TAPE 1, SIDE 1

MR. COLLINS: Last time we talked, towards the end of our discussion, we were looking at the ways in which you kept yourself informed of the activities in the various divisions within North American. I wonder whether you might just describe the mechanisms that you employed to keep informed of what each of the different divisions were doing, and how information was exchanged between the divisions.

MR. ATWOOD: Well, during the fifties, of course, we spread the company operations out quite a bit, basically in Los Angeles County, also into Ventura County and Orange County. About that time, we got a couple of helicopters, and they became pretty important elements in our communication and exchange of information, authorizations, and other kinds of traffic that went on between divisions and between the divisions and the headquarters. Of course, we didn't have it all by helicopter by any means, but they did facilitate quite a bit of the executive travel, and improved our liaison quite a lot. Other than that, it was maturation of organization, and the education of people and exchange of information and all the activities leave a lot to be desired. We didn't have the computer printouts in very common use then. They were used by engineering organizations for more complicated computations, and in some of our bookkeeping, but not in the sense that they're used today.

    We tried to make each division capable of administering its own affairs, originating its business contacts, accounting for its customer responsibilities, its own contract administration. The expenditure of company facility money was a little more centralized. One of the principal functions of Stan Smithson, who was senior vice president for manufacturing, was the allocation of facilities money and the preparation of estimates for facilities expenditures, for approval of the board of directors. Accounting, of course, had its usual functions. And I think they were handled very well. Engineering liaison was probably the most complicated, and I made it a point to try to get engineering briefings on progress and possibilities, and naturally those things lead to pressures now and then. You can hardly help it, you're pursuing engineering development with several strings of difficult technologies, and you estimate progress, anticipate progress, look for bottlenecks, and try to put in supplementary efforts in certain technical things. Inevitably you run upagainst something that isn't smelling as well as you thought it would be, and extra effort is needed, outside help is needed, and one of the problems is to get the engineers to realize when they're going to need help, because it's like unravelling a skein of tangled yarn sometimes, when you're trying to get to the final solution which involves not only a good engineering solution but a test program and a durability program.

    For instance, in our Minuteman guidance program, Autonetics received that contract from the Air Force Missile Division. Sam Phillips was their manager, actually, for the Minuteman guidance machinery. We were taking discrete components--primarily the resistors, and diodes and transistors, capacitors, all the elements of electronic circuitry--together with gyroscopic elements, actuators, etc, and working them into a system for the guidance, and the programming at this time was on punched tape. That was set up with the tape which sequenced the guidance system for the 4000, 5000 mile flights, programmed that way to cut off of the engines, make the vernier corrections, all these things.

    To begin with I might say, we had some serious overruns. I'd be the last to minimize that. But we asked for 30 million dollars, finally got it, to develop our reliability components from suppliers. This involved a special overcapacity type of component, because you see if each component's probability of endurance is 30,000 hours, and you put in hundreds and hundreds of components, your probability of failure is going to be maybe 40 or 50 hours. First failure, anyway, because the probabilities on these things are just like the probabilities on anything else. So what we had to do was accelerate testing so that we could over-stress these things and have reasonable confidence that they would last maybe a million hours.

    Now, a million hours is years and years and years and years. You can't test that way, but you can accelerate the wear-out, if you can call it that, by certain techniques which, I'm not an electronic engineer but they are quite well developed. Well, the upshot of that was, in spite of the overruns, we fielded some systems that almost at once, after early teething troubles, began to run 8000 hours and more. Now, that's over about a year--8000 hours without failure, or without having to be removed for service. Next came the Minuteman II. In this we were going to use integrated circuits, more capability, lighter weight, all that. We again asked for a large sum of money for this type of reliability testing, burn-in, (we called it burn-in.)

    The project office said, "No. You spent all this money on the Minuteman I, and we didn't have any trouble, you got your durability, so why do you want to spend 30, 40 million dollars again? You should have learned," or words to that effect, I don't know what they said, but we got a very small sum for reliability testing of the integrated circuits, which we could buy--you know, they're thumbnail-sized things. And we tested as well as we could, but we didn't have money for what we wanted to do.

    So when the Minuteman II's were fielded, they began to have trouble, a lot of trouble. They had a chemical thing that happened on the integrated circuits. They called it the Green Plague. We had at one time nearly 150 of those sets actually out of service for miscellaneous failures. It was a defense crisis, almost, because they programmed Minuteman II's to replace the Minuteman I's, that sort of thing, and we had an awful fight with it, got it working, but it meant backtracking, with all kinds of problems.

    So to make my original point, you don't see clearly your way through the engineering labyrinth when you're working on a development. So that's been one of our problems always. These days, we're putting more and more and more into early testing, capabilities, components, all these things that built up a system and are getting more and more predictability. Even today we have our disappointments and scandals and one thing and another. If you don't make good on a schedule, it's getting to be almost bordering on sabotage--the way people look at it, but it's not really that way, of course. Anyway, those are some of the things that I'm using as illustrations of the point I was trying to make.

COLLINS: Well, there are several elements of that--using your illustration, how were problems or decisions about areas that might be problems brought to your attention? Was there some kind of normal review process that you were a part of or some of these major programs?

ATWOOD: Oh yes. Major projects were always reviewed and usually what we'd call an engineering round table type of thing. They'd formalized it enough to use viewgraphs and something like that for progress reports, and every report of course included a series of problems, predicted solutions and solution times, that sort of thing. Being an engineer, my instinct is to participate rather than to single out some scapegoat. It's always been that way, and I may have gone too far at times, sympathizing instinctively with the problems that people had, but rarely have I, I think, overrated their capability, although I have done that, too. So you see, it's a management problem you handle as best you can with the knowledge and background you have. Of course, since we divisionalized, I have not had to intervene on the lower levels of divisions, because it's pretty non-productive to try to go down the line and diagnose the troubles of engineers in Rocketdyne, for instance, where they're far ahead of me in rocket science. I would find it quite out of character to try to do that.

