Box 5, Folder 3A – General speeches

 

February 7, 1984, Productivity, Fairmont Hotel, San Francisco, CA – an HP sponsored Executive Luncheon with an emphasis on top management of HP customers.

 

2/7/84, Copy of speech handwritten by Packard on yellow, notebook paper

 

Packard looks at the decline in growth of productivity in the U.S. since World War II.  He says the U.S. gained 3% per year from 1948 – 1965; 2% from 1965 – 1972; 1% per year from 1972 – 1979. Saying other countries have done much better he cites some examples:

France, West Germany, Italy: Late 1960-mid 1970s – 5-6%/year

                        Japan: 1967-1973 –10%/yr, fell to 4% 1973-1979, well ahead of U.S.

 

He points out that the U.S. came out of WW II with a high level of productivity while Europe and Japan had to rebuild economies that were destroyed in the war. The U.S. also had the highest standard of living and a large share of the export market. He says things began to change from the 1960s to the 1980s.

 

“I can not propose to explain what caused this change. In part it was simply these other countries catching up. And we helped them with massive aid and __?___ open markets for their products. There was a significant change in our educational system in the 1960s and early 1970s to try and provide more opportunities for minority groups and those thought to be disadvantaged. The emphasis changed from education for excellence to education for everybody, excellent or not. This was not all bad, but it was also not all good for our nation.

 

“Research and development – the generation of new knowledge and applying it to make better products and better services is without any doubt the most important source of productivity improvement – which, after all, is best defined as making a better world for more people.

 

“Before WW II the center of R&D for the world was Europe. The U.S. was not far behind and Japan was known best for its ability to copy from abroad and had a poor reputation for the quality of its products. WW II made the United States the undisputed leader of the world in research and development. By winning the war the U.S. position as the world leader in R&D was determined for the next two decades that followed.

 

“Thus, by the end of the 1960s a new world equilibrium in R&D was being established. There is no reason to assume that the U.S. could have maintained its position of leadership forever.

 

“On the otherhand, the position of leadership in world wide R&D gave the U.S. an advantage that it should take advantage of for the future welfare of the country. Hewlett-Packard has been in the center of this drama of R&D for the last 45 years. And I can assure you that we did not see these trends in this great drama with any great clarity. I think we have learned some lessons that have helped with our success. And I think we are in a unique position to help improve the productivity of our economy in the years ahead.

 

Bill Hewlett and I are engineers by profession and we devoted the first 25 years of our work in our company to designing and manufacturing electronic instruments to improve the productivity of electronic engineers. One of our early mottos was “Inexpensive quality,”  and we did design and manufacture electronic instruments that enabled electronic engineers all over the world to do their work more efficiently.

 

“We are here today to talk about productivity, not just for electronic engineers, which has been our business for 45 years, but to talk about productivity for our entire economy – administration, marketing, manufacturing, distribution and, of course, engineering.

 

“I do not suggest by any means that we have all of the answers. In fact one of the messages that this program is intended to convey is that to improve productivity with computers is a cooperative endeavor. It involves hardware suppliers, software suppliers and the user, all working together to analyze the problem and to select the best solution.

 

“The reason I have asked you to join me here for lunch today is that to achieve real productivity improvements from the application of computer technology requires a better understanding by top management of what it is all about.

 

“Now I am not smart enough to give you the exact answer to this question. I would like to note some of the things that the Hewlett-Packard Productivity Program will suggest that your people consider.

 

1. “A large centralized computer system is not likely to be the right way to go in applying computers to your management problems. There are several reasons for this recommendation.
   1. Your computers should be adapted to improve the efficiency of your people. A study on engineering use of computers showed that if the routine non-productive work of engineers could be eliminated by computers, an order of magnitude of improvement of engineering productivity could be achieved. Your engineeres know what will improve their productivity and if each engineer is given a work station that has network capability with other engineers, and not just across to a big central computer, a very large improvement in productivity can be achieved. In one recent survey engineers responded that they were spending as much as 80% of their time doing non-engineering tasks. This is the kind of work computers should eliminate for them. So they will have more than just 20% of their time doing creative work.”

 

2/7/84, Copy of printed program for the “Executive Luncheon”

11/8/83, Internal HP memo from Dave Lyon to Packard inviting him to speak at the Productivity ’84 Executive Luncheon

1/26/84, Memo to Packard from Dave Lyon thanking him for meeting with him to discuss plans for the luncheon

2/1/84, Copy of a memo from Packard to Dave Lyon asking for some specific examples of productivity improvement.e.g. inventory control

6/23/80, Copy of a page from the U.S. News and World Report containing a Q and A with Packard discussing the subject of productivity

 

 

Box 5, Folder 4 – General Speeches

 

March 13, 1984, Japan and U.S. Cooperating in High Tech

 

3/13/84, Typewritten text of Packard’s talk

Packard says this is an important subject because “advanced technology is moving forward very rapidly in every aspect of our society today and promises great things for all of us and our children and our grandchildren.”

 

Packard sees Japan and the U.S. at the forefront of this high technology revolution and he says “…the question we are here to discuss at this conference is how can we cooperate to improve the contributions of technology to our respective societies and to the rest of the world as well.”

 

Since the production of new products and services is a competitive process, Packard asks “…why should we cooperate in high technology, why shouldn’t  we just compete and let the cards fall where they will.”

 

Before discussing the question of “cooperation or competition,” Packard relates a story which took place in Palo Alto when HP had about ten employees. He and Bill Hewlett had decided to develop and manufacture general purpose electronic instruments. The leading company in that field was General Radio, founded by Melville Eastham. Mr. Eastham called on Dave and Bill in 1939 and they expected him to be critical because they had decided to go into competition with him.

 

“Mr. Eastham, much to our amazement, relates Packard, “said he thought competition would be good for both of us. Not for the obvious reason that it would encourage both of our companies to work harder but for a much more important and much less obvious reason.

 

“He said that given the rapidly advancing electronic technology both of our companies were bound to develop new instruments utilizing new principles and new concepts in measurement. He said these new ideas would catch on much faster if two or three firms proposed them than if they were the exclusive product of only one firm.

 

“We have had many areas of friendly cooperation and this friendly cooperation has helped us both succeed in our business enterprises. We used to meet at least once a year – visited each others labs.”

 

 

“Thus,” Packard says, “I became convinced early in my professional career that cooperation and competition are not mutually exclusive but indeed can and should be beneficial to both parties. We had a firm policy not to copy a competitors product but to do better. And we had an open door policy at our laboratories.”

 

“I believe that all of our firms which are engaged in new technology products will benefit from a relatively free flow of new knowledge. In fact, in the field of electronics there has been a great deal of cooperation in the exchange of new technology both here in the United States and between the U.S. and Japan.”

 

Packard agrees “There are occasional areas where a technological break through can be made by an individual company and can be exploited by exclusive protection. In most cases, additional participants will accelerate the product’s development and the public acceptance of a uniquely new product. In today’s maze of new technology, cooperation, even among competitors, will advance the cause of all.”

 

“Actually, this is a very complicated problem that is being discussed at this conference because, while it is possible to make a good cause for cooperation in general, when one looks at specific situations one can find areas where broad cooperation is important, also areas where new technology must be tightly controlled, for example in areas of national security and also where a private firm has an unique position in some new technology.

 

“Cooperation between our two countries is very important in basic research. In searching for new ideas it is often the collaboration of several people that results in a major contribution. A few new basic scientific concepts are the result of an individual’s contribution. More often it is a team effort or the synergism of several different approaches to a study of the problem. This, in my view, argues for the most extensive cooperation among laboratories doing basic research work. Anyone who has been working in the field of high technology, electronics, genetic engineering, aeronautics – whatever – knows about a great many things to be done if only the technology were available.

 

“I think there is no doubt that the advance of high technology will be accelerated by extensive cooperation, not only between the United States and Japan but among all nations in basic research.”

 

“This recommendation for more cooperation in basic research may not have much meaning for those of you in small, high technology companies when you are working day and night to get out that new product. In the long run you will succeed or fail by the market acceptance of your new product. Your chance of success will be much greater if you can develop a new product, clearly ahead of the field. To do this the technology must be available and you must know about it. In the final analysis all of us in the high technology industry live on the output of basic research activity.

 

Packard says he would now like to discuss “some of the specific ways high technology companies can cooperate in their work.

 

“One important approach is licensing of patents or know how. Over the years our company has received a great deal of technological assistance through cross licensing In the field of electronics most patents are generally available through reasonable license terms.

 

“The strategy most firms follow is to have an aggressive patent policy to obtain as many patents as possible and then to use patents to negotiate license agreements for  other technology to support their work.

 

“We prefer to do this through broad, royalty free cross licenses with a lump sum prepayment negotiated to balance the respective contributions of the two parties.”

 

“We have enjoyed excellent cooperation with Japanese firms in negotiating cross license agreements and both parties have benefited from this cooperation.

 

“We have also undertaken a number of joint ventures in R&D with Japanese firms. We have preferred not to have highly structured agreements and this seems to match the Japanese approach.

 

“The agreement will be generally about two pages long. Instead of trying to anticipate all the problems and cover them in the agreement in detail, we simply include a statement to the effect that if difficulties are encountered, we will endeavor to sit down with them and negotiate a solution.

 

“It is my impression that the most effective benefits our company has received from R&D agreements come about when a good personal relationship develops between the people who are actually doing the research work. That approach has worked for us for many years here in the United States and during the last few years it seems to be working for us the same way in Japan.

 

“There are some problems in getting a good working relationship started with Japanese partners. One our people have noted was that you have to make at least two trips to Japan just to get acquainted with your prospective partner, to develop some understanding and confidence. After both parties are satisfied there will be some mutual benefit in the relationship, good working relations between the people doing the research work seem to become established and not much top level attention is needed to keep the program moving ahead.”

 

Packard describes some new approaches to cooperation in the field of biotechnology. “These are in effect research partnerships with large front end payments to help carry the relatively high cost of new product development in this field. …This approach provides an important means of access to this new technology but it is much too early to know how well this approach will pay off for the participants.”

 

“Military weaponry,” he says, “is one other area of cooperation that is beginning to open up to industry in U.S. and Japan.

 

“As you know,” Packard says, “a large part of the total R&D expenditure in the United States is for military work. Total R&D spending in U.S. is in excess of $90 billion and federal spending is about 47% of the total. It is interesting to note in passing that private R&D funding reached that of the U.S. government in 1978 and is increasing faster than federal funding.

 

“Private funding for R&D in the United States exceeds that of Japan and West Germany combined.

 

“But defense spending on R&D is substantial and there is an opportunity for Japanese industry to receive some benefit from this work.

 

“The basic Japanese policy for the development and production of defense equipment which was announced in 1970 stated Japanese government preference for acquiring military equipment from Japanese domestic R&D and production efforts. Japan has been developing and manufacturing military equipment for its self defense forces. This equipment includes armored personnel carriers, tanks, telecommunication and electronic equipment.

 

“Also, Japan has licensed production of the F15 fighter, the P3C anti submarine aircraft, the Hawk surface to air missile, as well as other items. Most of this equipment is licensed from U.S. firms but also some licenses from European firms are involved.

 

“Recently there has been some discussion of joint U.S.-Japanese development of military equipment in Japan. I believe this would provide an excellent opportunity for cooperation between our countries. Japanese know how in high tech electronics and in high quality production could make a very useful contribution to our joint military capability. Such joint R&D would also provide useful fall out for civilian products. In addition, many such products could be dual purpose, useful that is for both military and civilian applications. Japan could consider the export of dual purpose equipment although probably not the export of strictly military products.

 

“Let me conclude by saying that I believe this is a very important subject on the agenda of this conference. Japan and the United States have an increasingly important role of sharing world leadership in the future.

 

“The question is not which country will develop a dominant position for there will no longer be an overall dominant position in high tech industry in the future. One country may excel in certain areas while the other country will excel in others. With the rapid progress in the generations of new knowledge through basic research the situation will be continually changing. The years ahead will provide unlimited opportunities for both of our countries. The opportunities will be better for both of us if we can maintain an atmosphere of cooperative competition in high technology.”

 

3/13-14/84, Copy of the printed program for the conference

3/13/84, Copy of a printed pamphlet containing a brief biography of the speakers

3/14/84, Copy of a printed invitation from the officers of The Japan Society of Northern California to a reception the evening of 3/14/84

9/7/83, Letter to Packard from Maria Simpson, Project Director for The Conference Board inviting him to be one of the speakers at their conference on Japanese-American cooperation.

9/27/83, Letter to Packard from Maria Simpson saying she is delighted that he has agreed to speak at their conference, and giving information on conference arrangements.

11/30/83, Letter to Packard from Phyllis R. Herbert conference manager for The Conference Board, discussing arrangements for the conference.

1/19/84, Letter to Packard from Joseph L. Near, Director Public Relations for The Conference Board, asking for a copy of the text for this speech to be furnished to the press.

2/6/84, Letter to Packard from Phyllis Herbert discussing conference arrangements

2/27/84, Letter to Packard from Phyllis R. Herbert, conference manager for The Conference Board, discussing arrangements for the conference.

3/13/84, Copy of a typewritten sheet entitled, ‘Notes of Session Procedures for Speakers’

3/13/84, Copies of two charts showing ratio of research spending to GNP for several countries

 

 

Box 5, Folder 5 – General Speeches

 

May 13-14, 1984, 100 Years from the Carbon Arc to the Silicon Chip, IEEE Centennial, Boston MA

 

5/14/84, Copy of typewritten text of Packard’s speech

 

Packard says he was recently sitting on the deck of his house in Los Altos Hills at dusk, watching the thousands of lights coming on below – all over Silicon Valley. There were the bright sodium vapor lights along the highways, incandescent lights, traffic lights, many colored signs, airplane lights, diesel electric trains, satellites in the sky. There were power lines, telephone lines – over a thousand laboratories and factories making silicon chips and computers.

And he thought how much the world had changed since 1884 when AIEE was founded. What would he have seen from this spot a hundred years ago, in 1884, he wondered.

 

“There might have been a few bright carbon arc lights here and there across the valley. There would have been a telegraph line along the railroad where the trains were drawn by steam locomotives. There would be no power lines, no telephone lines. A few kerosene lamps might be seen moving along the road on wagons or buggies drawn by horses. There were probably a few DC motors here and there but they would not have been visible. The valley would have been covered with apricot orchards and vineyards and farms, but there were no factories of any consequence. It was not yet the age of electricity in the Santa Clara Valley, nor anywhere else, but that age was about to dawn.

 

“By 1884”, Packard says, ”electrical theory had been fairly well understood although the existence of the electron had not yet been demonstrated. During the previous century the relationship between voltage, current, magnetic field and even the theory of electromagnetic radiation had been worked out. There had been Gilbert and Ohm of Germany, Gersted of Denmark, Ampere of France, Volta of Italy, Benjamin Franklin and Henry of the U.S., Faraday of England and many others….It was in 1864 that James Clerk Maxwell expressed the basic laws of electromagnetic radiation by his famous equations.”

 

“By 1884,” Packard says, “there was not only considerable theory established about electrical phenomena but there also had been some practical use of electricity. The electrical telegraph on land had been in use for forty years, the trans-Atlantic cable for eighteen years. The direct current generator had been in use for twelve years, there was extensive use of the carbon arc for outdoor lighting.”

 

Packard says the American Institute of Electrical Engineers (AIEE) was founded in 1884 – “for the dissemination of information about electric power, illumination and telegraphy through publications and meetings. The time was right, for in the two decades that followed, the development and application of electrical equipment expanded at an explosive rate.”

 

Packard tells how Nicolas Tesla announced the development of the AC motor in a paper read before a IEEE meeting in May, 1888. “George Westinghouse recognized the importance of Tesla’s work. He acquired the rights to Tesla’s patents and engaged his services, and in October of 1880, only two years later, the Westinghouse Company was awarded a contract for three, 5000 horsepower, three phase, 25 cycle, 2000 volt generators for Niagara Falls. Power was transmitted from Niagara Falls to Buffalo, a distance of 22 miles, using three phase current at 11,000 volts, a short time later.

 

“From then on the generation and distribution of electric power and the conversion of electrical power to mechanical by AC motors proceeded to expand rapidly…,” Packard adds. “It is interesting to note that electrical machinery and transmission were the subjects of nearly half of all the papers in the AIEE transactions during the first twenty years of the Institute.

 

“Illumination was the second subject included in the purpose of the AIEE, but only 10% of the papers published before 1905 were on this subject. Carbon arc lighting was in widespread use in 1884. Incandescent lamps had been built and had just become practical a year or two before. It was the development of the carbon filament for incandescent lamps by Edison in the U.S. and Swan in England at about the same time that made incandescent lamps practical.”

 

Packard says “One can see this situation of simultaneous invention repeated over and over again during the past century. This is the result of the fact that when basic technical knowledge is widely disseminated throughout the world, a way to use that knowledge to solve a common problem often occurs to several people at about the same time.”

 

As a sidelight, Packard says he can not resist the temptation to comment on the “grossly misguided current proposal by our Defense Department to censor the publication of the results of basic research funded by the Department at U.S. universities. I am quite certain that this proposal, if carried out, will do considerable damage to the advancement of all technology in the United States including technology useful for military purposes. It will not seriously hamper the Soviets’ progress in technology for military equipment unless an impregnable barrier to the transfer of technical knowledge can be place around the Soviet Union and this, of course, is impossible.

 

“Telegraphy was another area to be addressed by the newly formed Institute. There was not much more to be done in telegraphy over wires, but the telephone became a practical device available for the public shortly after 1884. Telephone service was offered to the public in Cambridge, Massachusetts in May of 1877, after Alexander Graham Bell had been given priority in his invention by the Patent Office in 1876.”

 

Packard makes a point of saying that he thinks the forced breakup of the American Telephone and Telegraph Company was a great mistake. “The assured result that I see already developing is that our country will most likely have much worse telephone service in the future and it will cost all of the users more.”

 

:”It was wireless transmission that provided the greatest attraction for scientists and engineers as the 19^th century came to an end. Marconi is widely recognized as the father of radio. In 1901 he sent a wireless signal across the Atlantic. He deserves much of the credit for the development of wireless telegraphy and the radio that followed.”

 

“It has been a mystery to me,” Packard says, “that some important work done in Palo Alto, California has seldom been recognized as an important contribution to the beginnings of radio. I read about Marconi, Fessenden, Alexanderson’s high frequency alternator but not much about the Poulsen arc. Thus, I am going to take this opportunity to tell you about an important contribution to radio that took place in Palo Alto, I might say Silicon Valley, just after the turn of the century. In keeping with the title of my talk tonight I want to make the point that the carbon arc was important, not only in the beginning of electrical illumination, but the carbon arc was also important in the beginnings of wireless telephony which became radio.

 

“Young Cy Elwell made a deal to acquire the American rights to the Poulsen arc, ordered a set of equipment to be delivered, and returned to San Francisco to raise the money to pay for the deal he had made. He set up the equipment in Sacramento and San Francisco and invited potential investors to talk over the system. The demonstration was a great success, the money was raised, including an investment by David Starr Jordan, then President of Stanford University. This resulted in the establishment of the Federal Telegraph Company in Palo Alto about 1906.

 

“The Poulsen arc became the most important source of radio frequency energy for the U.S. Navy through World War I, and large Poulsen arc transmitters were still being produced in Palo Alto in the 1920s, after the vacuum tube had taken over for both the transmission and reception of radio waves.”

 

“It may be interesting to you to note that a very large electromagnet was manufactured by the Federal Telegraph company in the 1920s, after the vacuum tube had taken over, for one of the last Poulsen arc systems. This magnet was later used by Professor Lawrence at Berkeley to make the first cyclotron which opened the door to high energy physics.

 

“The AIEE did not become extensively involved in radio, and so in 1912 a new organization was established, the Institute of Radio Engineers [IRE]. The AIEE continued a minor interest in radio and through the 1930s and 1940s, when I became actively involved in the profession, an occasional paper of importance to the field, that by then had become known as electronics, was published by the AIEE.”

 

Packard tells how, around 1924, he hooked up his first vacuum tube radio in Pueblo, Colorado, and was able to hear WHO from Des Moines  Iowa.

 

“Through the 1920s radio broadcasting continued to develop, and there were more electronic phonographs, talking pictures, and some industrial applications of electronics in the early 1930s.

 

“But even in 1935 the electrical engineering profession was not quite sure about the importance or the future of radio. I studied radio engineering under Professor Fred Terman at Stanford in 1934 and the field had not yet become known as electronics at that time.,

 

“I was fortunate to get a job with General Electric when I graduated from Stanford in 1934. When I arrived in Schenectady, I expressed by interest in radio or electronics. My advisors from the company were convinced there was no future in electronics at the General Electric Company and recommended that I become involved in the more important areas of electrical engineering, such as power generation or transmission, or electric motors or other areas of electrical engineering that held great promise for the future – but electronics –no!

 

Packard says he hopes the audience will forgive him for expressing a bit of personal pride in this matter, “for next year it will be fifty years from the time I received that advice about my future career in electronics from my General Electric advisors. Today the Hewlett-Packard Company is larger than General Electric was at that time, and my Company has as much capability in electronics as the General Electric Company has today.

 

Packard tells of the transistor being invented in 1947, and integrated circuits being developed in the 1960s. In each case it took about ten years for this new technology to come into its own.

 

“The relative importance of electrical and electronic engineering was recognized by merging the AIEE and the IRE into the IEEE in 1963.

 

“Most, if not all of you, here tonight have been involved in the exciting things that have happened since that time. But the silicon chip has replaced the carbon arc and offers a very exciting future.

 

“I think it bodes well for the future of our profession and our industry that these 100 years have ended in a decade of excitement and challenge even greater than the decade of challenge at the beginning, 100 years ago.

 

Packard talks a bit about the past contributions of the IEEE before giving his thoughts about the future.

 

“Our institute has performed well its original objective of disseminating information about electrical and electronics engineering work.

 

“It has provided a strong incentive for scientists and engineers by providing a platform where they can present their work to their peers and receive accolades if the work is deserving. The IEEE has helped with standards and measures without which progress would have been difficult.

 

“Our institute has helped with the education of young men and young women –many more women today – as scientists and engineers. And the IEEE has been involved in governmental affairs from its early days.

 

“It is especially important to note that the IEEE began to develop a strong interest and involvement in the social responsibility of engineering in its early years. This subject has become of great importance during the last two decades since the work of electrical and electronics engineering has become more pervasive throughout the affairs of the world.

 

“I hope very much that the IEEE will play an even stronger and more effective role in the social aspects of our professional work during the next 100 years.

 

“During the past 100 years our profession has devoted its attention to producing electrical energy and electrical products to make the necessities of life: food, shelter, transportation, more readily available. In the next 100 years our profession will be much more involved in improving the quality of life.

 

“As the preservation of the environment and the conservation of our available energy have become high priority objectives during the past few years, all too many policies have been established and regulations adopted without adequate consideration of the basic engineering principles involved.

 

“I believe one of the most important challenges for the IEEE as it enters its second century is to make a more effective contribution to these important concerns of the society.

 

“Our work will of course involve technical innovation and development, but our profession must become more effective in dealing with the social aspects of our work.

 

“The generation and distribution of electrical energy will continue to be an important job during the next 100 years. We must find ways to use electrical energy more effectively and to generate it with less dependence on fossil fuels.

 

“One very important challenge will be to make nuclear energy safer, more reliable and more acceptable to the public. Nuclear energy has fallen into disfavor in recent years but I am sure it will come back to its rightful place sometime in the future.

 

“Our profession will do exciting things in space. There will be both manned and unmanned work stations in space and perhaps a manned station on the moon by the turn of the century.

 

“I doubt that we will see a large solar energy space station beaming large amounts of electrical energy to the earth with microwaves, but I could be wrong.

 

“I am sure the electric automobile will be in widespread use long before the end of the next 100 years. There will be a permanent shortage of fossil fuels and we will not be able to afford to squander the diminishing supplies on personal automobile transportation. I am quite sure the electrical engineering profession will come to the rescue on this problem long before 2084.

 

Packard believes the silicon chip “will continue as a star performer throughout the next 100 years. The capability of these remarkable devices will increase by several orders of magnitude and their effective cost will continue to come down.

 

“We are clearly becoming a society of information and communication rather than a society of industry. Nevertheless, industry will continue to expand the production of goods and services and energy. Industry will simply become much more efficient in using materials, energy and manpower, and the silicon ship is already becoming involved in improving the performance of the smoke stack industries.

 

“As we become a society of information and communication, I suggest to you that the IEEE could make an immense contribution by helping the world to become not only a society of information and communication, but a society of wisdom and communication. Information and communication are essential elements in achieving wisdom and I believe this is a real challenge to think about.

 

“One of the exciting new fields of technology is genetic engineering. This work will certainly expand our ability to control disease and extend the span of human life.

 

“In 1900 life expectancy was a little over 40 years in the industrialized countries. A child born this year will have a life expectancy of 80 years. Some people believe that life expectancy could again double in the next 100 years, in good part as the result of genetic engineering.

 

“I find this an awesome prospect and I raise it partly to indicate the excitement about the future in other fields. But also genetic engineering may have some impact on our profession in addition to offering the participants a longer and more productive life.

 

“There is an electrical aspect to most biological phenomenon. The human brain is an electronic computer with infinitely more capability than anything we can now design and build. Genetic engineering just might make biological material available to replace the silicon chip. This could bring many orders of magnitude of improvement in computers, electrical sensors, and perhaps other devices. Work is already being done in this field.

 

“I would like to conclude with a general observation about the opportunities of the next 100 years. It is a well known and widely applicable principle that the rate of change is proportional to the level of activity. This assumes that the process is not resource limited – or  artificially limited in some way.

 

“Some aspects of electrical and electronic engineering will be resource limited in the next century and the rate of progress will be slow. Many opportunities, on the other hand, will be dependent only on human imagination and human ingenuity which are, of course, unlimited. And there will be areas of exponential growth for us in the future.

 

“We can take much pride in the accomplishments of the IEEE over the past 100 years. We can look forward to the next 100 years not only with hope, but I believe confidence that the second 100 years of the IEEE will be even more challenging, and more productive than the first.

 

“I only wish I were young enough to start all over again.”

 

5/13/84, Copy of printed Schedule of the IEEE Centennial Celebration

5/13/84,  Copy of pamphlet with brief schedule of events

5/13/84, Copy of typewritten sheet  summarizing a history of IEEE

5/26/82,  Letter to Packard from Dr. Robert E. Larson, Institute President, inviting his participation in the 1984 Centennial Day celebration.

6/14/82, Copy of a letter from Packard to Dr. Robert E. :Larson saying, “While I am reluctant to give a commitment this far in advance, I would be pleased to take this assignment subject to the ‘fortunes of nature’ between now and then.”

4/2/84, Letter to Packard from Richard J. Gowen, 1984 IEEE President, thanking him for agreeing to be ‘their speaker.’

5/3/84, Letter to Packard from D. S, Brereton, of IEEE, giving details of the Celebration

5/3/84, Letter to Packard from Thomas C, White, IEEE, discussing press arrangements

5/9/84, Copy of a letter to Thomas White from Margaret Paull, [Packard’s secretary], enclosing a copy of Packard’s speech

5/14/84, Copy of  room bill for Packard from The Westin Hotel in Boston

5/29/84, Copy of a telegram to Packard from Walker Cisler, Chairman Overseas Advisory Associates, Inc., asking for a copy of his speech

5/30/84, Letter to Packard from Joe Millington, HP Personnel Representative, saying he has been an employee for 10 months. He asks for a copy of Packard’s speech, and says ‘it is such a joy to work for our company.’

 

Newspaper clippings covering speech:

5/20/84, Boston Globe

5/20/84, Photocopy of article from Boston Sunday Globe

5/27/84, Mass High Tech, photograph only

5/28/84, Computerworld Weekly

5/28/84, Photocopy of clipping from Mass High Tech

 

 

Box 5, Folder 6 – General Speeches

 

May 27, 1984, Report On Federal Laboratory Review Panel

 

5/27/84, Typewritten text of Packard’s remarks

Packard had chaired the Federal Laboratory Review Panel in 1982, and he was asked by the American Association for the Advancement of Science to comment, at a symposium they were holding, on their findings and what progress had been made by the laboratories since then.

 

In his remarks Packard says the Review Panel was appointed in March, 1982, and asked to “look at the laboratory missions, identify impediments to performance and determine whether the nation is getting the optimum return on its substantial investment at the Federal Laboratories.

 

Packard explains that with some 700 Federal laboratories it was not possible to physically visit each one. As an alternate the Panel decided to visit laboratories supported by The Department of Defense, Agriculture, Commerce, Energy, Health and Human Services and National Aeronautics and Space Administration. The Panel members met with top agency representatives responsible for laboratory management, reviewed past studies, invited comments from industry and university people. Most of the Panel members had worked with Federal laboratories and brought their own experiences as well.

 

Packard says the Panel “identified many highly competent scientists and engineers, important research programs and unique large research facilities at the Federal laboratories. The magnitude of many of the programs and facilities were beyond the means of universities and industry and thus had a unique role in the advancement of science and technology.

 

“The Panel also noted,” he says, “a number of serious deficiencies at the Federal laboratories that limit both the quality and cost effectiveness of the work being done there. These deficiencies are not entirely new but have become more serious in recent years and the Panel decided it was time for these deficiencies to be corrected.

 

Packard presents the recommendations of the Panel:

 

Recommendations on the subject of missions:

 

1.1    “As a top management priority, Federal agencies should re-examine the missions of their laboratories.

1.2   The size of each Federal laboratory should be determined by its mission and the quality of its work.

 

“We noted that the preservation of the laboratory is not a mission, but we did not recommend that any specific laboratory should be terminated.”

 

“The second finding of the Panel related to personnel at the Federal laboratories. Many of the laboratories are having difficulty in attracting, motivating and retaining qualified scientists and engineers. The most serious problems were at laboratories under Civil Service regulations. Even at some of the laboratories which were contractor operated there were less than optimal personnel policies.

 

“The Panel made several recommendations in the personnel area:

 

2.1  “Administrative and legislative actions should be undertaken to create personnel systems for scientific and technical people independent of current Civil Service procedures.

2.2   Contracts governing government owned, contractor operated laboratories should be administered so as to permit the contractor to carry out an independent salary administration.

2.3   Personnel ceilings should not be used in addition to budgetary control of Federal laboratories.

 

Re resource funding:

 

3.1    “The Congress and Office of Management and Budget should authorize funding for the Federal laboratories on a predictable multiyear basis so research activities can be properly planned.

3.2    At least 5% and preferably up to 10% of the annual funds should be devoted to independent research and  development at the laboratory director’s discretion.

3.3    Federal laboratories should be allowed to carry remaining funds into the next fiscal year.”

 

Fourth finding, management:

 

“There was far too much detailed direction of laboratory activities from agency headquarters and lack of accountability for the quality and relevance of the work being done. Far too many reports were being required.”

 

Recommendations:

1.1    “Each Federal laboratory should have a more effective oversight function, generally a committee responsible for assuming the continuing excellence of the laboratory.

1.2    Federal agencies should rely to a greater extent on a peer review process for funding basic research.

1.3    The laboratory director should be appointed for a finite term and be held accountable for the quality, relevance and productivity of the laboratory.

1.4    The administration and the Congress should work together to strengthen the DOE laboratories. In particular, the Congress should make a substantial reduction in the oversight of DOE research and development.”

 

The fifth finding – “laboratories too isolated from universities, industry, and other users of their research.”

 

Recommendations:

 

5.1    “Federal laboratories should encourage more access to their facilities by universities and industry.

5.2    Laboratories should have more flexibility in contracting to be able to contract with universities and industry for research.

5.3    DOD laboratories should have a larger role in working with military operating forces.

 

“The report of the Panel was reviewed by the full White House Science Council and submitted to Dr. Keyworth in May of 1983.

 

“I had the opportunity to brief the President and the Cabinet on the report in July of 1983 and in August the President directed the Office of Science and Technology Policy and the Office of Management and Budget to respond to the central thrust of the report.

 

“I also briefed the Secretary of Defense, the Secretary of the Department of Energy, the director of NASA and was assured of their support in implementing the recommendations.

 

“In response to the President’s memorandum, the Federal Coordinating Council for Science, Engineering (FCCSET), and Technology established a Committee on Federal Laboratories to  monitor implementation of the Panel’s recommendations. The FCCSET  was asked to report on July 1, 1984 the progress of implementation of the recommendations.”

 

“In general, the direct agency response to our recommendations has been good but it is too early to determine how much real improvement will come from this response.

 

“Packard says, “Some reductions have been made in the size of the laboratories and at least the panel’s recommendations in respect to laboratory size have been recognized.

 

“In the personnel issue there has been a good deal of work done in:

The Development of model legislation –

Assessment of actions that can be taken without legislation –

An examination of the operation of government owned, contractor operated laboratory operating policies – and

The collection of proper statistical information.

 

“While good progress has been made in developing the necessary model legislation to get laboratory personnel administration out from under Civil Service procedures, it is not yet clear whether the appropriate legislation can be enacted.

 

“Some of the bureaucracy that will be affected is having second thoughts and it will probably take a good deal of work with the Congress to get legislation passed. We may need the support of organizations like the AAAs to get this job done.

 

“The model legislation included these key features:

1. Permits agencies to establish alternative personnel systems
2. Applies to scientific and technical personnel in Federal laboratories and throughout agencies if broader coverage is deemed essential
3. Bases pay on performance rather than longevity
4. Creates broad pay bands
5. Simplifies job classifications
6. Allows pay cap to be waived for up to five percent for specifically qualified scientific and technical people
7. Permits agency head to classify positions and fix compensation to be competitive with comparable positions outside government
8. Allows inclusion of positions now in the Senior Executive Service
9. Permits Naval Weapons center and Naval Ocean Systems Center personnel systems to become permanent.

 

“There are some personnel actions that do not require legislation that are recommended by the interagency working group.

 

1. “Exclude Federal laboratories from current proposal to reduce the number of employees in Civil Service grades 11 through 15.
2. Allocate to the laboratories more positions for specially qualified scientific and technical personnel under provisions of 5 USC 3104.
3. Provide government operated laboratories with blanket permanent direct hire authority for all professional, scientific and technical positions in the laboratories.
4. Provide government operated laboratories with blanket, direct hire excepted service appointment authority for research associates.
5. Include special rate schedules for engineers and other manpower shortage occupations in annual cost of living adjustments.

 

“There are considerations underway about what can be done to eliminate personnel ceilings and allow the laboratories to be under budget control only.

 

“The interagency group is working on multiyear funding for R & D. This will have to be considered by OMB and requires agreement of the administration and the Congress.

 

“It will take further work to get multiyear funding approved for the Federal laboratories but I believe it can be done.

 

“Considerable progress has been made to increase discretionary funds for the Federal laboratories.

 

“Carryover funding situation is quite variable. DOE and DOT and DOC have no time limit on R & D appropriations. The DOD has two year obligation authority but DOD…[end of text].”

 

A sheet handwritten by Packard contains some additional notes – but difficult to decipher:

 

“Legislation –

 

“Missions should be set by Administration

 

“Might require [  ?  ] reports on what missions should be.

 

“Put some DOD [   ?   ] in other than DOD laboratories.”

 

10/7/83, Letter to Packard from Albert H. Teich, Manager, Science Policy Studies of the American Association for the Advancement of Science inviting Packard to speak at a symposium entitled ‘The Role of Federal Laboratories: Toward a New National Policy?’

10/19/83, Copy of a letter from Packard to Albert H. Teich saying he would be pleased to speak at their symposium

10/25/83, Letter to Packard from Albert H. Teich saying he is pleased Packard will be able to participate and discussing possible dates.

11/8/84, Copy of a letter from Packard to Albert H. Teich discussing dates

1/18/84, Letter to Packard from Albert Teich discussing possible topics for Packard to cover

1/27/84, Copy of a letter from Packard to Albert Teich with further discussion of topics.

3/5/84, Copy of a flyer from AAAS to symposium speakers discussing copies of speech text

5/30/84, Copy of status report  on a ‘Utilization Study – Pilot Stage, which involved visits to five companies, including HP, preceded by questionnaires to be completed by company lab personnel

June 1984, Note to Packard from John Adam, Associate Editor of the ‘Spectrum’ attaching an article they with to publish covering Packard’s speech at the symposium. A pencilled notation thereon says “Called OK 6/19/84.

 

 

Box 5, Folder 7 – General Speeches

 

June 13-15, 1984, New Products From Advanced Technology, German/American Seminar, Bonn, Germany

The seminar was entitled “Venture Financing and Foundation of Technology-Oriented Companies

 

Typewritten text of Packard’s speech

 

Packard says that he is pleased to participate in this conference “on how to contribute to economic growth and create new jobs by developing new products based on advanced technology.”

 

Rather than simply telling of his experiences at the Hewlett-Packard Company, he says he would like to first look at the subject from an “historical view,” – describing some general principles “that encourage success in new product development, and these same principles have resulted in successful new product development in many places and over a very long rime in the past.”

 

“The first principle,” Packard says, “is that the driving force for the development of new products is not technology, not money, but the imagination of people. Basic technical knowledge often makes it possible to do things that could not be done otherwise.” He adds that a complete understanding of the basic scientific principles involved isn’t always necessary – and he gives Edison’s development of the electric light bulb, and deForest’s invention of the vacuum tube as examples.

 

He also gives a corollary of the first principle “…there are many examples where new scientific principles have been discovered and it took time, and often someone other than the scientist who discovered the principles, for a useful new product based on those findings to be developed. A good example of this situation is in the early development of wireless, or radio.

 

“James Clerk Maxwell developed the scientific theory of electromagnetic radiation in 1865. Over twenty years later Hertz devised a rather simple experiment to demonstrate that electromagnetic waves actually existed. Ten years later Marconi in England and Professor Popov in Russia achieved wireless transmission of signals over distances measured in miles.

 

“There is often a delay between the scientific discovery and the successful product even in recent years. The transistor was demonstrated first in 1947, but it was nearly ten years before it came into widespread use.”

 

Packard gives two reasons why a new discovery may not be converted quickly into widespread use. “The scientist working at the forefront of new knowledge is often not interested in new products. More important, particularly in today’s world, a new product requires a large combination of scientific knowledge, not just one new idea. Often an innovative development requires a team of people working together and bringing a wide range of knowledge to the development.”

 

Packard says he raises this point because it is often thought that if a country would only increase its support of basic research, the development of new high technology products would be increased. “Most new basic science,” he says, “is available to anyone in the world (with a few exceptions that are classified for national security reasons), and so the differences among countries in their development of new products can not be explained on the basis of the scientific knowledge available to people working on new products.”

 

Packard emphasizes the point with the example of Japan and the

U.S.S.R.  “Japan does very little basic research, yet has perhaps the most impressive new product program in the world today. Japan simply depends on basic research done in other countries.

 

“The U.S.S.R. has one of the best programs of basic research of any country today, yet has the least impressive new product development program. The U.S.S.R. is at least a decade behind the United States and Japan in electronic products. The Soviets try very hard to catch up by buying or stealing new product ideas from the United States, but for that matter, so does Japan.”

 

Packard says the Hewlett-Packard Company “does little basic research. All of our company’s new products are based on scientific knowledge that is available to virtually everyone else in the world. We do some very important research that has helped us achieve a lead in many new products over the years, and I would like to tell you what we do.

 

“To be useful for new product work, research has to be focused. Our company decided to concentrate on general purpose electronic measuring instruments from the beginning in 1939. Our first few products were based on the ‘feedback principle’ that was developed at the Bell Telephone Laboratories a few years earlier. We also realized that if, instead of using the knowledge available to everyone else, we could get ahead of the game by research, it would give us an important advantage. Accordingly, we have done a great deal of research in fields that would be directly applicable to our products and we have often been able to gain a lead on our competitors.

 

“Industrial research of the kind we have done at Hewlett-Packard is very important to the development of new high technology products, but to be effective it must be highly focused.”

 

“Highly focused industrial research can make an important contribution to new product development but at the same time, many companies have successful new product programs without much industrial research of any kind.

 

“Money can be an important factor in encouraging new product development. Money is important as an incentive to motivate innovative people and it is often a necessity to support experimental work and development work. The need for money varies greatly in different situations. Bill Hewlett and I started the Hewlett-Packard Company in 1939 with an investment of only $500. The dollars were larger in those days, but it did not require a great deal of equipment either to experiment or to build a product in electronics in 1939. The situation is different today. Work in large scale integrated circuits requires millions of dollars worth of facilities and equipment. The development of a new product in the field of genetic engineering is costing in the range of $50 million before the product can be marketed. The development of a new commercial jet aircraft may require the investment of $2 billion before the first aircraft can be delivered to a customer.”

 

“In the case of Hewlett-Packard Company, we spend about 10% of our sales dollar on new product development and with these funds, we finance hundreds of new product projects in some fifty of our divisions all over the world.

 

“The $500 million dollars we spent last year in new product development will add billions of dollars to our sales over the next few years. In 1983 over two thirds of our orders were for products introduced during the past four years.”

 

“I know there has been a great deal of talk about commercial fall out from government funded research and development, including that done for military purposes. There has been some important fall out such as the development of commercial jet aircraft from military jet aircraft. I would not consider this to be an area where a major contribution to the development of new commercial products can be made. There is, however, a great deal of research and development being supported by governments all over the world. The extent to which this work might make a more effective contribution of new commercial products should receive continuing attention.

 

“Last year I chaired a panel to study the U.S. Federal Laboratories. There are some 700 of them and they are supported at a level of nearly $20 billion. The panel recommended that a closer relation between the Federal Laboratories be established and that the laboratories should not undertake the development of commercial products without industry participation.

 

“Thus far,” Packard says, “I have talked about research and money, and I have intended to convey the idea both are important to better new product development. I hope you may have concluded that I do not believe these are the most important factors.

“It is said that necessity is the mother of invention, and any successful new product is the result of a person or a group of people deciding there is a need for a new product or service and having the imagination and the motivation to develop the product or service.

 

“I do not know whether a person’s imagination and therefore his innovative ability can be developed, but certainly it can be identified and encouraged. It seems to me then, that identifying and encouraging innovative people may be the most important thing that can be done to improve the effectiveness of new product development, whether it be in a company or in a country.

 

“We have given this matter a great deal of consideration in the Hewlett-Packard Company from the very beginning. In the first few years, Bill Hewlett and I participated actively in the development of our first products. Our first product came from a very innovative idea that Bill Hewlett had on the negative feed back principle. He did this work while he was still in the laboratory at Stanford.

 

“As the company grew, we realized our future would be determined by our ability to attract and motivate engineers to develop successful new products. With help and encouragement from Professor Frederick Terman

we undertook to identify as many bright young graduates as we could afford to hire each year from the leading technical universities across the United States.

 

“In hiring young people from U.S. universities, we learned that some universities like Stanford had given their students a good deal of encouragement in becoming involved in innovative new product work, sometimes to the point of encouraging them to go out after graduation and start new companies. This is clearly the reason why over a thousand new electronics companies have been established around Stanford University in Silicon Valley over the last two decades.”

 

“While I do not believe that the way we have approached the problem of new product development at the Hewlett-Packard Company is the only way to do the job, it has at least been moderately successful.

 

“In the first place, it became clear that it was essential to know what a potential customer might need and might want before a new product project went too far. Often the need was known before the project was started, but the customer’s ideas were always helpful as the development progressed. Thus we tried to establish and maintain a close relationship between our development engineers, our customers, and we also kept our marketing people closely involved. Often it was the marketing people who came up with an idea for a new product.

“We also realized that the cost and quality of a new product was highly dependent on our manufacturing capability. We decided it was essential to bring manufacturing people into every new product development program at an early stage, and as a corollary, keep development people involved

until the production of a new product was going smoothly.

 

“Thus we came to understand that an effective new product program was a team effort involving development people, manufacturing people and marketing people.”

 

“These ideas encouraged us to structure the Hewlett-Packard Company into a relatively large number of small divisions, each with an area of product responsibility, and each with the responsibility to develop, manufacture and sell products to provide leadership, if  possible, in its product area. The company has over fifty such divisions world wide.

 

“Each division has a great deal of autonomy, is measured by its performance and requires a minimum of overall guidance from top management. Top management does have the responsibility to see that performance standards are set and performance is evaluated. There are also a number of policies, financial and personnel for example, that are kept as uniform as possible on a company wide basis.

 

“It is interesting, and I believe important, to point out that the country where these divisions have been located has not made much difference in their performance  We have several divisions located in the Federal Republic of Germany, and they have been just as effective in developing successful new products as those in the United States, Japan, or elsewhere.

 

“In conclusion, I believe the actions which can be taken at the government level to improve new product development are very limited. I do not believe Japanese industrial policy has been anywhere as important as the highly competitive and highly energetic work of Japanese people in the Japanese success story.

 

“The Government can be helpful in some areas of tax policy to encourage venture and reward success. Perhaps the most important thing any government can do is to help establish an environment in industry and education that encourages entrepreneurship and rewards successful innovation.

 

“Before concluding I would like to say a word about what I think are the fields of opportunity today. Predictions about the future of science are always risky, but there are at least several good areas of opportunity for the next decades.

 

“Electronics will continue to be an area of opportunity for innovative new products. The field of general purpose computers is becoming very competitive and the chance for success for a new firm or a new venture in this field is not very high. Many small firms that entered this field during the last few years are going to fail, a number have already gone bankrupt.

 

“There is talk about the opportunity to develop a super computer. This is a limited field and it would be very difficult for a new firm to compete with those already working in this area.

 

“On the other hand, microprocessors and electronic sensors are invading every facet of the world’s economy. It would seem to me that this field is still one of great opportunity.

 

“Genetic engineering is a new area of great promise in high technology and appears to have almost an unlimited future. There are still some hurdles to overcome – the regulatory process has not yet been stabilized. Manufacturing costs and quality control have not been demonstrated. There are some real challenges in this field, but challenges make an opportunity for innovation.

 

“The development of better products in old established fields is often limited by the materials available and this innovative work on new materials will certainly result in the improvement of older products and also exciting new ones.

 

“In conclusion, I am quite sure the opportunities to develop successful new high technology products will be just as great in the years ahead as they have been at any time in the past.

 

“I wish I were young enough to start all over again.”

 

Undated, Two pages of notes, handwritten by Packard. It is not clear whether he used these with the above talk or not.

 

The outline starts with –

“Group I

 

“I Entrepreneurship

 

“Small business not viewed with great favor

Government procurement policy changed

Major corporations should be encouraged

 

Government should make reports on progress

Tax concessions should be given to small companies

Red tape on auditing books could be cut

Help should be given to prospective people

Fulbright scholarships

Industrial parks

Government help should be given

Publish magazine for tech firms”

 

“Group 2

 

[No notes]

 

“Group 3

 

“Positive relationship between entrepreneurs and venture capital people

Venture capital – risk involvement

Active note – partnership relationship”

 

6/11/84, Travel and meeting schedule for Mr. and Mrs. Packard

6/13/84, Typewritten seminar schedule for Mr. and Mrs. Packard

6/13/84, Printed copy of the seminar program – written in English on one side, German on the other

6/13/84, Typewritten list of seminar participants from the United States

6/13/84, Typewritten list of seminar participants from Germany

6/13/84, Typewritten program for a banquet to be held and June 13. Dr. Risenhuber, Federal Minister of Research and Technology will preside and speak.

6/13/84, Typewritten list of seminar speakers giving a short biography of each – in German

6/13/84, Copy of typewritten list of what appears to be the names and addresses of seminar attendees

6/13/84, Copies of what appear to be worksheets for three work groups – typewritten and written in German

6/14/84, Typewritten seating arrangement for luncheon and English translation of remarks to be given by Chancellor Kohl

6/14/84, Typewritten copy of speech at the seminar by Peter L. Wolken, entitled ‘Experience Gained with Venture Capital in the United States of America’

6/15/84, Copy of typewritten speech given at the seminar by Dr. Otto Graf Lambsdorff

 

Newspaper clipping

6/5/84, San Francisco Chronicle discussing  Chancellor Kohl’s relations with the press

 

3/29/84, Copy of a telex from Arthur Burns, Ambassador to Germany to Packard asking if he will participate in a seminar on technological innovation being organized by Chancellor kohl in Germany

4/13/84, Copy of a letter from Packard to Eberhard Knoblauch General Manager of HP in Germany, telling him of the seminar and asking that he give Packard any thoughts he may have on why Germany “is not keeping up with the U.S. and Japan in technology

5/9/84, Copy of a letter to Packard from Dr.  Heinz Riesenhuber inviting him to participate in the seminar

5/23/84, Copy of a letter to Packard from Dr. Peter R. Weilemann, discussing arrangements for the seminar.

6/13/84, Copy of an invitation from Dr. Heinz Riesenhuber to Mr. and Mrs. Packard for dinner on the evening of 6/13

6/14/84, Copy of an invitation to Packard inviting him to lunch on June 13

6/14/84, Copy of an invitation from Ambassador Burns inviting Mr. and Mrs. Packard to a reception 6/14

6/14/84, Hand printed letter to Mr. and Mrs. Packard from George and Walburga Kieferle, who says he designed several HP buildings in Germany, and wants to send some flowers

 

 

Box 5, Folder 8 – General Speeches

 

November 27, 1984, U.S. Japan Relations, New York, NY

 

11/27/84, Copy of typewritten text of Packard’s speech

 

Packard says he is glad to be here to discuss the report of the United States-Japan Advisory Commission. “The Commission began its work in May of 1983 and submitted its final report to President Reagan and Prime Minister Nakasone on September 17, 1984.

 

“The Commission was asked,” he says, “to consider all aspects of the U.S.-Japan relationship, not just trade and economic affairs. The full commission held four meetings with both U.S. and Japanese members present and both sides met a number of times and in addition, there were a number of informal meetings among the various members.”

 

Packard says he was pleased they were able to have “very frank as well as friendly discussions.”

 

When they started, Packard says he “had serious doubts that we could contribute much that world be useful since the subject of U.S.-Japan relations had already been studied in every aspect by literally hundreds of knowledgeable people. If nothing else, I hope our report will at least help to underscore the great importance of the U.S.-Japan relationship to both countries, and particularly to the future of peace and prosperity in the entire Western Pacific region.”

 

Packard says the most important message of the report of the commission is contained in the introduction which he proceeds to read [and which is quoted herewith].

 

‘The Japan-United States relationship over the past four decades has developed into one of the most unusual relationships between two major nations. Beginning with almost complete dependence on understanding and assistance from the United States, Japan has risen from the ashes of World War II to become one of the world’s powerful nations. As recently as 1960, Japan’s economy was only one-twelfth the size of the American economy. Today it is almost half, and its per capita income is nearly equivalent to the U. S. level. Our two countries together account for one-third of the world’s annual production of goods and services and three-fourths that of the Pacific basin nations.

 

‘The Japan-United States bond has become strong because of a wide range of common interests and attitudes, and because there have been few, if any, areas of basic conflict. It is fair to say that no two countries in the world share the essential ingredients of a vital bilateral relationship – economic, political and security ties – in greater degree than the United States and Japan.

 

‘The future success of this relationship is of great significance to world peace and prosperity, especially to that of the Pacific basin region. We believe that if Japan and the United States can manage their relations well and build even stronger bonds of cooperation, they have the capability to lead the Pacific region into a new era of progress and lasting peace. Our cooperation can be a powerful force propelling the developing countries of East Asia and the Pacific toward living standards comparable to those of the advanced, industrial democracies. It will also be of tremendous importance to our own prosperity and that of other advanced countries.

 

‘The U.S.-Japan Advisory Commission has studied nearly every aspect of our relationship: economic, including industrial, agricultural, and financial relations; security affairs; political and diplomatic relationships; and scientific and technological relations. We have noted particularly that as economic interdependence has increased, points of friction and conflict have increased. We do not believe these problems have arisen because of any divergence of basic national interests. We believe, however, that a more effective management arrangement is required to deal properly with the many complex problems that occur between the two countries.

 

‘Improving the management of the relationship, in our judgment, is the key challenge to the leaders  of the two countries. The section that follows, which highlights this crucial issue, proposes solutions intended to break out of the pattern of recurrent cycles with peaks of friction and frenetic negotiation. In view of differences on our governments and administrative structures, each government will have to work out the details of improved management arrangements. The essential ingredients, however, call for the President and Prime Minister to set overall U.S.-Japan policy; establish and periodically review both short-term and long-term agendas; and assure that internal mechanisms for implementing decisions and monitoring performance are well in place, with provision for coordinated input by appropriate government agencies as well as representatives of the private sector.’

 

Returning to his own text, Packard says “There are going to be continuing problems of trade, of financial relations, of security affairs, political and diplomatic relationships, scientific and technological relationships.

 

“There is no way these problems can be solved once and for all. They are not being managed very well and they could get out of hand. They simply must be managed better. Better management requires the attention and leadership of the President and the Prime Minister. We believe President Reagan and Prime Minister Nakasome know and understand this. They have an historic opportunity to establish a pattern of leadership in managing the U.S.-Japan relationship that can result in a long era of peace and prosperity in the Pacific Basin.”

 

Saying that he is sure his audience is aware that this relationship has not been handled well, Packard proposes taking a look at some of the issues.

 

“Trade attracts most attention. Japanese exports to the United States have been going up at the rate of 19% per year while U.S. exports to Japan have been going up at only 12%.

 

“Last year the U.S. trade deficit with Japan was about 20 billion. This year it will be over 30 billion and it will increase again in 1985. This balance is between a very large export of manufactured goods by Japan over a smaller but still important export of agricultural and forest products and some raw materials by the United States.

 

“We are Japan’s largest market for manufactured goods and they are our largest market for agricultural products.

 

“From a macro-economic standpoint there is no need for the bilateral trade between the U.S. and Japan to be balanced. The dollars we give Japan for manufactured goods eventually get back to us one way or another. For example, they go to the Mid-East to buy oil for Japan and come back to the U.S. to finance our federal deficit.

 

“The problem is that the Japanese exports to the U.S. cost jobs in the U.S. and even threatens entire industries. The problem is exacerbated by the fact that the Japanese market is by no means completely open to goods manufactured in the United States. Also the market for agricultural goods in Japan is not completely open to U.S. agricultural products even though Japan is the largest U.S. market for agricultural products.”

