Space Firms Roiling Over Allegedly Quashed Report : Down-to-Earth Satellite War

The once discreet and gentlemanly military spacecraft industry is roiling amid harsh allegations and countercharges that the Air Force quashed a proposal to update an existing satellite system for up to $6 billion less than an alternative new program.

The dispute involves one of the biggest prizes in the aerospace industry: the design and production of the next generation of early-warning attack satellites and, with it, nearly 2,000 jobs at contractors throughout California.

The unusual bitterness of the controversy reflects the tough reality that spacecraft builders, after years of being insulated from budgetary cutbacks, are now in a fight for survival.

“It is understandable why it has developed into a cat fight,” said Albert Wheelon, former Hughes Aircraft chairman and former deputy director at the Central Intelligence Agency. “It is part of the triage that is going on in the military space industry. This program is a big plum.”

In the midst of precipitous defense cutbacks, an opportunity to save taxpayers $6 billion would seem a sure bet, but senior Air Force officials balked at the prospect of abandoning an advanced technology system born during the nuclear arms race with the Soviet Union.

When the Cold War ended in the late 1980s, the Air Force wrestled with whether to start over on a more modest system for tracking enemy missiles from space but decided to stay with a satellite that critics now have branded as “gold-plated” for today’s needs.

The controversy provides a glimpse into the battle over the future of the military space industry, in which losers could be out of the business in the next decade. The players include Lockheed Missiles & Space Co. in Sunnyvale, Calif., TRW Space & Electronics Group in Redondo Beach and Aerojet Corp.’s electronic systems division in Azusa.

The dispute surrounds two senior Air Force generals and the president of El Segundo-based Aerospace Corp., who apparently attempted to quash a report showing that a $7-billion modification of the current Defense Support Program (DSP) satellite could accomplish most of what the proposed $13-billion Following-On Early Warning System (FEWS) satellite would do.

Lockheed and TRW are competing for the new FEWS project. Meanwhile, TRW and Aerojet are the prime contractors of the existing DSP project and would be in a key position to win the job of modifying DSP, a proposal known as DSP-II.

The report on the lower-cost DSP-II was considered by senior Air Force officials to be a threat to the FEWS project, which enjoys broad support among high-level Air Force officials. The 500-page report was written by Guido Aru and Carl Lunde, Aerospace Corp. engineers, and Col. Edward Dietz, DSP program manager at the Air Force Space and Missile Systems Center in El Segundo.

After hearing about it, Gen. Jack Horner, commander of the U.S. Space Command, and Maj. Gen. Garry Schnelzer, the Air Force’s chief procurement official for spacecraft, pressured Aerospace Corp. President Pete Aldridge to withdraw the report, according to interviews and correspondence obtained by The Times.

The two generals also declined to include the lower-cost DSP-II option in briefings to the Senate Armed Services Committee, which originally requested the report two years ago out of concern that the Air Force had redundancy in its satellite programs, according to four officials knowledgeable about the case and correspondence. The generals declined to comment.

In a letter to Aldridge obtained by The Times, Horner lambasted Aerospace, saying the report challenged his “top priority” and “was flawed technically and politically,” an apparent reference to the threat posed to FEWS.

Horner added, “This kind of work is unprofessional and is not representative of the type of government-industry team I want.”

Aldridge, a former Air Force secretary, wrote back, saying he would perform as requested and that the report should never have been issued, according to sources familiar with the Aldridge letter. Aldridge declined to comment.

Despite efforts to confiscate the report, it leaked out, sparking charges that the Air Force attempted to protect its higher-cost program and that it lied to the Navy about the urgency of FEWS--prompting a row with naval officials.

The allegations are now under investigation by the Air Force inspector general. Meanwhile, Dietz has since been reassigned to a job with less responsibility at the El Segundo base.

Dietz “is a very honorable man, and if anybody criticizes him, it is because he was doing his job,” said Cmdr. John Hearing, a Navy space official who has closely watched the dispute unfold and regards Dietz as a friend. “A military where somebody won’t stand up and say the right thing is not a good military. It is certainly not a good acquisition system.”

Among the subplots in the controversy is the allegation that Air Force officials leaked proprietary TRW technology for modifying DSP to Lockheed so Lockheed could issue a technical rebuke of the proposal.

