Approved for Release: 2018/11/16 C05115251 

Issue: Basically, the issue is wlwt:,cr to 

drones in FY 1969. 

Discussion: 

Drones: 

." , .... J 

8 Nov 1967 

or 0 Tagboard 

The current TAGBOARD drone production program consists of a retrofit 

of 15 drones initially procured under the old program, the FY67 procurement 

of 7 drones and the FY68 procurement of 12 drones. 

Although the drone contractor, Locy~~eed, feels that two drones per 

month is a good minimum production rate, he will, in fact, be producing 

most of the 19 drones at a 1 1/3 per month rate. Fu:rthermore, he plB,ns 

to produce these drones on an 80% learning curve ~Jl1d has negotiated a 

contract based on this curve. In accordance with the recommendation from 

Director D, a FY69 drone buy of 16 could also be built at a 1 1/3 rate 

per month on an 80% learning curve§ The estimated unit cost would be 

$1.78 million, with an estimated total cost for 16 drones of $28.50 

million .. 

Tne contractor was asked .for his estimate of costs associated with 

a FY69 production of 12, 8, and 6 drones corresponding to a monthly 

production rate of one, two .... thirds, and one-h2~f respectively. He has 

stated that, on a rough order of mC),gnitude basis, a stretchout of the 

scheduled rate of 1 1/3 per month to one per month would not only nullify 

the learning curve at the point. of rate change but would also cause an 

increase of 10 to 15% above the existing learning cu:rve. He also feels 

that it would not be possible to achieve an 80% learning curve at this 

production rate but that after some "c.ime a eUl've of 90% could probably 

be reached. On this basis, it is estimated that the unit cost of twelve 

drones (the DNRG recommended budget) produced at a one per month rate 

would bp, .$2008 mi.llion for a total tvrelve-drone buy cost of $25 million. 

Lockheed WOQld not estimate on a production rate below one ppr 

month but did st·ate that there i,;o1..Lld bea substantial increase in hours 

required per drone and in the unit cost per drone. Much of the increase 

would be in the indirect cost area bGcause of the number of people, the 

space, and theequipmeht which would necessarily be tied up in support 

of the production of a small number of drones at a low and inefficient 

rate. This then poses a question, raised by Lockheed, as to whether 

LoclrJleed and its subcontractors would choose to tie up its facilities 

for a year or more at a low rate ofprodu.ctiohin the hope that the 

production ratEl.inthe following years would be substantially increased .. 

2~.RC.~RO~£T A CPO A:1J HEXP,G01. ~ . .. J c··'' t;:y¥ .. __ .. ____ '.IJ, _~.~~ 11 ____ l' .fV 'pi-) . tJt 

GAMBIT .. Pbge;.._~'! __ oL_~13 __ PQcl'\';;:;. 

('QRONA 

CC)21t.t >. (;]. 111 .,0 __ BYE-52826 .. _____ -:-___ ... _ 67 

.. 1 ~DEALIST 

Approved for Release: 2018/11/16 C05115251 
Approved for Release: 2018/11/16 C05115251 " 

K'lking the assumption that they would produce at alow and inefficient 

rate for at least a year, it is estimated that the unit cost of eight 

drones produced at a 2/3 rate per month I-[ould increase to $2.86 million. 

The un} t cost of six drones produced at a -~ per month rate would further 

increase to $3.48 million. This equates to a total cost of $22.9 million 

for an eight-drone buy and $20.9 million for a six-drone buy. 

Another possibility should be addressed; namely, the implications of 

stopping drone production for at least a year, and then reinstituting 

production. In this connection, implications vary as to potential future 

operational requirements, training requirements, future production quantities, 

and status of the contractorls facilities. 

It appears that the lowest economical production rate is 12 per year. 

If Lf- are conSWlled in training each year, 8 additional would accrue to the 

lIoperational" inventory each year. If no fntm'o operational requirements 

were immediately evident, there would have:~o be a determination of provision for contingency operations. This is inherently the situation 

when a production gap ,is discussed at. this tine. 