 

Looking at the reasons why Japanese markets are not completely open, Packard says “Japan has very small resources of energy and raw materials and a shortage of food and must sell its manufactured products abroad to pay for energy, raw materials and food. This fact is thoroughly understood by the Japanese bureaucracy and the Japanese people as well. They have, really, no economic incentive to import manufactured products.

 

“This is reflected in bureaucratic action and is the cause of many of the non-tariff barriers to the import of manufactured goods.”

 

As an example, Packard tells of reports of small merchants in Japan putting American products on the back shelf while featuring local Japanese products. He contrasts this with the U.S. where department stores will feature Japanese imports in special sales.

 

Packard says their study showed up a very interesting thing concerning how Japanese and Americans perceive each other. “About 70% of the Japanese” he says, “feel friendly toward the United States. Of those who feel friendly, 38% said it was because of strong economic and trade ties, 23% because of close security relationships and 20% because we are both a democracy; but only 5% because we are friendly and likable.

 

“I suspect the fact that Americans are not really very well liked in Japan has something to do with the difficulty we have in selling our products there.

 

“There is another serious problem we have in penetrating the Japanese market with U.S. products. Very few American business people, or for that matter other Americans, can speak Japanese. Thus there is very poor communications with people in Japan at the working level. On the other hand, nearly all Japanese business people who have anything to do with U.S. markets can speak English.

 

Packard concludes from this that there are several things that can be done to increase the penetration of U.S. manufactured products into the Japanese market:

 

“One is to have a bureaucracy in Japan more interested in U.S. imports. Here the leadership of the Prime Minister is the key. (The bureaucracy was very critical of our report. Prime Minister Nakasone told them all to read it and do something about it.)

 

“Second, there should be increased private sector discussions of the problem. Most of the business leaders in Japan realize that the trade deficit has become a major problem. Discussions industry by industry will be productive and should be encouraged.

 

“Third, U.S. business should learn more about the Japanese market, the tastes and desires of the Japanese consumer. This will take time for more business people will have to learn Japanese, which is no easy matter.

 

“I might comment here that Americans don’t as a whole feel personally very friendly with Japanese people either. This is not surprising since we have completely different cultural backgrounds, religions, family customs, etc. This cultural barrier to a better understanding is breaking down, but it will take time. At least it is moving in a positive direction.

 

Turning to common national security problems, Packard says “Japan is making an immense contribution to the U.S. security position in the Western Pacific. One needs only to consider what the U.S. capability in that area would be without the availability of Japanese ports for our ships or Japanese bases for our aircraft.

 

“The security relationship is fortunately moving in a positive direction. Cooperation between the U.S. military people and the Japanese self defense people is excellent.

 

“Japan is now much more aware of the Soviet threat in the Western Pacific and has agreed to undertake the defense of the sea lanes 1000 miles from Japan.

 

“The Commission recommended that the United States should stop complaining about the percent of GNP spent on defense in Japan and instead concentrate on joint efforts to increase the effectiveness of our security forces in that theater. In particular, we recommended that the Japanese ability to produce high quality high technology products should be harnessed more effectively to improve our joint military capability.

 

“While it would be desirable for Japan to carry a larger share of the national security burden in the Western Pacific it must be recognized that this must continue to be largely the responsibility of the United States.

 

“A completely rearmed Japan would be a matter of great concern to all of the people in that area. People in that area have not forgotten how it was when Japan was the dominant power and actually occupied Korea, parts of China, the Philippines, Malaysia and Singapore, and even threatened northern Australia.

 

“Despite the historical involvement of Japan in the Western Pacific , it can have a very positive influence in diplomacy and in economic aid in the future.

 

“Many of the developing nations in the Western Pacific have a free enterprise economy and must have receptive markets for their products. Japan and the United States must keep their markets open for the industrial products of these developing countries – Korea, Taiwan, Mainland China, and all the rest. This will cause additional strains on both the Japanese and the U.S. economy.”

 

Looking at the subject of industrial policy, Packard says it has two distinct elements. “One is the appropriate role of the government and the private sector in the national economy. The second question is the degree to which the relationship affects the competitiveness on a country.

 

“Both the United States and Japan have industrial policies. Japan’s policy is directed more at increasing foreign trade than the U.S. policy, which has a stronger focus on the domestic economy.

 

“Our recommendations suggest that both the past Japanese industrial policy and the past U.S. industrial policy have developed on the basis of the economic objectives of the two countries and there is no reason to bring them into any sort of conformity. If anything, the U.S. has more to learn from Japan about how to utilize industrial policy than the other way around. At the same time, there is no reason for the United States to try to emulate the Japanese industrial policy.”

 

Packard turns to the recommendations made by the commission regarding the flow of trade between Japan and the U.S. and he says “A major cause in the growth of the imbalance has been the different macroeconomic policy mixes in Japan and the United States. We recommended that U.S. interest rates should be reduced and Japan’s growth rate should be increased by increasing its domestic investment and reducing its saving rate. While these adjustments would, we believe, help in reducing the trade imbalance, both countries maintain these policies for a number of other reasons. I doubt that our recommendations in regard to macroeconomic policy will have much influence on either government.

 

“The exchange rate is a major factor in the trade imbalance between the United States and Japan and it also makes U.S. industry less competitive with Japanese industry in other world markets.

 

“This issue was considered in detail last fall and the Commission made a number of recommendations that would help make the yen more of an international currency.

 

“Our recommendations were given to President Reagan and Secretary Regan before the President’s trip to Japan last fall. In the meeting last November, the Prime Minister agreed to implement many of the recommendations.

 

“There was excellent follow-up work by Secretary Regan. In May of this year the U.S. Treasury Department and the Japanese Minister of Finance agreed to a number of important measures relating to the internationalizing of the yen and the liberation of the capital markets in Japan. These steps alone will not correct the yen-dollar imbalance but they are a significant step in the right direction.

 

“We hope that these steps toward financial deregulation will not be viewed in Japan as dictated by foreign pressures but as a desirable path in Japan’s own economic interest.

 

“In the meantime as you know the dollar has continued to strengthen in relation to the yen and it will continue to be strong as interest rates are high and the United States is considered a safe haven for investment.

 

“We discussed the desirability of Government intervention in trade matters and agreed that it should be avoided or at the most be only temporary to allow breathing time for industries to adjust to market forces. We also felt it would be desirable for such actions to be voluntary and with substantial industry to industry involvement.

 

“The quota on Japanese automobiles is a good case in point. It was generally accepted by the industry in both countries. The automobile industries in both Japan and the United States have benefited at the expense of the American consumer who is now paying higher prices for both Japanese and American automobiles. At the same time, the quota has resulted in more jobs in the United States, including jobs created by Japanese investment in manufacturing plants in the U.S.

 

“Although the Commission agreed that the quota on U.S. imports of Japanese automobiles should not be a permanent arrangement, we did not recommend a specific time table to eliminate the quotas.”

 

11/1/84, Letter to Packard from David MacEachon of the Japan Society saying they are delighted he has agreed to discuss the Report on U.S.-Japanese relations

11/1/84, Letter to Packard from Emi Lynn Yamauchi, Press Attaché in the U.S. Embassy in Japan, sending a copy of a speech recently made by Ambassador Mansfield on the subject of U.S.-Japan relations

11/13/84, Copy of a letter from Packard to David MacEachon discussing travel times

11/27/84, Printed flyer invitation to hear Mr. Packard’s address ‘Challenges and Opportunities in United States-Japan Relations

Undated, Publication of the Foreign Policy Association

Box 5, Folder 9 – General Speeches

 

February 6, 1985 – Council of 100 Business Leadership Award, Arizona State University, Phoenix, AZ

 

Packard was selected as the first recipient of this award and these are the remarks he presented on that occasion

 

2/6/85, Handwritten 3X5” cards, written by Packard outlining his remarks. These are very brief and cryptic.

 

“Attention on President Reagan’s budget and State of the Union Address. Tax reform, deficit, what the economy will do, interest rates

 

“I don’t have any special insight on these issues. I don’t like a lot of things I have been hearing.

 

“US – Japan Advisory Commission [See speech folder 11/27/84].

Appointed by President Reagan and Prime Minister Nakasone, May 1983

8 US members

7 Japanese members

Held 8 meetings

Made report to Pres. And PM September 1984

[He lists the names of all the members]

 

“[Commission considered] all aspects of US- Japan relationships

Yen/$ relationship

Agriculture, industrial policy

Security, technology

Long range serious

 

“US-Japan relationship over past four decades has developed into most unusual relationship between two major nations.

Complete dependence after war

1960 [Japan production] 1/12 of US

Today ½, nearly equal on per capita basis

 

“US & Japan [together] 1/3 of world production, ¾ of Pacific Basin

Wide range of common interests

Few areas of basic conflict

New era of lasting peace, prosperity in Pacific Basin

 

“There are some problems, these must be managed better in future

Trade

US – Japan’s largest market for manufactured products

Japan – US’ largest agricultural [market]

 

“Bilateral deficit

20 Billion 1983 – 30 billion 1984

Will probably grow further, 1985 Automobile, Electronic equipment

 

“Character of Japan’s economy

Export manufactured goods to pay for energy, raw materials and food

US – large domestic market much less incentive to export

 

“Strong dollar, weak yen. 1979 costs more nearly equal yen below 200/$ Since 1979 cost spread 30%

 

“Japan labor practices

Heavy emphasis on quality

Automobile 1975 2.9 B

Auto costs 1981 13.7B

Quota on Japanese automobiles, increased costs by $1000

Electronic Products 15B last year

 

“What can be done?

Voluntary action – open Japanese market

Quotas – tariffs, protections

Japanese know problem serious

Japan does not have advantage in technology

Better management

More competitive spirit

Better teamwork between industry and government

Better education

 

“Some progress

US must work harder at Japanese market

Industry cooperation

Agriculture

Security Situation in Pacific

US, Japan, PRC

Developing countries doing well

The US-Japan relationship is one of the brightest spots in a troubled world

We must give it a high priority”

 

10/12/84, Letter to Packard from Marilyn Seymann, Ph.D., telling him that he has “been selected as the first recipient of the Council of 100 Business Leadership Award”

1/31/85, Typewritten sheet listing Packard’s schedule for the day of the award, February 6, 1985

1/31/85, Typewritten note from Laurie O’Brien, Arizona State, enclosing a typewritten membership list of the Council of 100

2/7/85, Letter to Packard from L. William Seidman, Dean College of Business, Arizona State, saying it was an honor to have him visit with them and receive the Award

2/11/85, Letter to Packard from Ron K. Schilling, Arizona State, enclosing copies of some press articles

2/14/85, Letter to Packard from Anne Marie Shanks, Development Director of the Arizona Center for Law in the Public Interest, enclosing a news article  from the Business Journal

 

 

Box 5, Folder 10 – General  Speeches

 

September 9, 1985, Interex Conference, Washington D. C.

Packard was invited to speak at the 1985 Interex North American Conference, a group devoted to the interests of users of HP equipment, particularly computers.

 

Packard says he is not going to discuss specific products or programs, explaining that both he and Bill Hewlett have not been involved in the day to day business of the company. He does say that the main message he wants to give is that “…the HP computer users groups have become very important to our company because we have had a strong commitment to HP users from the very early days of the company.” He contrasts the typical characteristics of users when HP made general purpose electronic instruments –  “essentially all electronic engineers,” with those of the users of HP’s computer products, “people of all kinds, in every aspect of the economy.”

 

He makes the point that when most of their customers were engineers they understood their needs very well and had a good rapport with them; but now, with a much more diverse group he says, “It would be impossible for us to keep in good contact with all of our users without organizations like these users groups.”

 

Continuing on the subject of change, Packard says, “Some people have suggested that Hewlett-Packard is changing from a company dominated by engineers to a company dominated by marketing. I do not see it that way at all.

 

“From the beginning we had a close coupling between our development engineers, our manufacturing people and the users of our products. We have always had strong connections between engineering and marketing. Our basic philosophy in this regard has not changed at all but has simply been adapted to a new and vastly larger group of users. The development of the HP users groups has made these possible and you have become important members of our team.

 

“From the beginning we had a close coupling between our development engineers, our manufacturing people and the users of our products. We have always had strong connections between engineering and marketing. Our basic philosophy in this regard has not changed at all but has simply been adapted to a new and vastly larger group of users. The development of the HP users groups has made these possible and you have become important members of our team.

 

“In the early days of our company we required just as much understanding of what HP users needed and wanted as we do today. The essential difference was that the users of electronic instruments were a small, reasonably coherent group with a limited variety of requirements. We concentrated our work on the development of general purpose products in order to have as many users as possible, but the number was still relatively small.

 

“We had a special advantage,” he says, “in that all of our technical people in our development laboratories and in our factories and in our marketing organization were electronic engineers, and so were almost all of our customers. We knew that if we developed a new electronic voltmeter or a

signal generator that would do a better job for us in our laboratories and our factories, it would also do a better job for our customers.

 

Packard says they would allude to that relationship as the ‘next bench syndrome.’ “If the engineer at the next bench in the HP laboratories thought the new development was going to be a useful product, it would almost always be a commercial success when we put it on the market.”

 

Packard talks about the organization of the company – a large number of relatively small divisions, each having responsibility for a specific group of products. “This structure,” he says, “enabled our development people to specialize in the needs of the users of that product group. Thus this particular management structure was determined in large part to maintain the most effective relationship with the users of our products. We could have developed larger manufacturing organizations which might have had better efficiency in production. There were two considerations that influenced this choice of structure. One was that we believed it would enable us to remain closer to our users. The other was we felt a smaller unit would provide a more friendly, more personal and a more cooperative environment for our employees.”

 

“This particular corporate structure did not work as well when we became involved in computers and closely related data products such as computer peripherals, and during the last few years we have modified the relationship between our divisions to accommodate the important relationship between products in groups

 

“Our products were much simpler in the early days, often with only five to ten active elements or vacuum tubes, in contrast to millions of active elements in computer systems today.

 

“Even though the problems we dealt with were vastly simpler than the products of today, and even though we had a good understanding of what our users might need, we still gave our users a great deal of personal attention.”

 

“The corporate structure that we had developed to support the users of general purpose electronic instruments worked fairly well during the early years of our involvement with computers, but we were already beginning to deal with a larger and more complex group of users of HP products. We had entered the field of medical electronics and electronic instruments for chemical analysis and we soon learned that the ‘next bench syndrome’ was no longer working.

 

“ We tried a number of different approaches to establish better rapport with this new group of users in medicine and chemistry. We used doctors and chemists as consultants, established ties with university people in these fields and with medical schools and hospitals. It took time to learn how to work effectively with this new group of HP users but we now have a very good position in both of these fields.

 

“It was not long after we became involved in the computer business that we realized we were really in the business of developing and marketing general purpose computers and related data products and that we had a great opportunity in a vastly larger and more complex market.

 

“I do not think any of us felt that new basic principles were involved in the computer market. We simply had to find a better way to serve a new and much larger group of users and we have found it.

 

“You people who are here tonight and all the other members of the HP users groups around the world have become an important part of the HP team. Because you are members of our team I want to say a word about some of the basic HP objectives which I do not see as changing in any significant way.

 

“One of our objectives has always been to make a contribution to our field of endeavor, not to be just a ‘me-too’  company. We have tried to be at the forefront of new technology and we will continue to endeavor to do that. As I think you  all know, we have always supported a relatively large research and development program. Over the years we have often been first in applying new technology to a new product. That emphasis will not change and in fact, should be enlarged because we will try to find ways to apply the latest technology not only in hardware but in computer architecture and artificial intelligence.”

 

Packard speaks of the importance of basic integrity. “One of the most important assets of any organization is its basic integrity. We have always expected all of our people to adhere to the highest  standards of integrity in everything they do related to our business. We expect all of our people to play it straight with our customers, with our suppliers, with each other and with the public at large. We expect no less of each of you in our user groups.”

 

“Now I suppose all of you want me to say something about the Spectrum program. The program is going well but we will not tell you anything this week about performance, price or delivery. I want to tell you a story that will explain why.

 

“As some of you may remember, I served as Deputy Secretary of Defense from 1969 until 1972.  During that time I dealt with many problems in the development of new weapons. They wouldn’t perform up to specifications or they cost more than predicted, often both. I concluded that the basic problem was that these new weapons were quite often put into production before they were fully developed and almost always before they had been fully tested in the environment in which they were expected to operate.

 

“I put into effect some new regulations to insure that production would not start until development and testing had been completed. After I left those regulations were largely disregarded and the problems I tried to deal with are still there.

 

“Shortly after I came back to HP we started to develop the 3000 computer. I thought our people at HP were smart enough not to announce the performance of a new product before it had been developed and tested to make sure it would meet the published specifications. I did not get back into the day to day detail of these developments but we did have a full scale review of the project when the new product was ready for the market.

 

“I had been back a couple of years when we had the full scale review of the 3000 project. We found much to my embarrassment that it would barely support itself and wouldn’t even come close to meeting the target performance specifications. Worse yet, literature had been published and distributed to customers six months before this review.

 

“We had to send the team back to the lab and it took nearly another year before this model 3000 would perform to its published specifications.

 

“I know that all of our developing and marketing people got the message at that time. It would not bode well for them to forget today.

 

“The happy outcome was a good product, for as you know the 3000 series which began with that incident has done very well. I do not have the slightest doubt but that Spectrum will do better.”

 

Packard says he would like to conclude with a word about the future.

 

“As far as the general outlook for the computer business is concerned I am very optimistic. There is considerable distance yet to go in hardware. There are probably several orders of magnitude yet to go in DSI geometry. There are opportunities for improvement in materials. There are a number of attractive improvements in software. There will be better mass storage, better terminals, printers and communication. In general, computers will continue to become more powerful and less expensive for some time to come.

 

“The opportunities will be  just as exciting in computer applications, the work most of you here are involved in. We are not using computers very effectively in education and I predict impressive gains in this field in the years ahead.

 

“Good progress is being made in business management but there is much yet to be done all the way from small business to large and complex manufacturing. Super computers will become less expensive and make it possible to better deal with some of the big, complex problems of the next century.

 

“Hewlett-Packard is proud to be at the forefront of this exciting field and we intend to say there. We are especially pleased to have these user groups working with us. All of our people involved in the computer business have recognized that the HP computer users are not just important customers, you are also key players on our team – and it’s going to continue to be a winning team.”

 

10/17/84, Letter to Pam Tower, HP User Group Liaison, from Christopher C. Sieger, Conference Chairman extending an invitation to Packard to speak at the 1985 Interex North American Conference to be held in Washington D. C.

1/11/85, Letter to Packard from Christopher Sieger saying he is gratified to learn that Packard has accepted their invitation to speak at the Conference and giving details of the arrangements

2/14/85, HP internal memo to Packard from Dick Harmon of Press Relations saying that a reporter of INTERACT magazine would like to interview him before the Conference for a promotional article, and he gives several sample questions

9/26/85, Internal HP memo from Pam Tower to Packard thanking him for speaking at the Conference

Undated, Copy of the Bylaws of the International Users Group for HP Computer Professionals

 

 

Box 5, Folder 11 –  General Speeches

 

September 17, 1985 – Statement before the Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, Washington D. C.

 

9/17/85, Typewritten text of Packard’s speech

 

Packard says he is “delighted” to appear before this Subcommittee to give his views on the U.S. trade deficit, as well as possible ways that might be taken to bring exports and imports into better balance. “This is an extremely important subject”, he says, “and I congratulate you and your associates for holding this hearing and for working to develop a legislative response to deal with our country’s unprecedented and growing trade deficit.

 

“Packard says he plans to describe what he believes [are] some of the major causes of the deficit, as well as comment on the difficulties he sees in the proposed import surcharge bills before Congress.

 

The U.S. Trade Deficit

 

Packard says he sees several reasons for the severe deterioration in the U.S. Trade balance.

 

1. “The consistently high value of the dollar abroad has caused sharp declines in U.S. exports and dramatic increases in imports. The strength of the dollar is a direct result of the reputation of the U.S. as a ‘safe haven’ for foreign funds, a strong U.S. economic performance, and extraordinarily high U.S. interest rates – in turn a direct result of massive and ever growing federal budget deficits.

 

1. “The huge U.S. market has been an almost irresistible attraction to many foreign competitors. In order to gain market share, many of these firms are willing to sell here at lower profit margins than are acceptable to U.S. suppliers.

 

1. “Our exporters face tariff and non-tariff barriers abroad, that are often more than our foreign competitors face in this country. The European Community has high tariffs on many products and heavily subsidizes agriculture. Many of the newly industrialized countries – South Korea, Taiwan, India, Mexico. Brazil and others  — have high tariffs, import quotas and licensing requirements, and restrictions on incoming investment. Although some of these may be justifiable as temporary debt reduction measures, U.S. exporters have been strongly affected by reduced trade with the less developed areas of the world, especially the high debt countries in South America. Japan has lowered some trade barriers in recent years and has removed most legal restrictions to its markets. Nevertheless, Japan still retains some quotas and other restrictions. In addition its traditional buying habits, close industry-government relations and archaic distribution systems make it an extremely difficult market to penetrate. Moreover, the Japanese export industries of such concern to us today grew strong in a domestic market that was protected from U.S. competitors until well past the time when our firms enjoyed a competitive advantage and could build a market in Japan.

 

“The Federal Reserve estimates that last year’s $123 billion trade deficit cost the U.S. some two million jobs and 2-3 percent lost growth in gross national product. These estimates, however, must be put in perspective,” he says. The Federal Government has been spending more than it has been taking in, he explains. “As a result imports of both goods and capital have been absolutely essential to U.S. economic growth since 1983. Lower priced foreign goods have helped moderate inflation while imports of foreign capital have offset the shortfall, estimated to be equal to about forty percent of domestic savings, needed to finance both the U.S. budget deficit and an investment boom. If foreign sources of capital had not been available the federal Reserve would have had to either expand the money supply, which would have increased inflation, or permit a strong rise in interest rates. Either action would have reduced growth rates.

 

“Though some U.S. workers have been displaced by imports, 7.3 million new jobs were created between 1982-84 without a surge in inflation. Estimates are that imports reduced the inflation rate by 1.0-1.5 percent by pressuring domestic producers to maintain competitive prices and resist demands for excessive wage increases. As a result, many U.S. firms have moved or are moving to modernize plants and adopt efficient manufacturing processes.

 

1. “U.S. business has traditionally focused its efforts on the domestic market while export markets have had second priority. This preoccupation with domestic concerns has meant that in certain areas, United States business has not kept up with its foreign competitors. These competitors have been able to produce higher quality, lower priced products by increasing their capital investments and productivity, and by becoming more technically sophisticated.

 

Congressional Response

 

Packard says the Administration has not done enough to stem the growth of the trade deficit. “Furthermore, the efforts of some government agencies have actually increased the deficit. for example, the Defense Department has authorized co-production of U.S. designed weapons in several foreign countries. These arrangements have made significant contributions to our trade deficit, while at the same time increasing the cost of the weapons to the U.S. taxpayers. Some of these actions have been based on legitimate non-economic reasons; but if the effort on the U.S. trade deficit had been considered, I’m sure not all of these co-production arrangements would have been approved.”

 

With the Administration’s lack of attention on stemming the trade deficit, Packard says the pressure has been on Congress to try to narrow the trade gap – mainly by imposing temporary import surcharges. He says he thinks these surcharges are a bad idea for several reasons:

 

1. “Even if such surcharges are permissible under our GATT obligations, other countries would be certain to demand compensation or to retaliate by closing parts of their markets to U.S. products. The result would be more lost U.S. jobs (and less tax revenues to apply against the federal deficit!).

 

1. “The imposition of an across-the-board import surcharge would severely limit the ability of the developing countries to repay their debts.

 

1. “Such measures would immeasurably complicate the efforts of the U.S. Trade Representative to maintain an open international trading system and to conduct further liberalizing negotiations with our trading partners.

 

1. “Broad surcharges would not focus on specific import situations and therefore, would not serve to stimulate the bilateral negotiations necessary to achieve permanent solutions.

 

1. “U.S. consumers will bear the brunt of increased prices for imported and, inevitably, U.S. products. The inflationary impact of surcharges is likely to be enormous and its effect on low income consumers most severe.

 

Packard says that a current bill under consideration in the House (H.R. 3035) has many of the same problems. He explains that this bill would establish a 25 percent across-the-board surcharge imposed on the imports from specific countries, those that:

 

1. “Limit access to their own markets;

 

1. “Run a substantial trade surplus with the United States and/or the entire world; and,

 

1. “Do not take steps to reduce their surpluses by 5 percent the first year and 10 percent each year thereafter.”

 

Packard agrees that “Conceptually, there are some positive points to [this feature of H.R. 3035]. First” he says, “it sends a strong message from the Congress to some of our trading partners and to the Executive Branch that there is strong public support for decisive action to reduce our trade deficit. Second, it is designed to reduce the trade deficit by putting in place a prospective weapon that can be used if certain countries do not take action to reduce their trade surpluses. Finally, the import surcharge could be removed quickly once a country reduced its trade imbalance.

 

But, Packard says H.R. 3035 is not an “acceptable response to our present trade problem.”

 

He outlines some specific problems he sees:

 

1. “The statistical provisions that would be used to determine when the ‘standby’ surcharges would be employed and which countries they would affect seem to me to be quite arbitrary. There is no reason to assert that drastic action should be considered to reduce imports when the trade deficit of a country such as the United States exceeds 1.5 percent of Gross National Product. Several major European countries, including the U.K. and Italy, ran merchandise trade deficits in the 5.5 percent range in the 1970’s. The U.S. would have been aghast at that time if they had proposed surcharge measures such as these to reduce their deficits or, for example, to ‘open’ the U.S. market to more British woolens or to more Italian suits and shoes.

 

1. Continuing his critique of what he sees as problems with H.R. 3035,  Packard says that “The rather arbitrary exclusion of petroleum trade from the ‘formula’ may discriminate against a whole sector of developing countries and even Japan and the European Community (except the U.K.) that rely upon imported oil to operate their economies. It’s difficult for me to see how any country’s trade activities can be properly evaluated by excluding such a vital commodity. For example, $55 billion of the $123 billion 1984 U.S. trade deficit was due to imports of crude oil and petroleum products.

 

1. “I believe,” he says, “H.R. 3035 contains an overly mechanical set of thresholds, levels and action points. International trade is complex and constantly changing and no one is smart enough to be able to prescribe appropriate actions several years in advance. For this reason, I favor provisions that permit a flexible response rather than some sort of doomsday device; which, set to go off more or less automatically years in the future, could produce completely unexpected results.

 

1. “The surcharge provisions of the bill hit quite hard at the newly industrialized countries most of whom need to export to help pay their debts. If we consider current account balances, a more accurate way than simple exports and imports to view international transactions because they capture trade in services including interest and royalty payments, Brazil was $1.8 billion in deficit in 1984 and is projected to be about the same in 1985.  This year, Brazil must make $10 billion in payments on its $100 billion debt (owed in large part to U.S. banks). This amount virtually eliminates its projected overall $12.9 billion trade surplus. South Korea, although not in as desperate shape, ran both a $1.1 billion trade deficit and a $1.4 billion current account deficit in 1984, and its current account is projected to be $1.7 in the red this year. It must meet nearly $5 billion in payments on its $49 billion debt in 1985. Taiwan is the only one of the three newly industrialized countries most affected by HR. 3035 that has an increasing current account surplus and low debt. Even so, projections are that Taiwan’s trade surplus will decrease over the next two years.”

 

“…these [newly industrialized] countries view as major barriers any restrictions the U.S. places on products such as textiles, apparel, shoes, and steel where the have a clear comparative advantage. It is unrealistic to think that they will not attempt to protect these and other important industries. We should expect protectionism and be working with them to define standards by which we can assure that such protectionism is temporary and does not support continued inefficiencies.

 

1. As another problem with surcharges imposed by H.R. 3035, Packard says that “No authority exists for a GATT member country to impose large tariff increases on all the exports of one or a limited number of other countries simply because its trade deficit, either with an individual country or overall, has reached certain predetermined, arbitrary levels. To comply with GATT, any action a country takes to restrict market access must apply to all other GATT members and be limited to a specific imported product (or products) that are causing serious injury. GATT members affected by such actions have a right to receive compensation or to retaliate.

 

“I believe,” Packard says, “the prospects for retaliation would be quite limited – after all, this would hardly be in the interest of countries that wish to remain major exporters to the U.S. market. Nevertheless, the bill, if enacted by the United States, the leading country in the industrialized world, would signal a major shift toward a ‘market sharing’ approach to world trade, away from the concept that trade flows should be primarily determined by market forces. The legislation would distort trade and stunt growth rates as many countries, developed and developing, began to ‘manage’ their trade with the United States and the world to avoid punitive duties that would be imposed if the arbitrary levels within the bill was exceeded. These maneuvers could deprive sectors of the U.S. economy of the most efficiently produced goods at the lowest prices.

 

“In addition, a possible, even likely, consequence of U.S. action would be passage of similar legislation in both industrialized and developing countries, with each defining ‘excessive trade deficits’ to suit its own needs. Under these conditions countries would soon have to negotiate annually with each other to determine the amount and character of trade they would accept!

 

Trade Relations With Japan

 

“Our trade relationship with Japan, the cause of $37 billion of last years’ $123 billion U.S. trade deficit, is especially important. Japan presently bears the brunt of U.S. criticism for loss of export related jobs and the deterioration of our international trade. In part, this is due to past history. In the 1960’s Japanese textile imports caused a reduction in U.S. textile employment – a market that Japan subsequently lost as well. Then it was television sets, then steel, then autos and now we see our high technology semiconductor-conductor, computer, and communication markets threatened by Japanese imports. It is also due to a certain amount of envy and frustration. There is no denying Japan exports high-quality, well-styled, favorably-priced products which have created a market of well-satisfied U.S. customers. There is also no doubt that for a variety of reasons the Japanese market is extraordinarily difficult to penetrate.

 

“My recent experience,” Packard says, “as the U.S. Co-chairman of the U.S.-Japan Advisory commission has led me to two conclusions. First, the current large U.S. deficit in trade with Japan poses very real risks for both countries. Second, I believe Japanese leaders recognize that a substantial part of the solution to the problem of their U.S. and worldwide trade imbalance rests with them. Let me elaborate on these two points and then suggest a way our country can provide an impetus to help our Japanese trading partners make the kinds of fundamental changes required.”

 

Packard says he believes the “Japanese know that they cannot prosper in the long run by selling into economies which have continuing, negative balances of trade. For trade to endure over time, it must be mutually beneficial to the countries involved. Such is not the case in the current U.S.-Japan trade relationship. Further, the growing perception of Japanese market protection coupled with a Japanese export drive to the U.S. market undermines a commitment to an open trading environment.

 

“This negative view of the Japanese approach to trade results from specific Japanese actions. Because their economy is so dependent on adding value for export, they have not pursued policies which might encourage domestic consumption, imports, or unrestricted investment abroad. Thus far, business and government leaders have been politically unable to adjust these policies or to moderate their exports. On the  other hand, the policy of the United States, for example in unilaterally opening our telecommunications market without seeking reciprocal agreements, have provided little incentive for the Japanese to change their policies.

 

“We need a strategy for dealing specifically with Japanese trade over the short and long term. As a means of addressing the long-term issue of U.S.-Japan trade, a member of the Advisory Commission has proposed affirmative action to reach:

 

1.  “Agreement on the principle that a persisting, lopsided trade balance between us can have a dangerously destabilizing effect on the relationship;

 

1. “Agreement on an objective of bringing under control our current trade imbalance by concerted actions to progressively reduce its size.

 

1. “Agreement on a program of specific goals and timetables for achieving this objective, such as actions to gain more access to Japanese markets, restrain various Japanese exports, encourage more Japanese investment in U.S. production facilities, stimulate more imports by Japan, and adjust the yen-dollar exchange rate; and,

 

1. “Agreement on a mechanism for periodically examining and

adjusting good faith actions taken to achieve established goals.

 

“These are all positive steps for correcting the current misalignment. However, nothing will happen until they are put into effect, and given the enormity of our trade deficit, this should be as soon as possible. In my opinion, the only course of action that will have a significant immediate effect on our trade imbalance with Japan is for the United States to:

 

1. “Determine by the end of this year (and each succeeding year) the specific amounts on an industry sector, by industry sector basis, by which we want to change our trade deficit with Japan – hopefully reduced, but certainly not increased;

 

1. “Construct specific short-term time tables for the achievement of such changes; and,

 

1. “Establish appropriate sanctions such as import quotas that would be applied to limit access to the U.S. Market if the timetables were not met.

 

“With these measures in place, the four points listed by my fellow commissioner could be pursued with the Japanese and their agreement sought to the specific amounts we have previously determined our trade imbalance should be changed. If, at the end of the first six months of 1986, (and each succeeding year) it is determined that the timetables are not being met, the previously determined sanctions would be imposed to remain in effect until the changes have occurred, and the timetables restored.”

 

“There is a concern that arbitrary quotas or other restrictions might present some dangers. However given the size of Japan’s trade surplus with the United States, its desire to remain a major factor in our market and the selectivity of the approach I’m advocating, I don’t think Japan would press a case for compensation in the GATT, or seek to retaliate. Indeed, I believe continuation of the current trade imbalance and the tension it creates pose even graver concerns. The measures I’ve suggested, could have substantial impact on the future growth of the bilateral deficit. Hopefully, they would be used to achieve more openness in the Japanese market were any sanctions quickly removed upon achieving the desired results. I don’t think our Japanese partners would consider them unfair, and hopefully such measures would provide the much needed impetus they require to address the long-range actions vital to the continued health of our trading relationship.

 

 

Alternate Approaches

 

“Restricting access to the U.S. market through quotas or import surcharges, whether ‘triggered’ automatically or not, is a cumbersome process, difficult to achieve with any degree of precision and certainly not a long range solution. Several longer range steps come to mind which I believe would reduce trade restrictions and lower the large and growing U.S. trade deficit:

 

1. “Our government needs to make U.S. trade policy a high priority. The government must recognize that free (or freer) trade, while an excellent goal, cannot be achieved unilaterally. It requires consideration and cooperation from our trading partners. This means that engaging in multi-lateral and bi-lateral trade negotiations and working to strengthen the GATT is not enough. The U.S. must, in addition, rigorously defend its rights. For example, the little used provisions of Section 301 of the Trade Act of 1974 can and should be a powerful tool to stimulate negotiations and, if necessary penalize our trading partners for their unfair trade practices, including those which restrict our ability to sell in their markets. 301 actions, judiciously and aggressively used, would strengthen the world trading community rather that invite retaliation. Countries realize when the are doing something wrong and, if not corrected will, like children, soon engage in other wrong or illegal acts.

 

“More laws are not needed to permit the Administration to make trade policy a high priority. Instead, the Administration needs to make better use of the laws the Congress has already provided to obtain fair and equal trade practices. One way to help in this process would be for the President to give the U.S. Trade Representative more influence in making trade decisions. If this were to occur, trade decisions could be reached more quickly and without being subject to so many political considerations.”

 

“The Administration also needs to make a serious effort to correct various self-imposed practices which have an adverse effect on U.S. exports. These include unnecessary restrictions under the Export Administration and the Foreign Corrupt Practices Acts, the effects of various U.S. tax measures, and limitations on export financing.”

 

“The Congress can make an important contribution to the reduction of our trade deficit by taking actions that will help United States industry become more efficient. Among these actions are those which will encourage capital formation, reduce the costs of meeting regulatory requirements, stimulate the modernization of manufacturing facilities, and encourage increased investments in research and development, including R&D to improve manufacturing technology.

 

1. “The U.S. government must get its own economic house in order. This means a substantial reduction of the Federal budget deficit, preferably through cuts in spending; a leaner and more effective defense program, some reduction in ‘automatic’ entitlements, and actual curtailment or elimination of some programs. If sufficient cuts should prove impossible, an increase in taxes will be required.”

 

1. U.S. productivity must be increased. This means corporations must take a somewhat longer view, modernizing production facilities, insisting on competitive labor settlements and, above all, assessing the need for increased productivity against foreign, as well as domestic, competition.

 

1. U.S. businesses should be encouraged to go after foreign markets, and particularly the Japanese market. In doing so, it is essential to realize that these markets have to be approached very differently from those of the U.S. Patience, persistence, understanding and a willingness to invest for the long term are all required. However, whenever it becomes apparent that foreign governments or competitors are acting unfairly or not in accord with their agreements they have undertaken, U.S. businesses should not hesitate to move quickly and publicly to make their concerns known to the U.S. Trade Representative, nor should they shy away from preparing and filing the paperwork necessary to support their claims. Standing up for U.S. rights will do much to restore the world’s trading system to vigorous good health.

 

1. “The government and the business community should actively support changes necessary to update the GATT and bring more international trade transactions under its auspices. The principle of non-discrimination must be reinforced to reduce the number of actions taken outside the GATT such as ‘voluntary restraint’ agreements, agricultural subsidies and quotas, limits on textile and apparel imports, etc. Third World countries should no longer be able to exempt themselves easily from the principles and standards of the GATT since such actions tend to keep trade barriers in place in both the developing and industrialized worlds. Finally, the GATT codes, principally those on subsidies and government procurement, need strengthening and the GATT dispute settlement process should be reformed to speed decisions and reduce political considerations.”

 

 

Box 5, Folder 12 – General Speeches

 

October 22, 1985, Statement Before Science Policy Task Force, Committee on Science & Technology, U.S. House of Representatives

 

10/22/85, Copy of typewritten text of Packard’s remarks to the Committee

 

Packard says he is pleased to be here “to discuss the subject of science in the mission agencies and the government laboratories. This…is a subject that is of considerable interest to me”

 

“The Federal government has provided an enormous amount of support for American science during the last four decades. It is in a large part because of this massive Federal support that the United States has taken a leadership role in science over the rest of the world.”

 

“Although the Federal support for American science has been very large in magnitude, it has not been as effective as it should have been. I believe there are a number of specific things that could be done to improve the way the Federal government supports American science, in the agencies, in the Federal laboratories and in the colleges and universities of our country. I would like to make some observations on how I believe our Federal science policy should be improved.

 

Saying that “Progress in science comes from two basic endeavors, people who think, and people who carefully design and conduct experiments,” Packard offers two guidelines for supporting science.

 

“First: The scientists are the ‘people who think.’ They should be selected and supported on the basis of the quality of their scientific work, not simply on how well they can write a proposal asking for support. When they are supported, they should not be burdened with preparing unnecessary progress reports, effort reporting and other unnecessary work which takes away the time in which they are to do their real work.

 

“Second: Scientists must have the proper equipment in order to carefully design and conduct experiments. The equipment needed to keep scientific work at the forefront of scientific knowledge is much more complex and more expensive today than it was in the past. Modern instruments are more accurate and often include computation capability which makes them much more efficient. It is a serious handicap for a scientist to have inadequate equipment and facilities for the work to be done.”

 

Packard also offers “specific recommendations on how the agencies can do a much better job in selecting the scientists they want to support.”

 

Packard says he believes the “peer review process should not be carried too far.…[This process] should focus more on what the scientist has actually done, not just on what he says he can do.”

 

“In our report on the Federal laboratories [See speech May 27, 1984, Report on Federal Laboratory Review Panel] we recommended that each laboratory have a review committee and that the review committee should report not to the laboratory director but to the agency or organization responsible for the laboratory. It was intended that this review committee work would serve to reduce the number of routine reports required of the laboratory. An objective review of work done by a review committee of peers would be a much better way to evaluate the performance of a laboratory.”

 

“After a scientist, either in a Federal laboratory or at a college or university, has demonstrated good work, that program should be supported to provide long time stability for the work; no routine progress reports but a periodic evaluation of performance by the review committee should be made.”

 

“Research at colleges and universities deserves continuing support, particularly what is generally known as basic research. Federal agencies and Federal laboratories find it difficult to place research contracts at universities because of the many detailed requirements placed on the contracting procedures.

 

“All Federal agencies and Federal laboratories should be given specific authority to give contracts to colleges and universities on a sole source basis. There is absolutely no place for competitive bidding for research placed with colleges and universities.”

 

“I expect it is too much to ask the Congress to refrain from ‘log rolling’ activities where research at colleges and universities is involved. It would be great if this work could be supported strictly on the basis of its contribution to the quality of American science.

 

“Universities are also having a problem with the equipment and facilities available for their research people. The Federal government has done a fine job in the area of high energy physics where facilities costing hundreds of millions of dollars have been provided. There are many areas of science which may make a much more important contribution to our economic well being, the health of our citizens, and the quality of life than high energy physics. A few tens of millions of dollars for equipment and facilities would bring a big return in the productivity of scientific work in these other areas.”

 

Talking about tax credits for equipment corporations give to colleges and universities, Packard says one problem is that, while all companies should give equipment to universities where quality work is being done, some use this as an advertising or sales gimmick.”

 

Another problem [he sees] with the tax credit program is that it does not extend to all colleges and universities on the basis of their real need. “The tax credit program should be supplemented by direct grants for equipment by Federal agencies. The Federal agencies will receive more for their money if they take the responsibility for providing equipment where it is needed in the programs they support.”

 

Packard says the Department of Energy “has a special problem that needs to be corrected….Our committee on the Federal laboratories noted this problem and I have discussed it with two Secretaries of the department but the bureaucracy has refused to change.

 

“The DoE treats research grants like contracts to do construction rather than contracts to do research. They have field offices that look over the work being done, they require monthly reports. This requires paper work by the ton. Most of it useless and this poses a large and unnecessary burden on the people doing the research work. They do this to the laboratories they support and they also do it to the people in universities doing research.”

 

Packard says this apparatus should be phased out, thereby saving many millions of dollars a year, and provide scientists an environment where they would have more time to do scientific work instead of paper work.

 

“I want to say a word about government owned – government operated laboratories….Because these laboratories are under civil service regulations they are not able to hire, motivate or retain the best scientific people, scientists and engineers. Our laboratory committee recommended that these Federal laboratories be allowed to establish a better personnel management program. This could be patterned after an experimental program which has been operating at the Navel Ordnance Laboratory at China Lake in California. I visited this laboratory and discussed the program with the director. He has been able to improve the quality of his professional staff because of this program. I hope your committee will support this program we recommended.

 

“I note that the Department of Defense has proposed a similar program for all of the professional people in the department. I believe that would be a big step forward and I support their program. It may be difficult for the Congress to take the big step at this time but I hope they will at least support the smaller step we are recommending for the Federal laboratories only.

 

“All federally owned laboratories are not federally operated and one choice would be to put all of the laboratories under private sector management. I do not believe it would be wise to do so. I believe the present mix of federally operated and company operated laboratories is about right, but if the Federal government is going to operate a laboratory, it should be able to do so with a commitment to excellence and under policies that would encourage excellence. That is not the case today.

 

“The Federal laboratory Panel recommended that research people should be allowed to spend part of their time on ideas of their own choice. This would include areas of science other than that of their main program. We thought at least 5% of free time should be allowed, some Committee members thought it should be 10%. This idea is one that is supported by almost everyone who has had experience administering a scientific project.

 

“This free time is probably the most important source of innovative ideas. Innovative ideas sometimes come from the laboratory director. Innovative ideas that contribute to the quality of American science never come from the Federal bureaucracy. Their ‘innovative ideas’ almost always do the opposite.

 

“The idea of independent research and development (IRD) for defense programs was originally based on an understanding of the importance of giving scientists and engineers some time free from their assigned work to explore their own innovative ideas.

 

“This program was effectively destroyed by the ‘Mansfield Amendment’ in 1970 when the Congress required IRD to be limited to ideas related to military work. This required that the justification for IRD be documented to demonstrate the independent work had a military potential. While this requirement has been repealed, the practice has not improved very much. This country would receive much better commercial fall out benefit from the vast sums of money spent on military research and development if the original idea for having independent research and development were restored.

 

“I hope some of these ideas will be useful to this Committee in its work to help assure that Federal support for science and technology will be as effective as possible. I know that many other committees of the Congress, probably too many, are involved in this issue. I believe, however, this Committee is in a good position to provide leadership and for that reason, I appreciate the opportunity to give you my recommendations.

 

“I will be please to respond to your questions.”

 

No other papers in folder

 

Box 1, Folder 34 – HP Management

 

February, 1986 – Remarks on Spectrum Project

 

Not clear who the audience is. Packard presents his thoughts on the Spectrum computer program.

 

2/86, Text of Packard’s remarks

 

Packard says he and Bill Hewlett have been watching the spectrum “with a great deal of interest.” “It is a difficult technical challenge and a large management challenge. At the same time there has been continued growth in both our technical capability and our management capability. I have never had any doubt about how the spectrum program will turn out. It will clearly be a strong foundation on which we can continue to build technological leadership in the computer industry for many years in the future.

 

“I can really feel the excitement and genuine sense of achievement behind this program. I know Bill Hewlett feels the same way.

 

“Shortly after Bill and I founded the company in 1939 we decided we were going to concentrate our efforts on making a real contribution in our field of endeavor. We did not want to be a me too company – we wanted to do things that had not been done before.

 

“From the first product – the 200A audio oscillator – we have made a great may important contributions, microwave instrumentation, digital counters, medical instruments, electronic calculators. Product after product over the years we have demonstrated that making a contribution in new products has always been a key to a successful product.

 

“As our activity in the field of computers increased, we learned that teamwork as well as technical excellence is essential to making important contributions in the computer and data products area. Spectrum is a great program in the history of HP for we have demonstrated a great team effort in combining technical inputs from various parts of the company, a team effort among software and hardware people, and a great team effort in melding the various components into a real contribution to the needs of our customers.

 

“The Spectrum program will bring an important contribution to the needs of our customers not only this year and next year but for many years ahead.

 

“While the spectrum program has been the largest new product development in the history of the company, it has not overshadowed our other R&D efforts. We have an outstanding program to strengthen and expand our technology base. We will be announcing this year a great vintage of other new products, electronic instruments, medical instruments and including computer peripherals, all of which will be the same kind of important contributions we have made in the years past.

 

“I want to congratulate everyone who has taken part in this great team effort. But I want to add – don’t stop running hard now because that’s just what our competitors are going to continue to do.

 

“We have to demonstrate by our continuing performance that all of our old customers will benefit if they continue to depend on HP. And also we have to demonstrate to a lot of new customers that their future will be better.”

 
Box 5, Folder 12A – General Speeches

 

March 26, 1986 – Remarks to The Brookings Institution on the work of the President’s Blue Ribbon Commission on Defense Management, Washington D. C.

 

Packard gave many speeches covering work of this Commission, see end of this speech for a complete list of such speeches.

 

3/26/86, Copy of the typewritten text of Packard’s speech

 

DEFENSE MANAGEMENT REFORM

 

INTRODUCTION

“It’s a pleasure for me to address you today on the subject of reforming defense management. The forum here addresses military procurement. However the broader issue of management includes the way we do planning and budgeting, the way we’re organized to make decisions, as well as the actual process of procurement. So I’d like to ask you to take a stop back and look at some very fundamental issues relating to the defense that underlie the procurement activity.

 

“Last year the President established our Commission to look at essentially every aspect of defense management. In our Interim Report we covered four major subjects:

 

• National Security Planning and Budgeting
• Military Organization and Command
• Acquisition Organization and Procedures
• Government-Industry Accountability

 

“Our Interim Report was intended to be a terse summary of the Commission’s conclusions and recommendations to date. [See speech May 5, 1986 to The Heritage Foundation.] I thought today I would give you some of the rationale and philosophy underlying the report that involve military procurement.

 

Packard says the Commission members were able “to agree on recommendations to change the JCS structure that will, we believe, improve national security planning and budgeting and also military organization and command. Our recommendations also mesh closely with the legislation on JCS reorganization being considered by the Congress.”

 

PLANNING AND BUDGETING

“There has been no rational system whereby the Executive Branch and the Congress reach coherent and enduring agreement on national military strategy, the forces to carry it out, and the funding that should be provided. In the absence of such a system, instability and uncertainty plague our defense program. In turn, they cause imbalances in our military forces and capabilities, and increases in the costs of procuring military equipment.

 

“Since World War II, planning has been dominated by each military service’s own perception of its role and mission. The Services have done their own long-range planning and determined, to a great extent, their force level and weapon system requirements. Final decisions on weapons required are made more often on a piecemeal basis characterized by a process of negotiation rather than through a coherent and preconceived master strategy.

 

“Congress adds to this management by fits and starts. The present method of Congressional budget review centers on either the minutiae of line items or the gross dollar allocation to defense. This approach obscures key defense issues. It also causes instabilities which require program stretch outs, cancellations and other actions that will result in substantial waste.

 

Packard reviews Commission recommendations to change these procedures.

 

“We recommend that the President propose and the Congress approve defense budget levels for five years ahead. We are recommending that the Chairmen of the JCS be asked to plan military forces that can be procured and supported within those budget levels. To do this effectively, the Chairman must be able to balance the inputs of the military departments against each other and also take into account the requirements of the unified and specified commanders (CINCs) who are the ultimate users of the forces which are provided by the military departments.

 

“To enable the Chairman of the JCS to provide the best, most objective professional advice on this very important issue, he must have his own staff and not be dependent on the Service staffs for advice. We are also recommending that a Vice Chairman of the JCS be established and that he be specifically responsible to provide inputs from the CINCs for the Chairman to take into account in developing the military plans for the Secretary.”

 

Getting the Congress and the Administration to agree on defense budget levels looking five years ahead is an important goal Packard says. “We do not believe these budget levels need to be established down to the last dollar – or the last billion dollars. A projection with even a 5 percent uncertainty would be much better than the FYDP has been over the years and would provide a much more useful long-range plan for the management of the Defense Department.

 

And another major weakness in the defenses budget system Packard points out “is that the President and the Congress have not been provided with a satisfactory way to determine whether or not US military forces are adequate to support our worldwide national security requirements. To do this, an assessment of the capability of the forces of the United States and its allies versus the capability of enemy forces needs to be made, the so called net assessment of military forces.

 

“This is a complex problem and difficult to do in a way that is useful. We believe a better net assessment can be made by the Chairman of the JCS working in cooperation with the DCI, since the Chairman is less dependent on the Service Chiefs.

 

“We are recommending that such a net assessment be made and provided for the President and the Congress so that each can be better able to evaluate the overall adequacy of the US military forces in relation to the threats they will have to deal with around the world.”

 

The Commission wants to see more effective teamwork within the national defense establishment. “In the Defense Department,” Packard says, “this will require better teamwork between the Secretary, the Chairman, the Joint Chiefs, and the CINCs.”

 

“These recommendations are highly dependent on the support of the Congress. Some new legislation will be required, but our recommendations are consistent with that which the Congress is already considering. There is recognition that stability in defense planning an result in very substantial savings and so the incentives are strong for the Congress to support these recommendations.

 

“We realize that absolute stability in five-year budget projections is not likely to happen. The Congress will want to keep some control of funding. In fact, Congress has already provided stability for some major programs. We believe a major improvement in this long range planning aspect of defense management can be achieved at this time. If it can be done, the payoff will be very substantial.”

 

ACQUISITION ORGANIZATION AND PROCEDURES

Packard continues saying, “Another major recommendation of the Commission is intended to improve the management of the new weapons development and production.

 

“Our Commission looked at some successful examples of systems acquisition both inside and outside the DoD and concluded that they had the following characteristics:

 

“First, clear command channels. That is the program manager had clear responsibility for his program and a short unambiguous chain of command to the CEO, General Manager, or comparable decision maker.

 

“Second, stability. Meant that the program manager made a ‘contract’ with his CEO at the beginning of the program specifying performances, schedule, and cost.

 

“Third, limited reporting requirements. The program manager was required to report only to the CEO, and typically on a management by exception basis.

 

“Fourth, small high quality staffs.

 

“Fifth, communication with the user. That is, the program manager established a dialog with the customer and maintained it throughout the program.

 

“Sixth, prototyping and testing.

 

Packard interjects a statement to the effect that his own experience has validated these principles many times. “Successful programs,” he says, “result from assigning good program managers and giving them clear cut authority to get the job done. My experience has also shown me that prototyping is absolutely essential. Every successful new product development in the commercial world must meet both a performance target and a cost target. There is no valid reason why this cannot be done with military equipment. Thus, we are recommending the slogan, ‘Fly and know how much it will cost before you buy,’ to be the guiding principle of all future new weapons programs.”

 

Packard says the Commission has recommended a procurement process which will “result in better decisions, made early and with more resolve. To encourage the right decisions, we recommend a streamlined acquisition organization, headed by a full time Under Secretary of Defense for Acquisition on the same level as the Deputy Secretary and the Service Secretaries.

 

Responding to what he says  has been “some concern” that establishment of such a position as Under Secretary of Defense for Acquisition would encourage greater centralization of the acquisition process, Packard says, “In the present system the Secretary and the Deputy Secretary provide the overall final authority for the entire acquisition process in the Department of Defense. These two officials have a tremendous range of other responsibilities. In the past the Deputy Secretary has been given the primary responsibility for the acquisition process, but even so he is able to devote only part of his time to this tremendously important job. We believe the defense acquisition process, which is one of the largest and most important management challenges in the world, will be substantially improved with an experienced manager in charge full time.

 

“Putting an experienced manager in charge of acquisition full time has nothing to do with whether the acquisition work is centralized or decentralized. The person would need a much larger staff to centralize the entire acquisition process. That is not what we are recommending. The acquisition work should continue to be decentralized to the Services and agencies just as Secretary Weinberger has done. Unified policies must be established and implemented and performance must be evaluated.

 
This recommendation adds one person, not another layer of management to the system. It reduces the span of control of the Secretary and his Deputy which is now far greater than good management practice would dictate.”

 

Government-Industry Accountability

“In recent years there has been increasing public mistrust of the performance of private contractors in the nation’s defense programs. Wide coverage in the news media of questionable practices on the part of industry have eroded public confidence in corporate morality.

 

“This country relies heavily on the private sector to carry out weapons system development and production. Cooperation between government and industry is essential if private enterprise is to fulfill its role in the defense acquisition process. Contractor or government actions that undermine public confidence in the integrity of the contracting process jeopardize this needed partnership.”

 

Packard says the Commission’s Interim Report urges “that the laws continue to be aggressively enforced. We also recommend that both defense contractors and the Department of Defense take steps to apply the highest standards of ethics and conduct.”

