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 18th
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 25th 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 60th 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 20th 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.]
- ‘Setting requirements for the most sophisticated systems attainable often irrespective of cost;
- Underestimating schedules and costs of major programs, distorting the decision making process for the allocation of the national budget; [ Packard adds “deliberately doing so.”]
- 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;
- Lack of incentives for contractors and government personnel to reduce program costs; and
- 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 27th.
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
