that this facility will have a single-story, slab on grade, production area with a two-story area at the south end to house laboratories and office operations. The proposed structure is the result of an intensive industrial engineering study where production flow, materials handling, functional relationships, and expansion capabilities have been considered. In the proposed facility, the inadequacies which prevent efficient layout and space utilization have been eliminated so that the proposed building will require 60,000 square feet (gross) less than is now occupied.

The efficiencies to be gained from the proposed new facility will permit reduction of 90 to 115 personnel during the first year of occupancy, without jeopardizing the Communications Security Organization mission. This represents a savings of approximately $720,000 to $920,000 per year and will amortize the building in about 9 years.

An additional factor to be considered is that upon occupancy of the proposed structure the National Security Agency will be able to release 271,258 gross square feet at the Naval Security Station, Washington, D.C. The availability of this space would undoubtedly have an impact upon future construction plans for the Naval Security Station thereby resulting in considerable savings for the Government.

The unclassified portion has to do with money requested annually to accommodate the installation, rewiring, and other utilities aspects of highly complex equipment, principally in the data processing computer field. Prior to fiscal 1964 this was covered in operating and maintenance expenditure. With fiscal 1964 this kind of expenditure was included in the construction budget.

We have very good experience factors in this area. For example, in fiscal year 1963 we requested $173,000 and spent $171,645. That was the last of the operation and maintenance years. In fiscal 1964, $156,000 was requested and $149,250 was spent. In fiscal 1965, $139,000 out of $280,000 was expended to date. Our plans for fiscal 1966, which are before you today, have eight projects-a building modification totaling $156,000; $144,000 in a number of equipment installations; and $75,000 to rehabilitate and enlarge the medical center.

Senator INOUYE. In this $5.7 million item, do you have any equipment involved?

General BLAKE. Not in the communications security field. At the present time a building we call annex 1, which serves primarily our other mission, is due for completion this fall. With the completion of annex 1, we will still be short of operating space and will continue to utilize old hospital buildings at Fort Meade.

In future year programs we have another annex we call annex 2. This is not before you this fiscal year, which would be required if we were to eventually abandon the old mobilization hospital space, which of course is very inefficient.

Senator INOUYE. General, you have been most helpful to this committee, and I thank you very much.

General BLAKE. Thank you.

TITLE VI-GENERAL PROVISIONS

Senator INOUYE. Mr. Sheridan, I believe the general provisions in this year's bill are the same as those of prior years with these exceptions; namely, sections 605, 606, and 608. You may therefore confine your comments to these sections beginning with section 605.

In regard to this section I should like for the record to clearly show what the provision you propose is designed to do, the difference between your proposal and the language of last year's bill, and the language contained in the bill as introduced in the House this year; namely, H.R. 5885.

This provision was a source of considerable debate in conference last year, and the language of last year's bill was agreed to only after we were told Defense could live with the language as set forth in last year's bill.

Now we are faced with three provisions which make it highly important to have a clear, concise record of just what is proper and desirable.

Mr. SHERIDAN. Mr. Chairman, I would like to ask, with your permission, Andrew Mayer, Assistant General Counsel in the Office of the Secretary of Defense, to answer the question, and I will amplify it. Senator INOUYE. Fine. Welcome to the committee, Mr. Mayer.

STATEMENT OF ANDREW C. MAYER, ASSISTANT GENERAL COUNSEL, OFFICE OF THE SECRETARY OF DEFENSE

Mr. MAYER. Thank you, Mr. Chairman.

Under the Construction Act enacted last year, section 605 contained a provision that regulations issued by the Secretary of Defense implementing the provisions of this section shall provide the department or agency requiring such construction with the right to select the Corps of Engineers, Department of the Army, or Bureau of Yards and Docks, Department of the Navy, as its construction agent, providing that under the facts and circumstances that exist at the time of the selection of the construction agent, such selection will not result in any increased costs to the United States.

Now, when that section became law, the Department of Defense was faced with the problem first of all of interpretation. We were not given any criterion in the statute as to what constituted increased costs: to the United States.