 

And Packard adds that he believes “industry itself will be far better off by cleaning up its own act rather than relying on the federal government to do the policing. In the long run, lax internal auditing leads to public outrage and resulting reaction by enforcement agencies. The result is damage to the corporate reputation, personal suffering on the part of corporate executives, loss of revenue to the corporation, and cost to the nation as a whole.”

 

Role of Congress

Packard says he wants to reemphasize the point that “Congress needs to focus on larger issues and stop trying to micromanage the Defense Department….No  matter how well DoD streamlines its own organization and procedures, Congress can undo most of it by continuing to get involved in day-to-day management.”

 

Packard cites one central theme in his remarks:

 

“If you want the job done, pick a qualified person to do it, say what you want done, leave him alone but hold him accountable for the outcome.” [A statement of HP’s Management by Objective policy.] And he adds that this message “should apply both to DoD and to the Congress.”

 

Closing Remarks

As I mentioned earlier, the Commission’s final report will be issued by the end of June. We hope to amplify on some of the recommendations already made, and we may issue two or three more reports on special topics. These reports will probably deal with acquisition, personal conduct and accountability, and planning.

 

“The response to our Interim report has been very positive, both on the part of the President and Congress. Those of us on the Commission have been extremely encouraged by this. We feel very strongly that reforms in defense management are long overdue. Now is the time to do something and stop talking about it. I hope all of you will support us.

 

“In closing I want to emphasize that our recommendations are not in any way intended to be a criticism of Secretary Weinberger. I pointed out in my covering letter to President Reagan that our military forces are stronger and their morale is higher than at anytime in recent memory.

 

“Secretary Weinberger has already undertaken a number of the management improvements we suggest. He has developed an outstanding relationship with the JCS, and he has saved billions of dollars by stabilizing major programs.

 

“He was also responsible for seeking out and discovering a number of serious problems that have been in the establishment for a long time. Unfortunately, the news media blame him as though these problems were the result of his management. They should instead be complimenting him for discovering the problems and for taking steps to correct them.

 

“We believe the adoption of our recommendations will enable Secretary Weinberger to do an even better job in the next three years and will provide the foundation for better Defense Management by future Secretaries.”

 

3/11/86, Letter to Packard from A. Lee Fritscher, Director, The Brookings Institution, expressing delight that he has agreed to be their luncheon speaker. He encloses a preliminary agenda.

3/24/86, Letter to Packard from B. K. MacLaury, President, The Brookings Institution, inviting him to an “off-the-record discussion with 18 people listed on the enclosed sheet prior to your remarks….”

 

The following is a list of Packard speeches which cover work of the Blue Ribbon Commission on Defense Management. Many were similar to other speeches and thus are not summarized here.

 

Packard speeches wherein he discusses work of the Commission on Defense Management:

 

March 26, 1986 – Remarks to the Brookings Institution, Washington D.C.

May 1, 1986 – Keynote Address to The American Institute of Aeronautics and Astronautics, Arlington, VA

May 5, 1986 – The Heritage Foundation, Washington D.C. (Not summarized   here)

May 21, 1986 – American Electronic Association, no location (Not summarized)

July 24, 1986 – Another to AEA, Palo Alto, CA

July 25, 1986 – Lakeside Talk, Bohemian Club

September 10, 1986 – The Commonwealth Club, San Francisco, CA

September 23, 1986 – Aerospace Industries Association/ National Security Industrial Association. (Not summarized here.), Williamsburg, VA

October 7, 1986 – Keynote address Electronic Industries Association, San Francisco, CA

Novembeer 6, 1986 – Committee for Economic Development, New York, NY. (Not summarized here)

December 4, 1986 – American Enterprise Institute, Washington D.C.

March 1, 1988 – The Thomas Jefferson Research Center, Beverly Hills, CA

June 14, 1988 – Defense Systems Management College, Fort Belvoir, VA

July 22, 1988 – Bohemian Grove

July 27, 1988 – Testimony before the Senate Armed Services Committee, Washington D. C.

October 24, 1989 – YMCA Enlisted Personnel Military Awards Dinner. [Offers retrospective comments on the work of the Commission.]

August 1, 1991 – Testimony before the Subcommittee on Science, Space, and Technology of the House of Representatives

 

 

Box 5, Folder 12B – General Speeches

 

April 15, 1986, Statement before the Subcommittee on Civil Service, Post Office and General Services, U.S. Senate, Washington D. C.

 

4/15/86, Typewritten copy of speech

 

“Mr. Chairman and members of the Subcommittee, I am pleased to have this opportunity to discuss with you the subject of personnel in the federal government. I cannot overemphasize the need to make sure that we get high quality people to fill critical positions in the government. Presidential Commissions may recommend, and Congress may legislate the creation of new positions or more effective organization structures. But without the right kinds of people in these jobs, the structure alone will not solve the problem.

 

“I will base my remarks today on my experience as a former Deputy Secretary of Defense, on the review of federal laboratories that I chaired for the White House Science Council, as well as on my present work with the President’s Commission on Defense Management. My focus will be on federal scientists and engineers and on critical acquisition personnel in the Department of Defense.”

 

Packard first addresses the issue of scientists and engineers, and says that
research and development are key to both our national security and industrial competitiveness. In the past 10 years both federal and private support for R&D in the United States have been increasing in constant dollars, and in 1985 this support reached an all-time high of $107 billion, about 47 percent of which was federal. Ironically, with more national emphasis on R&D than ever before, the federal government’s inability to attract and retain qualified scientists and engineers has become a major problem.

 

“At the heart of the problem is pay, with rigidity and inertia of the personnel administration system being a less important but contributing factor. The pay disparity between government and industry began to grow with the last cycle of inflation, when increases in federal salaries failed to keep pace. The problem is particularly acute in the scientific and engineering fields, where industrial pay scales have risen faster than the rest. Congress has made the problem worse by insisting on linking congressional and civil service pay. Because Congress is reluctant to raise its own pay, civil service salaries have been capped for at least six years; in 1986 the salary ceiling is $72,300. The result is not only lower federal salaries, but also severe salary compression at the senior levels, which penalizes some of the most highly trained and experienced people entrusted with critical responsibilities.”

 

Packard cites 1984 studies by the GAO and the Air Force that showed engineer and computer science people were from 30 to almost 50 lower paid than those in industry, and adds that data from other agencies tell a similar story.

 

“There are indications,” he says, “that problems exist in other critical career fields as well. For example, in my role as Chairman of the President’s Blue Ribbon Commission on Defense Management, I found that the Defense Department is losing many of its best contracting specialists at critical stages in their careers, principally at the journeyman level of GS-9, 11 and 12. In 1984 there was a 68 percent increase over previous years in the number of contracting specialist resignations.” And he adds that 45% of those resigning said they did so to join private industry, where they expected higher pay and better promotional opportunities.

 

He also cites an independent survey made by purchasing managers which showed that salaries in private industry were from 16 to 51 percent higher than Department of Defense pay scales for jobs of comparable experience and responsibility.

 

“Faced with problems in recruiting, federal agencies often have to choose between accepting a less qualified candidate or leaving a position vacant. Defense Department data show that the aptitude score of newly hired scientists and engineers are declining relative to national norms. This situation illustrates that the nation is getting only what it is willing to pay for.

 

Fringe benefits are also being eroded, Packard says. “Although the federal pension plan is still relatively generous, it has been affected by recent budget cuts and is often matched or exceeded in the private sector. Federal health and life insurance provisions, and annual and sick leave allowances, are far less generous than those offered by many private companies and universities.”

 

Packard mentions his work on the White House Science Council panel established in 1982 to review the federal laboratories, which he chaired. “The panel concluded,” he says, “that the inability of many federal laboratories – especially those under civil service restraints – to attract, retain, and motivate qualified scientists and engineers limits the productivity of the laboratories. If not corrected, this situation will seriously threaten their vitality.”

 

When the Federal Laboratory Review Panel compared administrative practices in government operated laboratories with those in industrial R&D organizations, “…they found that industry typically places more administrative control over technical personnel in the hands of technical supervisors than do government operated laboratories. In the federal system, personnel administration is handled by a more or less autonomous bureaucracy focused on procedures and standardization rather than on technical achievement. The federal government also commonly imposes personnel ceilings as well as budgetary controls on the laboratories, while the general industrial practice is to use budgetary control alone. Our panel recommended that government operated laboratories, also, use budgetary control alone.”

 

Another problem cited by Packard is that federal personnel administration tends to emphasize length of service over quality of performance in determining pay. “Thus,” he says, “a federal employee who has a clean service record is assured of a step increase at regular intervals regardless of productivity. Conversely, the process regarding high performers is administratively cumbersome, and most bonuses and promotions are difficult to push through the system.”

 

Packard recommends a greater exchange of scientists and engineers between government and academia, saying it would provide an exchange of new ideas to the laboratories involved, and to the federal R&D program offices as well. “Unfortunately,’ he says, “the current structure and rigidity of the federal personnel system inhibits the mobility of technical personnel between government and universities. Pay comparability would do a lot to improve the situation, as would additional flexibility in retirement accounts. There is no reason for example, why academics who join a federal organization should not have the option of retaining their own pension plans rather than being required to join the federal one.

 

“The Navy is attempting to rectify some of these personnel management problems in a demonstration project started in 1986 at two of its California laboratories, the Naval Weapons Center at China Lake and the Naval Ocean Systems Center in San Diego. An alternative personnel management system has been created at each facility that, among other things, aggregates the numerous civil service grades into broad pay bands, links pay to performance, and simplifies personnel administration. The broad pay bands give supervisors more flexibility in making initial salary offers and giving subsequent in-grade raises; they also permit more generic job descriptions and greater latitude in rewarding deserving individuals without having to promote them. In contrast, the existing civil service system, with its many narrowly and rigidly defined grades, makes it difficult to match market rates for scarce talent. This system also forces supervisors to rewrite job descriptions, thereby justifying promotion to higher grades, in order to give employees pay raises.”

 

Packard expresses his belief that the more general approach to personnel management demonstrated by the Navy at China Lake needs to be expanded and applied elsewhere in the federal work force. “In particular,” he says, “we have identified a need to stop talent drain among scientists and engineers as well as critical Defense acquisition personnel. We need to bring modern personnel management practices into the federal government, and this will require some structural changes as well as greater flexibility in the pay system.”

 

Packard says the China Lake system works quite well at entry and middle levels, and provides salary comparability with the private sector. “However,” he says, “we must also make allowances to have some top quality people in the very senior positions. These are the people who will provide the ideas and leadership to keep our R&D and systems acquisition activities above the level of mediocrity.

 

“Today, for example, the directors of large federally operated laboratories are paid only about half as much as their counterparts in contractor-operated laboratories. Some provision must be made to pay them above the current ceiling before the government loses the majority of its best talent. Adopting the China Lake approach solves part of the pay problem, but this issue of the pay cap must be dealt with in order to solve the whole problem.”

 

Realizing that the of such an approach as he recommends is an important question, Packard says, “I believe that present budgetary controls are adequate to limit costs. A program or laboratory manager, given a fixed budget for personnel costs, can make the necessary trade-offs between quality and quantity. In other words, the manager must understand that getting better people at higher salaries will mean having fewer of them within the budget constraint. From the defense systems acquisition point of view, this would certainly be a move in the right direction, since indications are that there are already too many people cluttering up the acquisition process.”

 

Packard emphasizes the need to do something about this situation very soon….  “Time is running out.” he says, “Many of the best senior people are nearing retirement age, and many of the subordinates who would have replaced them have left the government. Congress has an opportunity to pass remedial legislation this year, and I urge you to do so.”

 

“I appreciate the opportunity to appear before this Subcommittee, and I will be pleased to respond to your questions.”

 

Box 5, Folder 13 – General Speeches

 

May 1, 1986, Keynote Address, AIAA, Arlington VA

T. A. Wilson, Chairman of the Board of the Boeing Company, invited Packard to be the keynote speaker at the AIAA (American Institute of Aeronautics and Astronautics) 1986 Annual Meeting and International Aerospace Exhibit, April 29 – May 1, 1986. Packard was Chairman of the President’s Blue Ribbon Commission on Defense Management, and his speech here covers the interim recommendations of the Commission. The Commission’s Interim Report was issued February 28, 1986. See speech March 26, 1986 for complete listing of speeches which include comments on the work of the Blue Ribbon Commission on Defense Management.

 

5/1/86, Copy of typewritten text of Packard’s speech

 

When he was asked to speak at this meeting Packard says he realized that it would be “an excellent opportunity …to talk to many of the key people who would be putting the recommendations of the Commission on Defense Management into action on a day-to-day basis.” He says he is “confident that our major recommendations will be implemented.

 

“The old way of doing business with the Defense Department is going to change, he says, “we hope, in important ways. Many of you will be the ones responsible for putting the changes into action. We hope you will understand and embrace the changes we are recommending, and make sure that the men and women who work for you down the line do, too.”

 

Packard says that the reports which have been delivered to the President are brief, – “each represents a great deal of hard work and effort, and careful, and at times agonized, analysis of this country’s defense management policies by a group of Commissioners with diverse and impressive backgrounds. We had decades of Chief Executive and flag Officer experience to draw on; — academic expertise, government and Capitol Hill knowledge, also. We were fortunate to have a highly talented, experienced and hard-working staff.”

 

The Commission had been appointed in June of 1985 and Packard says that “one of the most overwhelming obstacles to our success was the simple fact that more than 30 reports on defense management have been issued since the last major reform during the Eisenhower Administration – and not much has changed.” However, he says he has been optimistic that the current climate for reform would “give our Commission a real chance for success. Each of our recommendations has received our careful consideration as to how it should be implemented – to insure that our reports would not end up on the shelf, like those of many other Commissions.”

 

Packard says he would like to “review the major recommendations the Commission has made – the rational behind them and what they mean to you.”

 

He explains that they separated their recommendations into four major areas: “National Security Planning and Budgeting, Military Organization and Command, Acquisition Organization and Procedures, and Government-Industry Accountability.” He stresses that “none of these recommendations stands alone – they are intended to work together as a package and they were arrived at with considerable thought and deliberation as to how one will affect the others.

 

“National Security Planning and Budgeting.

 

“One of the most serious problems in our defense management process has its roots in the way we plan and budget. The Commission concluded that there is today no rational process by which the Executive Branch and the Congress reach an agreement on funding, forces or strategy.

 

“As we all realize, the Defense Department budget has been for a long time too largely the product of parochial in-fighting between the Services and of an agonized Congressional examination of line-item minutiae. There has been too much lobbying by industry and too much pork barrel politics by the Congress. We know that cannot be completely eliminated but we need to do better long-range planning.

 

“Our piecemeal assessment of forces and weapons means that we lose all focus on matters of strategy, operational concepts, and key defense issues. Lost, too, are many opportunities for dramatically greater management efficiency. Avoidable instability, program stretch-outs, cancellations and waste are the unfortunate results of the way we conduct our planning and budgeting process.

 

“The Commission has recommended means for achieving better management of this process at the highest level, including that the President propose and the Congress approve defense budget levels for five years ahead and then a specific two-year operational budget. These changes would realize major improvements.”

 

“Military Organization and Command.

 

“The Chairman of the Joint Chiefs of Staff would play a key role in this new process. He would be the principal military advisor to the President, the National Security council and the Secretary of Defense.

 

“To date, we have not fully realized satisfactory ways of evaluating whether we are buying the right number of weapons, or in fact even the right kind of weapons. This has been the Secretary’s responsibility, but we believe it can be improved.

 

“This should be part of the job of the Chairman of the Joint Chiefs of Staff. He should be able to balance the interest and needs of the services for new weapons, against the readiness requirements of the unified and specified commanders in the field.

 

“He should also be responsible for working with the JCS and the Director of Central Intelligence to prepare a net assessment to evaluate the military capabilities of our forces, and those of our allies. This would provide information indispensable to making better long-term decisions.

 

“The Chairman should have the authority, staff and responsibility to accomplish all this. It is my belief that in the past we have had Chairmen more than equal to this job, but we have never told them that this is what we want them to do.

 

“I want to emphasize that these recommendations are in no way intended to reduce the authority of the Secretary. They are designed to enable the Chairman of the JCS to give the Secretary better advice.

 

“To assist the Chairman in this critical process, we are recommending that there be a Vice Chairman of the Joint Chiefs of Staff. He should be specifically responsible to represent the interests of the CINCs, and take an active role in the process of determining weapons requirements.

 

“Acquisition Organization and Procedures.

 

This Commission was established in part because of the spare parts horror stories. We looked at these cases, but we concluded that there were other more serious systemic problems in the acquisition process that cost billions of dollars. Correcting these will improve the management problems causing the horror stories.

 

“We have recommended, — and the necessary legislation already has been introduced in Congress – putting a senior OSD official, with experience in industrial management, in charge full time of defense acquisition policies. Today at DoD, you have the biggest acquisition operation in the whole world, and no one in charge full time.

 

“The new organization we are recommending includes the position of Under Secretary of Defense for Acquisition. A level II appointee, this person would be given the authority and responsibility to oversee the entire acquisition system.

 

“We are recommending that the Services retain the responsibility for all new major weapons systems from the beginning of full-scale development through production and deployment. The procurement procedures should be uniform, hopefully, embracing the best features of each Service.

 

“We have recommended a process with greater emphasis on the early stages of weapons development that picks the right system early in the process and uses more prototypes for adequate developmental and operational testing.

 

“The most important decisions are those made at the front end of the acquisition process. That’s when the analysis is done to determine if the technology is really adequate and can be converted into a useful military capability. If this is done correctly, with the first 3 to 5% of the expenditures, you will be able to stabilize costs and assure better performance further along in the program’s life span.

 

“The new Under Secretary would have the authority to establish appropriate policies for this part of the process. Only when it could be determined that program uncertainties have been addressed and dealt with adequately would Congress be asked to authorize high rate production and make major commitments of funding. The guiding principal of this new approach is: ‘Fly and know how much it will cost before you buy.’

 

“We are calling for more prototypes and more operational testing in the early stages of major programs. To do this may add some time and so streamlining will be very important at this stage. In addition to recommending a streamlined acquisition organization and a better balance of weapons system cost and performance, we have proposed other ways – for example, expanding the use of commercial products, and improving procurement competition – to run the Defense Department more like a successful commercial business.

 

“Government-Industry Accountability.

 

“Industry has a big role to play in the defense reform initiatives. The defense industry has to shape up and do a better job of keeping its own house in order, but defense contracting is a two-way street. What we need is a more honest and a more productive partnership between government and business.

 

“Public trust in our defense effort has eroded, and, more often than not, industry is seen as the villain. Whether this is fair or undeserved is irrelevant, because it is absolutely vital that a healthy government-industry relationship be restored. This country relies heavily on the private sector to carry out weapon system development. It could not be done without private industry.

 

“We have made some specific recommendations to industry in our interim Report, and will be making some additional recommendations in our final report in June. I want simply to stress today that industry will be far better off by cleaning its own house rather than relying on the federal Government for more regulation and enforcement.

 

People

 

“Improvement in senior level appointment system.

 

“SecDef to have more flexibility in personnel management policies.

 

“Expanded opportunities for education and training of all civilian acquisition personnel.

 

“Thank you very much, ladies and gentlemen. I will now be happy to answer your questions.”

 

1/16/86, Letter to Packard from T. A. Wilson, Chairman of the Board of the Boeing Company, inviting him to speak at the Annual Meeting of the AIAA (American Institute of Aeronautics and Astronautics)

1/24/86, Copy of a letter from Packard to T. A. Wilson saying he would be pleased to speak at the meeting

4/29/86, Copy of the printed program of the AIAA meeting

 

 

Box 5, Folder 13A – General Speeches

 

May 5, 1986, Address on Defense Management, the Heritage Foundation, Washington D.C.

 

5/4/86  Typewritten copy of speech.

This speech is very similar to others given by Packard on the subject of the Blue Ribbon Commission on Defense Management and, therefore, it is not covered again here. See speech March 26, 1986 for complete list of speeches covering work of the Commission.

2/26/86, Copy of letter to Packard from Edwin J. Feulner, Jr. President of  The Heritage Foundation, inviting him to visit the Foundation for a public discussion on the work of the President’s Blue Ribbon Commission on Defense Management.

4/4/86, Note to Packard from his secretary, Maddie Schneider, saying that she had talked to representatives of the Foundation , and they suggest three choices of format for the discussion – should Packard decide to accept. They recommend  a presentation in the morning, (attended by about 100, including members from the  administration, business, Congress, the media, and the Foundation)followed by further discussion over lunch with about a dozen attendees – Foundation members, congressional members and staff, and key administration representatives.

4/9/86, Copy of a letter from Packard to Mr. Edwin J. Feulner accepting his invitation.

Undated, Two typewritten sheets giving schedule for the meeting

Undated, Typewritten sheet listing projected guests

Undated, Typewritten sheet listing guests of honor

Box 5, Folder 14 – General Speeches

May 15, 1986, Statement before the Committee on Science and Technology, U.S. House of Representatives, Washington D.C.

 

5/15/86, Copy of typewritten text of Packard’s speech

 

Packard thanks the Committee for the opportunity to discuss the findings and recommendations of the White House Science council’s Panel on the Health of U.S. Colleges and Universities, and says he has had the “privilege and pleasure of chairing the Panel since its inception.”

 

He says they talked to more than 100 universities and over 40 private sector organizations. While these discussions bolstered their belief that America still enjoys a strong scientific and technological enterprise, Packard says a number of disturbing problems and questions concerning both the short and long-term health of this area were raised.

 

“In our Report,” he says, “we address these problems and questions and make specific recommendations directed to each of the federal government, the universities and private industry. Although we recognize that fully implementing many of these recommendations will be difficult, particularly given the continuing need to bring Federal spending under control, we are confident their implementation over time will preserve the health and vitality of a higher education system that has served this nation well in the past, and will be even more critical in the future as the worldwide technological competition becomes increasingly intense.”

 

“If we are to meet this competitiveness challenge, it is critical that we preserve and expand America’s science and technology base. The President’s Commission underlined the importance of science and technology to this country’s ability to compete when it noted that ‘Without doubt, [technology] has been our strongest competitive advantage. Innovation has created whole new industries and the renewal of existing ones. State-of-the-art products have commanded premium prices in world markets, and technological advances have spurred productivity gains. Thus, America owes much of its standard of living to U.S. pre-eminence in technology.’

 

“In the United States, we depend upon our universities and colleges to educate our scientists, mathematicians and engineers and to perform the basic research necessary to our technological enterprise.”

 

Historically, the United States’ commitment to maintaining a strong, stable higher education system dedicated to creative scientific inquiry and exploration has permitted industry to acquire the talent and technologies necessary to carrying out these chores. Yet there are worrisome signs that colleges and universities may not be able to play this role as sell in the future as they have in the past.”

 

He outlines a few of these signs:

 

• “The costs of research continues to increase, in most cases substantially faster than the ability of university revenues to keep pace with them.” Some 50% faster than the inflation rate, he says.
• “Scientific and engineering faculty salaries remain uncompetitive with those of private industry. As a result, fully one-tenth of the nation’s engineering faculty positions are vacant. In critical fields like electrical engineering and computer science, some universities report half their positions unfilled.
• “Universities are not producing enough new scientists and engineers. For instance, in 1983, the American Electronics Association projected that 200,000 new positions for electrical engineers and computer scientists would be created over the 5-year period ending in 1987 – more than twice the number our universities will have graduated during that time.
• Due to long years of forced neglect, university physical plant is decaying and scientific equipment is becoming obsolete. According to the Association of American Universities, the median age of instrumentation in our nation’s universities is twice that used in industrial laboratories. Universities are unable to upgrade this plant and equipment at a fast enough rate to ensure adequate future levels of scientific productivity.

 

“In response to these needs and problems the Panel produced a set of specific recommendations aimed at ensuring that colleges and universities would be able to meet the scientific and technological demands that will be placed on them over the next several years.”

 

Packard discusses three of the recommendations:

 

“First, the Federal Government must increase its commitment to the colleges and universities. There simply must be a greater and more focused Federal R&D effort.

 

“Second, the government should provide more realistic accounting and reimbursement of university research costs. The Panel recommended that the Federal Government fully fund all of the research it supports, rather than demanding an arbitrary level of ‘cost sharing,’ since, in fact, universities’ continuing support of personnel, support of students and provision of an environment conducive to the conduct of research and training in themselves constitute a very real and significant cost contribution.”

 

“Finally, and most importantly, the Federal Government should stop treating its basic research funding as an exercise in procurement and start treating it as what it is – a long-term investment. This change in approach would greatly enhance the efficiency and creativeness of university research, while at the same time eliminating unnecessary and burdensome administrative expenses that consume increasing percentages of every research dollar. Key elements of this investment approach that the Panel recommended be put in place are stability of funding, greater discretion on the part of researchers in the use of their research funds, and greater use by the government of block grants or contracts to support groups of investigators having shared research interests.”

 

“The Panel believes that if the U.S. Government, industry and higher education institutions undertake these and other steps cited in the Report, the United States will be able to restore and protect its most important scientific and technological resources – that is, its colleges and universities. In so doing, the United States not only will ensure that it remains on the cutting edge of science and technology, but also will help ensure that American industry remains competitive far into the future.

 

“In closing, let me emphasize again that, where recommendations urge additional funding, we recognize that fiscal constraints require that many of these objectives be long-term rather than immediate goals. However, we urge that the government at least start –now – down this increasingly important path of preserving the health of America’s higher education institutions. In this way our colleges and universities, so vital to building and expanding the nation’s scientific and technological base, will remain as effective in the future as they are today– the continuing envy of the rest of the world.

 

“Thank you very much. I will be happy t answer any questions you might have.”

 

There are no other documents in the folder.

 

 

Box 5, Folder 14A – General Speeches

 

May 21, 1986, Address to Amereican Electronics Association on the Presidents’s Blue Ribbon Commission of Defense Management

 

Since this speech is very similar to others on the same subject it is not included here. See listing March 26, 1986 for complete list of speeches covering work of the Blue Ribbon Commission.

 

 

Box 5, Folder 14B – General Speeches

 

June 24, 1986, Address on work of the President’s Blue Ribbon Commission, at Symposium on Defense Acquisition Issues sponsored by the National Defense University, Washington D.C.

 

6/24/86, Copy of typewritten text of speech

This speech is very similar to that given to the AEA on July 24, 1986 so it is not summarized here. See speech March 26, 1986 for complete list of speeches covering work of the Commission

5/12/86, Letter to Packard from Lt. General Richard D. Lawrence inviting him to speak at their symposium. He says the audience will include corporate executives from throughout the defense industry, as well as key leaders from the executive and legislative sides of the defense establishment.

Undated, Copy of printed pamphlet describing the National Defense University Foundation.

 

 

Box 5, Folder 15 – General Speeches

 

July 24, 1986, Remarks to American Electronics Association, Palo Alto, CA

 

At this meeting – an Executive Briefing of the American Electronics Association’s Northern California Council, Packard continues to report on the recommendations made by the President’s Commission on Defense Management – this time following issuance of the final report. See speech March 26, 1986 for list of speeches covering work of the Commission.

 

7/24/86, Copy of typewritten text of Packard’s speech

 

Packard explains that the Commission [of which he was the Chairman] had its last meeting in June. They had met with the President [Reagan] who asked that they return in six months to give him a progress report on implementation.

 

Packard says he was very pleased that the President asked for a progress report on implementation. “I was well aware,” he says, “that this was not the first commission to study and make recommendations on the management of the Defense Department. There have been at least thirty reports and studies of defense management since 1958. Not much has come of any of them.”

 

In accepting chairmanship of the Commission Packard says he thought the environment was ripe for change. “This turned out to be true,” he says.

 

“In April, the President directed the Defense Department to implement our recommendations not requiring legislative action, and the Congress is moving ahead in three areas that do require legislation.

 

Packard reviews the Commission’s Interim Report which had been submitted to the President on February 28, 1986, In this Report Packard says that the Commission “made a number of recommendations relating to the organization and the responsibilities of the Office of the Joint Chiefs of Staff.

 

In making these recommendations, the Commission had two objectives in mind. First to improve the command of the United States military forces deployed around the world under the Unified Commanders, including both the established worldwide commands and those assigned for specific actions, such as Lebanon and Grenada.

 

Second, the Commission’s recommendations were designed to give the Chairman of the Joint Chiefs and the Unified Commanders a stronger role in the process of deciding what new weapons should be acquired and in distributing the resources available among the Military Departments. An important part of these recommendations involved developing a more effective long-range planning process to keep the overall military plans within limits of the financial resources that are likely to be provided by the Congress for the period of at least five years ahead.”

 

“Packard says that the practices that have evolved since the last major reorganization of the Department of Defense in 1958 have become very wasteful of our national resources. They have all but destroyed the one clear advantage the United States has over the Soviet Union: Technical Superiority.

 

“U.S. technology is clearly ahead of the Soviet Union in every area of military importance. The process of developing and deploying weapons utilizing our technical advantage has become so burdened with what can only be described as garbage that it now requires ten to fifteen years to deploy a major new high technology weapons system. This process should take no more than five years.

 

Packard gives two examples: the Polaris system which took five years to deploy over the period 1955-1960, compared to the Trident system which took sixteen years from 1972 to 1988. Another example which he describes is the Minuteman program which took 4 ½ years to deploy, compared to the MX system which is eight years along and will need several more years before a “meager 50 missiles” are deployed.

 

Packard says there are several reasons for the “disastrous deterioration of the United States military acquisition system.

 

“The first is poor decisions at the beginning of a new weapons program and the failure to develop a strong consensus to support those decisions that are made.

 

“The second is adding a plethora of unnecessary baggage to these important programs. Congress imposes much of the unnecessary baggage by legislating many detailed requirements. The Department of Defense makes the situation worse by issuing and enforcing rules that all too often go beyond the intent of the Congress.

 

“The new structure of the Joint Chiefs can make a major contribution to getting the whole acquisition process back on the right track.

 

“First, the decision to proceed with the development and deployment of a proposed new weapons should be determined by the contribution that weapons will make to the unified military capability of U.S. forces, rather than by the desires of the Military Departments.

 

“Second, stability can be greatly improved by assuring that all of the new weapons systems authorized can be properly funded for efficient development and production with the resources that are likely to be available for at least five years in the future.

 

“Better decisions at the beginning and better long-range planning are both essential steps to better defense acquisition management.

 

“A different philosophy of management must be introduced throughout the system. The sheer magnitude and complexity of a program to develop a modern high technology system put these programs beyond the ability of one man alone to plan and implement the work.

 

“These programs require a team of people working to achieve the basic objectives of the program, unfettered by laws and regulations that have little or nothing to do with the main job of designing and building the system.

 

“Another major recommendation of the Commission is the establishment of the position of an Under Secretary of Defense for Acquisition as a level II Presidential appointee. He will have the responsibility for establishing the overall policy in all of the acquisition areas in the Department of Defense. In many ways, this is the most important acquisition job in the whole world, and right now there is no one in charge full time.

 

“The final area requiring legislation is the establishment of a unified transportation system. This is being worked on now and will require more time, but I am confident that it will happen.

 

Packard says the Commissions third report on the National Security Planning and Budgeting section in the Interim Report was released June 23.

 

“This report is an aid to assist the Defense Department which has started work on the first two-year budget scheduled to go to the Hill in January for consideration by the Congress.

 

“There are no guarantees that  Congress will adopt this budget which will be for FY 88-89, but in my view it is imperative that there be more stability and long-range planning in our budget and planning process starting with the President, and continuing with the Defense Department and in the Congress.”

 

“Much more is going to be required besides passing legislation to make our recommendations work. It will require a new way of doing business and a better partnership between all the members of the defense establishment. This is a major theme in all our reports.

 

“It means the Executive Branch needs to chart a better course for our national defense; the Defense Department needs to give better advice to the President to assist him in doing this, and in matters of acquisition the department needs to conduct its business more like a successful commercial enterprise.

 

“The Congress needs to make some changes in the way it operates as well. There is too much lobbying and pork-barrel politics which probably contributes as much to the instability in the Department as anything else. Granted, our democratic form of government provides some unique demands on the system, but the whole process has just gotten out of hand. And finally, the defense industry needs to be a part of this new partnership as well.

 

“Industry and defense have been playing games with each other. This was going on even when I was Deputy Secretary of Defense fifteen years ago.

 

“As a result, public trust in our defense effort has eroded, and more often than not, industry is seen as the villain. Whether this is fair or undeserved is irrelevant, because it is absolutely vital that we get away from this police-sate attitude. A healthy government-industry relationship must be restored. This country relies heavily on the private sector to carry out weapon system development which could not be done without private industry.”

 

Packard says the Commission’s final report includes specific recommendations to industry. “The thrust of these recommendations is that industry needs to be self-governing rather than relying on regulation by the government.

 

“Doing business with the government is different from doing business in the commercial marketplace. The defense industry has a higher accountability to the taxpayers, the Congress and the men and women in uniform whose lives often depend on their products.

 

“Business with the government is different in other ways as well. In commercial business, for example, profits and overhead for different product lines can be transferred from account to account, and it is perfectly legal and sensible. However, this is illegal in defense accounting and is an open invitation to hordes of auditors and investigators.

 

“These are lessons the defense industry has learned, and they have caused a lot of heartaches and hard feelings on all sides. However, I am convinced that a new page will be turned over.

 

“The key to this effort is to make it the responsibility of every individual in the industry and the department to know what good behavior is, what is expected of them, and to have the opportunity to report anything they see without danger of retribution. We need to get the entire defense establishment dedicated to a higher level of performance.

 

Packard says, “Twenty-four Chief Executive Officers have developed a set of Defense Industry Initiatives on Business Ethics and Conduct to do precisely this. The initiatives will be made public with the release of our final report. I feel confident that the entire defense industry is going to adopt these initiatives. I think you will find that this will put a whole new spirit of enterprise into your business.

 

“The higher level of performance cannot be legislated or mandated. It must come from a spirit of enthusiasm and dedication from every individual in the work place – or centers of excellence.

 

“These Centers of Excellence flourish in environments where individuals can identify with a team or unit, and take pride in their work. Centers of Excellence encourage entrepreneurial initiatives and give each person the necessary authority and responsibility in a management environment where policies are established centrally and implemented through a highly decentralized management structure. [He is describing the typical HP management structure.]

 

“This management technique is common in the business world and has been used to a limited extent by the Department of Defense in its Model Installations Program.

 

“This program has been very successful – base personnel have found innovative ways to accomplish their missions while saving money and improving the quality of goods and services.”

 

“We have recommended that the Chairman of the Joint Chiefs of Staff have increased authority and responsibility. This is another example of where there should be a Center of Excellence in the department committed to the job of providing the best, non-parochial military advice possible to the President.

 

“Centers of Excellence need to be established not only in the department, but also within the entire Defense establishment to include contractors and auditors. I am pleased to report that a first step in that direction has been taken by industry.

 

“Our Final Report contains some recommendations on data rights and the revolving door issues. The Defense Department and Congress have gone too far on both these issues, and a proper balance needs to be restored.

 

“Before I close, I want to spend a few minutes discussing our recommendations which will have a direct effect on some of you here today.

 

“The Commission was established in part because of the spare parts horror stories. We looked at these cases, but we concluded that other more serious systemic problems in the acquisition process cost billions of dollars.

 

“Many of you are familiar with these problems which plague the defense acquisition system, such as goldplating, overarching regulations and an inflexible bureaucracy. There are other serious problems that severely erode our ability as a nation to defend ourselves. Today it takes 8 to 10 years from start to finish to get a new weapons system in the field, and by that time the technology is out of date.

 

We must keep our technological edge both in the laboratory, and in the field where this ‘edge’ is deployed. Our ability to mobilize our industrial base in the event of a national emergency is also seriously threatened because of our encumbered defense acquisition system.

 

“The new Under Secretary [of Defense for Acquisitions] is the key to many of our other recommendations. Getting the right person in that position is critical to making the  other recommendations fall into place correctly.

 

“We have also specified a streamlined chain of command in the acquisition organization with only four layers: The new Under Secretary, a service acquisition executive, a program executive officer and the program manager. This streamlined system will mean fewer people and bureaucratic layers, and a more responsive system.”

 

“We have recommended that the weapon system decision structure be changed so that program initiation, full-scale development and production decisions are made by the Joint Requirements and Management Board. This Board, to be co-chaired by the new Under Secretary and Vice Chairman of the Joint Chiefs of Staff, would change the focus of the decisions to concentrate more on requirements and operational suitability.

 

 

“We have recommended a process with greater emphasis on the early stages of weapons development which picks the right system early in the process and uses more prototypes for adequate developmental and operational testing. The idea is to evaluate a system using hardware instead of paperwork.

 

“The most important decisions are those made at the front end of the acquisition process. This is when the analysis is done to determine if the technology is really adequate and can be converted into a useful military capability. If this is done correctly, with the first 3 to 5% of the expenditures, you will be better able to stabilize costs and assure better performance further along in the program’s life span. The Services will retain the responsibility for all new major weapons systems from the beginning of full-scale development through production and deployment.

 

“The new Under Secretary will have the authority to establish appropriate policies for this part of the process. Only when it is determined that program uncertainties have been addressed and dealt with adequately, would Congress be asked to authorize high rate production and make major commitments of funding. The guiding principal of this new approach is ‘Fly and know how much it will cost before you buy.’

 

“In addition to recommending a streamlined acquisition organization and a better balance of weapon system cost and performance, we have also proposed increased use of baselining, improving procurement competition and expanding the use of commercial products.

 

“A perfect example of how money can be saved by increasing the use of commercial products is in the area of integrated circuits. The Defense Department uses $2 billion a year worth of integrated circuits. The mil spec integrated circuits cost anywhere from four or five to ten times as much as the equivalent commercial products. And, the quality and reliability is not as good. This one use of commercial products can save $10 billion a year or more and make more reliable equipment.

 

“Although our recommendations are being accepted and acted on in an encouraging way, it will require some very strong follow up work to achieve any real progress. The Defense Department bureaucracy has a way of accepting such recommendations with lip service yet nothing changes. I sense a broad interest among a great many organizations in some strong and continuing follow up activity. I am pleased about the active interest of the AEA in this important issue. Your continued active support of the Commissions recommendations will help in finally achieving much needed improvement in the management of the Department of Defense.”

 

7/17/86, Letter to Packard from Alice Zatarain Member Services Manager, AEA, thanking him for agreeing to address the AEA meeting, and discussing details of the luncheon.

 

7/25/86, Newspaper clipping covering the speech, clipped from the Times Tribune

 

Box 5, Folder 16 – General Speeches

 

July 25, 1986, Lakeside Talk, Report on President’s Commission on Defense Management, Bohemian Grove, San Francisco, CA

See speech March 26, 1986 for complete list of speeches covering work of the Commission

 

7/25/86, Copy of typewritten text of Packard’s speech

 

Packard starts with a short history of the Defense Department, beginning with its inception by legislation in 1947. “Until that time,” he says, “the U.S. military establishment consisted of the Secretary of War, established in 1788, and the Secretary of the Navy, established in 1798. The Marines were established in 1775 and were under the Secretary of the Navy.

 

“By the end of World War II, air power had been established as a major military force and the Army [Air] Corps had become a very important part of the Army.

 

“The experience of World War II demonstrated that all future military operations were likely to be joint or unified operations of the four services. This view was strongly held by General Marshall and General Eisenhower and was a major consideration in the military reorganization Act of 1947. This act established the Defense Department, and a separate Air Corps and brought the three military departments we have today under the Secretary of Defense. The Secretary of Defense was given limited power and the 1950s were characterized by strong service influence on defense policy and intense competition among the services.

 

“During President Eisenhower’s second term he became quite concerned about this excessive service influence. He proposed to put a military chief over the services, reduce their influence and strengthen the hand of the Secretary of Defense.

 

“Legislation was passed in 1958 to make some but not all of the changes Eisenhower recommended. The authority of the Secretary of Defense was strengthened, the power of the service secretaries was reduced, the Joint Chiefs were excluded from any executive function in the assignment of military missions, but there was no effective military authority established to control the services.

 

“Secretary McNamara brought to the office of the Secretary of Defense a very strong team and he took charge of the Department. The military services, however, never fully accepted Secretary McNamara’s authority. When I joined Mel Laird at the Pentagon in 1969, the depth of resentment of the McNamara policies by the professional military people was still very strong and very evident.

 

“During this period the Joint Chiefs were asked to prepare plans for the military forces they thought would be needed to deal with the worldwide national security interests of the United States. These plans were essentially the combined with lists of the four services. These plans would require budgets substantially higher than likely to be provided by the Congress. Secretary McNamara would then prepare his own plans and budgets and take credit for the great savings he had achieved.

 

“This procedure gave strong incentives to the services to find ways to get their programs into the budget and encouraged lobbying efforts by industry and log rolling practices in the Congress. The most serious problems resulted from low estimates on the cost of a new weapons program to get it into the budget. The real costs which became apparent later built up a large bow wave of cost in future budget requirements. To keep within funding as it became available in future years, programs had to be stretched out or cancelled. In effect, there has been no effective long range planning in the systems since 1958 and tens of billions of dollars have been wasted every year because more programs are started than can be funded on an efficient basis.

 

“President Reagan took office in 1980 with a strong commitment to strengthen our military forces and to eliminate fraud and waste from the military establishment.

 

“Secretary Weinberger had a good understanding of some of the basic problems I have described when he took office. He established a good rapport with the joint Chiefs. He gave the unified commanders a larger role in resource allocation and he gave service secretaries and their services a stronger role. From FT1981 until FY1985 he obtained substantial increases in the defense budget from the Congress. Over this period there was about a 50% increase in the defense budget in constant dollars. This gained for him the enthusiastic support of the professional military people and he achieved a quantum increase in the strength and capability of U.S. military forces.

 

“I believe Cap[Weinberger] had every right to be pleased with what he had accomplished in his first four years. There was, as usual, criticism of waste. There was, however, a feeling that the country had not received its money’s worth for this substantial build up in our defense budget. This was not easy to evaluate because considerable money had gone to improve the readiness and sustainability of our deployed forces – factors that are not obvious to the untrained observer.

 

“Other problems caused concern. The U.S. operations in Lebanon indicated serious problems in our command control capability. Grenada raised other questions that troubled the Congress and the public.

 

“The actions taken by the Secretary to deal with fraud and waste were a sharp departure from long established policy in the relationship between the Department and the defense industry.

 

“About 1982 the Congress established legislation to assign Inspector Generals to the auditing problems with the defense industry as well as problems in the Department. The Inspector General has authority to bring criminal indictment and to assess penalties for actions it finds in violation. Questionable charges were investigated by the Inspector Generals assigned to industry and what had for decades been a matter for negotiation with the contracting officer became a legal violation. Unfortunately, this was done without any notice or discussion with the defense industry.

 

“The contracting people in the Department were also called to task for not adhering strictly to the rules. A great deal of real fraud was uncovered at military supply depots around the country as well as in the industry.

 

“What had been done by Cap in his first four years in a real contribution to the military strength of our country began to fall apart in 1984, and by 1985 had lost credibility with the Congress and with the general public. Both the Department and the industry were in a state of crisis.”

 

Having brought his discussion to this point, Packard moves on to the subject of the Commission which he headed.

 

“There had been some discussion about the appointment of a commission to deal with this problem initiated by Republican members of Congress. Cap was not very enthusiastic unless the commission would agree to convince the Congress and the general public that he had, in fact, done an excellent job and there was no need for any substantive change in the management of the Department.

 

“I had been aware of the discussion about the pressure on the President to appoint a commission to deal with this problem and I was not entirely surprised when the President called me and asked me to take on the job. I agreed to do so because I sensed that this was a very serious problem, yet might be a unique window of opportunity to make a substantial improvement in the procedures in the Defense Department management.”

 

Packard says he was able to select the majority of the members of the Commission – and he says he received strong support from the White House. “Some of the Commissioners were doubtful at the beginning that the Commission work would be either interesting or useful,” he says. However he found that after a few meetings, “all of the Commissioners became excited about the challenge we had accepted and our work was a real team effort from then on and every Commissioner made a substantial contribution to our work.” He adds that the report ended with the unanimous support of all of the Commissioners.

 

“I had been aware,” he says, “of the discussions which had been going on for considerable time about the role of the JCS and about the command control problems of the military establishment. I saw this as an opportunity to bring better professional military advice to the make up of our overall forces, to the selection of new weapons programs, and to the allocation of resources among the services. If this could be done I believed it would greatly increase our ability to undertake more effective unified military operations.

 

“The Marines were not very enthusiastic about unified military operations. General P. X. Kelley, the Marine Commandant, testified quoting one of his predecessors. He said it was all right to work with the other services but to expect a man to love the other services as he loves his own is just like asking a man to love all of his girl friends just as much as he loves his wife.

 

“It became very clear as we began to realize what a broad range of issues we were expected to deal with that we had a real problem in determining whether our recommendations should be limited to broad strategic recommendations or whether we should try to describe how our recommendations should be implemented.

 

After discussing this subject, Packard says they decided to develop a “grand strategy about how to improve the management of our national defense establishment,”  – and they also provided “some specific guidelines as to how this [could]  be done.”

 

“Now I want to say one more thing before I talk about our specific recommendations.

 

“There have been at least 30 separate reports by commissions and other knowledgeable groups about how to improve the management of the Defense Department since 1958. None of them have had any significant impact on the management of the DOD. There is, therefore, no evidence from the history of these attempts that our commission will have any useful influence toward improvement.

 

“I believe that the recommendations we have made have a good chance of breaking traditional behavior in the DOD and the DOD can indeed move to a higher plane of performance in its all important role of preserving peace and the freedom of people in this troubled world.

 

“The Commission had its last meeting in June [1986], and we issued our final report at the end of that month. At our last session we met with the President, and he asked us to come back in six months to give him a progress report on the implementation of our recommendations.

 

 

“The first two recommendations, National Security Planning and Budgeting, and Military Organization and Command, require changes in the structure of the JCS. These changes are consistent with both the Senate and House legislation and will be put into effect this year.

 

“Our second report titled  ‘A Formula for Action,’ makes detailed recommendations on the Defense Department system for developing and acquiring new weapons. It was done by a sub committee of the Commission chaired by Bill Perry who has served in DOD as the Director of Research.

 

“Our third report was done under the leadership of Vince Puritano who had been Comptroller of DOD. It is titled ‘National Security Planning and Budgeting’ and it is intended to help DOD implement our recommendations on this subject.

 

“Our fourth report is titled ‘Conduct and Accountability’ and it makes a number of recommendations to both the DOD and the defense industry to improve their working relationship.

 

“We say in this report – ‘Our study of defense management compels us to conclude that nothing merits greater concern than the unnecessarily troubled relationship between the defense industry and the government.’ The United States relies on private industry for its military equipment. It follows that the vigor and the capability of the industry is indispensable to the successful defense of America and the security of our people.

 

“It is a long complex business with 60,000 prime contractors and hundreds of thousands of other suppliers and sub-contractors. Contracts worth $164 billion were placed in 1985, seventy percent of which went to 100 large firms. An average of 15,000 contracts are placed every day.

 

“It is not surprising that in an enterprise of this size fraud and waste can be found. While fraud is a serious problem it is not as costly as many Americans believe. It is, as far as we could determine, less than 1% of  total expenditures.

 

“In a public survey we found that Americans believe that half the defense budget is lost to fraud and waste and that most of this is simply pocketed by defense contractors.

 

“We recommend as the best way to deal with this problem a greatly expanded program of self discipline, the establishment and self enforcement of codes of ethics, better auditing by both the contractors and the auditing profession.

 

“The Commission stated in its first report that:

Management and employees of companies that contract with the Defense Department assume unique and compelling obligations to the people in our armed forces, the American taxpayer and our nation. They must apply (and be perceived as applying) the highest standards of business ethics and conduct.

 

“I am very pleased that the defense industry has enthusiastically accepted our recommendations on this important matter. The industry leaders have voluntarily undertaken to expand and strengthen the enforcement of codes of ethics and work is under way to improve the auditing procedures of the defense industry.

 

“I believe there will be real improvement in the industry and in the Defense Department as the recommendations of the Commission are put into effect.

 

“I want to note that this will probably not change the public perception quickly. The politicians will continue to use DOD as the whipping boy. This is nothing new .In the 1930s the industry, although relatively small at the time, was characterized as ‘merchants of death’. Harry Truman gained public visibility by criticizing the defense industry. It is not always that way. In both World War I and II, the American defense industry was ‘the savior of democracy’.

 

“Whatever the public view and the pronouncement of the politicians, the American defense industry produces the best weapons in the world. We must keep the industry healthy and re-establish a better relationship between DOD and the industry.”

 

Saying that he has taken more time than he should have on the DOD/industry problems, Packard moves on to others which he says are “much more important”.

 

“We note in our interim report that – ‘Today, there is no national system whereby the Executive Branch and the Congress reach coherent and enduring agreement on national military strategy, the forces to carry it out, and the funding that should be provided – in light of the overall economy and competing claims on national resources.”

 

“There is simply no effective long range planning in the system and the decisions on what weapons to produce are distorted by service competition, contractors lobbying the Congress and far too much pork barrel log rolling by members of the Congress. These practices result in tens of billions of dollars of waste and are therefore much more serious than the waste resulting from fraud which is in the range of tens of millions of dollars a year.

 

“To improve the defense management we make a number of important recommendations.

 

“First: Military forces should be planned so that our unified military capability can be optimized to support our overall world wide national security objectives.

 

“Second: Military force should be planned under a five year fiscal plan agreed to by the Administration and at least tacitly supported by the Congress.

 

“Third: Military budgets should be on a two year cycle rather than one year.

 

“Fourth: The Chairman of the JCS should have a larger role in planning military forces, the ability of the forces to sustain their action over an appropriate period of time and the level and type of modernization that should be provided for our forces with new R&D and acquisition programs.

 

“Fifth: The unified commanders who are the users of the forces should have a larger role in the budget development and in decisions about what new weapons to acquire.

 

“I do not have time today to go into more detail about our recommendations. In the foreword to our Final Report I emphasized the need to establish and support strong centralized policies to achieve the objective of the Department. These policies should be long in range, and should have broad support.

 

“The Administration has given strong support to our recommendation. It is a big bureaucracy to deal with and it is very resistant to change.

 

“Congress causes many of the problems. During the defense budget review in 1985 Congress made over 1800 changes and directed the Department to conduct 458 studies from the feasibility of selling lamb products in commissaries to the status of retirement benefits for the Philippine Scouts.

 

“We hope our recommendations will encourage the Congress to direct their attention to the larger issues of National military strategy and the overall capability of our military forces rather than the line item detail.

 

“We realize that Congressional log rolling can not be stopped, but perhaps it can be reduced somewhat.,

 

“I have no illusions that even if all of the Commission’s recommendations are adopted the problems of defense management will be eliminated.

 

“Spending a year on this subject has impressed me again that defense management is a large and complex endeavor. I am convinced there is no possibility whatever for a complete reorganization of the entire system as some critics have suggested. I do believe that significant improvement can result from the Commission’s recommendations. I hope this will have your support.”

 

7/28/86, Letter to Packard from H. Leonard Richardson, Chairman, Lakeside Talk Committee, thanking him for speaking to Bohemian Club members

8/5/86, Letter to Packard from Wm David Smullin asking for a copy of Packard’s speech

9/5/86, Copy of a letter from Packard to Dr. Roger Heyns, The Hewlett Foundation, sending a copy of his speech

 

 

Box 5, Folder 17 – General Speeches

 

September 10, 1986, President’s Commission of Defense Management, Commonwealth Club, San Francisco, CA

See speech dated March 26, 1986 for complete list of speeches covering work of the Commission

 

9/10/86, Copy of the text of Packard’s speech

 

Packard says he wants to begin with a brief “sketch” of the history of the Department of Defense, “which,” he says, “was established by legislation in 1947. Until that time the U.S. military establishment consisted of the War Department under the Secretary of War, established in 1788, and the Navy Department under the Secretary of the Navy, established in 1798. The Marines had been established in 1775 and were under the Secretary of the Navy.

 

“Prior to World War II the United States had a limited national security problem. We were not threatened by land forces and had no need for a large standing army. We did need to control the seas around our continent and the Navy with its Marine Corps provided our main military capability ready for action. The Navy and the Marines had a long, proud tradition.

 

“In light of this tradition it is not surprising that the Navy and Marines were opposed to unification with the other services in the negotiations that established the Department of Defense in 1947, and have not been very enthusiastic about unification ever since.

 

“By the end of World War II, air power had been established as a major military force and the Army Air Corps had become a very important part of the Army.

 

The experience of World War II indicated that all future major military operations were likely to be joint or unified operations of the four services. This view was strongly held by General Marshall and General Eisenhower and was a major consideration in the Military Reorganization Act of 1947. This act established the Defense Department, and a separate air corps and brought the three military departments we have today under the Secretary of Defense. The Secretary of Defense was given limited power and the 1950s were characterized by strong service influence on defense policy and intense competition among the services.

 

“During President Eisenhower’s second term he became quite concerned about this excessive service influence. He proposed to put a military chief over the services, reduce their influence and strengthen the hand of the Secretary of Defense.

 

“Legislation was passed in 1958 to make some but not all of the changes Eisenhower recommended. The authority of the Secretary of Defense was strengthened, the power of the service secretaries was reduced, the Joint Chiefs were excluded from any executive function in the assignment of military missions, but there was no effective military authority established to control the services. The fact that his recommendations were not completely implemented in the Reorganization Act of 1958 is what caused President Eisenhower to warn the country about the danger of the ‘Military Industrial Complex’ in his farewell address.

 

“The Joint Chiefs organization was intended to be a mechanism for developing our overall military strategy and planning the forces to support that strategy. Because its recommendations were the joint recommendations of the four chiefs, they generally involved an accommodation of the views of the four services and its    recommendations were thus almost always at the level of the lowest common denominator.

 

“Secretary McNamara brought to the office of the Secretary of Defense a very strong team and he took charge of the Department. The military services, however, never fully accepted Secretary McNamara’s authority. When I joined Mel Laird at the Pentagon in 1969, the depth of resentment of the McNamara policies by the professional military people was still very strong and very evident.

