Skunk Works: A Personal Memoir of My Years at Lockheed

16 DRAWING THE RIGHT CONCLUSIONS

In my forty years at Lockheed I worked on twenty-seven different airplanes. Today’s young engineer will be lucky to build even one. The life cycle of a military airplane is far different from the development and manufacturing of anything else. Obsolescence is guaranteed because outside of a secret, high-priority project environment like the Skunk Works, it usually takes eight to ten years to get an airplane from the drawing board into production and operational. Every combat airplane that flew in Operation Desert Storm in 1991 was at least ten to fifteen years old by the time it actually proved its worth on the battlefield, and we are now entering an era in which there may be a twenty- to thirty-year lapse between generations of military aircraft.

Whether we as a nation will develop intelligent military planning and spending policies in the post — cold war era, I will leave to futurists and politicians to argue about. My interest is the future survival of the Skunk Works as a widely adopted concept, and understanding the key reasons for its unsurpassed success. Will its future be anywhere as bright as its past? Will the concept itself finally receive broad acceptance across the industrial landscape at a time when development dollars are as sparse as raindrops on the Sahara?

To my mind, the leaner and meaner Washington becomes in doling out funding for defense, the more pressing the need for Skunk Works — style operations. Any company whose fortune depends on developing new technologies should have a Skunk Works in operation; in all, there are fifty-five or so scattered around various industries, which isn’t very many. But if Lockheed’s Skunk Works has been a tremendously successful model, why haven’t hundreds of other companies tried to emulate it? One reason, I think, is that most other companies don’t really understand the concept or its scope and limitations, while many others are loath to grant the freedom and independence from management control that really are necessary ingredients for running a successful Skunk Works enterprise.

Unfortunately, the trend nowadays is toward more supervision and bureaucracy, not less. General Larry Welch, the former Air Force chief of staff, reminded me recently that it took only two Air Force brass, three Pentagon officials, and four key players on the Hill to get the Blackbird project rolling. “If I wanted an airplane and the secretary of the Air Force agreed,” the general observed, “we had four key congressional committee chairmen to deal with and that was that. The same was true of the stealth fighter project — except we had eight people to deal with on the Hill instead of four. But by the time we were dealing with the B-2 project, we had to jump through all the bureaucratic hoops at the Pentagon and on the Hill. So it is harder and harder to have a Skunk Works.”

To buck smothering bureaucratic controls inside or outside government takes unusual pluck and courage. Smallness, modest budgets, and limiting objectives to modest numbers of prototypes are not very rewarding goals in an era of huge multinational conglomerates with billion-dollar cash flows. There are very few strong-willed individualists in the top echelons of big business — executives willing or able to decree the start of a new product line by sheer force of personal conviction, or willing to risk investment in unproven technologies. As salaries climb into the realm of eight-figure annual paychecks for CEOs, and company presidents enjoy stock options worth tens of millions, there is simply too much at stake for any executive turtle to stick his neck out of the shell. Very, very few in aerospace or any other industry are concerned about the future beyond the next quarterly stockholders’ report.

Yet if times stay tough and the New World Order evolves without any new big-power confrontations, the need for innovative, rapidly developed, and relatively inexpensive systems that are best supplied by a Skunk Works will be greater than ever. Which is the main reason why I remain optimistic about the future viability of the Skunk Works. By its very definition as a low-overhead, advanced development operation for crash production of hot items — prototypes representing cutting-edge technologies that the customer eagerly needs or wants to exploit — the Skunk Works is needed more than ever. The beauty of a prototype is that it can be evaluated and its uses clarified before costly investments for large numbers are made.

Extremely difficult but specific objectives (e.g., a spy plane flying at 85,000 feet with a range of 6,000 miles) and the freedom to take risks — and fail — define the heart of a Skunk Works operation. That means hiring generalists who are more open to nonconventional approaches than narrow specialists. A Skunk Works is allowed to be less profitable than other divisions in a corporation only if its projects are not financial back-breakers and are limited to producing about fifty units or so. Going “skunky” is a very practical way to take modest risks, provided that top management is willing to surrender oversight in exchange for a truly independent operation that can make everyone look good if its technology innovations really catch on, as with stealth. By keeping low overhead and modest investment, a Skunk Works failure is an acceptable research and development risk to top management.

Frankly, in today’s austere business climate I don’t think a Skunk Works would be feasible if it could not rely on the resources of the parent entity to supply the facilities, tools, and workers for a particular project and then return them to the main plant when the task is completed. But given the right project and motivation, even the usually rigid corporate controls dominating Detroit automakers can benefit enormously from a Skunk Works — style operation for new product research and development, as Ford Motor Company proved recently in producing a new model of its classic Mustang automobile.

