COMMITTEE ON APPROPRIATIONS

GEORGE H. MAHON, Texas, Chairman

PAUL M. WILSON, Clerk and Staff Director

DEPARTMENT OF DEFENSE APPROPRIATIONS FOR

FISCAL YEAR 1972

THURSDAY, MARCH 18, 1971.

DEPUTY SECRETARY OF DEFENSE

WITNESSES

HON. DAVID PACKARD, DEPUTY SECRETARY OF DEFENSE
HON. ROBERT C. MOOT, ASSISTANT SECRETARY OF DEFENSE

(COMPTROLLER)

HON. BARRY J. SHILLITO, ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS AND LOGISTICS)

BRIG. GEN. J. F. LAWRENCE, USMC, DEPUTY ASSISTANT TO THE SECRETARY (LEGISLATIVE AFFAIRS)

Mr. MAHON. We are pleased this morning to have, before the committee, the Deputy Secretary of Defense, Mr. David Packard.

Mr. Packard, very often, when witnesses are before us and we get down to the nitty gritty on various issues, witnesses will say "that matter is in Mr. Packard's hands." I do not know whether they mean the buck stops with you or not. Anyway, that is what we keep hearing. We do know that you are a very busy man, and heaven knows you need to be busy since you are involved in such an important enterprise. We know you play a major role in major weapons systems acquisitions. This is where much of the money goes.

We know that you are sincerely interested in improving management practices and in making it possible for the Defense Department and the American taxpayer to get more for the tax dollar.

So, we are truly pleased to have you before the committee.

We are pleased to have you, Mr. Shillito. You have been before us many times.

Will you now proceed, Mr. Packard.

STATEMENT OF THE DEPUTY SECRETARY OF DEFENSE

Mr. PACKARD. Mr. Chairman and members of the committee, let me say that I am very pleased to have the opportunity to spend some time with you here this morning. As far as time is concerned, I am prepared to come back this afternoon, and I will take as much time as you and your committee would like to have to talk about these matters. I appreciate your comment about the buck-passing. I might say that perhaps I ought to reverse this procedure once in awhile, and if I find something I cannot answer, pass it to Secretary Laird. I do not know whether that will work or not. I may find that to be a useful procedure.

This morning I would like to talk about some of the things we are doing which we believe will contribute to the implementation of the new Defense policy that Secretary Laird presented to you in his Defense report.

(1)

NEED FOR BETTER MANAGEMENT

Mr. MAHON. To what extent is this related to the so-called report of the Blue Ribbon Panel?

Mr. PACKARD. I will have some comments about the Blue Ribbon Panel. Many of the things that we are doing are consistent with the Blue Ribbon Panel's report and I will give you a report on some of those matters and discuss them with you.

I would like just to take a few minutes and try to put the approach we are trying to present here in context.

We are addressing the management of the Department in ways that we hope will help us implement Secretary Laird's strategy of realistic deterrence and the President's strategy for peace for the future.

I think you are all familiar with the buildup in Soviet forces. Secretary Laird has covered that and Admiral Moorer addressed it in great detail and I have discussed it briefly in my statement, so I will not take time to discuss that now.

One of the important points I want to try to make today is that if we, in fact, are to achieve realistic deterrence with our forces of the future, we must recognize that those forces are likely to be smaller in number. Therefore, it is very important, in my view, that we focus on the capabilities of these forces rather than the numbers of the forces. There are some examples in my statement on this matter, and we will talk about those later.

Essentially, I make the point in my statement that in the future we must plan on making reductions in the number of our people, both military and civilian. As these numbers are reduced we must do everything we can to make these smaller forces more effective.

Mr. MAHON. I want to interject this idea. Statements are made, in and out of the administration and in and out of Congress, that we must do this and we must do that with respect to our forces. It is said that we must cut back sharply in numbers of personnel, and so forth.

It has long been my position that we must do whatever is necessary to maintain sufficient military strength in this country. Whatever we have to do must be done. We must not permit ourselves to be euchred into a position of doing something we know is dangerous for the country as a result of our desire to reduce military forces. Do you somewhat subscribe to that?

Mr. PACKARD. Mr. Chairman and members of the committee, I assure you I do subscribe to that. Our focus in this budget is directed at maintaining and improving the capability of these forces. We have to be realistic about this. There are limits to how much we can ask for.