 

“During the McNamara regime the Joint Chiefs were asked to prepare plans for the military forces they thought would be needed to deal with the worldwide national security interests of the United States. These plans were essentially the combined wish lists of the four services. These plans would require budgets substantially higher than would be provided by the Congress. Secretary McNamara would then prepare his own plans and budgets and take credit for the great savings he had achieved.

 

“This procedure gave strong incentives to the services to find ways to get their programs into the budget and encouraged lobbying efforts by industry and log rolling practices in the Congress. The most serious problems resulted from low estimates on the cost of a new weapons program to get it into the budget. The real costs which became apparent later built up a large bow wave of cost in future budget requirements. To keep within funding as it became available in future years, programs had to be stretched out or cancelled. Thus, there has been no effective long range planning in the systems since 1958. Tens of billions of dollars have been wasted every year because more programs have been started than can be funded on an efficient basis. This is by far the most important problem dealt with by the Commission.

 

“President Reagan took office in 1980 with a strong commitment to strengthen our military forces and to eliminate fraud and waste from the military establishment.

 

“Secretary Weinberger understood some of the basic problems I have described when he took office. He established a good rapport with the Joint Chiefs. He gave the unified commanders a larger role in resources allocation and thus supported more effective unified operations. However, he gave service Secretaries and their services a stronger role. The better cooperation that he brought about among the Joint Chiefs and the unified commanders resulted in some improvement in unified operations. The more freedom he gave the service Secretaries badly fragmented policies that should have been unified. From FY1981 until FY1985 he obtained substantial increases in the defense budget from the Congress.

 

“Over this period there was about a 50% increase in the defense budget in constant dollars. This gained for him the enthusiastic support of the professional military people and he achieved a quantum increase in the strength and capability of U.S. military forces.

 

“In 1982 the Congress established legislation to assign Inspector Generals to the auditing problems and other problems with the defense industry as well as problems in the Department. The Inspector General had authority to bring criminal indictment and to assess penalties for actions it found in violation. Questionable charges were investigated by the Inspector Generals assigned to industry. What had for decades been matters which were resolved by negotiation with the contracting officers became legal violations. Unfortunately, this was done without any notice or discussion with the defense industry.

 

“The contracting people in the Department were also called to task for not adhering strictly to the rules. A great deal of real fraud was uncovered at military supply depots around the country as well as in the industry.

 

“It was the Inspector Generals’ actions that brought to light the high priced spare parts and numerous examples of fraud and waste in the Department and in the industry.

 

“These cases of fraud [and] waste provided headline news and political hay for members of Congress to hold up a high priced toilet seat before the TV camera and propose some legislation to solve the problem.

 

“Secretary Weinberger should have been given credit by the public and the Congress for dealing effectively with these problems of fraud and waste. Instead, he was blamed for these problems even though they existed long before he took office.

 

“What had been done by Cap [Weinberger] in his first four years in a real contribution to the military strength of our country began to fall apart in 1984, and by 1985 the DOD and the industry had lost credibility with the Congress and with the general public. Both the Department and the industry were in a state of crises.

 

Having  provided this historical background, Packard turns to the work of the President’s Commission on Defense Management which he was asked to chair in June, 1985.

 

“I had been aware,” he says, “of  the discussions which had been going on over the last several years about the role of the JCS and about the command control problems of the military establishment. Because of this I thought the Commission had an opportunity to make a fundamental change in the role of the JCS. If we could do this, it would bring better professional military advice to the make up of our overall forces, to the selection of new weapons programs, and to the allocation of resources among the services. This change in the role of the JCS could strengthen our ability to mount unified military operations and provide an effective procedure for long range planning.”

 

As the Commission began its deliberations, Packard says “It became very clear…what a broad range of issues we were expected to deal with [and] that we had a serious problem in determining whether our recommendations should be limited to broad strategic recommendations or whether we should try to describe how our recommendations should be implemented.

 

In the end, Packard says they tried to develop “a grand strategy about how to improve the management of our national defense establishment”, but they also provided “some specific guidelines as to how this can be done.

 

“The Commission had its last meeting in June [1986] and we issued our Final Report at the end of that month. At our last session we met with the President [Reagan] and he asked us to come back in six months to give him a progress report on the implementation of our recommendations.

 

“The Commission issued five reports. Our first report titled, ‘An Interim Report to the President’, dated February 28, 1986, covers most of our major recommendations. This first report is our grand strategy and makes most of our major recommendations. The other reports provide detail to support and help implement our major recommendations.[See also speeches dated May 1, 1986, July 24, 1986, and July 25, 1986]

 
“Our second report titled, ‘A Formula for Action’, makes detailed recommendations to improve the Defense Department system for developing and acquiring new weapons. It was done by a subcommittee of the Commission chaired by Bill Perry, who had served in DOD as the Director of Research.

 

“Our third report was done under the leadership of Vince Puritano, who had been Comptroller of DOD. It is titled, ‘National Security Planning and Budgeting’, and it is intended to help DOD implement our recommendations on this subject. It clearly indicates that our recommendations in this area can and should be accomplished with a smaller bureaucracy.

 

“Our fourth report titled, ‘Conduct and Accountability”, makes a number of recommendations to both the DOD and the defense industry to improve their working relationship.

 

“Our Final Report entitled, ‘A quest for Excellence in Defense Management’, is a summary of our other reports with a few additional specific recommendations.

 

“We note in our Interim Report that – ‘Today, there is no national system whereby the Executive Branch and the Congress reach coherent and enduring agreement on national military strategy, the forces to carry it out, and the funding that should be provided – in light of the overall economy and competing claims on national resources’.

 

“As I have said, there has been no effective long range planning in the system and the decisions on what weapons to produce are distorted by service competition, contractors lobbying the Congress and far too much pork barrel log rolling by members of the Congress. These practices result in tens of billions of dollars of waste and are therefore far more serious than the waste resulting from fraud, which is in the range of tens of millions of dollars a year.”

 

Packard says the Commission’s recommendations on this last issue are: [quotes from report]

 

‘To institutionalize, expand, and link a series of critical Presidential determinations, we recommend a process that would operate in substance as follows:

 

‘The National Security council would develop and direct a national security planning process for the President that revises current national security decisions directives as appropriate and that provides to the Secretary of Defense Presidential guidance that includes:

 

• A statement of national security objectives;
• A statement of priorities among national security objectives;
• A statement of major defense policies;
• Provisional five-year defense budget levels , with the advice and assistance of the Office of Management and Budget, to give focus to the development of a fiscally constrained national military strategy. Such budget levels would reflect competing demands on the Federal Budget as well as projections of gross national product and revenues; and
• Direction to construct a proposed national military strategy and strategy options for Presidential decision in time to guide development of the first biennial defense budget for fiscal years 1988 and 1989.
• The Chairman of the JCS would be given the specific assignment to construct the military strategy and to recommend the military forces necessary to support the strategy. The most important new element in this plan is that the Chairman of the JCS would be requested to recommend those forces that could be supported within the five-year defense budget levels and his recommendations would not require the concurrence of the other Chiefs.’

 

Continuing with his quote of the Commission’s recommendation, Packard says:

 

‘Following receipt of the Secretary’s recommended national military strategy, accompanying options, and a military net assessment, the President would approve a particular national defense program and its associated budget level. This budget level would then be provided to the Secretary of Defense as five-year fiscal guidance for the development of biennial defense budgets such that:

 

• The five year defense budget level would be binding on all elements of the Administration.
• Presidential guidance, as defined above, would be issued in mid-1986 to guide development in this transitional year of the first biennial defense budget for fiscal years 1988 and 1989 to the maximum possible extent.
• The new national security planning process would be fully implemented to determine the course of the defense budget for fiscal years 1990 to 1994.’

 

And back to his speech text Packard says, “These recommendations on planning and budgeting have been supported by the Congress and the Administration. The changes in the JCS to implement these recommendations is covered in legislation passed by both houses of the Congress and will be in place early this fall. The President has instructed the DOD to implement those recommendations that do not require legislation.

“Our second report entitled, ‘A Formula for Action’, analyzes the problems of the DOD’s new weapons acquisition system and  makes a number of specific recommendations for improvement.

 

“We point out that there is an ‘unnecessarily long acquisition cycle – ten to fifteen years for major weapons systems’. This leads to unnecessarily high acquisition costs, for time is money. More important it leads to obsolete technology in our fielded equipment. We have at least a five year advantage over the Soviets in advanced technologies in the laboratory. We forfeit this lead in the time it takes to get technologies from the laboratories into the field.

 

“We studied a number of successful new development programs, in the private sector, in other governmental agencies as well as in the DOD. We found that these had six underlying common features:

 

1. Clear command channels
2. Stability
3. Limited Reporting requirements
4. Small, high quality staffs
5. Communication with users
6. Prototypes and testing

 

“We noted that defense acquisition programs differ from these successful models in nearly every aspect. We made a number of recommendations which, if implemented, could greatly improve defense acquisition.

 

“One of the recommendations was to utilize more standard commercial products that are available on the open market. In the case of large scale integrated circuits, commercial products are in many cases more reliable than military specification products and often cost only one tenth as much. In this one area alone savings could be at least $1 billion dollars a year and we would have more reliable military products with the use of off the shelf commercial products instead of military specification products.

 

“We say in this report – ‘Our study of defense management compels us to conclude that nothing merits greater concern than the unnecessarily troubled relationship between the defense industry and the government’ The United States relies on private industry for its military equipment. It follows that the vigor and the capability of the industry is indispensable to a strong national defense.

 

“This is a large, complex business with 60,000 prime contractors and hundreds of thousands of other suppliers and sub-contractors. Contracts worth $164 billion were placed in 1985, seventy percent of which went to 100 large firms. An average of 15,000 contracts are placed each day.

 

“ It is not surprising that in an enterprise of this size fraud and waste can be found. While fraud is a serious problem, it is not as costly as many Americans believe. It is, as far as we could determine, much less than 1% of total expenditures.

 

“In a public survey we found that Americans believe that half the defense budget is lost to fraud and waste and that most of this is simply pocketed by defense contractors.

 

“We recommend as the best way to deal with this problem a greatly expanded program of self discipline, the establishment and self enforcement of codes of ethics, better auditing by both the contractors and the auditing profession and the DOD.

 

“The Commission stated in its first report that:

 

“Management and employees of companies that contract with the Defense Department assume unique and compelling obligations to the people in our armed forces, the American taxpayer and our nation. They must apply (and can be perceived as applying) the highest standards of business ethics and conduct.

 

“I am very pleased that the defense industry has enthusiastically accepted our recommendations on this important matter. The industry leaders have voluntarily undertaken to expand and strengthen the enforcement of codes of ethics and work is underway to improve the auditing procedures of the defense industry.

 

“I believe there will be real improvement in the industry and in the Defense Department as the recommendations of the Commission are put into effect.

 

“I want to note that this will probably not change the public perception quickly. The politicians will continue to use DOD as the whipping boy. This is nothing new. In the 1930s the industry, although relatively small at the time, was characterized as ‘Merchants of Death’. Harry Truman gained public visibility by criticizing the defense industry. This was his ladder to the presidency. It is not always that way. In both World War I and II, the American industry was ‘The Savior of Democracy’.

 

“Whatever the public view and the pronouncement of the politicians, the American defense industry produces the best weapons in the world. We must keep the industry healthy and re-establish  better relationships between DOD and the industry.

 

“In the foreword to our Final Report I emphasized the need to establish and support strong centralized policies to achieve the objectives of the Department. These policies should be long in range, and should have broad support within the Administration and the Congress. The implementation of these policies, however, should be decentralized to the greatest extent possible. The structure of the Department can be streamlined, lines of authority and responsibility shortened and the number of people can be reduced.

 

“Here we have the largest, most complex and the most important acquisition enterprise in the world and no one in charge full time. Our recommendation on this issue is to establish a full time acquisition official at the same level as the Deputy Secretary of Defense to see that uniform policies are established and adhered to and to see that the delegation of the work is decentralized down to the people who know how to do it. If this is done, layers of micromanagement within the Department can be eliminated and we will have much more defense for the billions of dollars we are spending.

 

“The Congress has caused many of the problems for DOD. During the defense budget review in 1985 Congress made over 1800 changes in the budget and directed the Department to conduct 458 studies from the feasibility of selling lamb products in commissaries to the status of retirement benefits for the Philippine scouts.

 

“The Administration budget for FY 1986 was presented to the Congress in January 1985. It was intended to be approved by October 1985, the beginning of the FY1986 year. We are now within a month of the end of FY1986 and no budget has yet been approved by the Congress.

 

“We hope our recommendations will encourage the Congress to direct their attention to the larger issues of national military strategy and the overall capability of our military forces rather than the minutiae of line item detail. This detail discussion by the Congress causes hundreds of thousands of man days of work by DOD and contributes absolutely nothing to our military capability.

 

“We realize that Congressional log rolling can not be stopped, but perhaps it can be reduced somewhat.

 

“I have no illusions that even if all of the Commission’s recommendations are adopted, the problems of defense management will be eliminated. In our democratic system, defense is and will continue to be a political issue. It will never have the efficiency of a private enterprise.

 

“Spending a year on this subject has impressed me again that defense management is a large and complex endeavor. I am convinced there is no possibility whatever for a complete reorganization of the entire system as some critics have suggested. I do believe that significant improvement can result from the Commission’s recommendations. It will depend a great deal on what the Congress does and that in turn will depend on the general public’s view of our defense management problems and whether our recommendations will have strong public support.”

 

6/20/86, Letter to Packard from Michael J. Brassington, The Commonwealth Club of California, inviting him to speak to their members on the subject of the President’s Commission on Defense Management

6/27/86, Copy of a letter from Packard to Michael Brassington saying he would be pleased to speak to the Commonwealth Club

9/19/86, Letter to Packard from Richard C. Otter, President of The Commonwealth Club expressing their gratitude for his addressing their meeting

9/22/86, Copy of the publication of The Commonwealth Club covering the speech

Undated, A clipping from a newspaper covering the speech

 

 

Box 5, Folder 18 – General Speeches

 

September 23, 1986, Keynote Speech at Joint AIA/NSIA Government Quality Conference, Williamsburg, MD

Packard was invited to be the Keynote Speaker and address the recommendations of the President’s Commission on Defense Management.

 

9/23/86, There is no copy of Packard’s speech in this folder. However, it is likely that it was similar (and possibly identical) to the speech he gave on October 7, 1986 to the Electronic Industries Assoc., also on the subject of the President’s Commission. A copy of the October 7 speech is included in the folder for this speech. See speech dated March 26, 1986 for complete list of speeches covering work of the Commission.

9/23/86, Copy of typewritten program for the conference

6/12/86, Copy of an internal HP memo to Packard from Roy Baker (Irvine Sales Office), and Greg Michels (Fullerton Sales (Office), passing along an invitation from Tom McDermott to be the keynote speaker at the conference. They mention that Dr. Wade, Assistant Secretary of Defense and “chief procurement officer of the Department of Defense” will also speak. They say this conference would be a good opportunity for Packard to speak on the recommendations of the President’s Commission on Defense Management.

6/20/86, Internal HP note from Roy Baker to Margaret Paull (Packard’s Secretary), among others, saying that Stan Siegel of the AIA will send Packard a formal invitation and acknowledgement of his acceptance of their invitation to be the keynote speaker.

7/2/86, Letter to Packard from S. N. Siegel saying they are pleased that Packard will be able to address their conference, and giving further information on program details

8/26/86, Letter to Packard from T. C. McDermott, giving more information on the program schedule

9/30/86, Letter to Packard from Don F. Bonhardt, Conference Program Chairman, thanking him for speaking at the Conference

 

 

Box 5, Folder 19 – General Speeches

 

October 7, 1986, Keynote Address, AIA Government Division, Requirements Committee Symposium, San Francisco, CA

 

See speech dated March 26, 1986 for complete listing of speeches covering work of the Commission

 

10/7/86, Copy of Packard’s speech on the subject of the President’s Commission on Defense Management.

 

Packard says he will discuss the Commission’s major recommendations and then make a few observations about what might happen in the future. He begins with a brief overview of  recent Department of Defense activities in the Reagan Administration.

 

He says, “President Reagan took office in 1981 with two basic commitments concerning our military establishment. First, he wanted to substantially increase our military capability. Second, he wanted to eliminate waste and fraud from the military establishment. President Carter had already begun a build-up in the defense budget….He started in his first two years on the assumption that his administration was going to work out some accommodation with the Soviets and that it wouldn’t be necessary to increase our military strength. They changed that view in the last two years and began a build-up which was underway when Secretary Weinberger took office.

 

“The first budget that the Secretary had a major influence on was the FY 1983 budget. For that year, it was a projected 7.5 percent increase for the full five years, and the same for the following year. To point out how unrealistic it turned out to be, the projection called for nearly $400 billion in expenditures for FY 1987. In actuality, it will barely get $300 billion.”

 

“By 1984, Secretary Weinberger had been able to achieve a substantial build-up of our military capability. He had to decentralize the operation in the Defense Department to a considerable extent. He developed a better working relationship with the Joint Chiefs than any Secretary had in recent years and gave the Services a free rein in what to do.

 

“This resulted in an increase in our military strength and higher morale and spirit [among] the uniformed men and women than there had been in recent years. In many ways, this was a very important contribution. Unfortunately, he did not anticipate that there were going to be some problems with the federal deficit. By the end of 1984, it was quite clear that Congress was not going to continue to support increases of the kind they had up to that time. Also, there was beginning to be criticism about the operations in Lebanon and Granada.

 

“Secretary Weinberger also established the Inspector General system as a result of Congressional action. This system was turned loose to look into auditing and potential fraud problems in the industry, as well as in the Department. This generated a very bad atmosphere between industry and the Defense Department. For some reason, Secretary Weinberger was not willing to spend much time talking with industry. In fact, he hardly talked with anyone in industry up to the time the Commission was started. The Commission had very extensive reports from the Inspector Generals, and some of the things they reported to us were worse than what you read in the papers. This all backfired on Secretary Weinberger. Instead of getting credit for uncovering all these things, which had been going on long before he was in office, he was blamed for them. The combination of these things resulted in complete loss of confidence by congress and by the general public in the defense establishment. The appointment of the Commission was recommended to President Reagan by some of the members of Congress who saw the Commission as a possible way to deal with these issues.

 

“Therefore, in this situation I saw an opportunity to make some recommendations and possibly accomplish some structural changes in the defense department that some of the Commission members, including myself, thought would be desirable. Since the last legislation in 1958, thirty other commissions have addressed the issue of defense management but none of them have had any significant impact on the operations. I thought this might be a little different.

 

“We got very good support from the White House. We also worked directly with the National Security Council staff. I picked the members of the Commission and two or three were appointed. They all turned out to be very good people. We had a good working relationship within the Commission. A good many of the members started by wondering whether this was going to be a futile exercise, but they all got quite enthusiastic about it , and it was indeed a team effort.”

 

“As we looked at this job, it was quite clear that we had a broad range of issues to address. We spent some time talking about whether we would just make some broad strategic recommendations and let somebody else implement them, or whether we would spend some time trying to get into enough detail that would be useful to the people who would be expected to implement the recommendations. Eventually, we decided to spend time trying to provide back-up material to enable our recommendations to be implemented.”

 

Packard says the Commission produced five reports:

The first one was an interim report to the President and contained most of the major recommendations.

 

The second was a detailed report on acquisition.

 

The third covered national security planning and budgeting.

 

The fourth was on relationships between the defense industry and the Defense Department

 

The final report contained a summary of the other reports with some additions.

 

Packard says their recommendations on national security contained this statement: ‘Today there is no national system whereby the Executive Branch and the Congress reach a coherent and enduring agreement on national military strategy, the forces to carry it out, and the funding that should be provided in light of the overall economy and the competing claims on our natural resources. In effect, the Secretary has pre-empted this decision, and decided what he should recommend in terms of what share of our natural resources are applied to defense. It is not really the Secretary’s responsibility. It is only the President who should do this. The result has been no effective long-range planning. The long-range planning that had been done was very unrealistic and the decisions on what weapons to produce have been distorted by service competition and contractors lobbying the congress. These practices, in the view of the Commission, resulted in tens of billions of dollars of waste and, therefore, were far more serious than the waste that resulted from fraud and abuse which has attracted the attention of the media. The losses from those are only in the range of tens of millions of dollars.’

 

“This recommendation to try to bring the system under a more rational procedure for long-range planning can, if properly implemented in my opinion, have a very large impact on the effectiveness of the Defense Department and on the return we get for the dollars spent. On this issue we made the following recommendations:

 

‘In order to institutionalize, expand and make a series of presidential determinations, we recommend a process in which the National Security council would develop and direct a national security planning process for the President that revises the current national security decision directive, as appropriate and provides to the Secretary of Defense presidential guidance that includes the following items:

 

• …a statement of national security objectives. This is being done.
• …a statement of priorities among the national security objectives, and
• …a statement of major defense policies. Neither of these last two items have been done, but they have been developed in the pentagon as a result of a lot of interacting factors.
• Finally, the most important item is a provisional five year defense budget level. These budget levels will be developed with the advice and assistance of OMB and will be designed to give focus on the development of a fiscally constrained national military strategy. Such budget levels would reflect competing demands on the federal budget and projections of the gross national product and revenue. They would also give direction to construct a proposed national military strategy and strategy options for the presidential decision, in time to develop the first bi-annual budget for the FYs 1988 and 1989.’

 

“More importantly, we recommend that the Chairman of the JCS be given the specific assignment of constructing the military strategy and recommending the military forces to support that strategy. These recommendations would then be given to the Secretary of Defense so the Chairman would not be able to override the Secretary. The Chairman would be asked to develop these forces in terms of the basic force level, and the amount of readiness, sustainability and modernization.

 

“In order to do this, the Chairman needs to be independent of the other chiefs and maintain his own staff. One other important element in this plan is to bring the views of the united commanders more directly into the considerations of all these important matters. Secretary Weinberger has done this to some extent by bringing the unified command in at a lower level. It was quite apparent that the people using the equipment will often have a different idea than the service people in Washington. We think a larger input from the ultimate users will result in better decisions regarding what weapons should be developed and also in terms of the balance of these last factors.

 

“We also recommend that a better procedure for making a military net assessment be made. We recommend that this task be given to the Chairman of the Joint Chiefs together with the director of the CIA. This would provide the military plan, evaluation of effectiveness and the budget levels for the development of  bi-annual defense budgets.

 

“We would hope that the five year budget levels would be binding on all elements of the Administration. It would be desirable if you could get budget levels which were binding on the Congress, but to my opinion that is not feasible. On the other hand, in talking about what might be recommended five years from now, I think it is very likely to find an area where the Congress and the Administration could agree very closely, which would provide very important stability to the program.

 

“We were very anxious that the changes in the JCS structure and other issues that are required to put this system into effect be implemented as quickly as possible. We hope this could be done in developing the first bi-annual defense budget by FYs 1988 and 1989, and then in the second round, the budgets for 1990 to 1991 , the whole system would be in place.

 

“These recommendations on planning and budgeting have been supported by the Congress and the Administration. As you know, the legislation necessary to make these changes in the JCS structure was signed into law last week by the President. Everything is in place to go ahead.”

 

“The second report, which is entitled ‘A formula for Action’, was done by Bill Perry. This report addresses the specific problems [as well as the] related [subject of ] acquisition [i.e. procurement]. I might make a comment about our discussions on the JCS. We had some very heated discussions in the Commission because we had a former commandant in the Marines, Bob Barrow. In the first few meetings, every time we talked about any changes in the JCS circle, he got up and pounded the table and said we would destroy the capability of our whole military establishment if we do anything. We finally convinced him that what we were doing was giving the uniformed military people a role in the process. He finally agreed.”

 

“The recommendations on acquisitions were done by Bill Perry. I think the most important recommendations in this area is the establishment of the Under Secretary for Acquisition who is expected to spend full-time on the acquisition process. I think you know that the Deputy Secretary of Defense has generally been responsible for managing the acquisition affairs. When I was there I spent a good deal of time on that subject, but I had a lot of other things to do. Looking back, I’m sure I could have done better if only I had more time to do it.

 

“Secretary Weinberger, in a sense, has been lucky in this matter because Frank Carlucci came in first and actually made some good recommendations for improving the management. But before they were implemented, he left. Paul Thayer came in and it took him a little time to understand how everything worked. About the time he did, he got involved with a personal problem and had to leave. Then Will Taft, a very bright young lawyer, took over, but had no experience in acquisition.

 

“This highlighted a serious problem. We came down very strongly on the recommendation that this is the most complex and probably the most important acquisition job in the world and nobody is in charge full-time. There are 60,000 prime contractors and hundreds of thousands of suppliers. In 1985, the expenditures were $164 billion, 70 percent going to large firms. To illustrate the dimensions of  the problem, 15,000 contracts were awarded per day.

 

“This required the establishment of this new Under Secretary for Acquisition position and dividing the job of the Deputy Secretary into two pieces: the acquisition job being given to the new position, and the remaining responsibilities being left with the Deputy.

 

“In order to be effective, this person needs to be at the number two level. He has to have authority over the service Secretaries, and essentially over everybody in acquisition matters. We had quite a time convincing the congress that was necessary, but they finally authorized the position the way we wanted it. Dick Godwin, former President of Bechtel and a very capable manager, was sworn in last week.”

 

“There is one part of the plan that may not be obvious to everyone. We are recommending a major change in the point at which new weapons program decisions are made. We set up a procedure when I was there called DSARC. That was a small group that worked very well, but it has gotten to be a very large committee and has become almost ineffective.

 

“We are recommending that the major decisions on new acquisition programs, in fact, on all acquisition policies that are at a high level, be done at the level of the Joint Requirements Management Board, which is an organization of the Joint Chiefs. This will be restructured to be co-chaired by the new acquisition Under Secretary and the vice-Chairman of the Joint chiefs, because we think it is very important that we bring the unified commanders views more into focus when decisions are made on new weapons. These two will co-chair this group and its members. It is our recommendation that these two alone make the recommendations without requiring a majority vote of the group. If they can’t agree, then they will go to the Secretary.

 

“Our recommendations anticipate that the services will continue to have a large role in the acquisition process. Specifically, we are recommending that the services be responsible for all the major programs, from the beginning of full scale development through to operation. The services will also continue to have a large role in the advanced development area, but we are hoping that the role of DARPA can be increased in order to do some things that the services themselves are not likely to do.

 

“We are proposing that all of these new major programs be funded on a milestone basis. The first of the key milestones is from the beginning of full scale engineering development through to low-level production. The second milestone is the beginning of full scale production through to deployment.

 

:Our recommendations contain some guidance on operational testing, which as you know, has been somewhat controversial. We recommend strongly that operational testing should begin at the advanced development stage early on, with the very simple proposition that if you don’t know how a new weapon is gong to be tested, how in the world are you going to be able to design it. The operational testing procedure needs to start early and integrated through the program.

 

“The final operational testing should be done on articles that are from the production line, because there are always things that show up in the initial production that don’t show up in the development. It is for that reason that we are recommending that the first milestone extend through limited production so that the final operational testing can be done on limited articles before undertaking full-scale development.

 

“The Congress is likely to go along with milestone funding on major programs. They have already done this on the B-1 program and are sympathetic to the general idea. Obviously, these key points can not always be precisely defined, but we think this will provide a better environment of funding so that contractors will know what the funding will be through this period, and have some stability that it won’t be revised every year.

 

“One of the more serious problems in the whole matter is the fact that we are ahead of the Soviets, maybe by quite a few years in the laboratory, but it takes so long to get the equipment into the field that we are behind. Our recommendations are that the new Under Secretary of Acquisition be encouraged to manage the development part of the program with some streamlining procedures. Some of you know that the impact of the Inspector General on the general environment has increased the time to award contracts. To award a contract for DARPA, it previously took 90 days, which was too long. It actually should take only 60 days. In some days it is up to over 200 days. Some things like this need to be cut back.”

 

Packard says the Commission looked at several successful acquisition programs, both in the government and in private industry. They found they all had several things in common:

 

1. “clear command channels
2. stability
3. limited reporting requirements
4. small, high quality staffs
5. good communications with the users of the equipment
6. extensive prototyping and testing”

 

“It is quite clear,” he says, “ that most defense acquisition programs differ from successful programs in almost every respect and in most cases.”

 

Moving to matters relating to national security and budgeting, Packard says their report “…sets out a way to get long-term planning in the system without setting up a whole new bureaucracy in the Defense Department. Vince Puritano, former Comptroller, spent some time looking into this and making detailed recommendations as to how to implement this part of the program.

 

“The [Congressional] Defense Appropriations Subcommittees have greatly increased their surveillance of line items. Line item mark-up of the defense budget has played a major role in moving Congressional review of the defense budget toward narrowly focused financial action on individual items and away from oversight based on operational concepts and military effectiveness.

 

“During the 1985 defense budget review, for example, the Congress made changes to over 1800 line items, directed the Defense Department to conduct 438 studies, ranging from the feasibility of selling lamb products in commissaries to the status of retirement benefits for Philippine scouts. This kind of tinkering and financial fine tuning has really contributed to instability in the acquisition process and has cost a lot of money. These actions keep programs in an uncertain status and usually they do not cancel very many items. But in order to get everything within  the budget, they stretch out adjustments and so forth that are very, very wasteful.

 

“Our conclusion was…that the procedures and systems already in the Office of the Secretary an be used to provide the data that the Chairman of the Joint chiefs will need. In fact, if done properly, it will take fewer people to do what we recommend than the number of people required in the present system.

 

“Our next report is on conduct and accountability and it follows on the fundamental proposition that the United States has been dependent upon private industry for its weapons, and therefore, the vigor and capability of our defense industry is indispensable to our national security capability.”

 

Packard says they conducted a variety of public surveys on a number of issues relating to defense budgeting. He says “There were two very interesting conclusions that came out of this study. One was that the general public holds the uniformed military in very high esteem. On a scale from one to 100, professional military people are rated at about 80, the same as doctors and the same as professors the most distinguished profession in society. Military officers are also considered by the general public to be at that level. The defense industry, on the other hand, is at a level of 25 on the same scale, about the same rate as the Congress. Lawyers are also in that category.

 

“Beyond that the public thinks that 50 percent of the defense budget is lost to fraud and waste and that defense contractors simply pocket the money. The fact is that fraud and waste amounts to, at most, one percent or so of the total defense budget. It may be a little more than that, but not much more, therefore the perception by the public is entirely different than the facts.

 

“The horror stories in which you hear all the bad things and not any of the good things have been created by the media. There is serious concern about what can be done about this. The fact is that the industry has not dome as good a job as it should establishing codes of ethics and maintaining accounting procedures which are different for defense business than for commercial business. We decided that the best way to handle this would be to recommend that the industry establish codes of ethics and establish procedures so those codes of ethics would be implemented and understood by everybody in the organization. Furthermore, we recommend that some changes be made in the accounting procedures, which would eliminate some of the problems that evolved.”

 

Packard says he is pleased that industry leaders are in agreement on the need for a code of ethics and are already working on one.

 

Turning to the final report of the Commission Packard says it was “entitled ‘A Quest for Excellence’, and contains, in the foreword, some of [his] personal observations. Specifically, there must be established centralized policies, objectives and goals for the Defense Department and every element of the Defense Department.

 

“Excellence, however, cannot be created by policy, objectives or goals. Excellence can only be created by the people who do the work. You can only flourish when individuals identify with a team, take professional pride in their work, and above all, have the freedom and incentive to explore new and better ways to get their job done. There are many examples in the military over the years where this has been done, i.e. fighting units.”

 

“We think that most of the recommendations that have to do with basic structure are going to be put into place by legislation. There is one area where we made a recommendation dealing with improving the environment for people. This is based on the idea that whatever you do in the structuring of policies, getting better people in the department would improve the performance.

 

“We wanted to institute a system that provides more flexibility and that will reward people for accomplishment rather than survival as a civil servant, which this system tends to do. This idea was rejected in an intercommittee dispute in the congress. We had the exact legislation we wanted proposed by the Senate Armed services committee, but Ted Stevens of the Post Office committee considered it their baliwick. He was all for it, but he got the legislation put aside.

 

“In my opinion, the major issue we now have is whether people are going to really work hard in trying to get some of these recommendations completed. The President has directed the Secretary. to implement the recommendations. The Secretary has come to realize that if they are implemented, it will improve the job he can do. We have a big problem with the Congress. My speculation is that that is probably going to be the most difficult situation we could have.

 

“In my opinion, the major issue we now have is whether people are going to really work hard in trying to get some of these recommendations completed. The President has directed the Secretary to implement the recommendations. The Secretary has come to realize that if they are implemented, it will improve the job he can do. We have a big problem with the Congress. My speculation is that that is probably going to be the most difficult situation we could have.

 

“In the final analysis, these recommendations will be held to the extent that they can be supported by people in the industry and the general public. I hope that you will have some time to review these recommendations. I do not say they are perfect by any means, but we think they are a step in the right direction. If they can be implemented, we think that good results and a better defense capability for the dollars we are spending will be achieved.

 

“I understand you are going to be talking about the defense environment for the next few years. I might just relate my view of what is likely to happen in this five year plan. It was the recommendation what I made to the people at the White House that this five year plan be given to the Defense Department and involve a 1.5 percent real growth over the next five years, from about a little under the $3 billion level. Secretary Weinberger is talking about a 3 percent goal and the Congress will probably support 3 percent. If we could get rid of some of the red tape and the other things we are doing, we could indeed have adequate defense capability for budgets around that level. The job is simply then to find some way to get these recommendations done.

 

“Thank you very much for giving me the time to discuss these recommendations and I hope we can have your support in one way or another to see if we an make some significant changes in the management of the defense Department.”

 

6/16/86, Letter to Packard from Jean A. Caffiaux, Senior Vice President of the Electronic Industries Association inviting him to be the Keynote speaker at a symposium titled ‘The Military Electronics Market: Outlook on Future Opportunities’.

7/14/86, Copy of a letter from Packard to Jean Caffiaux saying he would be pleased to speak at the symposium

8/12/86, Letter to Packard from Frank A. Mitchell, of EIA, giving details on the program

11/3/86, Letter to Packard from Jean Caffiaux, Thanking him for participating in the symposium

 

 

Box 5, Folder 20 – General Speeches

 

October 31, 1986, Remarks at the 40^th Anniversary Symposium of the Research Laboratory  of Electronics at Massachusetts Institute of  Technology

 

10/31/86, Copy of the text of Packard’s remarks

 

Packard says he is pleased to participate in this symposium on the occasion of the fortieth anniversary of the Research Laboratory at MIT. “This occasion,” he says, “has a special personal meaning to me, for the life of this laboratory coincides very closely with my professional career, both in the time span and in the area of my personal involvement. Our company has also benefited greatly from its relationship with this laboratory. Thus, there are many reasons why I am pleased to be included in this symposium.”

 

Packard explains that the laboratory at MIT had its start from a report prepared by Vannevar Bush in 1945 which recommended a continuing high level of federal support for research and development.

 

“This program was implemented first through the Office of Naval Research. Centers of excellence…were identified in several scientific disciplines, including electronics, and were supported with funds administered by the Office of Naval Research. This laboratory as well as the laboratories at Stanford University and several other universities were supported in electronics.”

 

Saying that, after World War II,  there was not agreement about the future of electronics, Packard lists some of the important military  contributions of electronics: radar, electronic counter measures, the proximity fuse, sonar, electronic navigation, and not the least, the atom bomb.

 

He says “There were those who questioned whether the great advances in electronic technology, as well as other technology, made during the war would be translated into comparable contributions to a peacetime economy.”

 

“Fortunately, the optimists of that era prevailed and electronics has made an immense contribution to progress in every aspect of our society since the establishment of this laboratory.

 

“Federal support of research at university laboratories began after the war with policies that were enlightened by scientists who understood university research. Individual faculty members or groups of faculty who had demonstrated capability and interest in various scientific fields were identified and supported. Federal support was provided without excessive supervision in or influence on their work. Funds were provided for the equipment they needed as well as for the salaries of the people doing research. Graduate students were supported so that they could be effectively involved in the research work.”

 

“The widespread hope that World War II would mark the end of worldwide military conflict and that the energies of research could be devoted to a world at peace turned out to be a false illusion.”

 

“The Korean War was probably the turning point in the events that have shaped the world since 1953. The military budget of the U.S. reached a low point in the early 1950s. We hoped at that time that moderation on our part would be answered with moderation on the part of the Communist world. We were wrong in that hope and consequently had to respond with the defense of South Korea.”

 

Packard says he emphasizes this point to show that federal support of R&D since the founding of these laboratories has been largely influenced by military considerations.

 

“Total federal support of research and development increased from $4.5 billion in 1953 to $18 billion in 1966 in constant (1972) dollars. federal support of research and development at universities was only a small part of the total but a very important part. In 1953 federal support of research at universities was at about $210 million. It increased, in constant dollars, to over 1.8 billion by 1968.

 

“Federal support of research and development leveled off in 1969, declined a bit and began to increase again, in real terms, eight or nine hears later. It is not easy to explain why federal support of research and development deteriorated so seriously from 1968 to 1978. It coincided with the national anti-establishment trauma, caused in part at least with disillusionment about U.S. involvement in Vietnam. While military requirements were a driving force for the substantial increase in federal support of R&D from 1953 to 1968, it had been administered under an enlightened policy that encouraged commercial fall out from military research. The Defense Department policies on independent research and development were developed to encourage defense contractors to develop products from their military research. The Mansfield amendment of a defense bill in 1969 prohibited independent research and development to be used to develop commercial products, it constrained these funds to be used for research having potential military applications only. This was in direct opposition to the original purpose of independent R&D.

 

“During the hiatus in the growth of federal funding for research and development two unrelated things exacerbated the situation.

 

“The first was a greatly increased involvement by the federal government agencies, the Congress and the Administration in trying to manage the research the federal government was funding. This is what has come to be called micromanagement.”

 

“Because of this micromanagement by the federal government the universities…and faculty members were required to spend too much time in administrative detail, paper work that detracted from their time and effort in their research work. This resulted in a serious decrease in the amount of real research a federal dollar could support.

 

“The second trend during this period was that the real cost of research increased. In electronics, for example, good research could be done in the 1940s and early 1950s with a modest amount of instrumentation and equipment. As electronics advanced into solid state technology and then large scale integrated circuits, very expensive equipment was required to work at the frontier of knowledge. Equipment costing millions of dollars became necessary for electronic research in the 1980s, contrasting with equipment costing only thousands of dollars in the 1940s and 1950s.”

 

Packard feels the damage done by the hiatus in federal support of university research is not easy to assess.

 

“One important indicator is that the number of scientists and engineers employed in research and development peaked in 1969 at 558,000 and declined to 530,000 by 1975. In universities the number of scientists and engineers was relatively constant from 1968 until 1975. By contrast the total number of scientists and engineers employed in research more than doubled from 1954 until 1964.

 

“I takes time for the research work of scientists and engineers to be converted into useful products that strengthen our economy or strengthen our military capability. In my view, the fact that we are losing our clear advantage in worldwide technology today is a direct result of the fact that we are supporting much less effective research and development than we supported in 1968…We must find some way to restore this deterioration in federal support of research.”

 

Packard points to the concern in the country about the deterioration of the United States economy in its ability to compete in worldwide markets and says that while the causes are complex, “I believe we should look at those factors that have changed and that can be corrected. Federal support of research and development has clearly deteriorated since the late 1960s both in quantity and quality. There is ample evidence to support the proposition that research at our universities has made a major contribution to our economic well being. Not just since World War II, the period when this laboratory has made its great contributions, but clear back to the beginning of this century when research at our agricultural colleges made the United States agricultural enterprises the most productive in the world.

 

“I was pleased to be asked in May, 1982 by Dr. Buchsbaum, Chairman of the White House Scientific council, to chair the panel on the Health of U.S. colleges and Universities, with Dr. Allan Bromley as Vice Chairman. Your President, Dr. Paul Gray, was a member of the panel.”

 

Packard says their report “…began by saying, ‘One conclusion is clear. Our universities today simply can not respond to society’s expectations for them or discharge their national responsibilities in research and education without substantially increased support.’

 

“While the panel did not make recommendations on specific dollar amounts for increased federal support, some of us believe it would not be unreasonable to ask the federal government to double its support for university research and development over the next three budget years.

 

“As I have tried to indicate to you already, the problem is not just in the level of federal support for university research. The panel makes several recommendations to improve the administration of the federal funding that is provided.

 

“Research grants or contracts with universities should be for a longer period of time, at least three and preferably five years.

 

“Investigators should be freed to use up to 10% of their time on a discretionary basis and they should be permitted to carry over unexpended funds to the next fiscal year.

 

“Greater use should be made of block grants to groups of researchers.

 

“Except for young research people who do not have a record of achievement, the achievements of research people should receive more emphasis in making awards.

 

“The importance of involving students, both graduate and undergraduate, should receive more consideration in federal support of university research.

 

“The panel recommended more joint research activity among universities, federal laboratories and other federal research activities and private sector organizations doing research.

 

“The panel agreed that the federal government is not always paying the full cost of university research and that it should do so.

 

“To compound the problem the federal government is driving up the cost of overhead by asking for far too many reports and is doing excessive micromanagement of university research programs.

 

“In my view it is high time to get federal support of university research back on the right track again. There is support in the Congress and in the Administration for a watershed change in this matter. There is not, however, very good understanding of the problem. In a meeting only a few weeks ago some of us recommended a substantial increase in the support of basic research in our universities, from about four billion to about eight billion, over the next three budget years. I was shocked to find that four of the most influential people at the White House did not understand how an increase in federal support of university research could strengthen the economic future of our country. Those who believe in the importance of university research as I do have a very important job to do. We must convince the Administration, the Congress, indeed the American public, of the importance of university laboratories, of which the Laboratory of Electronic Research at MIT is a great example.”

 

10/31/86, Copy of the program for the symposium

10/31/86, Copy of the printed invitation to dinner banquet

10/1/86, Copy  of an agreement to have his presentation videotaped signed by Packard

10/4/86, Letter to Packard from Jonathan Allen, Director of MIT’s laboratory giving details on the symposium arrangements

11/17/86, Letter to Packard from Jonathan Allen thanking him for participating in their fortieth anniversary celebration.

Box 5, Folder 21 – General Speeches

 

November 6, 1986, President’s Commission on Defense Management, The Committee for Economic Development, New York, NY

 

Packard spoke on this subject on several occasions (See speech dated March 26m 1986 for complete list of speeches covering work of the Commission.)  In view of the similarity of this speech with others on the subject it is not included here.

 

11/6/86, Copy of the typewritten text of Packard’s speech

6/20/86, Letter to Packard from Edmund B. Fitezgerald, Chairman, Committee for Economic Development inviting him to speak to their group on the subject of the President’s Commission Report. He says they would be interested in hearing what the CED might do to help.

6/27/86, Copy of a letter from Packard to Edmund B. Fitzgerald saying Nov. 5^th or 6^th would be acceptable. He also says that the CED could help to convince Congress to avoid ‘micromanaging’ defense programs and confine themselves to major defense matters.

7/9/86, Letter to Packard from Edmund B. Fitzgerald saying that he is pleased that Packard will be able to speak to their group. He adds that the CED can no doubt help to promote the recommendations suggested by the Commission.

10/23/86, Copy of CED announcement of Nov. 6 meeting where Packard will speak

 

 

Box 5, Folder 22 – General Speeches

 

December 2/3, 1986, Issues on Maintaining a Quality Ethic, Second NASA Symposium on Productivity and Quality, Washington D.C.

 

12/3/86, Copy of notes for speech, handwritten by Packard

12/3/86, Copy of typewritten transcript of Packard’s remarks prepared by NASA

 

Packard says he has concluded there is not a lot he could add to what other speakers are saying about how they could rejuvenate their organization, so he has decided to “reminisce with them about some of the experiences he has had during his career that have had an impact on his own thinking about productivity and quality.

 

He tells of his first job with General Electric Company – 51 years ago.  “I worked in the vacuum tube engineering department where they were working on a new kind of tube –an ignitron – which was a controlled mercury vapor rectifier.”

 

At this point, before getting into his story,  he says he would like to digress a few moments to tell them how he happened to get the job with GE. He tells of graduating from Stanford and interviewing with  someone from GE and telling him that he was interested in electronics. He says the interviewer’s reply was ‘There is no future in electronics.’ Packard says he persisted in his interest in electronics and asked permission to talk to people in some of the departments to see if he could find something of interest to him. Receiving permission, he found the job in the vacuum tube engineering department.

 

Continuing with his story of work in the tube shop, he says “I’d been there about two months when something began to happen down in the factory. They had been producing one of these tubes with no problems when all of a sudden their yield went down. Only about 20 percent of the tubes would pass the final test. They asked me to see what I could do about it.”

 

Packard describes the testing process as a simple one. He says. “The final test is just to see if the tubes can handle the maximum load. If they can, they pass. If they can’t, they lose control and blow up. All you have left is a bunch of glass.”

 

Worse yet, he explains that each tube contains about a pint of mercury, so if the tube fails you get not only flying glass but floating mercury vapor as well. In this event he says all personnel must leave the room until the mercury settles.

 

Packard says “I finally decided that the only way we could deal with this problem was to spend some time in the factory, close to the manufacturing process.” He tells of talking to the employees working on the production process and, even after three weeks, they could not find any reason for the failures. However, the yield starting going back up, seemingly by itself, returning to the goal of 90%.

 

Packard says he learned two things from that experience. “Quality and productivity are highly dependent on paying a great deal of attention to every detail involved in the process. And, if you can get the people doing the work to take some interest in the problem it will almost always result in something positive.”

 

Next Packard tells how Bill Hewlett, after they had started their company, had to leave due to the World War II. Packard was left to run their little company. With the war effort everyone was interested in quality and productivity and Packard says they visited other companies to see what they were doing to promote productivity and quality. He says they visited the Lincoln Electric Company which had a profit-sharing program which allowed employees to participate in the success of the company. “They gave their employees,” Packard says, “an incentive to produce a better  quality product at a lower cost than their competitors…There was another company called Jack & Hines that was set up in Cleveland. Their management also provided financial incentives for employees and they, too, were able to produce their products with greater efficiency than their competitors.

 

“We’d been thinking about this ourselves and came up with a system whereby all of our employees would benefit from higher productivity. We had only a few hundred employees at the time, but this system was the basis for a management policy still in place today.

 

“Our idea was to pass on to employees any savings they could make in direct labor costs. The company would benefit from savings in overhead.

 

“This had a tremendous effect on our people. At the end of every period, everybody would just work like the devil to get that last item out the door. That system worked so well during those years that our productivity was about double at the end of the war what it had been at the beginning.

 

“This system did have one bad effect, however. There’s additional pressure at the end of the period and it’s very hard to get the work distributed uniformly throughout the period. But there is no question that financial incentives have a very big influence on productivity and the dedication to quality that people develop.

 

“Now we’ve changed that incentive system but we’ve kept the basic policy. We have a profit-sharing plan and also an opportunity for our people to buy stock in the company at 25 percent below the market. These have been very important incentives for our company and I’m sure many of you have had similar experiences.

 

Packard says that HP perhaps had more reason that most to emphasize quality because they made instruments which were used by other people to measure the quality of their products.

 

“We spent a good deal of time looking how we could improve quality. One method we found very effective was to structure the lines in our manufacturing operation so that the final test and the final assembly areas operated close together. We were able to get feedback from the final test area back to the people in final assembly directly and immediately without having to go through procedures and reporting.

 

“This was very much like what has come to be known as a ‘quality circle’ because here were people working closely together with effective, informal communication. We found, over a period of time, that there were  many ideas that came from those people doing the work down on the factory floor. If they hadn’t had an opportunity to work close to and directly with each other, we probably wouldn’t have benefited from these ideas. The ability to get immediate feedback, plus those financial incentives I mentioned earlier, contributed a great idea to keeping an emphasis on quality and productivity.”

 

Moving on to another story, Packard tells to a joint venture in Japan which HP formed in 1963. He says the Japanese partner  was “a company that has been involved in process instrumentation and had some compatibility with our product line. It’s interesting to recall the early discussions that led to this organization, which was called Yokogawa-Hewlett-Packard, or YHP. This was before the Japanese had become famous for things you’ve heard about in recent years.

 

“When we were first considering the venture, I spent some time with our prospective partner and concluded that the only way we could possibly work out a partnership was to get them to agree that the company would be managed our way rather than their way. We were pretty tough on this point and they were kind of anxious to get us to join them, so they agreed to it. And, during YHP’s first few years, they picked up some of the things we’d been doing and found them to be beneficial.

 

“Now, HP is structured into many relatively small divisions. Every year we get all of the division managers together and spend two or three days reporting, comparing notes, evaluating performance and so forth. One of our sessions always had to do with how well we’re doing on quality. We kept a record on the failure rate of every product we had in the line and we kept a detailed record on our warranty costs.

 

“During the first few years of our Japanese joint venture, the YHP manager came to the meeting and reported along with all of our other managers. YHP’s performance was usually just about in the middle. They were neither at the top nor the bottom in product failure rates or warranty costs.

 

“After this had gone on for some time, a bright young Japanese manager who was really doing good work over there cornered Bill and me one day. He said, ‘Why don’t you let me run this operation? You send an American manager over there to look over our work. We spend a lot of time – in fact, waste a lot of time – talking to him, and if something goes wrong, he’s the fellow we blame. Besides that, you’re not sending over very good people anymore.’ And he was right. So we said, ‘Okay, Kenzo, you go ahead – run the operation from here on in.’

 

“The following year, YHP’s growth rate was much more rapid than it ever had been before. They even showed a little bit of improvement in the quality of their product. They started to move up toward the top of the HP list . The following year, the manager came back with some reports that were just amazing in terms of what they had done. Their record on failure rates with the product they were building was better than any of our other divisions. And the year after that, YHP received Japan’s Deming prize for productivity and quality.

 

“Let me give you an example of what they were able to do. We had been making printed circuit boards in various parts of the company. Our best failure rates were about four in a thousand. We thought that was fairly good – a little less than one-half percent. And that was the target we found a lot of other people were achieving.

 

“Well, our Japanese division came in with a failure rate in their printed circuit boards of only 10 per million. That’s 400 times better than anything we had been able to do. Obviously that shook up a lot of people in the company. It simply demonstrated that our targets on quality just were nowhere near what could be achieved, and it opened up a whole new ball game for us.

 

“So, we found that we can learn something from the Japanese and we’ve been carefully watching what they’ve been doing since. The encouraging thing is that the work they were doing at YHP was soon reflected all over the company. Our people in the U.S. divisions were not going to be outdone, so we were able to raise the quality targets in a great many areas, far beyond anything we thought could have been done before.

 

The final story Packard relates shows that quality and productivity are important in every area of the company, not just in engineering and manufacturing and production.

 

“Our company,” he says, “has been committed from the very beginning to financing our growth by reinvesting profits. Bill Hewlett and I were raised during the Depression and we took a very dim view of any kind of debt, so we didn’t go for this business of leveraging. We wanted our company to continue to have no long-term debt.

 

“In about the middle of the 1970s we found that we were running a little short on capital. Our management people got together and decided they were going to go out and raise $100 million in long-term debt. After thinking about this, I said something else was wrong. So we looked into the situation and found that our people had lost control of assets, lost control of inventory and lost control of accounts receivable.

 

“Drawing on my early experiences, I decided that there was a simple way to handle this. I went around the company and gave a lecture to every division about how to manage assets. I managed to get everybody worrying about this. And it turned out that, as is quite often the case, a lot of managers had simply forgotten that all the little details count.

 

For example, they were sending shipments out with one or two pieces missing. That, of course, gave the customer a perfectly good excuse not to pay the bill until it was fixed. There were a whole series of things that our people learned they hadn’t been doing right. They went to work to fix the problem areas and a year later we had $100 million more in the bank  We didn’t have to borrow the money after all.”

 

“Our first-hand experiences in this matter of quality and productivity have taught us some lessons I’d like to offer today.

 

“You’ve got to have a real commitment to quality and productivity. I’ve often thought about that in terms of the difference between a winning team and a team that doesn’t win. I was interested in athletics in my younger years and have followed sports ever since. I’ve noticed that there are many cases when there are two teams that are very closely matched, player for player. There are two differences between the winning team and the losing team. The winning team has better teamwork and the winning team has  greater desire to win, a stronger will to win.

 

“I think this applies to almost any competitive situation. Look at NASA. In the Apollo program, you had a tremendous incentive to prove you could win, you had the will to win and you had every reason to promote great teamwork.

 

“I’ve also seen it in defense programs. During the development of the Polaris system, led by Admiral Rayburn in the late 1950s the Navy was determined to prove that they could do a better job than the Air force. You might have read about this in a book called The Mind of the Organization.

 

“They put a good team together. And they fostered a spirit of competition. Admiral Rayburn got the whole organization working together, almost as one man, with a tremendous amount of cooperation and enthusiasm and a commitment to win. There hasn’t been a major new military product or weapons program since then that has come as close to being as efficient as that one in terms of the time it took and the success they realized.

 

“We need to learn to make a new commitment to winning. First, we need to get the best people that we can, and then encourage teamwork and a will to win.

 

“That has to do with another matter that I’ve had some interest in. I think a good many of you know that the U.S. has not kept its basic education system up to standard during the last decade and a half. We’re not graduating as many engineers and doing as much basic research as we should.

 

“We can’t have a winning team without winning players. Now, we do have quite a few winning players in the business, but we simply need more. Look at what’s happened in Japan and some of the European countries. Unless we can correct our situation down the line, we’re not going to have enough winning players to have a winning team. This has to be a very high priority in what we do to say ahead.

 

“Second, we need a stronger commitment to teamwork. This has to include not only you people out there doing the real work in your program. It has to involve the people here in Washington, the Congress and the Administration. Everyone has to work together as a team. I don’t know whether this is possible, but I’ll tell you that if it can’t be done, we’re going to be in for some real competition – and trouble – down the line.

 

Finally, we’ve got to want to be first. That shouldn’t be hard. After all being number one has been a characteristic of America from the very beginning. Maybe we lost that drive for a while but it seems to me that a lot of people are now sensing that we are threatened by competition from the Japanese and from the Europeans. This realization in itself should get us back on track and set those critical ingredients in place so that we can, indeed, have a winning team and stay ahead for the long run.

 

That’s my message for today, ladies and gentlemen. I’d be pleased to respond to a few questions if you’d like. Thank you very much.”