For many years the idea of reopening that once popular line of cars was rejected by company executives as being prohibitively expensive. Development costs were projected at more than $1 billion. But in 1990, management put together an ad hoc Skunk Works operation called Team Mustang, composed of designing and marketing executives and expert shop people, swore them to secrecy, then instructed them to design and produce a new Mustang for 1994. Most important, management allowed Team Mustang to do the job with a minimum of second-guessing and management interference. The result: the group took three years and spent $700 million to produce a new vehicle that was extremely well received and became one of Ford’s hottest sellers. That represents 25 percent less time and 30 percent less money spent than for any comparable new car program in the company’s recent history.

General Motors is now following Ford and has started a separate and secret development group of its own for future projects. Four or five aerospace companies now claim to have a Skunk Works. McDonnell Douglas calls its group Phantom Works, and it apparently emulates what we tried to do at Lockheed. Overseas, the Russians and the French have evolved the most sophisticated Skunk Works operations modeled on Kelly Johnson’s original principles. The French aerospace company Dassault-Breguet probably has the best operation in Europe. The concept is beginning to spread, and the ground is certainly fertile because there are only a few thousand days remaining before twenty-first-century technology becomes a reality.

At our own Skunk Works nowadays we are investigating development of vertical landing airplanes and the feasibility of hypersonic airplanes to carry space stations into orbit because rockets are so horribly expensive. We are looking into dirigibles as the ultimate heavy-lift cargo transports, perhaps a better and safer way to ship crude oil around the world than vulnerable tanker ships. We could build dirigibles double-hulled for additional environmental safety and fly them high above violent weather systems. We are researching new uses of composite materials used in our stealth airplane and ship prototypes. These materials never corrode or rust and might be used in new bridges. We are also mulling over better methods to speed up the handling and transportation of large volumes of products.

On the military side, the end of the cold war has brought some welcome new thinking into the military development and procurement areas. Avoiding casualties is now a political imperative for any administration, and the search is on to find new nonlethal disabling weapons that can knock out hardware but leave troops relatively unharmed. There are techniques, for example, to disable a tank without killing its crew by using sprays that crystallize metals or supersticky foams that clog traction. Research is underway to perfect powerful sound generators tuned to frequencies that incapacitate humans without causing any lasting harm. This wall of agonizing sound stops troops in their tracks. So can stunning devices and nonlethal gases being researched, as well as laser rifles firing optical munitions that explode dazzling light brighter than a dozen flashbulbs, causing temporary blindness. Another possibility is an immensely powerful jammer that puts out so much energy that it shuts down all enemy communications or missile defense systems.

But schemers never sleep and there are always counters to every new technology. Currently, the French and Germans are trying to create a missile that can shoot down our stealth fighter. It might well take them twenty years to succeed, but ultimately they will find a way. And then we will find a way to counter their way, and on and on — without an end.

Lockheed’s Skunk Works will find useful and productive ways to stay in business for years to come. But a Skunk Works is no panacea for much that ails American industry in general or the defense industry in particular. I worry about our shrinking industrial base and the loss of a highly skilled workforce that has kept America the unchallenged aerospace leader since World War II. By layoffs and attrition we are losing skilled toolmakers and welders, machinists and designers, wind tunnel model makers and die makers too. And we are also losing the so-called second tier — the mom-and-pop shops of subcontractors who supplied the nuts and bolts of the industry, from flight controls to landing gears. The old guard is retiring or being let go, while the younger generation of new workers lucky enough to hold aerospace jobs has too little to do to overcome a steep learning curve any time soon. I’ve recently seen young workers install hydraulic lines directly over electric wires — oblivious to the dangers of a hydraulic leak that could spark a fire. We are not producing enough airplanes for workers to learn from their mistakes.

During the 1980s an incredible $2 trillion was spent on military acquisitions alone, with new aircraft receiving the largest share of the defense budget, about 43 percent, followed in distant second place by missiles and electronics. The development costs of fighters have increased by a factor of 100 since the 1950s, and unit procurement costs have risen 11 percent every year since 1963! Small wonder, then, that there were only seven new airplanes introduced in the 1980s, compared to forty-nine in the 1950s. Only three new airplanes have been produced so far in this decade. Correspondingly, the aerospace industry has lost more than a quarter of its workforce since 1987.

New technology cannot be put on a shelf. It must be used. And the desperate need is to try to find ways to drastically reduce costs that would allow new generations of aircraft to evolve within the parameters of extremely modest defense expenditures. That will be the great challenge facing the Pentagon and the defense industry in the years to come.

I would like to share a few cost-saving ideas, but with the following caveat: in some ways I really do think that aerospace has gotten a bum rap from its critics. For example, General Motors spent $3.6 billion giving birth to the Saturn automobile, and it doesn’t even go supersonic. We spent $2.6 billion creating the stealth fighter and were able to keep costs down by incorporating the flight controls of the General Dynamics F-16 fighter and using the engine from the McDonnell Douglas F-18. We didn’t start from scratch but adapted off-the-shelf avionics developed by others. Avionics is the killer expense, costing about $7,000 a pound in a new airplane. A case in point is our own F-22 Advanced Tactical Fighter, which we designed at the Skunk Works in 1988, to replace the F-15, which has been the primary tactical fighter for the blue-suiters since 1972. In answer to the question, do we really need the F-22, comes another question: do we really want our combat pilots putting their lives on the line in a fighter now more than twenty-two years old?

