DEPARTMENT OF DEFENSE APPROPRIATIONS

FOR 1952

MONDAY, JUNE 11, 1951

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D. C.

The subcommittee met at 10 a. m., pursuant to recess, in the Caucus Room, Senate Office Building, Hon. Joseph C. O'Mahoney (chairman of the subcommittee) presiding.

Present: Senators O'Mahoney, Hayden, Ferguson, Wherry, Young, and Thye.

OFFICE OF THE SECRETARY OF DEFENSE

MILITARY OPERATIONS AND PROGRAMS

STATEMENTS OF HON. ROBERT A. LOVETT, DEPUTY SECRETARY OF DEFENSE; HON. W. J. MCNEIL, ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER); JOHN D. SMALL, CHAIRMAN, MUNITIONS BOARD; HON. FRANCIS P. MATTHEWS, SECRETARY OF THE NAVY; HON. JOHN A. MCCONE, UNDER SECRETARY OF THE AIR FORCE; KARL R. BENDetsen, asSISTANT SECRETARY OF ARMY (GENERAL MANAGEMENT); HON. DAN A. KIMBALL, UNDER SECRETARY OF THE NAVY; BRIG. GEN. R. S. MOORE, SPECIAL ASSISTANT TO ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER); AND LYLE S. GARLOCK, ASSISTANT COMPTROLLER FOR BUDGET, OFFICE OF SECRETARY OF DEFENSE

BUDGET FORMULATION

Senator O'MAHONEY. The committee will come to order.

Mr. Secretary, do you have before you a copy of the prepared statement which you submitted?

Mr. LOVETT. Yes, I have.

Senator O'MAHONEY. I would like to direct your attention to some of the matters which were raised in that opening statement. For example, in the second paragraph you speak of the formulation of the budget and say that it is based on military requirements rather than on an allocation of dollars a id that the preparation began on December 14, 1950, when the National Security Council approved the program, the military program, for the three services.

What can you tell us about the formulation of the decision of the National Security Council and how was that transmitted to the Department of Defense? It would appear from your statement, for example, that it was decided by the Council to have a military force of D; million men, an active fleet of 1,161 ships, and an Air Force struggling onward to 95 wings. That of course seems to me was a major

policy decision and I think it would be well to have something in the record about it.

Mr. LOVETT. Certainly, Mr. Chairman. The Joint Chiefs of Staff, at the direction of the President and the National Security Council, developed a series of papers which established the end strength of the three services. As I recall the figure, the total of the three armed services was 3,462,000, divided between the Army, Navy, and Air Force, both in personnel and in units under the three services. Those papers were then collected, passed through the screening section of the Department of Defense, approved by the Secretary, and forwarded through the President to the National Security Council. The Security Council then considered the proposals from the military point of view in the light both of national security, national interest, and foreign policy, and having approved those, they authorized the forwarding of the papers to the President.

PRESIDENTIAL APPROVAL

The President approved the figures which I have indicated and it became a directive to the services on 13 January 1951 to my best recollection, and the implementation of those instructions proceeded immediately. The military requirements were necessarily based on certain assumptions. Those assumptions set target dates for the total of the units and their state of readiness. Those dates in the budget we are speaking of were in general July 1, 1952. We took note of the fact that the long lead time in certain types of aircraft would require a few months additional before the number of wings approved would be reequipped with fully modern aircraft and particularly aircraft electronics. That is the basis of the procedure, Mr. Chairman.

Senator O'MAHONEY. Did the National Security Council make any substantial changes in the plan which was transmitted from the Joint Chiefs of Staff through the President to the Security Council for its consideration?

Mr. LOVETT. No, sir; not on forces or initial equipment. The Security Council did suggest that the three services and the Office of the Secretary consider the question of the level and amounts of reserves that is, whether we were to have a given number of months reserve for mobilization and for combat and then go into a program of a vast stocking of so-called war reserves.

It was felt that the problem of obsolescence was a very live one and that if we could get a system of multiple production lines estab lished, we would be far better off in that we would have a live, activ method of supply and mobilization instead of a completely static one That was referred back to the Joint Chiefs of Staff and the Depart ment for study.

The firs

Senator O'MAHONEY. There are two factors, of course. is the human factor in which the Security Council approved a total o 31⁄2 million men. Your statement refers to the military forces, but take it that the 31⁄2 million men include not only the 18 divisions o the Army, but the number in the Navy and the Air Force, too?

Mr. LOVETT. That is correct; for the armed services as a whole.

