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Note to Researchers: Distribution of the document that follows is unrestricted. Original audio cassette(s), signed legal release forms, and edited interview transcripts are on file in the Defense Acquisition History Oral History Collection, U.S. Army Center of Military History, Fort Leslie J. McNair, Washington, D.C. MG Charles R. Henry UNITED STATES ARMY INTERVIEW OF CONDUCTED BY Interviewee: Major General Charles R. Henry DR. HÖFIG: Tell me about your career in acquisitions. You told me a little bit on the phone. GENERAL HENRY: I started in procurement around 1967. As a captain in the Army, I was deciding where I wanted the career to go. I had looked at procurement and felt that it would be kind of neat to be able to deal with the defense industry. So I went to my battalion commander at the time (circa 1965), and we filled out the necessary application. The Army back in 1964 to '65 had the Army Procurement Program, and I became a member of that program and started a career in acquisition in an assignment in 1967. I was in Germany at the time. When I returned from Germany, I was sent to my first procurement assignment at the Defense Construction Supply Center in Columbus, Ohio. Then I was assigned for my first tour of duty in procurement at the Defense Logistics Agency (DLA) at Columbus, Ohio. I was a major, a mid-level kind of guy. I went through the procurement schools—the basic course and then the advanced course. At that time, I also had completed two years of law school. My goal was to obtain a law degree. Of course, law school helped because a lot of contracting is based on contract law. Then there was the Vietnam assignment (1972-73) DR. HÖFIG: Were these Army schools? GENERAL HENRY: No. This was night law school. First I attended in Nashville, Tennessee, and later in Atlanta, Georgia. DR. HÖFIG: The procurement schools, I mean. GENERAL HENRY: Oh, yes. It's the Army Logistics Management Center located down at Fort Lee, Virginia. The Air Force has a similar school out at Wright-Patterson Air Force Base. But ALMC, the Army Logistics Management Center, is the primary school for entry into the Army Procurement Program. I took that course. Then within a couple of years, I took the advanced course and combined that with the legal training I had completed after the tour in Vietnam, as well as the school at the Army’s Command and General Staff College at Fort Leavenworth in 1974, which was a requirement for all majors who are making the Army a career. I left Fort Leavenworth and was then reassigned to Atlanta, Georgia, in Defense Contracts Management. Back then, it was part of the Defense Logistics Agency. I spent five years as deputy director for Production in the Defense Logistics Agency, Atlanta Region. In that capacity, I was out in contractor plants, looking at production of defense contracts. Although the three elements of contract management are contract administration, quality assurance, and production capabilities, you had some extra items to look at, like contractor employment compliance, which was enforcement of the Civil Rights Act, and Executive Order 11246. Those were all incidental to the contract management process itself. I left Atlanta after five years and was then selected by the Army to command a battalion. The functions of command in the Army are company command, battalion command, and brigade command. The company is commanded by a captain; a battalion, by a lieutenant colonel; and a colonel commands a brigade. Command is absolutely essential to a successful career in the Army. Back in those days, selection for command was left to the old-boy network. He who was in command would reach back and pick someone arbitrarily and capriciously (a buddy) and put them into the job. Then they would get good efficiency reports, go before the selection board, and be selected for higher, command, schooling, and promotion. It was in the midst of all of that that the Army came to the realization that if command is so essential to one's career, the Army ought to have a centralized command select process, so that under a merit system, only the best and brightest get selected for command. Now, I happened to be a lieutenant colonel coming through the system about that time. At this point, I had been away from troops for twelve years. From an Army standpoint, the record is all based on merit. The merit is based on your efficiency reports, and the efficiency reports would determine that merit accuracy. But you also have to have the right jobs in order to go to the next level. What happened is that I got selected in my second year of eligibility for the Army centralized command select for battalion command—not as a procurement officer, but as a logistician who happened to have a significant procurement background. It was probably the shot heard around the Army. I am sure many said, “Who is this guy who has been away from troops for twelve years and who has been selected by the Army for battalion command?” A little interesting point: Even my assignment officer had predicted that there was no way I was getting a battalion. I remember going to see him—I've got about eighteen years in the service about that time—and I said, "How am I doing?" He said, "Oh, you're doing great. You've got wonderful efficiency reports.” I said, "Well, what's the chance of me getting a battalion?" He said, "Slim to none.” I said, "Well, wait a minute. You mean to tell me that you don't think I have a chance?" He said, "No, I'd rate your chances slim. Why don't you just go find yourself a good procurement job, ride it on out and retire at twenty?" That was the advice that I got. Needless to say, that was not necessarily the advice that I wanted to hear. He was going to bring me into Washington and put me in the Pentagon. I was going to be a staff officer in the procurement process. I'm thinking, boy, this is not what I want to do. At the time I was assigned to a procurement job in Atlanta. My assignment officer called me a few days after our meeting and said, “Forget all I said to you.” I said, "Why?" He said, "I can't tell you," but then I put two and two together. The board had met. The board results were out. Of course, he could not release the results of the board to me or anyone else until they were officially approved and published. Sure enough, though, when the results were published, I had been selected to command at the battalion level and was the first procurement guy, so to speak, in the Army at that time to be selected. I went on to command a battalion, did well in the command, came out of command, and spent the rest of the tour at Fort Lee doing things that a logistician would do. As my tour at Lee was coming to an end, I was sitting for the board that would select new colonels. I got selected for colonel, and the Army said, “Well, we’ve got a colonel now who's got a procurement background.” DR. HÖFIG: This hadn't happened before? GENERAL HENRY: This had not happened before. This was a first. The idea of putting the procurement commands under a centralized command select and giving one equivalent credit as a colonel for commanding a procurement unit as opposed to a brigade was all new twenty-five years ago. Of course, there's a built-in bias—and maybe there should be, from the Army’s standpoint—that you've got to be a beady-eyed warfighter, a killer with a gun in your hand. That's what it's all about, and anything else is secondary. But we know that with the advent of technology over the previous years, you can find tremendous requirements for soldiers, as an example, who are expert in the IT (information technology) world. DR. HÖFIG: Who had commanded the procurement units before? GENERAL HENRY: This is not going to sound very well, but what had happened is that they would take a colonel who had had a very successful career doing all the things that the Army wanted you to do in other fields. This officer had been a good warfighter, etc., and had been able to get through the wickets of being selected at the battalion level, and now he was ready for the colonel level. The Army, answering a call to place an Army colonel into a procurement command, would assign this capable but inexperienced procurement officer to the job. While he was an all-around good Army officer who has accomplished many good things for the Army, generally this was the first procurement assignment in his career. The Air Force, on the other hand, would assign the individual from second lieutenant all the way to two-star general in the procurement process. I found out that I could respect those guys because, from the Air Force's standpoint, they didn't have to move into the cockpit, out of the cockpit, and so on to be successful. They could carve out a successful procurement career and stay in the field and get promoted all the way to general officer. The Army would always say you've got to be qualified in two disciplines, and within the Army—I can't say it's wrong—always your secondary is going to be an infantryman. You're brought into the Army to learn how to shoot and fight first and then do other things later. Then, of course, as we, the Army, became more sophisticated during the 1970s, it became very obvious that we needed people who really knew what they were talking about in highly technical disciplines, the procurement field being one of them. So I had just been selected for colonel, hadn't pinned on yet. I was now recognized as a procurement officer and a logistician. My colonel's assignment officer said, “We need you to go to Detroit to be the commander of the Defense Contract Management Area in Detroit,” working for an Air Force colonel who commanded the Cleveland Region. I said, "Okay. That's my bag," and away I went. My family and I moved to Detriot, and I reported for duty in July 1981. DR. HÖFIG: Is this within the DLA structure? GENERAL HENRY: Yes. All of my procurement experience, with the exception of my years as Army competition advocate general, was within DLA. Sixteen of the thirty-two years that I spent in procurement were in DLA. I ended up as deputy director of DLA, and the senior acquisition executive of DLA, and the commander of the Defense Contract Management Command (DCMC), which now is the Defense Contract Management Agency (DCMA). I was now working for an Air Force colonel, and we had a Navy captain and three other colonels. The command was Ottawa, Canada, over all of Michigan, up to Chicago, and then Ohio. That was the region. There were nine regions in DLA at the time. The Army elected to take, on a rotational basis, command of three of those nine regions at the colonel level at any one time. So, again, here comes the first. The first Army procurement colonel command came out, and I got selected—not as the primary, I might add. I was the second alternate. That was an interesting point because, quite frankly, they had a couple of other guys who could have been considered more qualified in procurement than I was. They hadn't been battalion commanders, but the Army selected them ahead of me because of greater procurement experience that they had. Why didn’t they get the job? They either were at a point in their careers where they didn't want to do it, or one of them had just purchased a house in Dallas and did not want to move. (Another interesting point about this business of Army procurement: You rarely had the opportunity to be in government quarters. So you became adept at being able to buy and sell houses because that's where the job took you. For example, when I was in Detroit, we were in government quarters assigned to Selfridge Air Force Base. I was thus free to make a move and did not have to liquidate the house. However, when I was assigned to Cleveland, we had to buy a house. When I got orders to go from Cleveland to Washington, we bought a house. I sold a house in Cleveland and bought the house here in Washington, D.C. That was pretty much the mode of operation during that period.) These two guys declined command, and that is how I got the first procurement colonel assignment in the Army. The rules are that if you decline command, you're off the list, never to be looked at again for a command. So I got a call, and they said, “You have one week to get to Cleveland to take over command of the region.” I accepted and took command of the Cleveland region. This was a wonderful job, and quite frankly, if I had left the Army after that assignment I would have felt fully satisfied. But the Army had more in mind for me. Two years later, I came out of the Cleveland assignment to be General Babers’s chief of staff (when he became the director of the Defense Logistics Agency) at his request. Then shortly thereafter, at the time that I was reporting to DLA, the Army, on the footprints of the spare parts horror story, said, “We need a general who knows something about procurement.” So the Army in that year selected three colonels to be brigadiers general, all whom had procurement experience. General R.H Thompson, then commander of Army Materiel Command, was the leading voice in the Army leadership to select three brigadiers for the assignments. The individuals selected were Mike Pepe, Harry Karagennes (who lives in Dallas now), and me. This was the 1984 brigadiers general promotion list. The Army assigned the three of us to procurement duties. It was at this point that I discovered rather an interesting dynamic. I realized for the first time that it's not that you know so much more as a procurement general, it's just where you are in the organizational structure that gives you a voice, and that voice allows you maybe to make some real changes. It certainly, in my case, gave me the opportunity to talk to the vice chief and the Army and the secretary of the Army, which I never would have been able to do before had it not been for the organizational structure of being a general officer assigned to the Pentagon as their procurement officer. To follow along then, I'm now the chief of staff of the Defense Logistics Agency. I am on the brigadiers’ list. The Congress passed the 1984 Deficit Reduction Act, (DEFRA, Public Law No. 98-369), and in it, the Navy, under John Lehman, the secretary of the Navy (1981 to 1987), had appointed the Navy’s competition advocate general, Rear Admiral Stuart Platt. (He's retired in California now). He was the first competition advocate when it was a brand new position. The concept was to streamline the procurement process and increase competition so that, in effect, the shareholder value was increased—shareholders being the taxpayers, etc. That worked very effectively because we had what we called the justification and approval process, J&A. It meant that any major procurement within the service—over $10 million—had to be approved by the competition advocate general. So when I was Army competition advocate general, I got a chance to look at every major procurement. My job was to force that cultural change, to say: “We're not going to go back sole source. We're going to look at the forces of competition that will drive this program to more efficiency.” Over a three-year period, the Army improved its competition of contracts from 32 percent competitive procurements to 62 percent, a significant change, considering the $17-billion-a-year procurement budget that they had at that point. The Army was very happy. The secretary of the Army was very happy. That was John Marsh. (John O. Marsh, Jr., was Army secretary from 1981 to 1989.) He's a great American. He knew what we were doing and was very interested, and he was a very adept politician. General John Wickham was the Army chief of staff at the time, a person whom I admired greatly. Wickham probably gave me more footlocker mentoring during that period of time that allowed me to focus on the things that I ought to be considering. When I was appointed the competition advocate general, I reported into the Pentagon and—this was kind of hefty, I guess—he invited me into the Army chief of staff's office. Wickham said to me, "Chuck, I don't know you. We haven't had the opportunity to work together before. I know you're going to need some help. So what I want you to do is go do your job and come back every forty-five days and see me. Tell me how it goes. While you're at it, go down and see the Army secretary and tell him how it goes, too." If you're a change agent in a major organization—and that's what the Army was asking me to be—you need top cover. It goes without saying that if you're a brigadier on the Army staff, and you've got all these two- and three- and four-stars around, you're not going to have much impact unless the head fellow says that this is where we want to go. Wickham, in the way he conducted his business as Army chief of staff, made it so obvious that this organizational change was a high priority. He embraced the concept of changing the Army procurement process, and he acknowledged that he did not know that procurement process. But I attribute the success that we had in Army competition advocacy in the mid-eighties to John Wickham establishing the foundation and to John Marsh, who was the Army secretary and was a very respected lawyer, knowing that you had to appeal to the Congress, to show them that we were being good stewards of the taxpayers’ money. When the rest of the Army found out that this brigadier general had the ear of the secretary and the chief of staff every forty-five days, when I would call, they would open their calendar