 

12/2-3/86, Printed invitation and preliminary program for the symposium

12/2-3/86, NASA news release about the symposium

8/20/86, Letter to Packard from David R. Braunstein, Co-Chairman of the symposium, inviting him to be the keynote speaker

10/1/86, Letter to Packard from David Braunstein, requesting that he write President Reagan urging him to attend the symposium for a short opening address

10/16/86, Copy of a letter from Packard to President Reagan urging him to attend the symposium

10/17/86, Letter to Packard from David Braunstein, asking Packard’s help in securing a room in the Old Executive Building for a reception, and thanking him for writing the President

10/20/86, Copy of a NASA form giving various releases

1/27/86, Copy of a general letter to symposium speakers giving details on the arrangements

11/4/86, Letter to Packard from NASA asking if he would be willing to participate in a video taped interview

11/6/86, Copy of a letter to symposium speakers giving more details on arrangements

11/17/86, Letter to Packard from Gene Guerny of NASA asking if he would agree to be interviewed by a reporter from Quality and Productivity magazine

1/12/87, Letter to Packard asking that he sign a copyright release on his speech

4/16/87, Letter to Packard from C. Robert Nysmith of NASA sending him a copy of the video tape of his address

5/1/87, Copy of a letter from Packard to Robert Nysmith thanking him for the tape

 

 

Box 5, Folder 23 – General Speeches

 

December 4, 1986, – Management of America’s National Defense, American Enterprise Institute, Washington D. C.

 

This is another speech on the recommendations of the President’s Commission on Defense Management which Packard chaired. Since it is similar to the other speeches on this subject it is not repeated here. For other speeches on this subject see list with speech dated March 26, 1986.

 

By way of epilog Packard does tell of government reaction to the Commission’s recommendations: “At the end of June this year,” he says, “the President’s Blue Ribbon Commission on Defense Management completed its work with its final report to President Reagan. Since that time legislation to reorganize the Office of the Joint Chiefs consistent with our recommendations has been enacted by the Congress and signed by the President.

 

“Legislation to establish a new Undersecretary position in DoD, which the Commission recommended, to provide for a full time professional manager for the defense acquisition process has been enacted. A well qualified man has been appointed and is already hard at work in the Pentagon.”

 

5/30/86, Letter to Packard from William J. Baroody, Jr, President, Enterprise Institute for Public Policy Research,. inviting him to deliver the tenth annual Francis Boyer Lecture and receive the Francis Boyer Award

6/17/86, Copy of letter from Packard to William J, Baroody, Jr. accepting his invitation

8/14/86, Letter to Packard from Paul W. McCracken, discussing the printed text of Packard’s speech

12/18/86 Letter from Patrick Ford, AEI, enclosing a draft of his speech which they wish to publish in their newsletter, and asking for Packard’s OK

5/7/87, Letter to Packard from Isabel Davidow, AEI, enclosing several copies of Packard’s speech printed in booklet form. One copy is attached here.

Copies of printed invitation and other material from AEI

Box 5, Folder 24 – General Speeches

 

May 20, 1987, National Science Board, Vannevar Bush Award, Washington D. C.

 

Packard was recovering from a back operation and was unable to attend the dinner award.

 

5/20/87, Copy of the printed invitation to the dinner

5/20/87, Copy of S. J. Buschsbaum remarks accepting the award on behalf of Packard

2/25/87, Letter to Packard from Roland W. Schmitt, National Science Board, telling him he has been selected to receive the 1987 Vannevar Bush Award

3/18/87, Copy of a letter from Packard to Roland W. Schmitt saying he and Mrs. Packard would be pleased to attend the award dinner

4/8/87, Letter to Packard from W. O. Baker, AT&T, congratulating him on being selected for the Vannevar Bush Award. He attaches a copy of a speech he had made at a similar award dinner in 1981.

4/23/87, Copy of a letter from Packard to W. O. Baker, saying he is recovering from a back operation and will not be able to travel to Washington to receive the award

4/23/87, Copy of a letter to Dr. Roland W. Schmitt from Packard’s secretary, Margaret Paull, transmitting a note from Packard to be read at the dinner saying he is honored to receive the award and explaining his recuperation prevents his travelling to Washington

5/18/87, Letter to Packard from President Reagan congratulating him on receiving the award

5/20/87, Copy of a press release from the National Science Foundation announcing presentation of the Vannevar Bush Award to Packard. Biographical information on Packard is attached.

5/20/87, Copy of the text of  Dr. Schmitt’s comments in making the award presentation at the dinner. He explains that Mr. Packard is recuperating nicely from surgery and that Solomon Buchbaum will accept the award in Packard’s honor.

5/13/87, Copy of a letter from Packard to Dr. Solomon J. Buchbaum, saying he would honored to have the Doctor accept the award for him

5/22/87, Copy of a letter from Packard to Dr. Solomon J. Buchbaum thanking him for accepting the Vannevar Bush Award in his behalf

Undated letter from Dr. Buchbaum to Packard saying it was an honor to accept the award for Packard. He encloses a copy of his remarks on that occasion.

6/4/87, Copy of a letter from Packard to Dr. Buchbaum thanking him for the copy of his comments at the dinner

Several letters of congratulations to Packard on his receiving the Vannevar Bush Award

9/7/89, Note from Margaret Paull to Packard attaching the file on documents relating to this award. She reminds him that he had not been able to attend.

 

 

Box 5, Folder 25 – General Speeches

 

October 14, 1987, Remarks on Accepting the George C. Marshall Medal

 

10/14/87, Typewritten text of Packard’s speech

 

Packard says he would like to discuss a few of the management principles that General Marshall followed, and which, he feels, are important in the management of industrial affairs as well as military affairs.

 

“One of these principles,” Packard says, “is to establish sound objectives and to have them fully supported by the people who are involved…..His papers continually reflect the importance he gave to sound plans and to the need to develop support for those plans by agreement rather than by command.”

 

“Another principle of good management is to select the best people for the job, give them responsibility and authority, and back them up when they need help.”

 

Packard gives the example of General Groves who Marshall chose to manage the Manhattan Project. While Marshall tried to follow the project, he soon found he could not keep up and left it to General Groves to manage.

 

Packard says that “One of the most important things that could be done to improve defense management is to do better overall planning for our military activities. We would benefit from continually asking the questions General Marshall asked and making the important decisions; 1^st – as to what we are not going to do, and 2^nd – as to what we must be prepared to do.”

 

Referring to the work done by the President’s Commission on Defense Management, Packard says their first recommendations to improve military planning was to “change the structure of the joint chiefs and this has been done by the Congress and the Department. The chairman was given more authority to be able to develop better plans for joint operations and overall military strategy. A vice chairman has been appointed to give the unified and specified commands a larger influence in the planning process. These changes are intended to give professional military people a more effective role in defense planning.”

 

One of the other recommendations the Commission made on planning was to establish a longer time for the planning and the implementation of the acquisition work. While the Department of Defense does plan on a five year basis, the Congress provides financial support year by year. This causes programs to be cancelled or stretched out and instead of being done on an efficient basis, billions of dollars are being wasted. An even more serious problem is that the Congress has become involved in detailed legislation which adds cost and seldom achieves what is intended. For example, it now takes longer than ever to deploy new technology weapons and we are throwing away whatever technical advantage we have over the Soviets. This is a very serious problem which has triggered by far too many detailed regulations on procurement imposed on the Department by the Congress. Thus we have strayed a long way from the kind of planning General Marshall considered so important in the mobilization and training of the military forces and in the development and acquisition of the weapons to win World War II.

 

“Better planning simply can not be done unless the members of the Congress will change their ways and consider our defense establishment essential to our leadership of the free world, and to our survival as a free nation instead of treating the Department of Defense as their personal pork barrel for the benefit of their constituents.”

 

“Our Commission made several recommendations intended to get the Department back to General Marshall’s normal practice of picking a responsible man and leaving him great freedom to carry out his assignment. The management of research and development and procurement in the Department has strayed far from this principle. In fact, it has been getting worse year by year in this regard..”

 

“Our Commission recommended that a new undersecretary job be established and be given the sole responsibility for managing defense acquisition, including a strong input in the planning process and full responsibility for establishing the overall Department policies for research, development and procurement, and this new under secretary be a man with industrial management experience. That has been done but it has not worked out as we had hoped. Perhaps we were expecting too much to establish a new job in as organization that had been working together for six years. Despite the fact that Secretary Weinberger gave the new undersecretary good support, it required that many other people in both OSD and the services had to get out of the procurement business which they were not willing to do. The next administration could do a much better job in implementing the Commission’s recommendations if the people involved are really interested in improving defense management.

 

“The Commission believed that the implementation of its recommendations in the acquisition area would result in a substantial  reduction in the number of people in both OSD and the services in acquisition work, including research and development. There would be better weapons, lower costs, and we would be able to put new technology into the field much more rapidly. We should have recommended to the Congress that it should have first mandated a reduction of about twenty-five percent in the number of people in the acquisition area. With a reduction of that magnitude there would still be more than enough people left to do the job right. The Defense Department is simply not able to make this kind of a reduction in people without a mandate from the Congress, and I strongly urge the Congress to take this action.,

 

“In closing I want to emphasize that we do have considerable military capability at this time, good men and women in the services, equipment generally superior to that of our potential adversaries, and a high level of morale. We are simply paying too high a price for what we are getting, and the whole acquisition process is in the worst condition ever. Perhaps it is too much to hope that someday the Department will get its house in order and the Congress will see the error of its ways, for that is the only way our great country will again be able to enjoy the excellence in defense management that General Marshall demonstrated so well.

 

“There are, fortunately, some areas in the Department where General Marshall’s management practices are being followed. Even though it will be difficult or even impossible to make significant improvements in the overall management of the Department, I want to encourage the men and women in the Army to continue to seek ways to expand the areas in which General Marshall’s principles can be applied, to develop centers of excellence in the management of your job in spite of all the regulations and red tape. This will do honor to the memory of General Marshall and it will do honor to your service to your country.”

 

1/16/87, Letter to Packard from Maj. Gen. Ret. Robert F. Cocklin, informing him that the Association of the United States Army has selected him as the 1987 recipient of the George Catlett Marshall Medal.

2/9/87, Copy of a letter from Packard to Gen, Cocklin saying “Frankly I do not believe that I am particularly qualified to receive the award…”

2/17/87, Letter to Packard from Gen. Cocklin asking that he reconsider

4/23/87, Letter to Packard from Gen. Cocklin telling that the announcement of his selection for the Marshall Medal will be released shortly

8/17/87, Letter to Packard from Gen. Cocklin giving information on arrangements for the dinner

10/20/87, Copies of letters from Packard sending copies of his speech to 16 prominent people

10/21/87, Letter to Packard from Norman R. Augustine  congratulating him on receiving the Marshall Medal

10/26/87, Letter from Frank Carlucci, The White House, thanking Packard for the copy of his speech, and saying ‘Right on target.!’

10/21/87, Letter to Packard from Gen. Cocklin thanking him for his participation at the AUSA’s Annual Meeting

10/26/87, Letter to Packard from Carla Hills, congratulating on receiving the Medal

10/26/87, Letter to Packard from William P. Clark thanking him for his address

11/27/87, Letter to Packard from Charles J. Pilliod, Jr. Ambassador to Mexico, thanking him for sending a copy of his speech

 

Publications and news clippings

6/5/87, Clipping from the Wall Street Journal with an article written by Antonio Martino discussing the Marshall Plan

May 1987, clipping from Army magazine announcing forthcoming presentation of Medal to Packard

May 1987 issue of Army magazine

March 1987 issue of ‘Topics’, a publication of the George C. Marshall Foundation

1996 Annual report of The George C. Marshall Foundation

 

 

Box 5, Folder 25A – General Speeches

 

November 3, 1987 – Child Health and our Nation’s Future, David Packard and Richard E, Behrman, M.D. Center for the Future of Children, The David and Lucile Packard Foundation.

 

11/3/87, Copy of typed text of speech

 

“As a nation,” Packard says, “we are overlooking the most fundamental step required to provide for our economic welfare and quality of life in the next century. It is not a matter of protecting the commerce of oil or reducing our national debt, as important as these may be. We can fulfill our responsibilities to the next generation and maintain our competitive posture in the worldwide economy only if today’s children become healthy, productive adults. This requires that children have adequate health care during their early years, giving them a proper foundation for succeeding in their education.”

 

Packard emphasizes that meeting this goal will require a long range view. “Statements by the administration to the effect that we can’t afford major initiatives now to deal with those living in poverty (forty percent of whom are children), of the 31 million who don’t have health insurance ( a third of whom are children), are missing the point. For our own well-being, as well as theirs, we cannot afford to ignore the children in these groups…. We can’t afford to squander our natural human resources by failing to produce physically and mentally healthy children.”

 

Packard agrees there are honest differences of opinion on how to address the important educational and social issues that affect children, he says “…there is no debate about the proposition that all children should be provided basic medical care. Good health is a prerequisite to being able to learn, to develop normally, and to being able to work to one’s full potential.”

 

“At the very least, we should start now by providing all pregnant women and newborns each year with a basic insurance plan. We propose the following:

 

1. A health benefit package similar to that proposed by the American academy of Pediatrics would be required for all insurance policies and should be included in every employee’s health insurance benefit package.

 

1. For those children whose parents cannot afford a policy directly or through employers, coverage should be purchased for them through a combination of income-graduated, parent paid premiums, public funds financed by a payroll tax on employers and employees, and allocations from state and federal budgets. It is reasonable the public funds come from those whose families will benefit in the future from the good health of all children.

 

1. The plan should include appropriate cost-saving measures such as managed care.”

 

“Children are our future and the future is now. Every CEO knows that today’s decisions determine tomorrow’s bottom line. Failure to act as well as think strategically leads to loss of productivity or competitiveness, or both. Failure to address the health needs of today’s children is similarly insidious in its consequences, We mortgage our future as a nation to a much greater extent by this negligence than by our failure to reduce the federal budget deficit.”

Box 5, Folder 26 – General Speeches

 

January 18, 1988, Observations on the INF treaty and Other National Security Issues, Menlo Park, CA

 

1/18/88, Typewritten text of Packard’s speech.

 

Although the folder for this speech does not reveal who the audience is, Packard says he fools “greatly honored to be able to appear before this distinguished audience …and add a word of warm welcome to that you have received from Warren Christopher.” He says he is appearing in an unofficial capacity and will be expressing some personal views on the INF Treaty and “some other aspects of U.S. National Security.

 

Packard begins with “a brief summary “ of the main points of the treaty. This is a rather detailed accounting of the types of missiles, both Soviet and American, and what restrictions are placed on them, and which are to be eliminated. He explains that the U.S. must approve the treaty before it can be ratified. Packard says “It is far from a good treaty but I think it should be ratified, and I think it will be ratified.””

 

Packard reviews the advantages and disadvantages of the treaty for the Soviet Union and the U.S. and concludes that the U.S. “should ratify the INF Treaty and be cautiously guided by what the Soviets now do rather than what they say.

 

Talking about the defense budget Packard says the Reagan administration has made a substantial increase in the Defense budget, about 100% during the first six years and this bought a real increase in both the strength and the morale of U.S. military forces. The increases were largely based on the wish lists of the Services and by 1985 examples of fraud, waste, and abuse were being cited by many members of the Congress and the Media and the credibility of the Defense Department was in jeopardy.”

 

Packard mentions the President’s Commission on the Defense Budget [which he chaired] without going into detail on its recommendations. He says he mentions it only to “highlight the importance of the report of the Commission On Integrated Long-Term Strategy which was released on January 12. “If our defense funds could be devoted to support the kind of forces that would be needed by this recent report,” he says, “the present budget level of just under three hundred billion dollars would be quite adequate to support U.S. Armed Forces of utmost strength and readiness. Unfortunately this is not likely to happen for our Congress considers the defense budget first as a pork barrel for the benefit of their members and only incidentally as the necessary means to provide the military strength adequate to support our leadership of the Nations of the Free World.

 

“[If] the INF Treaty is ratified …what follows will be a real test of the resolve of the United States to continue to meet its obligations to its allies and friends around the world. It is absolutely essential that the Defense budget be kept at the present level until we see what happens after we ratify the Treaty. The year 1988 is certain to be a turning point of historic importance. I hope and pray as I know you do that it will be a turning point toward a better world. The outcome is not yet determined, the important decisions have not yet been made.”

 

2/23/88, Handwritten note from Sidney Drell to Packard enclosing a copy of his [Mr. Drell’s] testimony before the Senate Committee on Foreign Affairs on February 18^th

2/12/88, Copy of a letter Packard sent to all HP General Managers enclosing a copy of his remarks on the INF Treaty.. A note from Bob Kirkwood suggesting this distribution is attached.

3/22/88, Copy of a letter written by HP General Manager Don Curtis to the two Senators of his State of Idaho where he enclosed a copy of Packard’s remarks on the INF Treaty, adding some thoughts of his own. A copy of Curtis’ letter was directed to Packard.

4/12/88, Copy of a letter from Packard to Don Curtis saying The thoughts that you have brought to their attention are very good.

 

 

Box 5, Folder 27 – General Speeches

 

March 1, 1988 , Ethics – The Essential Element of a Free Society, The Thomas Jefferson Research Center, Beverly Hills, CA

 

3/1/88, Typewritten text of Packard’s speech. There is no background material in this folder which would indicate how Packard happened to be at this place to make this speech, but his first words give a clue: “It is a great honor for me to be here to join in the celebration of the 25^th year of the Thomas Jefferson Research Center. I am very flattered to be able to join the select group of distinguished people who have received the ‘Responsible American’ award in recent years. I sincerely believe the work being done here at this center and by its disciples all across the country is extremely important because of the serious degradation of our country’s moral standards during the past three decades.”

 

Packard says he will begin with a few observations on the general subject of ethics, and then offer some opinions on ethics as found in the operations of the Defense Department procurement  system.

 

“Ethics,” he says, “ is considered to be a branch of moral philosophy, the study and the practice of what is right and what is wrong, what is good and what is bad. Ethics is closely related to religion, and there are many who believe that what is right and what is wrong comes from the word of God. The consideration and practice of what is right and what is wrong [has] been undertaken over the centuries by people of different religions, with different supreme beings, and codes of ethics have often governed the actions of groups of people without the involvement of religion at all. Ethics is above all a subject of extreme importance to every group of people who interact together for the ethics of the people in the group determine how the people get along together, whether they are happy and mutually supportive and productive and thus enjoy a high quality of life, or whether they are antagonistic, unhappy and unproductive. Groups of criminals often have strong codes of ethics that enforce individual discipline very effectively. We generally however consider ethics as an important determinant of good behavior in a group of people and that is the context I will use in my following remarks.”

 

Packard notes that the consideration of ethics is not new, and he mentions the work of thoughtful people like Socrates, Plato, and Aristotle. “It is interesting to note,” he says, “that these early philosophers considered ethics as being a desirable ingredient of politics, and in listening to the current political campaign it seems as though we haven’t learned much in these last two thousand years.”

 

Many people have believed that fear is what motivates good behavior, Packard observes. “Ruthless enforcement of laws and regulations does seem to result in more uniform behavior among the people of a group, and it may be said the more ruthless the enforcement, the more uniform the performance,  – this of course is the essence of tyranny, the antithesis of a free society.”

 

Packard sees that “…while we may not know all the answers to the physical universe we have an understanding of our physical world that is infinitely better than that of two thousand years ago. Yet our understanding of ethics, of morality, of human behavior has by no means reached the point of common acceptance in the world. The concept of ethics, however, what is right or wrong, what is good or bad for the individual person and for the society as a whole has not reach a state of common agreement during these last two thousand years.

 

“This is a subject that can not be resolved by rigorous scientific procedures, but will be resolved by the strength of conviction of the individuals on one side or the other. The ethics of the Judeo-Christian tradition has demonstrated that it provides a much better opportunity for the individual, a more productive environment, and in every aspect a higher quality of life for the majority of the individual people in the society. The ethics of the Japanese society, which has an entirely different origin has had a similar result. The more effective performance of the free market economy is one demonstration of the benefits that come from an environment of individual freedom contrasted with an environment of tyranny.”

 

Switching to the subject of the business world Packard says that “…business managers have found that their organizations are more productive when the people in the organization are given the opportunity to use their abilities in ways they think best for the common objectives of the organization rather than in ways dictated from the leaders at the top. For the environment of individual freedom to be effective it is essential that there be a common set of objectives, a common ethic, accepted and adhered to by the people in the organization. Honesty, fair play, consideration of others, are necessary complements to hard work, intelligence, skill, and ingenuity in an efficient organization of any kind.

The more complex the role of an organization the more important it is to have a commonly accepted code of ethics, particularly if it is desirable to achieve the maximum benefit of the hard work, intelligence, skill, and ingenuity of the individual people in the organization.

 

“This brings me,” Packard says, “to the subject of the role of ethics in military procurement.”

 

Packard first outlines the some of the complexities of the U.S. Department of Defense. “The Department annually conducts business with some 60,000 prime contractors and hundreds of thousands of other suppliers and subcontractors. In 1985 the Department placed contracts worth approximately $160 billion, seventy percent of which went to a group of 100 contractors. Twenty five contractors did business of $1 billion or more, 147 did $100 million or more, and almost 6,000 did $1 million or more….This vast and important enterprise is almost impossible to manage on an effective basis because of the size and breadth of its activities and because of the political environment in which it exists. The Congress must authorize the plans and the budgets for the Department, and appropriate the necessary funds. Every member of the Congress has a constituency that is affected by Defense Department activities, and each of the services has its own constituency. Because defense procurement involves expenditures in every congressional district and every State, the members of the Congress deal with defense procurement to a very large extent as if the budget was their personal pork barrel. To make matters worse, many members of the Congress think they have become experts in Defense Management, and there has been far too much legislation in recent years on management issues that should have been left to the Department. It is indeed unfortunate that our Congress has, in many ways, the lowest level of ethical performance of any of the parties involved in Defense activity.

 

Packard says that, “Given the size and complexity of the department, and the political environment [in which] it operates,  it should not be surprising that there has been considerable criticism over the years, charges of waste and abuse of one kind or another, and of mismanagement, and fraud. There have been innumerable studies and reports on these problems, one of the latest being by President Reagan’s Blue Ribbon Commission on Defense Management, with which I was involved and which I will refer to as the commission. These studies have made generally similar findings. Mismanagement and waste, and fraud have been found and have been dealt with to some extent, but whether or not these problems are worse than might be expected in [an] activity of  this size complexity, the general public has continually demanded that waste, fraud and abuse be eliminated from defense procurement.”

 

Packard notes that ever since the 1950s every new administration has tried to deal with these problems. “The response to the charges of mismanagement in Defense,” he says, “ have been generally in the form of additional rules and regulations put in place by department or legislative action. These rules and regulations have become so extensive and so complex, that further expansion of them seems to be adding waste without eliminating much abuse and fraud. It requires 600 pages of small print just to summarize the Defense procurement regulations. The more recent recommendations for improvement have been strongly in favor of reducing and simplifying the rules and regulations,  rather than further increasing them.

 

“At the beginning of the Reagan Administration the Secretary of Defense put in stronger procedures to enforce the rules and  regulations. This was done by assigning inspector generals to procurement activities and by enlarging and strengthening the audit activity in both the Defense Department and the defense industry. This approach caused a very antagonistic relationship between the Department and the defense industry, it slowed the procurement process, and it has generated an environment which is counter productive to high quality, low cost development and production in the defense industry.

 

“Examples of waste and abuse are found in the activities of the major defense contractors. Theses include charging of exorbitant prices for spare parts, mischarging costs to their contracts, giving gifts or other favors to government officials, falsifying test results, etc. The Department is responsible for some of these problems, as well as the Industry.

 

“The high priced spare parts issue was primarily caused by two bad practices; first, contractors following the regulations of the Department which called for the same kind of documentation, packaging, etc. for one item that is required for a large number of items. Second, in many of the cases a small number of items had to be manufactured on a special order which resulted in high unit costs that were reflected in the pricing. The use of a little more common sense by both the Department and the Industry would have avoided these problems, but unfortunately there has been little opportunity to use common sense in the whole procurement business.

 

“A problem that was more serious was the mischarging of costs to contracts by the defense Contractors. This was caused by a perverse set of incentives established by many if not most defense contractors for their lower level managers. The performance and the compensation of these managers was evaluated by the financial results of their division or department and they thus had an incentive to switch labor and material costs from one contract to another to make their financial performance look good. This often happened when there were both fixed price and cost plus contracts in the same department. Adequate rules and regulations were in place, but these managers were seldom given a clear message by top management that honesty and integrity had to come above financial results in performing their job.”

 

After describing some cases of fraud that occurred Packard says that “The Commission concluded that many of these problems were caused by a lack of ethical behavior by both the Department and the defense contractors and the situation could be greatly improved with a commitment to more ethical behavior by both parties. It is abundantly clear from the record that even more rules and regulations and the more rigorous enforcement of the rules and regulations has not worked, in fact it has caused other problems that are in many ways more serious.

 

“From discussions with some of the major defense contractors it became apparent that they were seriously concerned about these problems and anxious to take some remedial action. Many of the defense contractors had already established codes of ethics but many had not and in very few cases were the codes of ethics fully understood or rigorously followed at the lower levels of management. At a meeting with a dozen or so of the chief executives of the major defense contractors in the spring of 1985 it was quite evident that they were all anxious to take some positive action to correct these deficiencies in their performance. Following this meeting a number of them worked together to develop a Defense Industry Initiative, (‘DII’) to establish a procedure of self-governance to deal with the problems in industry on a voluntary basis.

 

“The DII identifies six critical elements as necessary for effective self governance: (1) codes of conduct; (2) employee training; (3) reporting of violations by employees; (4) procedures for voluntary disclosure; (5) responsibility to the industry; and (6) public accountability. This is a remarkable endeavor by the leaders of the defense industry, a real ray of sunshine in an otherwise dismal situation. It  was privately endorsed by Secretary Weinberger and President Reagan, I believe it will be enthusiastically supported by the department under Secretary Carlucci and I hope this approach will eventually be strongly supported by the Congress.”

 

Extensive inspection and the imposition of penalties for infraction has a very negative effect on the quality of work being done by defense contractors. Largely because of increasing  competition from Japanese companies which have achieved both high quality and low costs for their products by more extensive employee participation, United States companies have been giving employees more freedom in how they do their work. This has improved quality and reduced costs here in the U.S. just as it has done in Japan. This is not an entirely new principle for it is well established in management practices that quality must be built into the product, it can not be obtained by inspection. If the work is done right in the first place as it should be, less inspection is needed not more. In some circumstances too much inspection can actually reduce the quality of a product, and cases of this were reported to the commission.”

 

“It should be thoroughly understood that adoption and implementation of self governance by the industry even with the full support of the department and the congress will not immediately solve all of the problems. It will take some time to reduce acts of malfeasance in large companies to an acceptable level, and problems which occurred in the past will continue to come to light. Thus there will continue to be reports in the news media which will make it appear from time to time that self governance is not working very well.

 

“A good example of where self governance can be very helpful is the issue of ‘whistle blowers’, individuals in an organization who try to bring problems they see from the level of their work to the attention of the top managers of the organization. The Defense Department has not handled this problem well, and ‘whistle blowers’ have traditionally been given a hard time by their superiors in the Department. Industry has not been much better, but when the chief executive officer encourages people at all levels to report problems and this is incorporated in the culture of the company many more problems will be discovered and corrective action will be taken before the problem gets out of hand. Regulations and legal action have not worked well in dealing with this problem. For effective action, mutual trust must be established, and here codes of ethics and self governance is absolutely necessary.”

 

“There are several things the Defense Department must do if this voluntary effort by industry is to be successful. First it must clarify its regulation so that contractors can know what is expected, so they can properly structure their internal procedures and controls. If both parties do not know exactly what is expected, arguments and disputes are bound to occur. This is a big task because there are too many regulations, and many of them are conflicting. The right type of contract must be chosen for the work to be done, for example fixed price contracts for the procurement of equipment that has not been developed are an invitation to disaster. The Defense Department must honestly and publicly support the industry program otherwise it could be turned into a tool for prosecution, investigation and the enforcement of unreasonable claims and thus be completely undermined.

 

“To summarize the situation, waste, fraud and abuse have been present in defense procurement for a long time. They have been dealt with by ever increasing legislation and regulation. There have  been more and more regulations, and recently a campaign to increase the enforcement of the regulations. None of this effort has reduced waste, fraud and abuse in defense procurement, in fact it is, particularly waste, worse than ever. In consideration of all aspects of this problem it appears that self governance is a better course for both the Department and the Industry, and regulation and legal action should be restricted to those areas where self governance clearly will not work. The adoption and self enforcement of codes of ethics will reduce the incentives for these bad practices in industry and at the same time stimulate better quality of work and lower cost products. It will encourage trust and cooperation between the department and its Contractors and this will reduce the time needed to put high technology weapons in the field. The people of the United States have every reason to expect their Defense Department and their Congress as well as their defense industry to establish and maintain the highest ethical standards in providing the military strength to support the leadership of the United States in the affairs of the world. I hope the Thomas Jefferson Research Center will continue its strong support of good ethical behavior in the Defense Department and throughout our entire society.”

 

3/8/88, Copy of a letter from Packard to John F. Welch, Jr.,. GE, enclosing a copy of this speech

3/15/88, Letter to Packard from Paul W. McCracken saying his speech was ‘right on’.

3/10/88, Note, presumably typed by Packard’s secretary, saying copies his speech have been sent to all members of the Armed Services committee in the Senate of the House. Lists of these people are attached.

3/23/88, Letter to Packard from Frank Carlucci, Secretary of Defense, thanking him for the copy of his speech. Mr. Carlucci says “You are right, I endorse the approach.’ He encourages Packard to keep speaking out.

3/25/88, Letter to Packard from Nicholas F. Brady thanking him for the copy of his speech

4/4/88, Letter to Packard from Bill Nichols, Chairman, House Committee on Armed Services. He says ‘I appreciate receiving a copy of your recent speech on ethics in defense procurement. I agree that the defense industry needs to develop comprehensive and self-governing codes of behavior. Nevertheless, I believe that such a program will not supplant the need for appropriate laws, regulations and enforcement mechanisms from outside the industry and that the Congress has a duty to develop the necessary laws and to conduct oversight as to their enforcement and observance.’

4/11/88, Letter to Packard from Samuel S. Stratton, member House Committee on Armed Services, saying his views are outstanding, and they are trying to uphold the goals to which he refers.

4/12/88, Letter to Packard from Senator Strom Thurmond, member of the Committee on Armed Services, thanking him for the copy of his speech. He says ‘While fraud should not be excused, we must remember that human frailty plays a major role in such mistakes. I applaud industry efforts to improve their performance, but I know that their response is largely due to the outstanding work you did with the Packard commission. We all owe you a debt of gratitude for all you have done.’

4/12/88, Letter to Packard from Sanford N. McDonnell, Chairman Emeritus, McConnell Douglas  company, thanking him for the copy of his speech. He also thanks him ‘on behalf of industry for pushing the Defense Industry Initiative of Self-Governance.

5/4/88, Letter to Packard from Carla A. Hills complimenting him on his speech. ‘Absolutely first rate,’ she says.

 

 

Box 5, Folder 28 – General Speeches

 

March 22, 1988 – Philanthropy in America, East Bay Community Foundation 60^th Anniversary, Berkeley, CA

 

3/22/88, Copy of the typewritten text of Packard’s speech

 

After congratulating the members on their Anniversary and the good work they are doing, Packard says he “…appreciates the opportunity to make some observations about the importance of private philanthropy with the hope it will encourage additional support for your fine organization.

 

Packard takes a moment to give his audience the definition of philanthropy, saying “The word comes from the derivation of a Greek word which means ‘lover of mankind’, and has come to mean an action or an institution designed to promote human welfare….We commonly speak of Charitable Foundations. The word Charity comes from a Latin word …love and thus the words Philanthropy and Charity mean essentially the same thing, Brotherly Love.

 

“Charitable Foundations,” he says, “have existed since ancient times.” And Packard says he found in the Encyclopedia that Renaissance merchants created numerous foundations for educational and charitable purposes. And he says he learned they were criticized by Adam Smith for their poor management.

 

Packard observes that there were few Charitable Foundations in the United States before the 20^th century when their growth was prolific. “The conquest of America, from the establishment of the early colonies on the east coast to the Westward Movement of people across the continent provided a rather special ground for the expansion of charitable activity….The various church groups established hospitals, schools and universities, as well as providing help for the poor.”

 

Packard tells of recently receiving information from the Historical Society in Pueblo Colorado, his home town, describing the establishment of a hospital their in 1881. A newspaper at the time drew attention to the ‘suffering’ of tent dwellers in the town and asked if were any Christian Ladies association which would ‘take the matter in hand.’  Packard says “The Christian ladies did step forward [and]established the ladies Benefit Union which included ladies from all of the churches in Pueblo…”

 

“Although there has been a great expansion in charitable activity in this century  I have the impression that the major priorities have not changed very much. Religion has had the highest priority over the centuries, and religion still receives the largest amount of charitable support today. The care of the ill, hospitals and medical activity to relieve suffering and to save people from dying has also, historically had  high priority and receives the next to the highest amount of charitable support today.”

 

Since the 1960s there has been a tremendous increase in Federal outlays for a wide range of activities intended to improve the quality of life in our country. Direct Benefit Payments for individuals for the fiscal year 1989 are expected to take 43% of the federal budget, well over 400 billions of dollars. This compares with National Defense at 27%, or just under 300 billions of dollars. These domestic payments include Social Security, Medicare, Unemployment compensation, Civil Service Retirement, Veterans Pensions, Temporary Employment Assistance, Medicaid, aid to families with Dependent children, supplemental security Income, food Stamps, Public Housing, and Child Nutrition. These major programs are nearly all over ten billion dollars each. In addition there are dozens of other federal programs in the realm of Public Charity.  National endowment for the Arts and for the Humanities on and on ad-finitum. [sic] As one looks at the magnitude and breadth of this Public Charity program in the United States one should wonder what is left for Private Charity, yet Private Charity has been increasing about as rapidly as Public Charity.

 

“There are several reasons why there continues to be an important role for Private Charity from both Individuals and Corporations. Probably the most important is that these federal Programs are not doing what they are intended to do and this is quite obvious to people at the local level. Your foundation funds programs in the Arts, in community Services, in Education, help for seniors, help for Youth, and Health and in other areas that receive substantial federal money. The level of your support is not large but the good that you do is very substantial. You know from personal knowledge where the money will be most useful, and the involvement of people who care, your members, your staff and your donors is often as important as the money you provide.

 

The second reason why people who are concerned want to become involved on a personal basis is because they are very troubled about the waste and mismanagement of the Federal Programs. These are Pork Barrels for the members of the Congress, the are riddled with red-tape, and the funds are appropriated not in accordance with the real needs but all too often on the basis of the most effective lobbies.

 

“I have seen some of these things from within the Federal Government, and I have been involved with a number of charitable activities in the private sector. From my personal experience I feel very strongly that community foundations such as yours play a very important role in improving the quality of life in our Country.

 

“I have noted that your Foundation receives contributions from corporations. Charitable contributions by corporations in the United States is a recent , but very important, development. Before 1950 it had not been clearly established that a business corporation had the authority to make a charitable gift. I can recall discussions among groups of corporate leaders in the 1940s that questioned whether they had any responsibility beyond tha5t to their shareholders. Many thought labor was merely a commodity to be bought and sold on the open market, and that Charity had no place in corporate affairs. There was an important change in corporate thinking after World War II, and some of the enlightened leaders began to make charitable contributions to universities and other private institutions. Such contributions were challenged in a legal action, A. P. Smith Mfg. Company vs. Barlow that went to the Supreme Court. In the year 1953 the authority to make charitable gifts when the gift would advance the general interests of the corporation and its shareholders. The tax laws were changed to allow the deduction of charitable contributions up to 5% of profits before taxes. During the following years corporations developed a rationale for charitable contributions but very few made contributions up to the 5% limit, about 1% of profits before taxes was the average for a number of years. The general rationale was established on the theory that the success of a corporation was influenced by the social environment in which it operated and that theory is widely accepted today. The quality of education in both the local community and in the nation came to be considered important by corporate management, and this will become even more important as we move further into an economy based on knowledge rather than raw materials, energy supply, and transportation. Corporate charity has now become legitimate for essentially everything that will improve the quality of life in the community, and is an important source of support for your Foundation.

 

“Although the rational and legal base for corporate contributions has been firmly established the actual level of giving, in my opinion, is not as high as it should be. Many new companies are simply too busy with other important things.. I think this is an area of opportunity for this foundation to do some educational, missionary work if you will, with the companies in your community. You can provide services the smaller companies need to establish a good company contributions program, With your record of fine performance you should continue to receive good support from the larger companies in your community.

 

“There is another recent development that I want to bring to your attention. That is cooperation between the Public Sector and the Private Sector in charitable activity. The wolf Trap Foundation for the Performing Arts in Washington D.C. which is operated by a private foundation with substantial funding from the National Park Service is a good example. There are may other examples, some here in the local area. Discussions with officials in the cities and counties where you operate could be mutually beneficial.

 

“There are other things I could talk about in regard to community Foundations such as yours. Because of the time, however, I will close by simply saying to all of you who are involved in the East Bay Community Foundation  Happy Anniversary! You are doing a great job, keep up the good work.”

 

3/22/88, Printed program for the Celebration

Undated, Typewritten note from Margaret Paull, Packard’s secretary, providing information from the encyclopedia on the Supreme Court case concerning the right of corporation to contribute money for charitable purposes.

 

 

Box 5, Folder 28A – General speeches

 

April 15, 1988, Remarks at Arnold and Mabel Dinner, celetrating their gift of the Beckman Center.  No location given but likely at the Center in Irvine CA.

 

4/15/88, Copy of typewritten text of speech

 

Packard says he is “pleased to join the audience in thanking Arnold and Mabel Beckman for their wonderful gift of a Center for the National Academies of Science and Engineering here on the west coast. And he adds that he is especially pleased because “I think it is about time someone recognized that not all of the scientific knowledge and wisdom in the United States resides in Washington D.C. or any where else on the east coast.”

 

He acknowledges that “the Company [Arnold Beckman] founded in 1935 served in many ways as a model for Bill Hewlett and me when we decided to start our own company in 1939. Although Bill and I did not know Arnold at the time we started our company, we did know about his company and his success was a great inspiration to us. It was only recently I learned that Mabel kept the books for their new firm just as my wife, Lucile, kept books for our new firm four years later. In a very real sense many companies have been trying to follow in Arnold’s footsteps, but he has had a long and energetic stride in everything he has done, and has remained a leader throughout his remarkable career.

 

Noting that Beckman’s life has spanned the entire twentieth century, Packard says he “found it very interesting to go back and review some of the exciting things that have happened since [Arnold Beckman] was born in the month of April, 88 years ago. Electrical power distribution in the United States had begun only four years before Arnold’s birthday and the Olds Motor Works proudly displayed six different models of the horseless carriage to be sold during Arnold’s first year of life. Steam railroads were still the main means of mechanical transportation on land, the automobile industry, and aviation were just in their beginning stages. Wireless transmission had been demonstrated a few years before Arnold was born, but it would take a few years more before voice or music could be transmitted and received. Arnold was eight years old when Lee De Forest invented the vacuum tube in Palo Alto, but he was twenty years old before vacuum tubes began to be widely applied in radio broadcasting and in radio receivers.”

 

Beckman earned his BS from the University of Illinois in 1922, and his MS Degree in 1923, and Packard tells how he became a research associate in the Bell Laboratories in 1924, “a time when some of the most important research in electrical communication theory was being done.” Beckman received his Ph.D from Cal Tech in 1928.

 

Packard says it is quite likely that the depression of the early thirties had an “important influence on his decision to establish his own company in 1935 to develop instrumentation for the field of chemistry. The success of the Beckman Instrument company is ample evidence,” Packard says, “of Arnold’s expertise in his professional field. But he brought to that company not only technical expertise but, even more important, a commitment to excellence in every aspect of the company’s work, and in every aspect of his own life.

 

“…Arnold has been an outstanding citizen of his local community and of our Nation. He was responsible for bringing Bill Shockley to northern California and thus he played a key role in the development of Silicon Valley. He was the president of the California Chamber of commerce in 1967 and 1968, and was very influential in helping to shape California’s favorable environment for high technology industry. At the national level he was a member of the President’s Air Quality Board from 1970 to 1974, and his advice has been requested on many occasions by Presidents and by the Congress. He is a member of numerous  scientific societies and of the National Academy of Engineering, to mention only a few of his many activities.

 

“We are here tonight to thank Arnold and Mabel Beckman for this wonderful gift of the Beckman Center, but also to honor them as two of the great citizens of the twentieth century.”

 

Thinking about the progress of technology over the past 88 years Packard says “…there has been much speculation about what is likely to come about in the twenty-first century. Will young people in the United States have the same opportunity in the next century that Arnold and Mabel had in their Century? Can the United States maintain its important lead in technology, and what can be done to make this happen? I know we can learn from the experience of our honorees.”

 

Two factors were essential in Arnold’s success, Packard says, “…a close association with university research at the frontiers of science, and a superb education at two of the nation’s outstanding research universities. I believe it is quite evident from the record of technical progress in the United States during the twentieth century that the advancement of knowledge by university research and the education of scientists and engineers by our universities have been two of the basic foundation building stones of the United States’ leadership in technology over the entire twentieth century These are building stones that must be maintained and strengthened if we are to keep our leadership over the next century.”

 

However, Packard sees some “troubling developments” within American universities. “They are having difficulty keeping the best people on their faculties, and all too many young people in the United States are dropping their graduate education for more lucrative jobs in industry. Federal support for universities, while it is still quite large, has become inefficient. Faculty people spend far too much time applying for Federal grants and reporting on how the money was used. Federal grants are also uncertain in timing and thus make it difficult to achieve the continuity of research effort by faculty members. It is often said that a faculty appointment to do research work is little more than a hunting license for Federal funds. These are problems that must be corrected and to correct them will require some hard work in the political arena.

 

“As most of you know, our primary and secondary educational system is also in serious trouble today. This trouble is the result of decisions made in the 1960s to convert our educational establishment from its dedication to education to a dedication to social reform. The adoption of racial quotas, bussing to obtain racial balance in the schools, and promoting and graduating students who had not met the educational goals required of others, were a disservice to those who needed help as well as damaging to the quality of education in the United States.”

 

Packard also sees that the world itself has changed, “in many important and irreversible ways,” during the past 88 years. “In 1900 it took days to cross the Atlantic Ocean and weeks to travel around the world. Communication was largely by letter and it took considerable time and study to know what was going on in other counties. Today, we can see much of what is happening anywhere in the world while it is still happening, and we can be in any major city in the world in only a few hours. The twenty-first century will be an international century. Leadership in international affairs will be a basic ingredient of success, whether in political affairs or in business. It is the height of folly to think the United States can isolate itself from the rest of the world with trade barriers and continue to have a healthy economy. I should note that by 1980 the Beckman company’s international business was already over fifty percent of its domestic business and was growing faster. More than half of Hewlett-Packard’s business is now in international markets and we compete successfully with dozens of firms from other countries in nearly every aspect of our business.”

 

Packard points to another major change in high technology business that has taken place since Arnold Beckman started his company. “All electronic products have become much more complex and much more capital is now required to start a new business. I do not know how much capital Dr. Beckman had to start his company in 1935 but not very much was needed, a few thousands of dollars would have been quite adequate. Today very expensive equipment, and very expensive facilities are required,  investments in the millions of dollars are needed to start a new company.”

 

On the other hand, Packard says some things needed to start a high technology company have not changed. “Vision to see that something new is possible, hard work and determination to bring that vision to life, and a dedication to integrity are still immutable elements of success that Arnold brought to his work in large measure. These will continue to be essential elements of success for every business endeavor in the next century as well.

 

“Many people,” Packard says, “are asking the Federal Government to take whatever action is necessary to insure that the United States maintains its leadership in high technology and keeps a competitive advantage in the world economy. You may already be able to judge from what I have said that there are some things the Federal government should do, in fact must do. The first is to restore the heath of our universities. This requires more attractive support for university research, and better incentives for our young people to continue their graduate education. The Federal Government can also help in obtaining better education at the primary and secondary level for all our young people in mathematics and science, as well as in the arts and humanities. This will require more thoughtful participation of parents and people in the local community, not just more money from Washington.

 

“Second, the Federal Government must continue to make venture capital available for the obvious reason that innovation has become very expensive in many important fields. This really means that the tax on capital gains should be lower than the tax on income from investments which have little or no risk in losing capital. In recent years there has been too much venture capital driven by the desire to make a fast buck rather than to create something of value. A holding period of at least one year should be imposed on new venture capital to reduce the speculative pressures but new venture capital will continue to be important.

 

“Third, the Federal Government, recognizing that high technology business will be competing in the world wide economy, must take whatever steps as may be necessary to maintain a ‘level playing field’ for U.S. business firms in the world wide economy. This, like many other things, is easier said than done. A level playing field for one industry may be a steep uphill slope for another. It is essential that the Congress address the trade issue on a broad, objective basis, not simply on the basis of what has been happening to a particular industry in a local district or state.”

 

In a contrary vein, Packard believes some of the things the Federal Government is trying to do don’t make “any sense at all. “The Federal Government’s support of special programs like Semitek.” he says, “is a complete waste of not only the taxpayers money, but the waste of valuable scientific talent as well. Federal support of efforts to put more emphasis on manufacturing technology are also in my view a waste of time and money. Manufacturing technology is available in abundant supply for anyone who wants it. What we need is a change in the attitude of the leaders of U.S. industry. When they decide that manufacturing [technology] is important they can find it and put it in place with no great difficulty.

 

“In conclusion, I want to say again that it has been a great privilege for me to be with you tonight to honor Arnold and Mabel Beckman, and to thank them for their magnificent gift of the Beckman Center. And as we approach the end of the twentieth century I hope we can learn from the great things they have done for us throughout this century. They will continue to be an inspiration to all to try to do what can be done to make equally exciting and productive opportunities for those who will follow in the next century.”

 

4/25/88, Copy of a letter from Packard to Dr. Arnold Beckman sending him a copy of the remarks he intends to give at the Beckman Center.

 

 

Box 5, Folder 29 – General Speeches

 

June 4, 1988, Commencement Address, Santa Clara University, Santa Clara, CA

 

6/4/88, Copy of typewritten text of Packard’s speech

 

Clipped to this            this copy is a note to Packard from his secretary, asking if it is OK “to send Santa Clara U a copy of your speech (as attached)… they wish to put some quotes in one of their publications….Then on the note is a handwritten answer from Packard which says “I was going to edit this but I will not have time –send it as is.”

In his commencement speech Packard congratulates the graduates and also  the faculty, President Rewak, and the members of the administration who “have worked so hard during the past few years to raise the University of Santa Clara to such a high standard of excellence.

 

“In several way,” Packard says, “this University has made an unusual contribution to the young men and women who have studied here. Those who have attended the academic programs have had the benefit of inspiring teachers, and of courses that have been kept at the frontiers of knowledge in all of the disciplines involved. Equally important, I believe the University of Santa Clara has been able to instill a real understanding of the importance of personal integrity, a commitment to honesty, fair play, and personal responsibility, in its students more effectively than many other of our great universities today. I am quite certain that all of you who are graduating here today will in the years to come realize that the two most important assets you will ever have are your knowledge and your integrity. The store of knowledge available to you will continue to expand for as long as you live and you must continue to study and learn as much as you can wherever your future life may lead. Your integrity on the other hand is an invariant and must be protected with unfailing determination from whatever temptations you may encounter.

 

“54 years have gone by since I received by undergraduate degree from Stanford in 1934. I do not remember who the commencement speaker was that year and I do not have the slightest idea what he or she said. I assure you I expect no more of you who are here today. Commencement speakers are expected to deliver a message that will be useful or at least interesting to the graduating class, or to use the platform to deliver a message of importance to the community at large. I have given a certain amount of thought about how I could fulfill either of these responsibilities here today.

 

My first impulse was to do some speculating about what the future, say the first half of the twentieth [sic] century, might hold for you in your professional careers. Engineering, business management, and education, are all areas in which I have been involved over many years, and are areas where I understand many of you who are graduating here today plan to do your work. But then I thought about how a prediction accurately describing what has actually happened in the 54 years since my graduation in 1934 would have been perceived by my graduating class at that time. Predictions about the development of television, further refinements of the automobile, and the development of better aeroplanes would have sounded reasonable. Predictions that a man would be landed on the moon and brought back safely would have been considered completely incredible. That nuclear weapons powerful enough to destroy the major cities and much of the population of the world  in the matter of just a few hours might have been considered possible by those students who had taken a course in physics. Predictions that it would be possible to put a million active elements, each roughly equivalent to a vacuum tube of that day, on a single chip of silicon the size of one’s finger nail would have been considered impossible even by those of us who had studied electronics. Predictions of the amazing developments that have been made in medicine, that all but three of the most common diseases would be brought under control, and that life expectancy would be doubled in the twentieth century, or that we would be able to control the genetic development of plants and animals rapidly and with predictable results would have been received with great skepticism. Anyone making some of these predictions in 1934 would, to say the least, have had a serious problem in credibility.”

 

Packard tells his audience that while he was at Stanford he had the opportunity to study a course in American History, and engage in some independent study about the westward movement of the United States. Living in Colorado he read with great interest about the finding of gold, establishing great ranches, fighting off Indian raids and so on. He says he decided, back then in 1934, that he had been born 100 years too late. “I had missed all the challenge and excitement and would have to look forward to little more than a mundane career as a professional engineer.”

 

Packard says he and Bill Hewlett had already decided that they would start their own business immediately after graduation if they couldn’t get a job first to obtain some practical experience. Packard tells of obtaining a job with General Electric Company in Schenectady, New York. Arriving in Schenectady he looked for a job in radio engineering or electronics. However, when the advisor at GE heard of this Packard says he explained that there was no future in electronics. “He advised me,” Packard says, “to take an assignment in a department working on motors or generators, electric railroad engines or power generating plants, or in several other areas where he thought there might be a good opportunity for me. Needless to say I did not take his advice but rather found a job in the Vacuum Tube Engineering department where I had an interesting time for three years and learned a great deal that turned out to be very useful when we started our company in 1939.”

 

“While I did decide against making any very specific predictions about what the future might hold for you who are graduating here today, I strongly believe that the challenges and opportunities for you will be much greater than they were for me and my classmates in 1934 –  if for no other reason than that you will be starting from a much higher level of both intellectual and economic activity.

 

“Without any doubt the twentieth century will become known as the Century of America, the century when the United States became the strongest country in the world and assumed the leadership of the free world. It is important to note that our country did not actively seek this position of leadership it was thrust on us by default. Since the middle of this century, after the devastation of world War II, there were only two countries strong enough to exert substantial leadership in the world, the United States and the Soviet Union. Unfortunately President Roosevelt and his advisors failed to understand the motivation and intent of Stalin and the Soviet Union at the end of the war and the seeds of the cold war were thus planted with the help of our own leaders. This was not surprising for the current of isolationism has run strong in the United States since the early days of our history. Woodrow Wilson had offered an enlightened plan of leadership after World War I only to be shot down by the isolationists in the Congress. There are still very strong currents of isolationism running in our country as we come to the end of this century.

 

“There are two very important developments going on in the world today that are likely to threaten the world leadership of the United States and certainly will have an impact on the careers of you who are graduating today.

 

“The first development is the result of the tremendous pace of world wide communication and world wide travel. We have now reached the point that no major business enterprise can hope to be successful unless it is prepared to compete in the world wide market place.

 

“The second important development is that communism has finally been recognized as a complete failure in providing the economic benefits it promised its people as well as a complete failure in the economic competition it predicted for the free enterprise system. This is what the changes going on in Mainland China are all about. This is what the successes of economic development in Korea, Taiwan, Hong Kong, Singapore, and of course Japan are all about.

 

“It would be utter folly to predict that these changes will bring about a ‘Brave New World’ in any short period of time. Forces of isolation will continue to be active in the United States and there will be pressures on the Congress to protect domestic business from foreign competition. Socialistic pressures will continue to encourage the Congress to distribute the tax dollars you pay to those who are unwilling or unable to support themselves. The leadership and the entrenched bureaucracy in the Soviet Union may not yet be ready to admit the failure of their system. I think however the die has been cast and it is now only a matter of time before there are some real changes in the world that come from the changes in the forces that influence the relationship among the nations of the world.

 

“Even if these changes going on in the world are for real it does not imply that the leadership position of the United States will improve or that our historical relationship with Western Europe will be as important in the future as it has been in the past. The gross national production of the countries on the western rim of the Pacific is increasing at over twice the rate of that in the United States and the countries in Europe, and they are achieving considerable success at the forefront of high technology. If the present trends continue the markets of the Western Pacific nations will be larger than the markets of the European Nations in less than ten years and their technology could be at a higher level. The economy of the United States will still be the largest and most attractive in the world until the end of this century but if we continue to look inward our world leadership position will certainly continue to decline.

 

“There is certainly no manifest destiny to determine the continuing world leadership of the United States. This is a challenge and a burden that will fall largely on the shoulders of your generation. There will continue to be conflict and change in the world of your time, for there is little evidence that human nature has changed in any significant way. There is however a very good chance that we are at the beginning of a watershed change in the world along the general lines I have outlined. If so you are in for a very exciting and challenging experience in the years that lie ahead.

 

“Good luck and God bless you each and every one.”

 

 

6/4/88, Copy of the printed program for the Graduate Commencement

4/5/88, Letter to Packard from William J. Rewak, S.C. President  inviting him to be the commencement speaker and receive an honorary degree

4/25/88, Copy of a letter from Packard to President Rewak accepting his invitation to speak at the commencement exercises

4/24/85, Copy of a letter to Packard from President Rewak thanking him for his pledge of $1,250,000. He says they plan to use the money “to award fellowships to persons who are recent recipients of doctoral degrees.

