparation of reports detailing the contractors' technical progress and technical performance. 

2. To insure that the Termination Contracting Officers were furnish-. 

ed the best available data, the MOL SO directed that separate evaluations be 

conducted by the Aerospace Corporation and the SO. After all reports were 

completed, any differences in the reports were discussed and a common:s position 

developed. These evaluations were then made available to the TCO's for use 

during their individual negotiations. 

3. During the period 10 June 1969 to 30 June 1969, Aerospace supported the MOL SO in all activities related to equitably formulating the technical 

percentage of completion of each of the MOL contractors for which they had had 

a GSE/TD responsibility. 

D. Financial Management Activities 

1. Funding Policy. The MOL funding policy through the first three 

quarters of FY 67 was one of commitment funding (obligating funds for each 

contractors' expenditures and non-cancellable commitments and his respective 

pro rata of target fee). During the fourth quarter of FY 67, funds which the 

Assistant Secretary of the Air Force for Research and Engineering had hoped 

to reprogram to MOL did not become available and a policy of fUnding less than 

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commitments but more than expenditures (expenditure funding) was) authorized. 

The Assistant Secretary of the Air Force reviewed the financial status on a 

monthly basis and advised the Secretary and Assistant Secretary of Defense of 

the situation. Although the MOL contracts were funded on a commitment basis 

during the first three quarters of FY 68 and FY 69, the policy of expenditure funding as in FY 67, again was authorized in the 4th quarters of FY 68 

and FY 69. At the time of cancellation this amounted to approximately MM. 

When added to the STC requirements ($47M) and worms terminated subsequent 

to 10 June ($8M) this brought the total Government requirement to approximately 1 $128M. The first MOL priority was to apply monies ($81M) to cover 

the Government deficit at the time of complete termination. The second 

priority was to apply monies for Special Termination Cost requirements. The 

following actions were taken consistent with this policy. 

2. Financial Reports. 

(a) On 18 June, a TWX was issued to all cognizant plant TtOs 

requesting Contract Financial Status and Forecast Reporting to be submitted 

monthly. This report was to provide the MOL SO current contract fund requirements and the funding required for Special Termination Costs. 

(b) On 11 July, a revised format for the above report was furnishthe TCOa. This format requested the fund requirements be time phased by FY. 

quarter. 

(c) The SO personnel have analyzed these reports, not only for 

current fund requirements but the overall financial status up through the final 

termintion settlement, to ascertain if the fund forecast is reasonable. 

3: Funding Actions 

(a) The following Contractors were underfunded at the time. of 

1 

Per Contractor Reports as of 30 September 1969. 

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termination: 

MDAC - WD (A) Aerojet General 

MDAC - ED UTC 

GE (A) & (B) EK 

Martin AC Electronics 

(b) The following Contractors were fully funded (Limitation 

of Government's Obligation (LOGO) only) at the time of termination: 

Hamilton Standard MDAC - WD (B) 

Whirlpool TRW a (A) & (B) 

(c) In July, the first increment of FY 70 funds were received. 

These funds were obligated to the following Contractors to makeup the deficit 

LOGO funding and to change the fund runout date in the Contract. 

MDAC WD (A)* Aerojet General* 

MDAC - ED AC Electronics 

GE (A) & (B) UTC 

Martin EK * 

* Contractors that were fully funded except for STC. 

In addition, an increment of funds was obligated on the MDAC-WD (B) and EK 

contracts for Special Termination Costs. 

(d) In September, a second increment of FY - 70 funds was received to 

complete the deficit funding. Said funds were obligated to the following 

Contractors to complete the LOGO funding through date of complete termination: 

Martin GE (A) & (B) 

UTC MDAC - ED 

(e) All Contractors except AC Electronics and TCOs have been 

advised by TWX and letter that the above funding actions complete the funding of the contracts except the funding required for Special Termination 

Costs (STC). As additional increments of funds are received, they will be 

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obligated to fund STC upon a request from the TCO that the funds are required. 

AC Electronics reporting does not indicate a need for additional funding under 

LOGO, however, they do not agree that they are fully funded. 

E. Inventory Disposition 

1. Letters were issued to all cognizant plant TCOs setting forth the 

priorities to be utilized for disposal of the termination inventory. 

2. Certain major items of termination inventory were covered by a 

special committee. (See Figure 1) 

3. In early October, the TCOs were requested to submit a report to 

the SO by 31 December 1969 with an update every 30 days. This report is to 

reflect the disposition of termination inventory having a value of $1,000,000 

to a single recipient. 

F. Associated Reports 

1. Manpower 

(a) At the time of termination, the TCO was requested to provide 

the Contractor's total manpower on contract as of 10 June and the number of 

personnel separated as a result of termination. 

(b) On 24 July, a TWX was sent to the cognizant plant TCOs 

requesting manpower data be submitted on a monthly basis. This report included 

. number of equivalent personnel charged to the MOL contract (direct and indirect), 

number of personnel separated from the company due to the termination, a forecast of personnel through final termination settlement, and the same information 

for each subcontract of $5 million and over. 

(c) There have been various meetings and discussions with the TCOs 

and Contractors regarding the manpower. The latest report indicates that the 

reduction in manpower is very good and, in most cases, has 

10 
STATUS OF ACTIONS 

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exceeded the original forecast. (See Figure 2) 

2. Termination Settlement Plan 

(a) On 19 August, a letter was sent to the cognizant TCOs 

(with a format) requesting the TCOs termination settlement plan. This plan 

set forth major milestones, e.g., Plant Clearance period, final settlement 

of subcontractor claims, evaluation and audit of final claim, negotiation of 

final settlement, and execution of final settlement agreement, for accomplishing the settlement in an expeditious manner. (See Figure 3) 

(b) A review of these plans reveals that in most cases the dates 

for accomplishing the various steps are reasonable. However, during field 

trips by SO personnel, this area has been discussed with the TCOs in view of 

compressing the dates wherever possible. It is recognized that at this point 

these dates are strictly forecast. This will remain as one of the continuing 

areas of review by the SO. 

G. Related Termination Activity 

The following documents were issued to all cognizant plant TCOs to be utilized 

in connection with the settlement of the termination: 

AFPI Form 49 - Termination Authority 

DD Form 1598 - Contract Termination Status Report 

Letter confirming termination TWX 

Listing of Unadjusted Contract Changes 

DD Form 254 - Contract Security Classification Specifications 

MOLS0 Technical Evaluation of contract. 

The appropriate regulations concerning termination require these actions to be 

accomplished by the Procurement Office. 

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H. Special Instructions and Guidance to TCOs 

1. Letters to CMD, DCASR, and NAVPRO. On 24 June, letters Were sent 

to CMD, DCASR, and NAVPRO stating that, in the interest of uniformity, certain 

aspects of MOL Program closeout must be responsive to MOL SO policy, e.g., 

application of funds to contracts to the level necessary to fund the Government's obligation to the date of termination. Establishment of MOL SO vs TCO 

responsibilities in effecting,the termination settlement in an orderly manner 

was also addressed. Said letters also requested that the TCOs indicate the 

total support required from the MOL SO in terms of resources, skills, etc. 

2. Letters from DCASR and CMD. On 3 July and 10 July, respectively, 

DCASR and CMD replied to the above referenced letters, concurring in the 

necessity to maintain uniformity and management visibility during the termination settlement phase. The CMD reply set forth a summary of basic responsibilities as they pertain to the TCO and MOL SO. Both DCASR and.CMR stated that 

the MOL SO support would be minimal and would consist primarily of the funding 

requirements and review of the Contractor's claim prior to initiating final 

negotiations. 

3. TWX to All TCOs. On 22 July, a TWX was sent to all cognizant 

plant TCOs setting forth the concern on the part of the Under Secretary of the 

Air Force that the termination actions were not being accomplished with the 

rapidity necessary to minimize the cost to the Government. In addition, the 

TCOs acquire from the Contractors a plan that relates personnel skills and 

numbers to the termination functions with a personal assessment from the TC0 1 

on the Contractor's plan. 

4. TCO Briefing by the MOL SO. On 30 July 1969, the cognizant plant 

• 

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TCOs were invited to attend a meeting at the MOL SO to be briefed on MOL 

SO phasedown planning, financial situation, and to discuss adequacy of the 

MOL SO technical evaluations. This meeting was held on 12 and 13 August. 

5. Designation of MOL Personnel. On 29 September 1969, a letter 

was furnished all TCOs forwarding a listing of designated former MOL 

personnel whom they may contact to answer questions or participate in support 

of the termination activity. 

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AGENCIES AND TCO'S RESPONSIBLE FOR TERMINATION 

A. Contract Management Division 

1. Contract 

AFPRO MDAC-WP, Huntington Beach, Calif 

Mr. G. Gavora, Jr. (TCO) 

2. Contract 

AFPRO AC Electronics Division, Milwaukee, Wise 

Mr. John R. Belgum (TCO) 

3. Contract AF04(695)-997 

AFPRO MMC, Denver, Colo 

Mr. Luke V. McCabe (TCO) 

4. Contract AF04(695)-941 

AFPRO Aerojet, General Corp, Sacramento, Calif 

Mr. George R. Carney, Jr. (TCO) 

5. Contract AFO4(695)-1022 

AFPRO UTC, Sunnyvale, Calif 

Mr. Charles Kjelland (TCO) 

6. Contract 

AFPRO GE, Missile & Space Div, Philadelphia 

Mr. Phil Isaacon (TCO) 

B. Naval Plant Representative 

1. Contract 

NAVPLANTREPO MDAC ED, St Louis, Mo 

Mr. Robert S. Unks (TCO) 

C. Defense Contract Administrative Services 

1. Contract 

DCASR,Los Angeles, Calif 

Mr. Frederick E. Wood (TCO) 

2. Contract 

DCASD, Hartford, Conn 

Mr. D. Ruddy (TCO) 

Figure 4 Page 1 
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PART III 

DORIAN SECURITY STATUS 

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TABLE OF CONTENTS 

Page 

A. Situation on 10 June 1969 and 1 November 1969 16 

B. Internal MOL SO Document Disposition 16 

C. Security Asiistance Rendered 17 

D. Continuing Actions 17 

ean-gr•MI t7r1rt ecrtDET 15 Num 
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PART III - DORIAN SECURITY STATUS 

A. The situation relating to the status of Dorian documentation and 

Dorian cleared personnel on 10 June 1969 and 1 November 1969 is outlined 

below: 

10 June 1969 1 November 1969 

Personnel/Documents ' Personnel/Documents 

• Aerospace . 534/12,847 53/845 

TRW 526/4,500 85/970 

Eastman Kodak 2,890/165,000 1,970/68,705 

General Electric 3,713/165,000 764/26,000 ' 

ITEK 964/20,000 170/2,800 

MDAC-WD 3,162/70,000 • 84/1,710 

MDAC-ED 286/362 37/87 

Other* 1,112/1,908 509/309 

Totals 13,187/439,617 3,672/101,426 

* Includes: Hycon, Perkins Elmer, Bell Telephone Laboratories, 

Pittsburgh Desmoins, Norman Engineering, Minneapolis 

Honeywell, LTV, CBS Laboratories, Radiation Inc., 

Contract Management Division, etc. 

Analysis 

Discussions with the Contractors and visits to Contractor facilities' have 

shown that the current level of on-hand documentation is required by the 

principles for their termination activities. Eastman Kodak, General Electric, 

ITEK and Perkins Elmer must maintain briefed personnel and Dorian documents for 

use in other current exercises. 

B. Internal MOL SO Document Disposition 

Key management and historical documents have been retained so a complete 

picture of the life of the MOL Program can be reconstructed at some future date. 

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Arrangements are being made with SAFSP for the permanent storage of the 

referenced docu=entation subsequent to 30 June 1970. 

'Secret and Confidential technical material has been forwarded to the Defense Document Center (DDC). The DEC had previously 

amassed several hundred pre 1965 MOL documents and since termination the MOL SO has sent them an additional 300 documents. 

White contract supporting data has been forwarded for storage 

at the Federal Records Center, GSA, Bell, California. 

C. Security Assistance Rendered 

To facilitate surfacing of MOL equipment and/or technology, assistance has 

been given to: 

1. The AF Avionics Laboratory and General Electric relating to: 

'The Beta System and Tester 

°The Visual Optics 

'On-Board Processor 

'The Visual Display Projector (only its application was Dorian) 

2. The AF Weapons Laboratory and General Electric relating to: 

'Technology on bearings and torquers 

3. The MOL SO is prepared to assist NASA when it initiates action 

to study the Acquisition and Tracking Scope (ATS) and the mission simulator. 

D. Continuing'Actions. 

1. A continued Phase-out of Dorian cleared documents and personnel 

in contractor facilities. Continued MOL SO assistance will be made available as required. 

2. Refinement of arrangements with SAFSP for the permanent storage 

of Dorian material both on hand and to be received. 

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3. Assistance to NASA, Eastman Kodak, Perkins Elmer, etc. on 

pending studies requiring Dorian documentation. 

• 

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- PART IV 

STATUS OF MOL 

REAL PROPERTY (SLC-6) 

4 

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TABLE OF CONTENTS 

A. Status of MOL Support Facilities 

B. Status of MOL Space Launch Complex (SLC-6) 

TABLES 

Page 

21 

2, 

Pages 

I. Acceptance Status - SLC-6 Facilities 3 

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PART IV - STATUS OF MOL REAL PROPERTY (SLC-6) 

A. Status of MOL Support Facilities - Vandenberg AFB (as of 15 

October 1969) 

1. The MOL support facilities are of two general categories - existing structures to be used or modified for use and new construction. These 

facilities were located either within the Vandenberg AFB cantonment area or 

in the South Vandenberg APB industrial area. 