The F-22 is a performing miracle. It can fly supersonic without afterburners, and using a revolutionary Thrust Vector Control System, can fly at extreme angles of attack while changing directions at high speeds, thereby outperforming any other airplane in the world — all this with the stealth invisibility achieved by the F-117A. To perform its incredible feats, the F-22’s avionics is as powerful as seven Cray computers! When we bid on this airplane we did so with the understanding that we would build seven hundred of them. That number would justify the enormous development costs that we shared with the government. Uncle Sam gave us $690 million and we put up a similar amount. The development phase was so expensive that we partnered with General Dynamics and Boeing. Northrop, our competitor, also put up $690 million in partnership with McDonnell Douglas. We won the competition, but all five companies involved in the F-22 contest have lost. We, the winners, will never make back our original investment because in the current budget crunch the government has cut back sharply on the number of F-22s it now plans to purchase. Currently, the Air Force has budgeted for four hundred new F-22s, but that number could decrease even further. The fewer the new airplanes produced, the more expensive the unit cost. The F-22 currently costs around $60 million each — the most expensive fighter ever. Meanwhile we and our partners are carrying huge production overheads in tooling and personnel. The sad truth is that our stockholders would have done better financially if they had invested that $690 million in CDs.

New advanced-technology airplanes are budget breakers. The B-2 bomber, at more than $2 billion a copy, proves that point. But we need stealthy long-range bombers like B-2s, which can fly anywhere in the world in twelve hours and drop a payload of forty conventional bombs. Still, unless we manage to get wildly inflated production costs down, aeronautics could well become an arcane art practiced by one or two manufacturers who somehow manage to survive. (Grumman, the Navy’s principal supplier of fighters for nearly sixty years, recently abandoned the sluggish fighter business entirely, while several other big manufacturers are also rumored to be planning to quit increasingly high-risk and unprofitable military aircraft production.)

So an urgent question to pose is how can an airplane as revolutionary and advanced as the F-22 be made for considerably less money? One way, which I have been promoting in vain for several years, would be to make it even more revolutionary than it already is. That is, much of the horrendously expensive avionics on board allows the F-22 to perform incredible aerodynamic maneuvers, from climbing straight up to pulling enormous g-loaded turns. But what if we invent onboard weapons systems that perform all the maneuvering while the airplane itself flies straight and level? In other words, missiles that could electronically lock onto a dogfighting target and swivel and turn at twelve gs while the airplane flies at only two gs. Such a reversal would drastically reduce the huge avionics costs.

Like true Skunk Workers, the aerospace industry as a whole must start thinking in new directions. Why build each new airplane with the care and precision of a Rolls-Royce? In the early 1970s, Kelly Johnson and I had dinner in Los Angeles with the great Soviet aerodynamicist Alexander Tupolev, designer of their backfire Bear bomber. “You Americans build airplanes like a Rolex watch,” he told us. “Knock it off the night table and it stops ticking. We build airplanes like a cheap alarm clock. But knock it off the table and still it wakes you up.” He was absolutely right. The Soviets, he explained, built brute-force machines that could withstand awful weather and primitive landing fields. Everything was ruthlessly sacrificed to cut costs, including pilot safety.

We don’t need to be ruthless to save costs, but why build the luxury model when the Chevy would do just as well? Build it right the first time, but don’t build it to last forever. Why must every aircraft be constructed to fly for twenty thousand hours and survive the stresses and strains of a thousand landings and takeoffs? Why not lower the endurance requirements for the majority of airframes? Wars are now planned to last ninety days because after that time ammunition reserves run out. In battle, most airplanes will be deployed for a few hundred hours at most. It would be cheaper to dispose of them once they’ve seen combat than to stockpile vast quantities of replacement parts and engines. We could make a small number of aircraft to last for years in training flights. But produce the majority — the ones destined for a relatively short spurt of combat flying — with less expensive materials. This same sort of Skunk Works’ cost-reduction thinking could extend to airplane tires arid other parts. Why, for example, must tires last for one thousand landings? If we mass-produced them at somewhat lower standards, we could throw away airplane tires after ten landings and still save money.

We cannot enjoy total product perfection and really don’t need it. The only areas where the final result must be 100 percent are safety, quality, and security. That final 10 percent striving toward maximum perfection costs 40 percent of the total expenditure on most projects.