4/30/88, Copy of the printed program for a dinner in recognition of President Rewak who is resigning his post at Santa Clara University

5/1/88, Copy of a letter to Packard from President Rewak giving some details related to the commencement ceremony

5/3/88, Memo to Packard from HP VP Bill Terry saying he was very pleased Packard was able to accept the invitation to speak at the commencement

5/13/88, Letter to Packard from Kenneth E. Haughton, Dean of the Engineering School, inviting Packard to have lunch with the staff

6/17/88, Letter to Packard from President Rewak thanking him for speaking at the commencement and for his “generous support of Santa Clara over the years”

 

Newspaper clippings:

5/25/88, From unnamed paper announcing that Packard will be the commencement speaker

6/4/88, From the Times Tribune covering Packard’s speech

 

 

Box 5, Folder 30 – General Speeches

 

July 14, 1988, Lessons We Have Not Learned in the Procurement of Military Weapons and Equipment, Acquisition Leadership Conference of the Defense Systems Management College, Ft. Belvoir, VA

 

See speech dated March 26, 1986 for complete list of speeches covering work of the Commission

 

7/14/88, Copy of the typewritten text of Packard’s speech

 

Packard says it is a special occasion for him to be here at the Defense Systems Management College “because I was involved in the establishment of this [college] when I was the Deputy Secretary of Defense some 18 years ago.”

 

He says the College was established “because it is absolutely essential to have an adequate number of men and women thoroughly knowledgeable about the complex and important work of military research and development and procurement. The College has done an excellent job in the role we envisioned for it ever since it was established. The role of the College is more important today than it was when it was founded, because Defense Procurement has become much more complex and more demanding of the people who are involved than it was 18 years ago.

 

Packard congratulates [Defense] Secretary [Frank] Carlucci for sponsoring this conference, and also Under Secretary [Robert] Costello for developing the “excellent” agenda for the meeting. “I also want all of you to know how much I appreciate the invitation to be with you here today.”

 

Packard mentions the President’s Blue Ribbon Commission on Defense Management which he chaired in 1985, and says “…it is frankly embarrassing to often receive more credit than I deserve. The report of the Commission…was not a report on my personal recommendations but a consensus of the recommendations of all of the members of the Commission. Every member of the Commission contributed and Secretary Carlucci was one of the most effective members of all.”

 

Packard says there has been some progress in implementing the Commission’s recommendations, but he adds that “the recent disclosures about the extensive investigation of defense procurement emphasizes the fact that our country still has a problem of major dimension n the management of the Defense Department and the Defense Industry, despite a great deal of effort over nearly three decades to improve the situation.”

 

Saying that although he was not able to attend any of the  discussions taking place at the conference earlier in the day, he says he will .“make some observations about how I see the progress that has been made. My remarks will be strictly my personal views, I have not discussed them with any other member of the Commission. I will try to cover most of the issues you have on the agenda for the day, and I understand there will be time for discussion after my formal remarks so we can pick up issues that I have missed, and time for rebuttal if you do not agree with what I have said.

 

“In considering what can be done to achieve real improvement in Defense Acquisition, it is essential,: he says, “to understand that the examples of fraud and connivance that have recently been disclosed as well as many of such examples that have come to light in the past are not the problems but rather are symptoms of the problems.

 

“The real cause of the problems that we attempted to deal with in the work of the Commission and that have been highlighted in recent reports is that defense procurement has been micromanaged to death, and in effect criminalized during the past seven years by the combined actions of the Defense Department and the Congress. It is hard to understand how this came about during an administration dedicated to free enterprise. The actions that have been taken in defense procurement by the Administration and the Congress, assigning inspector generals to the acquisition business, bringing criminal action against people like Jim Beggs, wiretapping offices in the Defense Department and the Defense industry, and such are actions that would be taken in the most tyrannical type of a police state. Such actions are the antithesis of the very fundamental concepts of a free society and a free enterprise economy. It is very hard for me to understand how this came about during an administration dedicated to free enterprise.

 

“In my opinion, the Congress has been the major cause of this disastrous situation, but the Department must share the blame. Together, they have created an environment in which honest and efficient military acquisition is impossible to implement.”

 

Packard quotes some passages from a report prepared by a law firm [McKenna, Conner, and Cuneo] which he says “has had more experience in DOD acquisition affairs than almost any other law firm in the country:

 

‘Over the past seven years,’ the report says, ‘we have seen both a rapid growth in defense spending and an even more dramatic growth in the imposition of new laws and regulations on the Aerospace and Defense Industry. In fact, there have been more changes in laws and regulations affecting the industry in the last seven years than there had been in the proceeding twenty five years.

 

‘Congress has not come to grips with the nature and the dimension of their responsibility. First it loudly proclaims that the industry should be guided by the principles of free enterprise, capitalism and competition which have shaped all industry in our country. Then it sets out to legislate and regulate the industry to such a profound extent as to make the application of these principles utterly impossible.’

 

Continuing with his speech, Packard says “The DOD and the Defense Industry must also share the blame for this disastrous situation but they are the actors on the stage that has been designed and put in place by the Congress. Unless the procedures can be changed to put the incentives back in the right place for the DOD and for the Defense Industry the situation will only continue to deteriorate. I say this despite the fact that I know there are an encouraging number of areas of significant improvement including those on the agenda today.”

 

“I do not have any simple solution to propose,” Packard says. “In fact, I do not believe there is a simple solution. I am sure, however, that Defense Procurement can be put back on the right track but it will require continuing attention to the issues you are discussing here today to implement them effectively. Real and lasting improvement will also require better cooperation among all of the parties involved the congress, the Department, and the Industry. The Congress is in many ways the key element in this problem. Let me emphasize again, unless there is a major change in the attitude and the actions of the Congress there is absolutely no possibility that this country can ever have an efficient military acquisition system.”

 

“As you know, there have been many studies of this problem. One of the latest was The President’s Blue Ribbon Commission on Defense Management, which I chaired and which made its recommendations to The President in June of 1986. There have been numerous other studies over the past twenty-five years and they nearly all have made similar recommendations. Professor J. Ronald Fox, a member of the Harvard Graduate School of Business, has devoted his career to this subject. He makes a number of important observations and recommendations in his recent book entitled The Defense Management Challenge. He notes that studies on this subject repeatedly urged Congress and the Defense Department to correct five basic deficiencies: [Packard quotes from Professor Fox’s book.]

 

1. ‘Setting requirements for the most sophisticated systems attainable often irrespective of cost;
2. Underestimating schedules and costs of major programs, distorting the decision making process for the allocation of the national budget; [ Packard adds “deliberately doing so.”]
3. Changes in programs and contract requirements caused by changes in military user preferences, leading to annual or more frequent changes in program funding levels, initiated by Congress and the DOD itself;
4. Lack of incentives for contractors and government personnel to reduce program costs; and
5. Failure to develop sufficient numbers of military and civilian personnel with training and experience in business management and in dealing with industrial firms to oversee the development and production of enormous, highly technical industrial programs.’

 

Packard continues, saying “I realize that all five of these issues are being covered in your agenda today, but I want to make some observations about them on the basis of the recommendations of our Commission.

 

“One of the most important recommendations of our commission was on National Security Planning and Budgeting which relates to setting the requirements, and minimizing the changes in programs and funding levels. The Commission defined the problem as follows:-

 

‘Today there is no rational system whereby the Executive Branch and the Congress reach coherent and enduring agreement on national military strategy, the forces to carry it out, and the funding that should be provided – in light of the overall economy and competing claims on national resources. The absence of such a system contributes substantially to the instability and uncertainty that plague our defense programs. These cause imbalances in our military forces and increase the costs of procuring military equipment.’

 

“This subject was discussed extensively with people in DOD and in the Congress during the course of the Commission’s work. There are several facets to this problem. One is the lack of adequate consideration by both the Executive Branch and the Congress as to what our world wide military strategy should be, a second is the pressures of the military services to promote their individual strategies and their pet weapons, and the third is the practice of the Congress to appropriate funds that are not wanted or needed by DOD or the Military Services. This ‘PORK BARREL’ practice by the Congress causes a very large waste of funds in the procurement system. It is probably the largest waste of all if the military base issue is included. This is certainly a waste of the taxpayer’s money, far larger than any possible waste that might have been caused by the current scandal

 

Packard cites some actions that have been taken to address this problem. “The role of the Chairman of the Joint Chiefs has been strengthened so that he now has adequate authority to exert a positive influence in developing a ‘Coherent and enduring’ national military strategy. He also has the authority to over ride the other Joint chiefs in deciding what military weapons and systems to procure. This is an important step in the right direction but nothing significant has come of it yet.  The Commission On Integrated Long-Term Strategy has developed an excellent report on this issue, entitled Discriminate Deterrence, which seems to me to be a good start in developing a coherent National Military Strategy, but I have not heard about any serious discussion of this proposal or any other proposal that will do what the Commission recommended. I have not seen any evidence either that the Chairman in his new role has had much influence in getting the services to put the interest of the Country ahead of their own self interest.

 

Packard says that the Commission expected it would take some time for the Chairman to do the important things in his new role – developing the staff, overcoming bureaucratic tradition – and the strong support of the President, the Secretary of Defense, and the Congress would be required. “The Commission knew it would take time, measured in years not months, but we thought it would be a very positive development and have a very high pay off for the benefit of our country. I can not give anyone very high marks for the implementation of this important recommendation of the Commission so far.

 

“Multi-year funding is absolutely necessary to implement enduring agreement on military forces, and as I am sure you know billions of dollars would be saved. There has been some support for multi-year funding by the armed service committees, but the appropriation committees have adamantly refused to consider multi-year funding. The excuse they use is that there are so many problems in defense procurement that the Defense Department can not be trusted and must be monitored year by year. The real reason the Congress will not approve multi-year funding is that to do so would severely limit their ‘pork barrel’ opportunities. I can see only one way to deal with the selfish ‘PORK BARREL’ practices of the  Congress. They must be brought to the attention of the people all across the country. If the voters can be made aware of the magnitude and the seriousness of this problem perhaps it an be brought under better control.

 

Packard sees another “devastating effect of this disgraceful Congressional practice. It is absolutely unethical behavior. How can the Congress expect ethical behavior from the DOD and the Defense Industry when it sets such a bad example of ethical behavior at the top!”

 

Packard talks a bit about another recommendation of the Commission having to do with the need for the DOD to “attract, retain, and motivate well qualified acquisition personnel.”

 

He says he believes “the involvement of military people in acquisition is essential but if they are involved they must be officers who have opted for a career in procurement. The McKenna , Conner & Cuneo report puts it this way: ‘It has become quite clear that the DOD acquisition process is far too complex to be managed by military non-careerists who will be rotated to other unrelated assignments as often as every two years; no amount of intensive training will equip such individuals …to cope with the process.’

 

Packard adds that “In my opinion the same principle applies to lawyers at the Secretarial level. That was essentially the reason the Commission recommended the establishment of an Under Secretary position to be filled by a person with appropriate experience to oversee the entire military acquisition process. That office has been established and it is occupied by a capable person. Bob Costello is doing a fine job, but here again time will be required, probably measured in years rather than months to do what the Commission hoped could be done.”

 

In considering the number of people involved in military procurement, Packard refers to the conference paper entitled “Assessment of the similarities/differences between the service acquisition organization.’ He says that this title “indicates to me that you do not even understand the problem. To have three or four chains of command involved in a service acquisition organization is manifestly absurd. The Commission intended to give you the message that there should be only one, and apparently you did not get the message. We realized that our recommendations would require some major changes from past practice, and that it would be difficult for people in the services to face up to a major change from what they have been doing in the past. I think you have flunked out on this issue.”

 

Packard says “I now think the only way to deal with this issue is to recommend to the Congress that they mandate at least a 20% reduction in the number of people in DOD and in the Services who are involved in procurement.. I am absolutely sure you would do a better job with 20% fewer people.”

 

“I would also recommend a corresponding cut in the staff levels of the relevant Congressional Committees. How to get such a reduction is another question, especially since the recent trends are all in the opposite direction. Perhaps it would be possible to get both of the Presidential candidates to include in their platforms this election year the recommendation to support such a reduction in both Defense procurement people and Congressional staff of Defense committees.

 

Packard says he does not like to be so “…negative about the progress that has been made in implementing the Commission’s recommendations because I know you have made many positive steps in the right direction but they do not get at the heart of the problem. The breakdown of the procurement system is caused by two things, the attempt by the Congress to impose competition in a situation in which real competition in the conventional context is virtually impossible to achieve, and to try to impose it by a myriad of unrealistic rules and regulations enforced by ‘police state’ tactics.

 

“The question about how to manage the development and production of major military weapons and systems has been a major priority of every Secretary of Defense since 1960. The McNamara solution was ‘total package procurement.’ This appeared to be an obvious solution, get a bid for the whole job at the beginning and then hold the contractor responsible. The problem was, and is, that it is impossible for anyone to know how much it is going to cost to develop and produce a complex new weapon system that has never been built before. Contractors would bid or negotiate the best deal they could to get the job. I spent considerable time when I was at the Pentagon trying to resolve the problems that resulted from this approach. I visited several contractors who were in trouble, behind schedule and above cost on their programs. In several cases the work was in areas where I had some experience and after inspecting the work I usually met with the CEO of the company. In most cases I told him I was sure he must have known at the time he made the bid that the price was too low and the delivery time was too short. When I asked him why he did this the reply was almost always ‘That was the only way we could get the job.’

 

“The misplaced emphasis on competition which has been the recent practice has had the same result. I know you can cite substantial savings from this so called competition and some of it has been very real. On the big programs the competition is in brochurermanship, in meeting a bunch of ‘mickey mouse’ requirements that have absolutely nothing to do with selecting the most qualified firm to do the job. One could do just as good a job, as I have said many times, in awarding the major contracts by putting the names of qualified bidders on the wall and throwing darts. This would also save a lot of time and money.”

 

Packard looks at some of the other options for resolving the procurement problem at DOD. “It has been suggested that a completely civilian procurement organization be established to handle the procurement of all military weapons and systems for the services. This would be along the lines of the acquisition system used in Great Britain. Our Commission considered this option and concluded it was not a viable option. There would be severe political opposition, it would be hard to attract, keep, and motivate enough good people to do the job sell, given the existing civil service system. In addition, the British system does not work very well.

 

“It has been suggested that the defense industry should be nationalized, major production facilities converted into arsenals, owned by the government, but possibly operated by private companies in the same way some of our national laboratories are managed. This option would certainly have severe politician opposition and would be in the face [of] world wide trends in the opposite direction. I believe, however, there is a high probability this will be the only option available if the present practice of requiring contractors to make heavier investment of facilities, cost share research and development, and in the name of competition require programs to be broken down to uneconomical packages so there can be two producers instead of one. It has been estimated that the unfunded liabilities of the defense industry resulting from these practices are approaching ten billion dollars and under present contracting practices the industry has no possibility of generating funds to cover these liabilities.

 

“A much simpler option would be to go back to the contracting policies that have been used in the past. These would include cost plus contracts with incentives based on performance, and the use of prototyping to provide legitimate competition on smaller systems and sub-systems, and more extensive use of commercial products.

 

“ It seems to me the best solution would be to find an objective way to measure the performance of the defense contractors and to award contracts based on demonstrated performance, rather than on paperwork proposals. To do this it would be necessary to establish the rules to evaluate past performance. These would include actual cost compared to estimated cost, meeting delivery schedules, actual performance of the product, and other relevant verifiable data. An appropriate rating of the various factors would be needed. I would include the falsification of test data, of labor charges and other types of connivance or fraud as an absolute prohibition of any future contracts, for a year at the least and perhaps permanently. If such rules were established and the contractors knew about the rules and penalties when the contracts were awarded it would be  real incentive for better performances. Inspectors and auditors would still be needed but much fewer would be required. I am quite certain that a system along these lines would get the entire acquisition system on the right track, would provide our military forces with better equipment deployed more rapidly and at a lower cost.

 

“Under this approach all new major development programs would be awarded to a contractor that has a good record of past performance. In addition the contractor would also be disqualified for the production contract if he failed to meet established criteria in the development contract. I am convinced that a procurement program along these lines could be developed and that it would put the incentives for good performance in the right place. Fewer people would be needed in the DOD to manage such a program. It would be necessary for the Congress to get out of the micro-management business and the Congress would have to refrain from influencing or overriding the selection of the contractor by the DOD

 

“An acquisition program along these lines would not require a major change in the organization of DOD except to reduce the number of people involved with acquisition. It would not subtract from the need for better strategic planning, in fact it would give the DOD and the Congress more time to devote to strategic planning and it would still require program stability. Most important it could reduce or even eliminate the red tape and free the energy, enthusiasm and creativity of the talented people in the Defense Department and the Defense Industry to design and develop the best military equipment for our armed forces. I hope you people at this leadership conference will give serious consideration to an approach to defense acquisition along these lines.

 

“I want to conclude by saying that I know you are all here at this conference to explore together ways to do a better job in the acquisition business. I congratulate you on the good progress you have made, but as you can judge from what I have said while you have made a good start you still have a long way to go. Thank you for listening to me and now I will try to respond to your questions.”

 

4/25/88, Letter to Packard from Defense Secretary Frank Carlucci, telling him of the a one day Acquisition Leadership conference to be held at the Defense Systems Management College, to ‘decide which major issues need to be tackled next,’ and he invites Packard to be the luncheon speaker.

5/13/88, Copy of a letter from Packard to Secretary Carlucci accepting his invitation

9/28/88, Letter to Packard from Under Secretary of Defense Costello thanking him for his ‘outstanding contribution ‘ to the conference.

Undated page from Defense News covering Packard’s speech

 

 

Box 5, Folder 31 – General Speeches

 

July 22, 1988, Friday Afternoon Lakeside Talk on Lessons We Have Not Learned in Defense Acquisition Management, given at The Bohemian Grove, CA

 

7/22/88, Typed copy of the text of Packard’s speech

 

This speech covers the same ground as the preceding speech made on July 14, 1988, so we have not repeated it again. See speech dated March 26, 1986 for complete list of speeches covering work of the Commission.

 

No background letters or documents were in this folder.

 

 

Box 5, Folder 32 – General Speeches

 

July 27, 1988, Testimony before the Senate Armed Services Committee, Washington D. C.

 

7/27/88, Copy of typewritten text of Packard’s speech to this Senate Committee. Since his speech is almost identical with the July 14 speech, and others on the subject of the Commission on Defense Management, it is not detailed here again. See speech dated March 26, 1986 for complete list of speeches covering work of the Commission.

 

4/12/88, Copy of a letter from Packard to Lt. Gen. Brent Scowcroft and James Woolsey sending each of them a draft of the speech Packard proposes present to the Senate Hearing asking for any “notes or suggestions.” He offers to modify the statement to read from all of them, or to coordinate should they wish to prepare their own statements.

7/27/88, Copy of a PR release from HP PR to HP managers covering Packard’s testimony

7/27/88, Letter to Packard from Herbert Fenster of the Law firm McKenna, Conner & Cuneo, thanking him for his testimony before the Senate Armed Services Committee. He also urges Packard to remain active in trying to resolve the defense problems. He attaches a copy of a letter he has written [dated July 27, 1988] to Senator Sam Nunn, Chairman of the Senate Armed Services Committee, giving supplemental information on a question Nunn asked of Packard during his testimony.

7/29/88, Letter to Packard from John C. Warnecke, congratulating him on his testimony.

8/22/88, Note from Herbert Hetu, Aerospace Industries Association enclosing a copy of their publication, Key Speeches, containing an article covering Packard’s testimony.

8/24/88, Copy of a letter from Packard to Barbara Braucht of the Senate Committee returning transcripts of his testimony on July 27^th.

9/14/88, Letter to Packard from Charles J. Pillliod, Jr. saying that he had received a copy of Packard’s testimony

 

Background material:

4/12/88, Letter from Herbert L. Fenster, of the law firm McKenna, Conner & Cuneo to Senator Phil Gramm commenting on legislation

7/11/88, Copy of an article in the Defense Daily giving  comments by former DOD employee, Richard DeLauer

7/12/88, Copy of a speech by Senator Alan J. Dixon before the Armed Services Committee on the subject of the Defense Acquisition Process

7/13/88, Copy of a statement by R. James Woolsey before the Senate Armed Services Committee

7/13/88, Copy of a statement given by Donald E. Sowle before the Subcommittee on Legislation and National Security

7/29/88, Copy of  Inside the Pentagon, weekly industry publication

9/2/88, Another copy of Inside the Pentagon

Undated, copy of Senate Bill S. 2621 to expand the responsibilities of the Under Secretary of Defense for Acquisition, along with a page from the Congressional Record including testimony of the subject

 

News Clippings covering Packard’s testimony

7/18/88, Defense News

7/26/88, San Jose News

7/28/88, The San Francisco Chronicle

7/28/88, The Washington Post

7/28/88, The New York Times

8/1/88, Defense News

Undated United Press International

 

 

Box 5, Folder 32A – General Speeches

 

September 13, 1988, Remarks at Groundbreaking Ceremony, Monterey Bay Aquarium Research Instate Institute, Moss Landing, CA

 

9/13/88, Copy of typewritten text of speech. The speech is titled “The Role of the Monterey Bay Aquarium Research Institute.”

 

Packard says that when they were planning the Monterey Bay Aquarium they realized having a significant research program would be desirable. “The first priority for this research,” he says, “would be to develop and maintain the best possible environment for the marine life to be displayed. We also knew that the Monterey Bay was one of the most attractive locations on the west coast of the United States for the study of marine and ocean science, and that the Monterey Bay had the potential of becoming a center of world class marine and ocean research.”

 

Packard tells how, in the summer of 1985, a one-man man underwater vehicle made an excursion 2000 feet down in the waters of Monterey Bay. People from the Aquarium provided video equipment, and Packard says the success of this expedition “clearly indicated that there was an unusual opportunity to develop an extensive deep water research program in the Monterey Bay.” However, rather than have the Aquarium take on the research program directly, they decided to establish a separate foundation specifically for the research work. The Monterey Bay Aquarium Research Institute, MBARI, was established in 1987 to plan and execute a major research program in the Monterey Bay.

 

Packard explains that most research in the oceans of the world has been done within the first 2000 feet because it is within that depth that resources of any economic value are found. And he goes on the say that the “Average depth of the oceans of the world is about 10,000 feet and thus we know very little about a vast part of the oceans….The canyons in the Monterey Bay reach a depth of 5000 feet a short distance off shore, and beyond the canyons the ocean floor reaches 10,000 feet just a few miles from land. This bay thus provides an ideal location for research in deep ocean waters.

 

“Underwater vehicles that take people down to depths in the ocean for research are very expensive to operate. Fortunately it is now possible to design and operate unmanned vehicles for underwater research that can take excellent video pictures, collect all kinds of data, place equipment on the ocean floor or on the walls of the canyons, retrieve specimens and samples of material, and in fact, do everything necessary for a good research program. The Monterey Bay Aquarium Research Institute is now proceeding in this exciting endeavor and the groundbreaking here at Moss Landing is a major milestone in our work.”

 

Packard says that over the past few years he has had the opportunity to study science and technology in many countries around the world, and has concluded that the United States is in danger of losing its leadership in technology and becoming a second rate nation if it does not change the way scientific research and education are supported at the federal and state level.

 

“For example,” he says, “scientists and educators who receive federal support for their work spend far too much time applying for grants and reporting on how the money they receive is used. Research in nearly every field of science requires expensive equipment and instrumentation and many research organizations do not provide adequate equipment and facilities for their scientists. In planning the organizational structure of MBARI we have tried to provide an environment for the scientists and engineers in the organization that will enable them to devote their time and talents to science and engineering, and to have adequate equipment and facilities for their work. We will be providing operating funding for the foundation at the level of five million dollars a year and we have provided the funds for the start-up costs for buildings and equipment so that the scientists and engineers in the organiztion can do their research work without having to waste their time applying for grants and reporting on how the money is spent….

 

Packard says that, in planning the buildings for the research site, they have found that the local regulatory process has delayed their work and increased its cost…. “There are too many people and organizations involved in regulation. Their action follows rigid procedures that have no room for the application of common sense.”

 

While he would like to be optimistic, Packard says he is “not very encouraged by what we have encountered so far in planning and building this facility in Moss Landing.”

 

He says he can be “a bit more optimistic in telling you what I hope MBARI can achieve in its research work. With the people, the facilities and the equipment we now have in place we will be able to build a data base over a long period of time covering all of the scientific aspects of the Monterey Bay. This will include the physical and chemical characteristics of the water and the ocean floor, the geology under the bay, the life and habits of the inhabitants of the bay, plants, invertebrates, fish and marine mammals. It will involve the observation of all aspects of marine life in its natural habitat and the collection of specimens from all levels in the bay. With this wealth of scientific information that has never before been available, it will be possible to plan and implement better management practices for the economic resources of the bay. It will be possible to understand better the problems of pollution in the bay and to deal with them more effectively. I am convinced that the research by MBARI will bring a much better understanding of and appreciation for the Monterey Bay, and make it a more valuable resource for our state and for our nation.

 

We have already developed a close association with the other marine research activities located around the bay and we have representatives on our board of directors from the most important major marine research organizations in the United States. It was my hope in establishing this research institute that it might enable the Monterey Bay to become a center of world class marine research before the end of this century.

 

Packard takes a few moments introduce three of the major people at MBARI: Dr. Richard Barber, the Director of Research, Mike Lee, who is responsible to design, build and operate the scientific equipment and equipment at the Institute, and Derek Baylis who made a major contribution to the innovative design of the Monterey Bay Aquarium and who has the responsibility for the design and the building and operation of the support facilities for MBARI.

 

He also introduces their state representative, Sam Farr, and Marc del Piero, Chairman of their County Commission.

 

“In closing, I want to assure you it is an important event for MBARI to have this groundbreaking ceremony here today. In a rather short period of time we have brought together an outstanding team of scientists and engineers. We have designed and built a very complex underwater vehicle, obtained and equipped a mother ship from which we can now operate the underwater vehicle and begin our research work. What is so disappointing is that, in this same period of time, we have not been able to obtain the final approvals for the building and dock we need here at Moss Landing. This is a first-hand example of the deadening effect of over-regulation on scientific work in the United States and in the State of California. It is a dark cloud on the horizon of the future of our country. If this situation can not be corrected, our country will, without any doubt whatsoever, forfeit its leadership in science and technology and become a second-rate nation in the early years of the twenty-first century. We simply can not afford to let that happen. We must find a better way to deal with these problems.”

 

 

Box 5, Folder 33 – General  Speeches

 

October 27, 1988, National Security Issues for the 1990s and Beyond, Western Briefing Conference, Bureau of National Affairs and Federal Bar Association, San Francisco, CA

 

Packard was invited by Herbert L. Fenster, McKenna, Conner & Cuneo, to be the keynote speaker at this conference.

 

10/27/88, Copy of typewritten text of Packard’s remarks at this conference

 

Packard says he believes we are involved in a “watershed change in affairs of the world, a change that will influence our foreign affairs as well as our national affairs….” He says he would like to present his views on this subject “with the hope that the discussions in your meetings will be forward looking toward the great opportunity which I think is within our reach.”

 

Packard points to the major confrontation between the United States and the Soviet Union since World War II – one which has involved the major nations of the world as well. “That confrontation,” he says, “has been an ideologic [sic] conflict of the goals and values of the Communist Societies and The Free Societies of the world. It has been this confrontation that has shaped our foreign policy and our national security policy. It has been a major determinate in the kinds of weapons we have procured and the size and deployment of our military forces.”

 

“…people all over the world,” Packard believes, “are beginning to see … that Communism has not been able to deliver on the hopes it held out for the people in the countries where it has prevailed. “And,” he continues, “people all over the world have begun to see, quite clearly, that Communism has not been able to compete with the free enterprise economies, let alone destroy them as it once predicted.” Packard says he sees the results of this change, “In [Asia], in Europe, including the Soviet Union, and in the United States. More and more people now recognize the basic potentials of free enterprise in the economy. What we are seeing is a world wide wave of growing support for the conservative philosophy, the values of personal freedom in economic affairs as well as in private affairs. And I think people are finally beginning to realize that socialism can not function without an authoritarian government, that socialism and individual freedom are not compatible.”

 

Packard cautions, however, that even though these forces that he has described may be at work, changes will be slow in coming. “What this means,” he says, “is that any policies or actions that are based on the belief that a fundamental shift is in motion must be carefully hedged against [the] possibility of a reversal or at least a very long period of implementation. The road from here to where we would like to be will be long, steep, twisty, and bumpy, as usual.”

 

“If these changes that I have postulated are indeed under way they will have a major impact on United States national security policy and on our entire National Defense Establishment. I assume you have judged, from what I have already said, that I firmly believe these things I have outlined are already at work in the world. I really think this has given us an unusual window of opportunity, the kind that comes, at best, only a few times in any century.

 

“This world wide watershed change is very closely related to the task of improving the management of our defense establishment. You will be discussing a number of important problems today, all generally related to the problem of improving the military acquisition process. As our recent Commission on Defense Management pointed out there are a great many actions that can be taken to get more military capability for the tax dollars that are being spent. The greatest waste of all is to develop the wrong weapons and deploy the wrong forces.”

 

“…it is quite evident,” Packard feels, “ that we have not had an optimum mix of weapons and forces for the job to be done.” He believes that the Korean conflict will soon be resolve and that U.S. forces will no longer be required there.  There will be pressures to reduce our forces in Europe, and pressures to reduce our forces at home. These must be resisted, particularly at this time because these important changes that are now gong on around the world are not et permanent. They could weaken or reverse in the absence of a strong U.S. resolve to support these changes with the military capability to back up that resolve. Our ground forces have been tailored in large part to deal with a Soviet attack through the central European front. That problem may become less important. Even with the most optomistic senario [sic] there will still be conflict around the world that will threaten U.S. interests and special forces will be needed to deal with them. The role of the Navy will change. I think we are likely to need fewer aircraft carriers and different capabilities in the naval forces. Clearly, with limited resources and different problems to deal with it is more important than ever to acquire and support the optimum mix of military equipment and forces.

 

“There are two other causes of major waste in our procurement system, the Congress appropriates money for military equipment that is neither needed or wanted by our professional military people, I believe it was something like 4.5 billions of dollars this year. Because of political greed we spend billions of dollars, year after year, for military bases that do not contribute one iota to our defense capability. These three issues cause a much larger waste of taxpayers dollars than any of the issues that are on the agenda for this meeting.”

 

“The other two important issues involved in getting more defense capability for our dollars, the addiction to their self interest by the members of the Congress of the United States, to put their personal welfare ahead of the welfare of their country in appropriating money for weapons that are not needed and for military bases that are not needed, are issues that are difficult to deal with in this political world. They are however, the largest causes of waste and abuse in defense management and they must not be overlooked.

 

Packard says he thinks the only way  to bring about improvements in this political arena is “to do what we can, whenever we can, to expose the hypocracy [sic] of the many members of the Congress who continue to put their personal welfare ahead of the welfare of our country on the very important issues of National Security. I do not have to name names, some of the worst members of the Congress in this wasteful practice are from this area.

 

Packard turns to the agenda for the meeting.

 

“You have a number of subjects on the agenda involving the legal aspects of Defense Procurement. In my opinion the most effective way, in fact I think the only way, to deal with most of these legal problems is to do whatever can be done to encourage the defense industry to develop a strong commitment to self governance.

 

“The Defense industry has as you know a very poor reputation in the mind of the public. This will not be changed by legal actions of any kind. I think you all know that the legal profession is no Great White Knight in search of justice for all, in the mind of the public either. The image of the Defense Industry can only be improved when the public perceives that the Industry has wholeheartedly accepted the very special responsibility it has to the men and women in our armed forces. That requires, in my humble opinion, a total and complete commitment by every company producing material or services for our armed forces to do the best that can be done in every possible way.

 

“Freedom can only thrive when the people who enjoy that freedom behave in a way that is not only acceptable to but is supported by the general public that surrounds them. If they do not do so the government will impose the necessary regulations on them. The defense Industry companies, large or small, who violate this important trust are eroding the very foundations of our free enterprise system. This is an issue that is in my opinion more important than any of the issues you have on your agenda today. I hope you can find time to discuss it before you adjourn.

 

“I note that tomorrow you will be discussing defense funding cutbacks and increasing competition for the dollars that will be available.

 

These are important subjects. I do not believe there is any possibility of major increases in the defense funding, barring some unforeseeable crisis. The most that an be expected is about the present level with increases to accommodate inflation. I think that is all that is really needed, if we can make some reasonable improvements in the way we spend our Defense dollars. I have already discussed the areas where large savings could be made; deciding on the right weapons and military forces in the first place, treating the pork barrel addiction of the members of the Congress. A wholehearted commitment to self governance is, in my opinion the only way to deal with the poor public image of the industry, and in the long range view it is the only way that even more extensive federal regulation can be avoided.

 

“You should continue to work on the many mundane problems that are involved, good day to day management practices, correcting practices, rights for whistle-blowers, commercial products and commercial practices, quality versus price, and fraud and abuse of one kind and another which can never be completely eliminated, and all the rest.

 

“In all of our concern about improving the management of our Defense Establishment we must keep everlastingly in mind the fact that America can not continue to be the Great Leader of the Free World unless our country is willing to support and nurture a superior military capability.

 

“I know this is not supposed to be a political forum and I would not want to mention any names. I think you can conclude from what I have said who I intend to vote for and who I hope all of you here today will vote to be our next President. This election will be a watershed election, it will determine whether or not America will go forward to accept the great challenges that lie on the horizons of the future.”

 

8/30/88, Letter to Packard from Herbert L. Fenster of McKenna, Conner & Cuneo, confirming his invitation to be the keynote speaker at the Western Briefing Conference, held annually for the principal executives and counsel of the major defense contractors.

9/22/88, Letter to Packard from Herbert Fenster thanking him for agreeing to speak at their conference

10/27-28/88, Copy of the printed program for the conference

10/27/88, Copy of registration form for the conference

 

Box 1, Folder 35 – HP Management

 

January 17, 1989, – Perspectives on HP, Annual HP General Managers’ Meeting, Pebble Beach, CA

 

1/17/89, Copy of typewritten text of Packard’s remarks at the conclusion of this three day meeting

 

Packard says he has been “very impressed with the specific plans and programs that have been presented here….I have also been very encouraged by the enthusiasm and the optimism that have been expressed ….”

 

He adds, however, that he does have “a little concern that our company is developing some of the characteristics of a bureaucracy. I see quite a bit of evidence in our organization,” he says,” of topside people telling all of you how to do your job. Perhaps you do not need all the advice you are receiving….I hate to see these signs of bureaucracy developing in our company.

 

“Another characteristic of bureaucracy is that people begin to believe in their own propaganda. I see a little bit of that going on here, but all in all I am very encouraged about the progress.”

 

Moving into his main speech Packard says that he wants “to talk to you about a broad and an important subject. I will begin with some observations about what I think is going on in the world today. I want to point out how our company is eminently involved in these worldwide trends. To do this I will go back and outline very briefly what has happened during the 20^th century.”

 

He reminds everyone that the 20^th century has been dominated by two major wars – and the time since World War II dominated by the Cold War confrontation between the Soviet Union and the United States. He says “there were times when we were very close to an all-out nuclear war, but fortunately reason prevailed.”

 

Packard feels that “the leaders of both the United States and the Soviet Union…clearly realize that any major nuclear exchange would destroy a large part of the industrial world of both sides and a large portion of the people and resources of the countries of the civilized world.” As a result he sees “virtually no probability” of worldwide nuclear war.

 

Packard does see major changes going on around the world – developing conservatism in China, Gorbachev trying to make changes in the Soviet Union; and he sees these changes, not as the result of leadership on the part of anyone, but part of  “an underlying development that is extremely important.”

 

“What is happening on a worldwide basis,: he says, “is that communism has not been able to deliver what it promised to the people of those countries where it has been established, and it has not been a threat to the free enterprise market economy that it promised to be.

 

“People all around the world who have been living under communism are finally coming to realize this fact, and they want a change.” Packard sees two reasons why the change in China is coming about more rapidly than in the Soviet Union. “The first is that communism had not been in place in the People’s Republic of China for as long a period of time. Secondly, the Chinese people are basically, I think, more independent and entrepreneurial in their spirit.”

 

Packard points to many countries on the Western border of the Pacific Ocean –Japan, Taiwan, Korea, Singapore, Hong Kong – “which have made a commitment to a free-enterprise economy,” and says the message is clear.

 

“Now here is the United States, we have had President Reagan with a conservative philosophy that has made rather substantial changes during the past years and, in England, Margaret Thatcher. So in my humble opinion I think what we are seeing is a watershed change in the world – a change that is going to make the 21^st century different and in many ways better than the 20^th century.”

 

Packard says he doesn’t wish to imply that there will be no conflict in the world. “People have been fighting with each other from the beginning of recorded history and probably for a long time before that. Today we see in the Middle East the same people fighting with each other, and for essentially the same causes, who were fighting each other 2,000 years ago.

 

“I am sure that there will be continuing conflict and terrorism which will be difficult to deal with. I think that this simply says that human nature has not changed in any significant way, and it is not likely to change. But, I think that the major change that has come about is that we’re not likely to have another war of world dimensions, and this will then provide an environment of many more opportunities in the next century.

 

“Now I think it is very important to recognize that our company has had a major influence on these very important trends that I have outlined for you. In the first place, the very technology that we have been involved with has given everyone in the world a better understanding about what everyone else is doing, what they are thinking, what they hope for, and how they see their future.

 

“In addition, our company has clearly been a visible symbol of opportunity in a free-enterprise economy. You may or may not know that President Reagan cited the example of Hewlett-Packard Company before a group of students in Moscow. He emphasized that this could not have been done under communism. Certainly our example as a successful company, doing what we have been doing, has been a major factor in influencing the thinking of many people all over the world.

 

Packard looks upon these changes in world outlook as representing a “watershed change,” – one that “gives us a larger responsibility as a company. It goes beyond doing the things that we have talked about in this meeting to meet our short-term objectives, our quotas, and so forth. I think it really implies that our company has a responsibility to stand tall and play it straight as an outstanding leader in every way and in every society where we participate.”

 

“I think that we’re going to have a more extensive responsibility to not only act like a good citizen, but in every sense to be a real citizen, and to act like we are really a part of that country. I think we’re well structured to do this and I am sure that those of you who are involved in our international operations understand this responsibility. We all, of course, have to take advantage of the availability of low-cost labor if we’re going to be competitive with other international companies where we operate.

 

“But I think we must do more, as we’ve been trying to do in Brazil and Mexico and in many of the other countries where we operate. That is to say that we must try to make a contribution to the development of their economy in ways that we are able to do so. I think that’s going to be a very desirable policy to continue.”

 

Packard talks a bit about two areas that are not yet important markets for HP – China and the Soviet Union. He says he thinks we have a good start in China. It’s going to take a long time before China develops into an important market for us, but it clearly will be a very important market some day. I think our continuing presence there must be an essential part of our overall plan for the future.

 

“As you know, we were involved to some extent in the Soviet Union, and I think it is going to be desirable for us to get back there again, sooner or later. I don’t see any great urgency in doing this, because it is not clear yet how firmly the Gorbachev leadership is established and whether or not it is going to continue without a setback. As it becomes clearer, as I think it will, that these trends are for real and are going to be permanent, then it will be important for us to establish a presence in the Soviet Union because that is potentially a large market. We are going to have to enter that market cautiously and carefully and not expect it to be one of great value in a short period of time.

 

“In summary, I think we’re indeed facing a watershed change around the world, and I think this is a very optimistic situation for our company. I think we’re at the place, at the end of our first 50 years, that we clearly have a much larger and a much more important challenge and a much more important opportunity than Bill and I had at the beginning 50 years ago. Now it’s important for us to build on our strengths and I sense that you all recognize this from the presentations that you’ve made.

 

Packard switches form the world scene to share some observations on HP operations. “It is important to recognize that we don’t bat a thousand and we have some weaknesses that we need to continually address and shore up. I think a very good job has been done in the past 10 years to greatly strengthen our marketing capability and to get ahead of the power curve in computers and in data products capability. I think we’re now at the point where we might work toward a little better balance among technology, marketing and manufacturing. I sense that some of us felt that way from the reports that you have made. I think that’s a balance that should be maintained and preserved and emphasized in the future.

 

“It’s clear from the financial reports over the last 10 years that our operating profit has gone down. In 1979 it was 18%; it’s gone down to 11% ten years later in 1988. This is clearly an area where we have not done as well as we should have. I was very pleased to see that Dean Morton reported that the goal for the computer business next year was to increase the operating profit by 50%. That looked to me like a big challenge until I realized that to go from 1% to 1-1/2 % is a lot easier than to go from 10% to 15%. In any case, good luck. You’re going in the right direction.

 

“Now it seemed to me very clear in the reports that were presented that those in technology have had the best performance. Medical products, analytical products, electronic measuring products – they have dominant market positions because they have continued to maintain technological leadership. They have combined this with good marketing capability and good overall management capability.

 

“I think the Component activity deserves special mention because here clearly we have a very important lead in technology in the light-emitting diode field. I’d like to remind you that this capability is something we started in the mid 1960’s and a lot  of  people thought it would not come to anything. We insisted that it be continued, and I think that our position in light-emitting diodes is probably as strong as anyone in the country, perhaps as anyone in the world, simply because we did some basic research very early on. We continued that research and we are out in front because of our fundamental technology. We can now do some things first and some things better than anyone else.

 

“We had a good start in fiber optics, but I’ve come to realize that we’ve fallen behind in that area. I started a research foundation here in the Monterey Bay to explore the depths of the Monterey Canyons with unmanned, remotely operated vehicles, and we wanted to control these vehicles through light fibbers and to bring back the imaging information through light fibers. I’d hoped that we’d be able to find Hewlett-Packard products to do all of these things, and it turned out that we could not.

 

I think that this is an area which has immense potential – not only in those things that have been talked about, communications in general, communication among computers and localized situations, but there are some other areas of great potential. For example, in the future, aircraft design is going to make wide use of composite materials. One thing I’m sure that’s going to develop is that fiber-optics will be interwoven through those composite materials so that they will be able to monitor the strength and characteristics of those materials, detect any changes and provide a warning as to when important changes occur. Fiber optics have a tremendous potential in the measurement business. I think here is a field where we could well devote some more basic research and development.”

 

Packard comments on the Spectrum program and says it seems to have been a “great success and is going to be a very important pillar of strength in our growth for the future. Now in this field, as you all know very well, hard work and continuing strong effort in research and development will be needed in the computer field, both in hardware and software. What I’m suggesting is that we might look toward a little better balance than we’ve had in this past 10 years.”

 

In the area of personnel programs Packard says that he and Bill have “received an increasing number of letters from employees concerned about how they have been treated. A good many of these letters are the result of lack of good communications….

 

“There are still some cases where I think we should have given a little more attention to the situation of the individual employee. It seems to me that the one simple requirement of the HP way is just the Golden Rule. Every employee should do unto every other employee as he would have done unto him. I suggest you  work on the Golden Rule principle wherever you deal with a personnel situation. Put yourself in the other fellows shoes and think about what should be done. I think that’s probably the best test of all and you ought to apply that test in whatever you’re doing.

 

“I think that there were some cases in these letters from employees that indicated we may have put a little too much effort on the bottom line. Looking at the fact that we had in excess of $800 million of profit after taxes last year, a few dollars more spent in preserving the HP way might have been a very good long-term investment for the company.

 

“In summary, I again want to say that I’m very well impressed with what I’ve heard at this meeting, and I want to congratulate you all on a job well done during these last 10 years. I want to encourage you to keep the investment in basic research and development up, keep the investment in preserving the HP Way, building teamwork, and in making a contribution in whatever we do. Increasing the bottom line with tax benefits, stock buybacks, or other financial shenanigan[s] really does no credit to the traditions of our company.

 

We built this company on the basis of making a contribution, and profit is the best measure of the contribution that we make. I think if we continue our dedication to those principles that have carried us through these first 50 years, we will be assured of our continuing success over the next 50 years. I’m sure I speak for Bill as well as myself, in saying we are very very proud of what you’re doing and we expect you to do an even better job in the future.”

 

1/17/89, Copy of earlier draft of Packard’s remarks with many handwritten additions and changes by Packard

1/15/89, Copy of typed program for the conference

1/15/89, HP memorandum from Tom Uhlman to all Attendees giving the program and also a sheet to use in evaluating each presenter.

Box 5, Folder 33A – General Speeches

 

January 6, 1989, Remarks at the David and Lucile Packard Center for the Future of Children, Location not given, probably Palo Alto, CA

 

1/6/89, Copy of typewritten speech

“Over the centuries in nearly every society in the world mothers and fathers have given the highest priority to the welfare of their children. They have often even considered the survival of their children ahead of their own survival. The treatment of children has however varied greatly over long periods of time in different countries. The way children have been dealt with in any society has been determined to a large extent by the characteristics of the society. For example, the regimentation of the people which is necessary for the survival of a socialist state requires the regimentation of children in their formative years.

 

“It is clear that children’s lives are strongly influenced by their early environments, the first six or seven years, and thus this period is of great importance to both the future of the individual child and the future of the society to which that child will spend his or her life.

 

“Although the population of the United States has always been diverse in its origins and its history is distinguished by assimilation of a series of migrations of different peoples, we are currently in a period of unprecedented social, ethnic and racial diversity. This situation has caused unique and critical problems for children in our society. The concept of equal opportunity regardless of race, color, or religion is the cornerstone of our national heritage, admired and envied by people all over the world. This concept, however, is not a reality for many children and their families.

 

“Over the past half century, Black and Native Americans in this country have become recognized as major exceptions in the establishment of equality of opportunity for all. Slavery in the South, a violation of the concept of equality, was abolished by the Civil War but has been an aftermath which is still with us today. By the middle of the twentieth century the proportion of Black people in the United States had become significant in respect to the total population and it had become obvious they did not yet have equality of opportunity. Events during the 1960s focused the attention of both the Federal Government and many responsible people in the private sector on this problem. Equal opportunity was mandated by law, measured and enforced by quotas in educational institutions and in employment. In spite of vast expenditures of money and human effort, the beneficial effect of many of these programs has been hard to document. Many individuals and groups have made impressive progress, but we are still far away from achieving the goal of equal opportunity for all citizens of the United States.

 

“Our Foundation has been trying to do its share in improving the opportunities for people in these minorities. We have provided support for special educational activities and other activities to help minority people at both the local and the national level. After a number of years of experience working in this field, we have come to the conclusion that we, along with many other people, have generally overlooked an opportunity that could be the most important of all in improving the participation of these minority people in the privileges and benefits of our free society. We believe it has now become quite clear that equality can not be mandated by law without endangering the freedom we want to preserve. Remedial education at the high school or college level has not worked as well as many had hoped and the granting of diplomas or degrees that are not earned is often a disservice to those we are trying to help.

 

“We have concluded that our Foundation might make a much more effective contribution to the solution of this important problem by doing what can be done to help children have a more equal opportunity during their early, most formative years. We are encouraged to notice that other people who have been working in this area have come to similar conclusions.

 

“The David and Lucile Packard Foundation is establishing this new Center for the Future of Children to deal with this problem in two major dimensions, Children’s Health, and Children’s Educational and Motivational Environment.

 

“Because of recent developments in biological science many childhood disabilities and diseases which in the past resulted in lifetime disabilities can now be successfully treated. The Lucile Salter Packard Childrens Hospital at Stanford will be a World Class facility for the treatment of childhood diseases. This new Center For The Future of Children will have a close working relationship with the Childrens Hospital at Stanford, and will endeavor to establish cooperation with other Childrens Hospitals in the country. The Center will have the responsibility to bring the latest and best information on the treatment of childhood disabilities and diseases to the attention of influential people in both the public and the private sector. The Center will also have the responsibility to advise our Foundation as well as other interested parties on research that should be funded in this field, and may initiate or coordinate multi-institutional studies.

 

“This new Center will also have the responsibility to do what can be done to improve the educational, and motivational environment for children during their early, formative years. This will involve investigating what is already being done, with special attention to those programs that have been successful, and the Center may also selectively encourage new initiatives. We will want the center to bring the latest and best information in this area to the attention of influential people in both the public and private sector, and to provide advice on research and Public Policy in this field.

 

“This new Center will have a very big and important job to do. It will require the better part of the first year to study the situation in detail and to devdelop a specific plan of action. The Foundation is allocating one billion dollars for the first year’s work and will increase the funding to five million dollars per year or more to implement the plans as they are developed.

 

“As one of the founders, and as the Chief Executive Officer of the Foundation, I expect this new Center for the Future of Children to become one of the Foundation’s most important long range programs. I am most pleased to announce that Dr. Richard Behrman has accepted the appointment as Executive Director of the Center. He has been an outstanding leader in this field and is as well qualified as anyone in the entire country to provide strong leadership for this new endeavor.

 

 

Box 5, Folder 33A – General Speeches

 

March 21, 1989, Presentation of Lifetime Achievement Award to The Honorable Eliot Richardson, The International Day for the Elimination of Racism, Palo Alto, CA

 

3/21/89, Copy of typewritten text of speech

 

After greeting members of the audience, Packard says, “I consider it a great honor, and a great pleasure to be with you tonight to present the Lifetime Achievement Award to Eliot Richardson.

 

Packard says he first met Richardson in January, 1969, at the beginning of the Nixon Administration. Packard was Undersecretary of Defense and Richardson was the Undersecretary of State. “We spent considerable time,” Packard says, “working together that year as members of the Undersecretaries Committee preparing position papers for the National Security Council. Henry Kissinger, President Nixon’s National Security Advisor, in effect directed the work of this group and there were some very important issues to consider. We were still engaged in Viet Nam and that had a high priority in our work. President Nixon wanted to reduce our expenditures on defense in order to spend more on domestic programs. Work on arms control had a high priority, problems of the Middle East were high on the agenda. All in all, Eliot and I and the rest of the Undersecretaries team had a great many important and interesting things to work on in 1969.

 

“I considered Eliot to be a very impressive and a very capable gentleman when I met him and worked with him back in 1969. I assure you my high regard for him has been strengthened by everything I have seen him do in the intervening twenty years.”

 

Packard lists the many positions Richardson has held since his graduation from Harvard in 1947 – starting with a position as Law Clerk for Judge Learned Hand in New York City, on to several positions with the State of Massachusetts, until he came to Washington in January 1969. Packard continues with Richardson’s resume telling how he left the State Department to become Secretary of Health, Education and Welfare in June 1970, was appointed Secretary of Defense in January, 1973, and then Attorney General in May of 1973.

 

“You may recall,” Packard says, “that was in the midst of the Watergate scandal, and his performance as our Attorney General represented a commitment to the highest level of integrity at a time when integrity was in very short supply in our nation’s capitol.”

 

Packard says Richardson became Ambassador to the Court of St. James in early 1975, and from 1977 to 1980 was Special Representative of the President to the Law of the Sea Conference. “During the last few years,” he says, “Eliot has continued a wide range of activities. He is the Senior Resident Partner in the Washington office of Milbank, Tween, Hadley and McCoy. As you probably know, he is now the Chairman of the United Nations Association of the United States of America. He has been involved in a number of professional associations, both in his law profession and in important areas of public policy. He has received numerous awards and honorary degrees, far too many for me to enumerate tonight.

 

“As you can judge from what I have said, Eliot’s achievements have been outstanding in every sense of the word. What has particularly impressed me is that everything he has done in this very full lifetime of activity has been done with an absolute commitment to integrity. He has also had an unusual commitment to the welfare of this country and to the improvement of the quality of life for disadvantaged people everywhere. For example, in his work on the Law of the Sea he had an unusual interest in the welfare of the poor and developing nations of the world. Not the vested interests of the rich and powerful nations. I am sure his desire to improve the opportunities for people who need help wherever they may be was a strong motivation for him to accept the chairmanship of the United Nations Association.

 

“For these and many other reasons, it gives me a great deal of pleasure to present this award for a Lifetime of Achievement to the Honorable Eliot Richardson here in San Francisco on this International Day for the Elimination of Racism.”

 

 

Box 5, Folder 34 – General Speeches

 

April 30, 1989, Philanthropy in America, Greater Santa Cruz County Community Foundation, Santa Cruz, CA

 

4/30/89, Copy of typewritten text of Packard’s speech

 

Packard congratulates the Greater Santa Cruz County Community Foundation members on the “outstanding job that has been done in the six years since the Foundation was established in 1983. By reaching your goal of a $3,000,000 endowment you now have a firm base which will assure that this Foundation will be a permanent asset in your community.

 

He tells of the origin of the words ‘charity’ and ‘philanthropy,’ saying they mean the same thing – ‘philanthropy’ coming from the Greek word that means ‘lover of mankind,’ and ‘charity’ coming from the Latin word meaning ‘love.’ So, “both mean brotherly love,” he says.

 

Packard looked in the encyclopedia he says and found that in the Renaissance merchants created foundations for educational and local charitable purposes. He says he learned “…that although a few charitable foundations [were] established in the United States in the 19^th century, most notably the Smithsonian Institution in 1846, the 20^th century has been a time of prolific growth of charitable foundations in the United States….”

 

Packard says churches were “…the main charitable institution in the early settlements in North America,  establishing hospitals, schools and universities, as well as help for the poor.

 

Packard recalls the 1930s in his home town of Pueblo, Colorado. He says, “No one in our neighborhood was wealthy, but there were poor families with virtually no income. Yet I can recall of no one actually starving or without shelter or clothing. Those who were fortunate enough to have the means to support their own families shared it willingly and voluntarily with those who could not provide food, clothing and shelter for themselves. This personal experience left a lasting impression with me of the importance of personal involvement at the local level in charitable activity.”

 

When Packard came to California in 1930 he says he found “The major cities in California far ahead of my home town in charity as well as many other things….Community foundations were established early in California and have become very important in recent years. I am sure this Foundation will become a very important endeavor in your county in the years ahead”

 

Packard says that “Religion has had the highest priority over the centuries, and religion still receives the largest amount of charitable support today. The care of the ill, hospitals and medical activity to relieve suffering and to save people from dying has also, historically had a high priority and receives the next to the highest amount of charitable support today. This, as has been noted by others, indicates that above everything else people want to get to Heaven when they die, but also they want to put it off as long as possible. Now I suppose that is not a very charitable view of charity, but the fact is that a great deal of charity involves a significant amount of self interest, and I see nothing wrong with that as long as it does not provide a direct benefit to the giver.”

