Competing for space program business - marketing facto

Phillips, F. W.

English

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%N64-30349
NEW ENGLAND AND
THE SPACE PROGRAM
FRANKLYN W. PHILLIPS
Director
NASA North Eastern Office
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After papers by experts like Hugh Dryden, Robert
Seamans, George Mueller, and Homer Newell, and
by heads of the NASA Centers, what can there be left
to tell about NASA ? What can be added as com-
ment on the New England scene after James Gavin,
James Killian, and Jack Parker have made their re-
marks ? Perhaps there is something that can be said
about the experience of NASA's North Eastern Office
over the past 19 months.
The North Eastern Office was created in Septem-
ber of 1962 as a kind of management experiment on
the part of NASA. We were not meant to be a fore-
runner of an Electronics Research Center, although
we have been that too, but were meant to be a new
management tool of the agency.
First, NASA recognized that it could benefit from
having an agent regionally involved in guiding its
existing contract and grant program with the indus-
try and the universities in the area.
Second, NASA appreciated that there was an un-
tapped competence here that should in some way be
encouraged, on its own initiative, to become a part of
the Nation's space effort. After all, the Space Act of
1958 which created NASA calls upon us to use effec-
tively the scientific and engineering resources of the
Nation in the program.
Meeting the first of these goals has been a matter
of establishing sufficient competence in the North
Eastern Office to provide contract administration and
technicat monitoring and liaison services, quality assur-
ance monitoring and training services, and educational
program services.
The second goal has been a more difficult one to
meet--perhaps because there are few criteria by which
one can judge the degree of success achieved, and be-
cause there is a long difficult road to be followed for
any contractor trying to compete successfully for space
program business.
In one of Boston's papers last week, there was a
report on the results of last year's Conference on the
Peaceful Uses of Space that was held in Chicago.
That Conference--was an all out effort by Chicago's
business community to stimulate interest in space and
science industry and garner NASA contracts.
It cost us plenty to put it on--but economically we
didn't benefit to a great extent.
We went all out and we didn't get one single signifi-
cant contract.
These statements attributed to a Chicago spokes-
man, illustrate one of the common misconceptions of
doing business in this program. There is, in fact, no
way one can ingratiate himself so that business auto-
matically comes his way. Competition is keen and
widespread throughout the Nation, and in the long
run the payoff is for excellence.
We have counseled with representatives of more
than 500 companies or major divisions of companies
over the past 19 months; all of them thought they had
something to offer NASA or one of its prime con-
tractors. What do we see as the key to a company's
success with NASA ?
First, they must in fact have an idea or a product
that is relevant and good enough to interest NASA's
program specialists and managers.
Second, they must have the skill and persistence to
market their proposal.
The most frequent problems that we have identified
are associated with the second point--marketing. A
company wishing to be an effective partner in this
program must examine its marketing procedures on a
continuing basis. This may seem to be too elementary
an issue, especially to those who say they know the
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importance of marketing--take another look, I urge
you. There will be no panacea to problems, but the
thoroughness, the persistence, and the skill employed
in marketing are vital to NASA's acceptance of ideas
and products. This incidentally, is as true for uni-
versities as it is for industrial concerns, both large and
small.
Few of the companies represented by the audience
at this conference have the resources to cover even a
significant part of NASA, let alone all of it. In the
interest of making fullest use of NASA's competence,
the Agency is decentralized to give our Centers
and program managers the greatest degree of operat-
ing autonomy. A company, on the other hand, must
look for the needle in the haystack--the one office or
one program to which it can contribute. It must use
all of its resources as it tries to home in on its pros-
pect--NASA's abstracts of reports, congressional re-
ports on NASA programs, the counsel of the North
Eastern Office and others who can guide contracting
efforts. Of course, through your presence here you
are making use of another medium--the conference,
seminar, or briefing. In our experience, companies
may know of these sources of assistance but do not
always make optimum use of them.
New England's universities---especially those in
Greater Boston--are legendary, and their influence on
industry (as, for instance, represented by our Route
128 Development) is being copied the Nation over.
In such places as North Carolina--where the research
triangle was formed in 1954 for the purpose of
strengthening the graduate study programs at three
universities, and through this, enticing new research
oriented industries to the state Pittsburgh, Baltimore,
Dallas, Buffalo, Minneapolis, Portland (Oregon), are
all trying to emulate New England. Our universities
are no longer going to be a unique asset upon which
to trade. But we do still have a head start over many
competitors.
Electronics has been one of the cornerstones on
which much of our postwar changeover has taken
place, and this has implications that extend into many
fields--that of life sciences, to mention only one. The
marriage between electronics and medicine is only in
the honeymoon stage; its maturity in the future should
be a base on which many new and exciting business
ventures will be built.
What about the so-called big, prime contracts?
Can New England industry compete successfully for
these? Examining those awarded over the past, we
PEACEFUL USES OF SPACE
find that in-many instances there was no New Eng-
land company bidding.
We are not suggesting there should have been bids
from this region on these programs. What this does
suggest is that New England companies may find lim-
ited opportunities to compete effectively for certain
kinds of business because of the size and composition
of our industry.
But what about subcontracts ? They are going to
become more and more important in the period ahead
to concerns representative of New England--but only
if the full ingenuity and competence of the region is
brought to bear on them.
Good subcontracts under which a company can de-
velop and realize a satisfactory return are also com-
peted for actively; and, of course, we know of the
concern of subcontracting firms over the tendency of
prime contractors to do more and more of their work
in house. Although NASA does not encourage this
tendency of the "big to grow bigger", we know it as
a fact of the American business scene.
Industry in New England is indeed diversified.
With apologies to the larger companies, we really
have no giants of the business community, or an in-
dustry such as textiles that if in trouble can deal
an almost irreparable blow to our economy. This
diversification fits in well with the rapidly changing
technology base that supports us and should be a
stabilizing influence on industrial development. Be-
cause of this diversity and because we have so many
small concerns with highly developed special skills,
we are still debating whether or not we need some
kind of an organizational structure that would permit
many companies to work as a single unit. Perhaps
some banding together in formal relationships would
be helpful. Attempts at this Research Foundation are
being explored through the Bay State, but whatever
we do must produce a substantive relationship, the
advantage of which is apparent to the customer, the
Government in this case, and which can not be ob-
tained more effectively through traditional business
relationships.
This paper would not be complete without some
recital of the growth of NASA's stake in New Eng-
land. There are substantial differences in the amount
of participation of the six New England States, but
NASA's prime contract awards have increased from
$11.2 million in fiscal year 1961 to $24.2 in 1962, to
$53.7 in 1963 and to an estimated $67.7 in 1964.
This last figure is based on a projection of the first
NEW ENGLAND AND THE SPACE PROGRAM 221
9 months of our current fiscal year which ends this
June 30, and it may turn out to be much larger than
$67 million because the year was half gone before
we received our appropriation. Studies made of sub-
contracting practices indicate about equal amounts
spent in New England via this route.
Will these dollars continue to increase although it
looks as if NASA's budget is leveling off ? The an-
swer to this depends more on the New England com-
munity than it does on decisions in Washington. The
competition is fierce fo_ NASA work. With the
specter of defense cutbacks looming over the Nation,
this competition will increase. There is no automatic
percentage of even the Electronics Research Center's
program that can be assured for Boston or New Eng-
land. If we can adapt ourselves, be alert to an ac-
celerated changing scene, and not hang on to the
traditional beyond its usefulness, we will certainly be
able to make bigger and better contributions to the
Nation's space effort.


New england and the space program

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