IMPLEMENTATION OF TITLE IV, NATIONAL SECURITY ACT OF 1947, AS AMENDED

WEDNESDAY, NOVEMBER 4, 1953

United States Senate, Committee On Armed

Services Preparedness Subcommittee No. 3,

Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10: 30 a. m., in room 212, Senate Office Building, Senator Ralph E. Flanders (chairman) presiding.

Present: Senator Flanders.

Also present: Fred B. Rhodes, chief counsel; and F. Bradford Morse, of the subcommittee staff.

Senator Flanders. The hearing will come to order. This morning we reach the final lap of our present inquiry into the functions of title IV of the National Security Act as we continue with the testimony of Secretary Stevens of the Department of the Army.

Before we ask him to continue, there are some observations of the testimony that I feel I should make.

It is abundantly apparent from what all of our witnesses have said that there can be vast savings of money to the American taxpayers, of which I am one, if we are serious about this matter of instituting better management principles in the operation of the Department of Defense and the services.

This goal is so compelling that we cannot do less than our best to bring about the needed financial relief which we feel we can reasonably expect.

Frankly, it is this possibility which led us into this complicated and at times dry problem. It is from this encouraging point that we get into the less promising parts of the problem. The size of the problem is one which is without understandable comparison. It is huge. It will take much time completely to resolve.

Two things are needed before there can be much progress. First, it is essential that the services have accounting systems which are comparable, if not uniform. Second, there must be uniformity in the method of doing business and of keeping the books. To do this effectively we must know what sort of an inventory we have. It is essential that we know how many trucks, machine guns, and tanks we have. All of us would be ready to pull the Pentagon Building down in small parts if there were not complete and adequate personnel records of our boys who have been in the fighting services. We have a splendid system of personnel accounting. Every commander can tell at a moment's notice how many men he has on duty, how many sick and wounded, and so forth.

We recognize this as a sound practice. We feel that it can be carried, over into the matter of materiel. Before we agree to an increase in the size of our forces, we feel justified in asking what is being done with the men we now have. This can apply to materiel as well.

There is another aspect of this matter of what things we own that we should consider. We must know the value of what we have and how long it will last. It was interesting to notice in the testimony of the Assistant Secretary of Air Force White that an enormous saving had been effected in the purchase of spare parts for aircraft when it was learned that the engine life was considerably longer than our original plans showed them to be.

Here, through good management resulting from the use of business records, a real saving can be shown to the stockholders of our business, the taxpayers, who would like to see this repeated many times over.

I was particularly impressed by the statement of Secretary Wilson that he was not committed to the idea that any one law or any one system was the best answer. He maintains an open mind and he is committed to the idea that we will run this enterprise more efficiently in the future.

As we turn now to the testimony of Secretary Stevens, I feel that it should be stated that the score now stands at 2 to 2 on the matter of civilian versus military comptroller. His Department and the Air Force are on record as believing that military men, responsible to both their civilian and military bosses, are the best answer to the problem. The Navy and the Department of Defense feel that this is a civilian function.

The conflict is one which we will not be able to resolve this morning, but it does make an interesting point from which Mr. Stevens can begin to enlarge on his ideas.

Now, Mr. Secretary, do you want to go directly to the point where we left off day before yesterday? You have no new statement to make in the interim.

TESTIMONY OF HON. ROBERT T. STEVENS, ACCOMPANIED BY LT. GEN. G. H. DECKER, COMPTROLLER OF THE ARMY; AND LEONARD W. HOELSCHER, DEPUTY COMPTROLLER OF THE ARMY

Secretary Stevens. If by any chance the questions do not bring out any point, I might like to make a statement later.

Senator Flanders. You can bring up any point that you wish. Would you please define the term "comptrollership" as the term is used in business. Spell out, if you will, the duties and responsibilities that a comptroller in a large corporation has.

Secretary Stevens. I think in a nutshell he has the duty of getting together the information and financial facts that are necessary to supply the top management of the business with the data on which to make policy decisions. That is the function of a comptroller in business.

Senator Flanders. Does he go any further than that? Does he make recommendations ordinarily as well as prepare the material?

Secretary Stevens. I think sometimes he makes recommendations, but fundamentally you have to keep a sharp line between the functions of the comptroller and the management of the business because the comptroller is not the manager of the business.

Senator Flanders. And you would feel that the separation of the comptroller function from the manager function was important in the armed services?

Secretary Stevens. Yes, sir.

Senator Flanders. Are there any respects in which the comptrollership concept in the business community differs from that in the military field?

Secretary Stevens. Yes. I think that probably in the military field the comptroller's function is more operational in nature than possibly is true in some businesses.

Senator Flanders. Your testimony the other day opened up in my mind some questions which I have been putting to those who have been here in between our two appearances. Can the comptroller function be separated from the more general problem of military management?

Secretary Stevens. In my opinion it fits in the area of military management.

Senator Flanders. We were just saying, were we not, that the comptroller in general provides information.

Secretary Stevens. You asked me that in regard to business.

Senator Flanders. Yes.

Secretary Stevens. I think that the general conception of a comptroller in business is to some extent different from what it is in the military.

Senator Flanders. Do you feel that the comptroller in a military establishment should make some recommendations as to policy? fs it different in that respect?

Secretary Stevens. I think it is perfectly all right for him to make recommendations as to policy, but it is only a recommendation. It has

Senator Flanders. He does not enter into the matter administratively?

Secretary Stevens. No.

Senator Flanders. Is the problem of economy in peacetime essentially different from the problem of making the most of limited resources in wartime?

