Senator STENNIS. All right. We don't want you to be left out. All right, Mr. Reed. Those questions I will hand to you, and they will be put in the record at this point.

QUESTIONS SUBMITTED BY SENATOR STENNIS ON HOUSING

Mr. Reed, I notice that there are a number of so-called representation housing units in this bill costing approximately $100,000 each. Explain to the committee what the basis is and the needs are, that a general or a high-ranking civilian must live in a house costing this large sum.

NOTE. It might be pointed out that the Vice President of the United States does not live in anything as nearly as plush as the houses contemplated for high-ranking generals, and as of this date, the Vice President is not furnished public quarters.

Mr. REED. It is the view of the Department of Defense that there are a limited number of positions within the Military Establishment which involve extensive public relations and representational responsibilities. The incumbents of these positions are called upon to represent the interests of the United States in numerous social activities involving foreign and/or U.S. dignitaries of high governmental and military rank, as well as outstanding members of the business, industrial, labor, scientific, and academic communities. Sixty-one positions have been identified as meeting these criteria and qualify as "Military representational positions." Persons occupying these positions are in ranks O-8 to 0-10. Typical of these positions are the Chairman of the Joint Chiefs of Staff, the Chiefs of Staff of the Army and Air Force, the Chief of Naval Operations, the Commandant of the Marine Corps, commanders of joint commands, the Superintendent of the various service academies, et cetera.

In general, the incumbents of the positions identified as "Military representational positions" are adequately housed. There are, however, a few who lack appropriate accommodations. In addition, there are some who reside in units which are uneconomic to operate and maintain. It is proposed to provide satisfactory quarters for these who do not now have such facilities and to replace those which are expensive to continue in the defense inventory.

Military representational quarters cannot be obtained under current statutory size and cost criteria. At present, there are size limitations of 2,100 square feet for family housing. Further, there are statutory cost limitations of $24,000 for the unit itself (and $28,000 for all costs including site development work).

In fiscal year 1966, it is proposed to acquire or construct two sets of military representational quarters. These units will be limited in size to 3,600 square feet and in cost to $80,000 to the 5-foot line or $100,000 for the total overall costs. We do not consider the size or cost to be ostentatious or unreasonable.

Senator STENNIS. Mr. Reed, what is the annual cost of administering the family housing program and I include in this question, the Army, Navy, Air Force, and the Department of Defense costs?

Mr. REED. Mr. Chairman, the annual cost of administering all components of the family housing program is estimated to be about $2 million at the headquarters level and $1,900,000 at the command level, for a total of $3,900,000. This is about one-half of 1 percent of our

authorization request for fiscal year 1966. These costs are not charged to the "Family housing, Defense" appropriation.

In addition, annual administrative costs at the installation level total approximately $16,900,000. These costs encompass such functions as assigning occupants to quarters, maintaining waiting lists, making inspections at change of occupancy and keeping the accounts, as well as performing other management functions. Most of this total is charged to the "Family housing, Defense" appropriation, although military personnel, whose pay is charged to the military personnel appropriations, do some of this work.

Senator STENNIS. Mr. Reed, do you have figures showing the total cost of utilities furnished in public quarters (water, electricity, gas, trash collection)? Have you been able to strike an average or a mean figure for these costs?

Mr. REED. Yes, sir; we do have cost figures for utilities and services. Our cost-accounting system classifies water, electricity, gas, fuel oil, steam, and sewage disposal as "utilities," and refuse collection, fire protection, police protection, insect and rodent control, custodial services, and snow removal as "services." The average cost for utilities was $286 per housing unit for fiscal year 1964. The average cost for services was $41 per housing unit for fiscal year 1964.

Senator STENNIS. Information available to the committee indicates that, in the past, regular services maintenance and operation funds have been used to maintain houses. Have you been able to stop this practice with the organization of your office and is there any indication that this practice has been carried on recently?

