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The University of Texas at Austin

Studies in Ethics, Safety, and Liability for Engineers

Kurt Hoover and Wallace T. Fowler

The C-5 Galaxy: A Question of Need?

The C-5 Galaxy is the largest airplane in the free world. It can haul 250,000 lb of equipment; it is 246 ft long and has a wing span of 233 ft. The enormous tail reaches as high as a six story building and when the airplane lands the pilot is still three stories off the ground. The interior cargo compartment is as big as an eight lane bowling alley and longer than the Wright brothers first flight. To many people who equate size with greatness, the C-5 is a worthy triumph of American aerospace engineering. At the time of its creation, it was lauded by both Lockheed and the USAF as the best America could create. However, from its conception to the present day, the C-5 has provided examples of many of the worst problems with the weapons procurement system in this country. Today, the C-5 is an airplane with a greatly diminished and restricted mission, unable to fulfill the role for which it was designed. Despite the best intentions of all those involved in its design and production, the C-5 will never play more than a token role in the defense of this nation.


Background

The Need for the C-5:

The idea for the C-5 originated in the early 1960s; a fleet of giant cargo aircraft would allow the United States to move large quantities of troops and equipment to any place in the world in a matter of days. No longer would large numbers of U. S. troops have to be garrisoned abroad in distant lands to maintain America's military presence. With several C-5 squadrons, America could project its military power anywhere, anytime, without the expense of maintaining permanent facilities overseas.

Of course the USAF (United States Air Force) was not without cargo planes in the 1960s. The most successful was the C-130 Hercules. This turboprop driven airplane, designed and built by Lockheed, could land, release its cargo, and then take-off in only 3800 ft. The C-130 is a very versatile aircraft and today over 1800 of them are still serving the Air Force as gunships, cargo transports, and tankers. Despite the fact that it was designed in the 1950s, the C-130 continues to be one of the most useful aircraft in the USAF inventory. As military planners considered the available cargo aircraft in 1960, they determined it was necessary to have a larger jet powered cargo airplane. In 1964, the USAF began acquiring the C-141 Starlifter. Unfortunately Army paraphernalia continued to grow in size and by 1964 only one third of it fit through the C-141 cargo doors. In order to help the Army deploy rapidly, the USAF needed a larger cargo aircraft to haul the really big equipment.

The Ultimate Cargo Airplane:

To satisfy the increasing airlift needs, the USAF developed an RFP (Request For Proposal) in May of 1964. The new aircraft was to be the ultimate transport aircraft. Its ability to land fully loaded on dirt runways no longer than 4,000 ft. would allow combat and support equipment to be delivered right to the front lines. A complex system of slats and flaps would allow the aircraft to accomplish short take-offs and landings. The specifications called for the airplane to operate in temperatures ranging from -65oF to 120oF. A built-in malfunction detector was to monitor 600 critical systems and provide recommended fixes for any system failure. A special system was proposed to deflate and re-inflate the tires to facilitate landing gear stowage and to facilitate landings on unpaved runways. Built in ramps were included to facilitate rapid loading and unloading through both the front and rear cargo doors.

The Contract

Competition for the C-5 Contract:

Three companies, Boeing, Lockheed, and Douglas, bid for the C-5 airframe contract. The original proposal called for a fleet of 115 planes. Each company received money from the USAF to develop its proposal. When the proposals were finally submitted, Boeing set the cost of the program at $2.3 billion, Douglas at $2.0 billion, and Lockheed at $1.9 billion. A USAF team consisting of 400 officers and civilians evaluated the proposals and selected the Boeing design based on its technical superiority. However, this decision was overruled by high level DOD (Department of Defense) managers and the contract given to Lockheed because of its lower bid.

At the time the C-5 contract was awarded, there was great concern within DOD about the cost of weapons systems. A 1962 study of twelve major weapons systems showed that the average program ended up costing 220% of the original estimated cost. To counter the trend of over-budget programs, Secretary of Defense Robert McNamara developed the Total Package Procurement procedure (TPP). Under this procedure, a contractor was required to incorporate all costs in the bid, including initial design, final design, manufacture, testing, training, and spare parts. The central idea of the procedure was to required a company to submit a bid for all these components. The company was to be held to this price by the USAF, eliminating cost overruns.

