rately. The problem of knowing exactly what we were going to build and where we were going to build remained a requirement. In the sudden change we did not know exactly what was required or where. But I think the public works area was even more vague than some of our other appropriations. The amount of public-work funds included in the first and second supplementals for all three departments were, shall we say, on a broad estimate of what might be needed. The understanding between the Bureau of the Budget and the Department was that as projects became firm they would get the same kind of review they would have received prior to authorization and appropriation had we known exactly what we wanted to do at the time we requested the money. If the request for authorization had been delayed until the program was firm there was a possibility that this would be subsequent to the adjournment of Congress. So, in order to be sure to finance the projects that were required, we requested the money and made rather general explanations of what we expected to do with it, with the understanding that the individual projects would be reviewed as the money was released for their prosecution. Mr. SCHAUB. May I go on record to say that we agree with that understanding? Mr. GARLOCK. If any of the Department personnel do not agree with that understanding, I think I would like to have them say so, Mr. Chairman. REVIEW OF PROJECTS BY DEPARTMENT OF DEFENSE FOR APPORTION MENT PURPOSES Mr. RILEY. Do you have any firm policy as to how often you review a project? Mr. GARLOCK. Mr. Chairman, once a project is reasonably firm and we release the money, it is a rare situation where we have another look at it. Just in the normal course of our day-to-day operation, if some staff member or some Member of Congress or someone writes in and inquires about a project, or if we are in the field and it appears that there are irregularities, we will again review the project. Mr. RILEY. You mean you turn it loose in a lump sum or do you apportion it out? Mr. GARLOCK. We apportion it. When they come in and ask for X amount of money, there is a list of projects and what they plan to do. We look into whether or not they have a firm plan and whether or not they are ready to go ahead. If they are ready, we may or may not agree on all the details. We try to iron out the differences. We send the apportionment request to the Bureau of the Budget recommending approval. It is a rare case where we get into it again. Mr. RILEY. Do you approve projects in the beginning, Mr. Garlock, or do you require them to justify the project at various stages? Mr. GA LOCK Mr. Chairman, it depends on what you mean by approving it in the beginning. If we have plans from any one of the three services which say: "This is what we are going to build at these stations. We are going to need so many barracks, so many mess halls, so many hangars, so many shops. These are the estimates, and this is what we are going to build;" then the review of the projects and the release of funds is a relatively simple matter. But where they come in and say: "We have to start construction in this area. We require funds for advance procurements, or we know we will have to construct runways at these estimated costs," then we will agree only to that portion of the project covered by the request. When they come back for the next increment, the items for which funds requested will not have been previously considered. We like to have an estimate of what the gross cost is going to be even when we release the first increment of funds. That is not always possible on some of these large overseas projects that have so many intangibles. Mr. RILEY. If I understand it, it is this way: When you have firm plans and specifications and let your contracts out on a lump-sum bid, you review it one time and then as the requests for money come in you allocate that money. Mr. GARLOCK. When they let a firm lump-sum-contract bid, the money has already been apportioned. Mr. RILEY. You apportion that money out immediately? Mr. GARLOCK. Yes. Mr. RILEY. All right. Mr. GARLOCK. For example, in November we apportioned $404 million to the Army. That was immediately after the bill passed. General Nold can correct me if I am wrong. I do not recall our going back and having had another look at a single project. Those were projects they were ready to go on. They had plans. They were ready to build. They were ready to start the bidding process. Mr. RILEY. There was no delay in getting the money on those? Mr. RILEY. But on a cost-plus-fixed fee contract they have to justify it step by step; is that right? Mr. GARLOCK. No, sir. I do not know whether or not this $404 million was spent for fixed-fee contracts in part. I would suspect that it was. The difference is that when the departments have a set of line items and say, "This is what we are going to build and these are the estimated costs"- Mr. RILEY. Then you release the money? Mr. GARLOCK. Then we relase the money. If there are projects which are contrary to the Secretary's policy or congressional limitations, they are identified and eliminated. Sometimes the departments have to come back and say, "Well, our estimate was wrong. We do not have enough money at that station." This is a new problem, and further adjustments are necessary. Mr. Chairman, I am reminded that included in the most recent public-works bill was a requirement that the Secretary of Defense approve all ZI cost-plus-fixed-fee contracts in excess of $25,000. We do know, therefore, when funds are to be expended for cost-plus-afixed-fee contract. Mr. RILEY. I think he had to make an authorization in writing, as I recall it, on anything over $25,000. REQUIREMENT FOR LINE ITEM JUSTIFICATION OF PROJECTS FOR APPORTIONMENT OF FUNDS General NOLD. Mr. Garlock invited comment on his statement with respect to Army funds. Possibly an extract from our notes on the subject might be helpful. I will just quote from that; it is very short. With the fiscal year 1951 program, the Office of the Secretary of Defense and the Bureau of the Budget put in a procedure whereby apportionment of construction funds was required to be supported by detailed information on each