2. Those facilities located within the Vandenberg AFR cantonment 

area were of three types: 

a. World War II type wooden buildings. 

b. Industrial type buildings. 

c. New construction. 

The status of these buildings is as follows: 

4 

a. World War II type wooden buildings: 

(1) Building 6228, Building 6229 and Building 6230 are 

wooden, two-story barracks type buildings previously converted to office space. 

No modifications were required. These buildings have been vacated and made 

available to the Facility Utilization Panel (FUP) for disposition. 

(2) Buildings 5311 and 5311A: These are wooden buildings 

that had previously been used as the Titan II inertial guidance laboratory. 

They were to have been refUrbished and modified to support the Titan III-M 

inertial guidance system. Minimum modifications have been completed, i.e., wails 

and floors restored to make the facility useable. The facility is available to 

the FUP for disposition. 

(3) Building 7303: This wooden building is being used by 

the General Electric Company as a carpenter shop and lumber and metal storage 

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area. General Electric will continue to use this building to support their 

other programs. 

(4) Building 6420: This facility was to have been used 

for testing, checkout, storage, and control of all MOL pressure suits and 

related equipment. No modification was required. The building has been 

vacated and is being modified by the AFWTR for an Optics Lab. 

b. Industrial type buildings within the Vandenberg AFB cantonment area: 

(1) Building 8310, Mission Module Support Facility: This 

facility is an existing two-story corrugated steel building that would require 

only minor modification. No modifications have been completed. The building 

has been vacated and turned over and made available to the FUP for disposition. 

The 6595th ASTWg'has recommended that Lockheed be assigned the use of this 

building. 

(2) Building 7437, Gemini-B Support Facility: This facility 

is a single story corrugated steel building containing a hi-bay warehouse and 

environmental controlled warehouse, electrical shops and lab and a clean room. 

This building was being modified by adding an additional 22,000 square feet of 

environmental storage space. The air-conditioning system has been deleted from 

the building addition. The anticipated Beneficial Occupancy Date (BOD) is 

1 November 1969. At that time the facility will be made available to the FUP 

for disposition. The Wing has recommended that this building be assigned to 

Lockheed for use. 

3. Building 7525, Laboratory Vehicle Support Facility (BAB-6): This 

is a two-story, hi-bay with mezzanine building containing a total of 105,000 

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sq. ft. of floor space. This building is occupied by the McDonnell-Douglas 

Corporation, has been used to support the Thor boosted systems. No modifications were performed. This facility will be retained by the McDonnellDouglas Corporation for support of the Thor boosted and other programs. 

4. Building 8401) Missile Assembly Building (MAB-5): This facility 

is used to support all Titan programs at Vandenberg AFB. Modifications have 

been completed to provide the capability for receipt, inspection and storage 

of the Titan III rocket stages, for their components, assembly, storage and 

for the components of the 120-inch solid rocket motors and receipt of the 

aerospace ground equipment and real property installed equipment. This facility is much the same as Building 7525. It is now occupied by the MartinMarietta Corporation. They will continue to occupy this building'to support 

the Titan III boosted programs. 

5. Building 7420, Shipping and Receiving, Martin-Marietta Corporation: 

This facility is a single story corrugated steel warehouse containing approximately 32,000 sq. ft. of space. No modifications were required. Martin will 

continue to use this building. 

6. Building 9325: This facility is used by the Martin-Marietta 

Corporation as a Contractor maintenance area in support of the Martin-Marietta 

Corporation programs at Vandenberg. This is alsingle-story, corrugated steel 

building containing 19,000 sq. ft..of floor space. No modifications were 

required. Martin will continue to use this building. 

c. New construction within the Vandenberg APB cantonment area: 

(1) Building 6710, Gemini-B Propulsion Support Building: 

This facility will be a one-story, corrugated steel building containing 

6,700 sq. ft. of floor space. Construction Will be continued to provide a 
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minimum useable facility. The requirements for the parking area, fencing, 

guardhouse and decontamination pads have been deleted as well as all 

interior partitions except those for toilet areas and mechanical equipment 

rooms. Estimated BOD is 7 December 1969. The facility will be made available to the FUP for disposition. 

(2) Building 8500, Engineering and Operations Building 

(EOB): This facility is a single-story concrete building containing 81,500 

sq. ft. of floor space. 56,580 sq. ft. is administrative space; 1,920 sq. ft. 

is an automatic data processing room and the remaining floor space is a 

miscellaneous support area. This building is basically complete in its 

entirety. It has been recommended that this building be used as the new 

6595th Aerospace Test Wing Headquarters. 

(3) Building 8505, Operational Readiness Unit (ORU): , 

This building is a one-story, reinforced concrete building. The building 

contains 8,700 sq. ft. of floor space. It is fully air-conditioned. This 

building will be completed in its entirety. Estimated BOD is 7 December 1969. 

It has been recommended that this building be a 6595th ASTWg resource. 

(4) Building 8510, Operational Training and Evaluation 

Facility (OTEF): This building is a single-story, concrete block building 

with approximately 53,000 sq. ft. of floor space. This building will be 

completed with the exception of the installation of some temporary partitions. 

These partition 'sections will be delivered for future installation. Estimated 'BOD is 7'December 1969. It has been recommended that this building be 

a 6595th ASTWg resource. 

4. The following facilities are located in the South Vandenberg AFB 

industrial area: 

a. Industrial type buildings: Building 980, Gemini-B Test Cell: 

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This facility is a one-story, hi-bay, insulated steel building, It contains 

approximately 5,500 sq. ft. of floor space. Modifications were not completed. 

The building has been returned to a useable facility and is available to the 

FUP for disposition. 

b. New construction: All construction on new facilities on 

South Vandenberg was discontinued and the sites restored to their original 

condition. This included proposed Building 960, Pyrotechnic Test Cell, and 

Buildings 633 and 634, Pyrotechnic BtorageAreas. 

B. Status of MOL Space Launch Complex (SLC-6) Vandenberg AFB (as of 

15 October 1969) 

1. The construction effort at SLC-6 was accomplished in three phases, 

i.e., Site Preparation phase, Complex Peripheral Facilities phase, and the 

Launch Complex Facilities phase. The site preparation phase was started 

11 March 1966 and completed 26 August 1966. This phase included site excavation, intersite water main and some access road work. The complex peripheral 

facilities phase was started 7 July 1967 and completed 27 March 1969. This• 

phase included the power plant, railroad service area, ready building, Segment 

Ready Storage (SRS) building, Receipt Inspection and Storage (RIS) building 

and modifications to Missile Assembly Building (40)-5. . The launch complex 

facilities phase was started on 27 January 1967 and is still underway. This 

phase includes access roads, power lines, Launch Control Center (LCC), water 

storage tank, Aerospace Ground Equipment (AGE) building, parking areas, 

umbilical tower, mobile service tower, plus various other minor items. 

2. The acceptance status of all SLC-6 facilities is indicated in 

Table 1. 

3. The status of the SLC-6 facilities still under construction is 

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(a) Construction of the umbilical tower and mobile service 

tower is still in progress. The projected BOD of these facilities) including 

completion of all validation test procedures, is 8 December 1969. The U. B. 

Army Corps of Engineers Contractors are projecting that they will be completely off the site by mid-February 1970 and that all punch list discrepancies will 

also be resolved'by this date. The painting effort is expected to continue 

through the first quarter of CY 1970. 

(b) At present, the lower MOL Environmental Shelter (MES) 

door cannot be completely closed because of physical interferences. This 

interference is caused by misalignment of the lower MES door with the fixed 

portion of the MES. The estimated cost to fix this problem is $53,000. Since 

this represents a large percentage of fUnds available to complete SLC-6, 

the local Systems Command Civil Engineering office has decided not to proceed 

at this time. If funds are available upon completion of the project, action 

will be taken through the construction agency to correct the door alignment. 

4. Known Use of Accepted SLC-6 Facilities: 

a. The SLC-6 Power Plant is being maintained in full operational status to supplement commercial power needed for South Vandenberg. 

b. The SLC-6 Fire Station is being maintained in full operation 

to support South Vandenberg. 

c. The Receipt Inspection Storage (BIS) and the Segment Ready 

Storage (SRS) buildings and the Railroad Service Building/Area will be 

dispositioned by the FUP. They will be used by the United Technology Center 

(UTC) for support of the operations at SLC-4 East (Titan III-D). 

5. Present and Future Maintenance Status for SLC-6: 

a. As of 14 July 1969 all SIC-6 maintenance (of Air Force 

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accepted facilities) is being accomplished by the 4392d SAC Civil Engineering Squadron.. 

b. Upon final acceptance of SLC-6, the facilities will be placed 

in a caretaker status which essentially calls for the 4392d Civil Engineering Squadron to minimum maintain/operate SLC-6. The lot STEAD is presently 

awaiting approval from SPX Eq to allow the 4392d CES to inplement the SLC-6 

Downmode Maintenance Plan. 
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• TABLE I 

ACCEPTANCE STATUS - SLC-6 FACILITIES. 

1. Site Preparation Phase 

Accepted 26 Aug 66 

2. Complex Peripheral Facilities Phase 

Date of 

Acceptance Walk-Thru 

3 Apr 68 

17 Jun 68 

17 Jun 68 

Area 

MAB-5 

Ready Bldg 

R. R. Service Area 

SRS (Segment Ready Storage) 

Bldg and R. R. (Railroad)Lines 

ISZtt eUFO% 11C11 & ',Hit 

Remarks 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

17 Sep 68 

25 Jul 68 Accepted with punch list 

RIS (Receipt Inspection Storage) 11 Sep 68 

Building 

Accepted with punch list' 

Power Plant 27 Mar 69 Accepted with punch list 

3. Launch Complex Facilities Phase: 

Roads "N" and "0" 

69KV and 12. 47KV Power Lines 

Sewage Treatment Plant 

Liquid Petroleum Gas Tank 

Theodolite Bldg 

Series 7 Communications Manholes and Underground Duct 

Oxidizer Holding Area 

Fuel Holding Area 

8 May 68 

17 Jun 68 

10 Jul 68 • 

10 Jul 68 

10 Jul 68 

17 Jul 68 

25 Jul 68 

25 Jul 68 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Table I Page 1 
24 Jul 68 

24 Jul 68 

12 and 13 

Aug 68 

21 Aug 68 

11 Sep 68 • 

• :• 

..,„ 

Accepted with punch list''; 

Accepted witlepunch list. 1 

Accepted with punch list 

Accepted with punch list 

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R. R. Line "B" to Station 

Gas Storage Area 

Launch Control Center ) 

Parking Lot Area 

Fan Pads & LCC-AGE Bldg) 

Electrical Tunnel 

Master Substation 

Flammable Material 

Storage Bldg 

Access Roads "B", "E", ) 16 Sep 68 and Accepted with punch list 

"M" and "G" • ) 23 Jul 69 

Essential Power Supply 

Water Storage Tank, 42" Water 

Line, PRV Stations, & Underground Water Utilities 

Complex Service Building 

(Rooms 110, 111, 112 and 

113 not included) 

Slide Wire Anchor 

A/C (Air Conditioning) Shelter 

and 42" Air Duct 

T. V. and Film Camera Pads 

AGE Bldg (Lower Lever and 

Comm. Manholes 1-C, 2-C, 

3-C, 4-C, and 9-C) 

Liquid Hydrogen area, Fan 

Houses East and West, 

Exhaust Fan 

Paved Parking Areas, Graded 

Areas, Security Fence, Erosion 

Control 

Final Grading, Sewerage 

Treatment Plant Fence 

Liquid Oxygen Area 

18 Nov 68 

25 Nov 68 

17 Dec 68 

17 Dec 68 

7 Jan 69 

7 Jan 69 

7 Feb 69 

12 Jun 69 

23 Jul 69 

23 Sep 69 

Projected HOD 

date, 2 Feb .70 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 

Accepted with punch list 
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.,•1 .14 

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Upper Floor, AGE Bldg • 

Umbilical Tower Projected BOD 

date, 8 Dec 69 

Mobile Service Tower 

Complex Service Bldg 

(Rme 110, 111, 112, 113) 

Projected BOD 

date, 2 Feb 70 

'I 

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MOL SYSTEMS OFFICE PERSONNEL 

AND RESPONSIBILITIES 

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A. Introduction 

B. Responsibilities and MOL SO Assistance 

C. Possible Problems 

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A. INTRODUCTION 

Since the formal announcement of termination by the Secretary of Defense 

on 10 June 1969, the MOL Systems Office has applied its efforts toward terminaing all Government contracts and agreements in the most orderly and costeffective manner. 

Immediately after 10 June, the MOL SO formulated an internal plan for 

reduction of personnel in the Systems Office. Prior to the authorized release of any technical personnel, contract performance evaluations were completed to aid responsible TCO's in their final settlement negotiations. As 

individual personnel completed their required duties, releases were authorized and personnel reassigned in conjunction with AFSC personnel planners. 

The MOL SO has maintained a detailed roster of,the locations of reassigned 

personnel so they can be easily reached if further technical negotiation 

support is required. 

The current MOL SO represents the termination team and is comprised of 

specialists in procurement, program control and. administrative disciplines: 

The current personnel phasedown plan calls for a continued reduction as 

the required level of effort diminishes. 