or change their calendar, and I had direct access throughout the Army. I've done five different things in the commercial world since I left the Army. Generally the commercial companies hired me to go in and make change to make it better, and I equate that to change agency. So I sit down and we work this contract with my boss and I say to them, “You want me to do this. That means I'm going to have to break some eggs. The first time I break an egg and somebody comes to you and says, ‘Henry's a hair shirt and he's in my way,’ what's your response to that?” It's kind of a defining moment. I say, “If you stand behind it, then we'll make it work.” This approach seems to work very well. Three years after competition advocacy, I'm now promoted to major general. Lt. General Vince Russo (Lt. General Vincent M. Russo served as DLA director from 1986 to 1988.) is the current director of Defense Logistics Agency. Vince called me and he said, "Chuck, I'd like for you to be the deputy director for Acquisition Management, driving the contract management function of the agency." Now, this was a dream come true because I had started out as an Army major in this business, and I had served every rank up through colonel in the contract management world. That was DCAS. So in July 1988, I returned to DLA as a newly minted two-star to take over as what they called in those days DDAM (Deputy Director for Acquisition Management, which included the head of DCAS). Along with my other duties, I was also running what was called DCAS, Defense Contract Administration Services. DR. HÖFIG: And that's part of DLA? GENERAL HENRY: That's part of DLA. It's important that you know that I had two roles at this point. As the deputy director for Acquisition Management, I was charged with the procurement of all of DLA's acquisition, roughly 3,000 contracting officers and the commodities—basically, food, fuel, medical supplies, clothing, and consumables. Do you understand consumables? It would be lumber, for example, or it would be a repair part, a starter or something for a John Deere tractor or a Caterpillar tractor or things of that nature. Barbed wire is a good example. Some $13 billion a year went into the total DLA procurement process. Now, in addition to the above, I was also the deputy director for the Defense Contract Administration Services. Here I have to go back into a little history as I know it. Back in 1964, there were two Air Force colonels. One of those colonels is named Don Sowle. (Donald E. Sowle was the administrator of the Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) in the mid-eighties.) I do not know the name of the other, but Don Sowle is still in the Washington, D.C., area. He's in his eighties today, and he ended up his professional career as the director for the Office of Federal Procurement Policy. As an individual to tap into some knowledge, I would send you to him. This is hearsay but it’s validated. The services are all very parochial. I've spent a lot of my time since I've been in Washington watching how the Department of Defense operates. You have the Department of Defense and then you've got the Army, the Navy, the Air Force, the Marines. Sometimes it seems like they never talk to each other, and they don't want to talk to each other. (As an aside, the Goldwater-Nichols Defense Reorganization Act in the mid-eighties did a credible job of resolving a lot of that because it made the chairman of the Joint Chiefs of Staff the senior adviser to the president. Up to that time, each of the service secretaries had direct access to the president as a Cabinet member.) But back in the early sixties, this situation was characteristic. It got me really to thinking about how one goes about making change, and it was because of my assignment, which was to come later, of creating the Defense Contract Management Command, DCMC, which is now DCMA, as in “agency.” The services would all do things their own way. You had a federal acquisition regulation. You had each of the services writing their own implementing instructions to the federal acquisition regulations. You have on the Office of the Secretary of Defense staff a senior person who is in charge of defense procurement. That person today is Dee Lee, (Diedre R. Lee is director of Defense Procurement and Acquisition Policy (DPAP).) and Dee Lee is a marvelous pick for this because she's a very, very capable procurement official who has had extensive experience, both in DoD and with NASA. When I was growing up in this business, DLA-DCAS was considered the equivalent of a fourth service. The point that I'm making is that these two Air Force colonels back in the early sixties said, “You know something? With the idea of centralizing the contract management where performance of the item is at the contractor facility, it is then imperative that we have one face to industry. Therefore we need to consolidate contract management into one function.” Now, I learned that in organizational dynamics, there's always that but-for comment. I often say to the program managers when I get invited back to speak at the Defense Acquisition University at Fort Belvoir that once a major decision is going through and 95 percent of it is complete, be very careful of signing away that other 5 percent—because that's what they did in 1964. When the concept of the creation of the Defense Contract Administration Service came in, the services said, “This is a great idea for the common items, but you know, we've got some crown jewels, and we need to be absolutely certain that we manage them from cradle to grave.” That means for the Navy it was the shipyards, and for the Air Force, they were talking about the B-1 bomber and the C-17 aircraft. The Army had five crown jewels: two tank plants and three helicopter plants. The Navy had eleven NAVPROs (Navy plant representative offices), as they called them, and generally this was in aviation. Whoever the decision-maker was at that point in 1964 bought into that argument. Now, fast-forward to 1990, and I'm two years on the job back at DLA. I am the DCAS commander, and I've got $400 billion worth of contract obligation that's out in the contractor facility under this excepted concept of the common items. Now, no one knew this until later on, but each of the services combined had “excepted” almost $400 billion. Under this 1964 ruling that allowed the creation of DCAS, with the services keeping what they had aside, the Air Force had excepted twenty-six times—they had twenty-six AFPROs—and the organization was large enough that they put a two-star general in charge of it. The Navy had excepted eleven times, and they had their organization dispense it within the Navy. The Army excepted five times. No one knew the scope of these exceptions. It was only when I got the directive to form the Defense Contract Management Command and I pulled it all together that I was able to say that out of $785 billion worth of business, approximately $400 billion was excepted from the earlier decisions. Incidentally, during this period we were authorizing for payment to the defense industry at a rate of $20 million an hour or almost $200 million a day. That was a fantastic amount of money involved in the process. The point is that if the decision-maker had made in 1964 the same decision that was made in 1990, you would have had three decades of savings. We were able to document an auditable $500 million in first-year savings during the first year of consolidation. The answer on the procuring contracting officer side is: “Of course, always.” But the evidence that I would see led me to believe that, if anything, it was only superficially addressed. As an example, in the mid-eighties, the Army wanted a two-and-a-half-ton truck. They had some two-and-a-half-ton truck manufacturers, but the army awarded a company called BMY.
I don't want to be overly critical on this point. BMY’s manufacturing facility was in Ohio. They formed this manufacturing facility, and it became very obvious in their performance of that contract that they had some real problems. I visited with the company’s chief executive, and we concluded the company’s problems were substantial; my only recourse was to put a large number of my government people into the effort to devise a suitable plan of action. We went through everything that they had, every procedure. We wrote a detailed process in a book and gave it to the senior executive. To their credit, they followed it. Now, following the book, they were able to ramp up and complete the contract. The point is that I spent—in direct and indirect—over a quarter of a million dollars just to provide that free consulting service to a contractor who had just won a contract and who was (at the time) operating in a major direction of failure. In the end with the government’s help the contractor did produce a very good two-and-a-half-ton truck. Quite frankly, I can say the same thing about C-17 aircraft. Every major program that DoD has procured has experienced highs and very lows prior to completing the program. There is, indeed, a learning curve. My question to the acquisition community is: If that is the case, how do we take the knowledge of this historical data, and how do we equate that into our decision process in the award of future contracts? Now, did the Army learn its lesson? Not on your life. A few years later, the Army needed a five-ton truck. This time, BMY (now a very competent contractor) did not win the five-ton truck contract. They had gone through the learning process. But it was on a competitive procurement, and an outfit called Stewart & Stevenson out of Texas won that contract. They had never built a five-ton truck. Now, it was interesting that my former executive officer, who had worked with me through the two-and-a-half-ton-truck days, was now, under centralized command select, picked as the lieutenant colonel to be in charge of the Stewart & Stevenson government office on the five-ton truck program. I recall telling him, "Ron, look, we've been through this before. You're going to have the same problems that they had up at BMY. Go get the book that we developed for BMY, and you can use it as a guide for what you're doing.” Within a few weeks, he called me back and he said, "My gosh, you're absolutely right. We've got the same problems.” So we—the Army and its contractor—went through the same process again. The issue is not so much that it takes a contractor the time to ramp up. It always does that. It's that when you contemplate the award of the contract, do you always include this time and the process of learning how to build a new item? The procuring side will always say, “Absolutely.” From an administration side, I really question that answer because the evidence just does not lead me to believe that they did that. What I will say is that by '89, Mr. Dick Cheney was now picked as Defense secretary. (Dick Cheney served as secretary of Defense from 1989 to 1993.) Mr. Don Atwood had been chosen from the vice-chairmanship of General Motors to be the deputy secretary of Defense. (Donald J. Atwood, Jr., served as deputy secretary of Defense from 1989 to 1993.) Generally, the secretary is the outside guy and the deputy secretary is the inside guy, running the day-to-day operations. So procurement and the control of money and where the money is going, all of that is on the deputy secretary's plate. Certainly, the secretary's got the overall responsibility for whatever goes on. But as you define the duties on it, the public face is the secretary and he's at the Cabinet meeting dealing with the president. The guy that's running the Pentagon is the deputy secretary. I went and met Mr. Atwood. He was extremely competent, and a very nice individual. We met in a place very much like the place we are meeting today. If you've ever had the opportunity to see the deputy secretary's office in the Pentagon, you know that you've got a whole row of flags and you've got the trappings of office. It could be a little intimidating when you're in there, working and talking. Mr. Atwood couldn't use the office because one never presumes confirmation in Washington, D.C. So we were, in fact, in a broom closet in the Pentagon. We were just one-on-one, talking about contract management. What I surmised happened at the time when he got selected was that guys who were at the vice-chairman level of major companies, particularly Ed Hood, the vice-chairman of General Electric at the time, would say something to him like, “Hey, Don, you know something? We've got four sets of rules, procedures, different color uniforms, and all kinds of forms and everything. Isn't there a way for us to streamline this to get kind of one face back to the industry on it?” That was the kind of drift. Certainly that was the focus of the discussion that I had with Mr. Atwood. We had a two-hour discussion on the future of contract management. He asked me at the end of that conversation, "Chuck, could you reach out and grab all Army, Navy, Air Force, and DoD contract management, wherever you find it, and could you bring it together into one organization? Could you streamline it and make it more efficient?" You know, in the Army, you’re taught that if your boss has something like that, the only appropriate response is: Yes, sir, I can do it. So I said, "Yes, sir, I can do that." Truth of the matter is, I had no idea what I was signing up to do at that point. What it turned out to be was a highlight of my military career and one of the most important movements of organizational cultural change that occurred in Department of Defense at the time. True to form, Mr. Atwood said to me, "I'm ready to do this. I just need to get confirmed.” I thought, okay, this is another typical Washington bureaucratic process that's going to go on. Well, I’ve got to tell you, once he got confirmed, the very first thing we did was to get to work on these reforms. We set the command up in February of 1990, and then in July of 1990, we brought in all the PROs (plant representative offices). Fifty-five of them transferred one day into the Defense Contract Management Command. Lt. General Chuck McCausland was actually the guy who was programmed to head the effort, and I was the guy he selected to do the work. There was one very significant meeting, and it is really indicative of the way the military services do things. The services’ initial reaction is: “If we didn't think of it, we don't want to do it. And who is this DoD bunch anyhow to start telling us?” One must put this thought in perspective. We were not too far removed from Goldwater-Nichols at the time. DoD was kind of like a relative that you have to put up with but that you really don't want to do anything. They don't have the real authority, and the money kind of comes in and Congress passes money into Army programs, Navy programs, and Air Force programs. The guys at DoD—their job is only to collect it and then just dispense it, no questions asked along the line. That's a little bit overstated, but it was kind of the way of during business back then. So Mr. Atwood has this meeting, and I'm the junior guy at the meeting as a two-star. Sitting at the table is my boss, Lt. General Chuck McCausland. This meeting is designed to talk about the formation of a new agency that would be a defense contract management agency. I recall specifically the Navy sent over their under secretary of the Navy, a fellow by the name of Dan Howard. I can just assume that the Navy had gone in and found everything that was wrong with this concept. There was nothing that they liked about it. I can only presume that the Air Force had done the same thing. We had about twenty people in the room. Mr. Atwood was running the meeting. I'm sitting in one of the chairs that are at the wall, and you have the 800-pound gorillas (the seniors) around the table. I'm sitting there watching this meeting progress, with nothing to do, other than just keep my mouth shut and observe. It was all kind of funny back then. Howard got up and he was into the whole litany of how if you do this and if DLA is involved with it at all, it will be a total failure, and bad things are going to happen. According to Howard, nothing good will ever come of this. Said Howard, “We don't think that we want to do this.” You could just see the Air Force fellow ready to jump in and give a big “Me, too.” That was the climate at this meeting. The meeting was occurring around 6 o'clock in the evening. Mr. Atwood never raised his voice, and I always marveled as to how cool he was in his attitude. I wish I could have captured that moment. He reached over and he grabbed Mr. Howard's coattail and he pulls it like this. He said, "Dan, the president of the United States wants to do this. Your job is to get behind it or resign.” There was that pregnant pause that goes on in a room—he knew exactly what he was doing, of course—and this stopped Howard cold. The Air Force representative is now under defilade—not to be heard. Mr. Atwood gets up and he says, "Ladies and gentlemen, I think we've just had a decision. We're going to do this.” With that, he walked out. DLA was given the job of running the study. I emphasize running the study and not controlling the events because if you look at it, the command was formed under DLA. The concept from the very beginning was to create a new agency, a new command, and to have that command with $780 million, as we later discovered, and 26,000 people, 122 locations around the