The large stainless steel panel, dotted with several dozen colored magnetic blocks, looks like the sort of abstract art favored by many corporate executives for their office walls.
Yet the executive who owns this sculpture has a gift for the cryptic. His artwork contains top secret data on the performance of every Air Force satellite in space--but in a code only he knows.
The owner is Eberhardt Rechtin, president of Aerospace Corp., a stealthy organization whose powerful role in the defense industry is mirrored in the enigmatic art in its chief executive’s office.
Aerospace, with $287 million in annual revenues and a work force of 4,200, may seem like only a medium-size defense contractor in an industry full of big players. But its size is deceiving. Few defense contractors exert influence over such a broad spectrum of Pentagon programs, affecting U.S. national security so significantly.
Aerospace is the architect and engineer of the Pentagon’s huge fleet of orbiting spacecraft and its family of launch rockets.
It has been responsible for the conception and basic design of the Pentagon’s fleet of secret spy satellites, which have become essential to monitoring the activities of the Soviet Union and its allies. Its work has helped to revolutionize communications and navigation satellites.
It also has the role of assessing the risks of every Air Force space mission and certifying that they are low enough to proceed with a launch. Such assessments are critical in a business where up to $1 billion worth of delicate hardware can be blasted into junk in seconds.
Although unrecognized, the firm is one of the nation’s leading centers of high technology, regarded within its industry as equal to or better than such key defense contractors as Hughes Aircraft, TRW, Lockheed and Rockwell International.
It has a staff of 575 doctorate-level scientists and engineers, representing more than 25% of its technical staff and an enormous reservoir of talent by almost any industrial or academic measure. Its staff of PhDs, which rivals any in the industry, is the principal technical resource for the Air Force’s space programs.
The public has only scant knowledge of Air Force’s “black world” of space activities, but they are evolving into major military functions as the Pentagon pursues the so-called “high frontier” doctrine of militarizing space.
The Pentagon budget for space programs, which exceeds $10 billion annually, now outranks in size the nation’s civilian space programs. It is expected to grow significantly as the strategic defense initiative, or “Star Wars,” plan evolves over the next decade and the Air Force begins flying its own manned space missions.
At Aerospace, revenues have grown in recent years by 5% to 10% annually, far short of the growth in the military space budget. The firm’s stature and importance have grown, however, not diminished. While it has restrained its growth to avoid diluting the quality of its technical staff, it has sought to magnify its influence.
Engineering and architecture services typically account for only 3% to 6% of the total cost of a large military procurement program, but it is a role that exerts tremendous influence over the final product.
“Aerospace works where its leverage is the strongest,” Rechtin says. “That’s in the early part of the programs, when the performance, cost and schedule are set in place and the success or failure is often determined.”
Despite its growing importance, Aerospace dwells in the shadows of its industry, seldom seeking publicity for its achievements and usually shunning inquiries about its work.
“In that long list of things that are important to us, wide public recognition is very low on the list,” Rechtin says. “In this business, the trust and confidence of the customer is your most valuable asset.”
Possesses Most Secrets
The company possesses a greater wealth of military secrets covering more programs than any other aerospace firm. It carefully avoids wide recognition, fearing that could erode its security.
Aerospace was founded 25 years ago, at a moment in U.S. history when the nation was frantically mobilizing the full resources of its industry to meet the challenge posed by the Russian launch of Sputnik, recalls Bernard Schriever, the Air Force general who headed the military’s early space program.
“Aerospace proved an invaluable resource in the space effort of this country in those years,” Schriever says. “And, I don’t see anything other than a growing requirement for its support, especially with the demands of the strategic defense initiative.”
The firm, headquartered in the defense industry enclave in El Segundo, was created as an unusual hybrid institution--a private corporation, but with nonprofit status. While it builds no hardware and is prohibited from holding prime contracts, it earns its revenues from contract fees. It has normal business relationships with banks and an independent board of trustees.
But it also operates with a long list of restrictions imposed under its Air Force contract, which accounts for more than 90% of its revenues. (The balance comes from contracts for several civilian government agencies.)
Aerospace is oriented to avoid any stake in the outcome of the multibillion-dollar programs that are affected by its blueprints and technical advice. But the company’s work has significant effects on the direction of U.S. weapons policies, because its technology assessments help determine what is possible.
“An architect never makes a value judgment,” Rechtin says. “If you ask me what I think of the strategic defense initiative, I could answer you only in technical terms. Our job is to say that if you want to do that, here is the best that can be done.”
All of the normal corporate and institutional instincts--sales growth, dominance of new markets, public recognition and financial power--are contravened by the company in an effort to provide as independent a voice as possible in advising the Air Force.
“You would have a hard times figuring a better invention than we for certain kinds of work,” Rechtin says. “We have no conflict of interest. We work hard at making sure there is not even a perception of a conflict of interest. We have no stockholders. We do not contract out to others for construction of spacecraft. We are prohibited from seeking to influence legislation.”
The company was formed by spinning off the Space Technology Laboratories of the Ramo Wooldridge Corp., forerunner to TRW Corp. In those days, Ramo Wooldridge was prohibited by the Pentagon from building hardware.