General Electric’s jet engine plant at Evendale, Ohio, sells its engines to the commercial airlines for 20 percent less than to the Air Force. Price gouging? No. But the Air Force insists on having three hundred inspectors working the production line for its engines. The commercial airlines have no outside inspectors slowing down production and escalating costs. Instead, the airline industry relies entirely on GE’s engine warranty, a guarantee that the engine will function properly or GE will be required to pay a penalty as well as all costs for replacement, repairs, and time lost. Why can’t the Air Force operate with similar guarantees and save 20 to 30 percent on engine costs and eliminate three hundred unnecessary jobs to boot?

One of the biggest cost items in defense is logistics management and maintenance. We should reevaluate the design of many components and make them throwaway or limited-shelf-life items. Batteries, brakes, servos, modular avionics, should all be replaced on a definite schedule, not wait for them to wear down. This would reduce the accumulation of large spare part inventories in city-size warehouses, cut down repairs and maintenance, and lower supply pipeline costs. Savings could run in the hundreds of millions.

One area in particular where the Skunk Works serves as a paragon for doing things right is aircraft maintenance. We have proven time and again that the Air Force would be much more efficient using civilian contractor maintenance on its air fleet whenever possible. Fifteen years ago, there were so many mechanical breakdowns on the flight lines at air bases around the world that it took three airplanes to keep just one flying. The reason: lack of good maintenance by inexperienced flight crews. We in the Skunk Works are the best in the business at providing our own ground crews to service and repair our own aircraft. For instance, two Air Force SR-71 Blackbirds based in England throughout the 1970s used Skunk Works maintenance. We had on hand a thirty-five-man crew. By contrast, two Air Force Blackbirds based at Kadena on Okinawa relied on only blue-suiter ground crews, which totaled six hundred personnel. Contractors can cross-train and keep personnel on site for years, whereas the military rotates people every three years, and valuable experience is lost.

Currently, two U-2s are stationed in Cyprus with twelve Lockheed maintenance persons, while two other U-2s stationed at Taif, in Saudi Arabia, in support of the UN mission in Iraq, have more than two hundred Air Force personnel. And when the U-2s at Taif need periodic overhauls, they are flown to Cyprus, where our crews do the job.

Another relatively easy cost-reduction scheme would be to rethink aircraft design so that all parts are “no-handed.” That is, there would be no left and right hinges or wing flaps or other control surfaces. The cockpit controls would likewise be no-handed. Production learning curves in manufacturing these items would be twice improved by not having to devote half to left and half to right and would reduce significantly spares and storage parts requirements.

Even at the Skunk Works I’ve seen my share of money wasted, at times in the most ridiculous ways imaginable. One that particularly sticks in my craw occurred when President Johnson first announced in 1964 the existence of the RS-71, the Air Force two-seater Blackbird. That’s right, RS-71 was its official designation, but Johnson accidentally turned it around and called it the “SR-71.” Instead of putting out a brief correction, the Air Force decided not to call attention to a very minor mistake by the commander in chief and ordered us to change about twenty-nine thousand blueprints and drawings at a cost of thousands of dollars so that they would read “SR-71” and not “RS-71.” Another frustrating example was the stubborn insistence of the Air Force to have its insignia painted on the wings and fuselage of the SR-71 Blackbird, even though no one would ever see it at eighty-five thousand feet; finding a way to keep the enamel from burning off under the enormous surface temperatures and maintain its true red, white, and blue colors took our chief chemist, Mel George, weeks of experimentation and cost the government thousands of unnecessary dollars. After we succeeded, the Air Force decided that the white on the emblem against the all-black fuselage was too easy to spot from the ground, so we repainted it pink. Air Force regulations also forced us to certify that the Blackbird could pass the Arizona road-dust test! Years earlier low-flying fighters training over Arizona’s desert wastes suffered engine damage from sand and grit. We had to demonstrate that our engine was specially coated to escape grit damage — this for an airplane that would overfly Arizona at sixteen miles high.

Such bureaucratic madness, I am certain, will never entirely disappear no matter how tight things get, but affordability nowadays is even more important than technology, and a genuine attempt to control costs is the highest priority among all branches of the military. The Skunk Works concept as a vibrant force in the American defense industry can come into its own only if and when the government reverses some of its counterproductive practices. And the most obvious place to start in achieving greater efficiency is to ferociously attack unnecessary bureaucratic red tape and paperwork.

I was in Boston recently and visited Old Ironsides at its berth, coincidentally at a time when the ship was being painted. I chatted with one of the supervisors and asked him about the length of the government specifications for this particular job. He said it numbered two hundred pages and laughed in embarrassment when I told him to take a look at the glass display case showing the original specification to build the ship in 1776, which was all of three pages.

