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;in 2 6 1966 

MEMORANDUM FOR DIRECTOR, MOL PROGRAM 

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SUBJECT: Authorization for MOL Engineering Development 

Department of Defense Directive 3200.9 establishes DOD 

policies governing Concept Formulation and Contract Definition 

in the initiation of Engineering Development of major projects 

such as the Manned Orbiting Laboratory. The Directive states 

that OSD approvals normally are required at only two points in 

_ the Contract Definition Phase - prior to initiation of CDP (Phase 

I) and prior to initiation of the Engineering Development Phase 

(Phase II). DDR&E normally makes these approvals by memorandum 

to the Department responsible for development of the project and 

'43 based on this approval the Assistant Secretary of Defense (Comptroller) 

by memorandum to the Department releases funds. The DDR&E 

approval and release of funds to enter the Contract Definition 

Phase implies a willingness to proceed with full scale development 

if the project as defined during the CDP remains essentially 

within the cost and schedule limit and equals or exceeds the 

op*rational effectiveness stated in the plan submitted with the 

request for approval. 

Relating the events in the progress of the MOL Progrim to 

this established procedure, the Secretary of the Air Force on 

June 28, 1965 submitted a Proposed MOL Program Plan to the 

Secretary of Defense which requested specific approval and release 

of funds to enter the MOL Contract Definition Phase. Acting on 

this proposal, the Secretary of Defense on August 24, 1965 in a 

memorandum for the President stated: 

"Your FY 1966 budget request to Congress 

included, and the Congress is in the process of 

appropriating. $150 million for the MOL . . . 

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When these funds were budgeted in December 1964, 

I indicated I would defer their release until such 

time as the studies of the nature and value of the 

program. then underway, were satisfactorily completed. 

These studies have now been completed. Based upon a 

thorough review of the conclusions. I recommend --

approval of the MOL for full scale development to 

begin during FT 1966. The release of the $150 million 

in the TY 66 budget and the initiation of contract 

definition will begin the full scale development." 

On August 25, 1965 the President followed this with a 

national TV announcement instructing the Department of Defense 

to proceed immediately with the development of a Manned 

Orbiting Laboratory. A Memorandum for Director MOL from 

SAT (Zuckert), on the same date, was signed authorising you, 

as Director of the MOL Program, to proceed with the development 

of a Manned Orbiting Laboratory system. These events were 

followed by a request to DDR&E dated September 10. .1965 

requesting the release of $62.0 million of remaining FT 1965 

and initial FT 1966 MOL funds to undertake Phase I activities. 

Program approval was given by DDIMIC on September 20, 1965 

followed by release of funds by the Assistant Secret4Lry of Defense 

(Comptroller) on September 23, 1965. Subsequent approvals and 

release of funds were made by the DOD during February 1966 

for $40.0 million and June 1966 for $60.0 million for continuation 

of the MOL Program. 

DOD Directive 3200.9 draws a rather -distinct line separating 

Phase I study definition from Phase II engineering development 

with approval required to proceed from the former to the latter. 

This is not the case as experienced for all system segments of 

the MOL Program. The Titan DIM launch vehicle and the DORIAN 

sensor payload, because of their required lead time. are two 

segments which have progressed into the engineering development 

phase with DOD approval and consent while Phase I definition 

studies have continued on other system segments. In early 

April 1966, DDRia by memorandum to the DNRO speciftcally 

authorized proceeding with the purchase of support equipment and. 

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facilities to support the development of the optics associated with 

the primary sensor for MOL and incremental releases have been 

made from time-to-time to fund this effort. A very similar 

parallel has been followed on the approval and release of funds 

for development work on the Titan IIIM launch vehicle. 