There are many factors, of course, which constitute cost items, and it was not really possible to say in any particular instance whether it would be more costly to have the Army do a particular job or the Navy. We normally consider economy and efficiency in making a particular construction assignment.

As you know, in some particular areas in the United States, the Army is better staffed and equipped to perform construction, and in other areas the Navy is better equipped for that purpose.

Now, to try to spell out in great detail these various elements is virtually impossible. We could not, when urgent construction has to be performed, undertake to analyze all the various factors. There has to be a basic decision that a particular area, from the overall standpoint of policy, it is more desirable to have the Army or the Navy perform the construction. So we tried very assiduously to implement this section, and to determine the various cost factors involved, but in the last analysis we felt that to put this in the law and to require this detailed consideration of cost was just impractical, and that it really resulted in a rather cumbersome procedure which we could not effec-tively use to increase the efficiency of the Department.

So this year we feel that it is in the interests of the best management of the construction program to return to the type of provision that we have been operating under with great success, I think, for a number of years.

Senator INOUYE. If we should once again run into difficulty in conference and this is a possibility-can the Department of Defense live with the provision as contained in last year's bill? I realize, as you testified, it would be impractical and cumbersome.

Mr. MAYER. Mr. Sheridan, would you like to say something on that? Mr. SHERIDAN. In answer to your question, very directly, Mr. Chairman, we could live with it, but I do not think we would satisfy what the House is intending to do or which is not specifically detailed in the law as to how we are going to do it to attain the objectives of an equal basis.

Last year at the time of the conference between the House and Senate, Chairman Stennis asked me if we did not think that the provision which we had in last year's bill was unworkable from an administrative point of view. I checked with our General Counsel, and they would not take that position that it was unworkable.

But I think this year, if we are asked, the answer would be that it is unworkable, and this has been evidenced by the fact that I personally had about a dozen meetings with the heads of the Army Engineers, the Bureau of Yards and Docks, and heads of Civil Engineering in the Air Force. We could not come to a feasible method for breaking the work down other than the present one. Then my superior, Assistant Secretary Morris, took up the matter, working with the materiel secretaries of the military departments. In the final analysis they ran into the same difficulties we did.

The way we had been doing it in the past was well understood. There was a good pattern of historic background where one agency or the other had done the construction at a certain airbase.

Senator INOUYE. Mr. Sheridan, could you advise this committee as to whether you prefer the provisions in last year's bill or the provisions in this year's House bill. This will be most helpful to the committee, because very likely we will have to go into conference on this specific section, and we would like to have your assistance in coming to any decision.

Mr. SHERIDAN. When we went to the Bureau of the Budget with this provision that appears in the House bill, similar to last year's provision, the Bureau of the Budget said that the proposed authorization bill was satisfactory for submittal to Congress and was in consistency with the President's program but that the provision that we are discussing now "would appear to write into the statute a requirement which, if deemed desirable, can be accomplished administratively. Accordingly, it is recommended that this sentence be deleted."

That is the official position of the executive department. So I think my answer very definitely to your question is that we would prefer to live with it the way it had been in fiscal year 1964 and prior.

Senator INOUYE. If you wish to present a detailed explanation, the committee would be very happy to receive it, sir.

Mr. SHERIDAN. Mr. Chairman, I was going to volunteer to expand on that, but I am trying to give you a direct answer now. Senator INOUYE. Please proceed, sir.

Mr. SHERIDAN. In section 606, this corresponds to the format of the same section in last year's act, and continues in effect the established policy of repealing longstanding military construction authorizations that have not been used by the military departments. As a result, after October 1, 1966, only those authorizations with certain specified exceptions which are contained in public laws enacted subsequent to August 2, 1964, would continue to be available. Under this section unused authorization that had been in effect 2 years will be automatically rescinded.

Now, we have in here in the subsections specific locations and specific projects which we are asking to be exempted from the automatic recision clause, and the data which we have submitted to the clerk of the committee in support of the general provisions provides the detailed explanation on each project.