DETERMINATION OF MILITARY STRENGTH

Senator O'MAHONEY. How was that decision reached to the effect that 31⁄2 million men would be the number?

Mr. LOVETT. The Joint Chiefs of Staff in their various joint staff studies arrived at the required strength in the light of the then world situation and our immediate need of approximately 1,416,000 men for the Army, approximately 810,000 for the Navy, 175,205 for the Marine Corps, and about 1,061,000 for the Air Force. The sum of these totaled about 3,462,000. Those troop strengths and supporting unit strengths were of course the derivative of the amount of units in a military sense which would be considered necessary or desirable for the type of total Military Establishment the country needed at that time. This was later increased to a total strength of 3,593,516the increase going to Army.

POLICY RELATED TO MATÉRIEL REQUIREMENTS AND PRODUCTION

CAPACITY

Senator O'MAHONEY. With respect to the matériel requirements and the production capacity you made it very clear that the policy laid down by the Security Council was that we should have the facilities for the eventual production of the matériel desired and needed and that this would be built on an expanding basis, so that it would be possible in the event of an emergency to step up the rate of production; am I right?

Mr. LOVETT. That is correct.

OBLIGATIONAL AUTHORITY

Senator O'MAHONEY. That raises the question as to the fiscal arrangements you have made for maintaining the pipeline. You described that also in your statement. That in turn requires some discussion of the obligational authority and the percentages of demand, moneywise, for the various activities.

Can you amplify that, please?

Mr. LOVETT. Yes, Mr. Chairman. The adoption of the program of multiple production sources, I believe, is perhaps the fundamental of the whole process of supplying with initial equipment the troops provided for here, plus providing an expandable base which is most important in the event of mobilization as well as a combat reserve and a method of providing the troops with equipment for current

usage.

The amount of obligation authority is determined in large part by the lead time of the most critical items. The lead time is about 18 months for our single-seater aircraft. Those aircraft, Mr. Chairman, are far more complicated than our World War II aircraft, as has been indicated in our previous session here.

The determining factor is the slowest item or component used in the aircraft assembly. At the moment I believe that it is aircraft. et engines and electronics. That lead time being 18 months, we then had to work back from that into obligational authority required in fiscal year 1952 so that we may enter into contracts for the aircraft and so that there won't be a break in production. Expenditures are not entirely satisfactory as a measure of the deliveries. Perhaps a review of the percentage changes between the fiscal years in the

procurement as compared with the pay and the military personnel costs will answer your question.

MILITARY PERSONNEL COSTS AND STRENGTH

In the fiscal year 1950 military personnel costs were 35 percent of the total and major procurement and production costs were 20 percent. In fiscal year 1951 those items had changed so that military personnel costs which had previously been 35 percent were only 17 percent and the proportion budgeted for major procurement and production had gone up from 20 to 47 percent.

In the budget before you for fiscal year 1952 it is interesting to note that military personnel costs remain the same at 17 percent and major procurement and production costs have gone up to 49 percent of the total.

Senator O'MAHONEY. The meaning of that from this table, a copy of which has been distributed to the members of the committee, seems to be that while the cost of military personnel has increased from 1950 to 1951 and then again in 1952, the increase of the cost of major procurement and production costs have increased much more. rapidly, or is estimated to increase much more rapidly. Mr. LOVETT. That is correct.

Senator O'MAHONEY. I think it is important that you make clear for the record the importance of obligational authority, because sometimes I have noticed that there is a tendency to regard contract authority as merely a method of hiding an appropriation; whereas, as I understand your opening statement and what you have said now, contract authority or obligational authority is rather the authority to commit the Government to the payment for the production of items which take years to produce in some cases.

Mr. LOVETT. That is quite correct.

Senator O'MAHONEY. You must have the obligational authority when you make the contract otherwise it would be impossible to obtain production.

Mr. LOVETT. That is correct, Mr. Chairman. It is a demonstrated fact that you do not get production until the manufacturers get the orders on their boards. They do not get the order on their boards until they have a firm contract which enables them to go out and procure their basic materials and line up their subcontractors. So without obligational authority we cannot get the long lead items within the time needed.

Senator O'MAHONEY. In order to make this table, which I think ought to go in the record, a little more clear, may I ask for the numbers of military personnel for each of these years 1950, 1951, and 1952? Mr. LOVETT. We have that in summary. I will put a table in the record covering that.

(The table referred to is as follows:)

Number of military personnel in armed services