and by redoubling our efforts toward economy, I believe that we have enough money in the budget to do it. However, lest I create the erroneous impression that we shall have no financial problems under the 1951 estimates, let me add that our programs in that year can be accomplished only at the expense of certain long-range objectives, and even then we shall be hard-pressed to make ends meet.

PERFORMANCE BUDGET STRUCTURE

Before discussing specific programs, I should like to make a few explanations regarding the "performance budget" structure on which the present estimates are submitted. As you are aware, 1951 is the transition year from the existing appropriation structure to the revised or "performance" basis, and the present estimates are our first to be submitted in the new form. The objective of "performance" budgeting is to provide for all costs of a given major program under an appropriation or appropriations established specifically for that program. Thus, all costs of naval aviation are budgeted under naval aviation appropriations and, converesely, no nonaviation elements are included in these appropriations.

Basically, there is very little difference between the old and new budget structure in the content of the naval aviation estimates, because aviation appropriations have always rather closely approached a "performance" concept. Under the old structure, naval aviation functions were supported by three appropriations: an annual maintenance and operating appropriation, entitled "Aviation, Navy"; a small annual appropriation for payment of salaries of Bureau of Aeronautics civilian employees; and a continuing appropriation primarily for aircraft procurement, entitled "Construction of aircraft and related procurement." Under the "performance structure," the two annual appropriations have been consolidated and renamed "Aircraft and facilities," but otherwise have not been changed in any material respect. The continuing appropriation for aircraft procurement remains unchanged in title and, generally, is the same in scope, except for the inclusion of ordnance for new aircraft.

REGULAR NAVY FLIGHT OPERATIONS AND AIRCRAFT OVERHAUL

The 1951 program on which this estimate is based provides for an operating strength of 4,389 aircraft, a reduction of 22 percent from the authorized strength of 1950. and a reduction of more than 45 percent from the strength authorized by Congress 2 years previously. In terms of flight time, this estimate provides about 2,000,000 aircrafthours or approximately the same level as we now have. Within this level, we expect to increase the number of combat hours and to decrease the number of training and support hours, so as to provide the maximum possible combat effectiveness at the strength programed.

This adjustment in categories of flying increases our average operating cost per plane-hour because the combat planes are heavier in size and include the jets, which are the most expensive types to operate. Over-all, we have budgeted for an increase of $9,000,000 to cover the added cost of shifting to a greater percentage of combat-type hours in our flight programs.

Overhaul support is closely allied to the operational program. is in this area that the factor of increasing costs is most apparent. Increasing costs are inevitable at this stage of the transition from older models of aircraft to the newer and more advanced models which now figure significantly in the total overhaul work load. We are hopeful that within a few years these unit costs will level off, and perhaps even decline somewhat, as the transition in aircraft models is completed and shop personnel and facilities attain maximum adjustment to the new work-load problems.

In 1950 we have been forced to extend by 20 percent the average interval between overhauls. We believe this extension goes beyond what experience has shown to be an acceptable interval, but lack of funds left no alternative. In fact, we have increasing evidence that our system of overhaul most certainly results in greater readiness and, over the years, in lower costs than any other system we might use. The 1951 estimate will require a further extension because the number of overhauls which can be accomplished within the limitations of the funds provided is below the number required, even on the basis of the extensions we were forced to make this year. The probable effects of still another extension are being carefully studied, but it is not possible at this time to discuss what reactions still another extension would have on operational readiness and flight safety.

AVIATION SHORE ESTABLISHMENT

The aviation shore establishment continues to represent one of our most troublesome areas because of declining financial ceilings. Even though the number of air stations to be operated has decreased materially, and further contraction is in prospect, the declining work load has not matched the combination of financial reductions and increased operational costs. By 1951 the problem of providing adequate shore station support will have become increasingly acute, and our ability to render adequate fleet support will be considerably reduced.

