"Best in the Business"
SMC Commander Offers Perspective

on Air Force-Aerospace Partnership

by Lt. Gen. Roger DeKok
Commander, Space and Missile Systems Center

EL SEGUNDO, Calif. (1/20/97) -- Ever since the announcement of the proposed merger between The Aerospace Corporation and Science Applications International Corporation, rumors and speculation have been flying fast and furious. I would like to offer my perspective on the Air Force-Aerospace partnership now that the dust has settled on the merger proposal.

The driving force leading to the proposed merger was reductions in the Federally Funded Research and Development Center's budgets and the associated reductions to the Aerospace workforce for each of the last six years. From President and CEO of Aerospace Pete Aldridge's perspective, the merger was necessary to stabilize The Aerospace Corporation workforce and keep its expertise intact by branching out and pursuing non-SMC business. The resultant benefit to the Air Force was [to be] the continued availability of a broad range of world-class expertise.

Under the terms of the proposed merger, Aerospace would [have] become a wholly owned subsidiary of SAIC. This would [have] change[d] the company from a nonprofit corporation to a profit-making commercial business. This shift to for profit status and the associated conflict of interest concerns ultimately became the key issue to all parties involved in the merger.

Aerospace "Truly Unique"

The Air Force put together a team in August to evaluate all elements of the proposed merger to include the difficult conflict of interest subject. Led by Art Money, the assistant secretary of the Air Force for acquisition, and personnel from SMC, the team discussed the conflict of interest subject with industry, DOD and Air Force leadership. It quickly became evident that The Aerospace Corporation is truly unique in the function that it performs. The Air Force-Aerospace relationship is driven by much more than a conflict of interest clause in a contract.

The Aerospace "trusted agent" role is rooted in the very structure of the FFRDC. This 35-year-relationship has created an environment of trust that has permitted industry to share its most treasured secrets with confidence. Couple this unique structure with the unparalleled technical excellence of the corporation, which sets the framework for our launch and on-orbit success record that is the envy of the world. No other space program in the domestic, international or commercial marketplace has achieved the success rate of the Air Force.

$1 Billion Saved Each Year

Aerospace's expertise has repeatedly helped the Air Force avert costly failures on numerous occasions throughout the years. SMC's chief engineer has estimated that the Air Force receives a 4-to-1 return on its investment from its use of Aerospace personnel-a savings of over $1 billion every year. After a thorough review of the pros and cons of the proposed merger and its potential impact on SMC and the national space systems, the Air Force concluded that it could not support the proposed merger. In a letter to Dr. Ruth Davis [chair, Aerospace Board of Trustees], Money said "the proposed merger would negatively impact the trusted agent role the Aerospace FFRDC has served," and is "not in the best interest of the U.S. Government. As a nonprofit corporation, Aerospace has operated in the public interest with objectivity, independence and free from conflict of interest. Our dependence upon this organizational structure has made Aerospace a critical asset in the nation's space program." Money added that "the synergism between elements of Aerospace in the planning, integration, launch and operation of our national security space systems is a critical reason for the U.S. space program's preeminence as the recognized world leader."

The proposed merger would have fundamentally changed the way Aerospace [has] helped to support SMC and other DOD agencies. The change would have terminated the FFRDC, raising serious concerns throughout government and industry about the continued avoidance of conflict of interest issues.

Aerospace Role Revalidated

Bottom line: The Air Force's evaluation has revalidated the critical role Aerospace, as an FFRDC, plays in the defense of our nation. With that issue now behind us, the challenge of stemming the workforce reductions remain. There is no question that space is a growth business; nonetheless Air Force military and civilian manpower has declined in a fashion roughly equal to that experienced by Aerospace. As a result, we have been driven to manage our programs in a more streamlined fashion. You have responded to that challenge, earning national acclaim for your efforts in support of acquisition reform.

The Aerospace manpower reductions have captured the attention of DOD and Air Force leadership, and they have responded. The fiscal '97 Authorization and Appropriations Acts indicate that Congress is supportive of the five-year plan that Dr. Kaminski, the undersecretary of defense for acquisition and technology, submitted in May 1996 to stabilize the FFRDC workforce. The Air Force fully supports this plan and will continue to work with Dr. Kaminski to seek the manning levels necessary to retain and attract the kind of people who are responsible for Aerospace's world-class reputation.

n short, the SMC/Aerospace team is the best in the business, and we are truly pleased that this long-standing partnership will continue. I look forward to a bright future.