Senator INOUYE. These all seem reasonable, and I am certain the committee will consider them very carefully.

Mr. SHERIDAN. Thank you very much, sir.

Senator INOUYE. Please proceed.

Mr. SHERIDAN. Section 608, which proposes that the last sentence of section 2674a of title 10, United States Code, as amended, is amended by changing the figure "$10,000" to "$25,000."

Minor construction procedures now require that a determination of urgency be made for all projects above an individual cost of $10,000. This proposed amendment under section 608 would raise the floor to $25,000.

This change, we feel, is essential to permit local accomplishment of routine items which, although important to day-to-day operations, do not truly qualify as being urgent. Without this flexibility, commanders must often defer simple local work which contributes directly to efficiency and economy.

Annual legislative procedures are too ponderous to handle such small items, and some method must be developed to permit their ready accomplishment. The General Accounting Office has recommended that more consideration be given to this segment of the construction program.

Senator INOUYE. Specifically, Mr. Sheridan, what did the GAO mean by more consideration? I have not seen the reports.

Mr. SHERIDAN. Mr. Chairman, Mr. John Heard, our Director of Construction, is very familiar with that.

STATEMENT OF JOHN HEARD, DIRECTOR OF CONSTRUCTION,

OFFICE, DEPUTY ASSISTANT SECRETARY OF DEFENSE

Mr. HEARD. Mr. Chairman, in fairness we should not imply that GAO felt that minor construction was the only possible means for getting these projects accomplished. But the GAO did feel that because of questions of urgency, there was a temptation at the field level to make rather arbitrary decisions in favor of getting necessary things done. The thrust of the GAO recommendation was that we do truly make an effort to get things of this lower price category into valid programs. Unfortunately we only have two alternatives. One is to utilize minor construction procedures. The other is to include these items in the regular annual programs.

This again gets back to Mr. Sheridan's point that these small items do not really warrant consideration in annual programs because this forces them into competition with much more important projects, and into the complete programing procedures of the Department of Defense, a process which in many cases takes from 3 to 5 years.

On the other hand, these things have to be done, and the local commanders do have authority and money up to $25,000 an item. It makes a lot of practical sense to allow local people to proceed within this local authority.

Now, unfortunately the local authority requires a determination of urgency for any so-called minor construction project up to $25,000. We are asking for relief only from the requirement to determine urgency in these cases.

Mr. SHERIDAN. I think we might help the committee determine whether this is a sound proposal or not. We feel it very definitely is. We might help by submitting for the record an estimate of how many more items, how many items we have in the bill as it now appears before this committee, and then how many more items there would be that you would have to go through in detail to review under this 25,000. I think that might be helpful.

Senator INOUYE. This would be most helpful to the committee, sir. (The information referred to follows:)

Military construction projects costing over $10,000 but not more than $25,000

In fiscal year 1966 military construction authorization bill..
Estimate of valid minor construction projects (based upon most recent fiscal
year report, fiscal year 1964)_ ___.

Estimated total projects, fiscal year 1966..

Senator INOUYE. I am certain, Mr. Sheridan, you recall that prior to fiscal year 1964 the limitation was $5,000; was it not?

Mr. SHERIDAN. $5,000.

Senator INOUYE. At that time I think the request was made by your agency to increase this to $25,000, and the Congress I believe decided on $10,000, possibly as a compromise. I am certain we felt that this was sufficient. Now we may be faced once again with a compromise. I realize you are asking for $25,000, but what would be a fair figure? Mr. SHERIDAN. The original proposal by the military departments was for $25,000.

I think your question asked me what is a fair compromise between the $10,000 and the $25,000.

Senator INOUYE. Yes.

Mr. SHERIDAN. I would like to find out the volume between the $10,000 and we will say $15,000 or $20,000 and $25,000, to see how many we could eliminate by raising it to each level.

Senator INOUYE. Would you submit that for the record also?

Mr. SHERIDAN. Yes.

Senator INOUYE. To show in detail what would be involved if it was $25,000, $20,000, $15,000, $10,000.