Mr. DAVIS. The contract has been let but the facility has not been completed?

Admiral PERRY. The work is 80 percent completed, if I am correctly informed.

Mr. DAVIS. Is that work going forward right now, so that we can anticipate its completion before the end of this fiscal year?

Admiral PERRY. I think you had probably better let me get definite information and supply it to the committee.

Mr. DAVIS. May we leave it this way: That you will furnish to the committee the information with respect to the amortization when the decision on it has been reached?

Admiral PERRY. Yes, sir. I will furnish immediately the estimated completion date of the pumping facilities. I think you desire that. Mr. DAVIS. If you will, please.

(The matter referred to follows:)

Additional work on the Key West water line will be completed about May 1954.

REDUCTION IN OVERALL PLAN

Mr. HAND. Admiral Baker, in 1950 in the overall plan for the supporting works of the public-works program of the Navy there was $3.4 billion. Is that correct?

Admiral BAKER. That is right.

Mr. HAND. To what point has that overall plan now been reduced? Admiral BAKER. It has been reduced actually to $1.8 billion. But we made a further reduction in our own organization of $500 million, bringing it to $1.3 billion. That reduction was based upon many things, but some of them were the criteria which we were given. So at this time I would say our requirements which remain to be met total about $1.3 billion.

Mr. HAND. Of course, that is a very substantial difference. What has occurred in connection with our planning and strategic thinking which has made that very important difference in dollars?

Admiral BAKER. It was not really so far off, actually, because we had an estimated need for about $3.4 billion and we got $1.6 billion. That leaves us $1.8 billion when the Navy sponsors submitted the new requirements or the revised requirements for fiscal year 1954.

Mr. HAND. In the revised requirements you are reflecting the $1.2 billion you already have?

Admiral BAKER. Yes, sir. They have been authorized; so we can reduce the $3.4 billion by $1.6 billion, and that gives us a deficit of $1.8 billion. In some of those things the plans were changed and the amounts were not too well considered when we were working on the $3.4 billion, because that was gotten together in a short time. This year, for fiscal 1955 they submitted the amount of $1.7 billion which was reduced by the SSSB to $1.3. So this plan is pretty well in consonance with the requirements that are left over. In other words, we compare $1.8 with $1.3 over an elapsed period of 3 years. We found maybe we were excessive by $500 million in our original requirement. Mr. HAND. That is the only difference-around $500 million-between the present planning and the original plans in 1950?

Admiral BAKER. Yes, sir. We still have this year, a total requirement of $1.3 billion, actually, as I say, within our own program now.

These are requirements established by the sponsors and the Shore Station Development Board.

They do consider that they are going to have to replace buildings, because sooner or later things are going to be in such a condition that they cannot afford to maintain them and they have to build. However, for our consideration in the next 2 years, we feel we do not need and are not permitted, perhaps, to include this building. By that process, we eliminated about $500 million. That got it down to $1.3 billion. Mr. HAND. There have been no fundamental changes in the overall planning?

Admiral BAKER. No, sir. There have been many changes in details

Mr. HAND. But no fundamental changes?

Admiral BAKER. No fundamental changes, except several places we decided the activities were not as important as they were considered in 1950.

Mr. HAND. Hence I suppose it follows there has been no fundamental change in your overall strategic concept?

Admiral BAKER. No, sir. I think these things check pretty well overall with the basic planning.

Mr. HAND. Of course, all of this planning of shore works and all of this other planning is for the support of the fleet and aeronautical arm?

Admiral BAKER. Yes, sir.

Mr. HAND. And therefore are all related, of course, to the basic strategic function of the Navy?

Admiral BAKER. Yes, sir. You see, one of the things that happened-in World War II we fought most of the war in the Pacific and had a vast establishment out there which, when the war ended, we got rid of. Now the emphasis goes to the Mediterranean and the Atlantic, and our fleet is now deployed in the Atlantic. When the Korean incident occurred a great part was in the Atlantic, so we had to shift the emphasis to the Pacific where we had not had such a tremendous amount of emphasis before.