COLLINS: I guess I want to try to make some of this discussion a little more concrete by focussing on specific projects, but that's a good overview and introduction to some of the issues. For your major projects during the fifties, the F-100, X-15, B-70, F-108, work at Rocketdyne, would there be separate review meetings for each of these major projects, that you wouldparticipate in and listen to progress reports and key issues, or were these reviews thrown together and you'd hear reports on them all at once? How would that work?

ATWOOD: Well, the way I operated, it wasn't very formal. Some people are a lot more formal than I am. But take for example the B-70, XB-70. The Air Force was very anxious to get that plane in the air, and we were too, and we'd brought it along in very good shape, but of course, it was a new type of structure. It was spot welded steel, stainless steel, and it used different types of reinforcement, and I was much interested in structure. It had to be heat-resistant because it was going to generate 600 degrees possibly on some surfaces or some hundred degrees more than aluminum could stand.

    But the critical thing turned out to be the tanks holding the fuel. They were integral tanks, and I thought we'd designed them properly, but they would not refrain from leaking, and we were literally hung up for at least nine months and maybe more, the first flight, trying to seal the tanks. We had the plane up at Palmdale. I used to fly up at least once a week, maybe more, not that I could do anything, but I tried this review with them to see if they were missing any opportunities for other traditional help or something some other part of the company could do to help with this thing. And we'd go out to the plane. The workmen demonstrated what they'd been doing on some seam, and why it didn't stick or something like that. The process engineers were there. It was well understood where it was and we were trying to estimate when it would be ready.

    The Air Force selected a team of people to investigate, outsiders. They predicted when it would be solved, the problem would be solved, and they were pretty close, but they weren't very accurate either. But that's the kind of thing that's almost--well, I'd say not primitive but it's close to rudimentary, where you're just trying to take care of the things that are causing the trouble, as you would if you were building a dam, a bridge, or a ship. It's a trial and a strain. Things don't go to schedule, because they're developing, and sure, we'd have meetings and viewgraphs and I would say about two-thirds of my time was spent on technical things or trying to find ways to improve or help.

COLLINS: So this would be primarily through interaction with individuals, rather than through a media format here.

ATWOOD: Well, individuals and groups. It's been the nature of the aircraft business. If you could stabilize your design, and you have a quantity to build, it would just be an entirely different type of problem. Maybe they'd have just as many problems but they're entirely different. I tried to explain in the earlier part of my interview that aspect of it in war production, how when we got sequential production, we worked in changes, but still costs came down and down and down continuously. Most of thework we've done post-war has been in small production, high development and engineering, unknowns, I guess you'd say. The Aircraft Industries Association spent quite a bit of time during that period trying to explain to the public, as represented by Congress, why things weren't on cost and on schedule. In talking about these things, they developed a few terms like "unknown unknowns" and that became known as "unk-unks." It was a subject of some national consequence in those days.

COLLINS: Let's look at the postwar transition from the building of prototypes which you attempted to market primarily to the Army Air Corps and the Air Force, towards the move towards so-called "paper competition." When did this transition take place, as you recall?

ATWOOD: Well, of course during the war, this was all managed more or less by top decisions without any formal competitions, and as I mentioned before, the B-45 and the P-82 and the F-86 all evolved from a non-competitive wartime environment. Of course they continued on then into the postwar for the production phase, and that wasn't seriously undermined, or that method wasn't undermined in a direct way because the Korean War came along and it was still a sense of military urgency in getting these things done. The F-100 developed that way. I don't believe it was a competitive program. I don't recall any competition. We evolved it along with the development of a suitable power plant, and I think it was contracted for without competition.

COLLINS: How would that work? To take the F-100 or the F-86 as a case, what kinds of conversations would you have with the Air Force?

ATWOOD: Well, you see, in 1950, the Korean War started, and I can only give an anecdote or two. I can't answer your question properly. I--we'd produced the F-86 and had reached the point where we were flying the F-86E, which had the first hydraulic controlled stabilizers, direct control, longitudinal flight was controlled by hydraulics. I explained that, I think, before.

    I was in talking to Mark Bradley, who was the general in charge of procurement at Wright Field. He now lives in this area, too. The order, I think it was 110 F-86 E's--and we were, you know, planning our production. We were fighting the Korean War too, and they had the F-80's over there. They were kind of a fighter bomber, the first jet plane that the United States Air Force had. The F-86 was considerably faster, of course, and I asked Mark if they weren't going to order any more than 110. And he said, "Nope, that's it." I said, "Well, what about, what happens if the MIGs come out in Korea?" And he said, "Oh well, then we'll beat you out in the head to get more F-86's." That's typical of Mark. He was a little, I guess you'd say, sarcastic, in a way, but he was frustrated too, with the way the procurement is programmed in the Pentagon. But he was right. They ordered hundreds of F-86 E's later. I can't tell you how they programmed these things, even then, with the Korean War going on.

    But at the time of the request for the B-70, we had gone into paper competition. And we had started back in the mid-fifties with just the quiet study of a strategic bomber, in our engineering department, with a few people, and about 1957 or so, the drive to replace the B-52 began to come into being, and the Air Force started a design competition for a successor to the B-52, and it was a competition. It was kind of abortive. Nothing came of it. We participated. Boeing participated. Convair did, perhaps somebody else.

    But about that time, the Air Force decided that they would really take a big step and go for Mach 3. So they terminated what they'd been doing, and called for a competition for a Mach 3 bomber. And of course, about the same time, Lockheed in their "Skunk Works" were getting the same idea, and had begun to see what they could do as a replacement for the U-2. These things were based on the technology available, becoming available, and so we competed the Mach 3 design. Boeing presented a competitive design and so did Convair. I'm not sure about Convair. Boeing did, anyway. And our design was successful.