On many occasions I have referred to the increased cost of maintaining a level operational standard within the shore establishment from year to year. The older the facility, the more attention is needed to keep the plumbing functioning, the roof in repair, the runways smooth. The greater the amount that must be devoted to maintenance work of this sort, the less remains for operational functions. We shall attempt in 1951 to achieve within the limitations of the estimate the best possible balance between maintenance and operation expenditures, so that essential requirements under both categories can be satisfied to the maximum extent our finances will permit.

RESEARCH AND DEVELOPMENT

For the past several years our annual level of expenditures in the research and development area has averaged well in excess of $100,000,000. The level of new appropriations has been substantially lower than the level of expenditures and, as a result, we are now confronted with the problem of contracting our effort in this area.

Our research and development program for 1951 reflects the best possible distribution of available funds by projects in order of priority. Virtually all of the 1951 estimate is planned for projects which were

initiated in prior years and only a limited amount can be applied to new projects. This distribution between existing and new projects is required if we are to avoid loss of funds already invested in projects now underway which show considerable promise in relation to future operational objectives.

NAVAL AIR RESERVE

Although increased financial provision has been made for the Naval Air Reserve in the estimate you are considering, to cover the higher costs of the more modern aircraft being operated by Reserve squadrons, no increase in training, levels or in operational readiness can be provided. As Admiral Cassady explained, we are exerting every effort to advance the Naval Air Reserve in keeping with the increasing share of our mobilization requirements which must be met by Reserve forces as our Regular Navy forces contract. It has been necessary, however, to reduce the number of aircraft in the Reserve program by 16 percent, from 2,185 in 1950 to 1,844 in 1951. The total number of flight-hours has been kept at approximately the same level for the 2 years.

Pilot training has been programed at an 80-hour level for each pilot in the Organized Reserve, but we have not budgeted for any flying either by associated volunteers or by volunteers. To the extent that training is provided for pilots in either of these categories our Organized Reserve program will be reduced accordingly.

AIRCRAFT PROCUREMENT

Aircraft procurement again represents the largest and most important item in our estimate. The 1951 procurement program provides for 817 new aircraft at a cost of $634,000,000. This $634,000,000 consists of $511,000,000 in new obligational authority and $123,000,000 in obligational authority contained under the program approved by Congress last fall. Thus the 817 aircraft planned as our "1951 procurement program" represent in part a new program and in part implementation of a program previously authorized by Congress.

This program falls short by 530 aircraft of the number required to sustain in future years the operating strength contemplated for 1951 under the estimate you are now considering. Admiral Cassady has explained how we plan to meet this deficiency by the operation of second line aircraft. This expedient adds to overhaul requirements but defers to a later year the necessity of meeting procurement requirements.

AIRCRAFT MODERNIZATION

The 530 deficiency in first line aircraft has been minimized by modernizing aircraft already on hand and represents the deficiency which will exist after the modernization program is completed. The primary purpose of the modernization program is to provide out of aircraft already on hand additional aircraft equipped specially for antisubmarine search and attack missions.

Antisubmarine warfare has become one of the Navy's highest priority assignments and much of the activity involved in antisubmarine assignments centers around naval aviation. Although new

aircraft now being procured will be delivered equipped with latest antisubmarine devices, it is essential that older aircraft which are to be utilized in antisubmarine missions be modernized for their job.

Congress recognized last year the importance of this program by specifying in the 1950 appropriation act that an amount not to exceed $20,000,000 should be transferred, from other Navy appropriations, to a naval aviation appropriation to implement the antisubmarine aircraft modernization program. However, limitations on obligational authority and the urgency of existing programs have prevented the transfer of funds which Congress authorized in 1950, and it is unlikely that this vital program can be undertaken during the current year. The antisubmarine modernization requirement, therefore, carries over into 1951, and is reflected in these estimates.