world, authorizing $20 million an hour in payment to the contracting community. That was a significant focus to make in a new defense agency. Once the decision was made by Mr. Atwood, the services quickly fell in line. It must be emphasized that the whole concept was to create a new agency, where each service had representation. As the guy with operational control, I asked the services to send us their best and finest at the lieutenant colonel, commander, captain, colonel, civilian GS-13 and ‑14 level. The guidance that I gave the group was: We're going to create and build the best contract management organization in the world, and we're going to do it without regards to service parochialism. We're going to take best-value practices wherever we find them and we're going to incorporate them. I want you guys to figure out a process whereby I can identify and choose the best practice. Then along the way we will adopt the best practice. Surprisingly enough, that concept worked. We put about 17,000 hours collectively into building this large new organization, and when I got the job to create the command we had an excellent “blueprint” to follow. Sean O'Keefe, who is now the director of NASA— DR. HÖFIG: He was DoD comptroller then, right? GENERAL HENRY: He was comptroller. That's correct. Sean came to see me and he said, "How did you do this?" I said, "Sir, with all due respect to you, you weren't at the table when I got my orders. If you had been at the table, you would have given me the old comptroller shuffle, and you would have said, ‘Hey, he can save x-number of dollars, and what we can do is pull that money out, and detriment his budget right now. Then what you would’ve left me to be is a GS-5 just trying to implement a plan that was devoid of risk and decision." We were very proud of the fact that we documented in the first year $500 million dollars in hard dollar savings. DR. HÖFIG: Was that through eliminating the redundancies? GENERAL HENRY: Yes. Streamlining, avoiding duplication, and eliminating redundancies. ( More on this process of streamlining DLA and General Henry’s role in it appears on the DLA website at: http://www.dla.mil/history/halloffame/henry.htm. A copy of the web information is in the interviewer’s files. ) It was all hard-core money. No cost avoidance, no funny stuff. I remember telling my comptroller staff, "You know, if we fail, everybody's going to know about it. If we have success, everybody's going to want to pick at it. What I want you to do is to make absolutely sure that every dollar is a hard dollar. I want you to be able to defend with data every savings claim." The interesting thing about how it was formed as a command is, again, how sometimes the best plan can be developed and then you lose on the execution. The older I get, the more I realize that those are two separate, distinct functions accruing with each change operation. Planning is one, execution is the other. Success is when one can pull them both together. It's almost in my mind that execution is equally important to planning. I believe most plans fail for lack of execution, rather than lack of planning. I could also make the case that whoever plans should not execute. It’s just like the inventor. It is my experience that the inventor of a process is the worst guy in the world to take it to market. He always wants to tinker with it longer and really does not understand the dynamics of the commercial marketplace. We had really worked day and night to put together the concept. There were nine regions in contract management in DLA and one Air Force organization equally as large. The question of the day was: How many should there be? The answer at that time came down to five; now it's down to two. We brought in the entire Air Force, if you count them as one. So that was ten regions that we had to reduce to five. I learned an awful lot about human dynamics during this particular period. Every one of the deputies in the DLA organization was a civilian, and they were at the GS-15 level. All but one was eligible for retirement. I said to them we will not have ten regions at the end of this organizational process. (We kept the number very secret; we didn't know the number until the very last. It was kind of like a presidential candidate picking his vice president.) I found that each of those GS-15s would say to me publicly, “We understand what you need to do, and any decision you make will be okay with us.” I said to each of them, "Don't worry. I will make sure that I find you a job. You will have a job at your level.” Each one of them would say, “Yeah, we buy this,” but then at the end of the day, I would get notes from them at home asking: "Are you really going to take my job?" I started to think about Maslow’s hierarchy of needs. Organizationally, in 1990, we kind of pooh-poohed his teachings, but I said, "Good gracious, if the people who are so close to me are so concerned about their jobs, even knowing exactly what we were doing as we are going through this major change organizationally, what does the mid-level person out there, who doesn't have that information, think of the process and his or her prospects? That was going through my mind. What are they responding to? I was blessed to have two individuals on the staff that assisted immeasurably in some of the things that we did. The key was seeing what you do right and what you do wrong and trying not to make real bad decisions because you're really affecting the lives of a lot of people in contract management—26,000 people at this time. At the same time, I had the responsibility to the secretary of Defense not to have this major dip in productivity. The fact of the matter, it's the other way. I'm supposed to start that learning curve and go up very, very quickly. Al Ressler, who was DLA’s personnel director, made a recommendation to me. He said, "In a 50,000-person agency"—and that's what DLA was at that day—"twenty people die or resign or otherwise absent themselves every day.” That's the normal attrition. He said, "If you pick where you want to be in numbers at the end of the year and you put a total freeze in and allow no exceptions"—such as what happened in previous reductions—"you could be down 5,000 people and not have to fire a single person." I agreed. Recognize now that we had ten regions. I said to the subordinate commanders, "Okay, guys. Here's the deal. I'm the only one that can authorize bringing in a secretary from outside the agency. Anybody off the street, you’ve got to come to me and do a mother-may-I, and I am not prone to approve. However, you commanders may have a list of excess and vacancies in the command, and I will authorize you to pick anyone employed by the command now and offer them a job. Also, I will pay the travel costs.” (Ressler told me, "It's cheaper for you to pay the cost of moving people than it is to fire, rehire, and retrain.”) I implemented the concept exactly. I was the only person to authorize an exception to the policy. The command did not like it, but it worked, and at the end of the first year we had taken 5,000 people off the rolls. In the end, we only fired or caused adverse action to fifteen people. This was a truly amazing accomplishment. I reached out in the organization and pulled about five to seven people in who were excellent thinkers to help me think through this organizational change process. Out of this group—and I do not know the author—came the concept of transitional management office. By this time, we had indicated we were reducing from ten regions to five, and we had gone through the environmental studies to determine which of those five offices were going to be kept. When this group approached me, they said, “You’ve got 26,000 people. You know you're going to start the process to take it down. We're going to consolidate. We're going to take the duplication out, and that's going to form different jobs. You still have budget authority for the organization based on ten regions. Build the organization in two groups, one with a permanent and then the other with excess personnel. We will call the second group a ‘transitional management office.’ The second is a mirror image of the permanent organization chart. One is permanent; one's temporary.” The decision to establish dual organizations was probably one of the best decisions I made, as I look back on it. It involved what I call Sunday-school values. It was absolutely the correct decision. Any other decision would have created tremendous problems for me and the organization we were creating. My decision was wherever the person comes from—Army, Navy, Air Force, DLA— the personnel organization would create an order of merit based on this person's capabilities and where they've been without respect to gender, age, or which service them came from. The best person will get the best job. I said, “I want you to write it down, and then I want you to assign to the permanent chart those people who top the merit lists for each job. Those who are left over, I want you to put them into the temporary or transitional management office." I had the privilege of being able to make decisions more or less by fiat. Another way to say it is that I was not bothered by a committee that I had to sell. This worked exceedingly well because at the end of the day, it allowed me to go to the organization and say, “Here's the organization. Here's what we have: two identical organizational charts. You are now placed into this job. You have been totally treated fairly because it's merit-based. Those of you who are on the permanent chart, go to work. You have no other issues.” It allowed me, in effect, to divide a 26,000-person agency almost from the first sixty days. I found out that the most important questions to the individual in an organization are “what is this going to do to me, and how is my job going to be affected, and what's going to happen to me?” It is essential that these issues be addressed as quickly as possible for in the meantime, the organization has to deliver product out the back door, and I've got to be worrying about whether or not this contractor is meeting cost and pricing data, truth-in-negotiation rules, and all these other things that are incumbent upon contract managers. Let me say a word about General McCausland. McCausland is the one senior guy I've ever met who is totally devoid of real personal ego. He could really view things from the standpoint of: What does this do to the organization? Does this make sense for the country? And he could separate Chuck McCausland's empire and what it did for him into what is good for the organization. It is a measure that I totally respect. I've often wondered: How I would have handled the process? And would I have made the same decision that he made? But I can tell you that it was so easy on his part. What was right was right; what was wrong was wrong, and this is the way we're going to go. There was no equivocation. General McCausland knew that this was going to detriment the agency that he ran by as much as 50 percent, but it made no difference to him. He was even telling me, "You know, the thing that you probably really ought to do is go over to Andrews Air Force Base, take over some existing office space over there, and put the new agency there.” He truly could look at this globally, and it was a very interesting and very nice working relationship that I had with him. The time came for final approval of the plan that the services and DLA had developed. The concept was to organize into a new Defense Agency. General McCausland and I went to give the final decision brief to Under Secretary of Defense for Acquisition John Betti, who was the No. 3 guy working for Don Atwood. (Remember, I got my directive from Atwood, but Betti was the guy who was implementing the process). It occurred that there was one individual on the Office of the Secretary of Defense staff who realized he was going to lose 50 percent of the people and organizations that he was now responsible for.” So that person goes in and says to John Betti, "You know, Henry and McCausland work so well together that you could form this function under DLA as a command and you would not have to create a new agency." This comment was made thirty minutes prior to McCausland’s and my meeting with Betti. When we arrived for the meeting, we laid out what the agency was going to look like in this briefing. The only question that Secretary Betti had was: "Can you form this under DLA as a command?" McCausland very quickly said, "Mr. Secretary, yes, we can, but that's not the answer. The answer is a new agency. That's where you need to be driving this whole thing.” But Betti at this point had already made up his mind, and he said, "I want you to form it under DLA.” He did not have to form a new agency. I think that was what was driving him. He made the decision to form the command. (Ten years later his successor reversed the decision and created an agency.) Now, that decision sent a message to the acquisition community and the services because I had been out saying, “We're not forming a command; we are forming a new agency. This new agency will take the best of everything and; we will have a new defense agency. It will not be a hostile takeover by the Defense Logistics Agency.” But at the end of the day, that's what it was perceived to be. The Air Force particularly—and I can't say that I blame them—was very upset because they had thought that OSD had led them on through a series of decision points. As it turned out, the relationship that we had built during this negotiation in the staffing stage for the new agency left us with a repertoire of goodwill so that we were able to go to the various services. The decision had already been made by that time. We formed as a command. The flags were changed. My greatest admiration was for the Air Force. The Air Force will fight you the hardest on any change. Their concept is: We don't like this idea, but if it's going to happen, let us be the executive agent and we'll run it for everybody else. That's the Air Force's attitude. Once the Air Force realized that there was going to be a major change—I watched the way they did this and it could not have been executed better—they took care of every one of their people. At the end of the day, they took the flag, retired it, opened a new flag, and handed it to me. I think we made it a little bit easier for them because the decision that I had made was that their senior people would have senior positions in the new command. We integrated them into this new organization where they should be. I literally brought senior Air Force guys and Navy guys into the organization. That, looking back, was a watershed decision on my part because what it did, from the operational standpoint, was it made this a successful operation. Not that everything was rosy. We would soon be working through some major, major problems, but this personnel issue was not one of them. Surprisingly enough, that worked. What happened was that people said, “Okay, he's leveled with me, and I know that there's no future here.” So people started talking to the Department of Education, the Department of Agriculture, and everything else, and they started finding jobs. We would keep this list of people who were in the excess category. As I was talking about, I had one individual who was in Dallas and the job was in Turkey. He accepted the offer, and I sent him to Turkey. The people involved just loved the concept. I then got to the point that I said I don't want to put a RIF out if I don't have to. We ended up, I think, having to RIF fifteen people. Now that taught me something else. Twenty-six thousand people were impacted on this whole thing. You're trying to be upfront, leveling with everybody on what's going on within this defense acquisition process, but there are fifteen people saying you're never going to pull this off. This is not going to happen. I'm not buying what you're doing and for whatever reason it is, we finally had to get down to the point that fifteen people were terminated because they didn't follow the others. I look at it from the standpoint of a major success because the people who were receiving this positively said, “I need to take my career in hand and make the decision for me and my family.” This was an improvement over the old way of letting the organization dictate what was going to happen. The second individual who had a major impact on the success of the organization was Larry Wilson. Larry Wilson was DLA’s public affairs director. He is now an SES in the agency. Larry was one of these outside-the-box thinkers, and he was saying to me, "The whole point about this whole thing is going to be your credibility.” I agreed with him. I had served as a major, living in Atlanta. I came back as a major general, and a lady—I think she was a GS-5—came up to me and she said, "You know something? We knew you when you were a major, and we knew we could trust you. We did not know we could trust you as a general. But we listened to what you say in Los Angeles, and what you say in Los Angeles is the same thing that you're saying to us in Atlanta.” That was a defining moment for me because I thought, “Ah, consistency is the answer.” So it became a real issue for me to be consistent about how we were driving this whole process. Wilson said we ought to create what he called a "bugle." He would say, “I'm sitting in the inner sanctum. These are the decisions that were made