Mr. HÉBERT. The concern of the committee is not in the expression or the blueprint of the plan, but it is concerned mostly in the economics of the plan and if it is the most economical plan, then what can be eliminated which now exists in the Defense Department and Government. I think you recognize that fact.

Mr. ATWOOD. Yes, sir.

Mr. HÉBERT. If this is not a substitute plan, then the plan is no good, no matter how good it is.

These new ideas that come up must be substitutes and not merely new icings on the cake. The committee is going to explore this matter in the fullest and there will be many, many questions to be asked when other witnesses come. We will examine the other side of the

coin with great scrutiny.

Mr. Gavin?

Mr. GAVIN. I just want to call attention of the committee that I think one of the most significant things that has been brought to our attention in the development of this technique, of weapons system, is the great contribution to cutting down the lead time to a period of a year or two in production. Time is of great importance in the critical, chaotic world in which we are living. When we get into production, we want to do it expeditiously. It is quite evident that this technique certainly ought to be productive of very excellent results, if other corporations will apply the principles that you have developed here in your statement.

I think you and your associates are to be commended for a very fine report.

Mr. HÉBERT. Mr. Courtney, anything?

Mr. COURTNEY. I have no questions, Mr. Chairman, except to thank Mr. Atwood.

Mr. HÉBERT. Thank you, Mr. Atwood. The committee will stand in recess until Tuesday at 10 o'clock.

(Whereupon, at 12 noon, the subcommittee adjourned to reconvene at 10 a.m., Tuesday, April 21, 1959.)

WEAPONS SYSTEM MANAGEMENT AND TEAM SYSTEM CONCEPT IN GOVERNMENT CONTRACTING

TUESDAY, APRIL 21, 1959

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ARMED SERVICES,

SUBCOMMITTEE FOR SPECIAL INVESTIGATIONS,

Washington, D.O.

The subcommittee met at 10 a.m., Hon. F. Edward Hébert (chairman of the subcommittee) presiding.

Mr. HÉBERT. The committee will be in order.

Mr. Courtney?

Mr. COURTNEY. Mr. Chairman, we have the Lockheed Aircraft Corp. this morning; with Mr. Robert E. Gross, the chairman of the board, present, and Mr. Dudley E. Browne, the comptroller, and Mr. L. Eugene Root, who is the general manager of the missiles and space division.

Mr. Gross has a prepared statement. May he proceed in order, Mr. Chairman, without interruption?

Mr. HÉBERT. Mr. Gross, you will proceed, and the members of the committee will refrain from interrupting you until you have finished your presentation.

STATEMENT OF ROBERT E. GROSS, CHAIRMAN OF THE BOARD, LOCKHEED AIRCRAFT CORP.

Mr. GROSS. Mr. Chairman, members of the subcommittee, and your counsel: My name is Robert E. Gross. I am chairman of the board and chief executive officer of Lockheed Aircraft Corp.

As you may recall, it was my privilege to appear before this committee in connection with your hearings in 1956.

Mr. HÉBERT. May I interrupt, Mr. Gross?

Mr. GROSS. Yes.

Mr. HÉBERT. I would like at this time, prior to this statement, to put in the record your biographical background.

Mr. GROSS. Yes.

Mr. HÉBERT. Also those of Mr. Browne and Mr. Root.

Mr. GROSS. Yes, sir.

Mr. HÉBERT. Of course we know who you are and you are on record in other hearings, but we want you in this one.

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(The biographical sketches are as follows:)

ROBERT E. GROSS, CHAIRMAN OF THE BOARD OF DIRECTORS, CHIEF EXECUTIVE OFFICER, LOCKHEED AIRCRAFT CORP.

Born in Boston, Mass., in 1897, Robert E. Gross was educated in Massachusetts and Rhode Island and is a graduate of Harvard University (1919).

His early experience was in banking. His first venture into the airplane field was in 1928 when he invested in the Stearman Airplane Co. He later organized the Viking Flying Board Co. at New Haven, Conn., and was associated with Stearman-Varney, Inc., in San Francisco.