MOL SYSTEMS OFFICE PERSONNEL SUMMARY 

1. Ac tuals 

a, 10 June 1969 

Officers 163 

Airmen 11 

Highgrade Civilians 33 

Secretarial 

Total 264 

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b. 31 August 1969 

Officers 25 

Airmen 6 

Highgrade Civilians 12 

Secretarial 13 

Total 60 

c. 15 October 1969 

Officers 6 

Airmen 3 

Highgrade Civilians 10 

Secretarial 10 

Total 29 

-2. Forecast 

a. 1 January 

Officers 0 

Airmen 

Highgrade Civilians 6 

Secretarial 

Total 10 

b. 1 April 

Officers 0 

Airmen 1 

Highgrade Civilians 5 

Secretarial 2 

Total 8 

Effective 1 December 1969, Mr. T. Rutter, Deputy Director, Procurement and Production will assume full responsibility for the activities 

of the MOL Systems Office and will be reporting directly to General Higgins. 

He will continue to draw funding support from Colonel Ford of the MOL Program 

Office. 

At the date of termination, it was recognized that the Aerospace Corporation could be of no further assistance to the MOL SO and all support 

was terminated effective 30 June 1969. All Aerospace financial charges 

accrued since that date havebeen in conjunction with Aerospace personnel 

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B. Responsibilities and MOL SO Assistance. 

Since 10 June 1969 responsibilities within the MOL SO either have 

been transferred, combined, or reduced as the situation required. 

Terminating Contracting Officers were assigned in coordination with 

the Air Force Contract Management Division (see figure 4 Page ) and 

the MOL SO Procurement and Contracts Division has been actively supporting 

their efforts. 

Contract funding responsibilities have been retained in the MOL SO 

with funds made available through the MOL P0. 

Guidance on the disposition of MOL residual property and required 

coordination among and between government agencies continues to be performed 

by MOL Procurement and Conttacts personnel. 

Reduction of inhouse documentation and the storage of historical 

program records as well as coordination with the Defense DocumentatioA 

Center (DDC) has been a continuous activity. Every effort is being made to 

surface a maximum amount of Dorian documentation without jeopardizing the 

security posture of the program. 

Responsibility for Contractor and External Government Agency program 

Security matters (personnel and documentation is currently maintained by the 

MOL SO but will be transferred to Special ,Projects (SP) effective 1 Jan 1970._ 

All supporting activities which were administered within the MOL SO 

prior to termination have now been returned to responsible SAMSO organizations and future support is to be provided by those organizations. 

All excess floor space, equipment, and facilities of the MOL Program 

Information Center (MOL PIC) have been returned to SAMSO for local uses. 

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C. POSSIBLE PROBLEMS 

All activities related toward final termination of the MOL Program 

are in various stages of completion as documented in other areas of this 

report. The MOL SO has analyzed its capability for completion of those 

tasks which are internally controlled and has concluded that no problem 

areas exist. 

Several areas, however, require assistance from organizations external 

to the MOL SO and are addressed in PART VII, "Assistance Required and 

Recommendations for the Ptiture." 

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PART VI 

OFFICIAL FINANCIAL HISTORY 

SECTION A 

FINANCIAL HIGHLIGHTS 

MANNED ORBITING LABORATORY PROGRAM 

10 JUNE 1969 

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TABLE OF CONTENTS , 

Page 

I INTRODUCTION 36 

II EARLY HISTORY 36 

III MANAGEMENT 37 

' IV NINE FLIGHT BASELINE '37 

V SEVEN FLIGHT BASELINE (OPTION 6) 38 

VI ENTRY INTO PHASE II - ENGINEERING DEVELOPMENT 38 

VII 9/12/15/12-C BASELINE EXTENSIONS 40 

VIII THIRTEEN WEEK ADJUSTMENT 41 

IX TWENTY MONTH EXTENSION 41 

. 

X FY 69 BASELINE - 24 MONTH EXTENSION 43 

XI FY 70 BASELINE :43 

XII TERMINATION 44 

XIII SUMMARY 44 

ENCLOSURES NO OF PAGES 

1. MOL LAUNCH SCHEDULE 1 

2. CHRONOLOGY OF MAJOR EVENTS 1 

3. MOL FY FUNDING CHRONOLOGY 2 

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I.(U) Introduction 

On 10 June 1969, the Secretary of Defense announced the termination 

of the Manned Orbiting Laboratory Program. Since August 1965, when the 

program entered Phase I (Contract Definition), a total of 46 months had 

elapsed. During this time period, the program had undergone over eight 

major rescheduling exercises and spent over $1,300 million. 

II. Early History 

(U) On 11 December 1963, a memo from the Director of Defense Research 

and Engineetng to the Assistant Secretary of the Air Force (R&D), subject: "Manned Orbital Program", announced that a Manned Orbital Program 

had been approved by the Secretary of Defense and assigned to the Air 

Force. Conceptual studies were conducted from June to December 1964 

and additional program objectives were identified. 

—440- In January 1965, the Department of Defense's direction to couple 

the Manned Orbiting Laboratory Program with an advanced photo reconnaissance payload established the basic characteristics of the program. 

W) In August 1965, President Johnson announced approval for the 

program to enter Phase I, Contract Definition, in October 1965. The following contractors were selected to provide the major system segments: 

(U) a. Douglas Aircraft Corporation - (later, McDonnell Douglas. Astronautics Company - Western Division, MDAC-WD) - Laboratory Vehicle and 

System Integraton. 

(U) b. General Electric Company - Mission Module and Payload Integration. 

c. Eastman Kodak Company - Photographic Payload. 

(U) d. McDonnell Aircraft Company - (later McDonnell Douglas Astronautics Company - Eastern Division, MDAC-ED) - Gemini B. 

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(U) e. Martin-Marietta Corporation, AC Electronics Division, Aerojet 

General Corporation and United Technology Center - four associate contractors 

for the Titan IIIM Launch Vehicle. 

(U) The program consisted of seven flights (Encl 1) with the first launch 

in March 1968 and the First Manned Launch in October 1968. 

-(4)- The seven launch vehicles were to be two modified Titan IIICs for the 

first two development, flights and the subsequent five manned flights were to 

use new Titan IIIMs. The total program cost was estimated at $1,500K 

however, this estimate did not include the DORIAN aspects of the prOgram. 

III. Management 

....44)}.- During Phase I (Contract Definition) and through July 1967 of Phase II 

(Engineering Development), the MOL management structure involved three channels 

of direction to participating activities. The Director for MOL was responsible 

for the management of the Orbiting Vehicle aspects of the program development. 

The Covert "Black" photographic payload was the responsibility of the Direr 

for for Special Projects and the booster development was the responsibility 

of the Titan IIIM System Program Office, Space Systems Division. On 1 July 

1967, the Director for MOL was assigned the total MOL System Management 

function and became responsible to the Secretary of the Air Force and the 

Director, National Reconnaissance Office (DNRO), for the management, develop.. 

ment, acquisition and testing of the total MOL System in the approved 

baseline program, including the DORIAN payload. 

IV. Nine Flight Baseline 

_(-D)- In February 1966, the first schedule slip occurred due to payload 

nonavailability. T,5/photographic payload could not be delivered in time for 

the first mannaelaundh, Flight #3, scheduled for October 1968. In addition, 

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-110-the launch schedule was expanded to a total of nine flights by the addition 

of two unmanned flights (Enc1 1). The addition of the automatic mode 

created major changes to the program baseline. All launches were to use the 

Titan IIIM. The cost estimate for the nine flight program in May 1966 was 

$2,100M. 

V. Seven Flight Baseline (Option 6) 

44- The cost estimate for the nine flight program was greater than the 

funds programmed for MOL by HQ USAF. In March-April 1966, the Systems Office 

(SO) initiated an in-house cost reduction exercise to develop a program that 

programmed funding could support. This exercise resulted in reducing the 

nine flight SO estimate of $2,058.7M by $112.1M through reduction in program 

content. An additional $195.2M reduction accompanied the selection of a seven 

flight launch schedule known as Option 6 (Enc1 1). The cost estimatei for 

the seven flight program was $1,751.4M. Schedule and program contents were 

approved by the MOL Policy Council on 20 May 1966, and by Dr. Foster at a 

DDR&E briefing on 21 May 1966. First launch was scheduled for April 1969 

with the first manned launch in December 1969. 

VI. Entry into Phase II. Engineering Development 

(U) From August 1965, when the program entered Phase I, to 1 September 

1966, the start of Phase II, the MOL Program had been operating under the 

following general ground rules: 

(U) a. First manned flight before CY 1970 (December 1969). 

(U) b. "Bare bones" technical content. 

(U) c. No, contingency for changes in stated requirements. 

ao d. Program sensitive to total program cost. 

3. 

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-40)-- The proposals for the MOL Phase II (Engineering Development) from 

MDAC-WD, MDAC-ED and GE were based on a 1 September 1966 Authority to Proceed (ATP). Due to changes in the technical and program content requirements, negotiations were not concluded until the week of 10 December 1966. 

A contributing factor in "stretching out" the period of negotiation was the 

favorable position of the contractors due to the sole-source nature of 

the procurements. In order to protect the master program schedule and 

not require new proposals for a later ATP, several alternative courses of 

action were examined. The decision was made with the concurrence of Assistant Secretary of the Air Force Flax and the Program Director, General 

Schriever, to extend Phase IC effort beyond 31 August 1966 to protect 

the lead time and permit the contractors to be paid as the contract was 

definitized. 

--44- Firm Fixed Price Supplemental Agreements (S/As) for the Phase I refer-. 

enced contracts were negotiated and distributed. The intent of these S/As 

was to limit the contractors to supporting only those tasks essential to 

the waster schedule. The negotiated S/A dollar amounts were within the obligation limits of the Government's Phase II negotiated position. In December 1966, the Program Office documentation carried a total of $1,979.2M 

for the negotiated'baseline and included an estimate of $295M for the 

deferred field test effort, facilities, etc. The total cost of the program 

including the DORIAN Payload was estimated to be $2,274.2M in December 1966. 

Although this estimate included $295M of deferred and facilities effort, 

there was no allowance for growth. 

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VII. 9/12/15/12-C Baseline Extensions 

(U) Fiscal Year (FY) 68 funding requirements were estimated to be $58714 

and $647M/FY 69. The negotiated baseline schedule was being paced by 

fiscal year funding availability, technical progress, and lead time, On 

15 February 1966, at the MOL Monthly Management Meeting, direction was 

given to control FY 67 expenditures to stay within the approved budget 

of $286M, and to plan on $550M/FY 68 and $600M/FY 69. A series of schedule 

adjustments were exercised. A nine-month option slip produced funding 

estimates of $284/667/64114 for FY 67/68/69 and a 12-month optional slip 

produced estimates of $273/586/63714; neither estimate was within the funding 

constraints of $550M/FY 68 and $600M/FY 69. 

0;0 The nine and twelve-month schedule options were briefed in Washington 

to the MOL Policy Council (General Ferguson and Secretary Flax)(on 

10 March 1967. Neither option was acceptable and direction was given to 

proceed to and develop a schedule with a 15-month slip utilizing FY 6//68/69 

funding constraints of $286/480/620M. Funding requirements were to be 

calculated on an expenditure rather than a commitment basis. On 14 April 1967, 

the 15-Month option (Encl 1) was briefed at the MOL Monthly Management Meeting. Funding estimates were $286/519/62714 for the FY 67/68/69 period for 

a total Program cost of $2/47M. However, the FY 68 estimate of $51914 exceeded the available $48014. 

-**- On 12 May 1967, direction was given to reprogram to a 12-month "Comrpact" (12-C) schedule (Encl 1). Direction was given to preserve the content 

of the baseline schedule, to do only the minimum tasks necessary, and to delay activities as much as possible in FY 68. The photographic payload comb,- 

tractor (EKC) was to be fully funded. The FY 67/68/69 funding requirements 

were $292/480/68014 for a total Program cost of $2,350M. It was recognized that 

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(U) the funds available were not adequate to support the effort in FY 68 

and that an additional $60-80M would be required to maintain the schedule 

(12-C). Direction was received at the beginning of FY 68 to contract for 

$480M of effort. By the end of September 1967 all elements of the program had been placed under the SO. 

VIII. Thirteen-Week Adjustment 

-444-- In October 1967, the FY 68 funding problem was intensified with a 

reduction in the FY 68 funding from $480M to $430M. Some hope existed 

that an additional $50M could be reallocated to the program from other 

resources. The planning figure for FY 69 remained at $640M. Emphasis on 

the unmanned flights, Flights #6 and #7, continued. Performance was to 

be optimized and schedule adjustment provided the only possibility for 

relief. Funding began at. this time on an expenditure basis with a contractor forecast for FY 68 of $601M vs the $430M available. A series of 

management evaluation reviews were initiated. Contractors were directed 

to reduce funding levels aild visits were made to each plant to review the 

total financial situation. A schedule adjustment meeting was convened at 

Huntington Beach en19 and 20 October 1967. The time periods from 

1 November 1967 to 1 July 1968 were stretched from one week in November 

1967 to 13 weeks in June 1968; From 1 July 1968 to the end of the program, a 13-week block slide was impesedel. A subsequent presentation in 

Washington indicated that the contractors could not meet this schedule 

within the fiscal year funding constraints. 