However, almost nothing in the military industrial complex is simple. One of the major reasons that Lockheed was awarded the C-5 contract was DOD's desire to retain Lockheed as a viable defense contractor. In Marietta, Georgia, production on the C-130 and C-141 was winding down. Had Lockheed not won the C-5 contract, thousands of people at Lockheed Georgia would have been laid-off. The giant defense contractor, which was also the sole source of Polaris and Poseidon missiles, would have been in serious financial trouble. Although Lockheed's bid was the lowest, there was no guarantee that their costs would remain the lowest despite the TPP procedure.

Politics:

When a contractor wins a defense contract, that victory is usually based as much on politics as technical competence. It is the duty of every Senator and Representative to further the interest of his constituents; this is the whole idea behind representative democracy. However, this sometimes presents the politician with an ethical dilemma. What if the interests of his constituents conflict with the interests of the nation as a whole? The question is further complicated by the complexities inherent in determining what is truly good for America as a whole.

The Need for the C-5 (reexamined):

In the case of the C-5, there were some military experts who said the whole project was not good for the country and not even necessary. They believed that ships and existing aircraft could move the Army as rapidly as was likely to be necessary. The expected cost of moving cargo by C-5 was 15˘ per ton versus only 1˘ per ton by ship. In addition the ability to move larger amounts of equipment might actually destabilize world politics. Instead of allowing America to maintain world peace through the threat of rapid deployment, the acquisition of the C-5 might lead America to interject itself into places it did not belong.

However, most military experts and most members of Congress saw the C-5 as a necessary part of the nation's defense. The Georgia congressional delegation, particularly Senator Russell, who chaired the Senate Armed Services Committee, strongly supported the C-5 program. The C-5 also had widespread bipartisan support because of the diverse geographical locations of its many subcontractors. At one point, 2000 subcontractors in 41 different states participated in the C-5 program. For many Congressman, a vote against the C-5 was a vote against jobs back home. This fact, combined with the USAF's aggressive support for the program, assured the C-5 of Congressional funding.

Problems with the Airplane and the Contract:

Engineering Difficulties:

Lockheed's struggle to win the C-5 contract was a success, but the company's troubles were far from over. The shear size and complexity of the C-5 made it a very difficult project to complete. Because of the size of the engineering task, Lockheed was forced to hire contract labor; and at one point 850 engineers from British Aerospace were contracted to the project. The difficulties of regularly transferring detailed information across the Atlantic hampered vital communications and slowed the project. Engineering and production problems developed with many of the C-5's systems. The design of the wing proved particularly difficult and ultimately required a complete redesign after production had begun. The design of the undercarriage which allowed the massive plane to make short take-offs and landings created additional complications. Lockheed also had problems with its subcontractors. The advanced multi-model radar was particularly troublesome, and ultimately was scrapped for a simpler system. Development problems ultimately delayed the start of manufacture of the first prototype by more than a year.

Despite the use of the TPP procedure, the C-5 contract still contained many of the problems endemic to other defense contracts. During the course of design and testing, there were 46 major changes to the design and 789 changes in the contract specifications. Some of the changes were quite minor, but some, such as the redesigned wing and the new radar, were significant and required a much additional time and money. Many of the specification changes were written by the USAF because the Lockheed design could not perform up to the original specifications. The most glaring example was the inability of the wing to function with a fully loaded plane. The contract called for the C-5 to be able to carry 150% of its legal load limit. FAA regulations require commercial airliners to be able to carry 200% of their legal limit. The C-5 could carry no more than 128% of its legal limit and on one flight developed wing cracks when only 82% full. This problem necessitated redesign of the wing for future Galaxies and replacement of the wings on the existing Galaxies.

Underbidding and Run B:

Lockheed had originally won the contract because of its low bid of $1.9 billion for the whole program; this translated into a cost of $16.5 million per plane. However, by early 1969, Lockheed was estimating the cost at about $40 million per plane. Most knowledgeable people agreed that Lockheed could never have produced the airplanes for $16.5 million each, even without all the problems and complications. The company had bought into the contract with the intent of recouping its loses and making a profit on the second production run.