In conclusion, I should like to summarize the 1951 naval aviation estimates. New program authority, plus authority to implement programs approved by Congress last year, is requested in a total amount of $1,227,000,000. Of this amount, $690,300,000 is for new aircraft and related procurement, and $536,800,000 is for naval aviation operations, including research and development. Our detailed justification of these estimates is presented in the budget books, which the members of this subcommittee now have.

My general remarks have indicated that in every major program area of our estimate we are confronted with difficulties which materially affect our present operational efficiency or our future potential. Despite the magnitude of these problems, I feel that we have achieved in 1951 the best possible balance between program factors and available financial support. Although naval aviation will be smaller than in the past, its effectiveness as an element of national defense and of international peace will continue to be great.

I shall be happy to review with the members of this subcommittee any of the program elements in our estimate, and to answer, to the best of my ability, any questions that may exist concerning them.

TESTIMONY OF WITNESSES

Mr. MAHON. Gentlemen, we are pleased to have your statements. I should like to ask you some general questions, and then Mr. Sheppard, Mr. Sikes, Mr. Engel, and Mr. Plumley will want to interrogate you as to the policy matters.

Now, years ago when I first became a member of the Appropriations Committee I thought that the witnesses appeared before the committee to support and justify the President's budget and the program. It has been my observation during the last 2 years that witnesses representing the Military Establishment, Naval and otherwise, have appeared before the committee, and to my way of thinking. have made sort of a frontal attack on the Budget and the President's program.

I am not saying this by way of criticism, because I feel that if the time ever comes when the officials of the Department of Defense fail to give us the facts it will be most unfortunate for the welfare of our country. We want to know the facts; and we do not want to have any bridled witnesses in regard to the situation.

As I interpret your statement, your concern to the committee and to the Congress is that from many standards the present program of

the Navy arm is inadequate, but of course recognizing that the decision in these matters is for the determination of the Congress.

This statement which I am asking is applicable I think to the Navy and to the Army and the Air Force, that is, to the over-all situation.

COMBAT READINESS IN THE MILITARY SERVICES

It has been stated that the United States at this time and as contemplated in the 1951 budget, is in a better state of readiness for combat than at any time since the demobilization of forces following World War II. I would like to have your comment on the accuracy of that statement.

Admiral CASSADY. I think, Mr. Chairman, that all of us are fully appreciative of the fact we must take the economic conditions of the country into consideration. I feel that within the total defense budget of $13,000,000,000, we probably have about the best balance possible between the three services, and that within the total naval budget, we also have a very good balance between the Air, the surface and the subsurface units of the Navy. But I think that we all feel, in the armed services, that we have areas of weakness which could be improved if the economic conditions of the country were such that we could have more funds for the National Military Establishment. As far as the Navy is concerned, we have a good mobilization cadreboth in the Regular Navy and also in the Naval Reserve. We have been emphasizing our Reserve program, of which we are justly proud, and would be able to rely heavily on our Reserve forces if an emergency were to develop.

COMBAT READINESS OF THE NAVY

Mr. MAHON. I think your response is appropriately quite applicable to my observation, but you have not covered the latter part of my observation, as to whether or not the naval air arm is in a better state of readiness for actual combat than last year when you were before us. I would like to have your comment on that.

Admiral CASSADY. I feel that the reductions have weakened our readiness for combat in certain respects. We have always maintained that if conditions were such that we could have them, we should have more large carriers; we should have more patrol squadrons; we should have more marine squadrons than are possible under present budget ceilings.

Mr. MAHON. I still think you have perhaps misunderstood me. I am not saying that it has been said that we are, or that the statement was that we are in a better state of readiness to fight an over-all war under circumstances that exist. I am saying that if we just have one carrier, that the one carrier, I am told, is better able to fight than it previously was. In other words, what we have, I have been told, is in a better state of readiness than it has been heretofore. With that in mind I would like to have your further comment.

Admiral CASSADY. I think that as newer aircraft are coming into production, from that point of view we are better. We are getting more modern aircraft, and we hope under this 1951 program to get more modern aircraft. Also, the distribution of flight hours budgeted