    Harrison Storms was a very strong influence in that design. He was one of our key engineers, and he had been very effective in the design of the X-15, which was the hypersonic research airplane, and he pulled the design of the B-70 together, with his aerodynamic team, and it was a winner, a really remarkable design. It ended up having a lift to drag ratio of eight at Mach 3, which is still something to shoot for. Planes like the SR-71 have probably four and a half, five, something like that. Of course we started to build it on the basis of having won that competition.

    The other competitions about that time were for the F-108, which was a long range interceptor. We also won that competition, but the whole program was cancelled, because the missile program was coming along. Up to a certain point, the whole emphasis had been on bombers and interceptors, and those programs were going very strong, but when ballistic missiles became the obvious number one element in strategic warfare, the DEWLINE, for instance, the interceptor fleet, all that began to just lose their importance. The B-70 was cancelled by President Eisenhower after two planes had been built, on the theory that we didn't need it, and the F-108 was cancelled for the same reason. It was just a shift in strategic warfare. Of course, Robert Seamans was one of the key people on the DEWLINE, which was through Canada. It had a similar fate. It's gone down, down, down to nothing, really. But those things change with the technology and the technical possibilities. I think from that time on, all major programs were let on a competitive, design competitive basis.

COLLINS: How did you decide during this period of the fifties, as you moved into essentially paper competitions, which contracts to go over, which Announcements of Opportunities, as they're called nowadays, to pursue?

ATWOOD: Well, you know, we went after nearly everything except cargo planes. The C-5 was the big competition then. There hasn't been another one for a long, long time, until the C-17, I guess, recently. But on any major missile or combat airplane, I think we attempted to compete, and if we turned anything down, it would have been unusual, I think.

COLLINS: In pursuing these competitions, did you have some set amount of resources? How did the allocation of resources, the use of resources, go for these competitions?

ATWOOD: I don't believe it's possible in the airplane industry to do that. I'll give you a couple of extraneous examples. As you well know, Northrop spent over a billion dollars building and demonstrating the F-20, all to no avail. I don't think they expected to spend a billion dollars. I don't know. When I was leaving North American, retiring, after my 65th birthday, I spent over 35 million dollars bidding on the F-15 and the B-1, and I was really savagely criticized for it, because we had just merged with Rockwell, and most of those people couldn't understand it. In fact, I got a letter from Al Rockwell which in most bitter terms gave me six hours to tender my resignation by telegram. I still have a copy of it, or my secretary does. And so you see, a budgeting effort is just not possible. Of course, it's possible, but if you don't go in to win, you're wasting your money. If you do go in to win, you need to spend for certain key elements of research, other things like that, that are almost open-ended when you're trying to compete with other very, very capable and hard-working people. Those are just for free, you know, examples.

    I'd like to add one thing. I didn't leave the building in six hours. I did retire at the stockholders' meeting a little later. But that was pre-ordained.

COLLINS: With the increased competition, with the larger dollar value on many of these programs, did North American find itself getting more involved with actions in Washington, contacts with Congress, more contacts with the military, the Air Force?

ATWOOD: Well, that was kind of a gradual transition. When we were first operating, well, during the war, let's say up to the war period, the Congressional contacts we had then were more like the Truman Committee and Congressional groups trying to make sure that the resources were used properly in the war effort, and we had one episode of being accused of hoarding labor down in Dallas, building P-51's and trainers and other things, and the reason for it was kind of an interesting thing. When a new plane is put in production, the history is that the employment builds up to a peak and then tails off and begins to drop as you get the labor hours down. That was the normal sequence. In order toprevent that peaking, the schedule should be constructed so that the production rate is slow and gradually building up. Then you can keep your personnel on flat. But we had some pretty good people working on scheduling during the war, but pressures were awfully high, and we had some schedules that were laid on us that were hard to make. We did pretty well, but doing so, we peaked our employment, at Dallas in particular, and then dropping off. Of course, Harry Truman's group and Nils Walgren of Washington, a Congressman gave us a real hard time down in Dallas. It made Dutch Kindelberger mad. He said, "If you don't like the way we're running this place, you can take that plant and turn it cross-ways and stick it." That made Walgren mad, and they were going to get after him for contempt of Congress. But it never happened. But that's the kind of interest that Congress was taking during the war.

TAPE 1, SIDE 2

COLLINS: So what is the point of that anecdote?

ATWOOD: Well, that Congress was sitting as a critic not only of the production and the cost but the manpower employment and the program and the scheduling in the shops. If you see what I mean. Anyway, it's just in passing. Congress is always going to get into things. We didn't have much contact with Congress, never have had, really, although we've been before Congressional hearings. There were quite a few of them in the early postwar years, on the technology, on atomic energy, on aircraft production, and cost of defense, all those things were aired in Congress pretty well. I appeared before Congress several times, for various reasons. The Hebert Committee (he was a congressman from Louisiana) at one point was investigating the function and efficiency and work thereof in the defense industry. I did appear before him. I guess the Congressmen did try from time to time to get defense business in their districts. They certainly made every effort to get permanent facilities, air fields, or depots, shipyards, that sort of thing; those were strongly influenced by Congressional actions, appropriations, preferences, all those things that have gotten of more and more consequence as time went on and the budget went up.

COLLINS: So you're talking even in the period of the early fifties and just after the war.

ATWOOD: Even today. Right up until today.

COLLINS: Beginning in that period.

ATWOOD: Yes. It got more and more important, and you could see a connection between Congressional support and certain appropriations, certain projects. It's even more sharply outlined today, when they're arguing in Congress about various airplanes and mobile missiles,"Peacemaker" missile, the Midgetman missile, all those things are gone over in great detail by Congressional committees, and their chairmen. They have a big influence. I suppose they do, anyway, because they talk to the Secretary of Defense and those people all the time. So companies are in a bit of a--you know, the tassel on the end of the whip. When it's cracked, why, companies get the compound effect. We've been very much aware of that, and we tried to illuminate our position and avoid criticisms as best we could. We've had Washington representation always, although we've never been very effective, except in a background sort of way.

