Let me ask you how important is the foreign military sales program really? Have you made any precise estimate of what this really does in reducing our own costs, and what it really does in maintaining our defense base?

Mr. GANSLER. I think if you put it into perspective, what you see is that foreign military sales over the past few years, and this is, of course, since 1973 being increased over the $10 billion level in terms of foreign military sales and direct sales by the companies. It is over the $10 billion level in the last couple of years. Now, if you put the number I mentioned earlier of current defense expenditures, internal expenditures of about $17 billion, you see that in fact, foreign military sales are a very major share of the procurements taking place in the military in the United States.

The U.S. Army last year, for example, bought more for foreign military sales than for domestic procurements.

Well, now, if you are going to have in effect an almost doubling of the demand on the base, that is going to have a very positive impact in terms of the reduction of cost of equipment. It is just a learning curve, it is a simple learning curve.

Senator PROXMIRE. That is what I am asking about. What does that curve show? What is the effect? Does it save us $1 billion a year, does it save us $2 billion a year? Roughly what is the benefit from that? Mr. GANSLER. I don't know that.

Senator PROXMIRE. Can you work that out and give us the best figure you can? I'd like to know that. Also, I would like to have it broken down, if possible, for tanks, planes, for missiles, for the other major procurement items.

[Additional information submitted by Mr. Gansler follows:]

Cost savings resulting from foreign military sales are identified in Table 4 on page 18 from the Congressional Budget Office Staff Working Paper, CBO-1107, entitled, "Budgetary Cost Savings to the Department of Defense Resulting from Foreign Military Sales." This table identifies cost savings for five major defense systems which include the M60 Tank, the F14 Aircraft and the Harpoon and Maverick Missiles. Additionally, the CBO-1107 study concludes that:

"For those sales which can generate savings, the study estimates that on the average one dollar of sales results in fourteen cents in savings to the U.S., of which four cents represents R&D recoupments. These estimates are based on analysis of the data for the 35 major weapon systems."

Senator TOWER. Would you yield at that point?

Senator PROXMIRE. Certainly.

Senator TOWER. I think that would probably fluctuate, wouldn't it? Senator PROXMIRE. Sure it would fluctuate. I just wanted to get a general idea.

Mr. GANSLER. Actually by individual systems.

Senator TOWER. The individual system is what I am talking about. Mr. GANSLER. You don't determine what is the overall impact on, say, ships or what is the total impact on planes, but you take the individual systems being sold and simply apply the learning curve to those. There are some systems where we are building at extremely low rates, and it is basically the foreign sales, in fact, making the differ

ence to our costs.

Senator PROXMIRE. It would affect some aircraft, not others; it would affect some ships and missiles and not others. That is what I want to get, though, your best estimate as to what benefit this has in this regard. Frankly, I think it is a program that is one of the most tragic mistakes this country has ever made, to get this deeply involved. We ought to be working exactly the other way, using our greatest possible influence to develop arms free zones and to negotiate with other nations to reduce arms sales as much as possible.

I realize it would have an adverse effect on our ability to produce, but the long-term effect on war in the world, and death and destruction is just so conspicuous and obvious if we keep loading up the world with our enormously lethal systems.

Senator TOWER. Would you yield at that point?

Most of these sales go to our allies, though, those with whom we have treaty agreements or unilateral agreements.

Mr. GANSLER. The rationale, of course, is that part of the overall defense policy

Senator PROXMIRE. We sell them to anybody, though. We sell them to the rich, the poor, the dictatorships, the democracies. We sell them to Israel, and to Iran, and to Saudi Arabia, in huge amounts, and our allies, it is true, we sell them for some reasonable foreign policy purpose, I'm sure, in every case, but I just don't think you can justify it. Well, let me go on.

Representative MITCHELL. Would the chairman yield for just a

moment?

Senator PROXMIRE. Yes.

Representative MITCHELL. We don't sell just to our allies. We also sell to those nations that we seek to coerce or bludgeon into becoming our allies. That is just common knowledge. I am not at all sure that Zaire is an ally of America today. I know there has been a great deal of talk about arms shipments to Zaire, to bring it under our sphere of influence. So I think the record ought to show that those sales really become a method of maintaining American supremacy in terms of international influence.

Mr. GANSLER. Yes; I think, Congressman, if I could comment. let me say that as you are well aware, the Defense Department doesn't decide on which countries the sales go to. It is State Department policy and, of course, not one that we comment on.

Senator PROXMIRE. Yes, but only the Defense Department, particularly you, Mr. Gansler, can give us the data that I think is essential

so that we understand all of the dimensions of this, including the effect this has on our own defense establishment, its readiness, its cost and so forth.