The C-5 contract called for two separate production runs. Run A was to be priced according to the original bid. Run B was to be priced according to a complicated formula, which incorporated the actual production costs of Run A. The higher the Run A cost, the more the USAF would pay for each plane in Run B. Thus, it was to Lockheed's advantage to increase the production costs of Run A.

Unfortunately for Lockheed, Run B was not a sure thing. Troubled by cost overruns in Run A and rumors of poor performance of the C-5, Congress took a greater interest in the program. At the same time, a USAF study showed that the three squadrons in Run A would be sufficient and that a second production run was not necessary. This study was quickly disavowed by the top people in the USAF and DOD. Most of the Pentagon witnesses testifying before Congress insisted that the C-5 was absolutely essential to national defense and was not nearly as much over cost as rumored. The truth was that neither the USAF nor Lockheed really knew how much the project was over-budget or what the ultimate cost of a Galaxy would be.

Despite the lack of accurate cost figures, the USAF placed the order for Run B in January 1969. All that remained was for Congress to allocate the money. At that time, however, stories of the waste and fraud in the C-5 program were appearing in major papers all over the country. Congressmen began to receive large amounts of mail from their constituents demanding an end to the program. Faced with this onslaught of negative publicity, the USAF and Lockheed counterattacked with their own publicity campaign. Lockheed and several C-5 subcontractors took out full page adds in magazines such as Time and Newsweek, where they glowingly sold the merits of their plane. DOD witnesses continued to strenuously urge Congress to approve funds for Run B.

Lockheedıs Financial Difficulties:

All the negative publicity had a strong effect on Lockheed stock. After winning the C-5 contract, the stock rose to a high of $62 a share. With the concern over Lockheed's financial condition, the stock fell first to $30 in 1969 and continued falling until it reached only $7 a share in 1971. For several years progress payments by the USAF for the C-5 had represented almost 25% of Lockheed revenue. If Lockheed lost the C-5 contract, it would surely have caused bankruptcy for an already struggling company.

A No Win Situation:

DOD could not allow Lockheed to go bankrupt. Without some form of federal assistance, however, it was only a matter of time before this happened. DOD attempted to secure additional credit for Lockheed, but the prospect of large loses on the current production run and no additional production run to recoup the loses discouraged any bank from extending Lockheed credit. The company threatened to default on the first production run unless it received more money. An increasingly frustrated Congress debated cancelling the program or substituting the Boeing 747 at $22 million each for the Galaxy which had risen in price to almost $60 million each. Finally, DOD developed a compromise solution. A second production run of 24 planes would be authorized. In addition $200 million would be appropriated for a discretionary fund to fix the problems with the C-5 design and bring the already manufactured airplanes up to standard.

When the DOD proposed its compromise solution, it admitted that the C-5 had become an embarrassing problem. The program had progressed too far to cancel entirely and it would have been too costly to modify the 747 to assume the C-5 role. The compromise was an attempt to make the best of a bad situation. There were no winners, only losers.

The Losers

Lockheed:

Lockheed was left in a very bad financial position. The downturn in the aerospace industry in the early 1970s hit the company particularly hard. Even with the second run and the the discretionary fund, the company came perilously close to bankruptcy. Major layoffs and corporate restructuring followed. It took the company several years to recover from the financial setback. Although Lockheed had originally bought into the contract, top officials felt the company had been cheated by the government. Ultimately, however, the government purchased another fifty planes which allowed Lockheed to continue production at a reduced rate for several years.

The United States Air Force:

The USAF received 139 planes that are amazing to look at and can carry a tremendous load if they are in flying condition. Because of their propensity to break down and their general operating difficulties, the C-5s do not often fly. Stories of massive cost overruns and of $7000 coffee makers come from the C-5 program and continue to haunt defense spending today. Perhaps worst of all, the C-5 program seems to have made all parties involved in defense procurement involved cynical and willing to accept the problems in the procedure as a necessary evil. While attempts have been made to improve the procedure, it still is rife with problems. The current attempt to fight waste and poor quality relies on regulation, after-the-fact inspections, and punitive penalties. Unfortunately, it is not possible to regulate or intimidate quality into existence.