IX. Twenty-Month Extension 

(U) A meeting was held at the SO on 6-7 November 1967 to reevaluate 

the program content, Contractors presented their segment schedules 

GROUP 3 

6. Downgraded at 12 year 

"gsgifigkakt intervals; not 

automatioaliv 

• 

1 0 1969 
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"*E+ compatible with the anticipated fiscal year funding allocations for 

FY 68/69/70/71 of $430/640/590/590M. In general, each segment estimated 

approximately a 12-month slip. Realizing the full impact of the $430M/FY 68 

funding, immediate action was taken to put Titan IIIM and MDAC-ED on a 

level of effort and terminate all contractor support'at Vandenberg AFB. 

Following the presentation of several iterations of schedule options at a 

meeting on 28 November 1967, it was obvious that the FY 68 and FY 69 funding 

requirements were still too high. The contractors retired to Huntington 

Beach to replan the master schedule among themselves within the funding 

constraints and SO program guidelines. The resulting program was briefed 

to the MOL Program Review Council (Secretary Flax) on 8 December 1967. 

A 20-month extended baseline schedule was proposed and tentatively 

approved (Atch 1), subject to finalapproval by the Secretary of Defense. 

Secretary Flax realized that a manageable dollar variance might be required 

between contractor commitment and government funding at the end of FY 68. 

Total program costs were estiamted at $2,840M. EKC was given full funding; 

all other contractors were adjusted to stay within the FY 68 limit of $430M. 

Work continued on the 20-month extended baseline through the remainder of the 

fiscal year. Actual contractor commitment exceeded available funds by $27M 

but remained within the expected manageable variance. 

4Q" On 9 December 1967, Dr. Brown sent a memo to Secretary McNamara presenting two options: to fund the current program in FY 69 at no less than 

$600M; or if the first option was not possible, to fund the current program ' 

at no less than $520M in FY 69 and accept a 5 to 6 month additional "stretch 

out". The second alternative was selected. 

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(U) The President's FY 69 budget contained $600M for the MOL Program. 

During the January-March 1968 time period, it became apparent that the FY 69 

funding level would be less than $600M, Assuming a cut of $80K0OM, a 

series of program content reviews were conducted with the contractors at 

the SO in April and May. The conclusions reached by these reviews wefts 

(U) a. Flights #1 and #2 (Development Flights) were to remain in the 

program. 

(U) b. A seven flight program was the minimum number of flights. 

c. No more significant major items or tasks (AGE, Simulators, etc.) 

could be eliminated. 

X. FY 69 Baseline - 24-Month Extension 

(U) On 1 July 1968, the actual funding level for FY 69 was established 

at $515M, and the SO was directed to again exercise the problem with the 

contractors. The outcome of the exercise was an integrated schedule with 

a 24-month slip of Flight #3 from the negotiated baseline. The.MOL Program 

Review Council approved the FY 69 baseline (Encl 1) on 25 July 1968. The 

estimated funding requirements, as published in the updated MOL System 

Package Plan (SPP) of September 1968, were $515M/FY 69 and $600M/FY 70. Total 

program costs were estimated at $3,050M. No contingency was provided for 

unidentified changes,and provisions for incentives were excluded. 

XI. FY 70 Baseline - 30-Month Extension 

(U) On 6 December 1968, a Development Concept Paper (DCP) sent to the 

Assistant Secretary of Defense carried the MOL line at $576M for FY70; 

a reduction of $24M from the SPP requirements of $600M. 

(U) On 19 March 1969, Secretary Laird advised the Senate Armed Services 

Committee that the original FY 70 MOL budget for a seven launch program 

had been reduced to $556M. The further reduction of $20M in FY 70 was the 

result of a determination in Washington that a six launch program could 

8. 43 
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CONFIDENTIAL 1 0 JUN1969 

-1-0- accomplish the approved objectives. The unmanned flights (Flights #6 

and #7) were removed and an additional manned flight (Flight #6) was 

added. It should be noted that the SO estimated FY 70 savings for removing 

two unmanned and adding one manned flight was $4M (-18M +14M) when compared to the FY 69 baseline. The SO indicated that a slip of the FY 69 

baseline would remove any dollar savings from FY 70, 

(U) On 12 April 1969, the SO was advised that General Ferguson was assembling a high-level government team to review the MOL status and its prospects based on a $525M funding level for FY 70. During the period of 

6-9 May 1969, a schedule adjustment exercise was held with the contractors 

at Huntington Beach and a FY 70 baseline schedule was developed (Encl. 1) 

using a funding level of $525M. The FY 70 baseline was briefed to Dr. 

Seamans on 9 May 1969. The SO emphasized that this new baseline program 

could be accomplished without degrading manned safety or system performance 

provided that a funding level of $525M would be available for FY 70 and that 

a firm commitment of $625M to $640M could be made for FY 71. Total program 

cost was estimated at $3,471.M. 

XII. Termination 

(U) On 10 June 1969, the Secretary of Defense announced the termination of 

the MOL Program to the Congress. 

XIII. Summary 

(U) Since the original baseline was negotiated in December 1966, the 

MOL Program has reacted to funds availability. The exercising of the 

funding problem has been based upon optimization of performance and fiscal 

year costs, which in turn resulted in schedule slips and increased total 

program costs. Program funding levels were reduced each year from the 

9. 

CON nUNTIAL 

GROUP 3 

Downgraded at 12 year 

intervals; not 

automatically declassiflei 
.NRO APPROVED FOR 

RELEASE 1 JULY 2015 

(U) planned levels, and allocations to each of the system segments generally 

followed a corresponding across-the-board reduction. Schedule.adjustments, 

due to non-availability of funds, were a continuing necessity from the 

inception to the termination of the program. 

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19 Mar1969 
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RELEASE 1 JULY 2015 

.16. • • mag VIA BYEMM DORIM CONTROL SYSTEM 

PART VI 

OFFICIAL FINANCIAL 

HISTORY 

SECT/ON B-1 

FINANCIAL ANALYSIS 

31 JULY 1969 

LINE VIA BYEAIM 

CONTROL SYSTEM 

46 

DORIAN. 
-•_ 

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MR SYSTEM 

TABLE OF CONTENTS, 

b. 1 

bat 

I INTRODUCTION 

II FY 70 FUNDING REQUIREMENTS 48 

III ANALYSIS OF CONTRACTORS' FUND REQUIREMENTS I. 49 

IV TERMINATION TIMING 49 

V SPECIAL TERMINATION COSTS. 49 

VI CONTRACTOR FUNDING REQUIREMENTS: I 50 

1. 

ENCLOSURES NO. OF PAGES 

MOL FY FUNDING CHRONOLOGY . 2 

2. SUMMARY OF DIRECTION/GUIDANCE GIVEN TO THE 

MOL SO ON FY 70 FUNDS 1 

3. SUMMARY OF ACTION WITH CONTRACTORS ON FY 70 FUNDS 1 

4. CONTRACTOR FINANCIAL SITUATION ( AT TERMINATION 

LESS WORK AFTER 10 JUNE). 1. 

5. 31 JULY 1969 FUND REQUIREMENTS #1 1 

6. 

/0 1'0 ■ 411:; 

31 JULY 1969 FUND REQUIREMENTS #2 

km 

1 

7. TERMINATION TIMING[ , • 1 

8. CONTRACTOR IDENTIFICATION OF FUNCTIONS 

GENERATING THE SPECIAL TERMINATION COSTS 2 

9. SPECIAL TERMINATION COSTS 3 

10. CONTRACT FINANCIAL STATUS AS OF 31 JULY 1969 2 

, • 1 irA • r 0,1 I ',II' 

NM VIA 

maul 

BYEMAN SECRET paw SYSTEM 
RELEASE 1 JULY 2015 

CONFIDENTIAL 31 JUL 1969 

Introduction 

The purpose of this Section is to provide an analysis of the MOL 

financial situation highlighting the FY 70 funding requirements and the 

contractors' financial forecast subsequent to termination. 

2. FY 70 Funding Requirements 

On 1 July 1968, Dr. Flax, Deputy for Defense Research and Eng ineering, 

directed the MOL Program to plan for $515M in FY 69 and $600M in FY 70. 

Using these funding levels, the Systems Office (SO) and the contractors 

developed the FY 69 Baseline Schedule. However, in October 1968, the 

contractors' forecast requirement for FY 70 exceeded $730M. 

On 6 December 1968, a Development Concept Paper sent to the Assistant 

Secretary for Defense carried the FY 70 MOL requirements as $576M. 

On 19 March 1969, Secretary Laird advised the Senate Armed Services 

Committee that the FY 70 MOL budget of $576M for a seven flight progiam had 

been reduced to $556M. The $20M reduction in FY 70 was the result of a 

determination that a six (6) launch program could accomplish all of the 

approved program objectives. 

On 2 April 1969, following receipt of a 1 April Program Office TWX, the 

SO advised all contractors of the six (6) flight program and that $556M 

for FY 70 represented 70% of the requirements to maintain the FY 69 Base—

line Schedule. The TWX further advised all contractors to maintain 4th 

quarter FY 69 costs at'a level comparable to those experienced in the 3rd 

quarter of the year, avoid the manpower buildup scheduled for the 4th quar—

ter, and that a schedule slip of at least three months could be anticipated. 

On 12 April 1969, the MOL SO was advised by the Washington Program 

Office of the prospect for $525M in FY 70. During the week of 6 May, the 

GROUP 3 

Downgraded at 12 year 

1. CONriDRIATIA1 intervals; not 
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--CoNFeEN-RAL-- 3 1 JUL1969 

SO and contractors mat and developed a new FY 70 baseline schedule based 

on an anticipated funding level of $525M for FY 70. 

On 9 May 1969, the FY 70 baseline was presented to Dr. Seamans. The 

briefing emphasized that in order to provide the two years of schedule 

stability required to move the program forward to first manned launch, 

a firm commitment must be made for $515M for FY 70 and $625M-64OK for 

FY 71. On 10 June 1969, the program was terminated. 

Enclosures 1, 2 and 3 respectively summarize the MOL FY 70 funding 

chronology, the direction/guidance given to the MOL SO and the action taken 

by the SO with the contractors. 

3. Analysis of Contractors' Fund Requirements 

The allocation of monies obligated against the various contracts is 

shown on Enclosures 4, 5 and 6. The contractors' 10 June position is 

split into noncancellable (NCC) and expenditures plus fee (E + F) on 

Attachment 4. The remaining fund requirements under special termination 

cost (STC) and limit of government obligation (LOGO) are shown on Attachmeat 6. 

4. Termination Timing 

Although the program was terminated on 10 June, contractor termination 

was phased from 10 June through 31 July. Enclosure' 7 indicates by contractor the percent of termination on 10 June; and, for those not 1002 

terminated the date that final termination took place. It was extremely 

difficult to accurately define the scope of the work not terminated. 

Rough.„- estimates attribute $7.458M of the forecasted $53.455M (Attachment 5) to this effort. 

5. Special Termination Costs 

The contractors' identification of the functions generating the STCs - le • 

GROUP 3 

2.

-- 8Warik-H ALHar - 

49 Downgraded at 12 dear 4 2-. 
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CONFIDENTIAL 3, JUL 1969 

shown on EnclosUre 8. The categories of costs to which prime contractors 

and subcontractors may be entitled in the event of termination for the 

convenience of the government is shown on Enclosure 9. 

6. Contractor Funding Requirements 

The contractor funding requirements are shown on Enclosure 40. The 

specific line item entries are as follows:: 

a. Government liability as of 10 June represents the total amount 

payable by the government and includes expenditures, profit, NCC,and 

termination expenses not included as STCs. 

b. Work not terminated 10 June,is the E+F for the, stop work or 

suspension of work period or fortlms,continuation,of thati effort,not, 

terminated. 

c. STCs are the amount designated in the contract, or,in several 

instances, the contractor's current estimatei of,STC.J.e.,.MMCContract 

$7.5M vs current forecast of $3.5M. 

d. Total required to terminate MOL,program,iS.thesum of a + b c. 

e. Funds on contract 10 June represents the .amount actually obligated 

on the contract.as of that date. 

f. Estimated requirement for program termination represents, the. 

difference between funds obligated.as of 10,June and the .current financial ,. 

forecasts ( d - e). 

g. Funding 10 June to date represents all,funds ubllgated on the 

contract subsequent. to 10 June and includes FY. 69 FY.70 and, other,prograte 

funds. , 

h. Remaining to be funded represents the,difference.between,the 

estimated requirement for programHtermination;(f),and thGa_ aunt currently ROI'ly 

3. CONFIDENTIAL Downgraded at 12 ye" 

aitomitioally deolassifiek 

intervals; not 

• 
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--eefiFfEefTiAE- 31 JUL i969 

obligated on the contract (e + g). This amount is further broken out to 

identify the amounts remaining to be funded for the amount payable by the 

government through date of compleje termination exclusive of STCs and 

1 ) 

balance of .funding required forSTCs.„, 

' i I ', I 111 AM-Pl!lf i I, ..I1 I• 

• .,.I I Ii.,i t „ilI 

4. 

