we are not taking support of allies out of the services' hide, as we have done in the past.

Mr. MOLLOHAN. You used the word "mix" as being necessary and essential to assure a stable base for production of the kind of military weapon systems and the material that we needed. I gather that what you were saying there was that we needed to maintain, even on a very modified basis, the forging capability, the foundry capability, the various and sundry other capabilities that a wartime situation would require or a rearming situation would require.

I gather that is what you meant by mix, is it not?

General MILEY. I think we need a warm base, an operating warm base, with a surge capacity for every item that the services say is an item they are going to need in time of emergency. I think we need that as a basic essential.

Mr. MOLLOHAN. Well, now, just along that line, you have just finished talking about maintaining your responsive industrial base with a potential for surge in production. Let me ask you this question: Do you have or does your association and membership have a feel for the additional cost of maintaining such a base? It seems as a minimum we would have to reduce the time required for long leadtime components and increase the overall production rate, which is a function of availability of facilities, technology, and manpower.

Does your organization have any cost data concerning that issue, or do you get involved in such matters?

General MILEY. Well, we work on it. I would like to avoid the use of the word "maintaining," even though I have used it, in favor of the word operating the base. I think we need to operate the base so that it has those characteristics that I suggest. That it has a full one-shift capacity.

See, the problem is if you are running a one-shift plant with two or three stations that have to run around the clock to keep up with the rest of the line, then it is a fact of life that the leadtime to surging is the leadtime for that special tool. That special tool may have an 18-month leadtime so you can't surge that line for 18 months if you have got a bottleneck item in there, and the tendency over the past few years, from indications that I have had, is that we tend to shortchange the lines as we set them up because of the cost. We say we are running that special tool three shifts a day because to buy another one would cost too much. That eliminates your capability for surge.

The other item that I have built in there, that I think we haven't talked about, is the inventory of long lead items. Now, if you all were on the committee back when I was testifying during the Vietnam war, we always procured the engines for next year's buy of helicopters the year before. We had the long lead inventory and it rolled over every year. It was a 1-year investment.

When the war petered out, we used up the inventory and that was it. It is not an expensive thing, but its advantage to the producer was fantastic. If he has got 3 or 4 months of long lead items in his inventory, you crank him up quickly. If he doesn't ave those, he is dead in the water.

Mr. MOLLOHAN. One further question. You mentioned the three items we have talked about several times-faster depreciation, multiyear contracting, and allowance of interest as a cost in Government contracts. Those things do not seem to me to be something that are irrational or impossible to achieve. In fact, I think they could be achieved very quickly-the faster depreciation that you mentioned and the other tax incentives which I mentioned-to stimulate the modernizing of our industrial-base capability.

What sort of impact would you expect those three actions to have? Would they be radical? In other words, would the industry that you are acquainted with and associated with every day, are they talking about a high level of acceptance of the President's revitalization program as being something which would stimulate them to move forward?

Generl MILEY. Oh, yes.

Mr. MOLLOHAN. To modernize?

General MILEY. Yes, sir, very definitely.

Mr. MOLLOHAN. Definitely?

General MILEY. Yes, sir, you were here in September when the VIP's from industry were here and they talked about these very same things.

Mr. MOLLOHAN. But even today they are talking very optimistically about the President's program of revitalization and implementing that and utilizing that.

Thank you, Mr. Chairman.

Mr. ICHORD. The gentleman from South Carolina, Mr. Spence. Mr. SPENCE. I yield to the gentleman from Alabama.

Mr. DICKINSON. Thank you. I just had a couple of questions. General Miley, I am very pleased to see you again and have you come testify before us, and General Ragano, I believe we met before, too?

General RAGANO. Yes, sir.

Mr. DICKINSON. As a matter of fact, just to refresh my recollection, when was the last time I saw you, General?

General RAGANO. At Redstone Arsenal, when I was commander of the U.S. Army Missile Research and Development Command. Mr. DICKINSON. I believe you had a job there having to do with a missile or something, I believe?

General RAGANO. Yes; I did. I had the Roland program before I became commander.

Mr. DICKINSON. Yes, that is right. And you just made BG and I asked you if you would bet your star on that program and you thought that might be an unfair question.

General RAGANO. If you remember, sir, I said I had already bet my star when I took the program.

Mr. DICKINSON. I want to tie that program into what we are talking about now, if I may. I think it is pertinent.

At that time, Roland was in R. & D., as you know, and you were the program manager. The program was having trouble. The R. & D. money figures always kept surprising us each year, but we finally got it out of the woods. Now, the Department of Defense zeroes it.

Is there a relationship there with what we are talking about now in capability and planning ahead and getting more efficiency on multiyear buys?

General RAGANO. Mr. Congressman, I think there really is.

Mr. DICKINSON. Incidentally, that didn't have anything to do with your retirement, did it?

General RAGANO. No, that was 3 years earlier.

I think that one of the inhibitors to our industry investing is the unpredictability of our defense programs. To be quite frank, the on again, off again, false starts all discourage investment.

Roland is one I can hold up as a sparkling example. Contractors made a commitment in capital and equipment to the technology transfer procedure. They made a commitment to training and special test equipment, and now the program stands jeopardized because of our decision process in Government. I think it starts at the Army level and it percolates through the Department of Defense. Mr. DICKINSON. Let me interrupt there to remind you that Tradoc, a year before, said they didn't want that bird and they were overridden and the paper was destroyed. However, we got a copy of it. And then because of the political decisions, they were overridden and said we will do it even though the user said they didn't want it and couldn't afford it.

General RAGANO. That was the position of the user at that time. The situation was rather vague in the user community. They felt they needed it, but there were those who felt they would rather invest in other weapon systems to satisfy the short range air defense requirement.

Mr. DICKINSON. I am talking about the Roland system and its cost.

General RAGANO. What you say is true, that the user at that time was alleged to have said we don't have a requirement. I agree with you there was a paper floating around.

Mr. DICKINSON. There was a Tradoc study that was commissioned and came back to the Department of Defense, and then it was suppressed, and General Haig came over and said, "Hey, we can't kill this program, we have got a commitment to our Allies in NATO." I mean it wasn't just a piece of paper floating around, it was a study made by the user. If I am wrong, correct me.

General RAGANO. No; you are generally right, Mr. Congressman, but I think it is those kinds of things, notwithstanding the Roland and the political nature of those types of false starts, on again, off again, that really has our industrial community really antsy and skeptical.

Mr. DICKINSON. Absolutely.

General RAGANO. And cautious about reinvesting or putting profits into capital equipment and so forth.

Mr. DICKINSON. I am taking too much time, but I agree with you. I am emphasizing what you say. After going through all of the trouble that prevailed, in the R. & D. program where it kept escalating every year and was supposed to be off the shelf, when we finally got it out of R. & D. and ready to go to production, the DOD killed it.

Thank you for yielding.

Mr. SPENCE. Yes.

General Miley, Mr. Fuhrman of Lockheed testified earlier before the committee that our industrial surge capability was extremely limited, if not nonexistent. Would you agree or disagree with that? General MILEY. I think it is extremely limited right now, yes. Mr. SPENCE. As you stated in your remarks earlier, your association recently held a symposium on the problem we are talking today. Also you recently published a white paper on the problem. Would you submit to this committee for the record a copy of this white paper, please, and could you give us the benefit of the major findings that you arrived at?

General MILEY. Well, the findings of the symposium are essentially set forth in my statement. We had trouble at that meeting, as I said earlier in my statement, in keeping out of mobilization. Everybody likes to talk about mobilization, it is sort of sexy, and we just kept trying to talk about today's readiness to respond. [The following information was received for the record:]