The Public:

The biggest loser of all, is probably the American taxpayer whose money ultimately paid for everything. Everyone, engineers, businessmen, bureaucrats, generals, and Congressmen had their own agenda which they vigorously pursued. In such situations it is difficult to balance the conflicting goals of diverse groups. Millions and billions of dollars are sometimes tossed around like play money. People are always more careful with their own money, but in the case of defense procurement the money does not seem to belong to anyone. Defense procurement is extremely complex by its nature. A variety of technical, monetary, and political agendas and constraints make it difficult to accomplish goals within a reasonable time, with high quality, and on budget.

Ethical Issues

Several ethical issues are raised by examining the history of the C-5. In the simplest terms, maintaining good ethical conduct requires a person to differentiate between what is right and what is wrong and follow the course that the person determines is correct. Frequently, it is not so simple; right and wrong are not clearly marked, and a person must use his best judgement. Some of the ethical issues associated with the C-5 are listed below.

  1. How does a Representative or Senator balance the needs of the nation against his or her desire to stay in office?
  2. Did Lockheed's management commit a breach of ethics by buying into the contract at a price they probably knew they could not maintain?
  3. Did Lockheed oversell the capabilities of the C-5 to the Air Force?
  4. Did the USAF compound the problems by ignoring its own internal reports?
  5. Did any of the parties behave outside of the accepted norms of society? Are these norms ethically correct?
  6. Does knowingly buying a flawed product in order to keep a defense contractor in business and to keep its employees in work constitute military involvement in our nation's welfare programs?
  7. How does all of this affect the average engineer working on the project? Does the engineer have a responsibility to consider the ultimate use of the project?
  8. Is the government ethically bound to accept the lowest bid when all indications are that the final costs may be much higher than the bid?
References

  1. Willeinson, Stephan, ³Big.², Air & Space/Smithsonian, Volume 4, Number 3, August / September 1989. Washington D.C. pp 28-38.
  2. Rice, Berkely, The C-5A Scandal. . Houghton Mifflin Corporation. Boston, MA. 1971
  3. Hadley, Arthur T., The Straw Giant. . Avon Books. New York, NY. 1987
C-5 Galaxy Assignments

The multitude of problem encountered in the conception, design, development ,and funding of the C-5 is complex. However, three general questions can be asked. Was the need for the C-5 real? Did Lockheed act properly in bidding for and executing the contract? Did the Congress of the United States and the Executive Branch make an honest attempt to act in the best interests of the country as a whole?

Many conflicting factors were considered in reaching answering these three questions. Those responsible for high budget programs such as the C-5 must attempt to identify and evaluate many competing facts and objectives.

Assignment A:

Read the General Information provided on the C-5 Galaxy. Consider each of the following questions carefully in light of that information and write a complete and grammatically correct paragraph answering each.

  1. Why did the USAF really need the C-5?
  2. Should Lockheed have won the contract just because its bid was the lowest? What other factors should be considered in awarding the contract?
  3. Were the aircraft specifications in the RFP realistic? Was Lockheed's proposal honest? Did Lockheed promise more airplane than could be delivered for the price bid?
  4. What if Lockheed had not won the contract and had been forced to lay-off thousands of workers?
  5. How does a Senator or Representative balance the needs of the nation as a whole against the needs of his constituents?
  6. Why do you think the USAF ignored its own internal studies which suggested that the C-5 program was no necessary?
  7. Did Congress properly perform its oversight duty?
  8. Considering the large number of bills on which a Congressman is required to vote, it is difficult to be thoroughly informed on all issues? On matters of military issues, Congressman frequently except the word and opinions of the military? Does this represent a conflict of interest?
  9. How does might an engineer deal with pressure from above to follow a course of action he knows to be wrong?
  10. How might the process of defense procurement be improved?

Assignment B:

Choose one of the following statements, research the topic, and write a two page paper in which you explore the impact of the topic on the C-5 acquisition.