GROUP 3 

Downgraded at 12 

yeas intervals; not 

automatically deolassiffel 
FY 68reduced from 587 to 480 

Total of 1980 Reprogrammed to 12 Mo "Compact" 

Total of 2350 FY 68 reduced .from480to430 

Plan 640 forFY 69; 590 for FY 

Reprogrammed with 13 week slip 

7-- Reprogrammed to 20 Moslip (12C + 8) 

FY 69 MOL Line carried at 600 

0 

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REMARKS 

4' FY 69 reduced from 640 to 515 

o 

Plan "Full" funding fromFY 70 

(Requirement of 730) 

o 

Reprogrammed for 24 Mo s lip (20 4. 4) 

• 

Total of 3150 • 

• 

FY 70 Baseline Schedu le developed in N 4 

o 

Development Concept Paper (DCP) to Asst 

Secretary for Defense - FY 70 from600 to 576 

o 

SecretaryLaird's recommendation tothe 

Senate ArmedServices Committee for a 

six (6) flight program- estimating a $20M reduction in FY 70 

o 

TWXadvised SO of prospects of $525M for 

FY 70 

o 

Total of 3475 

o ProgramTermination 

• Cumulative effect of FY 67/68/69 - 357M 

FY 70 "600" was for planning, requirement 

was 730 

i.6 

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600M 

balance with adjusted FV-3. 

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* AUTHORIZED LIMITED PAtILITY 
DORIAN\ \ HANDLE VIA BYEMAN • 

CONTROL SYSTEM ONLY 

NRO APPROVED FOR 

RELEASE 1 JULY 2015 

CONTRACTOR IDENTIFICATION OF FUNCTIONS GENERATING 

THE SPECIAL TERMINATION COSTS 

1. ADAC-WD 

a. Post-termination plant maintenance and operational costs for 

both Prime and Subcontractors 

b. Settlement Expenses for Prime and Subcontractors 

c. Return of Prime and Subcontractor field service personnel 

from sites 

2. MDAC-ED 

a. Severance Pay for Prime personnel 

b. Return of Prime field service personnel from sites' 

c. Settlement Expenses for Prime and Subcontractors 

3. GE 

a. Applied and unapplied surplus personnel for both Prime and 

Subcontractors 

b. Prime contractor settlement expense of subcontractor and vendor 

settlement activities 

c. Termination Inventory 

d. Other termination charges 

4. EKC 

a. Travel connected with termination 

b. Direct labor people estimating physical completion 

c. Direct labor taking inventory, storing and disposing 

d. Direct labor involved in settlement of vendor claims 

e. Q.C. cost associated with incoming material 

f. Relocation expenses, associated with moving personnel back to ONF 

g. Credit for sale of scrap 

h. Non-burden center personnel involved in subcontract settlement 

i. Non burden center personnel involved in inventory taking 

trANoLe VIA BYEMAN CTPDETtmninti 
RELEASE 1 JULY 2015 ORM HANDLE VIA BYEMAN NRO APPROVED F R 

I tONTROL: SYSTEM ONLY 

j. Non-burden center personnel involved in preparing company claim 

k. Indirect labor personnel engaged in wrap-up activities not covered 

by other jobs 

1. Indirect personnel estimating % complete 

m. Indirect personnel taking inventory, storing and disposing 

n. Direct labor personnel engaged in wrap-up activities not 

specified by other jobs , 1, 

s. MMC 

a. Severance pay 

b. Post-termination plant maintenance and operational costs 

c. Settlement.expenses I. l' t, 

The above for both Prime and Subcontractors 

6. AGC 

Plant administrative functions and severance pay for both Prime 

and Subcontractors 

7. UTC 

Settlement Expense for Prime 

8. ACED 

Settlement Expense for Prime 

HANDLE VIA BYEMAN 

bums ',mow CveTrilal ANI V crenri Encl. 8 Page 2 no 
NRO APPROVED FOR 

RELEASE 1 JUIN 2015 

SPECTAL TF=ATION COSTS 

The categories of costs to which the Prime Contractor and the SubcOn• 

tractors trzy be entitled in the event of termination for the convenience 

of the Government are as follows: 

a. Severance Fay 

(1). ASPR 15-205.39(a) Costs of severance ;ay, rayment in 

addition to regular salaries and wages to workers whose employment is 

being terminated, are allouable only to the extent that, in each case, 

it is required by (i) law, (ii) employer-emplOyee agreement, (iii) 

established policy that constitutes, in effect, an implied agreement 

on the Contractor's part, (or (iv) circumstances of,the particular 

employment. 

(2) ASPR 15-205.39(b)(ii) ...Abnormal or mass severance pay. 

Accruals of pay for this purpose are not allowable. However, the 

Government recognizes its obligation to. participate, to the extent of 

its fair share, in any specific payment.- Thus, allowability will be 

considered on a case-by-case basis in the event of occurrence. 

b. Reasonable post-termination plant maintenance and operational 

costs. „ 

a. Settlement Expenses 

ASPR 15-20.42(f) - Settlement expenses.includingtthe following are generally allowable: 

,Accounting, legal, clerical and similar costs reasonably 

necessary for - 

(i) preparation and presentation to contracting officers 

of settlement claims and supporting data, and 

. (ii) the termination and settlement of subcontracts;, and 

(2) reasonable costs for the storage, transportation, protec- 

• • tion, and disposition of property acquired or produced for the contract. 

d. Cost of return of field service personnel from sites. 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 1 January 144 I F 1521 

SUPPLY AND RE3EARC11 CONTRACTS wan commEnciAL OP.GANIZATIONS 

15-203.37 Salim) Casts. 

(a) Selling costs arise in the marketing of the contractor's products and 

include cats of sales promotions, negotiation, liaison between Government 

representatives and contractor's personnel, and other related activities. 

(b) (CWAS) Selling costs are allowable to the extent they are reasonable and are allocable to Government business (but sea 15-107 and 154.03.1). 

Allocability of selling costs will be determined in the light of reasonable benefit to the Government arising from such activities as technical, consulting, 

demonstration, and other services which are for purposes such as application 

or adaptation of the contractor's products to Government use. 

(c) (C1VAS—NA) Notwithstanding (b) above, salesmen's or agents' 

compensation, fees, commissions, percentages, or brokerage fees, which are 

contingent upon the award of contracts, are allowable (filly when paid to 

bona fide employees or bona fide established commercial or selling agencies 

maintained by the contractor for the purpose of' securing business. 

15-205.33 Service and TVarranty Costs. (CWAS) Such costs include 

those arising from fulfillment of any contractual obligation of a contractor to 

provide services such as installation, training, correcting defects in the products, replacing defective parts, making refunds in the case of inadequate performance, etc. When not inconsistent with the terms • of the contract, such 

service and warranty costs are allowable. However, dam should be exercised 

to avoid duplication of the allowance as an eletneht of both estimated product 

cost and risk. . • 

15-205.39 Severance Pay. 

(a) (CWAS) Severance pay, also commonly referred to as dismissal 

wages, is a payment in addition to regular salaries and wages, by contractractors to workers whose employment is being terminated. Costs of severance pay are allowable only to the extent that, in each case, itris required 

by (i) law, (ii) employer-employee agreement, (iii) established policy that 

constitutes, in effect, an implied agreement, on the contractor's part, or (iv) 

circumstance of the particular employment. ; 

(b) Costs of severance payments are, divided. into two categories as 

follows: 

(i) actual normal turnover severance payments shall be allocated to 

all work performed in the contractor's plant; or, where the contractor provides for accrual of pay .for normal severances such 

method will be acceptable if the amount of the accural is. reasonable in light of paythents actually made for normal severances 

over a representative past period, and if amounts accrued are 

allocated to all work performed .in the conrtactor's plant; 

(CWAS) and , ,!, 

(ii) abnormal or mass severance pay is of such a conjectural nature 

that measurement. of costs by means of an accrual will not 

achieve equity to both parties. Thus accruals for this purpose are 

not allowable. However, the Government recognizes its oblig,aCon to participate, to the extent of its fair share, in any specific 

payment. Thus, allowability will be considered on a case-by-case 

basis in the event of occurrence. (CIVAS-NA) • 

ARMED SERVICES PROCUREMENT REGULATION I 15-235.39 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

1 January'; 140 1524.1 

SUPPLY AND RESEARCH CONTRACTS, WITH CO;IIMERCIALORGANIZATIONS • 

.. (3) If initial costs are claimed and have .not been segregated on the 

contractor's books, segregation for settlement purposes shall be made from 

cost reports and schedules which reflect the high unit, cost incurred during 

the early stages of the contract. , - • • • 

(4) When the settlement proposal is on the inventory basis, initial 

costs should normally be allocated on the basis of total, end items called for,by 

the contract immediately prior to termination; howeser., if the contract includes end items of a diverse nature, sonic other equitable basis may be used, 

such as machine or labor hours. • 

(5) .When initial costs. are included in the settlement proposal as a 

diiect charge, such costs shall not also be included in overhead. 

— (6) Initial costs attributable to only ,one, contract shall not be, allo. 

iire'd to other contracts. . . ; • , .. • , ; • • • 

(d) Lon of useful value of special tooling.; spe6iirMaglineridnd eyjuiprnent is generally allowable, provided— 

(i) such special tooling, machinery , or,equipment is not reasonably 

. capable of use in the other work of the contractor; 

• (ii) the interest of the 'Government: is protected by transfer of title 

or by other. means deemed appropriate 'by the contracting officer; 

• 7. . and 

•• (iii) the loss of useful value as to any one terminated contract is limto that portion of the acquisition cost which bears the same 

ratio to the total acquisition cost as the terminated portion of 

of the contract bears to the .entire terminated• contract and other 

. Government. contracts for . which the, special , tooling, special 

machinery and equipment was acquired. 

(e) Rental cost under unexpired lea-ses are generally allowable where 

. • clearly shown to have been reasonably necessary for the performance of the 

terminated contract, less the residual value of such leases, if---,- „ 

(i) the amount of such rental claimed does not exceed the reasonable 

use value of the property leased for the period of :the contract 

and such further period as,nty, be reasonable; and , • 

(ii) the contractor makes all reasonable efforts to terminate, assign, 

settle, or otherwiseyeduce the cost of such lease. • . • . 

There also may be included the cost of alterations of such leased property, 

provided, such alterations were necessary for the performance of the contract, and of reasonable restoration reqUired by the provisions of the lease, 

(f) Settlement expenses including the following are generally allowable: . 

(1) accounting, legal, clerical, and similar, costs reasonably necessary 

for— . . . 

(i) the preparation and presentation. to contracting officers of settlement. claims and supporting data with respect to. the terminated 

• portion of the contract, and 

(ii) the termination and settlement of subcontracts; and • • 

(2) reasonable costs for the .storage,' transportation, protection, and 

disposition of property acquired or produced for the. contract.. • 

(g) Subcontractor claims, including the allocable portion of claims 

winch are common to the contract and to other work of the contractor are --

generally allowable. 

ARMED SERVICES PROCUREMENT REGULATION I15-205.42 
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NRO APPROVED FOR 

RELEASE 1 JULY 2015 

--SECRET-DORIAN HA= %fix BYEMAN 

CONTROL SYSTEM ONLY 

PART VI 

OFFICIAL FINANCIAL 

HISTORY 

' SECTION B-2 

• 

• 

VARIANCE 'ANALYSIS 

31 JULY 1969 

HANDLE VIA BYEMAN 

CONTROL SYSTEM ONLY "IfelifFtORIAN 
NRO 

RELEASE 1 JULY 2015 

HOME VIA BYEMAN 

CONTIIOL SYSTEM ONLY, 

TABLE OF CONTENTS 

I INTRODUCTION AND EXPLANATION OF ENCLOSURES 

I i 

) 

ENCLOSURES NOi'OT PAGES 

1. FORECAST/CLAIM ANALYSIS (AS OF 30 JUNE) 1 

2. FORECAST/CLAIM ANALYSIS (AS OF 31 JULY) 1 

3. MDAC-WD 13 

4. GE 2 

5. MDAC-ED. 4 

6. MMC 4 

7. UTC 4 

HANDLE VIA BYEMAN 

CONTROL: SYSTEM nut le 

53 

-eEPOST-- DORIAN 
NROAPPROVEDFCrK 

RELEASE 1 JULY 2015 

I , I h 

I. INTRODUCTION AND EXPLANATION OF ENCLOSURES 

The Variance Analysis documents contractor responses to the SO 

regarding differences between forecast and actualcIaims through' 10 June 

1969. Enclosure I reflects the net change-between the.contractotsi 

30 April Contract Financial Report (CFR) forecast and'their claim 

through 10 June 1969, as of the end of June. Incloivie 1 was the basis 

for SO messages and telecons to specific' contractors requesting an explanation , of their net change. Enclosure 2 shows exactly the sane information as Attachment 1 but reflects data as of 31 July. Enclosure 3 

through 7 contain the respective contractor responses to the SO request 

for net change information. 

• 

.54 
0 

• 

In 

rl 

rl 

rl 

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FORECAST/CLAIM ANALYSIS (AS OF 30 JUNE 1969 

1 4 

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IQFcv KUVtUlRELEAS 1 JULY 2015 

I 

On or about the 8th of August 1969 the following message was transmitted 

via telecon by General Bleymaier, Deputy Director, MOL SO, to Mr. Charles 

Able, McDonnell Douglas Corporation. 

"I am particularly concerned with the termination costs for the MOL Program. 

These costs show a disturbing tendency to run somewhat higher than onel • 

would expect based upon the financial information you have supplied, earlier 

in the program." 

"In your 30 April 1969 Contract Financial Report, you forecast a position of 

423.8M for the 10th of June. This is based upon your 30 May estimate plus 

a prorata share (1/3) of your June estimate. After an allowance of .3M for 

work carried beyond 10 June, your latest claim of 443.2M exceeds this figure 

by 19.4M." 