Everyone in the defense industry knows that bureaucratic regulations, controls, and paperwork are at critical mass and, if unchecked, in danger of destroying the entire system. An Air Force general in procurement at the Pentagon once confided to me that his office handled thirty-three million pieces of paper every month — over one million per day. He admitted that there was no way his large office staff could begin to handle that kind of paper volume, much less read it. General Dynamics is forced by regulations to store ninety-two thousand boxes of data for their F-16 fighter program alone. They pay. rent on a fifty-thousand-square-foot warehouse, pay the salaries of employees to maintain, guard, and store these unread and useless boxes, and send the bill to the Air Force and you and me. That is just one fighter project. There are many other useless warehouses just like it. There is so much unnecessary red tape that by one estimate only 45 percent of a procurement budget actually is spent producing the hardware.

Oversight is vitally important, but we are being managed to death and constantly putting more funds and resources into the big end of the funnel to get an ever smaller trickle of useful output from the small end. Over the years in the Skunk Works, we supplied necessary paperwork when it was critically important and eliminated all the rest of it. A Skunk Works purchase order for vendor development of a system used in an advanced airplane took three pages. The vendor replied with a four-page letter proposal that included specifications for the system under development. And that was that. But at Lockheed’s main plant, or at any other manufacturer’s, that same transaction typically produced a 185-page purchase order, which led to a 1,200-page proposal, as well as three volumes on technical factors, costs, and management of the proposed project.

To put the paperwork blitz in perspective: there are currently operative throughout the Defense Department, acquisition regulations that reportedly could fill an entire shelf of 300-page books, in addition to 50,000 individual specifications, 12,000 contract clauses for specific components, 1,200 department directives, and 500 separate procurement regulations.

Paperwork should be limited to what the government most needs to keep tabs on. And I cannot deny that over the years the defense industry has had more than its share of cost overruns, bribery scandals, and other serious transgressions, which proves the need for intense scrutiny. In many ways, though, our sullied reputation was somewhat unearned because cost overruns in our industry were seldom more than 20 percent, while in other industries operating entirely by private financing, big-project overruns of 30 percent or even higher are not uncommon.

Nevertheless, excessive government regulation is the penalty we now pay for years of overpromising and lax management in aerospace. At the heart of the defense industry problem was a recognition that if we bid unrealistically low to get a project, the government would willingly make up the difference down the line by supplying additional funding to meet increasing production costs. And it would do so without penalties.

Now if there are serious cost overruns, whether caused by unexpected inflationary spirals or even “no fault” acts of God, the company is liable to pay for it all or fix any mistakes from its own pocket. The era of the fixed-price contract rules supreme. As for major cost overruns, it is impossible to really surprise the government by suddenly revealing out-of-control expenses because every production line is swarming with government bean counters and inspectors keeping close tabs every step of the way.

Back in 1958, we in the Skunk Works built the first Jetstar, a two-engine corporate jet that flew at .7 Mach and forty thousand feet. We did the job in eight months using fifty-five engineers. In the late 1960s the Navy came to us to design and build a carrier-based sub-hunter, the S-3, which would fly also at .7 Mach and forty thousand feet. Same flight requirements as the Jetstar, but this project took us twenty-seven months to complete. One hint as to the reasons why: at the mock-up conference for the Jetstar — which is where the final full-scale model made of wood gets its last once-over before production — we had six people on hand. For the S-3 mock-up the Navy sent three hundred people. S-3 may have been a more complex airplane than Jetstar, but not thirty times so. But we were forced to do things the Navy Way.

In more recent years the government seemed determined to lower procurement costs through rigorous competition. One curious idea developed by Ronald Reagan’s secretary of the Navy, John Lehman, and adapted by the Air Force and other service branches as well, was something called leader-follower competition. The rule of this game was that the winner of a competitive bidding competition had to turn over his winning design to the loser. The loser would then learn how to build the winner’s product, and by the third year of production the loser would be allowed to bid on the project against the winner. For example, several years ago Hughes won the competition for an advanced medium-range attack missile against Raytheon, builder of the Patriot missile. The government bought four thousand of these missiles annually. The first year Hughes got the entire order. The second year, Raytheon, which had studied Hughes’s winning design, got an order to build one thousand while Hughes dropped to three thousand. By the third year, the government opened up the bidding to full competition and Raytheon won a majority of the buy. They were able to put in a lower bid because they had no initial research and development costs to factor into the price and they took over 60 percent of that missile’s production.

The leader-follower concept was an absolute outrage and a debacle. Fortunately, the Pentagon has since abandoned the idea, after admitting that there had to be fairer ways to lower costs, stimulate competition, and spread around new business among winners and losers.

In the so-called New World Order, defense-related procurements will undoubtedly continue to sharply decline into the foreseeable future, rendering the mountains of regulations and the battalions of inspectors and auditors irrelevant. Obviously, we will need continual defense spending and new technologies for as long as the world remains dangerously unstable. But now more than ever, I believe, the Pentagon and industry need to adapt the kinds of specialized management practices that have evolved out of the Skunk Works experience over the past half century.