today.” And decisions were being made very quickly: What are we going to name this new organization? Defense Plant Representative Office, call it DPRO. I remember that we were going that fast with major decisions. There was a multitude of decisions that we were just checking off on to get the organization up and to get it under one book, as we later called it. Wilson said, "I know what I cannot divulge, but let me divulge the decisions that have been made”—the new name's going to be the DCMA, DPRO, etc. He would write it up and put it on the fax machine to the whole command each morning. Of course, the guys in the Pentagon would say, “Wait a minute. Henry, you mean to tell me you've got your public affairs guy sitting in on these meetings that are all highly confidential, and then he comes out and he sends a fax basically around the world?” To which I would answer, “Yes, and it's working,” because it provided instant credibility that we were leveling with the work force. What I later understood and came to greatly respect is that I could tell employees bad news—your job's been abolished, I'm going to offer you this job—and they would accept the decision. What the employee cannot stand is the fact that I'm behind the door talking about their job and nothing ever comes out about the process. So when they would see the movement of information coming out, then the employee was more amenable to help. They said, “I don't care what they come up with. If it is unacceptable to me, I'm going to take my career in my own hands.” They were helping us and that worked out exceptionally well. I credit public affairs and Larry Wilson with being able to establish legitimacy and confidence in our management throughout the command. Now in the meantime, we've got major issues going on in defense contract administration with major programs. I received a call one day from my boss, the Under Secretary of Defense Don Yockey. (Donald J. Yockey was under secretary of Defense (Acquisition) from 1991 to 1993. He had been acting under secretary for the first half of 1991; he also served as principal deputy under secretary for Acquisition in 1990.) He was the successor to Betti. (Unfortunately, Don Yockey is now deceased). Yockey was a very, very competent administrator who knew contract management. He was a retired Air Force colonel, and he took great delight in our first conversation by calling me with some specific instructions in a technical area of contract management. I must admit, I thought at first that I’ve got this new politician calling me, and I'm going to have to spoon-feed him a little knowledge about contract management. But I'm listening to Yockey, and he is making a lot of sense. I said, "Sir, tell me again what your background is?" And he said, "Yockey, Under Secretary of Defense and Air Force colonel, retired, contract management." So I knew this guy’s resume. A tough guy! Once he ever came to a decision, I can never recall me getting him to change his mind. Knowing that about him, I then spent a lot of time making sure that he did not arrive at the decision before I could state my case to him. Even then I am not sure I won very many positions. But I truly respected the gentleman, and we were very good friends by the time I retired from the Army in 1993. Yockey said to me one day, "Why is it that I have to read about bad news in the newspaper? Why don't you have a system that tells me what is going on?" That was in our earlier stages. To remedy the problem, we set up what we call “Bell-Ringer”(a term given to a significant happening). The services did not like this approach. It did, however, cut the time down in reporting. Within twenty-four hours, an issue of importance would be reported to the under secretary. I gave the program managers a choice: They could take it to the under secretary personally or I would do it on my own. With some bumps in the road, the system started working and issues were being reported up the chain in a more expedited form. The only other contract management in Department of Defense was the issue of shipbuilding. Allow me a moment on shipbuilding because that's important. My direction was to take over nearly all contract management, wherever I may find it. The Navy, of course, was absolutely beside itself. The thought that you'd have a green-suiter (an Army general) who would be dealing with Navy ships and the B-1 bomber— As it turns out now, looking back on it, it was not a big issue. But tied to that was a separate study about what to do about shipyards. Shipyards, of course, had been in the Navy for 230 years. I sent a team out and the question was: Could we do a better job than the Navy in managing the shipyards? I always made sure that we carried equal numbers of officers of all services through that. I think that was very important. The last thing you want is to find yourself shifting and have a predominance of your service over the others simply because you're a green-suiter. I believe that one has to rise beyond the parochialism of the service, particularly when you're doing a job such as acquisitions. I came to the conclusion that I could not do a better job than the Navy on the shipyards. It made the Navy exceedingly happy, obviously. Quite frankly, to me, it wasn't even a close call. All we would have done would have been to replace people who were doing the same functions for things that we were doing. Now, the Air Force had a large contingency overseas of contract management. Just to give you some example of the decisions that had been made, twenty-five years earlier in DCAS, one of my mentors, a fellow by the name of Bill Gordon, who was the director of Contract Management and a major power player in contract management during the day—Bill Gordon was almost a father figure to me—made the decision that we would do no contract administration on military installations and we would do no contract administration outside the continental United States. There were reasons for that. If you look at the budget, the budget drives everything. When the DCAS was formed, Gordon was really at the wholesale level, taking the common items. All of the contract administration was done within the continental United States. The idea of repair and overhaul was foreign to DCAS in those days. You just didn't do it. Now, with the creation of the Defense Contract Management Command, we were consolidating all elements into one. I've been told probably one of the most important decisions that I made was the creation of the international contract management organization. DR. HÖFIG: So you pulled that element back into the command? GENERAL HENRY: I did. We went to the Air Force and—I forget the acronym that the Air Force had—they had an organization that performed contract management outside the continental United States. We used that as the major framework for building the Defense Contract Management Command International. At the time, I asked, "How much in contract value is presently being performed out there?" Answer: $15 billion. Fifteen billion dollars outside the continental United States, to me, offered a considerable risk that we could do things wrong. As it turned out, I think that what they've done now is that they've expanded. You'll find them in Afghanistan. You'll find them in Iraq doing contract management procedures. The point about me relating this to you is that I had considerable problems with my mentor, Bill Gordon, because I was changing a decision that he had made years ago. At this point, he wasn't ready to acknowledge it was a new day. His point always was, "Hey, boss, I don't want anybody to lay a glove on you.” I’d say, "Bill, that's not the issue. The issue is that I've got a new directive, and we've got to move in a new direction." The other one was on contract military installations. The Air Force always pushes the envelope on issues. In the early days, the Air Force called and said, “What we want you to do is to supervise the hanging drapes in the officer's club.” “Well, no,” said Gordon, “we're not going to do that. That's not our function.” Fast-forward twenty-five years. The Air Force is now bringing airplanes on military installations, stripping them all the way down, repainting them, reworking them, and that is a major function. It’s called repair and overhaul. But the biggest problem I had was not with the other services. Once Mr. Atwood made that decision to form the command and once the services understood that decision, they turned supported it. There people who were assigned to my organization reported in and said, “I'm yours. Where do you want me to go?” You could say this is a new day, and they were receptive to new procedures and working for the new command. The biggest problem was with my old DCAS organization. I remember bringing all former DCAS personnel into a room and saying, "DCAS is dead, guys. You've got to understand that.” There were various manifestations of change. The Air Force was closing twenty-seven organizations and moving that organization to Washington; the Navy was moving its eleven to Washington. But the DCAS didn't change. They simply changed the name over the door. They changed the flag, but the same people showed up at the same desk, using the same phone every day. It was almost like they had fought another bureaucratic political war and had won. This attitude was totally against our new organizational concept. I was charged to develop a new command—a new command linked to a new thought—and the negotiations that I had made with the services were all based on the fact that we together are going to build a new contract management operation. Back to the Bell-Ringer. When Don Yockey said, "I need you to set up this Bell-ringer concept"—He didn't say that. He said, "Get me a process that advises me before I read about it in the paper.” So I went to the program managers, and I said, "Alright, guys. This is going to"—we said this in different terms; I’m cleaning it up a little bit now for you—"this is going to create a little stress for you, but I tell you what. If there's a major problem that goes on in the organization, I want to be notified of it within the day. I will give you twenty-four hours to report it into the under secretary's office, but you do not have an option to hold it. I will report it to him within twenty-five hours.” No organization wants to let it go outside that they've got a problem because they want to work it out without everyone seeing the trouble. [So the process continues, kind of in the dark, until the wheels come off.] Well, one day the wings fell off of the C-17—literally. And that was a defining moment for all of us, obviously. When you're a program manager on the C-17, you can see your whole career flashing before your eyes when you're told that the wings have just fallen off of your airplane. Then again you've got this new organization that's running contract management in the plant, and they don't work for you. They work for some guy in Washington (Henry) who works for the under secretary of Defense. You work as a program manager for the Air Force assistant secretary for RDA (Research, Development, and Acquisition). That builds in some instant conflicts. We wanted to make sure that when we made decisions or when we made a representation, we were treating the program managers with the same deference that we would want to be treated. So I said, "Here's what you've got. If something bad happens, my people have no option. They have no discretionary authority. The issue must be sent to me.” I set up my deputy, Robert Scott, as the individual who would receive the notification. Then the deputy had the decision of whether he would take it to me, and I had the decision whether or not it went to the under secretary. Now, the sidebar to the decision that we had with the program manager was that if you want to be the one that tells the under secretary, we'll go with you and be passive. But your option is not whether to tell him. He will be told within a certain period of time. Needless to say, that was a significant consternation throughout the process, but it did work. DR. HÖFIG: Was the Bell-Ringer system in place for the C-17 or was that in place because of the C-17? GENERAL HENRY: Probably a combination. I don't remember the exact timeline on when that happened, but I can say that it was similarly situated things that caused that. What was happening is that with the under secretary—and recognize that that was a relatively new job, too, as a result of Goldwater-Nichols—now you had within the Department of Defense one individual who was responsible for all of the acquisition within the department. Needless to say, he was fielding phone calls from reporters on a daily basis, and if they're telling him about major happenings going on in however many facilities that are out there—that’s $784 million in contracts, so something's going on all the time. An interesting tidbit is the selection of the Air Force One. One of the highlights of my career was the fact that we delivered Air Force One, this present Air Force One, to President George Bush (41). That was when they took over the old 707s and put 747s in. That was not a cupcake. The big issue was the paint and the unpainted aircraft skin. What was not painted must be polished. There were issues of excepting to the quality standards. So you've got quality assurance people out there who are asking for exact details to the specification, etc. If you're painting it and it doesn't work and you paint it again, you've added more weight. You're now changing the characteristic. It just went on and on and on and on from that. But those were everyday occurrences. In the end, we accepted the 747s from Boeing and delivered them to the Air Force for the president’s use. Speaking of the C-17 and that issue, McDonnell-Douglas had the C-17 operation, and I am sure that working the issue caused Mr. McDonnell some sleepless nights. It all came together in the end for the C-17, and it is a marvelous airplane today. That realization has also taught me some important lessons; with every major program our acquisition program has had there have been major, major elements of problems. It's almost endemic to the process. In McDonnell's case, I was sent to see Mr. McDonnell because the feeling in the Pentagon was that McDonnell-Douglas was not sufficiently progressing on this contract. My job was to go talk to Mr. McDonnell in a Dutch-uncle manner. He had five companies working for him, and I remember that we assembled those five companies’ presidents with Mr. McDonnell in one conference room one day. I was the messenger who was instructed to tell him that we were not happy with his performance. He later stated that that was a defining moment for him and the company, needless to say. If you look at a McDonnell-Douglas—these are not actual numbers I'm giving you, but just to give you some feel—if you're dealing with a Northrop, a McDonnell-Douglas, a Lockheed, you're probably progressing at a rate of $25 million a month in money over multiple contracts. You've always got, on the part of the contracting officer, the absolute duty to ensure that he is paying money for things that the United States gets as value to the contract (what was ordered). You've got to constantly be aware of the offer of the performance, the acceptance of the performance, and get it back. It works both ways because this flow of money is what keeps the company alive. Sans this, they've got to go borrow money. So progress payments are really a form of financing the project. It's like a banker, even though it's integrated into the contract itself. Now when you're talking about base year plus four years of options, and you're talking about a new delivery system or new weapon system, then you've got to go through the issues, such as the Crusader mobile howitzer last year, which was cancelled. I was part of the A-12 that was cancelled. Quite frankly, the reason the A‑12 was cancelled was because there was a big failure on the part of management—that includes all of the elements—to really pay attention to what the contractor was doing and the progress of that contract. I recall that the A-12 was a black program (secret). It was behind the door. You had a lot of operations going on out here, and you had that operation going on behind that door. That caused me to set up a separate organization to deal with the black-box world, which I would imagine is still in place today. I could not be read in on every one of the programs. I had to have somebody that I could look to, to say I want to make absolutely sure that I don't have an open sucking chest wound that's out here on one of these programs. Your job is to be read in on it. So I put a colonel, an O6, in charge of the program and he would be looking at this. Now, what I later found out in the case of the A-12, I had an individual who had a distinguished career. Unfortunately, he just didn't pay attention to what was going on behind that door, and that caused considerable consternation later on, and you know the result of that. Secretary of Defense Cheney cancelled the program. When you cancel the program, it is a significant emotional event, particularly to the contractor community. You have termination costs and things of that nature, but that's the reason we're in this business of management. In the early days of the C-17, McDonnell-Douglas did not have sufficient control over their vendors, their subsequent parts for the