I assure you that, as far as I am concerned, if I felt there were serious problems in maintaining needed capability, we would ask for more forces. That is specifically why we are requesting increased funds in this 1972 budget for research and development. It is my view that the future capability of our forces will be more dependent on technology than on manpower.

RESEARCH AND DEVELOPMENT

I have tried to cover two things in my statement. The first is what we are doing to improve the management of our research and development programs, including the decisions on which programs we believe should be supported; and, the second is what we are doing to improve the general management of all of our Defense resources in addition to those involved in research and development.

Turning now to the research and development program, one of the issues that we get into every year is the question of how much is enough. That will be a continuing question and will continue to generate debate. It has gone on for many years, and it will continue. I want to focus actually on three aspects of this problem.

The simplest approach to the problem is what I call the "keeping up with the Joneses" theory-that we ought to be sure we stay ahead of the Soviets in terms of our technology.

We are ahead of them in general today. The point I want to make here is that it is very difficult to measure accurately the relative levels of our research and development compared to theirs. We know that the level that we have supported in the past has kept us ahead in technology. We also know that if our level goes down while their level continues to go up, at some point in time they will be able to catch up with us and surpass us. Therefore, I do not think it necessary to get into the question of precise measurement of these levels, but in general, I think we are on very dangerous ground if their effort increases while ours does not.

That is the first point I want to make in support of our recommendation for additional research and development funding in fiscal year

1972.

There is another approach to the level of R. & D. funding that I think is important. I have been involved with this question of how much research and development is necessary over a good deal of my professional career. In business there is always the question: If you spend a little more on research and development, won't it help increase your business in the future. We are now addressing the same kind of question.

In determining the best level of expenditures on research and development we have to recognize that the law of diminishing returns applies here, just as it does in almost any other issue having to do with

resources.

I think we should address our research and development program year by year in the following manner. First in terms of whether we are supporting the ongoing programs well, whether they are the programs that will give us a good return measured by future capability, and whether that support is adequate to keep them going on an efficient basis.

Second-and, I think this is an important change this year-we should, and we have tried to go back and examine the broad area of research and development to determine whether there indeed are some areas which have not been covered, which should be covered, and which will provide a significant return in terms of increased capability.

Those three important factors are the ones we have utilized in assessing this question and recommending the increase in the R. & D. program this year.

I want to make clear to the committee that in requesting increased research and development funding, we fully accept the responsibility we bear, both to the Congress and to the American people, to improve the management of these programs. I want now to summarize quickly some of the things we are doing. I will go over the key points, and we can go back and discuss any of the specific points as the committee wishes.

The first point I make in the statement is that if we are to do a better job of managing our research and development program in the Department, the responsibility has to remain with the services. We must find ways to encourage and help the services to do a better job. This simply recognizes that the job is so big that it cannot be done from a centralized point, the Office of the Secretary of Defense. There has been too much involvement at that level, in my view, in too many details. We need to decentralize this matter; and in decentralizing, we have to find ways to encourage and help the services do a better job.

PERSONNEL UTILIZATION

The second point I make is a very straight forward one, but it is one that is very important. It is simply that if you want to have a better management job done, you should get a better man in the job and give him authority as well as responsibility. We have to emphasize that.

I am confident that we can make some progress by making sure that we have good managers on all the programs. It is essential that these managers be given adequate staff support as well as the responsibility and the authority they need to do the job. Also they must be kept in the job long enough so they can get something done. I am sure you gentlemen have recognized this problem of rotation too rapidly in the program, and I talk about this in detail in my statement.

Mr. MAHON. It almost sounds like you are reading from one of the committee reports of former years.

Mr. PACKARD. Mr. Chairman, I want to make clear at this point that this is not new wisdom. It is just a reemphasis of what I think is a commonsense approach to these problems. I think we just need to go back and look at the fundamentals and stick with those. We have spent too much time trying fancy contracts and other gimmicks. We had better get back to the old ABC's. That is my view of the matter. Third, we need to have more emphasis on, and better ways of getting, what I call tradeoffs in the management of these programs. This is so because, in my view, tradeoffs between what we would like to have and what we can achieve on a reasonable basis in terms of cost, offers the biggest and most effective promise for keeping the cost of these programs under control. We will talk about that in some detail.

NEED FOR BETTER EARLY PLANNING

The fourth point is, again, a very simple one: that we have to see if we can find ways to make the first decision right. You gentlemen have been dealing with these problems for some time now. You know