CDEPARTMENT OF THE AIR FORCE

OFFICE OF THE SECRETARY

MEMORANDUM

October 26, 1970

NOTE TO COLONEL SWE AND DR. NAKA

SUBJECT: "Skunk Works" Management

The memorandum to the right is intended

to compliment Colonel Hartley ' s memorandum

of October 16, copy attached.

I think that there is a tendency to

view "skunk works" as the answer to the

Systems development and acquisition

problems of today. My contention is

that the reason that "skunk works" is

successful is because it is so unique,

challenging and rewarding. For this

reason, I have great concern that if the

concept is universalized, it will negate

the very reason for its success. The

memorandum to Dr. McLucas urges great

care in "skunk working" all programs.

Recommend that you coordinate on the

memorandum.

^•r

k

Ilip

Control Srs
S SE^REf

),S'1 NATIONAL RECONNAISSANCE OFFICE

WASHINGTON, D.C.

THE NRO STAFF, October 26, 1970

MEMORANDUM FOR DR. MC LUCAS

SUBJECT: Additional Thoughts on the "Skunk Works" Concept

In his October 16 paper, Colonel Hartley offered

some very pertinent remarks concerning the value of

the specialized management, engineering shop, or "skunk

works" concept. lie cited three major factors as being

key to the success of this management philosophy. First,.

and most essential, is the cooperative use of streamlined

contracting and program management procedures by industry

and the government. Second, is the selection of highly

qualified and highly motivated people to do the job.

Third, is working within a streamlined organization with

limited numbers of people involved.

I would like to draw your

second and third points, since

to have been centered upon the

to recent criticism of present

special attention to the

much of the major focus seems

first factor as a response

systems acquisition methods.

The main reason for the ngualified successes of the

"skunk works" is that the projects wt!ch have been

accomplished were uncommon, unique and largely classified.

They were by-and-large short-lived and closed ended. In

other words, the working enviro!mlents which were created

for these projects were special, and unencumbered by the

traditional reviews, controls and central decision making.

The original SPO concept also produced this favorable work

environment until the control and decision mechanism

overwhelmed the program managers with reviews and committees

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and permitted a far lesser amount of dedication on the

parts of the SPO organization. Over the years, the

SPO staffs have grown to the point where it is no longer

a unique and special job assignment and the important

necessity of providing a high sense of job accomplishment

has been forgotten.

Unless careful a ntion is paid to the main reason

underlying the su _ c„ cess f the 

"

skunk works" - the unique

and special job environment - any amount of streamlined

procedures will not correct the ills prevalent in today's

systems acquisition philosophy.

There is great danger in attempting to pull the

entire spectrum of systems development and procurement

under the umbrella of "skunk works." If "skunk works"

is made too common, then the real factors for its past

success will no longer be possible to attain.

hjuz, USAF

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DEPARTMENT OF THE AIR F(311 Systemm

H(ADQUARTERS UNITED 5TATLS AIR PONCE

WASNINQTON. D.C.

16 October 1970

)hNlORAND11 FOR DIRSCWR, NATIONAL RECONNAISSANCE OFFTCE

SJJBSRCT: Specialized Management Concept

During his speech to the Armed Forces Management Association

on 20 August 1970, Mr. Packard cited Lockheed's "Slovak Works" as

an exceptionally effective approach to obtaining military weapon

systems. Although it is not common knowledge, a wide range of

military equipment and complete systems as well have been procured

under the specialized management, or "Skunk Works" concept, not only

from Lockheed but also from more than 30 other major contractors.

Most people with whom we .deal are generally aware of the

specialized management concept but unfamiliar with the essentials

of the system. This paper outlines some of the more important

aspects of the specialized management technique and cites advantages

to be gained through selective use of this approach on an expanding

scale.

A basic and most essential ingredient of the Skunk Works

approach is the cooperative use of streamlined contracting and

program management procedures by both industry and the government.