COLLINS: What was the nature and evolution of your Washington representation.

ATWOOD: Well, the first man we sent back there was a man named Lee Taylor, in the late thirties. We were selling planes to England and France and other countries. We had quite a bit of business with the Department of State on the export authorizations. We had a lot of business with the Army and the Navy, and we gradually built up a small technical staff in Washington to interface with the technical people in the government.

COLLINS: This would have been just before and during the war?

ATWOOD: Oh yes, we had representation there before and during the war. A man named Alex Burton had been our representative in England when we were assembling and flying out the planes we sent to England. He was quite good, I thought. He was very capable, and toward the end of the war, he was instrumental in getting some of the people like Bollay to come to the West Coast to work for the company. He maintained an interface with the Army air staff there and the Navy people, and introduced engineers we'd send back, teams we'd send back, briefing teams, on competitions and progress reports, that sort of thing. The next man was Ed Virgin. He was a former Air Force guy. He still lives in Washington. He was head of our Washington office for quite a while.

COLLINS: He headed up the Washington offices beginning approximately when?

ATWOOD: Oh, I think about 1948.

COLLINS: He remained in that capacity?

ATWOOD: We moved Alex Burton out to the Coast as a vice president, about that time. I don't remember, '48 to '50.

COLLINS: But Virgin headed up your Washington office till the sixties?

ATWOOD: On into middle sixties anyway, maybe later.

    Then we had this consultant whom Dutch Kindelberger hired. His name was Fred Black. He was supposed to get all the information on how to advise people in Washington, and he got into quite a bit of trouble, and Dutch Kindelberger had hired him on some basis, some people's recommendation, I don't remember who. He was very well connected in Congress, or appeared to be, and we employed him for several years. He got us in trouble through his relationships with Bobby Baker, who was the famous wheeler dealer back there that got involved with the savings and loan people and all that, and so eventually I had to let Fred go. Dutch Kindelberger had died in the meantime.

COLLINS: Who did Black report to?

ATWOOD: I think he reported to Dutch Kindelberger first. I'd begun to consult him, actually. I thought he could do us some good in various ways. But Dutch had him finally reporting to, administratively at least, to Ted Braun, who lived here in Los Angeles. His company is still going. It's a public relations firm. But Ted is dead. Dutch thought Ted Braun might make sure that Black was reputable and things like that. But he did get into the Bobby Baker thing. I don't know that they ever tried to pin anything on Fred, but it was just nasty publicity. He'd talked us into putting in the vending machine system which was presumably a normal deal, but it turned out that Bobby Baker owned most of it. Bobby got a lot of Congressional raking over. Fred didn't get any sanctions or anything, but he just was classified as many consultants are today as some kind of an unnecessary type around Washington. So we finally took over the vending machine business and it was run by our employee group that handled the recreation facilities for the company, and I finally had to let Fred go. He had involved himself in a kind of a double dealing situation and then concealed it. Our lawyers thought it was what you might say, conflict of interest. I guess it was. So I let him go.

COLLINS: This would have been in relation to a North American contract?

ATWOOD: No, it was in relation to the vending machine thing. Neither he nor Baker had disclosed their ownership in that, and our lawyer thought that it was conflict of interest and I'm sure it was. So I let him go. I fired him. He got into trouble afterwards. I heard that he's recently been in jail because he's been laundering money, accused of laundering drug money in one of the banks there in Washington.

COLLINS: Do you recall, before Fred Black was hired as a consultant for North American, what his activities were? Was he a lobbyist in the modern parlance?

ATWOOD: Well, he'd done some work for AVCO and reportedly for General Electric. They were not considered competitive companies at that time. They were making engines and other things. Jim Kerr was head of AVCO then--and oh yes, Black had been involved in a lot of Missouri politics down there. He came from Joplin, Missouri, originally.

COLLINS: What was the need for somebody, at this particular time, to do the kind of job that Fred Black apparently was doing, this intense, very personal liaison with Congress?

ATWOOD: Well, Dutch was very upset when the Navaho was cancelled. I told you about all that. He wasn't as much of a technical man as you might think here. He was very, very strong on his practical things, but I think he felt that the cancellation of the Navaho was something political. I didn't feel that way about it at all. I think it wasn't. In fact, it might have been overdue for cancellation, considering the ballistic missile progress. But he went back to Washington, went around to all the Congressmen he could reach,and Ted Braun went with him, and he protested long and loud around the corridors of everywhere. It didn't do him any good, of course. I think that expedition might have somehow gotten somebody to recommend this Fred Black to him. It's the only explanation I can put on it. I'm not sure of the timing either, but it's about correct. His feeling was that if you made your position strong enough to Congress, and clear enough, you might get some help. That's a very common thought in the world today, and sometimes it works, I guess, and sometimes it doesn't. I read these Congressional hearings with a great deal of interest. People like Deaver and the latest one, Watt, and things like that. I guess the possibilities are there in many many ways. But anyway, that was Fred Black's tenure.

COLLINS: What was his working relationship with Ed Virgin, who had formal responsibility?

ATWOOD: Well, they worked together, although Ed didn't like Fred Black very much, but Ed didn't make any pretense to know any Congressmen, and didn't think it would do any good and it probably wouldn't. They didn't work together too well, although they did work together some.

COLLINS: What was Dutch's approach to maintaining contacts in government, Congress as well as the Department of Defense?

ATWOOD: Well, Congress, he didn't have much continuing contact, frankly. He was well received wherever he went, of course, but I don't think he ever cultivated Congressional sources very much. In fact, I'm quite sure he did not. He cultivated the military. He had long association with them, having been a cadet flier during World War I, and reserve officer for a while, and that sort of thing. And the fraternity was rather small in the early days. He was well known. And of course, with the official Washington, the Defense Department was probably the most important and the Navy Department plus the Air Force, and I don't think he knew any Defense Secretaries particularly well. He did know people who were Chief of Staff and Chief of Naval Operations quite well. He was well-respected, and of course, the work we did, I feel, justified it, and he naturally relied on that.