Mr. REED. Sir, we are able to insure that "Family housing, Defense" funds, not "Service operation and maintenance" funds, are used to operate and maintain family housing. Funding is provided under the "Family housing, Defense" appropriation, and DOD Directive 7150.4 clearly requires use of these funds, not "Service operation and maintenance" funds, for this purpose. Of course, there may at any time be cases of either inadvertent or deliberate misuse of appropriated funds, and this includes family housing funds as well as any other. We have to rely on the audit agencies to detect such situations. Those responsible are subject to disciplinary action. However, no significant improper charges involving family housing have been reported by the audit agencies during the past 2 years. There is one minor exception to complete funding for family housing costs in that Air Force is currently budgeting in its "Operation and maintenance" appropriation for furniture and equipment for use of Air Force personnel occupying private rental housing overseas. These funds are specifically indentified in the Air Force budget for this purpose. We expect to review this item in the next budget cycle with the intent of insuring conformity among the services.

Of course, some family housing "Operation and maintenance" work is properly done by military personnel whose pay comes from the "Military personnel" appropriations; and the "Family housing, Defense" appropriation does not fund administrative costs above the installation level. Also, some housing costs are initially charged to a "Service operation and maintenance" appropriation which is subsequently reimbursed from family housing funds; this is for account

ing convenience only and the final charge is made to the "Family housing, Defense" appropriation.

Senator STENNIS. Mr. Reed, we know that when a serviceman occupies public quarters he is not paid a rental allowance. What is the total amount accruing to the Government from the people in the services and the Department of Defense occupying public quarters? Mr. REED. Mr. Chairman, the total amount accruing to the Government from the people in the services and the Department of Defense occupying public quarters (family housing) is estimated to be as follows: fiscal year 1965, $496 million, and fiscal year 1966, $510 million.

Since these amounts do not have to be paid out as "Basic allowance for quarters," the military personnel appropriation requests are this much less than they would otherwise have to be. Appropriation of these amounts is avoided.

Mr. STENNIS. During the hearings in 1963, the Appropriations subcommittee would rather extend inquiry into the criteria used in computing requirements for military housing. What is your criteria now and has there been a change from the criteria as stated in fiscal year 1965 ?

Mr. REED. A. Our present criteria for the determination of family housing requirements are summarized as follows:

1. Primary reliance is placed on use of adequate private rentals in the vicinity of military installations.

2. Onpost housing is programed only where required by military necessity or where there is a lack of adequate community support.

3. Onpost housing is programed only for married career personnel, in the officer and upper enlisted grades (E-4's with 4 or more years' service, and above).

4. Requirements are based on the lowest predictable, sustained strength level for the installation.

5. All adequate assets will not exceed 90 percent of requirements (80 percent of foreign countries). Assets include existing, authorized, and proposed onpost units as well as leased units, adequate private rentals available for military use, private units occupied by military owners, and units occupied out of the area by families not desiring to move into the area. The 10-percent basic safety factor is employed to offset unforeseen strength decreases; and other safety factors are applied in review, depending on the degree of isolation of the installation and the characteristics of the local housing market.

6. Existing private and public rental housing (including trailers), in which military personnel entitled to quarters are accepted as tenants will be considered as adequate community support and will be charged as assets against gross requirements, provided it meets the following criteria:

(a) Location. The distance from the administrative area of the installation can be traversed by privately owned vehicle in 1 hour or less during rush hours. Lesser time limits may be applied where clearly warranted by military necessity.

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(b) Cost. The average total cost per month does not exceed the amount shown for the rank of the occupant in the following schedule:

(c) Condition. The unit must be a complete dwelling unit with private entrance, with bath and kitchen for sole use of the occupants, and so arranged that both kitchen and bedrooms can be entered without passing through bedrooms. The unit must be well constructed and in good state of repair with heating and kitchen equipment provided, and it must be located in a residential area which meets acceptable standards for health and sanitation and which is not subject to offensive fumes, industrial noises, and other objectionable features. The unit must be adequate in bedroom count for military families. With respect to net floor area, one-bedroom units normally should be not less than 550 square feet, two bedrooms, 750, three bedrooms, 960, and four bedrooms, 1,080; however, only in unusual circumstances will units be declared inadequate solely because of insufficient floor area. 7. Units occupied by military owners will be considered adequate and charged as assets, providing they meet the above standards as to location, condition, and cost. Consideration must be given to the fact that such owner-occupied units do in fact increase the area housing supply and may subsequently enter the rental market when the present occupant is transferred.

