General DICK. We will do that, sir. Mr. FORD. I think we ought to have a comparison as to whether it is a minimal advance or whether it is actually an advance of some significance. General DICK. I will supply the figure, sir. It is a significant ad vance. Mr. FORD. And how much you are asking for in fiscal year 1965 and how much you used in fiscal year 1964. General DICK. I have the figures, here. million in 1965. million in 1964; Mr. FORD. When would you expect this new system to be type classified? General DICK. We would expect to finish it tional - million expended. PERSONNEL INCREASE with an addi Mr. FORD. Your installation summary shows that you desire to increase Government personnel paid out of research, development, test and evaluation funds, from 27,751 in fiscal year 1964 to 28,347 in fiscal year 1965. What is the justification for these proposed additional personnel? What is the estimated annual cost of the requested additional personnel? Put that figure in the record. General DICK. I can supply that. (The information is as follows:) The installation summary reflects the installations' estimate of the manyears which would be utilized in the accomplishment of the in-house effort. The principal increase is for White Sands Missile Range and is the result of increased testing requirements for the Army and other customers such as Air Force and NASA. A part of the remaining increase is due to a greater portion of the Army industrial fund capability being applied to R.D.T. & E. work. Small increases are estimated for several installations connected with medical and mapping and geodesy programs. Based on the average salary estimated for fiscal year 1965 of $7,255 the increased man-years used would require about $4.3 million. BALANCE OF PAYMENTS Mr. MAHON. How much of the funds requested in fiscal year 1965 will enter the balance of payments and how does this compare with fiscal year 1964? General DICK. The estimated flow of gold in fiscal year 1965 is $9.4 million compared to $11.2 million in fiscal year 1964. Only $7.5 million of the fiscal year 1965 amount is with Western Europe. The largest item is the Army contribtuion to the Hawker P1127 vectored thrust aircraft development. CONTRACT PROCEDURES Mr. MAHON. Are R. & D. contract negotiations competitive and to what extent? General DICK. Yes; in the sense that in most cases a number of contractors have been requested to submit proposals. The proposals are then evaluated principally on the basis of technical content and price, and then negotiations are initiated with the successful pro 30-741-64-pt. 5-15 poser. In addition, project definition procedures provide for competition among contractors in projects where that technique is applied. Mr. MAHON. Are any contracts for R.D.T. & E. placed by formal advertising? General DICK. Yes; but in relatively small dollar amounts. Based on a survey of fiscal year 1962 and fiscal year 1963, it is reasonable to estimate that approximately 5 percent of the total R.D.T. & E. procurements would be placed under formal advertising methods. For the most part, these contracts are for commercially available supplies and services needed to support in-house efforts. Mr. MAHON. Why can't incentive-type contracts be used in all R.D.T. & E. procurements? General DICK. The incentive feature in contracts provides for rewards or penalties in terms of profit or fee to the contractor. Profit or fee is not provided in some R.D.T. & E. contracts such as those with educational institutions for basic research. In other instances, the work to be performed cannot be defined and described with enough precision to permit the identification of performance or delivery features on which an incentive could be based. For contracts in the research and exploratory development categories the operation of a cost-control incentive might have the undesirable result of limiting or restricting the work of scientists and engineers to the degree that research goals are not attained. Finally, the cost of administering incentive-type contracts is not economically justified for many small dollar value contracts. Mr. MAHON. How much of the R.D.T. & E. program is expected to be placed under contracts with industry? General DICK. Approximately 70.5 percent; the following chart provides a detailed breakout. Mr. MAHON. To what extent will incentive-type contracts be used in R.D.T. & E. procurement? What kinds of incentives can be applied to R.D.T. & E! General DICK. It is estimated that approximately 50 percent of R.D.T. & E. contract dollars will be under incentive-type contracts. The following tabulation shows the percentages of contract dollars placed under various types of contracts. Performance, cost, and schedule incentives are being sought in all new contracts and extensions of existing contracts for R.D.T. & E., except those whose dollar value is insufficient to justify the administrative costs involved, or those for research, preliminary explorations and studies in which the work required cannot be precisely defined. Mr. MAHON. We want to thank you, Secretary Hawkins and General Dick, for your appearance here, and for the information you have provided us. When this record comes to you, you may amplify your answers at appropriate places where needed in order to give the full facts with regard to the situation. We hope to finish the hearings on the defense appropriations bill within 10 days and we hope to pass it much earlier this year than we did last year. That is one reason why we are having a little longer session this afternoon than we normally have. Thank you, Mr. Secretary and General. MONDAY, MARCH 16, 1964. RESEARCH, DEVELOPMENT, TEST, AND EVALUATION, NAVY WITNESSES HON. J. H. WAKELIN, JR., ASSISTANT SECRETARY OF THE NAVY (RESEARCH AND DEVELOPMENT) REAR ADM. C. T. BOOTH, U.S. NAVY, DEPUTY CHIEF OF NAVAL OPERATIONS (DEVELOPMENT) REAR ADM. E. B. HOOPER, U.S. NAVY, DIRECTOR OF ASW RESEARCH AND DEVELOPMENT PROGRAMS REAR ADM. L. D. COATES, U.S. NAVY, CHIEF OF NAVAL RESEARCH BRIG. GEN. W. B. KYLE, U.S. MARINE CORPS, DEPUTY CHIEF OF |