development. You know, the way you build airplanes is you start with one and you build it up and it starts looking like an airplane. Then behind it, you start building another airplane and then another one and so on down the line. What we found out that they were doing is that at certain phase points and they would need certain items. They would take this plane No. 1 through the phase and get the approval of it. Then they would go in and take a part off of No. 1 and take it back on to No. 2 so they could take it through the next phase. By the time you started trying to figure out where these parts went, it was a significant issue. The hydraulics is what caused the wings to fall off the C-17, if I recall. They had it up like that, and the hydraulics failed and that put the load on the wings. It probably sounds worse than it really was at the time. At the time, it was a very significant issue. It all points out the seriousness and the importance, I think, of contract management and how we've evolved. A lot of people think that once you award the contract, you sit back, and it's going to be okay and you're going to get exactly what you want. Truth of the matter is, in my experience, a significant number of contracts do not deliver on time. We in the government do various things about counting and reporting in the area of contract delivery performance. Chuck Henry would say to you that failure to deliver to the terms and conditions of the original contract is around 30 percent. There will be a number of people who disagree with me, but I think that if you look at it from the standpoint of the date of the original contract and look at how many deliver, one can make the case that 30 percent of all contracts are impacted. DR. HÖFIG: Let me ask you a quick question. With the A-12 or the C-17, were these projects that were underway before there was a DCMC? Or did you inherit a bunch of things that were in process when the command started. How did that work? GENERAL HENRY: The organization that was there in the case of the A-12 was Navy and the one with the C-17 was Air Force. Those people who reported to the Navy and Air Force subsequently reported to me at the close of one day. One was an Air Force colonel who was in the McDonnell-Douglas plant, named Ken Tollison. I had not previously met Tollison. (He's retired out in California and if you want to really get detailed information about C-17, he is the definitive authority.) Now that the MD plant is under my new responsibility, I'm reading an article in the MD house publication, and it features Tollison giving the entire MD organization heck over their production practices. I'm thinking that this guy's got some kind of death wish. I mean, he was saying real bad things about McDonnell-Douglas, and I'm thinking, “Whoa, we’ve got a real problem on the C‑17, and chances are I've got a real problem with this colonel.” So I get on the plane with the idea that I've got a rogue colonel out here and I'm not really sure what I'm expecting when I get there. I get on the ground and I remember saying, “I read your article,” and I was expecting him to be a little defensive about it. Tollison lead me through his evidence and within about two hours, he absolutely had convinced me that he was right. As I look back—and recognize I had 800 military officers working for me at any one time—Ken Tollison would have to be, in my opinion, listed as one of the most outstanding colonels that I ever had working for me, certainly the most courageous. DR. HÖFIG: And in this article, he was detailing problems with the C-17? Basically, he's telling them what the problem is? GENERAL HENRY: He was absolutely peeling the skin off of McDonnell. I mean, this was a searing indictment. Now, why McDonnell-Douglas wasn't coming down and saying, “If you're right, we've got to change this; if you're wrong, we've got some problems”— It didn't happen. But that was manifest, I think, of the way that McDonnell was addressing their problems back in those days. I literally had to go in to see Mr. McDonnell and say, “Mr. McDonnell, we think that the problem here is leadership, and it's you.” DR. HÖFIG: That must have been a difficult conversation. GENERAL HENRY: It was an interesting conversation. You make many mistakes, and it was kind of like an OJT (on-the-job training) position because there was no place else for me to go to figure out how you do this. Other people had done similar things. So you tried to reach out and learn from them. At 6 o'clock that morning, we were doing a workout and the radio news declared, “Pentagon brass comes to take McDonnell to the woodshed,” or something like that. I thought, “If I were McDonnell and somebody were coming in to see me, I'd kind of like to have a little personal conversation with them before.” I then asked of McDonnell’s staff, "Can you give me ten minutes of personal conversation with Mr. McDonnell?" When I got in to see Mr. McDonnell, he was, as you would expect, clearly apprehensive of what this meeting was going to be about because we had called the meeting and asked him to have all of his presidents there. I recall saying to him, "You know, my function in life is not to make your life miserable.” At that time, he was the nation's largest defense contractor. I said, "We have some real serious issues here. If you and I go into this room, and you direct your five presidents to get behind the issue, let's go in and let's identify what our problems are and then let's agree to solve these problems. All I'm interested in is getting a performance of what you've been contracted to do. To the degree that I can make that easier for you, I'll be happy to do it." When we went in to the meeting, it was not really an acrimonious meeting. It was: “Okay, we accept this. We'll go look at it. We'll try to work it.” Let me conclude by saying that to his credit, Mr. McDonnell, once the problem was identified, worked to correct and he did so satisfactorily.” It was in that vein that I also went to Northrop. We had some situations where the under secretary had me go to Northrop, and I did almost the same thing with Kent Kresa. (Kent Kresa, since October 2003, is chairman emeritus of Northrop Grumman Corp. He was chief executive officer of Northrop (1990-2003) and president (1987-2001). Currently, he is a director at General Motors.) He became very successful. Northrop today is probably the No. 1 contractor. If you add all the shipyards to it—Northrop assumed all of those—they would be the largest defense contractor. You've got to play the political process. When Congress gets hold of it, from the top end, and they say, “What is this contractor doing?” and they get the contractor by name and get focused on it, that obviously brings a different dynamic to the process. Then it's beyond just the simple contract. Little did I know when I signed up to be in the acquisition field that contracting would be so interesting and would carry so much vitality back and forth on the area! But it did, and that pretty much was the kind of environment that we were dealing with when we brought in the PROs, plant representative offices. DR. HÖFIG: Congressional involvement. That brings us back to the spare parts issue, which had to do with the creation of the new command. GENERAL HENRY: There was no definitive point that told the secretary of Defense that you will create a contract management agency. The spare parts issue created the competition advocate general's office. Then the maturation of working these issues put the spotlight onto the greater issues of the day. Spare parts was one such issue. The $700 toilet seat—the $640 toilet seat to be exact— Congress made a lot of fun out of that. Mr. Caspar Weinberger (Caspar W. “Cap” Weinberger was secretary of Defense from 1981 to 1987.) was secretary of Defense at the time. They took a little $5 toilet seat from the hardware store, and they put it around his head, and every time you saw Weinberger in the paper, he had this toilet seat around his head with $640 on the price tag. It was in that environment that I found myself being promoted to brigadier general and assigned as the Army’s competition advocate, and it was in that environment that secretary of the Army said: Don't let it happen here. So there was a lot of the political rhetoric that was going on. You don't know which precedes what at the time, but it certainly set the groundwork for what later was called acquisition reform. People like Colleen Preston (Colleen Preston was deputy under secretary for Acquisition Reform in the Clinton administration.) were very much a part of that acquisition reform. I think that acquisition reform started probably with the creation of the competition advocate. I think John Lehman, who was secretary of the Navy at the time, probably did one of those things by putting Stuart Platt in and making him the Navy’s Competition Advocate. He was ahead of his time, recognizing that the political process has got to drive the issue of buying spare parts. The whole issue comes down to what Representative Bill Nichols of Alabama said to me very early on. He said, "We on Capital Hill have got to have the confidence that when you're spending a dollar's worth of the taxpayer's money, you're spending it as though it was your own life savings.” It was a good statement and one I always remembered as I executed my procurement duties. He had a large investment in his district with the Anniston Army Depot. So he was a major player in defense acquisition and seeing money go to his district, but he was also the same kind of guy that had the country and its well-being at heart. He said, “You must spend our money like you would spend your own.” In all my decisions, I follow that creed when I deal with public monies. That's the way I approached everything that I did and the way I still do it. If I'm spending somebody else's money, I'm spending it as though it were mine. The question is whether you can get value out of that. That was the point of the creation of the contract management command, which was the result of acquisition reform that probably started back in '84 with the Deficit Reduction Act. I think that when Mr. Cheney and Mr. Atwood came in, these fellows were focused on an element of acquisition that had heretofore not been on everybody's radar screen at the senior level of DoD. And thinking back on some of the successes that we had in competition, I will tell you that they were dramatic—a 70 percent reduction. I remember there was a fire unit for the Chaparral missile. I think I've got that right. The threat of competition drove the price down 70 percent. DR. HÖFIG: Just the threat? So it was the same manufacturer? GENERAL HENRY: That's correct. And one of the things that we were doing back in those days was identifying successes. From that success, why, we would report it and that was what I would use to report. One of the guys early on who came to see me was a fellow by the name of Dr. Jacques Gansler. Jacques is a friend of mine. We both sit on the Procurement Roundtable; it's a non-profit think tank here in Washington. Jacques was a senior executive with an organization called TASC, now, I understand, a business unit of Northrop Grumman. It was Jacques that brought in some charts and gave me a little tutorial, if you will, on the concept of competition and how competition manifests itself into various functions. From that beginning, we became friends. Then Jacques later became under secretary of Defense for Acquisition and Technology, the same job that I had reported to back at the time that I was with DLA as the commander of the Defense Contract Management Command. To fill in some other gaps as I'm thinking about it: When Mr. Betti said to General McCausland, "Form it under DLA," he meant as a command, not an agency. Ten years later, the thought process was that they needed to reverse that decision and make it defense contracting an agency. They did about two years ago break it away from DLA and that was under Major General Tim Malishenko's command. He was Air Force. Today, you have Major General Darryl Scott, USAF, as the commander. Darryl likes to remind everybody that when I was the first commander, he was a lieutenant colonel out in Newport Beach. I had a group called Napoleon's Corporals, and I would bring them in and talk with them. He says, “Yeah, if Darryl understands it, anybody can understand it.” It was mostly my way of being able to stay in touch with what was going on at the far ends of the command. I would bring in the junior officers that were there, and Darryl was one of those bright young guys. Today, he's an Air Force major general running the agency. I'm very delighted about that, incidentally. GENERAL HENRY: Co-equal agencies. DR. HÖFIG: And their functions are completely distinct? GENERAL HENRY: That is correct. McCausland and I did have the relationship that made it work. I'm a big advocate of the consolidation and elimination of redundancy. To me, I think there could have been a way to have attached the two organizations for the acquisition of common items and at the same time to have kept it apart and kept it as an agency. DR. HÖFIG: How do the services get along with that apparatus? Or how did they when it was yours? GENERAL HENRY: I don't know about it today. You would have to get a data point from somebody else on that. As a critical assessment, I think we did very well, and I attribute that to the people that we brought in, back to that one point on people. I had enough people who were respected enough in their own service that they could drive and deliver the message—plus the fact that I like to think that we really were service-oriented. We built it around the concept of: How is it that we can be the best in the world and how is it that we can drive the service? For example, I remember Air Force Major General John Slinkard, (Major General John D. Slinkard enjoyed a long career in Air Force procurement and acquisitions, including service as the Department of Defense's Federal Acquisition Regulation Program manager in the Office of the Under Secretary of Defense for Research and Engineering (1978-1981); as director of contracting and manufacturing policy, Office of the Assistant Secretary of the Air Force for Acquisition (1987-1990 and again in 1992); and as deputy assistant secretary for contracting (1991-1992). From 1992 to 1994, he was director of contracting, Headquarters Air Force Materiel Command, at Wright-Patterson Air Force Base.) having this conversation with me. "You know," he said, "you guys do a pretty good job. We don't think you do as much in technical support as what we would like.” I said to him, "Okay, John. You've got 800 spaces. You transfer those to me, and I'll take the mission on and I'll give it to you." He did. The next guy was a fellow by the name of Larry Farrell.
He's now a lieutenant general, retired; he's president of NDIA (the National Defense Industrial Association) over here in Arlington. Right after Smoke left, I went in to see McCausland one day and he said, "I’ve got a great Air Force brigadier that's available. He doesn't know a thing about your business, but he's a good, good guy.” I said, "Look, if you say he's that good, send him to me and I'll train him." I gave him the same pitch for taking care of program management. Larry is a jet jockey. He probably could have been a contender to four-star. True to form, he was not a logistician at the time, but we put him in enough jobs that he could probably almost pass for one today. He also provided tremendous credibility to the Air Force. So, I think the answer to your question is the combination of, one, focus on the customer service; and, two, having the right type of people in the job gave the feeling that the new organization could do that. Where it is today, I don't know. DR. HÖFIG: But the program managers reported to their service chiefs? GENERAL HENRY: Oh, yes, absolutely. DR. HÖFIG: So these fellows were there basically to manage that relationship and manage that conflict or that incipient conflict? GENERAL HENRY: It would always be a conflict because there's a check and balance in the system which, quite frankly, I find good. But it's really rough on the edges. Let me give a tutorial on it. The program manager's job is to take this program where he or she finds it and field that program. At all costs? Nobody's going to say “at all costs,” but I daresay that we can count on our hand the number of times that a sitting program manager has walked into the boss and said, “You know, boss, I've got a real problem. I don't think we're going down the right track. I think what we need to do is pull the plug on this program.” It does not happen, and the reason it doesn't is because your career is so tied to a program’s successful completion. One, it is considered an absolute honor to be a program manager. A program manager has got to take on this job against almost all odds. I mean, you've got to overcome insurmountable odds in order to get a program through the wicket to get fielded. Prior to the creation of the Defense Contract Management Command, the C‑17—let's just use that as an example—had a program manager, and that program manager reported to the assistant secretary of the Air Force for RDA, Research, Development, and Acquisition. The people who were running the contract management for the Air Force prior to DCMC reported to a fellow out in Albuquerque who was an Air Force two-star. The Air Force called