In June 1932, he and others bought the assets of the bankrupt Lockheed company, then part of the Detroit Aircraft Corp. He began as treasurer and chairman of the board and became president 2 years later. He became chief executive officer in 1956.

He is a member of many aviation organizations and was president of the Institute of Aeronautical Science in 1955. He is a trustee of Penn Mutual Life Insurance Co. and a director of Pacific Finance Corp. and Security-First National Bank of Los Angeles.

Mr. Gross is an honorary doctor of laws, a chevalier of the French Legion of Honor, and was decorated with the order of Orange-Nassau by the Netherlands. DUDLEY E. BROWNE, VICE PRESIDENT-FINANCE AND CONTROLLER, MEMBER OF

BOARD OF DIRECTORS, LOCKHEED AIRCRAFT CORP.

A native of Los Angeles, Mr. Browne was graduated from the University of California at Los Angeles in 1934 with a bachelor's degree in economics. . He came to Lockheed as an auditor in 1937. He became chief accountant in 1939 and controller in 1942. He was named to his present position in 1956. Long active in aircraft and financial circles, Mr. Browne is a former national president and board chairman of the Controllers Institute of America.

In 1954-55 he served as a member of the Task Force on Budget and Accounting of the Hoover Commission on Organization of the Executive Branch. Prior to this, he had served during 1950 to 1952 on the city of Los Angeles' "Little Hoover Commission" on its task force on budget and accounting.

He is a California certified public accountant, a member of the American Institute of Certified Public Accountants and a past president of the Los Angeles chapter of the National Association of Accountants.

He is now a director of TelAutograph Corp. of Los Angeles and a member of the California Bank Trust Committee.

L. EUGENE ROOT, VICE PRESIDENT, AND GENERAL MANAGER, MISSILES AND SPACE DIVISION, LOCKHEED AIRCRAFT CORP.

Mr. Root is an engineering graduate of the College of Pacific and holds masters degrees in mechanical and aeronautical engineering from the California Institute of Technology.

He came to Lockheed in 1953 as director of development planning. His previous experience included service as chief of the aerodynamics section of Douglas-El Segundo and chief of the aircraft division of the Rand Corp., where he pioneered generalized or parametric approach to design.

He has served in many important scientific and technical capacities: adviser to the USAF Institute of Air Weapons Research; special assistant to the USAF's Deputy Chief of Staff for Development; chairman of several of the National Advisory Committee for Aeronautics' subcommittees; lecturer at the Guggenheim aeronautical laboratory at Caltech; chairman of the aerodynamics advisory panel at the AEC's Los Alamos Laboratory; member of the USAF Chief of Staff's Scientific Advisory Board; consultant to the Assistant Secretary of Defense for Research and Development; vice president, Institute of Aeronautical Sciences.

Mr. Root has been general manager of the missiles and space division since 1956,

Mr. HÉBERT. All right, proceed.

Mr. GROSS. I should like to voice my sincere belief that the exhaustive investigation you made then into aircraft industry production costs, and profits brought about a clarification and improvement in mutual understanding and public appreciation of our efforts and problems. I am confident your inquiries this year likewise will have beneficial results, and I should like to express my appreciation for being invited to testify.

Because many phases of your inquiry today concern financial and contractual aspects of weapon system management, I have brought with me Mr. Dudley E. Browne, vice president; finance controller, and a director of our company. My other associate is Mr. L. Eugene Root, who is also a vice president and is the general manager of our missiles and space division. This is the division of our company that has had the principal system management responsibilities and experi

ence.

I hope that among us we will be able to answer any questions you may have. I assure you we will try to do so, and if we do not have at hand the information you seek, we will provide it later.

In 1956 we gave your committee a historical review of our company and its products. I shall not repeat this, but briefly I should like to bring you up to date on our position today.

Our company has its headquarters in Burbank, Calif. We have four operating divisions and four wholly owned subsidiaries, and we own a controlling interest in two affiliated companies. The relationships among these units of our company show up in two charts which we have prepared. We have included copies of these with the statement and have brought two large-size reproductions. As I continue my description of our company today, perhaps you will wish to refer to these charts over here and we shall be glad to answer any questions you may have concerning our organizational structure. They are here.