Source: NASA Historical Reference Collection, NASA History Office, NASA Headquarters, Washington, DC.

The Phillips Report

I. Introduction

This is the report of the NASA's Management Review of North American Aviation Corporation management of Saturn II Stage (S-II) and Command and Service Module (CSM) programs. The Review was conducted as a result of the continual failure of NAA to achieve the progress required to support the objective of the Apollo Program.

The scope of the review included an examination of the Corporate organization and its relationship to and influence on the activities of S&ID, the operating Division charged with the execution of the S-II and CSM programs. The review also included examination of NAA off-site program activities at KSC and MTF.

The members of the review team were specifically chosen for their experience with S&ID and their intimate knowledge of the S-II and CSM programs. The Review findings, therefore, are a culmination of the judgements of responsible government personnel directly involved with these programs. The team report represents an assessment of the contractor's performance and existing conditions affecting current and future progress, and recommends actions believed necessary to achieve an early return to the position supporting Apollo program objectives.

The Review was conducted from November 22 through December 6 and was organized into a Basic Team, responsible for over-all [2] assessment of the contractor's activities and the relationships among his organizational elements and functions; and sub-teams who assessed the contractor's activities in the following areas:

Review Team membership is shown in Appendix 7.

Team findings and recommendations were presented to NAA Corporate and S&ID management on December 19.

II. NAA's Performance to Date - Ability to Meet Commitments.

At the start of the CSM and S-II Programs, key milestones were agreed upon, performance requirements established and cost plans developed. These were essentially commitments made by NAA to NASA. As the program progressed NASA has been forced to accept slippages in key milestone accomplishments, degradation in hardware performance, and increasing costs.

I. S-II--1.Schedules

As reflected in Appendix VI key performance milestones in testing, as well as end item hardware deliveries, have slipped continuously in spite of deletions of both hardware and test content. The fact that the delivery [3] of the common bulkhead test article was rescheduled 5 times, for a total slippage of more than a year, the All System firing rescheduled 5 times for a total slippage of more than a year, and S-II-1 and S-II-2 flight stage deliveries rescheduled several times for a total slippage of more than a year, are indicative of NAA's inability to stay within planned schedules. Although the total Apollo program was reoriented during this time, the S-II flight stages have remained behind schedules even after this reorientation.

  1. Costs
    The S-II cost picture, as indicated in Appendix VI has been essentially a series of costs escalations with a bow wave of peak costs advancing steadily throughout the program life. Each annual projection has shown either the current or succeeding year to be the peak. NAA's estimate of the total 10 stage program has more than tripled. These increases have occurred despite the fact that there have been reductions in hardware.
  2. Technical Performance
    The S-II stage is still plagued with technical difficulties as illustrated in Appendix VI. Welding difficulties, insulation bonding, continued redesign as a result of component failures during qualification are indicative of insufficiently aggressive pursuit of technical resolutions during the earlier phases of the program.
II. Schedules
A history of slippages in meeting key CSM milestones is contained in Appendix VI. The propulsion spacecraft, the systems integration spacecraft, and the spacecraft for the first development flight have each slipped more than six months. In addition, the first manned and the key environmental ground spacecraft have each slipped more than a year. These slippages have occurred in spite of the fact that schedule requirements have been revised a number of times, and seven articles, originally required for delivery by the end of 1965, have been eliminated. Activation of two major checkout stations was completed more than a year late in one case and more than six months late in the other. The start of major testing in the ground test program has slipped from three to nine months in less than two years.
  1. Costs
    Analysis of spacecraft forecasted costs as reflected in Appendix VI reveals NAA has not been able to forecast costs with any reasonable degree of accuracy. The peak of the program cost has slipped 18 months in two years. In addition, NAA is forecasting that the total cost of the reduced spacecraft program will be greater than the cost of the previous planned program.
  2. Technical Performance
    Inadequate procedures and controls in bonding and welding, as well as inadequate master tooling, have delayed fabrication of airframes. In addition, there are still major development problems to be resolved. SPS engine life, RCS performance, stress corrosion, and failure of oxidizer tanks has resulted in degradation of the Block I spacecraft as well as forced postponement of the resolution of the Block II spacecraft configuration.

III. NASA Assessment - Probability of NAA Meeting Future Commitments
Today, after 4 1/2 years and a little more than a year before first flight, there are still significant technical problems and unknowns affecting the stage. Manufacture is at least 5 months behind schedule. NAA's continued inability to meet internal objectives, as evidenced by 5 changes in the manufacturing plan in the last 3 months, clearly indicates that extraordinary effort will be required if the contractor is to hold the current position, let alone better it. The MTF activation program is being seriously affected by the insulation repairs and other work required on All Systems stage. The contractor's most recent schedule reveals further slippage in completion of insulation repair. Further, integration of manual GSE has recently slipped 3 weeks as a result of configuration discrepancies discovered during engineering checkout of the system. Failures in timely [6] and complete engineering support, poor workmanship, and other conditions have also contributed to the current S-II situation. Factors which have caused these problems still exist. The two recent funding requirements exercises, with their widely different results, coupled with NAA's demonstrated history of unreliable forecasting, as shown in Appendix VI, leave little basis for confidence in the contractor's ability to accomplish the required work within the funds estimated. The team did not find significant indications of actions underway to build confidence that future progress will be better than past performance.