The specialized management concept requires the elimination of every

nonfessentia1 activity. Committee reviews, reports, etc., are

limited or entirely omitted in order to produce a quality item,

quickly and economically. Documentation and, in fact, all forms of

paperwork are held to an absolute minimum. The contractor is given

a specific achievement goal, and after mutual agreement on time,

method, and money matters, is permitted to proceed toward the goal

with a minimum of government red tape. lb date, although many

mega-dollars of effort have been managed under this concept, audit

results indicate that no contractor has tried to "gouge" the govern..

ulent. This has been accomplished not only through the integrity of

the contractors, but also as a result of strong and effective.

internal management controls exercised directly by the government

program manager. Controls employed nay vary with the specific

project, but always include basic techniques such as system

performance reviews, audit analyses, and especially close fiscal

surveillance.

366-70

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,

Another key factor is selection of people. Highly motivated,

well-qualified people, representing both the contractor and the

government, who must be given the responsibility and authority

needed to do the job without going through multi-layer coordination

actions and stereotyped approval procedures. The government Project

Director, as well as the contractor's Project Director, should report

directly to the actual decision-making authority. The typical Air

Force SPO is organizationally located at a buying division with many

layers of management between the SPO director and the actual decision

makers. By having direct access to the ultimate authority, the

program director in special projects is not subjected to unneeded

reviews by intermediate cameittees with no authority to act. This

arrangement precludes being "helped to death."

Squally important is streamlining the organization to limit

span of control and enhance direct stsnegement capability. While a

standard Air Force SPO may be staffed with 200 to 300 people, we

have managed complex projects with two to 20-man SPO's and a limited

amount of Deadquartere assistance. This approach places a great

deal of responsibility and authority in each individual, but at the

same time the contractor knows precisely to whom be must go, and with

whom be can resolve problems on an expedited basis. Additionally,

austere manning of the government team conveys to the contractor the

correct tenor, of the program. A smaU government SPO does not mean

that the contractor must increase manning to accomplish the required

tasks. As a matter of fact, a lesser number of government SQO

personnel reduces the number of "marketing" teams needed within the

contractor's organization. Also, when fewer people are involved,

coordination becomes much easier.

During the mid-1950's and early 1960's, aircraft and other

systems produced under the specialized mansgeseat concept far

exceeded world altitude, speed, and other performance records, but

security constraints prevented public release of the knowledge. The

"8kun1c Works" approach creates the proper attitude and atmosphere

to encourage scientific breakthroughs rather than stifling progress

with unnecessary red tape. Igo. Packard'a advocacy of the specialized

management concept for acquiring military hardware on a timely and

economical basis has a firm foundation in successful past accomplishments handled the "8kunk Works" way. Some idea of lbs scope of these

achievements may be comprehended from the following examples:

7-80 -- Only 23 engineers and 100 shop people in Contractor's

organization during prototype development.

U-2 -- First aircraft was delivered within seven months of

contract go-ahead. State-of-the-art advances

incorporated in original design of the aircraft,

111 years later are still ahead of the field in many

eta.

366-70

2

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Coaple

electronic

with no cost overruns.

r

Needle'

Cord

SR-71 -- RID and production of the entire fleet accomplished

on schedule and well within budgetary target.

Fuels -- 8xotic fuels developed for U-2, A-12, SR-71 engines;

capable of superior performance at high speed and

altitude, represent a quantum jump in technology.

A-12 -- Another example of a giant step in advanced design

was achievement of Mach 3 speeds with this aircraft

in five years less time than it took to achieve

the same performance with the 8-70.