TRW Executive Vice President Timothy Hanneman was so incensed that he personally protested the leak to Undersecretary of Defense John Deutch in a meeting last month, according to military officials familiar with the meeting. Hanneman declined to comment.

A Lockheed spokeswoman said the company conducted an internal investigation into the matter and found no wrongdoing.

And Carl Fisher, president of Aerojet’s electronic systems division, wrote a letter to Air Force investigators in recent weeks asserting that the Air Force had “launched an effort to discredit the (DSP) study” and that Aerojet technology was also leaked to both TRW and Lockheed so they could discredit Aerojet. He said information about the DSP-II was being “suppressed.”

Fisher added that the Air Force had “threatened and intimidated” TRW officials into not helping Aerojet with DSP-II. “Use of intimidation to suppress information unfairly tipped the playing field in favor of FEWS,” he wrote.

Fisher declined to comment.

Meanwhile, the efforts of the Air Force to defend FEWS may have backfired. Deutch is reportedly leaning toward canceling the project in the fiscal 1995 budget that will be issued in January. Two federal advisory panels have already recommended that the Air Force save money by simply upgrading the DSP.

The looming cutbacks in the military space budget have hit the once elite industry hard, upsetting longstanding relationships and changing the business’ culture.

“There was a presumption in this industry that their contracts and programs were like a Catholic marriage, one that went on forever,” Wheelon said. “There are thousands of engineers in this industry who got out of college, went to work and retired without ever working on more than one program their entire careers.”

Although total spending on military space is a secret, analysts estimate that about $15 billion is spent annually on space hardware and technology, down no more than $1 billion or $2 billion from its peak in recent years. By contrast, the overall Pentagon budget for procurement is down 50% from its mid-1980s peak.

“People are saying if you chop the Marine Corps budget, then how come the space cadets can’t take their share,” said John Pike, a space expert at the Federation of American Scientists.

Space advocates counter that surveillance is more important than ever because the United States will have smaller forces and must keep its eye on more regional hot spots. But critics say the United States has more than enough spying capability, although nobody suggests that the government drop its guard and not have an early-warning system.

The current DSP uses infrared scanners to search the Earth for heat that a ballistic missile would generate at launch. Each 10 seconds, a DSP in orbit transmits a snapshot to ground controllers, continuously monitoring the world for any attack on the United States.

During the Cold War, DSP was used chiefly to monitor the Soviet Union for a nuclear missile launch. Today, the military wants an early-warning system that could be used to detect shorter-range missiles used in regional conflicts, such as the scuds used by Iraq.

But rocket engines on short-range missiles burn out quickly. In order to track such a missile, a new DSP or FEWS would have to make observations every few seconds. In addition, FEWS was conceived during the Cold War and has sophisticated features useful in a nuclear war.

Dietz wrote a series of memos, obtained by The Times, that attempted to alert his superiors to the possibilities that a simple upgrade to the DSP could provide much of the capability the Air Force needed, although with less nuclear war fighting capability. As the debate evolved, Dietz asserted that his superiors were trying to distort the process.

In September, he wrote to his immediate superiors that Horner, the general, and his staff “were clearly misinformed” about the DSP-II. Moreover, their factual errors gave the “appearance of bias,” Dietz said. In other memos, he warned of distortions of facts and that the decision making was “inconsistent and illogical.”

The controversy occurred during turmoil in the leadership of the Los Angeles Space and Missile Systems Center. Lt. Gen. Edward Barry Jr., for whom Dietz worked, had been rebuked earlier by Defense Secretary Les Aspin for his involvement in a secret bailout of McDonnell Douglas’ C-17 cargo jet program. In June, Barry’s authority in acquisition matters was revoked, preventing him from trying to settle the dispute.

The controversy also poses a threat to Aerospace Corp., a nonprofit corporation that acts as the Air Force’s engineer and architect for spacecraft. In an announcement to employees, Aldridge acknowledged that the firm’s “objectivity was challenged” and that it had failed “to distinguish carefully between analysis and advocacy.”

Meanwhile, the Senate Armed Services Committee, which requested the DSP report in the first place, has steered clear of the controversy. But Rep. John Conyers (D-Mich.), chairman of the House Government Operations Committee, has asked the Pentagon’s inspector general to investigate the allegations.

“If true, this would be an extremely serious--and possibly criminal--withholding of information vital to congressional deliberations,” Conyers said in a letter last month to the inspector general.