"Please supply me not later than 22 August with an analysis of the cause 

of this variance." 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

I I i ' 1 

MC DONNELL-DOUGLAS ASTRONAUTICS - WESTERN DIVISION 

Attached is the MDAC-WD data received as a result of our 

meeting on Friday, 15 August. Their accounting for the variance between the 30 April repdrt and the July report is on 

the top sheet. Their discuBsiOn of these figures went as 

follows: , 

1. Company Statement: 

1 1111 1 1 r. I • • 

1 1 1 

I i ! 

A. General Termination Costs 3.2 

This was not included in the earlier CFR in an 

effort to purge the NCC of unanticipated items. 

See Page 9. (This is carried at 3.1 on page 9) 

(The 12 August Report reduces this to 2.5) 

I , 

B. MSK/CSK Risk (NCC) 1 ; . 1 1 1 10.0 

This 18 a net figure which results froth the 

following data. 

Reevaluation of NCC and Profit. Page 8 13.5 

NCC Overrun Separate Sched.Attd.Page 8' .2"'' 

Profit - shown separately 'Page. 1" '(3:3) 

Continued Work - shown separately"Pg 1 1 ( .3) 

Unidentified Decrease Rounding .2 

Net Increase in NCC 

The contractor's May CFR (received June) contained 

an exceptional increase, of 7:0M fbr'July FY 70'. 

This was footnoted as recognition of "prior commitment"to subs. 

C. Profit on NCC 3.3 

" 1 

See page 8. The company states that this was excluded from the earlier NCC. 

D. , Overhead Adjustment", Page 7 .8. 

E. Work Carried Beyond 10 June .3 

,1 / 1 ,1 1 1 11 i.11 1 11 11 • 17.6 

2. SO Calculation ,May + 1/3 June 19.4 

3. 

, 1 •,, 

'Work Carried on (Not Sd'ica.lCUlaion) t

'1.8 

.3 

4. Net Differential 2.1 

This is a resonable variance caused by Accounting Period 

Disparity: DAC's "June" is May 25 to June 27. 

=AGSM 3 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

Since the July report, the company has reduced their claim 

by $2.2M as shown on page 2 of their analysis. 

The principal area of growth is on the NCC and profit thereon. 

This amounted to 10.0 + 3.3 as above between the April and 

July reports. The company has not supplied the names of 

the subs or the extent of the commitment which led them to 

this reevaluation. This may provide an area for investigation 

and analysis by the TCO. 

EtiCLOSURE 3 
cv PI • as 

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Causes for Increase 

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Estimate forGeneral Termination Costs 

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HANDLE. VIA DV5.141.4 

CONTROL, SY.T; t ON 

--s-r—e-fi—E-4- 

RR RUXQIIG 

• OE RUXQBAA 357 2311735 

ZNY XXXXX 1''167 

R 191726Z 

ST 

XxXxX 

DORIAN 

••••••• ••••••:•••••■•••••.....>„ 

1911262 Alt 69 CITE 2 138. 

DOR IAN 

FOR M. S. MALI< IN. INFO TO P. ISAACSON. FROM J. Se BLEYMA IER . THIS MESSAGE IN THREE PARTS. ..... PART I. WITH I AM PARTICULARLY CONCERNED 'PE TERM !NATION COSTS FOR THE MOL PROGRAM .' THESE 

A D 'STIRS ING TENOANCY TO RUN SOMEWHAT HIGHER THAN ONE WOUL COSTS SHOW 

BASSO UPON THE D EXPECT FINANCIAL INFORMATION Ti;: PROGRAM. YOU HAVE SUPPL IED EARL IER IN ' ' 

. 

. PART I I . IN YOUR 30 APR IL 1969. CONTRACT 

A POSIT ION OF 222.2M FOR THE 10TH OF F INANCIAL REPORT YOU FORECAST 

ESTI' JUNE. THIS IS BASED UPON YOUR ,

AFTER :ATE: FOR 30 MAY PLUS A PRORATA SHARE (1/3) OF YOUR JUNE ESTIMATE.. AN ALLOWANCE OF .7M FOR WORK CARRIED BEYOND 10 JUNE, YOUR LATEST CLAim OF 225.5.1 EXCEEDS THIS FIGURE BY 2.04. PART III. PLEASE SUPPLY ME . % NOT LATER THAN 22 AUGUST WITH AN ANALYSIS 

--6.-&-ert-C-4---... 

OF TEE CAUSE OF THIS VARIANCE. , • - ' . 

., • :.,:, ,- ST, • ,,, 

/4N!'iN 

n•rpir 

• •44—..-....---,#...?"4:tort7";:7-0717:77,,:•nrri.. 

,•••• 

1;:tr 

ENCLOSURE 'it 

• 

NRO APPROVED FOR 

RELEASE 1 JULY 2015 

owil 
1 . 11 .)721C 

7\Y 

2521CO 

'Jr 

XXXXX 

1TANoLe v14 

tolvrtioi, DYNAN 

systEM 014101 

SECRET (7) 

DORIAN b 

, 

111..44%94. Yh,'N 

ficaffit% WYMYttil MXt 4) • 

liNcLostrRE 4 

NRO APPROVED FOR I 

$4 .0001,1 6, 

RELEASE 1 JULY 2015 

S C i C T 252103Z AU 6 65 C14 5251. 

00711A:I 

ATTyl: J. 7,LIY,AIER FR( R L-K;,E0rIT 

SUCJECT: REPLY TJ 3LEY,AIER TA 

FINAACIAL DATA ' 

REFERE,\CE: AEY,AIER TX 

ThIS T-X I PROVIDED IN REPLY TO ThE 'REFERENCE- TA OF 19 AUGUST -1569. . 

QUESTICS !XL PRCGRA;,i FINANCIAL•jATA RECLNTLYiPROVIDED TOiYOUi, Li YOU 

AY RECALL..STAkTkG LATE APRIL '69 AA EARLY.',AY 165'A TOTAL RtPLAWNG 

Cr ThE iJL PRCGRA.1 WTIATED IA.AN ATTPT Tj HOLD r '69 AHD • 

'70 PROSRV COSTS TO A ;JASED ON ThE NE:: AND 1,CRE SEVERE FUNDIG 

RESTRICTIOi:S. ,,lANAGEE:iT, IN THE EARLY STAGES'OFIThIS REPLANNING 

ANC Ak EFFORT TO ,E,E AS RESPCSIVE AS POSSIJLE TO,;AKO.EASING THE FY '69 

FUnr4G PRO3LE.:1 AN AOVE TO,ARDS TiiE FY '70 LkITATICM, ESTACLISHED IN 

MAY '69 A 11C.61:, FY1 65 TARGET ARD flEFLECTED SUCH IN THE APRIL ''69 CFR, 

LIKE TO POINT 3UT, O,,EVER, ThAT f1E CFR 

FORECAST FOR FY '69 IN THE PRECEDkG ISSUE (SU64ITTED IN APRIL '69) RET 

FLECTED $112.01,.ATARGET HICH ..AS QUITE RESTRICTIVEilNVIE DF ThE 

I 

PAGE 2 5261Si.C'n CT 

SCi-IEDULE A10 FW%DING CONTE:IPLATED FOR FY '69. 

THE PROJECTED SAVING CF FISCAL YEAR 1969 AS NOT REALIZED DUE TO THE 

TI.flG 3F THE REPLANANG AND REACTION TI4E. THIS, IN EFFECT, GENERATED 

A S2.6::! I':CREASE OVER ThE APRIL '69 CFR FoRECAST•FOR:FY '69. Ii FACT 

SEVERAL SUKONTRACTORS DURING THE PEE100 OF JAY k,ID EARLY JUA. '(PRIOR' ' 

TO TEAATION) HAD TO INITIATE SIGNIFICANT EFFORTS TO CO-,PLY JTt - 

TECHNICAL REDIRECTICN •:;i1Ch ACCOUNTS FOR .:10ST 

SIGNIFICANT OF THE S/C'S .;;ERE THE ALPHA, STARTRACKERS ANUICITE SU3- 

CONTRACTOPS. • 

IT SHOULD ALSO E CTEt: THAT THE CALCULATIONS NOTED IN YOUR REFERENCE. 

.14X FAIL TO REFLECT THE HIGdER SHASE OF THE 4Liigh_EaLF.ATE ri THE FIST 

10 LAYS CF JUNE SINCE ThE EFFORT BEING :UADE TO REDUCE ,,N5,pUlLi.TOPHASE 

INTO FY '70 ';.OUL5 PRI:ARILY 3E REFLECT ECi LIE LATTER PATO. CF JUNE. 

I N'SUARY, THE :1,225.5i ESTIATE PROVIDED TO THE :TOO- G. 1 AUGUST '69 

IS VALID AS OF THAT DATE. THIS IS SU3JECT TO Chko;GE AS SUdCONTRACTOR/VENDLR 

&ILLING IS RECEIVED AND EVALUATED. 

gEC;;ET 

2138 3F Ed/15/6510N •Pi;GGRAJ 

21 'J 3/15/65 I 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

On or about the 8th of August 1969, the following message was transmitted 

via telecon by General Bleymaier, Deputy Director, MOL SO, to Mr. Charles 

Able, McDonnell Douglas Corporation. 

"I am particularly concerned with the termination costs for the HOL Program. 

These costs show a disturbing tendency to run somewhat higher than one 

would expect based upon the financial information you have supplied earlier 

in the program. 

"In your 30 April 1969 Contract Financial Report, you forecast a position 

of 104.5M for the 10th of June. This is based upon your 30 May estimate 

plus a prorata share (1/3) of your June estimate. Your latest claim of 

110.2M exceeds this figure by 5.7M. 

"Please supply me not later than 22 August with an analysis of the cause 

of this variance." 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

MC DONNELL-DOUGLAS - EASTERN DIVISION 

Enclosed is the analysis. supplied by MDAC-ED. They increased 

their NCC by S.4M between the April and July reports. This 

is composed of a 4.SM accounting rate adjustment and a .9M 

reevaluation of NCC. 

This analysis does not include a forecast from the April report of the June position. If it had, the principal variance 

would have been the above. Other differences (such as actual 

expenditures) would have been minor. 

The accounting adjustment made concerns the rate applied to 

the NCC to cover procurement expense and its profit. The 

realism of this claim has not been questioned or supported. 

It may prove a fruitful area for investigation and analysis 

by the TCO activity. 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

T T 

8-18-69 

The primary difference between the April 18 CFR and that of the July 18 CFR 

- are as follows: 1 

1. 

Uncancellable Commitments 

to Vendors 

In—house Factor for Procurement 011, G&A & Profit 

April 18 , 

$15,200,000 

*(257) 3,800,000 

July 18, 

*** $16,100,000 

** (50Z) 8,300,000 

Total $19,000,000 $24,404,000 

Based upon 1968 Actual Experience 

Forecast Based Upon 1969 Escalations 

Based Upon Better Visibility with Subcontractors 

and Vendors 

2. April 18 July 18 

Expenditures $79,818,600 $77,818,500 

This difference of $2,000,000 less expenditures. on July 18 is based tipon 

$2M less actuals due to termination on June 10 vs. forecast to June 30 

on April 18 CFR. In addition to this, profit decreased by appioximately 

$200,000 due to the $2M less expenditures. 

The above results in an explanation of the major differences between 

$115,000,000 total liability and $118,200,000, a difference of $3,200,000. 
-* Exp. has 839,

0

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81.

5

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2

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79,

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r

nished 109 to113M$ 

, I -. 

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H oi r4/ 

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• a • N a .0 a 4 a 

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0 P. 0. 0 .0 0 ■0 N ol N N 03 

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0. 0 0 0 7 NO 0 0 

VA 

a a •••1 0 Q. a - CO r1 o o a 

CO . . 0 

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co - . . . . .

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a teReceived 

0 0 

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ThroughAugust 12 received 

$$5,039,483 

...i. NO 0 0 0 01 o o o 0 0 

141 ...? o o 0 o 

. . a a . a a • 0 0 ir-1 CO 0 ■ 0 • 0 0 CO r 

- 

-4 0 o o 0 a a a • a a a ON 02 ON • N 03 In 

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4.1 11) 0 •-ii 0 4.• 4.4 1-3 vp4 El •ti1 43 •0 14 40 r4 4.1 r-1 r-4 CA •CD . 

.6-41 61 .r4 0.1 +1 .4 en 4 "I .50 
19 651 

NO. OF 

PAGES 

NRO APPROVED FOR 

RELEASE 1 JULJOINT T MESSAGEFORM 

stcumry CLASSIFICATION 

' 'INCLASSIFIED EFTO 

RILMV110 FOlf COMMUNICATION cairn 

S 1/ 

BOOK MULTI SINGLE 

TYPE MSG 

PRECEDENCE 

ACTION ROIITINP 

INFO DTO 

num MOL SYSTEMS OFFICE LOS ANGELES APS CALIF 

•■■• _ _ _ •_ 

TO: '_MARTIN MARIETTA CORP DENVER.. COLO 

INFO APPRO MARTIN MARIETTA CORP DENVER COLO 

UNCLAS EFTO SAFSL-4 

FOR CMRVKA/L. V. MCCABE AND D. S. LEVINE 

THIS MESSAGE IN THREE PARTS. PART 1. I AM PARTICULARLY CONCERNED 

WITH THE TERMINATION COSTS FOR THE MOL PROGRAM. THESE COSTS SHOW 

A DISTURBING TENDANCY TO RUN SOMEWHAT HIGHER THAN ONE WOULD EXPECT 

BASED UPON THE FINANCIAL INFORMATION YOU HAVE SUPPLIED EARLIER IN 

1E PROGRAM. 