8. Owned or rented units which are occupied by military families by free choice and considered satisfactory by the occupants will be classed as adequate assets regardless of any other factors.

9. Vacant for-sale units will not be considered as assets.

B. The criteria for determining the requirements for the fiscal year 1966 program were essentially the same as those for determining the requirements for the fiscal year 1965 program. However, during the several years prior to fiscal year 1965 a number of significant changes were made. In formulating these changes, consideration was given to the views expressed by Congress. Principal changes have been as follows:

1. Location.-Originally this was 15 miles or 30 minutes. Later this was increased to 45 minutes and still more recently to 60 minutes. 2. Cost. In the beginning this was the basic allowance for quarters for each grade. However, it was apparent that most servicemen could afford to pay a few dollars more than their allowances; the question was, What magnitude of excess payments would constitute a hardship? Since the most recent increase in quarters allowances was essentially based on housing costs for civilians of comparable income levels, we resorted to the same civilian cost data. It was concluded that generally a serviceman would reach a "point of hardship" if he were required to pay more than a civilian of comparable income in the 90th

housing cost percentile. Using the 90th percentile, we established a schedule of "maximum allowable housing costs" for use in determining which servicemen were unsuitably housed by reason of excess cost.

3. Condition. This has remained practically unchanged over the

years.

4. Preference. In recent years it became evident that consideration should be given to those instances where the serviceman prefers to buy a house or to pay a high rent for luxury type quarters or to live in substandard housing to save money. Accordingly, criterion 8 as set forth above was added and has remained in effect ever since.

Senator STENNIS. Mr. Reed, I believe in the past you have told this committee that the 5-year Department of Defense program for housing amounted to approximately 60,000 houses with a requirement of approximately 12,000 houses per year. Due to the base closings, has there been any change in this program? Is the Department of Defense making a study in an attempt to revise downward the 60,000 housing figure?

Mr. REED. The Department of Defense has continued to review its family housing requirements and our most recent analysis indicates a deficit of 49,000 units after taking into consideration all units which have been authorized and funded through the fiscal year 1965 program. This figure reflects an added requirement for approximately 2,000 units as a result of redeployments stemming from recent base closure announcements.

Senator STENNIS. Mr. Reed, under your leasing agreements, I understand that either the Bureau of Yards and Docks or the Corps of Engineers negotiate the agreements and manage these properties for you. What management fees do these agencies charge the services or the Department of Defense?

Mr. REED. In the domestic leasing program, either the Bureau of Yards and Docks or the Corps of Engineers negotiates and executes agreements for the military departments and administers the leases for the Army, Navy, and Air Force. (Generally, the Bureau of Yards and Docks performs for the Navy and the Corps of Engineers, for the Army and Air Force.) In oversea areas, however, Air Force may administer its own leasing program.

We have determined that during the first 6 months of fiscal year 1965, the costs of administration or management of 3,348 leases in the United States have been approximately 3 percent of the total cost of the leased unit. In dollars, this has been $4.34 for a monthly únit cost of approximately $155.

In the oversea program, the costs of administration have averaged 1.5 percent of the unit cost for the first 6 months of fiscal year 1965. For 2,532 leases costing a monthly average of $243 per unit, the average costs of administration have been $3.66.

Senator STENNIS. Mr. Reed, how do you determine whether rental property is adequate for occupancy by a military man? As an example, let's take a staff sergeant, a master sergeant, and a major.

Mr. REED. Existing private and local government rental housing (including trailers) in which military personnel are accepted as tenants, will be considered as suitable community support and will be charged as assets against requirements in all cases where it is classed as satisfactory by the occupant. If not classed as satisfactory by the