that CMD, Contract Management Division. Now, at the end of the day, both of those guys reported to the same assistant secretary. So, if there was a conflict there, you had one person, the assistant secretary of the Air Force, who could resolve it. Now, you have changed the structure because Defense Contract Management Command—and the commander—report to the director of DLA and through to the under secretary of Defense, who happens to be on the organizational chart one grade higher than the assistant secretary of the Air Force. I'll stop short from saying that the assistant secretary of the Air Force reports to the under secretary of defense, but technically speaking, he should. The assistant secretary of the Air Force does report to the secretary of the Air Force. There's still an element of conflict, and it's not as clear up there. Does the assistant secretary of the Air Force owe absolute, total umbrage to the under secretary of Defense? They'll probably say no, but from a technical standpoint, it was designed to be that way. The new arrangement under DCMC is bifurcated, if that's a good word. You’ve got the program managers here and you've got defense contract management over there. So when I said, like under the Bell-Ringer, that you as a program manager have got twenty-four hours to tell the under secretary, that means you've got to take it to the assistant secretary of the Air Force and from the assistant secretary of the Air Force into the under secretary. That's an extra step, which no one really wanted to do because each element along the way will say, “Well, wait a minute. Can we fix this?” The answer, generally speaking, is no, they can't fix it. So they let it sit. That's the reason why we created the Bell-Ringer. I remember having a conversation with the assistant secretary of the Air Force, who said, “You just can't wait to tell the under secretary all these bad things that are happening.” I said, “Sir, you were given the notice of a problem—you have had it for twenty-four hours—and you're sitting on it. Is that good for the nation, good for senior management?” What the Bell-Ringer does is that it certainly puts the sunlight on some issues. It certainly puts those that are accountable and some of the issues that are manifested within contract management into the light. It's their job to fix the problem and do it with dispatch. There have been a couple of times that I've had to eat crow for my people because they or I failed to do some things we should have done. It works both ways on that issue. The program manager’s job is to field that program. So the guy on the last day who fielded the C-17 really had a right to pop the champagne and to toast a very successful process. Now we look back on it, and we say, “Tough issues back in those days, but it is a great airplane. It serves the nation well; it’s doing what it was supposed to do.” But it was kind of hard knocks along the way. The same thing is true for the B-1, the B-2, the M1. I can remember my younger days when Major General Duard Ball, who was out in Detroit, now deceased, was getting all the major hits out of the media on the M1 tank. He was the program manager for the M1 tank, and he was taking severe daily assaults on something that had happened. You work through that with diligent people. Today, the M1 tank is considered too heavy; you can't move it. But on the battlefield, it is the marvel of the twenty-first century. In this defense acquisition business, that's the process you go through. The program managers spend a lot of sleepless nights. They probably are on antacid pills and everything else getting there, but, generally speaking, the process with all of its irritants probably does work. I say that to the defense community, also. They provide a very, very significant, fine product. From a historian’s standpoint, I think you may agree, if you look at the successes that we as a nation have had, not only have we had good, well-trained people to go and fight our wars, but we've also been able to put the best equipment on the ground. That's been my bag for over thirty-some-odd years. You just want to make absolutely sure that whatever that equipment, that product, is that you put out there, that it's the best. Remember it's the user who determines the requirement—the soldier, the guy in the field. For example the Army would have a group that determines what the next generation of tanks, airplanes, or helicopters will be. This concept works its way into a requirements document. The requirements document works its way into the service and into a budget line that gets funded up on the Hill. Once that funding comes down, it works its way into a contract solicitation. The contracting organization puts the from the standpoint of: What does this do to the organization? Does this make sense for the country? And he could separate Chuck McCausland's empire and what it did for him into what is good for the organization. It is a measure that I totally respect. I've often wondered: How I would have handled the process? And would I have made the same decision that he made? But I can tell you that it was so easy on his part. What was right was right; what was wrong was wrong, and this is the way we're going to go. There was no equivocation. General McCausland knew that this was going to detriment the agency that he ran by as much as 50 percent, but it made no difference to him. He was even telling me, "You know, the thing that you probably really ought to do is go over to Andrews Air Force Base, take over some existing office space over there, and put the new agency there.” He truly could look at this globally, and it was a very interesting and very nice working relationship that I had with him. The time came for final approval of the plan that the services and DLA had developed. The concept was to organize into a new Defense Agency. General McCausland and I went to give the final decision brief to Under Secretary of Defense for Acquisition John Betti, who was the No. 3 guy working for Don Atwood. (Remember, I got my directive from Atwood, but Betti was the guy who was implementing the process). It occurred that there was one individual on the Office of the Secretary of Defense staff who realized he was going to lose 50 percent of the people and organizations that he was now responsible for.” So that person goes in and says to John Betti, "You know, Henry and McCausland work so well together that you could form this function under DLA as a command and you would not have to create a new agency." This comment was made thirty minutes prior to McCausland’s and my meeting with Betti. When we arrived for the meeting, we laid out what the agency was going to look like in this briefing. The only question that Secretary Betti had was: "Can you form this under DLA as a command?" McCausland very quickly said, "Mr. Secretary, yes, we can, but that's not the answer. The answer is a new agency. That's where you need to be driving this whole thing.” But Betti at this point had already made up his mind, and he said, "I want you to form it under DLA.” He did not have to form a new agency. I think that was what was driving him. He made the decision to form the command. (Ten years later his successor reversed the decision and created an agency.) Now, that decision sent a message to the acquisition community and the services because I had been out saying, “We're not forming a command; we are forming a new agency. This new agency will take the best of everything and; we will have a new defense agency. It will not be a hostile takeover by the Defense Logistics Agency.” But at the end of the day, that's what it was perceived to be. The Air Force particularly—and I can't say that I blame them—was very upset because they had thought that OSD had led them on through a series of decision points. As it turned out, the relationship that we had built during this negotiation in the staffing stage for the new agency left us with a repertoire of goodwill so that we were able to go to the various services. The decision had already been made by that time. We formed as a command. The flags were changed. My greatest admiration was for the Air Force. The Air Force will fight you the hardest on any change. Their concept is: We don't like this idea, but if it's going to happen, let us be the executive agent and we'll run it for everybody else. That's the Air Force's attitude. Once the Air Force realized that there was going to be a major change—I watched the way they did this and it could not have been executed better—they took care of every one of their people. At the end of the day, they took the flag, retired it, opened a new flag, and handed it to me. I think we made it a little bit easier for them because the decision that I had made was that their senior people would have senior positions in the new command. We integrated them into this new organization where they should be. I literally brought senior Air Force guys and Navy guys into the organization. That, looking back, was a watershed decision on my part because what it did, from the operational standpoint, was it made this a successful operation. Not that everything was rosy. We would soon be working through some major, major problems, but this personnel issue was not one of them. Surprisingly enough, that worked. What happened was that people said, “Okay, he's leveled with me, and I know that there's no future here.” So people started talking to the Department of Education, the Department of Agriculture, and everything else, and they started finding jobs. We would keep this list of people who were in the excess category. As I was talking about, I had one individual who was in Dallas and the job was in Turkey. He accepted the offer, and I sent him to Turkey. The people involved just loved the concept. I then got to the point that I said I don't want to put a RIF out if I don't have to. We ended up, I think, having to RIF fifteen people. Now that taught me something else. Twenty-six thousand people were impacted on this whole thing. You're trying to be upfront, leveling with everybody on what's going on within this defense acquisition process, but there are fifteen people saying you're never going to pull this off. This is not going to happen. I'm not buying what you're doing and for whatever reason it is, we finally had to get down to the point that fifteen people were terminated because they didn't follow the others. I look at it from the standpoint of a major success because the people who were receiving this positively said, “I need to take my career in hand and make the decision for me and my family.” This was an improvement over the old way of letting the organization dictate what was going to happen. The second individual who had a major impact on the success of the organization was Larry Wilson. Larry Wilson was DLA’s public affairs director. He is now an SES in the agency. Larry was one of these outside-the-box thinkers, and he was saying to me, "The whole point about this whole thing is going to be your credibility.” I agreed with him. I had served as a major, living in Atlanta. I came back as a major general, and a lady—I think she was a GS-5—came up to me and she said, "You know something? We knew you when you were a major, and we knew we could trust you. We did not know we could trust you as a general. But we listened to what you say in Los Angeles, and what you say in Los Angeles is the same thing that you're saying to us in Atlanta.” That was a defining moment for me because I thought, “Ah, consistency is the answer.” So it became a real issue for me to be consistent about how we were driving this whole process. Wilson said we ought to create what he called a "bugle." He would say, “I'm sitting in the inner sanctum. These are the decisions that were made today.” And decisions were being made very quickly: What are we going to name this new organization? Defense Plant Representative Office, call it DPRO. I remember that we were going that fast with major decisions. There was a multitude of decisions that we were just checking off on to get the organization up and to get it under one book, as we later called it. Wilson said, "I know what I cannot divulge, but let me divulge the decisions that have been made”—the new name's going to be the DCMA, DPRO, etc. He would write it up and put it on the fax machine to the whole command each morning. Of course, the guys in the Pentagon would say, “Wait a minute. Henry, you mean to tell me you've got your public affairs guy sitting in on these meetings that are all highly confidential, and then he comes out and he sends a fax basically around the world?” To which I would answer, “Yes, and it's working,” because it provided instant credibility that we were leveling with the work force. What I later understood and came to greatly respect is that I could tell employees bad news—your job's been abolished, I'm going to offer you this job—and they would accept the decision. What the employee cannot stand is the fact that I'm behind the door talking about their job and nothing ever comes out about the process. So when they would see the movement of information coming out, then the employee was more amenable to help. They said, “I don't care what they come up with. If it is unacceptable to me, I'm going to take my career in my own hands.” They were helping us and that worked out exceptionally well. I credit public affairs and Larry Wilson with being able to establish legitimacy and confidence in our management throughout the command. Now in the meantime, we've got major issues going on in defense contract administration with major programs. I received a call one day from my boss, the Under Secretary of Defense Don Yockey. (Donald J. Yockey was under secretary of Defense (Acquisition) from 1991 to 1993. He had been acting under secretary for the first half of 1991; he also served as principal deputy under secretary for Acquisition in 1990. ) He was the successor to Betti. (Unfortunately, Don Yockey is now deceased). Yockey was a very, very competent administrator who knew contract management. He was a retired Air Force colonel, and he took great delight in our first conversation by calling me with some specific instructions in a technical area of contract management. I must admit, I thought at first that I’ve got this new politician calling me, and I'm going to have to spoon-feed him a little knowledge about contract management. But I'm listening to Yockey, and he is making a lot of sense. I said, "Sir, tell me again what your background is?" And he said, "Yockey, Under Secretary of Defense and Air Force colonel, retired, contract management." Yockey said to me one day, "Why is it that I have to read about bad news in the newspaper? Why don't you have a system that tells me what is going on?" That was in our earlier stages. To remedy the problem, we set up what we call “Bell-Ringer”(a term given to a significant happening). The services did not like this approach. It did, however, cut the time down in reporting. Within twenty-four hours, an issue of importance would be reported to the under secretary. I gave the program managers a choice: They could take it to the under secretary personally or I would do it on my own. With some bumps in the road, the system started working and issues were being reported up the chain in a more expedited form. I always made sure that we carried equal numbers of officers of all services through that. I think that was very important. The last thing you want is to find yourself shifting and have a predominance of your service over the others simply because you're a green-suiter. I believe that one has to rise beyond the parochialism of the service, particularly when you're doing a job such as acquisitions. I came to the conclusion that I could not do a better job than the Navy on the shipyards. It made the Navy exceedingly happy, obviously. Quite frankly, to me, it wasn't even a close call. All we would have done would have been to replace people who were doing the same functions for things that we were doing. Now, the Air Force had a large contingency overseas of contract management. Just to give you some example of the decisions that had been made, twenty-five years earlier in DCAS, one of my mentors, a fellow by the name of Bill Gordon, who was the director of Contract Management and a major power player in contract management during the day—Bill Gordon was almost a father figure to me—made the decision that we would do no contract administration on military installations and we would do no contract administration outside the continental United States. There were reasons for that. If you look at the budget, the budget drives everything. When the DCAS was formed, Gordon was really at the wholesale level, taking the common items. All of the contract administration was done within the continental United States. The idea of repair and overhaul was foreign to DCAS in those days. You just didn't do it. Now, with the creation of the Defense Contract Management Command, we were consolidating all elements into one. I've been told probably one of the most important decisions that I made was the creation of the international contract management organization. DR. HÖFIG: So you pulled that element back into the command? GENERAL HENRY: I did. We went to the Air Force and—I forget the acronym that the Air Force had—they had an organization that performed contract management outside the continental United