My years inside the Skunk Works, for example, convinced me of the tremendous value of building prototypes. I am a true believer. The beauty of a prototype is that it can be evaluated and its uses clarified before costly investments for large numbers are made. Prior to purchasing a fleet of new billion-dollar bombers, the Air Force can intensively audition four or five, learn how to use them most effectively on different kinds of missions and how to maximize new technologies on board. They can also discover how to best combine the new bombers with others in the inventory to achieve maximum combat effectiveness.

One of the problems with our stealth fighter was that because it was hidden for years behind a wall of tight security, most Air Force tactical planners didn’t even know it existed and thus had no way of integrating the airplane into overall combat planning and strategy. By the time the F-117A arrived on station for duty in Operation Desert Storm, the airplane was largely a cipher to the high command in terms of its performance capabilities. After the war ended, Lt. General Charles Horner, in charge of Air Force operations, stated frankly that before the F-117A’s first combat mission, he was apprehensive about the effectiveness of stealth in combat. “We had a lot of technical data, but I had no way of knowing that we would not lose the entire fleet that first night of the war. We were betting everything on the data proving the technology — but we had no real experience with the airplane to know for certain how well it performed under fire. We sent those boys in naked and all alone. As it turned out, the data was right on the mark. But we should’ve known that before the first attack.”

As another streamlining improvement in the years ahead, the government should adopt the Skunk Works’ proven procedures for concurrency in manufacturing new airplanes or weapons systems. That is, new weapons systems or airplanes need not be endlessly perfected before production begins, provided that development proceeds carefully, avoiding the messes that both the B-1 and B-2 bombers got into when it was discovered that their avionics and weapons systems, independently produced, just didn’t fit into the strategy and design concept of the new bombers. Fixing it cost a fortune. The bottom line in concurrency development is cost savings, provided it is done right. Our experience on the stealth fighter proves it can be cost effective to build in improvements from production model to production model and keep within the budget and time frame contracted for. By the time we built stealth fighter number ten, we had enhanced many features that we were able to quickly install into the first nine models, because we had planned for concurrency from the beginning by keeping detailed parts records on all the production models and designing easy access to all onboard avionics and flight control systems.

Procurement should be on a fast track basis with a minimum of meetings, supervision, reviews, and reports. Whenever possible all parts on a new airplane should be commercially available, not specially made for military specs that are most often overkill and unnecessarily costly.

Another sound management practice that is gospel at the Skunk Works is to stick with reliable suppliers. Japanese auto manufacturers discovered long ago that periodically switching suppliers and selecting new ones on the basis of lowest bidders proved a costly blunder. New suppliers frequently underbid just to gain a foothold in an industry, then meet their expenses by providing inferior parts and quality that can seriously impair overall performance standards. And even if a new supplier does produce quality parts according to the specifications, his parts will not necessarily match those furnished by the previous supplier: his tooling and calibrations might be different, causing the major manufacturer extra costs to rework other system components.

For these reasons Japanese manufacturers usually form lasting relationships with proven suppliers, and we at the Skunk Works do the same. We believe that trouble-free relationships with old suppliers will ultimately keep the price of our products lower than if we were to periodically put their contracts up for the lowest bid.

Still another area of potential cost reduction is security. A classified program increases a manufacturer’s costs up to 25 percent. I believe in maintaining tight perimeter security to guard the plant site and keep sensitive materials under lock and key. If we don’t allow our people to take out sensitive papers, then we don’t have to worry about it. We need to safeguard technologies and weapons systems, but we don’t need to hide behind secrecy as a means to cover up mistakes or to block oversight by outside agencies. In the past, the government has slapped on way too many security restrictions in my view. Once a program is classified secret it takes an act of God to declassify it. We should limit its use and be tough about periodic declassification reviews. What was secret in 1964 often is probably not even worth knowing about in 1994. I would strongly advocate reviews every two years of existing so-called black programs either to declassify them or eliminate them entirely. We could save millions in the process.

Just one very practical problem about classification that any reader would immediately understand: how do you transport from Burbank to Washington highly sensitive blueprints or performance studies stamped top secret? Do you call in Federal Express? Do you send them by registered mail? No. You use a special courier, who carries the material in a locked case handcuffed to his wrist. If the material is extremely sensitive, the means of transportation is usually government-chartered flight or use of multiple couriers. So, secrecy classifications are not inconsequential but a burden to all and horrendously expensive and time-consuming. If necessarily in the national interest, these expenses and inconveniences are worthwhile. But we ought to make damned sure that the secrecy stamp is absolutely appropriate before sealing up an operation inside the security cocoon.

Sunset laws on security are an important first step toward real dollar saving. But government has a long list of needed reforms in the area of imposing sunset provisions on dozens of unnecessary regulations. Companies with solid track records should be rewarded with less supervision and outside interference, while companies that fail to meet performance requirements should be penalized severely.