 

“Since the 1960’s there has been a tremendous increase in Federal outlays for a wide range of activities intended to improve the quality of life in our country. Direct benefit payments for individuals for the fiscal year 1989 are expected to take 43% of the federal budget, well over 400 billions of dollars. This compares with national defense at 27%, or just under 300 billions of dollars. These domestic payments include Social Security, Medicare, unemployment compensation, Civil Service retirement, veterans pensions, temporary employment assistance, Medicaid, Aid to Families with Dependent Children, Supplemental Security Income, food stamps, public housing, and child nutrition. In addition, there are dozens of other Federal programs in the realm of public charity; a National Endowment for the Arts and for the Humanities, on and on ad-infinitum. As one looks at the magnitude and breadth of this public charity program in the United States one should wonder what is left for private charity. Yet private charity has been increasing about as rapidly as public charity.”

 

Packard says there are several reasons why there continues to be an important role for private charity from individuals and corporations. “Probably the most important reason,” he says, “ is that these Federal programs are not doing what they are intended to do and this is quite obvious to people at the local level. Your Foundation funds programs in the arts, community services, education, help for seniors, help for youth, health and in other areas that receive substantial Federal money. The level of your support is not large but the good that you do is very substantial. You know from personal knowledge where the money will be most useful, and the involvement of people who care, your members, your staff and your donors is often as important as the money you provide.

 

“The second reason why people who are concerned want to become involved on a personal basis is because they are very troubled about the waste and mismanagement of the Federal programs. These are to a large extent ‘pork barrels’ for the members of the Congress. They are riddled with red-tape, and the funds are appropriated not in accordance with the real needs but all too often on the basis of the most effective lobbies. And as I am sure you know far too often this results in large sums of money being placed where it will in effect buy votes.”

 

Packard says he has seen some of these things from within the Federal Government, “and I have been involved with a number of charitable activities in the private sector. From my personal experience I feel very strongly that community foundations such as yours play a very important role in improving the quality of life in our country even though their finds are usually small in relation to federal grants.

 

“I have noted that your Foundation receives contributions from corporations. Charitable contributions by corporations in the United States is a recent, but very important development. Before 1950 it had not been clearly established that a business corporation had the authority to make a charitable gift. I can recall discussions among groups of corporate leaders in the 1940’s that questioned whether they had any responsibility beyond that to their shareholders. Many thought labor was merely a commodity to be bought and sold on the open market, and that charity had no place in corporate affairs. There was an important change in corporate thinking after World War II, and some of the enlightened leaders began to make charitable contributions to universities and other private institutions. Such contributions were challenged in a legal action; A. P. Smith Mfg.. Company vs. Barlow, that went to the Supreme Court. In the year 1953 the Supreme Court decided that ‘For profit corporations’ did have the authority to make charitable gifts when the gift would advance the general interests of the corporation and its shareholders. The tax laws were changed to allow the deductions of charitable contributions up to 5% of profit before taxes. During the following years , corporations developed a rationale for charitable contributions but very few made contributions up to the 5% limit. About 1% of profits before taxes was the average for a number of years. The general rationale was established on the theory that the success of a corporation was influenced by the social environment in which it operated and that theory is widely accepted today. The quality of education in both the local community and in the nation came to be considered important by corporate management, and this will become even more important as we move further into an economy based on knowledge rather than raw materials, energy supply and transportation. Corporate charity has now become legitimate for essentially everything that will improve the quality of life in the community, and is an important source of support for your Foundation.”

 

“There is another recent development that I want to bring to your attention. That is the cooperation between the public sector and the private sector in charitable activity. The Wolf Trap Foundation for the Performing Arts in Washington D. C., which is operated by a private foundation with substantial funding from the National Park Service is a good example. There are other examples, some here in the local area, of co-operative endeavors between the private sector and the public sector. In looking over the activities you are already supporting it appears that some of them are also supported by public agencies. I believe cooperative endeavors have much to commend them, and I encourage you to continue discussions  with officials in the cities and county where you operate. I am sure that you can develop cooperation that will be mutually beneficial.”

 

Packard says he has been troubled by increasing hostility toward private charity in some agencies of our state government in the last few years. The State Board of Equalization proposed to apply a property tax on the Monterey Bay Aquarium because we have a bookstore and gift shop and a restaurant for our visitors that might be competitive with some of the private enterprises in the area. They have also denied a property tax exemption for the Monterey Bay Aquarium Research Institute which is doing some very important and exciting research with remote, unmanned, underwater operating vehicles. This institute is chartered to explore the deep waters of the Monterey Bay with these ROVs. thousands of feet below the surface. This equipment is now operating every day, taking color video pictures nearly 2000 feet below the surface, and in a year or so they will be able to go down to 10,000 feet. The scientists of MBARI have already observed marine life at these depths that has never been observed before. I am convinced that with the technical leadership already established the Monterey Bay will become one of the worlds outstanding centers of ocean science in the years ahead. I am very proud of The Monterey Bay Aquarium and the associated research institute. It is very discouraging to have important state officials opposing what our family foundation has been doing in this area and if this attitude can not be corrected it will severely limit what we will want to do in the future.

 

“It seems to me it would be much better public policy for the State Government to encourage private charity of this kind. We are working to try to get these issues straightened out in Sacramento and some of the members of the State Legislature from this area have been helpful, but the issues are not yet resolved.

 

“This adverse attitude at the State level so far does not affect community foundations such as yours, but it does not bode well for the kind of cooperation I think should exist between the private sector and the public sector.

 

“I will conclude by simply saying to all of you who are involved in the Greater Santa Cruz Community Foundation, congratulations on a job well done. Keep up the good work!”

 

No other papers are in this folder

 

 

Box 5, Folder 35 – General Speeches

 

August 28, 1989, Welcoming Remarks to The Oceanography Society at their inaugural meeting, Monterey, CA

 

“Welcome to the Monterey Bay. I know I am speaking for all of the people in the Monterey Bay area who are interested in ocean science when I tell you how greatly honored and pleased we are to have the inaugural meeting of the Oceanographic Society here this week. This event has a rather special personal significance for me, because, over the past ten years or so I have become addicted to the vision that within the next few years the Monterey Bay will become one of the major world class centers for Ocean Science. I base this vision on my realization that the Oceans of the world are one of the major remaining frontiers of opportunity.

 

“One of my friends recently described a frontier in this way. He said ‘It’s that place in American mythology where things are wild and unknown, where mysteries and wonders await discovery.’ The oceans of the world certainly qualify as a remaining frontier in that romantic description. They qualify as an important frontier in a more pragmatic way, there is much we do not yet know about the oceans of our world, thus there is new scientific knowledge to be discovered; the oceans of the world contain major resources of economic value, the potential of which has by no means been fully realized, thus there are important economic benefits to be developed. In my humble opinion the oceans of the world are a more important frontier for research that will bring more tangible benefits to the world than space, or high energy physics, or other areas that have received a high level of public interest and therefore political support. It is about time someone gave ocean science more attention.

 

I am only a novice and a newcomer to this field, and I realize that speaking to this distinguished audience about the importance of ocean science is simply preaching to the choir, but even so I want to take a few minutes to tell you about the Monterey Bay Aquarium, and the Monterey Bay Aquarium Research Institute, MBARI, because they are the reason for my interest and involvement in ocean science.

 

A little over ten years ago the members of our family foundation decided that we should develop some worthy programs of our own instead of just responding to the many requests to provide funds for worthy projects that were being presented to us for consideration. One of the first ideas we considered was the possibility of building an aquarium on the site of the old Hovden cannery next to the Hopkins Marine Station here on the Monterey Bay. Our first step was to ask SRI  [Stanford Research Institute] for a feasibility study because I wanted to be sure such an aquarium would be of interest and value to the people who lived here or who visited this area. I decided that the only really viable measure of the value of an aquarium here would be whether the visitors would be willing to pay for the cost of operation through admission fees, gift shop and bookstore purchases and the use of the facilities for special events. In other words could we build an aquarium that would be self supporting over the long term.

 

“The SRI report was positive, an aquarium here would be of great interest to a large audience of residents and visitors, it could be self supporting, and it might cost $10 million. Armed with this advice we established the Monterey Bay Aquarium Foundation, selected a group of scientific advisors, hired a firm as architects ands went to work. We did not establish a firm budget, but of course we had the $10 million SRI estimate in mind. This soon became a family project including my wife, Lucile, two daughters, Nancy and Julie, and a son in law Robin Burnett. There were several other people who had a major influence in our decision to go ahead, Steve Webster, who is now the director of the educational program at the aquarium and Chuck Baxter who is now on the scientific staff at MBARI. We were very fortunate that Dave Powell agreed to join with us as we began work on o1ur plans because he helped in the design of the water system, the display tanks, and all of the details necessary to provide the best possible environment for the specimens we planned to display.

 

“We established some important guidelines at the beginning. We decided

the aquarium should concentrate on the natural history of the Monterey bay, it should be educational as well as enjoyable, and it should have a large participation from the local community.

 

“We knew practically nothing about aquariums, but we visited nearly all of the aquariums in the United States and several in other parts of the world, including the orient. I soon realized that we had the unique opportunity to design and build one of the best aquariums inn the world but to do that everything must be done in the best way possible. I concluded that we should do as much of the work as possible ourselves. For example we set up a shop across the way in sand city to make fiberglass reinforced tanks, artificial rocks, and anything else we might want in fiberglass plastic. We could have contracted outside for this work but I thought we might want to do some things that had not been done before. The life size grey whale and her calf, the two life size killer whale models and our exhibit of plastic dolphin models would have been difficult to obtain from outside sources. I also bought equipment to make fiberglass reinforced cement panels. In looking at other aquariums it was obvious there were serious corrosion problems in using dry wall and other common construction materials around the exhibit tanks, and fiberglass reinforced cement appeared to be an ideal material. It was corrosion proof, fireproof, and should last forever. There were not many outside sources for this work.

 

“As we proceeded with the design we chose what we thought would be the best material for the construction and the best designs for the artificial habitats to house and display the specimens.

 

“This of course played havoc with the $10 million SRI estimate, the cost ended up at over four times that figure. As you might expect I have been chided by the comment that this was a larger cost over-run than I ever encountered at the Pentagon.

 

“This concentration on quality, I am pleased to report has really paid off. The aquarium will have been operation for five years this October. It looks just as good as the day it was opened, after nine billion visitors. It has not only paid its way but has built up a surplus adequate to finance a major expansion which is in the early stages of design

 

“In the course of planning and building the aquarium we realized that we should have some associated research. The most obvious was that which would help to improve the operation of the aquarium. We [could] have done some useful research at the Aquarium but not of major importance. Because of our research on sea otters the Aquarium is the only place that has been successful in raising stranded sea otter pups. Just last week we sent two from the oil spill area in Alaska to their new home at the Vancouver Aquarium in British Columbia. Although the research we have done at the Aquarium has contributed to its successful operation, we began to realize three or four years ago that the Monterey Bay could become a real world class center for Ocean Science. We decided this should not be a mission of the aquarium foundation but that a separate foundation should be established to do Ocean Science on an extensive and long term basis.

 

“That is the genesis of the Monterey Bay Aquarium Research Institute. We wanted the aquarium to be closely associated because it would provide an excellent window for the general public to learn more about this exciting frontier. And this close association should make it possible to have exhibits at the aquarium which would be difficult to duplicate anywhere else.

 

“As we began the establishment of MBARI we realized it would be desirable to have good relationships with other organizations in the country that are involved in this field. We thought it was particularly important to work closely with those organizations here around the Monterey Bay. We have tried to do both. This meeting here this week is most encouraging for it is what we hoped would happen sooner or later.

 

“There were three areas of developing technology that I thought would make research in the deep waters of the oceans much more effective in the future. One was the progress that was being made in unmanned remote operating vehicles, ROVs. The second was the progress being made in instrumentation for chemical analysis. It is now possible to do chemical analysis with accuracy and sensitivity in the deep waters without having to bring samples to the surface. The third is the progress that is being made in computer science and communication. Deep water research involves immense amounts of data. I have the impression that much more time is being spent in collecting data than in looking at it and analyzing it. We believe that situation can be greatly improved.

 

“In establishing MBARI I gave a good deal of consideration to the management issues. I have been involved with the problems of Federally funded research for a number of years, and as I suspect most of you know it has become very inefficient. There are exceptions, the ONR has done a much better job over the years than others. I decided that our family foundation should provide the operating funds so the scientists and engineers at MBARI would not have to waste any of their time applying for grants and making excessive reports. We thought three million dollars a year would be adequate to get started, and in fact both Dr. Barber and Dr. Lee, our two key people agreed to join us at that budget level. After we got started we decided that three million dollars was not enough to do what we wanted to do and we have increased that level to five million dollars.

 

“By providing this funding without strings, except a bit of personal supervision by me, we established the foundation, had a nationwide search for talent, brought an outstanding group of scientists and engineers together, designed and acquired the first ROV and mother ship and had it operational, all in just over one year. We could not complete our facilities at Moss Landing as quickly because it has taken over a year to get the necessary permits. Those facilities will be completed this fall, about two and a half years from the time we started.

 

“As I am sure you all know progress in scientific research is highly dependent on the instrumentation and equipment available to the scientists doing the research. To deal with this problem more effectively we have established a management structure in which the scientists and engineers are working in parallel with each other, in personal contact on a daily basis. This arrangement greatly facilitates communication, eliminates reams of paper work and as I had hoped is working extremely well.

 

“I hope you have concluded from my remarks that I am very proud of what MBARI has done in a relatively short time. I hasten to add that I know we do not have all of the answers by any means as how to best explore this frontier of the deep oceans. I am sure we will benefit from the discussions over the next three days, for the wisdom and experience of you who are here from across the country far exceeds anything we have done so far. I hope the meeting starting here today will mark the beginning of a long and fruitful relationship among all of the organizations and people from all across the country who are challenged by the exciting frontier of the deep oceans.”

 

No other papers are in this folder

 

 

Box 5, Folder 36 – General Speeches

 

September 11, 1989, 1989 Interex HP Users Conference, San Francisco, CA

 

This speech was presented at a conference of HP computer customers. Packard spoke on September 11, with a welcoming address.

 

9/11/89, Copy of typewritten address by Packard

 

Packard thanks all “…for the great contribution you are making in partnership with us in this exciting era of technological progress.”

 

He says that he and Bill Hewlett realized very early on the importance of a close personal relationship with customers. He recalls that when they were still working in the garage in early 1939, “A manufacturers representative named Norman B. Neely called on them. He had heard about the audio oscillator, which was the only product we had at that time, and he said he could help us get to know the customers he dealt with, particularly in the Los Angeles area.”

 

They engaged Neely as their first sales representative and with his help “Bill and I became personally acquainted with the key people in nearly every organization doing work in audio frequency in the Los Angeles area.

 

Having decided they wanted to make a contribution with their products, not simply duplicate what other companies were doing, Packard says “…the only way we could do this was to find out what our customers needed so we could develop additional instruments that would help them do their job better.

 

“As we expanded our operations over the first two years, we signed up other sales representatives in the Midwest and on the East Coast, and with their help we became personally acquainted with many customers.

 

“It was this close personal association with our customers which began fifty years ago that enabled us to develop a successful family of instruments for audio frequency work of instruments for audio frequency work during the first few years. Throughout our first twenty years or so we broadened our product line to include nearly every type of general purpose electronic instrument.”

 

Packard says he “can not recall a single instrument that we developed and put into production during our first fifteen or twenty years without consulting closely with customers or potential customers. That is why nearly every new electronic instrument we developed and produced was successful.

 

“We also built a strong base of technology. This was essential to be able to create products ahead of the competition. Fortunately we realized that products with  the best technology we could muster would be doomed to failure in the market if they did not help our customers do their job better.

 

Packard describes the market when they started as “much smaller and simpler. When Norm Neely called on us in 1939,” he says, “we had three employees, Bill Hewlett, a young man named Harvey Zeiber, and me. Norm had about ten. We were in business for ten years before we had over two hundred employees.

 

“As our company grew and expanded into new fields, it became more difficult to maintain the close relationship with our customers. As I look back there was a period, roughly between 1965 and 1975, when we were expanding very rapidly, entering the computer business, expanding our line of medical and analytical instrumentation, and marketing components. We were also rapidly expanding our international business.”

 

Packard says during this period their marketing activity became very complex and they began to recognize that they were not doing as well as they should be in their marketing activity.

 

These problems have been corrected, Packard feels, “and our marketing capability and our relationship with our customers are now back on the kind of a sound foundation that we had in our early years, and which is so necessary to assure our continuing success over the next fifty years.

 

Packard notes that “INTEREX  has had a key role in helping HP establish a sound foundation for the future. It was fifteen years ago that you began to help us in this important endeavor….All of us in HP thank you.

 

“It was also about fifteen years ago that John Young and his outstanding team of associates at the head of our company began to address this problem of re-establishing a strong marketing capability which required the strengthening of our relationship with our customers. Ten years ago John Young became our Chief Executive Officer and Bill and I are very pleased with what John Young and his team have done to get our marketing activity back on the track.

 

Packard says he is proud of what HP has been able to do. “We have established and maintained a corporate culture that has brought financial success by endeavoring to provide real and meaningful benefits to our shareholders, our employees, our suppliers, the communities where we operate, and most important of all to our customers.

 

“We now have not only the opportunity, but the solemn obligation, to make the next fifty years even more successful than the first fifty years. To do this, we have to keep our marketing capability and the relationship with our customers strong. We need to develop and produce new products that make a real contribution, so that our customers can do their work better. We have to maintain a superior research and development program, supported by a manufacturing capability, that will enable us to manufacture our products with the highest quality and the lowest cost. We have everything in place to make the next fifty years even more successful than the past.

 

“We need your continuing enthusiastic involvement, and I hope you have an interesting and an enjoyable meeting discussing these issues at this 1989 INTEREX HP Users Conference.”

 

 

9/11/89, Copy of typewritten earlier draft of  Packard’s comments

7/31/89,  Letter to Packard’s secretary, Margaret Paull, from Suzanne Bellamy of HP television department, saying that they will be sending the meeting live to the Apollo Users Conference in New Orleans and to the Cupertino and Fort Collins HP sites. She invites Packard to a rehearsal. Summaries of the messages each of the key speakers is to put across are attached.

Undated, Copy of printed flyer announcing the conference

Undated, Copy of a letter to all Conference Attendees giving information on arrangements

8/24/89, Letter to Packard from Bart Coddington of HP attaching the program of events

9/12/89, HP Newsgram from HP Public Relations describing activities at the conference

 

 

Box 5, Folder 37 – General Speeches

 

September 13, 1989, James H. Doolittle Award, Hudson Institute, Washington D. C.

Packard  was selected to be the inaugural recipient  of the James H. Doolittle Award for Sustained Contribution to the National Security of the United States, from the Hudson Institute The award was presented at a luncheon during the Institute’s National Policy Day.

9/13/89, Copy of typewritten text of Packard’s speech

 

Packard says he feels “greatly honored to receive this award in recognition of the great accomplishments of General James H. Doolittle. I also feel very humble in doing so, because I do not think there is anything I have been able to do in my lifetime that is in the same class as even one of General Doolittle’s many great accomplishments.

 

“I realize this award is for sustained contributions to the National Security of the United States. Service in our military establishment is where the men and women in our country make the important contributions to our National Security….General Doolittle’s entire professional career was a sustained contribution to our National Security, one of the most important of this entire century.

 

Packard describes Doolittle as an “outstanding military leader, and when not in the military “he seemed to be almost always involved in some activity that would contribute to our National Security.”

 

“General James Doolittle clearly has always been a brave man endowed with a venturesome spirit. His rigorous mind, taught him to learn as much as possible, and to be well prepared to deal with any contingency that might be encountered.

 

Saying that he has admired Jimmy Doolittle for many years Packard feels prompted to recount some of his accomplishments: his first cross-country flight in 1922, first successful blind landing, bombing raid over Tokyo in 1942, commanding role in World War II.

 

“After recalling his many accomplishments I sincerely believe that James Harold Doolittle was as well qualified as any man who lived in this century to conquer the mysteries of aviation, that great frontier which he chose to enter seventy two years ago. I also sincerely believe that people over the entire world should feel in debt to him for the great contribution he has made to all of us during his long and productive career.

 

“I want to compliment all of you in the Hudson Institute for creating the Doolittle Award, and express my sincere appreciation to you for my being chosen as the first recipient. After recalling his many accomplishments, I now realize what a great honor it is to be associated with General Jimmy Doolittle in this way. Thank you very much.”

 

9/13/89, Copy of typewritten sheet listing program for the award luncheon

9/13/89, Copy of printed program for the entire National Policy Day.

9/13/89, Photo copy of biography of General Doolittle

5/30/89. Letter to Packard from Mitchell E. Daniels, Jr. of the Hudson Institute, telling him he had been selected as the first recipient of the Gen. James Doolittle Award

 

7/28/89, 7/28/89, Letter to Packard from Mitchell Daniels, Jr. sending a copy of the program for the day

8/16/89, Letter to Packard from Mitchell Daniels, Jr. sending a program for the luncheon and award presentation

8/29/89, Letter to Packard’s secretary, Margaret Paull, giving “some of our thinking here at Hudson Institute in creating the Doolittle Award….

 

 

Box 5, Folder 37A – General Speeches

 

October 24, 1989, YMCA Enlisted Personnel Military Awards Dinner, Monterey, CA

 

10/24/89, Photocopy of Packard’s speech, handwritten by himself on 47 notebook size pages.

 

In this speech Packard includes some retrospective cmments on the work done by the President’s Blue Ribbon Commission on Defense management. See speech dated March 26, 1986 for complete list of speeches covering work of the commission.

 

Packard begins by saying how pleased he is to be present and to honor ‘…the men and women who serve our country in our Armed Forces. The Monterey area has a number of imporatant military activities, the largest of which is Fort Ord, and these people are an imporatant part of your community. In addition to their military responsibilities many contribute to community affairs.

 

“I think it is altogether fitting for this dinner to be sponsored by the YMCA for there has been a long veneficial relationship of enlisted men and women and the YMCA.

 

“The citizens of our country have had a very high regard for the Army, the Navy and the Marines from the very beginning. It was the military capability of our early armed forces which gave us our freedom – and the strength, the ability of our armed forces, undergirded by the dedication of our men and women in Uniform.

 

“The trauma of the Viet Nam War has eroded the confidence of many people in the country in the military forces. What we should remember, however, is that it was the civilians in the Federal Government, the White House, leaders of the Congress, and two Presidents, Jack Kennedy and Lyndon Johnson, who got us involved. The men and women who served in Viet Nam were performing their duty, often taking action beyond the call of duty.

 

“It was the draft dodgers and all the other young men and women who refused to sereve their country who were the traitors. But, unfortunately, the media often gave them positive support, clearly far more than they deserved.

 

“As I am sure you know there has been a great deal of criticism of the department of defense and our entire military establishment that seems to be increasing over the last two decades. This critical attitude, expressed by the press, is in turn reflected in the congress. This has resulted in a tremendous increase in the number of regulations imp[osed by the Congress on the Department of Defense. This excessive legislation has had a very deleterious effeft on the efficiency of our entire military establishment.

 

“Several years ago I had the opportunity to be the Chairman of a Presidential Commission chartered to make recommendations that might improve the performance of our military establishment. The Commission made a number of recommendations which, if properly implementated, could save from $75 to $50 billions of dollars a year. The White House, both President and President Bush, strongly supported the recommendations of the Commission. The Congress was generally supportive but we could not get them to reduce the legislation relative to conflict of interest. One of the problems is that the defense establishment is so large, including the defense industry, that someone is going to do something wrong every day, and there is nothing one can do about it.

 

“As we worked on this problem I often wondered why members of both houses refused to support a broad program of self discipline by the DOD and the industry.

 

“I think the reason why the Congress found this to be so difficult is that many of the members – not all –  and present company excepted – these members of the Congress think everyone outside the Congress are as crooked as they are.

 

“President Reagan supported his Secretary of Defense, Cap Weinberger, in a major build up of US military strength during his eight years. It was not done efficiently – billions of dollars were wasted – but this major build up had two important benefits for our country. It was a great boost for the morale of the men andd women in uniform. It gave President Reagan, and President Bush, real strength in dealing with the …Soviets.

 

“I have mentioned the vast amount of bad publicity our military establishment has received by the press. Our commission decided to find out what the attitude of the American people was in respect to the Armed Forces. We hired a firm to do an opinion survey and the results were very intereesting. On a scale of 1-10, people were asked how they rated various professions. Ministers and doctors were high on the scale, 8 or 9 – but so were military officers. Businessmen did not rate very high, a 5 or 6. Members of Congress were near the bottom of the scale, a 2 or 3. Lawyers weren’t much better.

 

“So I want to tell each and every one of you who are here tonight – without the slighest doubt the American people are proud of you. Keep on standing tall, doing your duty to the best of your ability.”

 

Packard then says he wants to spend the remaining time providing some observations about what he thinks is going on in the world. “What is now underway on a world wide basis,” he says. “will make the 21^st Century much different – and probably much better than the 20^th Century. The affairs of the world up the the middle of the 20^th Century – World War II – have been characterized by large wars tetween groups of the major nations of the world. These wars have cost millions of lives over the years, and they have also wasted major economic resources. This vast waste has been decried by world statesmen, but they have been unsuccessful in doing anything constructive. The main result of most major wars is that they have produced victors for the moment, and set up a process of chosing sides in preparation for the next war to correct the distortions of the last.

 

“World War II had a quite different outcome. It ended with the United States and the Soviet Union having undisputed leadership of the free world and of the Communist world. With both nations having nuclear weapons, the strength of both the US and the USSR gave each nation unchallenged military dominence over any possible combination of other nations. This resulted in the Cold War which began at the end of World War II.

 

“Fortunately, the dominent nuclear strength of each country has been the deterrent that has prevented World War III up to the present day. There has been conflicts, some like Korea where the Soviet sponsors predicted what the US would do. This is a classic case of the importance of military strength in determining actions among nations; or Viet Nam, which in retrospect, was a serious mistake. And the Middle East where thr same antagonists have been fighting over the same issues for too many years.

 

“The early stages of the Cold War involved tests of military strength and determination. It was also characterized by two basic doctrines of the Soviet leadership:

1. That Communism is a superior social and economic system
2. That it was possible to win a nuclear war

Over the last ten or fifteen yearsthere has been a major change in Soviet doctrine.The Communist system has not delivered what it promised to its people, and it has not been competitive with thefree enterprise economy. I might add, there has been preserved a surprisingly strong commitment to personal freedom in these societies.

 

“This change in the attitude of the communist leaders, not only in the Soviet Union, but also in China and other countries, is the direct result of the amazing advances in communications and travel over the last few decades. People everywhere in the world can observe what is happening in other parts of the world. People can travel to virtually anywhere in the world in one day.

 

“This change in attitude of the Communist leadership all over the world is not the result of dominant personal leadership such as Gorbachov has implied. These undeniable forces are making it necessary for the leaders to admit the sad facts and do something about it.

 

“The other profound change is that the leadership of the USSR and the US have finally realized that an all out nuclear war is not only unwinnable, but also un thinkable. In the Soviet Union this change has come about because of a reduction in the influence of the military establishment on national policy. I think the failure of their large nuclear power plant had a profound effect on this change in attitude about nuclear war.

 

“What all of this means is there is a very high probability that the hostility between the US and the USSR which has characterized the Cold War is coming to an end. The 21st Century could be charactereized by a coopereative relationship between the US and the USSR and some reduction in world wide military forces.

 

“This watershed change which I believe is real is also fraught with danger. Major changes in Communist leadership must be established and supported by the bureaucracy.”

 

10/24/89, Copy of cover of program for the dinner

8/16/89, Copy of  a letter to Packard from Dr. Charles A. Sweet Jr. inviting him to speak at this dinner award ceremony

9/25/89, Copy of a letter to Packard expressing his pleasure that Packard has agree to atten the dinner.

10/24/89, Copy of Packard’s hotel bill for the night in Monterey. He has written “Personal” across it.

Box 5, Folder 38 – General Speeches

 

January 27, 1990, Science and Technology – Preserving American Leadership, The Business – Higher Education Forum, Tucson, AZ

 

1/27/90, Copy of typewritten text of Packard’s speech.

 

After saying that he is honored to be invited to participate in this roundtable session, Packard says he has been involved in many of the key issues which will be discussed at one time or another during the 50 years of his professional career….

 

“There is one thing I have learned about this subject, it is a very complex issue and there are no simple solutions. I have followed the work of the Business-Higher Education Forum over the past several years, and I think your work has been very constructive, but I do not think you have found all of the right answers and I will suggest several things we might want to discuss this morning.

 

Packard says that he believes that the most important measure that could be used to determine if we are preserving American leadership in science is “whether or not we are able to use our science and technology to keep the quality of life and the standard of living in the United States at the forefront of all of the nations of the world. This means that converting scientific and engineering knowledge into the best products and services should be the main goal. I would like to see us reduce our relative expenditures on some of the big science programs; high energy physics and manned space programs, for example, and increase our research and education in the central scientific disciplines; physics, chemistry, biology, mathematics, earth science, ocean science and engineering for example. The one big science program that should receive continuing high level funding is medicine and health care, but this field has some problems too, some of which you discussed yesterday.

 

“In these terms, science and technology leadership requires at least the following three things:

 

1. An adequate number of scientists and engineers in the front ranks of their peers world-wide, measured not only by their knowledge, but also by their creativity, or innovative spirit.
2. Adequate financial resources for university research and teaching, and for industry to build efficient facilities to compete on a world-wide basis.
3. An environment in which scientists, engineers, teachers, university and business executives can devote their time and their energy to their professional work.

 

The high level funding by the federal government for research and education began at the end of World War II. The GI Bill gave educational opportunities to the men and women who served their country in uniform. Some studies have indicated that the GI Bill did more to enable young minority people, Blacks in particular, to improve their status in our society than anything that has been done since the 1960’s.I strongly recommend that this forum look into that situation because what we have been doing recently in the field of education for our young Black people is not working very well. This might call for financial support to be provided for an individual to attend any school or university for which the individual is qualified.

 

Packard looks at how the high level of federal funding for research and development at American universities began. “It was at the instigation of the scientists who established and operated the National Defense Research Committee and the Office of Scientific Research and Development during the War. He quotes Vannevar Bush as saying ‘We gathered the best team of hard-working devoted men ever brought together…for such a task. Congress gave us appropriations in lump sums and trusted us to decide on what projects to spend the money.’ Packard continues, saying “Grants were made to promising research teams at a number of our universities and these people were allowed to pursue their research with a minimum of oversight. We have gone far astray from that practice, which made possible a tremendous accomplishment during the war with only half a billion dollars.” Packard describes some dangers foreseen by Dr. Bush:

 

[Allowing] “industry-wide combinations, either of managers or labor leaders, to exact undue prices or wreck an industry at the expense of the public.”

 

[Permitting] “special interests [to raid] the treasury, unbalancing the budget, and destroying the national credit upon which the whole world depends.”

 

‘Shutting off the source of venture capital, and enmeshing in the red tape of bureaucracy the new small pioneering firm that should be encouraged to build the great industry of the future’

 

Packard says that Bush’s concerns fortunately did not develop rapidly and the United States enjoyed two decades of “unprecedented progress and leadership in science and technology. About the middle of the 1960’s this great progress and leadership began to deteriorate and it has been almost all downhill since. Everything Dr. Bush predicted as dangers are now with us, and I think they are much worse than he could have imagined. I realize it is not possible to turn back the clock, but there are a number of things that could be done to greatly improve the situation.”

 

To consider these Packard says he would like to return to the three things he said were necessary to preserve America’s leadership in science and technology. “We clearly need an adequate number of scientists and engineers in the front ranks of their peers, but this is not a simple problem. We need them at all levels, not just the PhD’s at the top. Japan is ahead of us in some important areas not because they have better people at the top of the pyramid; they don’t. They are doing better in the mundane engineering and design job. They are beating us on quality, not basic science. They are beating us in the application of the technology that we have developed. They are creative in a sense, but their great strength is in meticulous attention to detail in both the design and the manufacture of their high technology products. They have had an advantage in low cost labor and capital, but American people now buy Japanese products because they have better quality. The United States lost its leadership in random access memories not because of Japanese lower cost but because of Japanese higher quality.

 

“It seems to me that it is the responsibility of you educators to look at this problem on a much broader base. I think we must find ways to instill in our young people a better appreciation of what it takes to win, the importance of knowledge and hard work. I do not think there is any reason to have set quotas for minorities, for either students or faculty members, at the graduate level of the prestigious research universities. That is not where the opportunities are for the majority of the Black and Hispanic young people. You do them a great disservice by lowering the standards and establishing special programs, for in doing this you are sending them a strong message that they are inferior. This suggests that you business people should not give money to universities for scholarships for minority people unless the recipients are fully qualified to compete with their classmates. The problem is that there are not enough high school graduates who are fully qualified to go around. That means to me that the problem is primarily how to improve the education and the motivation of the young minority people before they reach the university level. I feel quite sure that we must do a better job for these people beginning with their early years. Their first eight years, I think, are the most critical. This means that it will take time to do what is needed. It will be the end of the decade of the 1990’s before these young people who are in grade school are at the university level. We must, therefore, direct a major effort to improve our educational system at the high school level and at the later years of grade school to made a significant improvement in the decade of the 1990’s. I think, however, to do what we all would like to do will require a major effort for our young people during their first eight years, and I do not think it is possible to get our young Black people up to the position they deserve unless we can get them started right in the beginning. We have to take a much longer view of this educational challenge. I know the pressures are great to set numerical quotas, to generate numbers to make the situation look good. I think it is time we look at the facts and call a spade a spade.

 

“Continuing education is extremely important in this field of high technology which is moving so fast that much of what one learns in school is out of date in just a few short years. Many companies have good continuing education programs with schools and universities but more should be done. This forum is an ideal place to address this problem.”

 

Packard moves on to his second requirement for science and technology leadership – adequate financial resources for university research and industrial facilities. “There are a few special issues in the area of financial support” he says, “that deserve more attention from this Forum. Our leading research universities must have the best facilities and equipment, but their overhead costs are getting out of hand. Some of this is caused by a proliferation of programs to help minorities, expanded activities to attract students, and of course to deal with the red tape involved in government support of various kinds. I can not think of a better project for this forum than for industry members to give the universities some help in controlling their overhead costs.

 

Packard turn to his third requirement for leadership: an environment in which scientists, engineers, educators and business people can do their professional work.

 

“I think that probably the most important way the federal government can help industry commercialize technology is to provide a favorable environment for business and industry to develop, manufacture and market high technology products and services.

 

“Over the years the federal government has gone far beyond such a simple role and there is no way we could turn the clock back even if we wanted to, but I think one of the most serious problems we have on the basic issue we are discussing today is that business and industry in the United States are operating in such an adverse environment that it will be virtually impossible for America to maintain its world-wide leadership in science and technology unless the environment is improved. Any significant improvement will require a drastic change in federal policy and action.

 

“Let me call your attention to several of the specific problems. The first is hostile takeovers financed by junk bonds. These have sapped the strength of a number of important companies in the United States. In some cases loading a company with a level of debt that will require the use of all future earnings just for debt service for years to come….The threat of hostile takeovers is also encouraging American firms to take actions such as using profits to buy-back their stock instead of strengthening their research, manufacturing, and marketing capability.

 

“The university members of this organization deserve a considerable blame for this unfortunate situation. Most of your business schools have spent far too much time teaching the principles of financial manipulation instead of sound industrial management during the past few years.

 

“A second problem is that of the savings and loan situation. It is generally agreed that to be competitive in the future, the U.S. industry needs a larger source of lower cost capital. The common suggestion to solve this problem is to increase the savings rate of the American people. Here in the savings and loan business we have a situation in which billions of dollars of the savings of the American people have gone down the drain for no useful  purpose whatever, and the American taxpayer will have to foot the bill. The only attractive proposal I have seen that might lower the cost of capital for business and industry is to eliminate the double taxation of dividends.

 

“The federal government provides billions of dollars to support research and some of it goes go into research that helps industry commercialize technology, but a very large part goes into defense, space and high energy physics. The advocates of these large programs claim they help the  economy in general and the high-tech industry in particular by the fall-out effect. There has indeed been some very important fall-out in certain areas. For example, the American aircraft industry is the undisputed leader in the world because it has benefited from research in all aspects of aerospace technology done by the Defense Department and NASA. The computer industry had some benefit from defense research in the early years but in the past two decades the defense research policy in computers has been so bad that computer technology and practice in D.O.D. is years behind the private sector, and the same thing is true in large scale integrated circuits. The Defense Department is justifiably concerned about this situation and that is why they are strong supporters of Semitech, and U.S. Memories. In most cases I think we will do better to concentrate our research on what we want to achieve and not just hope to get the benefit of fall-out from the big ticket programs. I think the government involvement in such programs as Semitech will be one-way streets with the traffic signs all in the wrong direction as far as industry is concerned. And with the micro-management that will be contributed by our Congress, there is no way they an be very efficient anyway.”

 

Packard sees some other problems related to government support of research and development both for universities and industry. “It has a political element that can not be eliminated but could be handled better. Popular programs like medicine, space and high energy physics receive large funding that is not always well related to the basic welfare of the country. I do not see a serious problem with federal support of medical research. Its primary goal is the welfare of the American people. Since this subject was discussed yesterday I do not think we should discuss it further today.

 

“The Apollo project was a great triumph that clearly demonstrated American leadership in space to the world. The trouble is that we have not been able to find an adequate encore, and I think it is time to admit that there may not be one. High energy physics gave us nuclear weapons and nuclear energy as well as important fundamental knowledge about mater and energy. I think space research and high energy physics research should, from here on, involve international cooperation and international funding. I want to emphasize that I think federal funds would serve to preserve American leadership better if they went to increased support for research and teaching in some of the disciplines of basic sciences and engineering instead of for these big ticket programs.”

 

“Packard sees another problem with federal support of science and technology and that “is the congressional pork barrel which distorts the application of federal funds for university research and teaching, and influences the location of large research projects such as the super-collider. State governments also try to influence the location of industry. These political influences are not all bad. It does not make much difference where the super-collider is located if the space and the geology are all right. I think the work that many states do to try to help develop international business for companies in their state is mostly a waste of time and money, but  it is not a large problem in any case. These political influences make it difficult to allocate resources in the optimum way.

 

To summarize, Packard says he does not think “American leadership in space or high energy physics or exclusive American leadership in any other area of science and technology is a necessary, or even a ;possible goal for the future. For about two decades following World War II the United States enjoyed a dominant position of leadership, but there is no way we can regain that position. It is quite possible for the quality of life for the people in America to continue to improve without continuing American leadership in all of these large, highly visible projects. However it would be a devastating blow to the spirit of our country for us to fall seriously behind the other leading nations in the world in every area of science and technology. We must not let that happen, and of course that is why we are all here today.

 

“There are some other things we could discuss this morning; the tremendous burden placed on American industry by excessive and unrealistic government regulations, how the defense department could do a better job in making its vast expenditures for research and development make a better contribution in dealing with these problems, the research and development tax credit, and capital gains taxes. I am sure there are other issues that might be of interest, but I will conclude my remarks at this point.”

 

 

1/25/90, Copy of program agenda

11/16/89, Copy of letter to Packard from Jana Harris, Forum Administrative Assistant, giving details on travel, accommodations etc.

1/17/90, Copy of HP travel order for company plane

 

 

Box 5, Folder 38A – General Speeches

 

April 24, 1990, Statement Before the House Committee on Armed Services  Investigations Subcommittee, Washington D. C.

 

4/24/90, Copy of typewritten text of statement

 

Packard starts by saying he appreciates the opportunity to provide his opinion on the proposal they have developed to create an Acquisition Corps within each of the military services. He says he has reviewed the proposal and in his opinion it “will not work very well, it will not improve the acquisition process, and if anything it will make the DOD acquisition process worse.

 

“There are some aspects of your proposal which, if properly applied, might help. In order to not be completely negative I will give you some suggestions about how something along the lines you are considering might be developed to improve the acquisition of equipment, materials and services by the DoD.

 

Packard says he understands the proposal is to apply an Acquisition Corps “across essentially all of the present acquisition workforces of each of the military services, and other acquisition activities of the DoD. The plan would be an effort to improve the professional status of all of the personnel, civilian and military. Additional educational opportunities would be offered to encourage professional development, and a more professional compensation policy would be put in place for the civilian force. Military personnel in acquisition work would be expected to make a career commitment and be advanced in rank by competition within the corps, not in competition with other general or flag officers. There would be more stringent requirements on civilians at senior level also.”

 

While Packard sees these as reasonable objectives, he says “The problem is that you are proposing still another layer of micromanagement by the Congress on the DoD acquisition activity when the most serious overall problem with DoD acquisition is already too much micromanagement of DoD by the Congress.

 

Packard recalls the Blue Ribbon Commission on Defense Management which he chaired in 1985 and 1986, and says, “…many of the Commission’s recommendations were included in important legislation approved by the Congress, and are now in place. Many of the ideas in the proposal we are discussing here today were included in the recommendations of the Commission.

 

“To give you some understanding about why I think this proposal we are discussing will not help I would like to recall for you several of the key recommendations of the Commission that have not been implemented.” And Packard draws quotes from the Commission’s Interim Report, dated February 28, 1986. [See speech dated May 5, 1986 for his contemporary review of the Interim Report, as well as a list of other speeches bearing on this Commission’s work.]

 

from Page 16 of the Interim Report:

‘Establishing short, unambiguous lines of authority would streamline the acquisition process and cut through bureaucratic red tape. By this means, the Department of Defense (DoD) should substantially reduce the number of acquisition personnel.’

 

Packard says their proposal would “establish more ambiguous lines of authority, more red tape, and I do not see how it would reduce the number of acquisition personnel or streamline the acquisition process.”

Also from page 16:

‘Congress should work with the Administration to recodify all federal statutes governing procurement into a single government-wide procurement statute. This recodification should aim not only at consolidation, but more importantly, at simplification and consistency.’

 

Packard’s comment on the current proposal as compared to the Commission’s recommendation was, “I do not think your proposal contributes anything useful to this recommendation which I think is very important.”

 

Another quote from page 16 of the Interim Report:

‘DoD must be able to attract, retain, and motivate well qualified acquisition personnel. Significant improvements, along the lines of those recommended in November 1985 by the National Academy of Public Administration, should be made in the senior-level appointment system.’

 

Packard adds to this quote from the Report saying, “This paragraph goes on to recommend flexible personnel management policies, a better compensation plan for senior acquisition personnel and contracting officers as well as scientists and engineers. It proposes better education and experience criteria for professionalization of career paths….”

 

“This paragraph,” he says, “relates squarely on what you are trying to do by establishing an Acquisition Corps. In your proposal you have included most of the things the Commission recommended.”

 

Packard comments that while he doesn’t think the plan they are proposing will work, they “are obviously trying to do the right thing,” and, given this positive objective, he says he would like to make a recommendation.

 

“I think you should establish a joint task force with the Office of the Secretary of Defense to develop the legislation to what is necessary to attract and retain the caliber of people needed to elevate the DoD acquisition program to a level of excellence. You should ask for advice from industry about any new legislation.

 

Packard says that if the defense acquisition process is to be improved “it will be absolutely necessary to establish [an] environment conducive to high quality professional work in Acquisition.” And to remind the members of the Subcommittee what he means by the “proper environment,” he says he wants to recall a statement he made in the foreword of the Blue Ribbon Commission’s Interim Report:

 

‘Excellence in defense management will not and can not emerge by legislation or directive. Excellence requires the opposite – responsibility and authority placed firmly in the hands of those at the working level, who have knowledge and enthusiasm for the tasks at hand. To accomplish this, ways must be found to restore a sense of shared purpose and mutual confidence among Congress, DoD, and Industry. Each must forsake its current ways of doing business in favor of a renewed quest for excellence.

 

‘Congress must resist its inveterate tendency to legislate management practices and organizational details for DoD. Excellence in defense management will not come from legislative efforts to control and arrange the minutest aspects of DoD’s operations. Congress can more usefully contribute by concentrating on larger, often neglected issues of overall defense posture and military performance.

 

‘DoD must displace systems and structures that measure quality by regulatory compliance and solve problems by executive fiat. Excellence in defense management can not be achieved by the numerous management layers, large staffs, and countless regulations in place today. It depends, as the Commission has observed, on reducing all of these by adhering closely to basic, common sense principles; giving a few capable people the authority and responsibility to do their job, maintaining short lines of communication, holding people accountable for results.

 

‘Defense contractors and DoD must each assume responsibility for improved self-governance to assure the integrity of the contacting process. Excellence in defense management will not be achieved through legions of government auditors, inspectors, and investigators.  It depends on the honest partnership of thousands of responsible contractors and DoD, each equally committed to proper control of its own operations.’

 

Packard says he thinks that statement “was the most important recommendation that was made by our Commission. This recommendation has not been implemented. I think your proposal of an Acquisition Corps opens the door for an opportunity to make a contribution of historic significance to the improvement of defense acquisition.”

 

Packard says he wishes to comment on several of the issues raised in their proposal which give him concern – “not with the intent to be critical, but to try to be helpful.”

 

“As I interpret your proposal you intend that the existing acquisition stature would not be changed, and that the new requirements would be imposed as a sort of matrix across them all. I think this would be a mistake. I think there should be only one acquisition organization to each service, and the kind of educational, experience, promotional and compensation changes you are proposing should be directly incorporated into each service activity, not added as one more layer on top of what is already there.

 

“There should be more uniformity among the service acquisition programs for the lower level activity which is purchasing a vast array of what might be called housekeeping equipment, materials and services. I do not see any need for military officers to be involved.” And he goes on to suggest the elimination of excess specifications for products in this area, and more reliance on the purchase of commercial products.

 

Packard refers to those areas in the report now before the Subcommittee which discuss the issue of military officers vs. civilians in certain positions, particularly those activities involving weapons and weapons systems. “It is very important,” he says, “to have military experience and judgment in the consideration of what weapons to develop and what weapons to acquire. It is desirable to have some good business, or industrial experience, as well. This issue was given extensive consideration by the Commission, and as you may recall, the basic decision on the type and level of military forces was assigned to a team of three offices, the Chairman of the Joint Chiefs of Staff, the Vice Chairman of the Joint Chiefs of Staff, and the Assistant Secretary of Defense for Acquisitions ASD(A). The legislation to do this has been enacted and the structure is in place. I do not know how well it is working, but I still feel strongly this is the proper arrangement for making these important decisions even though it may take more time to have the arrangement working effectively.”

 

He says he has raised this issue because their proposal has suggested that “the Acquisition Corps be given some authority in this area.. It is, in my opinion, not necessary to give the Acquisition Corps any specific authority in this area as long as the ASD(A) has overall authority to establish policy and to evaluate the performance of the Acquisition Corps of each service or agency”

 

Responding to a proposal that acquisition personnel be given authority ‘similar to the independence of an accountant or inspector general,’ Packard says quality cannot be inspected into a product or an organization. “Until and unless the Congress gets over the idea that more inspectors and more auditors will help the DoD acquire better material and better services at a lower cost, defense acquisition will continue to be a sorry mess – it will not get better.”

 

On the proposal that acquisition personnel should have college degrees, Packard feels that, while college degrees should not be a requirement, he does agree acquisition personnel “must have considerable knowledge about how to do their work. It would be much better to have a series of examinations, uniform across the services, and a minimum score on the examination should be required. The knowledge necessary to pass the examination could be acquired by college courses, home study or simply from experience.

 

“These jobs are not going to be very attractive to college graduates unless they are really made much more professional, and I think there will be a larger choice of good candidates if college degrees are not required.”

 

“You also recommend the establishment of a new Acquisition University. I think you should recommend consolidating the courses that are already being offered into an existing institution and not establish a new one.”

 

Packard closes by offering to respond to any questions.

 

3/9/90, Letter to Packard from U.S. House of Representatives, Nicholas Mavroules, Chairman, and Larry J. Hopkins, Ranking Minority Member. Letter encloses a draft copy of the proposal on an acquisition workforce for Packard’s review

3/12/90, Copy of a press release from the House of Representatives announcing the release of the draft proposal for review by all concerned

3/22/90, Letter to Packard from Nicholas Mavroules, Investigations subcommittee, inviting him to testify before the Subcommittee on the proposal being circulated

4/13/90, Copy of a letter to Packard from Donald J. Atwood, although not so identified, known to be Deputy Secretary of Defense in 1990. The letter is not signed but a handwritten note on the copy, is signed “Don” and says he has attached the report they discussed. This report presents the current acquisition organization in the DoD.

4/18/90, Copy of a letter to Packard from Nicholas Mavroules confirming their Subcommittee meeting on April 24m and he attaches a list of issues and questions he would like Packard to comment on.

4/20/90, Copy of a letter to Packard from Bernie McKay and Eben Tisdale, of HP’s Government Relations office in Washington D. C. commenting on the proposal

5/10/90, Note to Packard from Joyce C. Bova  of the Armed Services Committee staff enclosing a copy of his comments before the Subcommittee. She asks that Packard edit his remarks and return the copy to her. She also asks that he supply answers to questions attached. A transmittal sheet shows the edited remarks were returned on May 31, 1990

Box 5, Folder 39 – General Speeches

 

September 12, 1990, presentation of the American Electronics Association Medal of Achievement to John Young, San Jose, CA

 

9/12/90, Typewritten text of Packard’s remarks

 

If he were to make a short presentation Packard says he could say that this award to John Young “…would be well justified by reminding you of the record; of the overall growth and success of the company since John took over in 1977. In 1976,” he continues, “ the last year before John took charge, HP revenue was $1,123, 584. Net earnings were $90,841. We had 32,200 employees. We produced 3600 different products. Our computer business was about 49% of the total.

 

“By 1989, under John’s leadership, total revenue had grown ten times to $11.9 billion. We had 95,000 employees and more than 10,000 different products. We had become one of the major players in the computer industry, and in the United States we had moved up to No. 39 in the Fortune 500 listing. I could add more facts and figures to demonstrate that John’s achievement in his leadership of the Hewlett Packard Company has been impressive indeed.”

 

Packard adds that he “…could also give…ample justification of the award by reminding you of what John’s peers in the industry think of him. During the last few years he has received many awards for his achievement’s. Among the recent awards: he was selected as the ‘Best Executive of the Year’ by the Electronics Business Magazine in 1989. He was given the award for Distinguished Public Service by the National Science Foundation in 1990, and last year in the Electronics Business magazine survey of the best executives and the best companies, John received the highest percentage of responses; 63.8% for best executive.

 

“I do not want to rest here,” Packard says, “for John’s record of achievement is far more impressive than these facts and figures I have given you would indicate.

 

“Achievement is to a large extent the setting of worthy goals and then living up to them. John has done that over and over again in his work with our company, both before and after he took charge in 1977.”

 

Packard says that “During his career with our company John has made a number of individual achievements which involve setting goals for himself or his management team and then achieving them. I want to tell you about two of his very important achievements as the CEO of our company. He recognized that our company would be expanding over the years ahead, we would have more customers, more products, and that to be successful we would have to compete in the world-wide market place. He properly recognized this would require us to develop and put in place the best possible service for our customers, wherever they might be, and for every one o our products they might be using. He established this goal for his management and the accomplishment has been impressive. In nearly every survey during the last several years Hewlett Packard has been at the top of the list in the quality of our customer service. This required the enthusiastic support of plants in 24 U.S. cities and 15 foreign countries, and sales offices in 140 U.S. cities and some 300 sales offices in 92 other countries, a real tribute to John’s leadership.

 

“John also recognized that the quality of our products would be a major factor in our ability to compete in our world-wide markets. He set a goal for the company to make a ten to one improvement in the quality of our products and made this a high priority challenge for everyone. The company has not quite reached this goal of his on an overall basis, but many of the manufacturing facilities have reached or exceeded the goal John set for them.

 

“During his tenure as President and CEO of our company John has taken time to help with issues important to the local community, issues at the national level of importance to our industry and to our nation, and he is recognized as one of the leading statesmen of industry by the governments of industrialized countries all over the world. He was appointed by President Reagan in 1983 to be Chairman of the President’s Commission on Industrial Competitiveness, and John was selected to be its Chairman. Of course it could have been that no one else wanted the job, but I am sure he was elected by the members as a sincere recognition of his leadership ability. I consider John’s work in trying to make our country more competitive to be another real achievement.

 

“There is one more thing I want to say about John’s achievements during the past decade. It has been a decade of unbelievably rapid change. The ability of computers to collect. store, analyze and distribute data and information has increased by orders of magnitude in just a few years. And so has our ability to communicate on a world wide basis. Some people think this ability is far in excess of the information and data that is worth all this effort. As usual we find there is nothing new about this idea. In 1854 Henry David Thoreau made this statement in his book, Walden: ‘Our inventions are wont to be pretty toys, which distract our attention from serious things. They are but improved means to an unimproved end, …. We are in great haste to construct a magnetic telegraph from Maine to Texas, but Maine and Texas, it may be, have nothing important to communicate.”

 

“There is a very serious and important aspect to this tremendous rate of progress in the electronics industry during the past decade that has made John Young’s achievements more difficult and therefore more impressive.

 

Without any doubt the technology that has increased the speed and efficiency of communication and travel on a world wide basis during the past decade is the driving force that brought an end to the cold war. This opens up a completely new ball game for the 21^st Century. We do not know yet what this really means for the current  Mid-East crisis is only the first inning.

 

“And now one final word. It has been long recognized that behind every successful man is a strong, capable woman. Tonight I want to rephrase that statement and tell you that standing shoulder to shoulder with John Young is a very strong, very capable woman, his wife Rosemary.

 

“I could say many more things about John Young’s accomplishments. I hope you know by now that I think this award is richly deserved. John, it is with great respect and with great admiration that I present this award to you tonight.”

 

9/12/90, Copy of printed program of the Medal of Achievement Award ceremony at the 47^th Annual Meeting of the American Electronics Association.

9/21/90, Letter to Packard from Dick Iverson, AEA President, thanking him for presenting the Award to John Young, and enclosing a copy of a picture [see Packard picture file] of Young and Packard at the podium.

9/16/90, Newspaper clipping from the San Jose Mercury News covering the Award ceremony with excerpts from Young’s speech at the time.