States. We used that as the major framework for building the Defense Contract Management Command International. At the time, I asked, "How much in contract value is presently being performed out there?" Answer: $15 billion. Fifteen billion dollars outside the continental United States, to me, offered a considerable risk that we could do things wrong. As it turned out, I think that what they've done now is that they've expanded. You'll find them in Afghanistan. You'll find them in Iraq doing contract management procedures. The point about me relating this to you is that I had considerable problems with my mentor, Bill Gordon, because I was changing a decision that he had made years ago. At this point, he wasn't ready to acknowledge it was a new day. His point always was, "Hey, boss, I don't want anybody to lay a glove on you.” I’d say, "Bill, that's not the issue. The issue is that I've got a new directive, and we've got to move in a new direction." The other one was on contract military installations. The Air Force always pushes the envelope on issues. In the early days, the Air Force called and said, “What we want you to do is to supervise the hanging drapes in the officer's club.” “Well, no,” said Gordon, “we're not going to do that. That's not our function.” Fast-forward twenty-five years. The Air Force is now bringing airplanes on military installations, stripping them all the way down, repainting them, reworking them, and that is a major function. It’s called repair and overhaul. But the biggest problem I had was not with the other services. Once Mr. Atwood made that decision to form the command and once the services understood that decision, they turned supported it. There people who were assigned to my organization reported in and said, “I'm yours. Where do you want me to go?” You could say this is a new day, and they were receptive to new procedures and working for the new command. The biggest problem was with my old DCAS organization. I remember bringing all former DCAS personnel into a room and saying, "DCAS is dead, guys. You've got to understand that.” There were various manifestations of change. The Air Force was closing twenty-seven organizations and moving that organization to Washington; the Navy was moving its eleven to Washington. But the DCAS didn't change. They simply changed the name over the door. They changed the flag, but the same people showed up at the same desk, using the same phone every day. It was almost like they had fought another bureaucratic political war and had won. This attitude was totally against our new organizational concept. I was charged to develop a new command—a new command linked to a new thought—and the negotiations that I had made with the services were all based on the fact that we together are going to build a new contract management operation. Back to the Bell-Ringer. When Don Yockey said, "I need you to set up this Bell-ringer concept"—He didn't say that. He said, "Get me a process that advises me before I read about it in the paper.” So I went to the program managers, and I said, "Alright, guys. This is going to"—we said this in different terms; I’m cleaning it up a little bit now for you—"this is going to create a little stress for you, but I tell you what. If there's a major problem that goes on in the organization, I want to be notified of it within the day. I will give you twenty-four hours to report it into the under secretary's office, but you do not have an option to hold it. I will report it to him within twenty-five hours.” No organization wants to let it go outside that they've got a problem because they want to work it out without everyone seeing the trouble. [So the process continues, kind of in the dark, until the wheels come off.] Well, one day the wings fell off of the C-17—literally. And that was a defining moment for all of us, obviously. When you're a program manager on the C-17, you can see your whole career flashing before your eyes when you're told that the wings have just fallen off of your airplane. Then again you've got this new organization that's running contract management in the plant, and they don't work for you. They work for some guy in Washington (Henry) who works for the under secretary of Defense. You work as a program manager for the Air Force assistant secretary for RDA (Research, Development, and Acquisition). That builds in some instant conflicts. We wanted to make sure that when we made decisions or when we made a representation, we were treating the program managers with the same deference that we would want to be treated. So I said, "Here's what you've got. If something bad happens, my people have no option. They have no discretionary authority. The issue must be sent to me.” I set up my deputy, Robert Scott, as the individual who would receive the notification. Then the deputy had the decision of whether he would take it to me, and I had the decision whether or not it went to the under secretary. Now, the sidebar to the decision that we had with the program manager was that if you want to be the one that tells the under secretary, we'll go with you and be passive. But your option is not whether to tell him. He will be told within a certain period of time. Needless to say, that was a significant consternation throughout the process, but it did work. DR. HÖFIG: Was the Bell-Ringer system in place for the C-17 or was that in place because of the C-17? GENERAL HENRY: Probably a combination. I don't remember the exact timeline on when that happened, but I can say that it was similarly situated things that caused that. What was happening is that with the under secretary—and recognize that that was a relatively new job, too, as a result of Goldwater-Nichols—now you had within the Department of Defense one individual who was responsible for all of the acquisition within the department. Needless to say, he was fielding phone calls from reporters on a daily basis, and if they're telling him about major happenings going on in however many facilities that are out there—that’s $784 million in contracts, so something's going on all the time. An interesting tidbit is the selection of the Air Force One. One of the highlights of my career was the fact that we delivered Air Force One, this present Air Force One, to President George Bush (41). That was when they took over the old 707s and put 747s in. That was not a cupcake. The big issue was the paint and the unpainted aircraft skin. What was not painted must be polished. There were issues of excepting to the quality standards. So you've got quality assurance people out there who are asking for exact details to the specification, etc. If you're painting it and it doesn't work and you paint it again, you've added more weight. You're now changing the characteristic. It just went on and on and on and on from that. But those were everyday occurrences. In the end, we accepted the 747s from Boeing and delivered them to the Air Force for the president’s use. Speaking of the C-17 and that issue, McDonnell-Douglas had the C-17 operation, and I am sure that working the issue caused Mr. McDonnell some sleepless nights. It all came together in the end for the C-17, and it is a marvelous airplane today. That realization has also taught me some important lessons; with every major program our acquisition program has had there have been major, major elements of problems. It's almost endemic to the process. In McDonnell's case, I was sent to see Mr. McDonnell because the feeling in the Pentagon was that McDonnell-Douglas was not sufficiently progressing on this contract. My job was to go talk to Mr. McDonnell in a Dutch-uncle manner. He had five companies working for him, and I remember that we assembled those five companies’ presidents with Mr. McDonnell in one conference room one day. I was the messenger who was instructed to tell him that we were not happy with his performance. He later stated that that was a defining moment for him and the company, needless to say. If you look at a McDonnell-Douglas—these are not actual numbers I'm giving you, but just to give you some feel—if you're dealing with a Northrop, a McDonnell-Douglas, a Lockheed, you're probably progressing at a rate of $25 million a month in money over multiple contracts. You've always got, on the part of the contracting officer, the absolute duty to ensure that he is paying money for things that the United States gets as value to the contract (what was ordered). You've got to constantly be aware of the offer of the performance, the acceptance of the performance, and get it back. It works both ways because this flow of money is what keeps the company alive. Sans this, they've got to go borrow money. So progress payments are really a form of financing the project. It's like a banker, even though it's integrated into the contract itself. Now when you're talking about base year plus four years of options, and you're talking about a new delivery system or new weapon system, then you've got to go through the issues, such as the Crusader mobile howitzer last year, which was cancelled. I was part of the A-12 that was cancelled. Quite frankly, the reason the A‑12 was cancelled was because there was a big failure on the part of management—that includes all of the elements—to really pay attention to what the contractor was doing and the progress of that contract. I recall that the A-12 was a black program (secret). It was behind the door. You had a lot of operations going on out here, and you had that operation going on behind that door. That caused me to set up a separate organization to deal with the black-box world, which I would imagine is still in place today. I could not be read in on every one of the programs. I had to have somebody that I could look to, to say I want to make absolutely sure that I don't have an open sucking chest wound that's out here on one of these programs. Your job is to be read in on it. So I put a colonel, an O6, in charge of the program and he would be looking at this. Now, what I later found out in the case of the A-12, I had an individual who had a distinguished career. Unfortunately, he just didn't pay attention to what was going on behind that door, and that caused considerable consternation later on, and you know the result of that. Secretary of Defense Cheney cancelled the program. When you cancel the program, it is a significant emotional event, particularly to the contractor community. You have termination costs and things of that nature, but that's the reason we're in this business of management. In the early days of the C-17, McDonnell-Douglas did not have sufficient control over their vendors, their subsequent parts for the development. You know, the way you build airplanes is you start with one and you build it up and it starts looking like an airplane. Then behind it, you start building another airplane and then another one and so on down the line. What we found out that they were doing is that at certain phase points and they would need certain items. They would take this plane No. 1 through the phase and get the approval of it. Then they would go in and take a part off of No. 1 and take it back on to No. 2 so they could take it through the next phase. By the time you started trying to figure out where these parts went, it was a significant issue. The hydraulics is what caused the wings to fall off the C-17, if I recall. They had it up like that, and the hydraulics failed and that put the load on the wings. It probably sounds worse than it really was at the time. At the time, it was a very significant issue. It all points out the seriousness and the importance, I think, of contract management and how we've evolved. A lot of people think that once you award the contract, you sit back, and it's going to be okay and you're going to get exactly what you want. Truth of the matter is, in my experience, a significant number of contracts do not deliver on time. We in the government do various things about counting and reporting in the area of contract delivery performance. Chuck Henry would say to you that failure to deliver to the terms and conditions of the original contract is around 30 percent. There will be a number of people who disagree with me, but I think that if you look at it from the standpoint of the date of the original contract and look at how many deliver, one can make the case that 30 percent of all contracts are impacted. DR. HÖFIG: Let me ask you a quick question. With the A-12 or the C-17, were these projects that were underway before there was a DCMC? Or did you inherit a bunch of things that were in process when the command started. How did that work? GENERAL HENRY: The organization that was there in the case of the A-12 was Navy and the one with the C-17 was Air Force. Those people who reported to the Navy and Air Force subsequently reported to me at the close of one day. One was an Air Force colonel who was in the McDonnell-Douglas plant, named Ken Tollison. I had not previously met Tollison. (He's retired out in California and if you want to really get detailed information about C-17, he is the definitive authority.) Now that the MD plant is under my new responsibility, I'm reading an article in the MD house publication, and it features Tollison giving the entire MD organization heck over their production practices. I'm thinking that this guy's got some kind of death wish. I mean, he was saying real bad things about McDonnell-Douglas, and I'm thinking, “Whoa, we’ve got a real problem on the C‑17, and chances are I've got a real problem with this colonel.” So I get on the plane with the idea that I've got a rogue colonel out here and I'm not really sure what I'm expecting when I get there. I get on the ground and I remember saying, “I read your article,” and I was expecting him to be a little defensive about it. Tollison lead me through his evidence and within about two hours, he absolutely had convinced me that he was right. As I look back—and recognize I had 800 military officers working for me at any one time—Ken Tollison would have to be, in my opinion, listed as one of the most outstanding colonels that I ever had working for me, certainly the most courageous. DR. HÖFIG: And in this article, he was detailing problems with the C-17? Basically, he's telling them what the problem is? GENERAL HENRY: He was absolutely peeling the skin off of McDonnell. I mean, this was a searing indictment. Now, why McDonnell-Douglas wasn't coming down and saying, “If you're right, we've got to change this; if you're wrong, we've got some problems”— It didn't happen. But that was manifest, I think, of the way that McDonnell was addressing their problems back in those days. I literally had to go in to see Mr. McDonnell and say, “Mr. McDonnell, we think that the problem here is leadership, and it's you.” DR. HÖFIG: That must have been a difficult conversation. GENERAL HENRY: It was an interesting conversation. You make many mistakes, and it was kind of like an OJT (on-the-job training) position because there was no place else for me to go to figure out how you do this. Other people had done similar things. So you tried to reach out and learn from them. At 6 o'clock that morning, we were doing a workout and the radio news declared, “Pentagon brass comes to take McDonnell to the woodshed,” or something like that. I thought, “If I were McDonnell and somebody were coming in to see me, I'd kind of like to have a little personal conversation with them before.” I then asked of McDonnell’s staff, "Can you give me ten minutes of personal conversation with Mr. McDonnell?" When I got in to see Mr. McDonnell, he was, as you would expect, clearly apprehensive of what this meeting was going to be about because we had called the meeting and asked him to have all of his presidents there. I recall saying to him, "You know, my function in life is not to make your life miserable.” At that time, he was the nation's largest defense contractor. I said, "We have some real serious issues here. If you and I go into this room, and you direct your five presidents to get behind the issue, let's go in and let's identify what our problems are and then let's agree to solve these problems. All I'm interested in is getting a performance of what you've been contracted to do. To the degree that I can make that easier for you, I'll be happy to do it." When we went in to the meeting, it was not really an acrimonious meeting. It was: “Okay, we accept this. We'll go look at it. We'll try to work it.” Let me conclude by saying that to his credit, Mr. McDonnell, once the problem was identified, worked to correct and he did so satisfactorily.” It was in that vein that I also went to Northrop. We had some situations where the under secretary had me go to Northrop, and I did almost the same thing with Kent Kresa. (Kent Kresa, since October 2003, is chairman emeritus of Northrop Grumman Corp. He was chief executive officer of Northrop (1990-2003) and president (1987-2001). Currently, he is a director at General Motors.) He became very successful. Northrop today is probably the No. 1 contractor. If you add all the shipyards to it—Northrop assumed all of those—they would be the largest defense contractor. You've got to play the political process. When Congress gets hold of it, from the top end, and they say, “What is this contractor doing?” and they get the contractor by name and get focused on it, that obviously brings a different dynamic to the process. Then it's beyond just the simple