line item of construction. The funds were not apportioned until preliminary design was complete and control estimates were available. However, funds for cost-plusfixed-fee contracts, as well as funds for design or construction from standard plans, were released without delay. This system caused a large increase in the amount of work required and introduced considerable delay in receipt of funds, particularly with respect to the fiscal-year-1951 regular program. By the time the second supplemental appropriation was received, some relaxation was obtained and as a result funds from this appropriation were received in many instances before funds were apportioned from the prior appropriations. Mr. RILEY. Mr. Garlock, I have a graph in front of me which shows the appropriated funds of the Moroccan air bases in green and the apportionments in red. There is also a line indicating the commitments by the engineers and the contractors. In several instances those commitments are above the amount which was apportioned. We have had testimony heretofore in this hearing that the contractor has had to carry a considerable amount of his own funds in those projects until he could be reimbursed. In some instances there was a delay in the work or a slow-up of the work because the funds were not available. Would you care to comment on that, Mr. Donnelly? Mr. DONNELLY. We are going to develop that point by point, and this large graph to which you refer will be one of the important exhibits. At the conclusion of this funding phase of the Moroccan operations, I will ask that it be inserted in the record. (The graph faces p. 572.) EXEMPTION OF MILITARY FUNDS FROM APPORTIONMENT STATUTE FOR 1952 Mr. Chairman, may I put this in the record at this point? This is the provision in the Department of Defense Appropriation Act for 1952, Public Law 179 of the Eighty-second Congress, enacted October 18, 1951, dealing with the exemption of the apportionment statute from the moneys expended during fiscal year 1952, reading from section 626: During the current fiscal year, the President may exempt appropriations, funds, and contract authorizations, available for military functions under the Department of Defense, from the provisions of subsection (c) of section 3679 of the Revised Statutes, as amended, whenever he deems such action to be necessary in the interest of national defense. Mr. Schaub, did the President deem it to be in the interest of national defense to exempt military funds in the fiscal year 1952 from the apportionment statute? Mr. VEATCH. May I answer that, Mr. Donnelly? Mr. DONNELLY. Surely. Mr. VEATCH. The President deemed it necessary to grant exemptions from three appropriations. Mr. DONNELLY. Would you identify them? Mr. VEATCH. "Military personnel, Army," "Military personnel, Marine Corps," and "Civilian relief in Korea." Mr. DONNELLY. I take it, then, there was no exemption with respect to funds for military construction? Mr. VEATCH. The President received no request to exempt the appropriations for military construction. There has been none. Mr. DONNELLY. From whom would he receive that request? Mr. DONNELLY. Mr. Garlock, can you tell the committee whether the Office of the Secretary of Defense considered making such a request? Mr. GARLOCK. I know of no specific request. Obviously, the question of the application of this particular section to all the appropriations was generally considered. But, so far as I know, the funds for public works were released as fast as the money was available and as rapidly as the departments were prepared to initiate construction. TIMING OF APPORTIONMENTS FOR MOROCCAN BASES Mr. DONNELLY. I take it that is a general statement. Does that apply specifically to the Moroccan project? Mr. GARLOCK. I think you will find, if you will follow the details through, we released money for Morocco promptly after it became available from the Congress and in fairly substantial amounts. The first and second apportionments were to cover advance procurement and mobilization costs. Thereafter, you will find that we released very substantial amounts which we were advised would be adequate to carry the program until such time as we could obtain better definition of the scope of the program. As of now, you will notice that practically all of the money has been released. Mr. DONNELLY. Now, Mr. Chairman, to aid the members of the committee, might I furnish each member a copy of a statistical table which shows all the money appropriated for the Moroccan air-base construction; all the money authorized, in the lower right-hand area of the table; and then up on the top of that the apportionment history. This is marked "Secret." The Air Force prepared it. I do not know whether we can insert it in the record at this point or not. It is a basic document which amplifies and explains the chart here. General ASENSIO. This was furnished by the Directorate of Budget. This information must continue to be classified, I am afraid. I should like to have the opportunity to make that determination, however. Mr. DONNELLY. Opportunity to do what, sir? General ASENSIO. To make the determination as to whether this can be unclassified. Mr. RILEY. General Asensio, is not the same information on this chart here, which is unclassified? General ASENSIO. I think, sir, we might be able to render an unclassified version of this particular table by deleting the reference to specific locations, or something of that order. Mr. DONNELLY. Well, can we do that now? General ASENSIO. I would like to take it back to headquarters and have the Security people pass on that. Mr. RILEY. That would be all right, because we are dealing with the appropriation as a whole and the amount used as it was released. General ASENSIO. Yes, sir. Offhand, I see no reason for reclassification if that is eliminated. Mr. RILEY. Will you furnish the committee with a revised copy of that? General ASENSIO. Yes, sir. (The information is as follows:) Department of the Air Force-Acquisition and construction of real property-French Morocco program 1 Amount of $6.0 million transferred from Public Law 843, 81st Cong., by reprograming not included. 2 Originally approved verbally in the amount of $1.2 million. |