Under existing laws if a company actually brings in a project at considerably less cost than called for in the original contract, it faces formidable fines and penalties for overbidding the project. Not much motivation to save time and money, is there?

All of us in the defense industry would benefit from multiyear funding. The laws require that all procurement allocations be on a strict annual basis, so that when the Air Force reopened the production line on the U-2 back in the early 1970s, for example, and I knew that I would be building about thirty-five U-2s — five a year for the next seven years — I still was prohibited from tooling up for five-years’ worth of parts or materials. Not only might the blue-suiters cancel the program, forcing me to eat all those parts for breakfast, but it is against the law for a manufacturer to spend money that has not actually been appropriated. I could be severely fined or penalized by losing the contract entirely if I tried to stock up for several years’ worth of materials and parts and tools. But by doing so, I could probably reduce my production costs if I were allowed to purchase in volume tooling and materials for, say, three years at a time, rather than doing so annually and incrementally.

Frankly, I think the government prefers this annual funding system because it can then promise a company the moon and the stars in order to get it to put up significant development capital, then later sharply reduce the procurement, as in the case of the F-22.

One of the bitter lessons of failure that Rockwell learned while building the ill-fated B-1 bomber was that in retrospect they surrendered too much authority and responsibility to the customer. The Air Force allowed Rockwell to build the airframe of the bomber, but the critical onboard avionics, both offensive and defensive, were in the hands of blue-suiters and were uncoordinated and out of sync with the airframe builders. Ultimately, it would cost millions to undo their mistakes. The lesson is that there is no substitute for astute managerial skills on any project. In the absence of effective managers, complex projects unravel. And, by the way, there is an even greater shortage of skilled managers than of effective leaders in both government and industry nowadays. Leaders are natural born; managers must be trained. When Noah designed an ark and gathered his family and a pair of male and female animals of all species to avoid the Great Flood, he demonstrated his leadership. But when he turned to his wife and said, “Make certain that the elephants don’t see what the rabbits are doing,” he was being a farsighted, practical manager.

I will leave it to historians to debate the effects of our own astronomical defense spending, particularly during the Reagan administration, on the demise of the Soviet Union. Did we really spend them into self-destruction, or did their own corruption and an almost nonexistent functioning economy do the job irrespective of military outlays? Or is the truth somewhere in between? There is no doubt that we ran up enormous debts ourselves that have almost wrecked our own free enterprise system by chasing after enormously costly technologies that were simply beyond our creative grasp. The Reagan administration’s Strategic Defense Initiative is a case in point. This was the so-called Star Wars concept of employing an impenetrable defensive shield capable of destroying all incoming enemy missiles launched against us. In an actual all-out nuclear attack, hundreds of missiles would be raining down on us, including many decoys. SDI would instantly acquire them all, distinguish between real and decoys, and save our bacon by knocking out all those nuclear warheads at heights and ranges sufficiently far removed from our own real estate. Some of us thought that SDI stood for Snare and Deception with Imagination, even though it was supposedly the brainchild of Dr. Edward Teller, the father of the hydrogen bomb, who sold the concept to President Reagan. The trouble was that the technologies to make this system function as advertised were not even on the horizon and would ultimately cost trillions of dollars to develop over many, many years. The administration allocated about $5 billion annually in R&D, which did result in some advances in laser and missile research.

Its apologists justify these costs with the claim that the Russians really believed in the seriousness of the administration’s intent and were panicked into disastrous spending to try to overcome SDL If so, we spent a hell of a lot of money in deception and very little in behalf of worthwhile technology. And that will always be the result unless the new technology we are attempting to create is really within practical reach of our current abilities and achievable with reasonable expenditures.

Lockheed’s Skunk Works has been a dazzling example of American aerospace at its best, setting the standards for the entire U.S. industry in developing aircraft decades ahead of any others in performance and capability. Fifty years is a long time for a very small development company to stay in business, much less to maintain its unusual competence and morale. But if we are to survive a future every bit as uncertain and turbulent as the past, we will need many more skilled risk-takers like the ones first brought together on the initial Skunk Works project during World War II, to build the first U.S. jet fighter.

We became the most successful advanced projects company in the world by hiring talented people, paying them top dollar, and motivating them into believing that they could produce a Mach 3 airplane like the Blackbird a generation or two ahead of anybody else. Our design engineers had the keen experience to conceive the whole airplane in their mind’s-eye, doing the trade-offs in their heads between aerodynamic needs and weapons requirements. We created a practical and open work environment for engineers and shop workers, forcing the guys behind the drawing boards onto the shop floor to see how their ideas were being translated into actual parts and to make any necessary changes on the spot. We made every shop worker who designed or handled a part responsible for quality control. Any worker — not just a supervisor or a manager — could send back a part that didn’t meet his or her standards. That way we reduced rework and scrap waste.