The foregoing events indicate the DOD intent and willingness. 

on the basis of the approvals granted, for the Air Force not only 

to proceed with the Engineering Development Phase but also to 

protect development lead time where necessary. The only program 

limitation, and it is a major one, for proceeding at the defined rate 

into full engineering development on all segments of the program 

is the funding deficit in r y 1967 and subsequent years. An 

approach to work around this limitation was requested in your 

Memorandum for the Secretary of the Air Force transmitting 

the Program Plan and Funding Requirements document. In 

this approach. you will recall, a request was made to proceed 

at the NOA rate of $Z54 million until January 1, 1967 with the 

engineering development effort on the schedule and toward the 

defined MOL objectives. It was proposed further that program 

requirement be reassessed and a current evaluation be given of 

our progress at that time. Then. if required, a request for new 

obligating authority would be made. The draft memorandum to 

the DDR&E requesting concurrence with this funding approach has 

been given to the Secretary of the Air Force for his approval and 

signature and I intend to pursue this position for an early decision. 

A resolution on the funding problem must be available no later than 

upon completion of contract negotiations and prior to contract 

signature. The Douglas, McDonnell and General Einctric Evaluation 

& Negotiation Teams are in their final rounds of review on the 

contractors Phase U proposals. Government position for all three 

are expected to be established by July 25 and negotiations to be 

completed by September 1. Whin a negotiated position is reached, 

these procurement contracts must be submitted to DM-Procurement 

and Production. Headquarters Air Force Systems Command, for 

review and approval. If at that time, neither the Secretary of the 

Air Force nor OSD has acted favorably on our Program Plan and 

Funding recommendation, then at a rzinirrium, a review with the 

Secretary of the Air Force of our negotiated position with the 

three contractors would be necessary and further discussion with 

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the OSD would likely be required. The qualm of such a situation, 

if it should happen, would be our relationship with the contractors 

and the status they assume while a decision is being rendered. 

I strongly recommend that we do all possible to avoid arriving at 

this position by bringing all pressure to bear now for an early 

decision on our recomm*nded program plan. 

Contract negotiations with Eastman Kodak for the DOR/AN 

effort also are scheduled to begin very shortly. This procurement 

will be negotiated as a cost plus fixed fee contract by fiA.FSP and 

forwarded to Dr. flax for final review and approval. I envision 

no particular problem arising out of this action and feel that there 

is sufficient support here to allow for continuation with the DORIAN 

development effort. We will, of course, give our assistance 

and support as required to assure that overall program integrity 

is provided. 

Similarly, the Titan lII development contracts present no 

immediate problem. These contracts with the Titan III associates 

are being managed by the Titan III SPO and contract changes to 

existing development contracts are being made to keep the effort 

moving until such time that new contracts for MOL booster 

development are negotiited. 

In summary: 

a) Except where specifically authorised to deviate, 

the MOL Program has followed the general pi:kitties and practices 

contained in DOD Directive 3200.9. 

b) In every instance where the Department of, the Air 

Force has submitted a request to OW for program approval and 

release of funds, such approval and release has been made. 

c) OSD has shown a repeated intent and willingness to 

proceed with orderly engineering development by initiating approvals 

which specifically involve not only current year releases but also 

follow-on funding. 

d) The Director, MOL by memorandum to the Secretary 

of the Air Force has submitted a Program Plan and Funding 

Requirement document containing his recommendation for proceeding 

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with the Engineering Development Phase. Accompanying this 

submittal was a draft memorandum to be signed by the Secretary 

of the Air Force to the DDR&E. The submission of a recommended 

Air Force position to DDR&E is in accordance with DOD Directive 

3200.9. 

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e) Contract negotiations with Douglas, McDonnell, and 

General Electric are scheduled for completion around September 1. 

1966. Because MOL Program funds do not meet "dated baseline 

and schedule requirements, Secretary of the Air Force and 080 

approval is required before Phase II contracts can be executed. 

f) Continuation of the sensor payload and Titan III 

booster developments by themselves present no immediate problem 

but funding these efforts must be controlled with consideration 

given to the total program funding problem. 

g) All possible action should be taken to get Secretary 

of the Air Force concurrence and OSD approval of our recommended 

program plan. 

SIGNED 

HARRY L. EVANS 

Major General, USAF 

Vice Director, MOL Program 

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