Using learning curve experience, it is estimated that the number of 

hours required to build drones after a production gap could be 50 to 

75% higher than the hours required to build drones as a direct follow-on 

to the currently-approved FY1968 program, with a commensurate increase 

in unit cost. More importantly, however, are the implications of the 

production gap itself -- Lockheed Sklmk Works other production business 

during this gap period will be at its lowest point for about 10 years 

(unless an F-12 production program is approved, which appears unlikoly 

for some time). The SR .... 7l production ends in 1"Y1968, and U-2R production 

ends in November 1968. Accordingly, there '\..JOu1d be no other production 

business which would allow trained Tagboard personnel to be shifted to 

other production work for a gap period. The ability to recall skilled 

workers or to hire skilled labor off +,he street would be questionable', 

particularly if there was still an uncertain futu:t'e to the program .. 

Firing, rehiring and training costs would be incurred in any event. There 

would also be questions as to the status of production tooling, the availability of production space, and the willingness of the contractor and 

sub-contractor to undertake production on a potential "start and stop" 

program. 

If .. a positive operational requirement materializes (reference the 

Sept 25, 1967 BYE 52692-:--67 to the Ex Com niembers, subject "Scenarios for 

Utilization of the TAGBOARD Drone) the TAGBOARD. program could require 

more than 12 .per JBar, .and production could be increased at a lower unit 

cost. The chances of this operational requirement materializing appear 

to be more pronounced no.w than even three months ago ,fromthestandpoint 

of North Viet Namcoverage, as potential vulnerability of the Oxcart or 

SP~7l manned aircraft incre~ses.. It isbEllieved,therefore,that the 

FYl969 budget for 12 Tagboardshould be approved" . If a decision were 

made to not buy these 12, it would m.ean f!.riinterruptionto the program, 

OXCART/TAGBOARf 1:,,\~,j . . . . 11 . '" EARl?O.P~ . .~. . ;sl COpy--. ____ ot._. _____ COPiO<.l 

~~~~~". .. .. ..... rag0~12-_-0~y-;=;~~~~~·6 7 I:::::: 1 Con~t 01 ~¢, .. ~ ... -------- .. 

,. S1' 

Approved for Release: 2018/11/16 C05115251 
Approved for Release: 2018/11/16 C05115251 

rather than merely a "production gap.fI To restart after the interruption 

would be uncertain, and in any event a very expensive exercise. 

prone Camerae; 

EstLuates have similarly been made as to the unit camera cost impacts 

if the buy sizes are 8, 6, 4, and 3 respectively. The estimated costs 

are as follows: 

Camera Unit Cost (Thousands) 

Camera Total Cost (Thousands) 

225 

1,800 

225 

1,300 

240 

960 

276 

8.30 

The increase in camera unit cost is not as extensive as for the 

drone, since the cameras are already essentially being produced by a job 

shop operation rather than on a produc·tion line. 

A summary of FY69 progra~ costs for the various· options discussed 

(;J.oove is attached herewith • 

. OXCART/T AGBOARD 

EARPOP~ I 

HEXAGON 

GAMBIT 

con ON A 

IDEALIST Control No. BYE-52826-67 . -------------

Approved for Release: 2018/11/16 C05115251 
Investment 

Drones 

Cameras 

Subtotal 

Qperatin.,g 

TAGBOARD TOTAL 

Unit Co§t§ 

Drones 

Cameras 

Unit Cgst Ratio~ 

Drones 

Cameras 

oouivalentg 

Drones - 16 Base 

Cameras - 8 Base 

OXCART/TAGBOARD 

EARPOP~ I 

HEXAGON 

GAMBIT 

CORONA 

IDEALIST 

Approved for Release: 2018/11/16 C05115251 

: .. ,..,.' 

i: " 

I., .. ;.. ...) ~ v. l.., ••• 

TAGBOARJJ FY 1969 DRDJ\TE/CA1~RA OPTTONS 

16/8 12/6 8/4 613 

$28,500 $25,000 $22,900 $20,900 

1,800 1. 35Q 960 8)0 

30,300 26,350 23,860 21,730 

6,600 6,600 6,600 6,600 

$j6 p 2QQ $.3.2 .. 960. $3Q,460 $28.33'0 

1,780 2,080 2,860 3,480 

225 225 240 276 

1,00 1.17 1.61 1.95 

1.00 1.00 1.07 1.23 

16 14 13 11 3/4 

8 6 41/3 3-3/4 

Approved for Release: 2018/11/16 C05115251