That is one of the reasons why the requirements are as large as they are. But it is based upon strategic planning, and my board goes back to the bureaus to establish these operation requirements and the planning, and we examine the requirements and the facilities to meet the requirements and put the two things together.

BASIC FUNCTION OF NAVY

Mr. HAND. What is the basic objective that the Navy has now? Admiral BAKER. The basic function, of course, of the Navy is to be prepared to maintain control of the sea at all times, and particularly, if war has to be declared, that we control it at the beginning and continue to control it until the war is ended. That is our basic mission.

We must insure that commerce must travel in safety; we must control the seas and prevent the enemy from moving in there. And we effectively did that toward the end of the last war when the Japanese ships were not moving anywhere outside of the inland sea. In 1945 they just collapsed.

Mr. HAND. That is tied to the purpose, I suppose, of being able to support the military forces anywhere we want to support them.

Admiral BAKER. That is correct. We must be able to deploy our military forces wherever necessary to deploy them and whenever necessary to deploy them.

Mr. HAND. It is only related in a comparatively minor degree to the defense of the shores of the continental United States?

Admiral BAKER. Yes, sir. Of course, the basic idea of the whole United States is that we will fight the war some place else; that we will not fight here if we can avoid it.

REVIEW BY SECRETARY OF THE NAVY

Mr. HAND. One other question that occurs to me. You talked about an independent review made by the Secretary of the Navy.

Admiral BAKER. Yes.

Mr. HAND. How independent is that review? Does it use the same personnel and the same people?

Admiral BAKER. No, sir.

Mr. HAND. Who does he use?

Admiral BAKER. He has just established a new reviewing group. I do not know the makeup of it at the moment. I believe Captain Lamb knows who they are.

Captain LAMB. About 2 weeks ago the Assistant Secretary of the Navy formed up this board. The board is composed-whether it is to be a continuing board or not I do not know, but he formed a board to review the 1954 estimates and to review the 1955 programnot on the basis of requirements but on the basis of cost.

The board consists of four men-the former chairman of the board of the American-Hawaiian Steamship Line; a man from Texas who has been a contractor for 40 years; a man who has been in production for 40 years, and a man who has been in airfield construction for from 15 to 20 years.

This four-man board-the chairman was the Assistant Secretary, Mr. Fogler-met with the Navy for a period of 2 weeks, 12 hours a day, and went into the cost factors on each of the projects in the 1954 program that we are presenting today, and really went down to the dollars and cents, the number of nails, the amount of barbed wire going into a fence; it was a thorough review, and they were not governed by what we had in the 1954 estimates. They came up with the ones presented here today. They had the 1955 requirements, although they did not go into that so much. We presented that to the Secretary. They did say the program was sound from an economic standpoint.

Mr. HAND. That is a civilian board?

Captain LAMB. That is a civilian board.

Mr. HAND. Is that independent reviewing board a new function. or just a new board? Have you always had that independent review? Čaptain LAMB. No, sir. That is a new function which has just been taken over and placed in effect by Secretary Anderson. He has delegated the review for his own office to the Assistant Secretary. Admiral Baker's board is to review for the Chief of Naval Operations and recommend.

Mr. HAND. But the independent review made by the Secretary which you mention is a new function?

Admiral BAKER. Yes, sir. Last year my board reviewed for the Chief of Naval Operations and recommended to him. We then put forward the program and presented that to the Secretary for his action. He did not at that time make an independent review of each project, but he did examine the project as a whole, and the concept, the extent of it, the nature of it, and so forth.

The procedure is that my board, the Shore Station Development Board, will recommend to the Chief of Naval Operations; then the Chief of Naval Operations will recommend to the Secretary of the Navy. The Secretary of the Navy, within his own office, has established Mr. Fogler, Assistant Secretary, as chairman of the board of review. He calls upon us for all sorts of information, of course, and we appear before him. But they make their own independent determination.