COLLINS: Did he and you make a point of going to Washington to pay these kinds of visits?

ATWOOD: Yes, he did that. On a pretty regular basis he'd go around the Pentagon and of course, before that, the State, War and Navy Building, and the Navy establishment at Constitution Avenue, and over at Anacostia. He'd go out to quarters there at Fort Myer occasionally with some of the military people. Before McNamara's time, the social relationship was pretty easy with the military and the Navy. During the McNamara period, they tried to stop the entertainment aspects of liaison between contractors and the military, which was probably a good thing, especially for the junior ranks, although I don't think it's made much difference, or helped much. But yes, Dutch used to enjoy going to Washington and hobnobbing with these people, reporting on what the government was doing, perhaps getting ideas from them on what they were looking for, various critiques they might have on the performance of our products, for one thing. If it got up as high as the Pentagon, you knew there was a problem, over and above our field service contacts. That was pretty much it.

COLLINS: Did you go on some of these trips with him?

ATWOOD: Oh yes. I used to go with Dutch quite a bit. He wanted me along. He didn't, I think he must have felt a little unsure on his technical responses, or at least he thought he could use some support. Yes, I did go with him quite often. As I said, we were on a very friendly basis too, personally. Very cooperative.

COLLINS: Just one episode of Fred Black's involvement in Washington has received a good deal of attention, and it relates to North American's award for the Apollo contracts. You may be aware that the initial source selection rated the Martin Company above North American.

ATWOOD: I understand. I didn't know how they rated it. They should have won it?

COLLINS: That may be of interest to you. Why don't we just pause for a minute here while you peruse it? This is a statement of Jim Webb entitled, "Statement of the Administrator, National Aeronautics and Space Administration, on the Selection of a Contractor for the Apollo Spacecraft."James E. Webb, "Statement of the Administrator, National Aeronautics and Space Administration on the Selection of a Contractor for the Apollo Spacecraft." 1 This is from early 1962, detailing their decision-making process in the fall of 1961.

ATWOOD: Right. Was this published at the time?

COLLINS: No, it was kept as part of Webb's files. Resuming after a brief pause, this was the reasoning set forth in this document, as the official rationale of how the response of the Source

Selection Committee was modified to direct the contract to North American. Some other accounts have alluded to, that there was a sort of web of political connections among Fred Black, Bobby Baker, Senator Kerr, that resulted in the reversal of this selection process from Martin to North American.

ATWOOD: Was there a previous document?

COLLINS: Not that I know of or am aware of.

ATWOOD: I never heard of one.

COLLINS: I have seen the Source Selection documents which do the rating, and the way they worked the numbers, Martin came out on top. I'm just, curious about your response to the variety of accounts that surround this contract.

ATWOOD: Of course, I don't really have any information. I was approached by Jim McDonnell to bid with them on the Apollo program, and I was considering whether to do that or not, and Stormy, Harrison Storms, and three or four of his people came in to talk to me, and they were sort of vehement in their desire to bid alone. They had a feeling that they were in a strong position. I told McDonnell that I didn't want to bid with him. I did think that he weakened his position by taking on some almost direct partners, I don't know who they were. But we bid it alone.

    I had no idea we were going to win, of course, until it was publicly announced. I was a little surprised, really, having gotten the second stage of the booster some time before, and of course having the rocket engines. Our hydrogen engines at least were the most suitable ones available. I was a little surprised, frankly, and I began to realize that before long it was going to be quite a strain on the company, in staffing that high technical work, and we kind of sent out--what they used to do in the British Navy--a "press squad" to get people to come over, raided other divisions, and did put on quite a big effort to staff it properly.

    Storms was my MVP, actually. He was a graduate of Caltech, had been with the company some 20 years, he worked up to be chief engineer of the airplane division. He had, as I said before, played a big part in both the B-70 design and the X-15. I considered him about as qualified as anyone could be, at least in our company. He was an enthusiastic manager, and maybe I'm taking this point a little too far, well, momentarily anyway. I thought he was doing a very good job. Unfortunately he had a heart attack, according to the doctors, and he was laid up for a while, of course. I tried to bridge him over. I don't know whether that was a mistake or not. I did bridge him over.

    The manager there was Dale Myers, who as you know is a very competent man. Charles Feltz, project engineer, was project engineer on the X-15, also very experienced and capable, and good financial management there. It became apparent to me later, when George Mueller came to me and we were reviewing things and he criticized Storms, was quite critical of him, and I sort of defended him. I'd meet with Mueller quite often. Next time he had worked up an organization chart of the division, and he had marked Storms as not suitable for the job. He marked question marks about others too, but I just couldn't believe that he wasn't the best we could field.

    But later on, I got to thinking about--I mean, now, even now, I think about him, at times, about Stormy. He's a friend. I think he's partly misunderstood, but I think his health probably did affect his performance. He's misunderstood in this respect. He's almost light-hearted in his approach. He's semi-jocular at times. He likes one liners. And he gives the impression of being more superficial than he is. At least, that's the best I can sort out on it. Of course, NASA finally almost made me replace him, although I'd been wondering. So I hired Bill Bergen, who had been for some reason retired or let out of Martin, had Bill Bergen there ready to move in, but I just wanted to interpolate that about Stormy because I still think he's brilliant, in many respects, technically, almost inspired at times. But he was not making it with the NASA people, and that was one of the real problems that came up after the Apollo fire. He was almost the scapegoat.

COLLINS: I want to wait just a little bit to analyze the Apollo period in more detail.

ATWOOD: You want to get back to this?

COLLINS: Yes. I don't want to put too much emphasis on this Fred Black thing, but there's been a fair amount written so I just wanted to get your view on this. Given this was a major contract, what would Fred Black have been doing during this time to support North American's interests?