With the first unmanned flight spacecraft finally delivered to KSC, there are still significant problems remaining for Block I and Block II CSM's. Technical problems with electrical power capacity, service propulsion, structural integrity, weight growth, etc. have yet to be resolved. Test stand activation and undersupport of GSE still retard schedule progress. Delayed and compromised ground and qualification test programs give us serious concern that fully qualified flight vehicles will not be available to support the lunar landing program. NAA's inability to meet spacecraft contract use deliveries has caused rescheduling of the total Apollo program. Appendix VI indicates the contractor's schedule trends which cause NASA to have little confidence that the S&ID will meet its future spacecraft commitments. While our management review indicated that some progress is [7] being made to improve the CSM outlook, there is little confidence that NAA will meet its schedule and performance commitments within the funds available for this portion of the Apollo program.

IV. Summary Findings Presented below is a summary of the team's views on those program conditions and fundamental management deficiencies that are impeding program progress and that require resolution by NAA to ensure that the CSM and S-II Programs regain the required program position. The detail findings and recommendations of the individual sub-team reviews are Appendix to this report.

A. NAA performance on both programs is characterized by continued failure to meet committed schedule dates with required technical performance and within costs. There is no evidence of current improvement in NAA's management of these programs of the magnitude required to give confidence that NAA performance will improve at the rate required to meet established Apollo program objectives.

B. Corporate interest in, and attention to, S&ID performance against the customer's stated requirements on these programs is considers passive. With the exception of the recent General Office survey of selected functional areas of S&ID, the main area of Corporate level interest appears to be in S&ID's financial outlook and in their cost estimating and proposal efforts. While we consider it appropriate that the responsibility and authority for execution of NASA programs be vested in the operating Division, this does not relieve the Corporation of its responsibility, and accountability to NASA for results. [9] We do not suggest that another level of program management be established in the Corporate staff, but we do recommend that the Corporate Office sincerely concern itself with how well S&ID is performing to customer requirements and ensure that responsible and effective actions are taken to meet commitments.

C. Organization and Manning
We consider the program organization structure and assignment of competent people within the organization a prerogative of the manager and his team that have been given the program job to do. However, in view of what we consider to be an extremely critical situation at S&ID, one expected result of the NASA review might be the direction of certain reorganizations and reassignments considered appropriate, by NASA, to improve the situation. While we do have some suggestions for NAA consideration on this subject, they are to be accepted as such and not considered directive in nature. We emphasize that we clearly expect NAA/S&ID to take responsible and thoroughly considered actions on the organization and assignment of people required to accomplish the S-II and CSM Programs. We expect full consideration, in this judgement by NAA, of both near and long term benefits of changes that are made.

Frankly stated--we firmly believe that S&ID is overmaned and that the S-II and CSM Programs can be done, and done better, with fewer people. This is not to suggest that an arbitrary [10] percentage reduction should be applied to each element of S&ID, but we do suggest the need for adjustments, based on a reassessment and clear definition of organizational responsibilities and task assignments.

It is our view that the total Engineering, Manufacturing, Quality, and Program Control functions are too diversely spread and in too many layers throughout the S&ID organization to contribute, in an integrated and effective manner, to the hard core requirements of the programs. The present proliferation of the functions invites non-contributing, "make-work" use of manpower and dollars as well as impediments to program progress.

We question the true strength and authority of each Program Manager and his real ability to be fully accountable for results when he directly controls less that 50% of the manpower effort that goes into his program. This suggests the need for an objective reappraisal of the people and functions assigned to Central versus Program organizations. This should be done with full recognition that the Central organization's primary reason for existence is to support the requirements of the Program Managers. Concurrently, the Program Manager should undertake a thorough and objective "audit" of all current and planned tasks, as well as evaluate the people assigned to these tasks, in order to bring the total effort down to that effort down to that which truly contributes to the program.

It is our opinion that the assignment of the Florida Facility to the Test and Quality Assurance organization creates an anomaly since the Florida activities clearly relate to direct program responsibilities. We recognize that the existence of both CSM and S-II activities at KSC may require the establishment of a single unit for administrative purposes. However, it is our view that the management of this unit is an executive function, rather than one connected with a functional responsibility. We suggest NAA consider a "mirror image" organizational relationship between S&ID and the Florida operation, with the top man at Florida reporting to the S&ID President and the two program organizations reporting to the S&ID Program Managers.

D. Program Planning and Control
Effective planning and control from a program standpoint does not exist. Each organization defines its own job, its own schedules, and its own budget, all of which may not be compatible or developed in a manner required to achieve program objectives. The Program Managers do not define, monitor, or control the interfaces between the various organizations supporting their program.

Organization -- S&ID's planning and control functions are fragmented; responsibility and authority are not clearly defined.