  1. In 1964, the United States Air Force identified a need for a very large transport plane. Was this need real?
  2. The RFP for the C-5 Galaxy called for many state of the art subsystems, and many concepts which had never been tried before. What advances were called for and how were these specifications met?
  3. Despite they fact that the Boeing design was judged technically superior by the USAF team, Lockheed won the contract to develop and produce the C-5. Many people believed that Lockheed deliberately submitted a bid which they could not meet, with the expectation of recovering the losses in later phases of the project. Discuss the ethics of this situation.
  4. The Total Package Procurement Procedure (TPP) was supposed to limit the eliminate cost overruns on government weapons procurement contracts. Obviously, it did not work. What went wrong?
  5. Maintaining Lockheed as a viable defense contractor was a major concern for the Pentagon. Are procurements such as the C-5 justifiable on these grounds?
  6. Senators and Representatives of Congress are placed in a difficult position when required to vote on contracts which provide jobs in their districts. How should such situations be handled?
  7. After problems began to develop with the C-5 program, an Air Force report suggested reducing or cancelling the program. Top Pentagon officials and influential Congressman ignored this report. Was there anything that the authors of the report could do?
  8. The original design for the C-5 wing could not carry the required 150% of its legal load, which required the entire wing to be redesigned. The planes already manufactured had to be re-winged. What was the root cause of this design problem?
  9. The threatened cancelling of production Run B by Congress caused a massive drop in the price of Lockheed stock. Should Run B have been cancelled?
  10. Faced with the prospect of a bankrupt Lockheed, and an ineffective transport plane, the Department of Defense developed a compromise solution. A $200 million discretionary fund was authorized to fix the problems, and a second limited production run of 24 planes was authorized. Discuss the wisdom of using discretionary funds in this manner.
  11. There were no winners in the C-5 fiasco. Lockheed company suffered large financial losses and took years to recover fully. The Air Force received a plane which did not meet many of the original objectives at more than twice the original price. The American public was stuck paying for everything. What lessons should we have learned from this situation? Assignment C:

    Divide the class into small groups, no more than three to a group. Each group is to choose one of the four roles outlined below and develop a statements outlining the position represented by those in your role on C-5 program. Develop two statements: (1) what you think was the position of those in your role, and (2) the position that those in your role should have taken.

    1. Lockheed Management: Your major objective must be to make sure that your company is profitable. You must maintain good relations with the government that employs your company, but at the same time you must try to get as must money as possible out of the government.
    2. USAF: Your group is split. Most believe that the C-5 is very necessary, but some believe it is unnecessary. Among career military officers, there is a strong tendency to bypass controversial issues which can only hinder one's career. In addition, turf battles exist with the other branches or the armed services, and the constant maneuvering necessary to maintain your funding require a certain amount of "looking the other way". At the same time, your members are passionately committed to the protection of this country.
    3. Congress: Like the USAF, your group is split. Some members want the program only for the jobs it provides. Others believe that the plane is needed. Some want to cancel the program and put the money in their own projects. Others feel that the program does not benefit the country. All must answer to the voters, and all must avoid appearing unpatriotic or soft on national defense.

    Assignment D:

    Working in three person groups, develop a realistic procedure for dealing with some of the problems of defense procurement. Remember that the procedure must create at least some form of concensus among individuals and organizations with different objectives, backgrounds, and priorities. Do not attempt to identify every threat to national security. Instead begin with a specific scenario in mind, (Kuwait Invasion by Iraq, Conventional Conflict in the Near East, Revolt in Russia, Iranian Terrorism, Ground War in Europe, Drug Wars in South America, Central American Revolution, etc.). Part of your work will require that you develop a methodology for weighing potential costs and benefits for various systems and programs. Remember that in the real world, personalities are often the dominant factor in a decision.

    Assignment E:

    Working in three person groups, consider the problems of an average engineer at Lockheed. Is this engineer likely to be aware of the political forces surrounding the contract? Should the engineer consider what the ultimate use the work will be? Should he or she try to determine whether the job at hand is truly in the best interests of the nation? Will his or her efforts lead to a weapon which makes the world safer or more dangerous? If the job goes against conscience, what can the engineer do about it?