We encouraged our people to work imaginatively, to improvise and try unconventional approaches to problem solving, and then got out of their way. By applying the most commonsense methods to develop new technologies, we saved tremendous amounts of time and money, while operating in an atmosphere of trust and cooperation both with our government customers and between our white-collar and blue-collar employees. In the end, Lockheed’s Skunk Works demonstrated the awesome capabilities of American inventiveness when free to operate under near ideal working conditions. That may be our most enduring legacy as well as our source of lasting pride.

A successful Skunk Works will always demand a strong leader and a work environment dominated by highly motivated employees. Given those two key ingredients, the Skunk Works will endure and remain unrivaled for advancing future technology. Of that, I am certain, even in the face of dramatic downsizing of our military-industrial complex. Prudence demands that the country retain a national capability to design and develop both new technologies and weapons systems to meet threats as they arise, especially better and improved surveillance of unstable, hostile regimes.

Nuclear proliferation is a growing menace: a bomb in the hands of the North Koreans, the Pakistanis, or the Iranians makes the world infinitely dangerous and demands the closest surveillance, which only the most advanced technology can provide. At last count there were about 110 local wars or potential trouble spots around the globe to keep a close eye on. Human conflicts may be smaller in size and scope in the post — cold war era, but certainly not in nastiness. Littoral confrontations — local conflicts caused by political, religious, or ideological differences — will probably monopolize international tensions and concerns for at least the remainder of this century. Increasingly, we will be facing small hostile countries armed to the teeth with the latest weapons technologies purchased from irresponsible outlets in Western Europe or from Russian, Chinese, or North Korean sources. A small country firing high-tech weaponry can do as much damage on the battlefield as a major power. Just remind the Russian high command of the tremendous losses of Hind helicopters they sustained in Afghanistan to a bunch of ragtag peasants firing shoulder-held Stinger missiles, supplied to them by our CIA.

Small localized conflicts are going to be played out on the ground by highly mobile strike forces requiring air superiority, overhead surveillance, and surgical air strikes with high-precision guided ordinance; and a Skunk Works that is expert at low rate production of startling new technologies will undoubtedly serve important national security purposes in the future as it has in the past.

Given current contractions in defense spending and needs, the mountainous inventory of big-strike weapons like intercontinental missiles will be sharply reduced and much of it scrapped. The remaining systems will need updating with the latest technologies, improved to reduce maintenance and manpower utilizations — perfect tasks for Skunk Works operations.

As regions of the world become increasingly unstable, the U-2 fleet might undergo its third reconfiguration in its five decades of service to the nation as our preeminent spy plane. And while that is happening a future successor of mine at the Skunk Works will undoubtedly be peddling ideas for solving technological problems arising out of nonuse of weapons — for example, how to keep silo-based missiles reliable and effective after years of sitting inert in the ground. In some cases reliability has dropped below 50 percent. Another big problem that a Skunk Works would be eager to try to solve is eliminating battlefield deaths caused by accidental friendly fire. Twenty-six percent of our battlefield deaths in Desert Storm resulted from our own shells and bullets. What is needed is some sort of foolproof technology, which the Pentagon has designated IFF — Identify Friend or Foe. The Army plans to spend nearly $100 million developing exclusive radio frequency signals that troops can use in the field at night (our GIs may give off a definite buzz), as well as infrared devices and paints on trucks and tanks that only our side can see using special lenses.

As the only remaining superpower, the United States will be wise to resist being drawn into any military intervention on the short end of public support or lacking a clear threat to our own national security. But even a leader able to whip up sentiment for “sending in the Marines” will find it dicey to undertake any prolonged struggle leading to significant casualties. New technologies will focus increasingly on developing non-manned fighting machines by using reliable drones, robotics, and self-propelled vehicles. As we proved in Desert Storm, the technology now exists to preprogram computerized combat missions with tremendous accuracy so that our stealth fighters could fly by computer program precisely to their targets over Iraq. A stealthy drone is clearly the next step, and I anticipate that we are heading toward a future where combat aircraft will be pilotless drones. On the ground and at sea as well, remote-controlled tanks and missile launchers and unmanned computer-programmed submarines and missile frigates will provide the military advantage to those possessing the most imaginative and reliable electronics and avionics. Field commanders can conduct battles and actually aim and fire weapons systems from the safety of control centers thousands of miles away — their targets sighted by the high-powered lenses aboard drone surveillance aircraft which they remotely control. This is not a Buck Rogers scenario; this is around the corner. Tomorrow’s most prized military breakthrough may be in the form of a dazzlingly new and powerful microchip.

The Skunk Works has always been perched at the cutting edge. More than half a dozen times over the past fifty years of cold war we have managed to create breakthroughs in military aircraft or weapons systems that tipped the strategic balance of power for a decade or longer, because our adversaries could not duplicate or counter what we had created. That must continue to be our role into the next century, if we are to preserve what we have accomplished and be prepared for the hazards as well as the opportunities for the uncharted, risky future.