ATWOOD: Well, he certainly knew quite a few of these people. He told me about his contacts with Senator Kerr. In fact, he had Senator Kerr at his house one night, when I was a guest there. And I met Senator Kerr for the first time. Senator Kerr worked on me to put more business in Oklahoma, and I think his implication was that he'd help. He did that at a party with--not a party, a dinner. Fred used to have a nice house in Washington and he served dinner to me and perhaps two or three other people and Senataor Kerr was there. I remember that very distinctly. I've seen Bobby Baker a few times, not often. I've never seen him in the presence of Senator Kerr.

    But one thing that did interest me, in a way, Senator Lyndon Johnson, who was Vice President then, was head of the Space Council, and I called on him one time to talk to him about the supersonic transport proposal. We'd built the B-70. It was successful. And Pete Quesada was head of FAA then and he was pushing for the supersonic transport. Pete Quesada was an Air Force general, retired, and an old friend of Eisenhower's, as a matter of fact. And I was talking to Mr. Johnson. He gave me an audience, he was gracious enough. We talked about these things and about the possibilities of the supersonic transport. I pointed out to him that the Mach 3 airplane would be materially more efficient from the fuel consumption point of view than a Mach 2 airplane like the Concorde. And he accepted that. I also acknowledged that it made a great deal of noise, sonic boom, and that it might be considerably more expensive to build. He accepted these thoughts, and didn't make any real comment on the basic subject.

    I wasn't there more than 20 minutes, to see him as chairman of the Space Council. During that time, Bobby Baker dropped in, as I recall, carrying a dispatch or something, and I hardly knew him. I don't know whether Johnson said, "Do you know Bobby Baker?" and I probably said, "Yes, how are you, Bobby" or something. Then Baker went on his way. Well, Lyndon Johnson took occasion to say to me, after Baker had gone, he said, "You know, that's a fine young man. If I had a son, I'd like him to be just like that." I said, "Yes, Sir," something like that. So there you are. He was really quite well connected.

COLLINS: Didn't North American eventually establish some facilities in Oklahoma?

ATWOOD: Oh yes. You see, we had done it long before this. We had a big expansion in production, and the Douglas Company had the Government owned Tulsa plant that had been built during the war, for the production of B-24's. It was an enormous plant about a mile long, for line production of those B-24's, and Douglas had planned to use it for a contract they had called the Sky Bolt Missile. But they didn't need very much of it, and eventually the Sky Bolt was cancelled. I asked to be allowed to use part of the plant for our F-86 and F-100 production work. I was in a meeting with Donald Douglas, Jr. on this subject, along with some Air Force people, and he didn't like the idea much, but he couldn't very well justify the use of the whole plant. That was the Korean War period and things were building up. So we were given a considerable fraction of that plant for our production purposes. We still have production there. Later, we were expanding somewhat, and I established two feeder plants, and one was in Princeton, West Virginia, where we made components to supply to our Columbus division, and electronic subassemblies and things like that. It was one of the areas that John Kennedy had been very much interested in supporting. In fact, I was told that he promised at various times that he would see that they got some help.

COLLINS: In West Virginia.

ATWOOD: West Virginia. Princeton. Of course, Fred Black advised that that was a good place to put a plant, and of course that had an influence, no doubt about it.

COLLINS: Advised North American that that would be a good place.

ATWOOD: Oh yes. And we did put a plant there, and I think Fred mentioned to me one time later that Kennedy told him he greatly appreciated that. Well, that's the way the United States is run. The other plant was in a little town in Oklahoma, the home town of Mr. Carl Albert, the Speaker of the House of Representatives. McAlester, Oklahoma. That plant existed for 15 years or more. It was an effective plant. We put a good man in there to run it. He did a good job. But it was spreading work. And selectively spreading work, if you like.

TAPE 2, SIDE 1

COLLINS: Just to be clear, the McAlester plant was established when, and what function was it performing?

ATWOOD: It was established oh, roughly during the time of the Korean War and so was the Princeton plant, and both were supplying subassemblies and components for aircraft and electronic systems. The Princeton plant had more electronic work, wiring and circuitry, circuitboards and things like that. The McAlester plant had more, I think, structural components, bracketry, things like that.

COLLINS: So what was Fred Black's counsel? You already had operations going there. Were you increasing the level of activity?

ATWOOD: Oklahoma, you mean?

COLLINS: For either case.

ATWOOD: It was an overload situation, and we were consciously spreading the work and supporting employment, just the way it's done today. The Apollo was spread out over the whole country, with 400,000 people and so forth. Many companies you'll find right now have little feeder plants in many parts of the country, looking for good labor rates, a hospitable environment, uncrowded conditions, and finally, at least giving lip service to a social function which is, spreading the work. How strong that is, I can't say. You can be as cynical as you like. But getting back to this, the paper on the selection of the Apollo, I had heard that the rating of the design iteration had been submitted and the technical capability were balanced, and that North American had rated the highest technical capability.

    To add a component to that, I was made, by the initiative ofDutch Kindelberger, the chief executive of the company. I'd been chief operating officer. I was made chief executive officer in 1960. In the fall of 1960, after the obvious move towards space activity developed, we had done all we could in Rocketdyne, of course, but I decided the Missile Divison at Downey, which was the unit making the Navaho body, wings, structure, etc, would have to try to enter the space program, because the Navaho had been cancelled and we were frittering down--10,000 people had been laid off, and the work over there was supporting to the Los Angeles Division, and getting started on the Hound Dog and things like that. The Hound Dog had been started.

    But I decided that the manager there, a guy named Joe Beerer, was a very competent engineer, and I guess you'd say a protégé of Larry Waite, was not quite the guy we wanted for the space age, if you like to put it that way, or at least the space programs coming up. And I told him, Storms, as chief engineer of the airplane division, as I say, our most valuable player, I thought, and assigned him the job of head of the Space Division. And moved Joe Beerer to a staff job as engineering--an engineering vice president for staff work. Storms took over there, and I told him specifically, "Stormy, get the people and we'll get the work." He did. He recruited some very fine technical people, among them I happen to remember in particular was John McCarthy, PhD from MIT, who had considerable experience, and he'll, his name will surface later as I go through this Apollo program. And many others. He did have what Webb describes here as superior technical capability, by the time this contract was to be awarded. He had recruited some excellent people.