Box 1, Folder – Folder 35A

 

November 6, 1991, Review of Stock Repurchase Action, Statement to All HP Managers

 

11/6/91, Copy of typewritten text of remarks

It is not clear how this was communicated, but it is clear that Packard felt strongly about the subject, and wished that managers be made aware of his, and Hewlett’s, feelings on the subject.

 

“During the period from 1980 until 1988 both Bill Hewlett and I refrained from any involvement in the management of the Hewlett-Packard Company. We felt we had a good management team well oriented in the traditional management policies we had followed over the past 40 years. I was troubled by the statement that HP was to become a more customer driven company because I felt that we had given the requirements of our customers a high priority from the very beginning. Our overall performance had been very good with earnings growing from less than $1.00 in 1980 to over $3.50 at the end of 1988, and the stock price increasing from $15 to over $90, and we had $2 billion in cash.

 

“When it was proposed that we use that cash to buy back HP stock I had an intuitive feeling that we were doing the wrong thing but we had a strong finance committee and most of our directors had experience in such matters so I was hesitant to bring the issue to a head at that time. You may recall I did predict that this action would bring the stock price down to about half its current value, to the mid $20s within the following year. And that is actually what happened.

 

“Hind-sight is always more accurate than fore-sight and we should look at what actually happened. The book price of the stock was $15.49 as of 10/31/85. It increased to $17.29 in 1986, $29.57 in 1987, $22.70 in 1988, and it would have been $25.86 in 1989 without the repurchase of stock. The repurchase brought the book value down to $22.91 as of 10/31/89. The remaining shareholders thus each lost $2.95 in book value. There were 237,644,000 shares outstanding after the repurchase and so the total loss they suffered was $701,049,000!!!!

 

“To compound the felony HP’s employees lost $24 million dollars a year in cash profit sharing and this is not just a one year loss but a loss in every year that follows in an amount in proportion to the interest return on $2 billion. The U.S. employees also lost a similar amount in retirement funds.

 

“The only stock repurchase plan that would benefit the company would be when the stock could be purchased below the book value.

 

HIND-SIGHT CLEARLY TELLS US THAT THE STOCK REPURCHASE ACTION HAS BEEN A DISASTER FOR THE COMPANY AND IT WOULD BE IRRESPONSIBLE FOR THE DIRECTORS TO AUTHOURIZE ANY FURTHER REPURCHASE OF HP STOCK UNLESS IT CAN BE REPURCHASED BELOW THE BOOK VALUE.”

Box 5, Folder 39A – General Speeches

 

February 28, 1991, Speech at Colorado University, Colorado Springs, CO

Packard was Keynote speaker at Banquet in honor the school’s 25^th  Anniversary

 

2/28/91, Copy of typewritten text of speech

 

Packard reviews some HP history, particularly its close association with Stanford,  which became a very important factor in the growing company’s ability to attract and retain technical personnel. So, in 1950, when they decided to establish operations outside the Palo Alto area, proximity to a university was high on their list, along with a location that would provide an attractive living area for employees. Access to an airport was also important.

 

He says Colorado looked good to them and Boulder was their first choice – but they couldn’t find a satisfactory location. They decided on Loveland, where operations were started in leased facilities in 1959.

 

Operations in Loveland “turned out very well” and so in 1962 they decided to look for another site in Colorado. Again they looked for a site in Boulder, but  without success. They did, however, find two possibilities – one in Denver, and another in Colorado Springs. “The Colorado Springs site had one fault,” Packard says, “It was too far from the University of Colorado – and neither the Air Force Academy or Colorado College could provide the continuing educational needs of our technical people.”

 

Packard recalls leaving Colorado Springs one fine spring day to drive up to Denver and take another at the location there. “As I came over the ridge above the city,” he says, “all I could see was a thick layer of brown smog where the city should be. That settled the matter – Colorado Springs it would be.”

 

However, he says he was “still troubled about the lack of a university that we needed to help us keep our technical staff at the forefront of the rapidly expanding electronics field.” Saying he has always been an optimist in dealing with such problems, he felt sure they could some how get the University of Colorado to help. “A U.C. branch here would help in bringing more high technology companies to Colorado Springs….With the help of the University, the Legislature, and the Governor, the University of Colorado at Colorado Springs was opened to classes in September 1965.

 

Packard says he does not deserve very much of the credit for this U.C. facility in Colorado Springs. “Many other people in the Hewlett-Packard Company were involved, and many people in other high technology companies in Colorado Springs helped, and it would not have happened without the help of many people in the State government….I am very pleased to be with you tonight to join with all of you in thanking the Dean and all of the people at the University of Colorado in Colorado Springs for their twenty five years of dedicated [help] to both Colorado springs and to the State of Colorado.”

 

Packard notes that we are all joined in “thanksgiving for the magnificent performance of our armed forces in the Desert Storm operation.” He comments that this victory was made possible in large part due to the most “sophisticated military equipment in the world, operated by the most capable and most dedicated military people in the world. This city, Colorado Springs with many high technology firms producing this equipment, and with the Airforce Academy training the military people to operate this equipment has every reason to take great pride in being an important part of the most successful military operation the world has ever seen.”

 

Packard takes a moment to change direction and offer some criticism directed at Colorado’s representatives in Congress. He adds that he feels he has the right to do so because Colorado is his home state. “I simply can not refrain,” he says, “from telling you that I am ashamed of some of the people you have sent to Washington. If our Armed Forces  had been developed along the lines they recommended we would likely be hanging our heads in shame tonight.”

 

He says he wants to conclude with some “guidelines which I think should be considered for C.U.C.S. in the years ahead. There has been considerable concern during the past few years about our ability to maintain our leadership in technology, particularly over the Japanese and other Asian countries and the counties of Europe as well….I think it’s time to get back to some of the fundamentals of this issue. The development, manufacturing and marketing of new products with the highest quality and lowest cost is a highly integrated procedure. High reliability and efficient manufacturability must be designed into the product in the original development. The performance to meet the needs of the customer must also be designed into the product in the original development. I hope you will give more emphasis to teaching your students that the design, the manufacturing, and the marketing has to be a fully integrated procedure especially for new high technology products.

 

“I do not share the concern that we will not be able to retain our technological leadership. Our government could be more helpful, the playing field is not always level, especially in respect to the Japanese. My main concern is that we are not doing our own job as well as we should. And I am sure we can, and I think we will, do better.

 

“Thank you for asking me to join in honoring the Colorado State University in Colorado Springs on this important Anniversary.”

 

2/28/91, Printed invitation to the Banquet

2/28/91, Copy of typewritten sheet, plus attachment, giving information about the University

2/4/91, Letter to Packard from Peiter A. Frick, Dean of the College of Engineering and Applied Science thanking him for agreeing to join them at their Anniversary, and giving some details about the evening.

2/27/91, Copy of a typewritten sheet listing Packard’s itinerary for the trip

Undated, Typewritten sheet listing dates HP’s facilities in Colorado were opened

 

 

Box 5, Folder 39B – General Speeches

 

April 25, 1991, Hearing on the Indirect Cost of University Research Before the Subcommittee on Science of the House of Representatives Committee on Science, Space, and Technology, Washington D.C.

 

4/25/91, Typewritten text of  Packard’s statement

 

Packard says he is “…pleased to appear before you today at this hearing on the Indirect Costs of University Research.” He has some recommendations to make, he says, and states that if these are adopted “…they will enable universities to conduct substantially more research with the funds provided by the federal government than they are able to do today. My recommendations will include the Administrative Cost issue, Direct Cost matters, Buildings and Equipment, and some of the other issues covered in the White House Science Council Panel on the Health of the U. S. Colleges and Universities, which I co-chaired with Dr. Allan Bromley from May 1984 until February 1986….He says he realizes there will not be time to consider all of his recommendations in detail, “but I think it is very important for this committee to address the overall problem, not just the indirect cost problem.

 

“In my opinion,” Packard says, “there is no issue before the Congress that is more important than determining how America can maintain its position of world wide leadership in technology that has been achieved since World War II. The matters to be discussed at this hearing are an important part of this issue, but I want to begin with a brief summary of how the federal support of university research began and why it is so important.”

 

Packard tells how President Roosevelt, when it became evident that the United States might become involved in World War II,  appointed Dr. Vannevar Bush to head a new agency called the National Defense Research Committee, in June, 1940. The object of this Committee was to recruit and use America’s best scientific talent to win the war, and Dr. Bush began by recruiting six thousand of the country’s leading scientists, engineers and doctors. By the end of the war this committee, known as the Office of Scientific Research and Development, had thirty thousand scientists, engineers and doctors engaged in this endeavor to use science to win the war.

 

“Some of these scientists,” Packard says, “concentrated on the specific objective of making the atom bomb. Others concentrated on applying scientific research and product development to all other aspects of the war effort. They developed better radar and radar counter measures, the proximity fuse, better sonar equipment for our submarines, countermeasure equipment for submarine warfare, which confused the enemy about the location of our submarines, and a great many types of equipment and systems described as electronic warfare.”

 

Packard describes the work of this research and development project as “…the most important determinate in the allied victory over the enemy in Europe and in our success in retaking the islands in the western Pacific from Japan.”

 

“This unprecedented endeavor is described in detail in a book, Modern Arms and Free Men, written by Vannevar Bush in 1949, and every member of this committee should read this book if they have not done so.”

 

Because the project was so successful, Packard says Vannevar Bush felt something similar should be continued after the war, and he quotes Bush as follows: ‘On the wisdom with which we bring science to bear in the war against disease, in the creation of new industries, and in the strengthening of our armed forces depends in large measure our future as a nation.’

 

“Vannevar Bush’s advice was followed,” Packard says, “and the outcome has been exactly what he predicted. The United States is today the leader of the world in Technology, We have made great progress in the war against disease. We have created vast new industries, and our brilliant military victory, Desert Storm, was assured because our distinguished military leaders and our highly skilled, brave and dedicated men and women in uniform had the best weapons in the world.

 

Packard says it is essential that all involved in reviewing the present issue, members of this committee, of the entire Congress, and of the Administration, realize that “the subject we were asked to discuss with you today, Administrative Overhead, is only a small part of the major issue which is: How can this research and development endeavor, which has served our country so well since World War II, be continued with equal success in the years ahead.”

 

Packard makes three recommendations, not going into detail due to time limitations, but says he will be available for questions and discussion afterwards.

 

ADMINISTRATIVE OVERHEAD: “Administrative overhead should be paid for by the federal government as a fixed percentage of direct research cost.” He suggests about 50% for private universities, less for state supported universities. Packard says this fixed allowance need not be audited, and he believes the elimination of this requirement would reduce the cost to both the schools and to the government. Packard also points out that it would eliminate “the current anguish about the legality and propriety of administrative overhead costs. Such overhead would include occupancy costs, light, heat, janitorial services and routine maintenance – but not the original cost of the buildings and of major equipment.”

 

COST OF BUILDINGS AND MAJOR EQUIPMENT: “The cost of buildings and major equipment paid for by university funds should be reimbursed in government contracts by a payment of the government’s fair share of interest at the average level of the current return on university endowments and by an allowance for depreciation. He includes some thoughts on how this should be determined.”

 

THE MANAGEMENT OF DIRECT COSTS: These are, Packard says, “…the salaries and the fringe benefits of the scientists, engineers and doctors who are doing the research, and costs of assistants, including graduate students, and the materials, etc. needed in their work. The direct costs should be precisely defined and be uniform for all contracts.” Packard believes too many reports and too much paper work is required of the people doing the work. He says “Some of the government contracts require the research people to make three reports every month, a financial report, a scientific report, and a report of their work for people who do not understand science….There is a large variation in the amount of reporting required among government agencies. The reporting should be reduced to a bare minimum, and uniformity among all government agencies should be required.”

 

For some additional recommendations Packard refers members of the Committee to the Packard-Bromley report of 1986. “For example,” he says, “most projects should be funded for at least three years; and there is no way to accurately measure the division of the research person’s time between teaching and research, and there is absolutely no reason to try to do so.”

 

Packard says the three key recommendations he has made here “must be implemented as an integrated unit. All federal agencies must be required to adopt them. If this is done there will be significant cost savings, and there will be more research from a lower level of  funding.

 

“It is the oversight responsibility of the Congress to determine whether the tax payer is receiving full value for the federal dollars spent on research at U. S. universities. The answer is a resounding No! And it is primarily the fault of the Congress!

 

“That completes a brief summary of my views on the subject. I will be pleased to respond to your questions and participate in the discussion.”

 

4/11/91, Copy of a letter to Packard from Rick Boucher, Chairman, Subcommittee on Science inviting him to appear before the committee to discuss the subject of the Indirect Costs of University Research. He attaches a summary statement of  the purpose of the hearing.

4/16/91, Copy of a letter to Packard from D. Allan Bromley who co-chaired a Panel on the Health of U.S. Colleges and Universities with Packard in 1984-1986. Dr. Bromley gives his thoughts on the matter under consideration, and encloses excerpts from various reports.

5/6/91, Copy of a letter from Packard to Chairman Boucher and Members of the Subcommittee. Packard comments on several issues which were discussed at the hearing which, he says, need clarification.

 

He says “There seemed to be general agreement that a fixed rate for administrative overhead would be desirable. There was a suggestion that it should contain a cost of living factor.” Packard points out that since the fixed rate would be based on the actual direct costs at the various universities involved the issue of cost of living would be automatically built in. So the fixed cost rate should not have a cost of living factor.

 

“There was also the suggestion that this fixed rate should be subject to negotiation by universities which considered it unfair. I would strongly oppose this position. One of the most important arguments for a fixed rate is to eliminate the extensive auditing and negotiating about administrative overhead costs and charges. This would save both the Federal government and the universities millions of dollars every year; dollars that are spent under the present system and are a total waste.”

 

Packard goes into considerable detail on how the matter of depreciation might be handled. “The problem,” he says, “comes from the fact that federal contracts provide for depreciation whereas most universities have no depreciation costs.”

 

“The depreciation allowances on government contracts are generally paid into the general funds of the university. As one Stanford study admitted ‘…these funds play an extremely important role as a source of income to the Operating Budget.’ I do not think Stanford’s situation is different from most universities. Furthermore, this has been done with the cooperation of the ONR as well as other funding agencies.

 

“This committee should not consider it fundamentally wrong for the Federal Government to underwrite some of the operating costs of our universities. That is a subject you must address. If you agree, the only issue is whether there is a better way for this to be done.

 

“If you agree, I would make this recommendation. All depreciation allowances which do not go into debt service should be allocated to a special building account and should not go to the general fund account. Allocations from this building fund account should be applied to new research buildings and equipment or major renovations of research facilities…..”

 

“Anything that can be done to deal with this problem in a realistic way will cost the Federal Government more money. If the Federal Government is not willing to provide more money to support this nation’s universities, there is only one possible outcome – American universities will have to retrench.

 

“This is the basic decision this committee has to address. Should the Federal Government provide more money to support our universities or not. I personally do not think retrenchment would necessarily be a disaster.

 

“I am quite sure that implementing the recommendations I have given you will allow the American taxpayer to receive more value for the federal dollars that are provided, and my recommendations are more important if the overall decision is not to increase the funding.

 

“A satisfactory solution will be difficult at best. It will be impossible if the pork barrel propensities of the members of the Congress cannot be brought into control.”

 

7/1/91, Letter to Packard from Roland W. Schmitt, President, Ressselaer University, discussing the issues addressed by the committee.

 

February, 1986, Copy of the bound report “Report of the White House Science Science Council Panel on the Health of U.S. Colleges and Universities. The Panel was chaired by David Packard and D. Allan Bromley

 

 

Newspaper clippings. These discuss various actions being taken by governmental agencies due to the perceived abuses by Stanford and other universities.

 

4/23/91, San Jose Mercury News

4/26/91, San Jose Mercury News

4/26/91, The Stanford Daily

 

 

Box 5, Folder 39C – General Speeches

 

May 13, 1991 – Remarks Before the Computer and Business Manufacturers Association

At their 75 Anniversary Event, Washington D.C.

 

5/13/91,  Copy of typed text of speech

 

 

Packard says he was asked by John Pickett, President of the Association to join them for dinner, and his only task would be to introduce Secretary Mosbacher – but he was told he could make a few remarks on his own if he wished. He proceeds to take advantage of this invitation, and his subject is the abuses in overhead charges from many research universities. He tells the story much as he did in the statement to the House Subcommittee described in the above speech dated April 25, 1991. Since the material is essentially the same it is not repeated again here.

 

 

Box 5, Folder 39D – General Speeches

 

May 20, 1991, The Health of U.S. Research Colleges and Universities, location not given

 

5/20/91, Copy of typewritten text of speech. This is again the same speech as given April 25, 1991 and is not repeated here.

 

 

Box 5, Folder 39E – General Speeches

 

June 27, 1991, Remarks at the Reception of the Marine Board at the Monterey Bay Aquarium, Monterey, CA

 

6/27/91, Copy of typewritten outline of speech

 

Since the speech is typed in outline form, the description here is broadened a little to provide more continuity.

 

Packard says he is humble to be speaking to such a distinguished group.

 

He says his interest in marine science began about 14 years ago with the development of the Monterey Bay Aquarium.

 

“The oceans are the most important frontier and we do not know as much as we should about them. At the Aquarium we concluded that unmanned remotely operated deep sea vehicles were the most efficient way to explore the oceans.

 

“Space based systems are also important for ocean research as they can also be unmanned and remotely operated.

 

“Computers are also important tools but not enough is known about modeling large systems and we do not have adequate input data.

 

“Environmental issues are overcharged with emotion and risk

 

“MBARI [Marine Bay Aquarium Research Institute] was founded to apply the latest technology to measure and study marine technology. Monterey Bay is an ideal location to develop and apply technology and I think we have made a good start in the past three and a half years.

 

“I am most pleased that Peter Brewer has agreed to be our Executive Director. He has been here since the first of the year and he is off to a very good start.

 

“Now we will have a brief presentation of some of the work we are doing. Mike Lee was involved in the acquisition and outfitting of our ROV. Bruce Robison is doing research on the marine biology of the mid water stream. His work has been to about 1500 feet and he still will be working at deeper levels in the months ahead.

 

“After the presentation we can respond to some questions.”

 

 

Box 5, Folder 40 – General Speeches

 

August 1, 1991, Hearing on NASA’s Midlife Crisis: Context for Reform, before the House of Representatives Subcommittee on Investigations and Oversight, Committee on Science, Space and Technology, Washington D.C.

 

8/1/91, Typewritten text of Packard’s remarks to the Subcommittee.

 

Packard says he is pleased to be able to present his views on how the recommendations of the President’s Blue Ribbon Commission on Defense Management [which he chaired]– might apply to the management problems of NASA. See speech dated March 26, 1986 for complete list of speeches covering work of the Commission.

 

“The final report of the Commission was submitted to the President,” Packard says, “on June 30, 1986.” The recommendations which I believe might be useful to this Sub-Committee are covered in an Interim Report to the President, dated February 28, 1986, and in my foreword of the main report. [See Packard speech May 1, 1986 to American Institute of Aeronautics and Astronautics]”

 

“The most important recommendation of the entire report was that the Chairman of the Joint Chiefs (JCS) should be designated as the principal uniformed military advisor to the President, and that the position of a four-star Vice Chairman should be established as the sixth member of the JCS.  The responsibility of the Vice-Chairman is to provide a channel for commands to and reports from the Commanders-in-Chief of the Unified ands Specified Commands (CINCS) to the Chairmen of the JCS.

 

“This recommendation was put into law by the Goldwater-Nichols act of 1986. I consider this the most important action to improve defense management since World War II because it made it possible to manage the entire military establishment in a coherent way. This made it possible for the President, the Secretary of Defense, the Chairman of the JCS and the commander of the forces in the field to bring all of our military strength, active and reserve personnel and equipment, from all four services, together in the most effective joint operation possible. The brilliant victory of Desert Storm would not have been possible without this important action.

 

“It is not clear to me how this lesson might be applied to the current management problems of NASA except to say that unless the divergent elements on NASA can be brought together in a strong uniform commitment to an appropriate goal, for every project undertaken by NASA, there can be no real improvement in the management of NASA. The APOLLO program had such a commitment, by any ordinary standard it was a mission impossible, but I can not recall anyone, even among those who knew the tremendous technical challenges, risks as we now call them, who had any doubts about our ability to land a man on the moon. That kind of a commitment must be established to support whatever projects NASA undertakes for the future. If this is not done NASA will simply go on from a Midlife Crisis to an Old Age Status as just another Federal Bureaucracy.”

 

Saying that there are other recommendation in the Defense Management Report that have relevance for NASA, Packard quotes form his foreword to the report: ‘The Commission’s recommendations are intended to help establish strong centralized policies that are both sound in themselves and rigidly adhered to throughout. In any large organization policies must be executed through discrete structures…..this requires that we cultivate resilient centers of management excellence dedicated to advancing (NASA’s) overall goals and objectives.’

 

Packard says he will respond to written questions submitted by the Sub-Committee:

 

The first question asks for a definition of ‘risk’ and asks how such risk could be allocated between public and private sectors.

 

Packard says he has had considerable trouble with ‘risk’ as used in government contracting. “I do not recall” he says, “thinking about risk until I came to the Department of Defense in 1969. I managed [at HP] the development of hundreds of new products at the frontier of technology and I can recall only a few that were not successful. Our management program had a tight coupling between development, manufacturing, and marketing and we made trade-off’s between cost, performance and time to market from the beginning to the end of the project. The cost of the new product development almost always ended up higher than the original estimate, and it usually took longer. We did not consider this a risk to the success of the program but rather a management problem.

 

“After a very short time at the Pentagon I realized the real problem was that the defense contractors and the defense buyers were simply playing games with each other. The defense contractors were making bids that were lower than what they knew the costs were likely to be. Both were playing games with the Congress to get a program approved by submitting cost proposals which they knew were too low at the time they were submitted. The ‘risk’ was that they might not be bailed out.”

 

Packard says he thinks the optimal solution would be “to hold the contractors strictly responsible for the technical integrity of the product, and in the end the government will have to pay the bill. The Hubble space Telescope is a good example. As I understand the situation, the contractor failed to do a rather simple test that would have identified the problem so that it could be corrected before launch. The contractor should have received a severe penalty for such a failure; even one that might have put him out of business.

 

“Our Defense Management Report does place a great deal of emphasis on contractor self-government. The Congress would not accept our recommendations on this issue. I did not then, and do not now, see this as eliminating government oversight. I think that infractions of self government by contractors should carry such heavy penalties that they would have to become self policing. This would be in my opinion the best way to allocate these responsibilities between the public and the private sectors.”

 

The next two questions submitted by the sub-committee  were ‘Please describe for the Subcommittee your findings on the long-range planning process employed by the Department of Defense, the President and the Congress and its effect on decisions reached in the budget process……’ And the next: ‘How do Congress and the Executive branch help and hinder Government managers.? ‘

 

Packard says “There has been too much micromanagement of defense programs by both the Congress and the office of the Secretary of Defense.

“We recommend more use of prototyping in defense programs. This gives the contractor complete freedom to make tradeoffs between cost and performance. While it is not practical to prototype very large programs, important parts of such programs can be prototyped.

 

“We recommend more use of commercial products in all defense projects. Because of the rapid progress of advanced technology in a number of fields, such as large scale integrated circuits, commercial products have much higher reliability and much lower cost than products developed to military specification. This also applies to components used in NASA projects.

 

“The use of commercial components was strongly opposed by the bureaucracy in DoD because it would eliminate the need for many people who have been involved in this work in the past.”

 

Next the Subcommittee had asked for comments on the changes that had been advocated by the Defense Management Commission  – were they fully implemented, if not why not, and how might their recommendations change to fit NASA’s situation where they buy limited quantities of items.

 

Packard responds saying that the most important recommendations were fully implemented through the Goldwater-Nichols legislation. As to the purchase of limited quantities, Packard says he doesn’t “…think the fact that NASA buys a limited number of items would change our recommendations. It makes the purchase of commercial items more important because the savings would be larger.”

 

Next, the Subcommittee wanted to know ‘…what elements of total quality management philosophy could be implemented within the limits of government management?’

 

“That is what my foreword to the report is all about. The centers of management excellence which I recommend could not be excellent unless they fully embodied total quality of  management.”

 

That was the end of Packard’s testimony.

 

Box 1, Folder 35B – HP Management

 

July 16, 1992, Message to HP People Everywhere Regarding the Change in HP’s Executive Leadership

 

7/16/92,  Copy of typewritten text of statement

 

“Yesterday you learned that there will be a change in the executive leadership of our company on November 1.

 

“The changes were recommended by the Succession Committee which was established by the Board two years ago to deal with some of the problems that were having an adverse influence on the performance of our Company, and to make recommendations for the future leadership of the Company. Both Bill and I have been working closely with the Succession Committee since it was established.

 

“John Young has also been working closely with the committee in developing its recommendations and he has done a superb job in implementing the recommendations it has made.

 

“As the committee began to address the question of future leadership we recognized very early in our work that Lew Platt and Dick Hackborn were the two leading candidates. Each had outstanding ability which was not competitive but complementary. We thus recommended that Lew be the President and CEO and that Dick remain as Vice President in charge of Computer Products, which has been the most competitive and most profitable activity of our company. Our recommendations imply that both Lew and Dick will be equally important for the future of the Company.

 

“We had to deal with the issue of when the change in leadership should be made. The leadership of John and Dean has brought the Company to a dominant position of strength in our industry and we could have delayed the change for several years. We had two outstanding people, Lew and Dick, extremely well qualified, enthusiastic about accepting the opportunity and responsibility for the success of Hewlett-Packard in the years ahead. We decided the best course would be to make the change at the end of this fiscal year. Lew and Dick will become members of the Board when they take office on November 1. John and Dean will retire from the Board on October 31.

 

“This action was taken with a unanimous vote of the Succession Committee and the unanimous approval of the Board.

 

“I will remain as Chairman of the Board. Although Bill Hewlett has resigned from the Board he has a strong desire to support and help the new leadership.

 

“I want to take this opportunity to thank all of my fellow employees throughout the world for the steady way you have upheld the company objectives we laid out so many years ago. Bill and I also appreciate the hundreds of letters and communications we have received from so many of you since we have been dealing with these issues. We hope we will continue to hear from you in the future.

 

“It is gratifying to know how many of you want to help us keep HP as one of the best companies in the world. I have no doubt whatever that with your help we can, and we will, do just that.”

Box 5, Folder 40A – General Speeches

 

February 10. 1992 – Programs of the David and Lucile Packard Foundation, with emphasis on The Relationship of Population Control and Economic issues with Biodiversity, Palo Alto, CA. The forum of the speech is not given.

 

2/10/92, Copy of the text of this speech

 

Packard says the foundation has been “involved in environmental issues for over twenty years and many of these issues include biodiversity. Most of the environmental issues have been in California or other parts of the western United States and have involved the preservation of open space and endangered species, including marine species. Population pressures and related economic issues have almost always been involved but could generally be dealt with on a local basis.”

 

He says they became interested in the oceans of the world some twelve years ago and decided to build the Monterey Bay Aquarium as a first step. “The aquarium was designed to display the major marine habitats of the Monterey Bay. In doing this we have been extensively involved in the preservation of threatened or endangered species, sea otters and other marine mammals and several species of birds.

 

The resources of the oceans are so poorly managed that they produce only about half of the food they could produce under good management, and the pollution of the oceans is almost completely out of control. I am sure no one knows how many oceans species are threatened or endangered.”

 

Packard explains that the work in population control and environmental issues of the foundation has been expanded into Canada and Mexico, as well as other Central and South American countries. “From our experience so far,” he says, “we feel very strongly that the endangered species and related environmental problems can not be dealt with in any adequate way without taking into account the population pressures and the economic well being of the people who may be affected by the actions that are taken.”

 

Concluding that population and economic pressures are the main cause of environmental damage, Packard says he “does not see any hope that environmental damage can ever be stopped if the population and economic  pressures are not brought under control.

 

Packard tells of the foundation’s work in the preservation of certain species such as the Monarch Butterfly. “The presence  of this attractive insesct is enjoyed by thousands of people in Northern California and other parts of the United States and there do not appear to be any serious problems in protecting that part of their habitat in Mexico that is critical to their surivval.”

 

The foundation has also been active in helping protect the environment of the sea otter along the coast of Northern California. He notes, however, that “Because these creatures are so attractive to people, this program has more emotion than common sense. Thousands of dollars were spent to save a few sea otters from the Valdez oil spill, but there was no way to deal effectively with the thousands that were involved. Most of those that were saved from the effects of the oil were not returned to the ocean but were given to aquariums for their display.

 

“Frankly,” he says, “I do not think the preservation of individual species should always be the main object of … conservation endeavor[s]. I think the main objective should often be the establishment of a stable, self renewing biological environment. But that, of course, will assure the preservation of at least most of the species.”  He cites the example of the spotted owl in the forests of  the Northwestern United States which he says very few people have ever seen. “Despite the actions taken on behalf of the spotted owl the forests are not being managed on a long term self-renewing basis, and if they were it would provide an ample area for the preservation of these birds,” he states.

 

Talking about the long ocean frontage of Mexico Packard says this is another example where the preservation of specific endangered species in the ocean should not be the main objective. Instead he feels the oceans should be managed “so that they will be a stable, self renewing environment that will provide important resources for Mexico and the the rest of the world. In doing this the vast array of species that inhabit the oceans will be preserved.”

 

In some cases he feels “the preservation of a single species will be the catalyst for action. Catching dolphins in fishing nets…is a situation that must be corrected. This is an issue driven by emotion which can be corrected with a bit of common sense.”

 

Noting the forthcoming negotiations about the North American Common Market, Packard forsees “considerable opposition building up in the United States and some of the groups in opposition will certainly use environmental issues to support their opposition….I believe this distinguished group could be helpful to the President of Mexico by identifying issues that are likely to be troublesome and suggesting some actions that might be taken to reduce the influence of environmentalists in the United States who oppose the free trade treaty.”

 

 

Box 5, Folder 40B – General speeches

 

May 13, 1992 – Garden club of America, Cynthia Pratt Laughlin Medal, Baltimore, Maryland

 

May 13, 1992, Typewritten text of Packard’s acceptance speech

 

Packard was nominated for this award by the Carmel by the Sea Garden Club, and he expresses his appreciation to the Club President, Donna Dormody, for nominating him – “and to my friends who supported her nomination.”

 

Packard says when he first heard of his nomination for this award his first reaction was that there were certainly many other people than himself who were more deserving of such recognition. But then he recalled that he had, indeed, had a life long interest in gardening, first fostered by his mother. He says he began to help her plant a vegetable garden at their home in Pueblo, Colorado when he was about ten years old, adding that  “We planted a vegetable garden every spring, a practice I have followed in nearly every one of the seventy years since.”

 

In the 1920’s Packard, earned a little money in the summer by cutting the lawns of neighbors. Many other boys did likewise, but, he says, “Most of the boys would try to get the job done as quickly as possible, but from my mother’s guidance I was motivated to take a little more time and do the cutting and trimming as neatly as possible.” From this experience he learned  about the “better mouse trap theory.”

 

Packard graduated from Stanford in 1934 and took a job with the General Electric Company in Schenectady New York. He tells how he and Lucile Salter “a young lady I met at Stanford,” were married there in April of 1938, and how, in July, his interest in gardening “almost caused a divorce.…” He got up early one Saturday, his mind full of plans for a vegetable garden behind their house, and, as he tells it he “had the garden spaded and ready for planting when I went into the house to have a cup of coffee and found his wife in tears. In my zeal to get my garden planted I had completely forgotten that Saturday was her birthday!”

 

By 1950 “the Hewlett-Packard Company” he says, “was doing well and I began to extend my gardening interest into ranching. Bill Hewlett and I have major ranches in California and Idaho. We realized that the success of a cattle ranch is primarily dependent on the quality of the grasses and broad-leaf plants that provide the feed for the animals, and the trees and shrubs that protect the land from deterioration.”

 

Although “semi-retired” for the past 15 years or so, Packard says he has been “actively involved in restoring areas near the Monterey Bay to their original character. I have planted thousands of native trees and shrubs and established a nursery to produce grasses and plants that will survive long periods of drought that are becoming common in California.”

 

Packard closes by saying that “Gardening has been an important part of my life and it is a great honor to accept this award.”

 

5/13/92, Award Certificate for the Cynthia Pratt Laughlin Medal-1992. States that the medal is being awarded for “…outstanding achievement in environmental protection and the maintenance of the quality of life.” It says it was presented to David Packard “whose ongoing commitment to researching and fostering the growth of native plants and wildlife in California is encouraging long-term national efforts in the areas of conservation and the preservation of natural habitats.”

5/13/92, Summary for Candidates lists the Proposer, Seconders, and supporters.

5/13/92, Copy of a printed pamphlet describing the Garden Club of America

12/13/91, Copy of a letter to Packard from Mrs. Edward King Poor, III, National Chairman, Medal Award Committee, telling him he has been selected for the medal award.

1/22/92, Letter to Packard from Mrs. Edward King Poor III, saying she is “delighted” that he will be accepting the award, and giving details of the ceremony.

1/24/92, Letter to Packard from Donna Dean Dormody, President Carmel by the Sea Garden Club. She extends her congratulations on the award and says they are pleased that “a convervationist of your magnitude from this area has won such a prestigious award.”

2/21/92, Copy of a letter from Packard to Mrs. Edward King Poor, III sending a draft of his acceptance speech.

4/15/92, Copy of a letter to Packard from Mrs. Sellers J. Thomas, Jr., President of the Garden Club of America,  inviting him to a cocktail party on the evening of May 13, preceding the award dinner.

4/21/92, Copy of a letter from Packard to Mrs. Thomas accepting her invitation to the cocktail party.

May 12, 1992, Copy of Packard’s travel itinerary

 

 

Box 5, Folder 41 – General Speeches

 

October 5, 1992, Dataquest’s Semiconductor Industry Conference, Monterey, CA

 

10/5/92, Typewritten text of Packard’s comments

 

Packard says he wonders what he could say to this distinguished audience that would be interesting or helpful. “I know you are interested,” he says, “in the outcome of the election this fall. Although I have expressed my preference I do not think it will make much difference who wins. The United States economy is so thoroughly involved and so dependent on the worldwide economy that there is no strictly domestic action that will be constructive.”

 

So Packard says he will confine his remarks to two matters. “First, to tell you about how some of the management policies and practices of the Hewlett-Packard Company came about. Second, to make some observations about what I see as the future long range opportunities for this industry.

 

Before talking of the genesis of the HP Way, Packard says he would like to begin “with a bit of personal background.”

 

He tells of growing up in Pueblo Colorado and wanting to be an electrical engineer with General Electric Company. He built a radio station at home and continued his interest in radio when he came to Stanford. At Stanford he worked in the radio station which was near the radio laboratory of Professor Fred Terman, who would stop in once in a while.

 

Professor Terman arranged for Packard to attend his course which included visits to local industrial companies which were involved in radio – Heintz and Kaufman, Litton, Eitel, McCullough and Farnsworth.

 

Packard met Bill Hewlett and Ed Porter at Stanford. They became close friends, and in 1934, they decided to go into business for themselves after they graduated – thinking it would be difficult to get jobs during the current depression.

 

However, Packard was offered a job at General Electric in Schenecdtady, New York. Professor Terman encouraged Packard to accept the job to get some experience while Hewlett finished a year or two of graduate study.

 

Packard tells of his advisor at G.E. trying to interest him in power transmission and electric generators. These were not to his interest and he took a position in the refrigerator department. He worked in a shop making glass tubes about the size of gallon jugs. Many of the tubes were blowing up in the manufacturing process and he was given the job of finding out why. He says he worked with the factory people going through each step of the manufacturing process until they produced a batch with no failures.

 

“As I look back,” he says, “ my decision to work on that ignitron tube problem with the people in the factory had a profound influence on the management policies we developed for the Hewlett-Packard Company. That was the genesis of what has been called management by walking around. I learned that quality requires minute attention to every detail, that everyone in an organization wants to do a good job, that written instructions are seldom adequate and personal involvement is essential.”

 

Saying that personal involvement has been very important at all levels in  HP he gives a couple of examples. “In the middle of the 1970s our company was running low on cash and was planning to borrow $100 million. I realized that accounts receivable and inventories had got out of control, and I made a personal visit to nearly all of our operations to emphasize the importance of controlling these assets. It turned out that some of our procedures were at fault. These were corrected and by the end of the year instead of needing to borrow $100 million we had $100 million in the bank. Just a couple of years ago Bill and I began to receive complaints that the company was becoming to bureaucratic. We made some personal visits and learned that a division could not start a new product until it had been approved by six different committees at headquarters. These committee approvals were reduced to one, and our new product program is now far more productive.”

 

“…trying to provide long term security has been one of our policies,” Packard says. This began with concern about engineers. We had observed that in the aerospace industry in Southern California an outstanding team of engineers would be working for a firm that had an important contract.. When that contract was finished they were let go and had to find jobs at another firm which had a contract. Bill and I both thought this was a bad practice and we decided to concentrate our efforts on proprietary products so we could build a stable engineering team.

 

“Although our initial concern was about engineers, because of our close association with all of our employees in our early days, we extended this policy to include everyone.

 

“One of the important tenants of the HP Way was to finance our growth strictly from reinvesting our earnings.

 

He tells of working with his father who was a bankruptcy referee during the 1930s. He learned that a person or a business could survive if it had no long term debt. Often long term debt could not be refinanced during the depression and the person or business lost everything….We also felt it was desirable to have our employees own some share of the company. To do that we had an employee stock purchase plan  under which our employees could purchase stock at a 25% discount from the market.”

 

“From these examples of our early experience I think you can see that the HP Way was developed over a long period of time and was built on personal experiences of Bill and myself.

 

“Because of the success of the policies followed by the United States and the free world since the end of World War II, we now face an unprecedented dilemma. I do not think anyone can predict the short term outcome but there are two areas of basic research extending over the last twenty years or so that will have a profound influence on all industry based on high technology in the future. One is a new understanding about how life began on the earth, and this is related to how the universe began. The other is a new understanding about the structure of the atom.

 

Packard says the second area of basic research that will influence industry in the future is “The beginning of the universe.”

 

“The most widely accepted theory about the beginning of the universe is that it was created some six billion years ago by a ‘big bang’ whereby all of the mass was created in a fraction of a second from energy. Over the next two billion years this mass condensed into all of the galaxies of the universe. The earth was formed during this period and had cooled to its present configuration. Water had condensed and about 3.8 billion years ago life appeared in virus-like micro organisms that each contained a piece of DNA and RNA identical in structure to a piece of DNA and RNA that is found in every living thing today. They had no cellular membrane and mutations could occur rapidly. These micro organisms lived on hydrogen sulfide which they disassociated to obtain the hydrogen for the hydrocarbons in their structures. There was no oxygen in the earth’s atmosphere at that time. About a billion years later these micro organisms learned how to disassociate water into hydrogen which they needed, and oxygen was released to the atmosphere and built up to its present level of about 30%.

 

“About two billion hears ago cells developed and mutations required the mating of two cells and the production of offspring. From that beginning all plants and animals in the world have evolved. The virus-type micro organisms still exist in all living things and can mutate much more rapidly than cells. It is through their action that such things as immunity to antibiotics can build up rapidly.

 

“The structure of the atom.

 

All of the amazing technical progress in the twentieth century has been based on scientific knowledge that was in place before the end of the nineteenth century. The basic laws of electricity and magnetism, Newton’s laws of gravity, Maxwell’s equations, were all known before the turn of the century. The atom was thought to consist of a simple nucleus of protons and neutrons surrounded by various numbers of electrons. This image could explain the periodic table and all of the electronic development of the twentieth century, the Poulsen arc, the vacuum tube, and the transistor were all based on this simple image of the atom. Einstein’s theories and the relationship of mass and energy were developed during the first half of the century, but this did not change the basic concept of a simple structure of the atom.

 

“The high energy physics projects, the Stanford linear accelerator and all other accelerators were driven by the cold war. There was serious concern that the Soviets might discover some new nuclear phenomena that would give them a military advantage. From this high energy research we learned that the atom is not a simple structure, but consists of ten or so different particles with weak forces ands strong forces. It is far different from the simple structure it was thought to be.

 

“Under the theory of the simple structure we could deal with only those materials that occur in nature. With knowledge of the complex structure it is now possible to make materials that do not occur in nature. Glass that is ductile, not brittle for example. This new knowledge about the atom opens up a whole new era, particularly I think for the information industry. I saw recently a demonstration in which nerve cells had been made to grow in an inorganic structure. This new knowledge about the nature of the physical universe will give us a better understanding of how the brain works, an ability to understand and utilize to our advantage the physical world in which we live. This means that your LSI’s will utilize organic material in the future.

 

“From this perspective, I do not think what happens this year in the political arena will be of any importance whatever in the long term. With these new horizons in front of you the opportunity for progress in the twenty-first century is clearly going to be far greater than the opportunity we have had in the twentieth century.”

 

Box 1, Folder 35C – HP Management

 

January 23-24, 1994 – General Manager’s Meeting, Reception for Dave Packard

 

1/23/94, Text of Packard’s remarks handwritten on yellow lined paper

 

Packard asks the question “How was HP different?

 

“Bill and I started at the beginning of the Great Depression of the 1930s.

 

“To be able to do this while we were doubling our business every year in the early days of the war we had to achieve nearly 100% increase in our return in equity, and keep our inventory and receivables at a low percent. Of our assets.

 

“Bill and I started this basic policy before he was drafted full time because he had a reserve officers commission in the Signal Corps.

 

“One day a year or so after Bill left the members of the local registration board appeared at our office. They were local businessmen and generally sympathetic with what we were doing but one of the guide lines they had to follow was the return on equity that was allowed was 12%.

 

“It was obvious to me that I could not accept that and I refused to do it. I pointed out to them that they could not get better instruments at a lower cost from anyone else. I went back to Washington to try to get an exemption from the 12% limit. I pointed out that I was getting a lower salary than most of the Chief Executives from companies of similar size. We were also spending more money on R & D or products from the Naval Laboratory.

 

“I put together some data to support this position and they finally agreed to accept what I recommended.

 

“We dealt with the Registration Board in every year after that following this problem.

 

“The Navy recognized our little company with the only E Flag given to anyone in our industry during the war.

 

“By the middle of 1950s we had reached a substantial level of sales and we looked at other companies who were leveraging their profits with long term debt. At one time I thought we should do the same. [But] Bill and I agreed not to do this and in the end we came out better than companies which had long term debt.

 

“Bill and I were very close to our employees and their families .Before we officially started the company in 1939 we were aware of what other companies were doing to provide motivation for their employees.

 

“The Lincoln Electric Company which made welding equipment had a profit sharing plan for their employees. Their equipment could be sold at a lower price and had better quality as well.

 

“The General Radio Company had a profit sharing plan for their engineers.

 

“We had noted tat the Aerospace Companies in Southern California did not have any way to keep the best engineer force. All of the good engineers in that business went to the company which had the business. If another company got the business all of the engineers went there.

 

“We had small group of employees in 1940 and we knew all of them and their families When we put together a profit sharing system for our employees we decided to include all of them not just our engineers.

 

“What this plan did was to give our employees the benefit of any improvement in products we achieved. This was done by taking the total cost of labor as a percentage of sales and keeping it at a level by increasing their bonus to keep the cost of total labor as a percentage of sales fixed. “This did two things, the take home pay increased substantially to about 180% of the starting point.”

 

“It had another long term effect on our employee award systems. They applied to all of our employees not just to specific groups of employees. These egalitarian aspects of our employee benefits plans encouraged team work as an important factor.

 

“U was active in athletics during my high school years. One of the teachers who helped in athletics helped to establish this principle.

 

“When a group is in the champion level there is a small difference in capabilities of the players. The winning team does so by having better team work and by having a stronger will to win.

 

“You can see the importance of teamwork in the champion basketball games when one player has a chance to make a basket he will pass to one of his team mates who has a better shot at the goal.

 

“The importance of the will to win was the key factor in enabling the 49ers to make such a decisive win mover the New York Giants. The same team was badly beaten just a couple of weeks before.”

 

1/23/94, Copy of the list of attendees at the General Managers Meeting

 

Box 5, Folder 41A, General Speeches

 

April 15-17, 1994 – Remarks Before the National academy of Practice, Denver, CO

 

4/15/94 – Copy of typewritten text of speech.

 

“The current interest in health care has brought forth a large number of activities which can influence the quality and the cost of health care. This makes it very difficult to chart the course to follow in a specific way. To make any real progress, long-standing attitudes and practices will have to be changed, and for many of the changes that might be desirable it will take considerable time to have them accepted.

 

“There is not even agreement on what the goal should be, except in general terms. The total cost should be lower, everyone should be covered and the quality should be improved. In my opinion, there should be one very important goal. Both the ultimate goal and the steps to get there should be done without arbitrary direction by either the state or federal governments – but both will be involved because legislation will be necessary and the National Institute of Health must continue to be a prominent anchor. The financial guideline should be to reduce the total cost so it will be less than the present 12% of GNP.

 

“Putting the patients record on a computer seems to be one step. I have made a good many visits to my doctor and to the hospital during the last several ;years. My health records are in a file of papers several inches thick. A substantial part of the time of my visits to my doctor are spent with his looking through the file to determine what happened in the past that might have some connection with my current problem. I would judge that this has taken over half the time I have spent with my doctor. In the process of being admitted to the hospital, several people spend a corresponding amount of time going through the file. My health record could easily be put on a computer, the trend of critical items plotted and a substantial amount of time now spent by my doctor and other people in the hospital could be saved. This appeared to me to be a simple problem but now I realize it involves some difficult questions that I will discuss later.

 

“Research and development in areas related to health promise stunning breakthroughs. It now appears almost certain that being able to mark human genes will make it possible to identify diseases before the symptoms appear, and genetic engineering will provide the treatment. Support for research in this area is not adequate even though the pay out would transcend everything else we could do. Research has been criticized because of the example of the two drugs that were developed to control heart attacks. One cost two thousand and the a few hundred dollars. A great deal of money was spent to justify the higher priced product by extensive testing, and although the testing showed that the difference was very marginal, the higher priced product still holds over half of the market.

 

“Human growth hormone and a new Genentech product to control cystic fibrosis are good examples of what can be done with genetic engineering. Recently an enzyme had produced a cure for a type of skin cancer.  A tremendous amount of work has been done in this field since 1960 and a larger effort is clearly justified. There is a countervailing problem – diseases that were under control are reappearing and there is a new one, HIV, which has appeared. These are caused by microscopic virus-like particles, according to the latest theories, that inhabit our bodies and mutate rapidly to destroy the effectiveness of antibiotics, cause diseases the we thought were eliminated, to reappear, and to create new diseases like HIV.

 

“The outcome of research is always uncertain but at least offers the possibility of control. The lack of research insures that these complex problems will not be controlled, and that is a risk we should not take.

 

There are literally hundreds of ideas that can have some impact on the cost or effectiveness of health care. I think they are nearly all Band-Aid solutions to a patchwork of hearth care. There are a number of these in the book Aging In Good Health, by Florence Lieberman and Morris F. Collen. This book covers a range of things that should be covered in good geriatric care. It makes a strong case for more involvement of the nursing profession but does not put much emphasis on the importance of giving more attention to children in their early years.

 

“It is in the context of giving more responsibility to the nursing profession that the problems of computerizing medical records appears. How much of the computer records of the doctor should be given to the nurses to see independently of the doctor’s supervision of the nurses. I am not competent to answer this question, but I suggest it will be an important question and will have to be answered.

 

“HealthPACT for Business and Industry, developed by Judith B. Igoe, is used by the Hewlett-Packard Company and it serves to make appointments with doctors more effective. It is a useful program but does not contribute very much to the solution of the over-all problem.

 

“The over-all opinion surveys seem to indicate the country is not yet able to coalesce on a final plan. Daniel Yankelovich, one of America’s leading public opinion samplers, has pointed out hat mounting criticism of the current U.S. health care system hoes not mean that Americans are really ready for a major change. according to Yankelovich, the process of public decision making proceeds in a series of well-defined stages beginning with a dawning of awareness about an issue and gradually evolving toward  fully integrated, thoughtful public judgment. According to this timeline, Americans are still in the early stages of development on health care reform, and enactment of major reforms may, despite the current heightened level of interest, be a long way off. Support for Yankelovich’s reading of where the public stands on health care reform can be found in a recent analysis which demonstrated a significant gap between export and public  views on the nature of the problem with hearth care, its causes, and how it should be solved. Addressing this gap ;may prove particularly difficult given the likely attempts to game the reform process by the large assortment of vested interests who will be trying to protect their turf in the nation’s largest industry.

 

“There is good reason to believe that the U.S. public is currently working through the health care reform issue. It sees likely that this process of exploring choices, dealing with wishful thinking, and weighing the pros and cons of alternatives would be facilitated b the same kinds of objective information provided to the congressional staff last year.

 

“This reinforces my opinion that it is going to take a long time to decide where we ought to go and how to get there. The information from the opinion survey done by Daniel Yankelovich appears in the summer/fall issue of The Future of Children, a publication of the Center for the Future of Children, the David and Lucile Packard Foundation.

 

“The statement of purpose of the Future of Children is as follows:

 

‘The primary purpose of the Future of children is to disseminate timely information on major issues related to children’s well-being, with special emphasis on providing objective analysis and evaluation, translating existing knowledge into effective programs and policies, and promoting constructive institutional change. In attempting to achieve these objectives, we are targeting a multidisciplinary audience of national leaders, including policymakers, practitioners, legislators, executives, and professionals in the public and private sectors. This publication is intended to complement, not duplicate, the kind of technical analysis found in academic journals and the general coverage of children’s issues by the popular press and special interest groups.’”

 

“The issues of The Future of Children are as follows:

 

Volume 1, Number 1 – Spring 1991

Drug Exposed Infants

 

Volume 2, Number 1 – Spring 1992

School Linked Services

 

Volume 2, Number 2 – Winter 1992

U.S. Health Care for Children

 

Volume 3, Number 1 – Spring 1993

Adoption

 

Volume 3, Number 2 – Summer/Fall 1993

Health Care Reform

 

Volume 3, Number 3 – Winter 1993

Home Visiting”

 

 

Box 5, Folder 42 – General Speeches

 

September 23, 1994, Remarks to employees of HPSA, Geneva, Switzerland

 

9/23/94, Copy of printed page from Geneva Site News, containing the transcript of Packard’s speech

 

Packard explains that Bill Hewlett wanted very much to make this visit too, but he  recently underwent an operation on his knees and is still convalescing, and in good spirits.

 

“Commenting on the people he has seen during his visit Packard says “In every place I visited I’ve been greatly impressed with the tremendous spirit, ability and enthusiasm that I’ve seen in the people who are responsible, doing these jobs. There are quite a few who are old friends here, but it’s also great to see a good many very young people and they’re all really working to do the job that has to be done.

 

“We have a very complex operation and it wouldn’t work if we had a routine system of somebody at headquarters who had to tell everybody what to do. It just wouldn’t work at  all in this kind of a business.

 

“And so the reason for our success is the fact that all of you people here have an understanding of where we want to go and have the ability to make the decisions that are important to achieve what we’d like to achieve. And I tell you it’s a very, very impressive presentation.

 

“Now I want to say a word or two about some of the long-term prospects of things. Some of you know this already but it’s so important that I think it’s very desirable to repeat it and keep it mind. If we look at the technology which has been put in place in the 20^th century we find that almost all the science on which that technology is based was in place in the middle of the 19^th century.

 

“In the years of about 1850, the electrical quantities had been named: Amps, volts, and so forth. Maxwell’s equations had been defined and Maxwell’s equations, as you know, defined very precisely how electrical energy is transmitted through space.

 

“And, in 1895, a scientist called Nikola Tesla published a paper in which he described every conceivable kind of power phase generator and motor run transmission system that we’ve got in this century.

 

“That science on which this progress is made, was based on the concept that an atom is the smallest particle in the world, and had two particles – neutrons and protons – and rings of electrons.

 

“And from that image, we constructed the Periodic Table and actually could demonstrate some of Einstein’s theories.

 

“That science prevailed until the end of World War II. At that time, both we and the Soviet Union undertook an extensive program of high energy physics. Wouldn’t you know that some of it was done right here in this vicinity! High-energy physics taught us that an atom was much more complicated than we had thought. It consists of ten particles and weak and strong forces – Newtonian, I guess. I don’t understand these. I can’t explain them all to you, but I can tell you what the difference is.

 

“With the science we had up until the end of the war, we could reproduce things that occurred in nature. With the science that has come from this new knowledge of the nature of the atom, we could reproduce things that did not occur in nature. You can make materials that are harder than diamonds. You can make glass flexible. This advance is the basis of engineering programs to do all these wonderful things.

 

“Now a good deal of work  is done and genetic engineering is helping to solve some of the medical problems in the world. Well, I think we’re going to find that genetic engineering is going to be much more important for us in other ways.

 

“Almost all the technology we’ve used with transistors and integrated circuits has been co-planar (that allows you to connect several planes together). But with some of the things that are done in genetic engineering it may be possible to add a third dimension to these devices which will have some tremendous possibilities. You can imagine some of the things. We don’t know what they will be for sure, but it’s something that we really must follow.

 

“When Bill and I started, the overall effort that generated the growth in the 20^th century was not very high. We had exponential growth. If one works at exponential growth, you sort of say that you can’t keep going up forever. It’s common sense that it’s got to stop somewhere. But this is one place where common sense does not apply. And the overall effort today is many, many times what it was when bill and I started. And the rate of change in the years ahead is going to be very much higher than anything we have seen in our life-time.

 

“Now you people have generated some rather expensive ideas about what you’re going to do in the next two to three years. I’m not suggesting you change it. It’s a good way to be. But the rate of growth in the 21^st century is going to be many, many times greater than it has been in the 20th century.

 

“So you young people have wonderful futures to look forward to and it’s going to be an exciting world for you. There are going to be some problems…I think for that reason it’s probably a good idea to be on the conservative side. As one of my friends said a long time ago, more businesses die of indigestion than of starvation and that’s a good thing to keep in mind.

 

“As we move into the next century, it’s going to be, as I said, an exciting time. And I can tell you that I’m going to go home and tell Bill that things are just as good as I hoped they would be and just as good as I expected they would be. And I expect you to keep up that performance. You have wonderful opportunities ahead. God bless you all.”