Exhibit VF-8. Retype of Memo on Deputy Secretary of Defense Stationary, from him.

MEMORANDUM FOR SECRETARY OF THE NAVY

7 June 1973

SUBJECT:    Navy Fighter Modernization Program

I have recently reviewed studies of the Navy Fighter Modernization program. At my direction these undertakings were conducted in recognition of two factors: first, the choice of aircraft to ultimately replace the F-4 in both the Navy and the Marine Corps, and second, the number of such aircraft that need to have the capability for fleet air defense potentially afforded by the F-14A aircraft. The study gave consideration to the F-14A and to the F-15 aircraft configured for carrier operations with and without PHOENIX capability.

Based on this review, I have concluded that it is not necessary that, beyond an initial number, all of the F-4 replacement aircraft have a PHOENIX capability, and that as a result we need to place immediate emphasis on the identification of follow-on non-PHOENIX aircraft for both the Navy and Marine Corps. In carrying out this decision, the following actions should be taken by the Department of the Navy:

1. Initiate appropriate budgetary action to obtain 50 F-14A aircraft for FY 1974.



2. The F-14A capability will be limited to a force size which will be determined not later than July 1976. In my annual review of this program I will give particular attention to the trend line of cost for this aircraft in my determination whether we will proceed with annual production increments.



3. Prompt action needs to be taken to develop and test alternative aircraft to meet the Navy and Marine Corps fighter modernization needs beyond the initial quantity of F-14As. In considering alternative aircraft I must give particular emphasis to the rapidly aging Navy and Marine Corps F-4 force and to the increasing sophistication of the enemy threat that we face. I do not believe that we have the time nor do I believe would it be efficient to originate a new development program for an entirely new fighter to replace the F-4. For this reason the options that you examine should be constrained to alternative versions of the F-14 and the F-15 aircraft and a modified F-4J aircraft. All versions are to be carrier compatible.



4. In developing plans for the alternative aircraft, the aircraft configuration will not require an avionics production cost in excess of that currently afforded for the F-15 system. A PHOENIX-like capability will not be specified and no emphasis will be given to an ability to carry and utilize the PHOENIX missile.



5. As a first step, the Department of the Navy will develop aircraft specifications and performance for the modernization fighter. Particular emphasis will be placed on design to cost and a cost that is consistent with an austere budget and the number of aircraft needed for modernization. Design to cost ceilings for the F-4, F-15 and F-14 variants will be provided for review by June 13. We want to assure that both contractors are equally well informed on desired characteristics. You should also indicate ranges of acceptable performance. We will, of course, retain the option for cost/performance trades in any aircraft selection. It would be to our advantage and that of both the contractors to understand where these trades could best be made. A basic characteristic of the Navy's plan should be a competitive fly-off between the two different manufacturers' aircraft. It is the responsibility of the Department of the Navy in drafting specifications that they not preclude full consideration of each of these aircraft. I wish to review the Navy specifications before they are provided to the contractors for their review and for the preparation of a formal proposal.



6. The Navy will develop for my approval, management, development, test, production and funding plans for these aircraft which will include the following as a minimum: 



1. The management plans will identify the organization; its authority, accountability and competence adequate to successfully develop the competing aircraft prototypes.
2. The development of two prototype aircraft of each type (F-4M, F-15N, F-14D).
3. A testing program, coordinated with DDR&E, which will permit a reasoned decision on the selection of alternatives by 15 July 1976, based on at least six months of flight test data.
4. A funding profile for this prototype testing and production program recognizing that there will be prototypes from both manufacturers and that there will be a competitive fly-off between these aircraft.
5. Additionally, in outlining the program, the Navy will proceed on the assumption that subsequent buys of F-14A aircraft will be at a rate of not over 50 aircraft per year. Emphasis will be given to a schedule which will permit continued delivery and orderly use of production facilities at both Grumman and McDonnell Douglas.
6. Identification of the funding required and acceptable sources therefor in FY 1974 and the out-years for both the level of F-14A production approved in this paper and for the prototype plan directed by this memorandum.

This memorandum establishes the basic policy for the Navy Fighter Modernization program. It is necessary that we have a complete rationale for the Congress which supports this decision and that we be prepared to jointly go before the Congress and outline this program prior to the mark-up on the FY 1974 Budget. I would like to have your initial proposals in response to item 6 not later than 13 June 1973.

                                                                                      /s/

                                                                                      William P. Clements, Jr.

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