PART II. IN YOUR 30 APRIL 1969 CONTRACT FINANCIAL REPORT YOU' 

FORECAST A POSITION OF 98.0M FOR THE 10TH OF JUNE. THIS IS BASED 

UPON YOUR 30 MAY ESTIMATE PLUS A PRORATA SHARE {1/3) OF YOUR JUNE 

ESTIMATE. AFTER AN ALLOWANCE OF .1M FOR WORK CARRIED BEYONDi10,JUNE 

YOUR LATEST CLAIM OF 100.71!1 EXCEEDS THIS FIGURE BY 2.7M. 

PART III. PLEASE SUPPLY ME NOT LATER THAN 22. AUGUST WITH AN • 

ANALYSIS OF THE CAUSE OF THIS VARIANCE. SIGNED. J. S. BLEYMAIER, 

MAJ GEN, USAF, DEPUTY DIRECTOR, MOL. 

SPACIAL. INSTRUCTIONS 

TYPED NAME AND TITLE PHONE 

A 30353 

F VINCENT S. CAHILL, JR., Lt Col, USAF 

E Director, Program Control 

SECURITY CLASSIFICATION REGRADING INSTRUCTIONS 

LINCLASSUJET1 EPTQ 

a 

a 

I.

a 

A 

S

E 

TYPED6weft.P.KUNAMEANot"Lx 

J. S. BLEYMAIER, Maj Cent USAF. 

SIGNATURE 

• 
NRO APPROVED FOR 

RELEASE 1 JULS12015 

I 

MARTIN MARIETTA 

The message attached itemizes the sources of variance , as follows: 

1. SO calculation from 30 Apr report 98.0 

2. Accounting for differences: 

a. Adjustment for work days and accounting period .5 

b. G & A on inventory .8 

c. G & A on }ICC •5 

d. Profit on G & A '•1 

e. Cost overrun on E •3 

f. Overrun on NCC ' 

2.7., 

3. Current Claim 4 1.1 Is' 101.7" 

The company seems to have made a reasonable representation of the sources of 

their variance. Aside from the TCO checking the accuracy of their statement 

on 0 & A charge procedures, there seems to be little to be gained from any 

further challenges at this time. 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

Luc 

„ 

IL rT AUG 22 411 10: 1.9 

ACT Otf 

•)41— / 7/ 

PITIVAY,t! 2341415-1111LTU--RU.4,1E3H. 

7s13, INT! , 

2r.1577 AL" 

7Pinro "APT7TA (OSP DF.INFP COLO 

-V% PUk!.7RF/NIOLSO CALIFP.'" 

INTO zrmceTT LCSA CALIF ' 

UktflAS. REFER TO 9-Y-3340 ATV!' MOLSO sast- 'MAJOR CENTRAL J. S. • 

nisymAirp -- INFO MMO S DI±NR 

SURD: RECONTP....7.ATIOm OF FtmATIAL FORECAST VARIANTES 

REF: (A) CPF:-.1.-4 'PE.FAr2E.P19001/2 AUC71:::T 1959 

1. AS PEr1,771TED PrI7EFF"CE (A) MESS:AC.E, WE. APE FURNISPINr PERE7.q1.1-1 ANTP!..r.-7I7 OF TI-7 CAUEE OF THE VARIANT:E. PETWEEN OUP APRIL • 

1959 CONTRA7 FINANTS. REPORT AND •OUR LATEGT FORECASTED PEOUIREMENTS. 

2. OLP APRIL 1959 CONITR.A7 FORECAST REPORT 100.(IS' A FORECAST CF 

95.9 TARO!/'=N , T1-7 MAY ACCOUNT!' INIP PERIOD .ENDED V MAY) 

OUP REPORT SPCVM 1;3.3M. FORECAST FOR JU.‘,TE PLUS A S.gl`o! 

"FC'RE.CAn7 !k!OT DEFI'L'ED" FOR MAY AND JUNTE. SINCE OUR REPORT IS 

CALMAT E7.) Om WORMAYS Ire TNE ACCOMMI PERIOD WHICH ENDS .ON 

TYE' LAST SUNDAY OF THE MONTH, AN INTERPOLATION BASED Om 

Assirmn TN OF UmIFOPM DAILY ExPENorrinEs VOLLD RESII.T AM 

EST PATE OF $1.47`1 OF THE $3.3M TO 13E SPENT BY 10 JUNE AND 

PPE 2 RU,',1EC-A0906. LINT? A? 

ASOUT 5.1M CF THE "FOS'EC.A.ST NOT DEFT.NL7)" MNIMITTED THIS 

DATE. THUS RAT) Cm OLP APRIL CONTRACT FINAN1CIAL REPORT, IF 

TH ASSUMPTION WAS MADE. THAT EXPENDITLPES OCCURRED AT A 

UNIFORM DAILY RATE, OUR FORECA&T SPOLLD BE INTEP.PRETM . TO 

S'-'N A pfyizrr TOM OF t 9?.AM OM 10 JUNE (AS CORARED wITH 'tom 

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AN7ALT:1? OF THE VARIANCE BET'! 'Ent T FE. EARLIER 5.9!.5N1 FORECAST 

AND THE CIRREN'T lcper FoREck-.7. 

A. (11,A Ar3P. ST THE TIT Am II IM INNEN:TOP, Y IS POT RECORDED in IL 

an' TIME AS THE ITE ARE WIT1-071AWN1FPCM I',m/ENITCRY AND 

CHARr;ED TO THE DETAILS. REINTr; FARPICATED. HENCE WE DID 11 /4-!OT 

ImnIDE THIS t,=,A I' OUR FORECAST UNTIL THE LATER. Tin 

PRIG) Wt7P.E. EXPET,TEID 1.41TI-DRAT4ALS FROM INVENTORY AND 

THE RECORD IMr.1! OF THE CI. &A. UPON' TERM IMAT ION, 11.1..EVER , THIS 

CAP. mUgf 11E. RECORDED AS Am EXPENID IT LPE T C&A ON 

rvF.?.‘Yr (*.FY A.YOLP.ITID TO APP2.0X IMATELY (t..PN!. 

S. LINE N'AmmER, r&A UNICANCEIARLE COrlITNEMTS IS 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 -7;"t 7/f 

PPP! 3 'D1.7n.l,r7.OAr!s,e5 1.A' 

T"‘ITYT(7!. YENT,F, Dn It OL 

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r*PEA.7 12'■'CA1■1Ca.AILE. CO*M.ITM.r1T FORECAST - .5 

TOTAL ' - 2.2 

A C1 P7VT7,1OF 17"CAmOarL7 00,4'17r7!,TS ISPROSTESSIMO TO T1-7. 

Pprr 1 147-'"E WE WiLL SC" P7ALE TO OTER"IME. IF !..r7 CAM ....=TLF. 

VF,\POPS FOP P..! AvOLTT LFSS TYAm TIE' STATED BAMCE OF 

ltiO.VrITLA2LE. crr*.q7 7 ,7.7,rrs. ADVI:7_. YOU CF 015 FPI:qS 

TM 71-7. NT' . AP FUT:IRE. 

5. F-7.7Ar•70 01/7-'ALI. FUT Pr, ".'E HAVE MADE A SIO^IIFICW:T F.7_DUCT I01.•7 

I" OUP FAST OF TOTAL FL"DP REOUIPM. OUR EarATE OF 

77p.mp1tr- rr COST t 09..Y Ar.7A.Ir.%7F.T THT. $7.5.`1 PEFLFCIM 

T!-'E CONTTPArf . (INT 19 J1YF, WE FORECASTED A FUND .RECUIRE7ViT CF 

F105..r. O" PS JLLY, WE FEVIS7D THIt DCWn.TAPD TO WE 

A7F. CO!Ti'VUINY,-;TO Ant.' YZE OCR TOTAL PEOUIPF.MEMTS Ar■D WILL .TRY 

TO p?O'/1)F TY177 MOST REALISTIC POSSIBLE ASSE.S.F".F.I■T CF OVERALL 

Ft.:NO PEOUPT."17:n. 

6. ol...TIO,IF Prr-7-.A."-',017A7r."..2TYE APOVE. 141.TTER P'AY BE REFER M TO 

i. ,TEP.EmIF.. U. LAFA'1C!, FXTEVSIOr 3655, MAIL. .110. 5100. 

,TEREYIE U. LAFRAMCE 5 100 • 

#09(.7.6 

mmINT ENCLOSURE 6 
RUF.HVRD FOR commumArion guru 

JOINT MESSAGEPORM 

SECURITY CLASSIFICATION 

. LASSIFIED EFT() 

I. 

BOOK MULTI SINGLE 

TYPE MSG 

X 

PRECEDENCE 

ACTION ROUTINE 

INFO Dye 

FROMt;•IOL SYSTEMS OFFICE LOS ANGELES.AFS CALIF 

SPECIAL INSTRUCTIONS 

TO, UNITED TECHNOLOGY CENTERSUNNYVALE CALIF tc: SL•8 

INFO APPRO UNITED TECHNOLOGY CENTER SUNNYVALE 

UNCLAS EFTO SAFSL-4 CALIF 

FOR C. KJELLAND AND B. ADELMAN 

THIS MESSAGE IN THREE PARTS. PART I AM PARTICULARLY CONCERNED 

WIlli THE TERMINATION COSTS FOR THE' MOL PROGRAM. THESE COSTS SHOW 

A DISTURBING TENDANCY TO RUN SOMEWHAT HIGHER THAN ONE WOULD EXPECT 

BASED UPON THE FINANCIAL INFORMATION YOU HAVE SUPPLIED EARLIER IN 

THE PROGRAM. 

II. IN YOUR 30 APRIL 1969 CONTRACT FINANCIAL REPORT YOU 

FORECAST A POSITION OF 52.7M FOR THE 10TH OF JUNE. THIS IS BASED 

UPON YOUR 30 MAY ESTIMATE PLUS A PRORATA SHARE (1/3) OF YOUR JUNE 

ESTIMATE. AFTER AN ALLOWANCE OF 1.1M FOR WORK CARRIED BEYOND 10 JUNE 

YOUR LATEST CLAIM OF 57.0M EXCEEDS THIS FIGURE BY 3.2M. 

PART III. PLEASE SUPPLY Me 'NOT LATER THAN 22 AUGUST WITH AN 

ANALYSIS OF THE CAUSE OF THIS VARIANCE. SIGNED J. Si, BLEYMAIER:„ 

AAJ GEN, USAF, DEPUTY DIRECTOR, MOL. DATE TIME 

/ 

- 

MONTH 

AUG 1969 

PAGE NO. NO. OF 

PAGES ' 

D 

R 

A 

F 

R. 

TYPED NAME AND TITLE . 

INCENT S. CAHILL, JR., Lt Col, USAF 

irector, Program Control 

SECURITY CLASSIFICATION 

SIGNATURE 

E 

A TyPED6watompecONAMEANomur 

S 

E • S. BLEYMAIER, 11aj Gen, USAF 

RE;GelattttltrlrtI0 

R 

E 

L 

PHONE 

30352 

v•irt A rr rr lr. 1.•••01, 
NRO APPROVFD FOR 

RELEASE 1 JULY 2015 

SL-8 21 August 1969 

Telephone Call from Eugene Roberts, UTC 

General Bleymaier • 

I. Mr. Roberts called this morning in response to our TWX 

regarding increased termination cost estimate. He will call you 

tomorrow. 

2. He briefly explained increase due to following: 

a. Increase in profit over contract target that will be claimed 

for work accomplished. 

b. $1.6 million additional due to common Titan buy of materials 

and assemblies which were previously accounted for at point of useage, 

rather than upon receipt in plant. 

3. Both reasons appear justified. The second explanation should 

have always been a part of their total liability in NCC. 

FRED H. DIETRICH, Col, USAF 

Chief. Procurement and Production 

Cys to: SL-4 

SL-8 
RELEASE_J_JLIV24,---g 7 ".. aaW"'""""".""".V 

NRO APPROVED FOR MOMAMMWAOMWella 

INNRTTUZYVw RUWMA11A9351 2362155-ULLIU--11UVJEBA. 

ZNR 

R 2.62155Z AUG 69 

Fel UNITED TECHNOLOGY CENTER/SUMVALEITALIF 

TO RWEEARiOVEO/LOSA. i.::.- (1 - 

I.C.CLAS C1RQ ATTN: SPISL-/GEN J S BLEVAIER ACTION 

SjEJ: EST MATED VIOL IERILNAT ION CLAD! 

REFF.RENCi..: NOL/SO/TWX/SAFEL-4, 19 MST 1969 

IN REPLY REHR TO: AD 970-69 

IN REPLY TO TIE REFERENCE TVc, ThE FOLLOVING ANALYSIS CONFIRAS INFORM.gisi 

AT ION PROVIDM - BY TELEPHONE BY MR E ROBERT S/UT CION 22 ALISUST • 

STARTING tiliH AN A-OREM-UFON BASIINE, FIGURE OF $53.04 TROUGH 10 

J LLY, PER PRIOR ac CONTRACT FINANCI REFORTS AND 11)UR ALLOCATIONS' AS 

CONTAINED IN REFERENCE TA, TE FOLLOWI% ADDITIONS RESIT IN TKE 

TOTAL ESTIAATED CLAIl OF $57.01:- • 

(A) $1.74 ALLOCATION OF UTC'S IN-OUSE MANUFACTURING INVENTORY COSTS. • 

THESE COSTS, REPRESENTING THE TIM PORTION OF 1N-HOUSE itIANIYACTURIM 

COSTS FOR EIV, D-BOXES AM ATTACH STRUCTURES, HAD NOT YET BEEN 

ONARG) TO THE T I WI PROGRAM OR MOWN ON THE 0:3tiTRACT FINANCIAL 

, REPORT. 