    Now, we were talking about spreading the work in Oklahoma. In Oklahoma, they had begun to develop a capability of their own. They got some engineering people and went to work and they started to specialize in stealth technology. This was back in the fifties. They developed a material called--we called it RAM, Radar Absorptive Material, which they began to use and sell to various people for different applications. Columbus was also active in Stealth technology from the radar point of view and radiation aspect of it. But unfortunately, the airplane they proposed hadn't worked out and the base was generally abandoned after I retired and things changed around a lot, but Tulsa had a good stable operation there. It finally took on a big job of subcontracting work for Boeing, building big portions of that 747 transport, the large plane, and they acquitted themselves quite well and kept work even till today, along with other things they've done. But that was our venture in Oklahoma.

COLLINS: To tie this discussion together, then, was there any correlation between your conversation with Senator Kerr and what was going on in Oklahoma?

ATWOOD: There was. Not exactly deliberate, but the connection between the third stage of the Saturn and the spacecraft, the service module, was a rather minor and not very technical conicalstructure which housed the lunar landing module. That structure was designed and built in the Oklahoma plant, Tulsa. Some other supporting work for Apollo was probably done there, too. I don't remember the details. I did not promise Mr. Kerr, Senator Kerr, any work. He was almost like a salesman trying to convince me that we should work in Oklahoma. That was my exposure to him. And he had a point, of course. He was a Senator and an influential one. He didn't live too long thereafter, but this was a pitch and certainly we responded, if you want to look at it that way. We had the capacity there and the organization and we certainly used it. I don't see how that could be a quid pro quo, but for a small structure like that in Oklahoma--are you intimating that Webb had made a decision in favor of Martin, and Fred Black got in to reverse it?

COLLINS: Well, I'm not intimating that. What I suggest is that some people have written about it in that fashion. I was curious about your reaction to that.

ATWOOD: Well, I never believed Fred 100 percent, although he was very helpful in the political relations at least, and in getting information he was quite good, I have to say. But he would try to take credit for helping getting the Apollo program, there's no doubt of it. But the interesting part of it was, to me, I put no personal effort or emphasis or influence into trying to get that command module contract. I thought we had a plate full. And I think we suffered in many ways. It wouldn't be too much to say that we probably lost our position in the Air Force fighter program because of the concentration on the Apollo of our resources and technical people. It wouldn't be too much to say, and I wouldn't make that a complaint or a public point particularly, but if something that I backed had caused someone like Webb to change his mind, I can't believe to begin with that he'd do it.

COLLINS: Let me be clear that Mr. Webb's own account is not the one that's presented in some of the literature. I mean, his view is what's presented in this document.

ATWOOD: Oh yes. But anyway--it's bothered us some, this Fred Black thing. Of course, it's been 25 years, but unfortunately, he got thrown in jail later. I saw the guy not more than five years ago or six years ago. He came out here in a limousine, visited with my wife and me, and he regaled us with Washington gossip, and my wife was really fascinated. He's quite an operator.

COLLINS: I guess the point is, you're essentially an engineering organization. And the question is, the degree to which you need people who are not really engineers but who essentially can relate as salesmen, political salesmen, and how necessary these people are in the environment that comes into being in the fifties and sixties.

ATWOOD: Well, I don't really know to this day, and I probablynever will. But the feeling is there, probably, in the industry, that you can influence programs at least. Award of contracts, I don't know. Some Congressmen and Senators put up an awful fight to try to get business in their districts. The Boeing people apparently got a thousand percent support on anything they did up there. Now, whether that influences anybody's award, I don't know. I prefer to think, and I do believe, that the line people in the military are impervious to that kind of pressure.

    I further believe most sincerely that Congressional people, especially committee chairmen, use every opportunity to claim that they have had an influence on the award of a contract. They're the first people notified when an award is made, and whether at some politically appointed defense level or administration level, these things are buggered, I don't know. I have no knowledge of any in all my life. This is true.

    The only one I know of is public, when the F-111 was competed, Boeing won the competition. The Irish Mafia decided to re-compete it, so Convair at Fort Worth and Boeing, Wichita, competed again. Boeing won again. The next time, under McNamara's direction, they declared there'd be a technical transference. Both sides would be allowed to benefit from the technical creations of the other. There was a third competition, believe it or not, and that time, the Convair division in Fort Worth won the contract and got the plane. Whether they won it or whether it was adjudged even, I don't know. But I think that one example might teach you that the source selection people are not politically influenced or corrupted themselves. Their decision was their decision, based on what they thought was best for their service. I believe that from the bottom of my heart.

COLLINS: The interesting question here is, what does somebody who is in your position do? I mean, you can see the integrity of the technical people in doing the selection, but you also have to be aware of and contend with these political elements.

ATWOOD: Well, now, of course, I don't know much about politics. I could well imagine that Kennedy promised Johnson something when he accepted the Vice Presidency. Texas was very important politically to Kennedy. I can imagine that. Beyond that, of course, I don't know. So what can people do? If there's anything that you can do legitimately, you do it. But you don't have much possibility. I've never heard of an Army, Navy, Air Force officer being corrupt or being bribed except--well, I never have. The Benny Myers scandal back in the early postwar was not bribing anybody, it was just improper ownership of a small business. I never heard of one. So I don't know.

COLLINS: Well, you mentioned that one of the functions of Fred Black was information. I would assume that one thing you would need as president or chief executive officer would simply be ability to know what the political currents were.