No Conflict of Interest
Simon Ramo, a TRW founder, said he originally suggested the formation of Aerospace to avoid the conflict of interest in which his firm was bound to fall if it continued to provide the Air Force with systems engineering services. Ramo also wanted to free the firm to move into manufacturing space hardware.
“We took a financial beating of millions of dollars in setting up Aerospace, but we felt there was a problem that needed to be solved,” Ramo says. “Sooner or later, somebody would have said ‘Look, these guys aren’t helping the nation.’ ”
The resulting company is separate both from the Air Force Space Division, which manages space programs, and from industrial contractors, which build equipment. It is a system of management that differs sharply from other areas of military procurement.
Lt. Gen. Forrest McCartney, commander of the Space Division, says the Aerospace formula has served the Air Force well.
“Space is a strange animal,” he says. “Aerospace satisfies a specific national need. They are essential.”
Some experts believe one reason the firm is growing even more important to the military is the brain drain that has thinned the ranks of technically experienced military officers in recent years.
“Our officers left for industry in droves,” says William Henry, former commander of the Air Force Space Division. “When I retired in 1983, more than one-half of my work force was lieutenants, which means they had less than five years experience. When I came out here in 1974, we had only one lieutenant in the whole organization.”
Aerospace has provided a “corporate memory” that has bridged the turnover of Air Force officers on long-lived programs, McCartney says.
In an era when the Defense Department has been widely attacked for its stewardship of public funds in almost every type of military program, the Air Force’s space programs have been relatively unscathed.
The Air Force has posted a better than 90% success rate in its launches and an 80% success rate in the operation of its satellites. It is a notably successful record because the military typically has far more demanding missions in its space programs that push technology to its limits.
At the same time, the Air Force has come to rely on fewer, but more capable satellites to fulfill its needs. While the Air Force launches about a dozen satellites each year, the Soviet Union launches over 100 each year.
“The Russians put them up and they crap out,” Rechtin says. “They are still back in the era of technology that we were in in late 1960s or early 1970s. They have lots of them and they don’t work well.”
Although Aerospace shuns taking credit for those successes, it has played a key role, says space expert Peter Glasser, a vice president at the consulting firm of Arthur D. Little Inc.
“Aerospace is independent in its views,” Glasser says. “Its well-being doesn’t depend on whether a program grows very large or is abandoned.”
Has Its Critics
But its role as an independent voice in a controversial defense procurement system has also won the company its share of critics, both in government and in industry.
Much of the firm’s work is granted on a non-competitive basis, which rankles competitors who would like to bid for the work and members of Congress who would rather see greater competition.
“Some criticism is valid,” says Malcolm Curry, executive vice president at Hughes Aircraft. “For-profit industry could do the same job, but maybe they wouldn’t do it with the same detachment. There is a need for Aerospace, but could they do it with half the staff? Yes, I think they could do the main job with fewer staff.”
Ernest Fitzgerald, the Air Force’s management systems deputy and a frequent critic of Pentagon practices, says, “Aerospace is just no good. They are non-wave makers. Their money comes from program offices, so they are hopelessly compromised.”
But others describe cases in which Aerospace stood firm in its technical convictions.
For example, TRW was selected as the prime contractor of the Fleet Satellite Communications system in the early 1970s. It decided to build the satellites with only one antenna to both transmit and receive messages.
Design Was Revised
Aerospace engineers argued that the design would not work because the antenna would interfere with itself. TRW built a working test model, only to discover that Aerospace was correct. TRW eventually revised its design, recalls McCartney.
The scientists and engineers at the firm routinely churn out inventions, but they seldom bother to seek patents, because, under its contract with the Air Force, the firm seeks to spread, rather than contain, its basic technology.
The firm has devised the basic architecture of the Teal Ruby Experiment, in which an orbiting infrared telescope will monitor aircraft by night or day. The firm also is heavily involved in the basic concept of Milstar, a massive communications satellite that will be invulnerable to almost any calamity, including nuclear war. Another of its programs is the $3.5-billion Navstar system, which will provide worldwide navigation with an accuracy of 35 feet.
The entire fleet of U.S. observation satellites, the so-called “Keyhole” satellites, are among the firm’s most important assignments and the ones it says least about.
Such satellites reportedly have the capability of reading automobile license plates from orbit, but the capability doesn’t come cheaply. The KH 12 satellite, under construction at Lockheed Missiles & Space Corp., reportedly is costing more than $1 billion, according to John Pike, associate director of space policy at the Federation of American Scientists.
In such an environment, risk assessment is critical to avoid costly mistakes.
“We only build a few of a kind and there isn’t time to learn from your mistakes,” says Max Weiss, vice president of Aerospace’s engineering group. “In space, the requirement is for launching spacecraft that will live five to 10 years. A mistake is very expensive.”
Often, such risk assessments means putting a damper on headstrong hardware contractors who want to push technology to the limit. It is an orientation that seldom wins accolades from industry.
To such criticism, George Paulikas, vice president of Aerospace’s large laboratory operation, replies: “Better is sometimes the greatest enemy of pretty good.”