I think the board is just more or less an ad hoc board. I presume it will be made a permanent board.

Mr. HAND. Has there been any major change in the thinking of the Navy as to the peacetime strategic functions since the development of atomic and other recently developed weapons?

Admiral BAKER. I think strategically it is the same, but I am not very well qualified to speak on that, because I am not one of the planners over in the Operations Division.

I would say this as a general thing, that the Secretary of the Navy is at all times endeavoring to keep abreast with modern weapons development and everything else and their proper use. Our operational concept is flexible so as to make the best use of whatever is available to us.

CONSTRUCTION PROGRAM IN SPAIN

Mr. DAVIS. Before we get to the details of the Navy public works program for 1954, there are two questions with respect to the proposed construction program in Spain.

As I understand it, you gentlemen are required to approach this Spanish construction program from two angles; first of all with respect to construction specifically for the Navy and then as a supervising agent for other branches of the armed services.

Admiral PERRY. That is correct.

Mr. DAVIS. I would like to ask you first of all with respect to the Navy construction program, what are the plans you have for proceeding over in Spain?

Admiral PERRY. In the first place we have over $18 million for 1953 which we can use for that construction. The construction of the Navy facilities in Spain will not be carried on as a separate operation from the construction of the Air Force bases. We plan at present to have one contractor and that contractor will carry on the work for the Air Force and the Navy simultaneously as the plans are ready for con

struction.

SELECTION OF CONTRACTORS

Mr. DAVIS. That contractor has not yet been chosen?

Admiral PERRY. No, sir; he has not. We do not have sufficient information as regards the scope that we feel we can select one just at the present moment. Our tentative deadline on the selection of the construction contractor is presently between January 5 and January 10.

Mr. DAVIS. As it appears to you now, do you anticipate you are going to be able to handle this through an existing contractor or that probably there will be a combination of several of them formed for this specific purpose, such as we had in Atlas, for instance, in North Africa?

Admiral PERRY. Please do not confuse any combination we might have with Atlas. We feel this way about it: There is no contractor in the United States that is diversified enough in his operations that one single contractor could do the job. Therefore, we must of necessity choose between several combinations. In other words, the types of construction that you have in Spain run the whole gamut of the construction business. You have grading operations; you have waterfront work; you have general building construction; you have a great deal of mechanical and electrical work; and all of the other phases of construction that you could enter into. And generally speaking, no single contractor in the United States is prepared to supervise and take on all of these types of construction. Therefore, we would be forced to select from a combination rather than from any single firm.

PREPARATION OF MASTER PLANS

Mr. DAVIS. What plans have you made thus far with respect to your responsibility as the agent in charge of construction in Spain for the armed services generally?

Admiral PERRY. We have already chosen the architects and engineers for the work. The selection of those architects and engineers was made by a joint board consisting of 3 Navy and 3 Air Force officers. While we have given the architects and engineers notice to proceed, that is just about as far as we have gotten on the general plans.

The architects and engineers were over in Spain. They had representatives over there who came back last Saturday. They had been over there for better than 2 weeks. They must originally prepare what we might call the master plan of all the activities that may be put into Spain. That is the first step in the work which will be done by those architects and engineers. Then, of course, after they have provided the master plan, will follow the final designs and the construction contract.

LABOR AND GENERAL SUPERVISION

Mr. DAVIS. What restrictions will you be under with respect to labor and general supervision on the spot?

Admiral PERRY. There has been a verbal agreement-I cannot say whether this has been written into the "base rights" agreement or whether it is purely an oral agreement that has been reached-that not less than 85 to 90 percent of all the construction work that might be done in Spain will be done with native labor.

Mr. DAVIS. Do you have limitations on your supervisory personnel? Admiral PERRY. None whatsoever.

Mr. DAVIS. It is nothing like the situation which we had in the early stages of construction in North Africa, then? Admiral PERRY. No, sir.

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