ATWOOD: This is an important commodity. If you have accurate information, if you can even know what projects are going forward for sure, it's an edge on the way you spend your money, the way you put your emphasis. It's an important commodity. The scandals, recent scandals on consultants bring that out. I don't know what they found and I don't know what these people have been doing. However, ordinary information as to what a service wants, what it needs and what it can pay for, should be a free commodity. It's to the best interest of everyone, everybody, to know that. And yet, for a consultant to have to go to somebody who's friendly to find out something that other people can't find out, that may be corrupt. But--what is freedom of information? I don't know. But it's important. It's important.

COLLINS: How did you approach, in your tenure as president and CEO, this process of getting this kind of information?

ATWOOD: A lot of information is there for the picking up. Our Washington representatives, they had a staff and of course they sent much information to us. A lot of it technical, a lot of it opinion. We got some in visits to Dayton. In fact, I've been to Dayton so many times it's almost like a second home. I worked there as a youngster, as a junior engineer. In Washington, you get information from places like Edwards, test grounds, Eglin Field in Florida, and you have to have quite a network. Political information, it's hard to get anything reliable really. Opinions are a dime a dozen around Congress. But what committees are going to do can be important to you.

COLLINS: Then this question of reliability of information seems like a critical issue. How do you assess what's reliable and something that you can act on or respond to in some way?

ATWOOD: Well, you really don't. I think most of it is tentative. You know the type of thing, they do study after study after study in the Pentagon. One guy in our Washington office brought me, with great fanfare, a kind of a production schedule somebody in the Pentagon had prepared. He thought it was worth its weight in gold. Well, I didn't pay much attention to it and it wasn't worth the paper it was written on. It was a study, and that's what they have these Pentagon officers doing half the time, making studies, take a budget of so much money and break it down, this percent to strategic, this percent to tactical, this percent to defense, and run the numbers for me. They want to see them. So those things aren't very reliable. Even though they come out of the bowels of the Pentagon, they're subject to change.

    So I don't know. You look at many measures. You get what you can. You take your losses, and altogether it's not been a bad business from a business point of view. But of course if you aren't technically apt, why, you lose. But the fact that the government carries most of the inventory makes it a lot better business. The fact that you don't have to perfect your product before you sell it, well, of course it would be nearly impossibleto do that, like an automobile that you put in production. But that in turn means that the government pays most of your research and development.

    In the years that I was president of the company, I think I averaged out, the company made about 2 3/4 percent after taxes on our turnover, but on our investment, we were running up to 30 percent, for part of the time. It's less now. So it's not a bad business, and certainly I haven't any criticism or complaint. But getting information is still quite a game, as you can see by reading the papers.

COLLINS: All right. Was there a need for this kind of information before the late fifties, or was it as critical to you?

ATWOOD: Well, it wasn't as complex. The early postwar period was one of the quick cycle. As I told you, we laid off nearly everybody and went down to 5000 people, but it wasn't a year before we were building pretty fast. I think it's because of things like the Russian truculence and inability to cooperate with them, and growing apprehension on the part of everybody about the military disarmament we were going through. In fact, people were almost throwing our guns down and running home. I did tell you one consultant we had predicted by years ahead we might look forward to 100 million dollars in business. Well, we exceeded that in a very, very short time, so it was a pretty wild field in which to do your estimating. And it still is, to some extent. Of course, everybody has that problem in business, estimating your production expenditures, what business you're going to get and all that. It's not unique to the government work, but probably the swings are greater, except for major depressions.

COLLINS: After the Fred Black experience, did you change your pattern of attempting to acquire information, from Congress or the services?

ATWOOD: Well, not really.

COLLINS: Did you hire another consultant?

ATWOOD: Well, no, not really. We sent another guy back to Washington, Bill Clark, who's a friend of mine, a lawyer as a matter of fact, has been working for the company for some time. He just retired recently, and incidentally, he's gotten an appointment as an adjunct professor in the Air Force War College. And it's very appropriate. He's a very talented guy. And he held the job for quite a long time, and we had other people there.

COLLINS: Resuming after a brief pause, you were talking about the post-Fred Black arrangements.

ATWOOD: Well, I don't know that we changed anything in particular. We had a man named Ralph Watson there who was a WorldWar II fighter pilot ace, and very nice guy, retired. He tried to specialize in what he called work on the Hill, and he was well received, of course. I thought he did as well as anybody could do in that situation. He's retired recently, I think. But he probably did about all the good he could in that situation.

COLLINS: Did you ever feel you were in a position where you had to say to one of these people: "There's a particular piece of information I need about the thinking in a particular committee, their attitude toward a particular contract." Or was it more that when they found something, they would come to you and say, "This may be of interest to you."

ATWOOD: It was more the latter. If they got any strong signals of any kind, they would of course try to relay them on. And I never asked Fred Black for anything in particular. You see, there are many things that involve a company's position. There are the danger signals, and there's the affirmative aspect of things, and I guess their attempt to spread contracts around the country were considered affirmative actions. Then things would come up that were negative, were danger factors, and--it's a jungle out there, of course, as people say. But there really isn't much that doesn't meet the eye in the Washington situation with an airplane company. Very little that I know. And these consultant problems lately are maybe just a little overkill, I don't know.

COLLINS: Typically did you have people who worked in Washington report to you verbally? Did they write reports?

ATWOOD: Well, there were some written reports. But I was more informal in style than many people are today, and verbal was generally good enough for many of us, and I think our culture was such that nobody ever called one to account for having misrepresented something or nobody ever, I never laid anything on anybody for what they said or what they told me, and many didn't even need to have what they call their "protection file." It just wasn't there. Many people feel like they've got to have a file to protect their own rear end--but I don't think that was ever considered a factor during my administration. I know darned well I never took anybody just for a remark or a failure to say something or something like that and gave them any hazing for it.

COLLINS: I think we've gone through this topic pretty thoroughly. Why don't we call it quits here for today?

ATWOOD: Okay.

1 James E Webb, "Statement of the Administrator, National Aeronautics and Space Administration on the Selection of a Contractor for the Apollo Spacecraft."

Rev. 08/13/96