AGEMA "D" Requirement for engineering drawings for this project

was reduced from an original demand for 3900 to only

350 by use of the "Skunk Works" concept; and with

major dollar savings as a direct result.

rth of various special

a compressed time span and

It is conventionally accepted that the ponderous methodology of

the normal Armed Forces Procurement approach is an irreducible array

of checks and balances necessary to safeguard the interests of the

government. However, actual past performance evidences the fact that

the reverse is often true. In the procurement of new systems or

equipments which, by reasons of security, situational complexity, or

urgency of national need were required within compressed time frames,

the specialized management or "Skink Works" approach successfully.

produced quality equipment on a timely basis, and in many cases more

economically than could have been obtained under standard procurement

practices.

It would appear that a real effort should be exerted within DoD

to simplify the normal weapon system procurement system and in

Mr. Packard's words "avid the C-5As .1,- ":. • i^Torks."

JR.

Colonel, USAF

Director, Program D

366-70

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Handle r^ . JEr Control System
_. Handle via

DEPARTMENT OF THE AIR ORCCEE,

OFFICE OF THE SECRETARY

- Some companies do get rich from

Skunk Works proj act 1Q t, but they do

not seem to take advantage and cheat

the gov't..

- There is great glamor working in

a Skunk Works operation. Would this be

lost if the concept was spread out more?

Motivation snd job accomplishment is not

matched elsewhere in the Air Force. If

Skunk Works were the norm mach of the

glamor and desire would be lost.

Yc i ..: — X ,..,:.,s

•

MEMORANDUM

October 16, 1970

NOTE FOR COL HARTLEY

Frank

Some quick observations on your paper

on "Skunk Works."

- Very well thought out, but very

biased toward Skunk Works concept.

- He makes an excellent point on

the matters of excessive reviews and

endless documentation,
-sEeREr Handle

CoaUdSyei

- You should offer maybe comments

on how to limit the scope of the

numbers of projects included in Skunk

Works. This is the central issue.

It is clear that the advantages in a

limited scope are great, but how about

an expanded scope?

- RAND is finding out that

concurrency is not the answer. Also

they see that too many people with

their "finger in the pie" causes more

cost in time and dollars.

- The original normal SPO concept,

for a while, was effective until the

excessive layers of management were

interjected.

EDWIN F. SWEENEY

Colonel, USAF

Ilandlet.

Caaol aten
4
DEPARTMENT OF THE AIR FORCE

OFFICE OF THE URGER SECRETARY

c

i

MEMORANDUM
MEMORANDUM FOR DIRECTOR, NATIONAL RECONNAISSANCE OFFICE

SUBJECT: Specialized Management Concept

During his speech to the Armed Forces Management Association

on 20 August 1970, Mr. Packard cited Lockheed's "Skunk Works" as

an exceptionally effective approach to obtaining military weapon

systems. Although it is not common knowledge, a wide range of

military equipment and complete systems as well have been procured under the specialized management, or "Skunk Works" concept

not only from Lockheed but also from sore than 30 other major

contractors.

Most people with whom we deal are generally aware of the

specialized management concept but unfamiliar with the essentials

of the system. This paper outlines some of the more important

aspects of the specialized management technique and cites

advantages to be gained through selective use of this approach

on an expanding scale.

A basic and most essential ingredient of the Skunk Works

approach is the cooperative use of streamlined contracting and

program management procedures by both industry and the govern.

sent. The specialized management concept requires the elimination of every non-essential activity. Committee reviews,

reports, etc., are limited or entirely omitted in order to

produce a quality item, quickly, and economically. Documentation and, in fact, all forms of paperwork are held to an

absolute minimum. The contractor is given a specific achievement

V4 NDCE

ZoN ffiOC
goal, and after mutual agreement on time, method, and money

matters, is permitted to proceed toward the goal with a minimum

of government red tape. To date, although many mega-dollars

of effort have been managed under this concept, audit results

indicate that no contractor has tried to "gouge" the government.

This has been accomplished not only through the integrity of

the contractors, but also as a result of storage and effective

^.._.^i

management Internal controls exercised directly by the government

program manager. Controls employed ,vary with the specific

always

project, but/include basic techniques such as system performance

reviews, audit analyses, and especially close fiscal surveillance.