Secretary Stevens. No, I think the problem of economy, as the word indicates, means economy and should be utilized whether in peace or in war.

Senator Flanders. You would feel that an organization set up for peacetime economy could function in providing the use of limited resources in wartime. You would not feel it is necessary to change the organization for that purpose?

Secretary Stevens. Not necessarily, Mr. Chairman. I think we can always improve this Department of Army organization. That is why we have such an effective committee at work on the problem at the moment.

My hope would be to make improvements in the organization to the point where the answer to your question would clearly be that the organization was capable of carrying on efficiently either in peace or in war.

Senator Flanders. Do you feel that financial management is an inseparable part of the command function?

Secretary Stevens. I feel that the comptroller as set up in the Department of the Army is an integral part of the command function. Yes, I do. But I think also, Mr. Chairman, that you must bear in mind that in the final analysis, the comptroller, like everyone else in the military—if he is a military man—is responsible to the Secretary of the Army. The contact with the comptroller of the Army comes at the present time through the office of the Under Secretary of the Army, who works with General Decker's organization.

Our office provides the policy and General Decker's office provides the carrying out of the policy. If we find that something in General Decker's office is not going the way we want it, it so happens, in his case, we have no trouble in setting that right at the level where the matter came up.

But in the final analysis if there were a problem, I would simply go to the Chief of Staff and issue a directive that we were going to change that. So in the final analysis, the civilian is responsible.

Senator Flanders. Would you define for me General Decker's function. Wha do you call him besides General Decker?

Secretary Stevens. We call him the Army Comptroller.

Senator Flanders. He is the Army Comptroller?

Secretary Stevens. That is right. His functions, as I said before, are operational in nature and they include such things as auditing property accounts and procurement contracts, handling the many details involved in accounting for the disbursing of funds, doing the spade-work in preparation of the performance budget, allotting to commands the funds apportioned to the Army, setting up stock funds, industrial funds, and management funds as contemplated by title TV. He is also charged with progress and statistical reporting and analysis.

Senator Flanders. That is your definition of his inseparable part of the command function. He does not, however—does he come into the line of command in his functions directly?

Secretary Stevens. He comes into the line of command by providing staff assistance through the comptroller function at all levels of the Armv.

Senator Flanders. He is more than an information gatherer?

Secretary Stevens. Oh, yes, he is. That is an area, Mr. Chairman, where in my opinion his function as Comptroller differs somewhat from what is commonly true in industry.

Senator Flanders. I think now we have that idea clear. It had not been clear to me until now. That, I think, is a definition and a practice which differs somewhat not merely from private concept of the eomptrollership, but also differs somewhat from the point of view held in some of the other services.

But it is a valid concept and it is one that Ave will want to consider in connection with the others.

Is it desirable for all ton commanders to have had experience as a comptroller sometime in their careers?

Secretary Stevens. I would say it was quite desirable—not utterly essential, but quite desirable.

Senator Flanders. They would be the better for it, and it is a desirable part of their experience.

Secretary Stevens. That is right.

Senator Flanders. Can the budgeting process for which the comptroller is responsible—I assume that he is responsible for that in your setup—be clearly separated from the programing function which is the responsibility of operations?

Secretary Stevens. Yes; I think it can, definitely.

Senator Flanders. The comptroller is not responsible for seeing that the thing is done. He is a responsible part of the machinery by which the budgeting item is apportioned, but he is not responsible for the carrying out of the program itself.

Secretary Stevens. He is responsible to some extent for following up the carrying out, and making sure that it is done, through, for example, the auditing process.

Senator Flanders. I think that is clear. It has been suggested that the departmental comptroller should be a civilian with the rank of Assistant Departmental Secretary. Would you please give the committee your evaluation of this suggestion?

Secretary Stevens. I believe Mr. Wilson commented on that yesterday and suggested the possibility of a third Assistant Secretary in the fiscal field. That suggestion would be a very welcome one insofar as the Department of the Army is concerned. We would welcome that, because as it now stands that function is carried on by the Under Secretary who has really more than he can do.

It would be a logical thing, along with the Assistant Secretaries for Manpower and Materiel, to have one on fiscal matters. He would be the fellow who would take the primary responsibility in the field of fiscal policy for the Department of the Army, and then under our setup he would work with General Decker's comptroller organization in putting the policies into effect.

Senator Flanders. Has the effect of retaining military persons as departmental comptrollers in the Department of the Army concurrently responsible to the Chief of Staff, as well as to the Assistant Secretary responsible for financial management in the respective departments, resulted in dominant responsibility of the comptroller to the military?

Secretary Stevens. Not in my opinion, Mr. Chairman, because, as I pointed out earlier, I am the fellow who is ultimately responsible. The Comptroller knows that and the Chief of Staff knows it, and if things are not going well within the area of the Comptroller, then it is my responsibility as the top civilian to instruct the Chief of Staff to do something about it.

I have that authority and would so operate.

Senator Flanders. Would the establishment of a separate chain of command for the comptroller organization at all echelons in the military department, giving departmental comptrollers command authority over comptrollers at lower levels, assist in the implementation of title IV?

Secretary Stevens. No, sir.

Senator Flanders. I do not know whether it is necessary to expand. Your answer is definite.

Secretary Stevens. I feel very definite on that.

Senator Flanders. You might give some response why you think that would be a bad idea.

Secretary Stevens. I do not think that we ought to get a lot of comptrollers in the Department of Defense, bypassing the responsible officials and officers and getting into the operating business. I think that the individual military departments have got to operate,