Mr. GANSLER. That is the point I tried to address in my testimony. One of the concerns we have is that in the event that this suddenly does drop for some reason, either because of buyers or because of legislation or whatever, that a drastic reduction in the demand on the industrial base could have even more significant impact if not properly planned for.

The other area that we talked about earlier is the technological advances on the Soviet side. We are equally concerned about the manufacturing advances that are taking place, and I am personally quite concerned about our technology transfer programs taking place, where we are in fact selling manufacturing factories and that sort of thing overseas as well.

Senator PROXMIRE. Now, Mr. Gansler, the committee understands that there is currently no overview of mobilization planning within the Defense Department. I understand that each of the military services, the defense agencies and other Federal agencies involved have their own mobilization plans, so there is no meaningful assessment of our total industrial mobilization posture.

I just wonder about that, that lack of coordination doesn't make any sense.

Isn't it the responsibility of the Defense Department to make such a comprehensive assessment? Does the Defense Department have any plans for trying to get an overall assessment of our defense mobilization posture?

Mr. GANSLER. Well, let me point out, we do have a coordination within the Office of the Secretary of Defense in the Department of Defense. The Federal Preparedness Agency, as you know, is responsible for the national coordination function.

Now, whether or not it is adequate and whether or not the current plan is well integrated, and whether or not the plan, in fact, covers all of the contingencies is the very real question I think you are addressing.

Senator PROXMIRE. Well, what I am addressing is the fact that our staff, which has been very diligent in exploring this, and I am very proud of the ability of our staff, tells me that we don't have a full picture of where we stand at all, and that the Defense Department has not given us that. They have not pulled it together, and only the Defense Department can do it.

Mr. GANSLER. Well, I think you are right, and that is why we chartered the Defense Science Board task force this summer to address that exact question. In fact, we had your staff minority and majority representatives address that group because we also felt that they had been doing a good job looking at this subject and we wanted their views as well.

The purpose of that task force was to try to get some kind of an independent assessment of whether or not our plans are adequate, and in general I would say the conclusions were with yours, Senator, that they are not adequate.

Senator PROXMIRE. When do you expect to get some kind of a comprehensive picture so we will have some kind of an adequate

Mr. GANSLER. Well, we have gotten some initial actions that we should take and have already started to take. The initial comments that I made to Congressman Mitchell in terms of trying to start doing more planning for the surge, for the shorter term response, comes from some of the looks that we have taken and recognize the deficiencies

Senator PROXMIRE. I am not talking about just the surge. I am talking about an overall picture of what our total mobilization capability is under all the circumstances.

Mr. GANSLER. We are now in the process of doing a broad study of that, trying to define both.

Senator PROXMIRE. When will that be ready?

Mr. GANSLER. We don't have a firm commitment on that, but it is in next year's time period. It is not in the next weeks and months. The sort of thing we are trying to get is some idea of the cost of implementation. Having a plan is not of too much use unless we can afford to implement it, or if it is too expensive, then we should cut back on the plan.

So one of the more important parts now is to determine what the cost of implementation of such a plan would be.

Senator PROXMIRE. Now, there have been other studies going on, as you know, including a study by the Arms Control and Disarmament Agency of industrial mobilization that was done over 2 years ago. The study was done by Arthur Little, I understand.2

Mr. GANSLER. Yes, sir.

Senator PROXMIRE. Were you aware that the study arrived at many of the same conclusions that you are still in the process of reaching? Mr. GANSLER. Yes; I did review that study and I thought it was a good initial look, and that was one of the earlier things that caused us to start looking more seriously, as you said, about 1 year or 2 ago. I thought that it was a rather generalized study, but I thought it was good in terms of the general conclusion.

Senator PROXMIRE. Well, you see, the reason I am raising this point is you said that we need to expand stockpiling, include long leadtime items needed to maintain a war production basis in product lines, need a critical review of procurement practices, need to improve the effectiveness of demand incentives to producers. But it also said, and this is the crux of it, that the principal difficulty is the cost. We are complaining now about the cost of government in every respect, including the Defense Department, and we should, but the cost here— your proposals add that would add a very substantial cost, would they not?

Can you give us some notion of what the cost increase might be? Mr. GANSLER. It depends entirely upon which programs you apply. Senator PROXMIRE. I understand that.

Can you give us a range?

Mr. GANSLER. Yes; I would think that one of the things, that if one were to try to get a more responsive base in terms of trying to order long-lead material costs, that this would probably involve picking the individual materials that are the longest lead items, and ordering 1 year ahead.

2 "Industrial Preparedness in an Arms Control Environment: A Study of the Potential Impact of Sharp Increases in Military Procurement." Prepared by Arthur D. Ltitle, Inc. for Arms Control and Disarmament Agency, ACDA/MEA-246, December, 1974.