Another key factor is selection of people. Highly motivated, well-qualified people, representing both the contractor

and the government, who must be given the responsibility and

authority needed to do the job without going through multi

layer coordination actions and stereotyped approval procedures.

The government Project Director, as well as the contractor's

Project Director, should report directly to the actual decision,

making authority. The typical Air Force SPO is organizationally

located at a buying division with many layers of management

between the SPO director and the actual decision makers. By

having direct access to the ultimate authority, the program

director in special projects is not subjected to unneeded

a

eiiiNki^.t: c/'

Cif TF2.^t ':

— ••, U.
reviews by intermediate committees with no authority to act.

This arrangement precludes being "helped to death."

Equally important is streamlining the organization to

limit span of control and enhance direct management capability.

While a standard Air force 8P0 may be staffed with 200 to

/

300 people, we have managed complex projects with a two or rr

three-man SPO and a limited aaount of Headquarters assistance.

This approach places a great amount of responsibility and

authority in each individual, but at the same time the contractor knows precisely to whom he must go^and with whom he

can resolve problems on an expedited basis. Additionally,

austere manning of the government team conveys to the contractor

the correct tenor of the program. A small government SPO

does not mean that the contractor must increase manning to

accomplish the required tasks. As a matter of fact, a lesser

number of government SPO personnel reduces the nua^er of

"marketing"teals needed within the contractor's organization.

Also, when fewer people are involved, coordination becomes

much easier.

During the mid-1950 ' s and early 1960 ' s, aircraft and o

systems produced under the specialized sanageaent concept far

exceeded world altitude, speed, and other performance records,

but security constraints prevented public release of the knowledge. The "Skunk Works" approach creates the proper attitude

and atmosphere to encourage scientific breakthroughs rather

than stifling progress with unnecessary red-tape. Mr.

3
Packard's advocacy of the specialized management concept for

acquiring military hardware on a timely and economical basis

has a firs foundation in successful past accomplishments

handled the "Skunk Works" way. Some idea of the scope of

these achievements may be comprehended from the following

examples.

F-80 Only 23 engineers and•100 shop people in

Contractor ' s organization during prototype developsent.

U-2 -- First aircraft was delivered within seven months

of contract go-ahead. State- . of-.the -art advances

incorporated in original design of the aircraft,

14 years later are still ahead of the field

in many respects.

SR-71 - _ R&D and production of the entire fleet accomplished on schedule and well within budgetary target.

Fuels -- Exotic fuels developed for U-2, A-12, SR-?l engines;

capable of superior performance at high speed and

altitude, represent a quantum jump in technology.

A-12 - _ Another example of a giant step in advanced design; r,a^,6

achievement of Mach 3 speeds with this aircraft

in five years less time than it took to achieve

the same performance with the 8-70.
evidences the fact thaw the procurement of new systems or

equipments which,by reasons of security, situational complexity,

of the government. Rowever, actual past performance sr

Tit" tew-'elf /S O^`7j'4 ' •

U...

AGENA "D" Requirement for engineering drawings for

this projeot was reduced from an original demand

for 3900 to only 350 by use of the "Skunk

Works" concept as with major dollar savings

as a direct result.

Completed orth of various special

electronics projects in a compressed time span

and with no cost overruns.

It is conventionally accepted that the ponderous methodology

of the normal Armed Forces Procurement approach is an irreducible

array of checks and balances dei,i. sed"( safeguard the interests

or urgency of national need were required within compressed

time frames, the specialised management or "Skunk Works" approach

successfully produced quality equipment on a timely basis, and

in many cases .more economically than could have been obtained

under standard procurement practices.

It would appear that a real effort should be exerted

fycTEM

within DOD to simplify the normal weannprocurement system

and in Hr. Packard's words "avoid the C-5A's and get more

Skunk Works."