contract. Little did I know when I signed up to be in the acquisition field that contracting would be so interesting and would carry so much vitality back and forth on the area! But it did, and that pretty much was the kind of environment that we were dealing with when we brought in the PROs, plant representative offices. DR. HÖFIG: Congressional involvement. That brings us back to the spare parts issue, which had to do with the creation of the new command. GENERAL HENRY: There was no definitive point that told the secretary of Defense that you will create a contract management agency. The spare parts issue created the competition advocate general's office. Then the maturation of working these issues put the spotlight onto the greater issues of the day. Spare parts was one such issue. The $700 toilet seat—the $640 toilet seat to be exact— Congress made a lot of fun out of that. Mr. Caspar Weinberger, (Caspar W. “Cap” Weinberger was secretary of Defense from 1981 to 1987.) was secretary of Defense at the time. They took a little $5 toilet seat from the hardware store, and they put it around his head, and every time you saw Weinberger in the paper, he had this toilet seat around his head with $640 on the price tag. It was in that environment that I found myself being promoted to brigadier general and assigned as the Army’s competition advocate, and it was in that environment that secretary of the Army said: Don't let it happen here. So there was a lot of the political rhetoric that was going on. You don't know which precedes what at the time, but it certainly set the groundwork for what later was called acquisition reform. People like Colleen Preston, (Colleen Preston was deputy under secretary for Acquisition Reform in the Clinton administration.) were very much a part of that acquisition reform. I think that acquisition reform started probably with the creation of the competition advocate. I think John Lehman, who was secretary of the Navy at the time, probably did one of those things by putting Stuart Platt in and making him the Navy’s Competition Advocate. He was ahead of his time, recognizing that the political process has got to drive the issue of buying spare parts. That was the point of the creation of the contract management command, which was the result of acquisition reform that probably started back in '84 with the Deficit Reduction Act. I think that when Mr. Cheney and Mr. Atwood came in, these fellows were focused on an element of acquisition that had heretofore not been on everybody's radar screen at the senior level of DoD. And thinking back on some of the successes that we had in competition, I will tell you that they were dramatic—a 70 percent reduction. I remember there was a fire unit for the Chaparral missile. I think I've got that right. The threat of competition drove the price down 70 percent. DR. HÖFIG: Just the threat? So it was the same manufacturer? GENERAL HENRY: That's correct. And one of the things that we were doing back in those days was identifying successes. From that success, why, we would report it and that was what I would use to report. One of the guys early on who came to see me was a fellow by the name of Dr. Jacques Gansler. Jacques is a friend of mine. We both sit on the Procurement Roundtable; it's a non-profit think tank here in Washington. Jacques was a senior executive with an organization called TASC, now, I understand, a business unit of Northrop Grumman. It was Jacques that brought in some charts and gave me a little tutorial, if you will, on the concept of competition and how competition manifests itself into various functions. From that beginning, we became friends. Then Jacques later became under secretary of Defense for Acquisition and Technology, the same job that I had reported to back at the time that I was with DLA as the commander of the Defense Contract Management Command. To fill in some other gaps as I'm thinking about it: When Mr. Betti said to General McCausland, "Form it under DLA," he meant as a command, not an agency. Ten years later, the thought process was that they needed to reverse that decision and make it defense contracting an agency. They did about two years ago break it away from DLA and that was under Major General Tim Malishenko's command. He was Air Force. Today, you have Major General Darryl Scott, USAF, as the commander. Darryl likes to remind everybody that when I was the first commander, he was a lieutenant colonel out in Newport Beach. I had a group called Napoleon's Corporals, and I would bring them in and talk with them. He says, “Yeah, if Darryl understands it, anybody can understand it.” It was mostly my way of being able to stay in touch with what was going on at the far ends of the command. I would bring in the junior officers that were there, and Darryl was one of those bright young guys. Today, he's an Air Force major general running the agency. I'm very delighted about that, incidentally. DR. HÖFIG: So, what's its relationship now with DLA? They're co-agencies? GENERAL HENRY: Co-equal agencies. DR. HÖFIG: And their functions are completely distinct? GENERAL HENRY: That is correct. McCausland and I did have the relationship that made it work. I'm a big advocate of the consolidation and elimination of redundancy. To me, I think there could have been a way to have attached the two organizations for the acquisition of common items and at the same time to have kept it apart and kept it as an agency. DR. HÖFIG: How do the services get along with that apparatus? Or how did they when it was yours? GENERAL HENRY: I don't know about it today. You would have to get a data point from somebody else on that. As a critical assessment, I think we did very well, and I attribute that to the people that we brought in, back to that one point on people. I had enough people who were respected enough in their own service that they could drive and deliver the message—plus the fact that I like to think that we really were service-oriented. We built it around the concept of: How is it that we can be the best in the world and how is it that we can drive the service? For example, I remember Air Force Major General John Slinkard
having this conversation with me. "You know," he said, "you guys do a pretty good job. We don't think you do as much in technical support as what we would like.” I said to him, "Okay, John. You've got 800 spaces. You transfer those to me, and I'll take the mission on and I'll give it to you." He did. I brought in at the time a Navy admiral, a one-star by the name of Smoke Hickman. (Rear Admiral Donald E. “Smoke” Hickman retired from the Navy as commander of the Naval Supply Systems Command and chief of the Supply Corps.) Hickman became chief of the Navy Supply Corps. I remember telling him: "I want you to go out and put your arms around the program managers, and I want you to love them. When they think that you work for them and I only pay you, you've got it just about right.” And he did. He did that incredibly well. He’s got the right personality, and so he functioned extremely well in that element. The next guy was a fellow by the name of Larry Farrell.
He's now a lieutenant general, retired; he's president of NDIA (the National Defense Industrial Association) over here in Arlington. Right after Smoke left, I went in to see McCausland one day and he said, "I’ve got a great Air Force brigadier that's available. He doesn't know a thing about your business, but he's a good, good guy.” I said, "Look, if you say he's that good, send him to me and I'll train him." I gave him the same pitch for taking care of program management. Larry is a jet jockey. He probably could have been a contender to four-star. True to form, he was not a logistician at the time, but we put him in enough jobs that he could probably almost pass for one today. He also provided tremendous credibility to the Air Force. So, I think the answer to your question is the combination of, one, focus on the customer service; and, two, having the right type of people in the job gave the feeling that the new organization could do that. Where it is today, I don't know. DR. HÖFIG: But the program managers reported to their service chiefs? GENERAL HENRY: Oh, yes, absolutely. DR. HÖFIG: So these fellows were there basically to manage that relationship and manage that conflict or that incipient conflict? GENERAL HENRY: It would always be a conflict because there's a check and balance in the system which, quite frankly, I find good. But it's really rough on the edges. Let me give a tutorial on it. The program manager's job is to take this program where he or she finds it and field that program. At all costs? Nobody's going to say “at all costs,” but I daresay that we can count on our hand the number of times that a sitting program manager has walked into the boss and said, “You know, boss, I've got a real problem. I don't think we're going down the right track. I think what we need to do is pull the plug on this program.” It does not happen, and the reason it doesn't is because your career is so tied to a program’s successful completion. One, it is considered an absolute honor to be a program manager. A program manager has got to take on this job against almost all odds. I mean, you've got to overcome insurmountable odds in order to get a program through the wicket to get fielded. Prior to the creation of the Defense Contract Management Command, the C‑17—let's just use that as an example—had a program manager, and that program manager reported to the assistant secretary of the Air Force for RDA, Research, Development, and Acquisition. The people who were running the contract management for the Air Force prior to DCMC reported to a fellow out in Albuquerque who was an Air Force two-star. The Air Force called that CMD, Contract Management Division. Now, at the end of the day, both of those guys reported to the same assistant secretary. So, if there was a conflict there, you had one person, the assistant secretary of the Air Force, who could resolve it. Now, you have changed the structure because Defense Contract Management Command—and the commander—report to the director of DLA and through to the under secretary of Defense, who happens to be on the organizational chart one grade higher than the assistant secretary of the Air Force. I'll stop short from saying that the assistant secretary of the Air Force reports to the under secretary of defense, but technically speaking, he should. The assistant secretary of the Air Force does report to the secretary of the Air Force. There's still an element of conflict, and it's not as clear up there. Does the assistant secretary of the Air Force owe absolute, total umbrage to the under secretary of Defense? They'll probably say no, but from a technical standpoint, it was designed to be that way. The new arrangement under DCMC is bifurcated, if that's a good word. You’ve got the program managers here and you've got defense contract management over there. So when I said, like under the Bell-Ringer, that you as a program manager have got twenty-four hours to tell the under secretary, that means you've got to take it to the assistant secretary of the Air Force and from the assistant secretary of the Air Force into the under secretary. That's an extra step, which no one really wanted to do because each element along the way will say, “Well, wait a minute. Can we fix this?” The answer, generally speaking, is no, they can't fix it. So they let it sit. That's the reason why we created the Bell-Ringer. I remember having a conversation with the assistant secretary of the Air Force, who said, “You just can't wait to tell the under secretary all these bad things that are happening.” I said, “Sir, you were given the notice of a problem—you have had it for twenty-four hours—and you're sitting on it. Is that good for the nation, good for senior management?” What the Bell-Ringer does is that it certainly puts the sunlight on some issues. It certainly puts those that are accountable and some of the issues that are manifested within contract management into the light. It's their job to fix the problem and do it with dispatch. There have been a couple of times that I've had to eat crow for my people because they or I failed to do some things we should have done. It works both ways on that issue. The program manager’s job is to field that program. So the guy on the last day who fielded the C-17 really had a right to pop the champagne and to toast a very successful process. Now we look back on it, and we say, “Tough issues back in those days, but it is a great airplane. It serves the nation well; it’s doing what it was supposed to do.” But it was kind of hard knocks along the way. The same thing is true for the B-1, the B-2, the M1. I can remember my younger days when Major General Duard Ball, who was out in Detroit, now deceased, was getting all the major hits out of the media on the M1 tank. He was the program manager for the M1 tank, and he was taking severe daily assaults on something that had happened. You work through that with diligent people. Today, the M1 tank is considered too heavy; you can't move it. But on the battlefield, it is the marvel of the twenty-first century. In this defense acquisition business, that's the process you go through. The program managers spend a lot of sleepless nights. They probably are on antacid pills and everything else getting there, but, generally speaking, the process with all of its irritants probably does work. I say that to the defense community, also. They provide a very, very significant, fine product. From a historian’s standpoint, I think you may agree, if you look at the successes that we as a nation have had, not only have we had good, well-trained people to go and fight our wars, but we've also been able to put the best equipment on the ground. That's been my bag for over thirty-some-odd years. You just want to make absolutely sure that whatever that equipment, that product, is that you put out there, that it's the best. Remember it's the user who determines the requirement—the soldier, the guy in the field. For example the Army would have a group that determines what the next generation of tanks, airplanes, or helicopters will be. This concept works its way into a requirements document. The requirements document works its way into the service and into a budget line that gets funded up on the Hill. Once that funding comes down, it works its way into a contract solicitation. The contracting organization puts the solicitation out on the street, and they find out what is the probability of having a company produce this item for the service. If it's a widget and you've got the data for it, it's easy. If you're building the next iteration of a black box, you're going to have to go into some R&D and when you go into R&D, you're throwing money at something and you don't know how it's going to come out, what it's going to be. I don't want to sound critical because I have the greatest admiration for the people who are in the process of trying to make sure that they can develop the product and field it for the soldier. We end up sometimes with errors, and I don't think that the errors are manifested because people are not important or people don't give the importance to the project. I think that sometimes we're trying to push the envelope to the point that we create these problems, and then I think we've got to go solve the problems. But of the elements that we discussed today from the contract management standpoint, let me say this: I'm absolutely convinced that the separation of contract management was a good idea. It's good to be able to have the senior guy in a room create the friction that exists among people who are Type-A personalities, who have a vested interest. You get it on the table, and you can deal with it. If you're hiding it, you can never deal with it. The defense acquisition is large enough that it's almost unwieldy. Yet you've got to marvel at the fact that at the end of the day, it's a system that's based on merit. There may be some inefficiencies in it, but the inefficiencies that we're dealing with are really, in comparison to some other systems, minuscule. I have the opportunity every now and then to be called on by major law firms to be an expert witness in this area of defense acquisition. That's when you've got a case in controversy about fraud. I've had the opportunity to look at some of those things, and I had to shake my head and say, “Gee whiz, this should never have happened. Where were the safe guards? How did all this come about?” But that doesn't negate the fact that the entire system deals with a defense budget that's somewhere around $300 billion. Look at the number of items that come through the system and are delivered each year, and look at the new technology that this country fields for the warfighter. America’s might has always been the ability to place the most advance equipment in the hands of the soldier, sailor, airman, or marine. That is what makes the defense acquisition system so important to this nation, and it also makes a very interesting field to be involved in. So, having said that, where do you want to go next? DR. HÖFIG: I think actually, if we could wrap this up here, you could get on with your day and I'll get this transcribed and we'll see where the follow-up goes, if you're agreeable to follow-up. GENERAL HENRY: Sure. Be glad to. * * * * * |
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