(B) S1.59 OF ADDITIONAL PROFIT, ,BASED ON UTC'S ESTIMATE OF FEE PAYABLE 

BASED ON WORK COMPLETED. • 

BARNET R ADEUIAN 

DIVISION PRESIDENT 

0351 

Br • _ 

111•61b •■•■• 4 

INNN 

116:666 .4.6.44 6166. -.166.46 66., • •66661.• ••■• .6-666.666..6 

4.1 

191U AUG 26 Ft1 3: 42 

• 
So S IS 

oramaamiewall•Ney 

••■•■•■111110.11■••■ 

NRO APPROVED FOR 

RELEASE 1 JULY 2015 

1 14 

1 . jto 

I 

Lb .

b41 •1a c.f.; "it qj 

hf.11 ',tit,. . Arks% 

RTIarfol RalANAS,374 24016ZO-UUUti—R 174Z BA. mIEU • 

CZ. A UCi 65 

Fi A17?-1/UTO suAYVALE CALIF 

10 RINJEEACI. 50/1.0.9A 

4 ET 

LNCLAS C.1R'jkK AUG 65. FOR MCI. S) (SAYEL•4). £12J: ESTIMATED :1CL, TE14.• 

INATION Q.AI1 CYR TtlX DID 15 AUG 65). REFERENCE UTC VP( AD 570•65 

2S AUCUST 1569. I CONCUR WITH Ili.: STATE:iE.NT CCITAINM • SUPARA• GRAPH (A) OF REFERS:4CE TWX. NO COMMENT IS OFFERED WITH riEGAiD TO SL 

P ARAMAPH (4) AT THIS TDIF. INASAUCH AS rxtOFIT IS T• 

A ELF., ITEM. SIGNED CHARLES A M zsTaLMELY (47.:GOT . Ma-LAND, TEirlINATION CONTRACTING' OFFICi.ii. 

I

S 

tS374 

• 
-SECRET nomit HANDLE VIA BYEMIN 

CONTROL SYSTEM ONLii 

NRO APPMFETTOW 

RELEASE 1 ;JULY 2015 

PART VI 

OFFICIAL FINANCIAL HISTORY 

SECTION C 

COMPLETE TERMINATION AND FUNDS FOR 

LIMITATION OF GOVERNMENT OBLIGATIONS (LOGO) 

AS OF 31 AUGUST 1969 

14ANDLE VIA BYEMAII 

--1114111142141=-4-,-- IMAM Ili 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

HANDL1 V1 BYEIVIAN -

CONTROL SYSTEM ONLY 

TABLE OF CONTENTS 

Page 

I. INTRODUCTION AND EXPLANATION OF ENCLOSURES 57 

ENCLOSURES 

1. CONTRACT FINANCIAL STATUS 

2. TERMINATION STATUS AND FUND REQUIREMENTS 

3. CORRELATES TOTAL FUNDS TO MOL FUNDS 

No. of Pages 

. 2 

3 

4 

56 
• 

NRO APPROVED FOR 

RELEASE 1 JULY 2015 

DORIAN HANDLE vin BYEMA 

tONTROg SYSTEM ONLY 

I. INTRODUCTION AND EXPLANATION OF ENCLOSURES 

Section C portrays the MOL post termination financial status as of. 

31 August 1969. It should be noted that although the second increment of 

post termination funds are shown in these,reporte the funds were not con., 

tractually implemented until 4 October 1969., Wlosure l shows total 

contract funds and forecasts of total Government liability. It is, noted, 

±h those instances where non-MOL funds are,includedl in.totals. Enclosure 

2 shows the total'MOL funding and MOL requirements for LOGO and STC 

as of 31 August 1969. EnCiOsurS 3 provides_an,explanation of,those additions and subtractions that are,, necessary to,equate Enolopure 

Enclosure 2. I 1 i 10 • ■ Ill I • i I s. 11 i I i III - 

III III I It 

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RELEASE 1 JULY 2015 

SE.CRET posoebNTROI: SYSTEM ONLY. 

WORK NOT TERMINATED 10 JUNE 

Work Not Terminated 10 June 

Plus: 

Miscellaneous Not Terminated 

$6,457,800 

A.,050,000 

Total MOL Work Not Terminated 10 June'''' 

SPECIAL TERMINATION COSTS 

$47,208,000 

TOTAL REQUIREMENT TO TERMINATE MOL 

Contract Financial Status A/0 31 August $1,367,275,710 

Less: 

MMC 19,483,561 

ACED 2,928,624 

AGC 16,025,750 

UTC 50938,840 

EK 22,620,000 

TRW(A) 1,400,000 

TRW(B) 1,510,300 

• 

(Constant) 

I 1.1'1 I 

(Constant) 

(Constant) 

(Constant) 

(Constant) 

(Miscellaneous). 

(Miscellaneous) 

Total All Deductions $ 69,907,075 

Sub Total $1,297,368,635 

Plus: 

Miscellaneous ( E * F 4 NCC 10 June) MOL Only 70,556,000 

Miscellaneous (Not Term. 10 June) MOL Only 1,050,000 

Total Requirement To Terminate MOL 4)368,974,635 

LARITICW UTAK BYENIAN ornnt'T ea ARS KU 
NRO APPROVEQLQ11 „ 

RELEASE 1 JULY 2015 

--I I ••14:n*.r... ••• ■•■-•4- 

• 

--SEGRETionti RANDCE vim BYEMAN 

'CONTROL' SYSTEM ONLY, 

FUNDS ON CONTRACT 10 JUNE 

Funds On Contract 10 June 4,234,579)328 

Less; 

I' I •1 1 , '

MMC 19,483,561 

ACED 2,928,624 

AGC 16,025,750 

UTC 5,938,840 

EK 22,620,000 

TRW(A) 1,400,000 

TRW(B) 1,510,300 

(Constant) 

(Constant) 

(Constant) 

(Constant) 

(Constant) 

.(Miscellaneous) 

(Miscellaneous) 

Total All Deductions 69,907,075 

Sub Total $1,164,672,253 

Plus: 

Miscellaneous (Total MOL Only) 72,258,000 

MMC (Funded Between 10 30 June),., .1 000,000 

ACED (Funded Between 10 - 30 June) 56,747 

Constant Recognized 'in $2,928,624) 

1 

Funds on Contract 10 June 

HANDLE Vra BYEMAN 

tONTROU SYSTEM ONLY. -SEC-RE-I DORM 

$1,237,987,000 

) • ' I. 
NRO APPROVED FOR :':5mossolowNIUMMI""7,Wvm11470 z.:71romirogamtvArcrrima=irr. 

RELEASE 1 JULY 2015 

FUNDING 10 JUNE TO DATE 

Funding 10 June To Date $662462,747 

Less: 

MMC 1,000,000 (Redognited: Prior 10 June) 

ACED 56,747 (Recognized Prior: 10 June) 

misc 406,000 (Reduced From Total MOL Misc) 

Total Deductions 1,462747 

Funding 10 4ilne To Date $65,000,000, 

REMAINING TO BE FUNDED 

Remaining To Be Funded $66,233,635. 

Less: 

Miscellaneous 246,000 

•■••■•••■■••■••••■•••••■ 

Remaining To Be Funded 465,987,635 
i""AmMMWOMMWMW" ."7.7,7 1-' -.NRtyltrpRoverrrinft.4.0' 

RELEASE 1 JULY 2015 

Oltig

Oxrestg viv BMW 

**TRW SYSTEM ONLY, 

LIABILITY 10 JUNE (E ♦ F NCC) 

Contract Financial Status as of 31 August 1969 

Liability 10 June (E t F 4 NCC) $1,313,609,910 

Less: 

MMC '19,463,561 (Constant) 

ACED 2,928,624 (Constant) 

AGC 16,025,750 (Constant) 

5,938,840 (Constant) 

EK 22,620,000 (Constant) 

TRW (A) 1,400,000 (Miscellaneous) 

TRW (B) 1,510,300 (Miscellaneous) 

Total All Deductions $ 69,907,075 

Sub Total $1,243,702,835 

Plus: 

Miscellaneous (Total MOL Only) 70,556,000 

Liability 10 June (E * F ♦ NCC) All MOL $1,314,258,835 

HANDL VIXBYENUM, 

CONTROU SYSTEM ONLY 
NRO APPROVED FQR 73:27 ::r44414.4 , i TT:Z.- -7:1120A70.4101 

RELEASE 1 JULY 2015 

HANDLE VIA BYEIWAN 

tONTROC SYSTEM ONLY 

PART VI 

OFFICIAL FINANCIAL HISTORY 

SECTION D-1 

FINAL TERMINATION 

30 , SEFTEMBER 1969 

I I I ,∎ .i I I:. I 

I 

HANDLE VIA BYEMANT 
NRO 'PPP-RON/ 

RELEASE 1 JULY 2015 

-S[511-10 HANDLE VIA BYEMAN 

CONTROL SYSTEM ONLY.. 

P'• 

TABLE OF CONTENTS 

I. INTRODUCTION AND EXPLANATION OF ENCLOSURES 

ENCLOSURES, 

1. Total Status as of 31 September 1969 

2. Liquidation and Expenditure Schedules 

Page 

GO 

No. of Pages 

, 5 

12 

HANDLE VIA BYEMAN ornnr9r 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

■ SEGRET

HANDLE VIA BYEMAN 

CONTROL' SYSTEM ONLY. 

I - INTRODUCTION AND EXPLANATION OF ENCLOSURES 

During the post termination phase, the MOL SO has considered the LOGO 

and STC Clauses as authorities to obligate monies. We have also considered from a SO standpoint that the total Government obligation prior to final 

settlement would not exceed the sum of "LOGO" and "STC." When MOL was 

completely terminated, the primary concern was to have each Contractor's 

"LOGO" funded to his forecast as of the date of termination, Enclosure 1. 

This has been accomplished. 

The next task was to examine the Contractor's liquidation and expenditure 

schedules in order that the Government would get maximum utilization of the 

remaining $35M of the $125M, initially established against the FY 70 MOL 

Budget line. 2. After examining the contractor's liquidation and expenditure schedules a few things are apparent. The Contractors' noncancellable 

commitments, NCC, were not being liquidated at the rate he initially forecast and STC expenditures were also lagging his previous forecasts. Since it 

has been determined that the MOL contract clauses allow any excess LOGO funds 

to be applied to STC, it becomes very important to validate the accuracy of 

Contractors' LOGO and STC forecasts before applying additional STC monies. 

Because of this the SO in conjunction with Contract Management Division, CMD, 

will visit certain key contractor facilities and make an on-the-spot evaluation prior to obligating any further funds. The SO will, as a result of 

these visits, submit a contract by contract analysis and forecast, Part VI-D2, of what the SO estimates the Total Government liability to be.prior to final 

negotiations. 

HANDLE VIA' BYEMAN 

CONTROL' SYSTEM ONLY. SECRE1 DORIAN 
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NRO APPROVED FAR 

RELEASE 1 JULY 2015 

PART VI 

OFFICIAL FINANCIAL HISTORY 

Section D-2 

Final Estimated Total Government Liability 
NRO APPROVED FOR 

RELEASE 1 JULY 2015 

TO BE SUMMED 

PRIOR TO 31 JANUARY 1970 

62 
• - 

NRO APPROVED FOR-7' 

RELEASE 1 JULY 2015 

Era HANDLE vor BYEMAti 

CONTROI: SYSTEM ONLY 

PART VII 

ASSISTANCE REQUIRED 

AND 

RECOMMENDATIONS FOR THE FUTURE 

HANDLE VIA BYEMA! 

r!nt4TROL: SYSTEM ONLY, -KGRET- DORIAN 
NRO APPROVE: 0R 

RELEASE 1 JULY 2015 

HANDLE VIN BYEMA! 

CONTROL` SYSTEM ONLY 

PART VII - ASSISTANCE REQUIRED & RECOMMENDATIONS FOR THE FUTURE 

A. ALTERNATE CHANNEL FOR TERMINATION FUNDS. 

Funds to cover the cost of termination are presently channelled 

from the MOL Washington Office through the MOL SO who obligates the dollars 

to the contract. It is planned for the MOL SO to be totally phased out by 

30 June 1970. Accordingly, an alternate funding channel must be established 

on or after that date. Recommend the channel be from the Office of the Assistant Secretary of the Air Force for Financial Management to the TC0s. 

B. DORIAN SETTLEMENT REVIEW BOARD. 

Currently established settlement review boards do not have clearances 

to enable termination settlement of terminated MOL DORIAN contracts. Recommend a board be established in Washington to perform this function. 

C. DORIAN PCO 

Upon the departure of General Bleymaie;, the sole remaining PCO 

authorized for DORIAN contracts will have departed the MOL SO. Recommend 

Mr. Thomas W. Rutter be appointed to accomplish the following: 

1. Necessary actions required to accomplish termination actions. 

2. Necessary actions to settle two contracts which have been 

settled but not closed out. These two contracts may require manual approval 

in Washington. 

HANDLE WA BYEMA! 

CONTROL SYSTEM ONLY SEGEL DORIAN