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Contracts for depot maintenance, fiscal year 1960-Engineer construction equipment-Continued

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Contracts for depot maintenance, fiscal year 1960-Engineer construction equipment-Continued

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Secretary IGNATIUS. With your permission, sir, I will be followed by Major General Bunker, commanding general, U.S. Army Transportation Materiel Command, in St. Louis who will discuss aircraft maintenance.

Mr. HÉBERT. All right, General Bunker.

Does any member of the committee have any questions to ask the Secretary?

Mr. Kitchin?

Mr. KITCHIN. Not at this point.

Mr. HÉBERT. Mr. Norblad?

Mr. NORBLAD. This has to do undoubtedly with aircraft repair. Canadian Commercial Corp. has a contract for about $1 million, I notice, for engine repair both here and in Montreal. I was rather

curious about that.

Mr. HÉBERT. Well, we will go into that. General Bunker will go into that.

Mr. NORBLAD. Thank you.

Mr. COURTNEY. He is going to discuss aircraft maintenance.
Mr. NORBLAD. Is that aircraft or automobile?

General BUNKER. That is an aircraft engine.

Mr. HÉBERT. That will be discussed by General Bunker.

Mr. Secretary, I have only one question to ask. I fail to find here a definitive answer or a positive answer as to whether or not the letting out of contracts is more economical or more costly than the inhouse work.

You roam all over the field here, first in left and right and in center, and then behind the homeplate, but come up with no decision. What is your opinion?

Secretary IGNATIUS. Well, I think that we have tried in the Army, and I think with good success, as the other witnesses will attempt to point out, to go out for services only when we do not have the capability inhouse sufficient to do it or only where we lack the technical competence to do the work.

The Army, I think, has done a very good job of balancing what it does inhouse and what it does out of house.

So that in order to answer your question in terms of a cost comparison, if we have the capability we want to do it inhouse, and the reason we want to is in order to be ready to meet our mission, which is to close with and defeat the enemy in sustained combat.

When we can't do it and yet need the services and have to go out, we have to pay the cost of these services which we either don't have at all or don't have in the requisite quantity.

Now, in terms of the costs of these effort contracts, undoubtedly the salaries that we might pay for a civilian engaged in an operations research or a management consulting firm would be, generally speaking, higher than the civilian pay scales that we have in the Army on a direct salary basis.

When we get into overhead loadings on these things, I think you get into fairly complicated questions. In comparison to military personnel, the salaries would also be higher, but there are other costs associated with military personnel that would have to be taken into account. I don't know that I have answered you.

Mr. HÉBERT. You have not.

I am trying to find out here the figures after the two directives came out, to make a survey. You refer to the bakeries, but I am sure there was another figure here as to how many operations were closed down and subsequently contracted out.

Mr. KITCHIN. If I recall correctly, 7 were closed and 8 reduced, weren't they, out of that 1,280-some?

Secretary IGNATIUS. Yes sir, in the second one.

That was quite some time ago. I do not have any figures on that. Mr. HÉBERT. Well, out of all this study, only seven were closed down?

Secretary IGNATIUS. In this particular one-in this one of the 1,200

or so.

Mr. HÉBERT. Well, suppose you tell us, Mr. Secretary, in what fields, in what areas, was the contracting out policy adopted by the Army? Which previously had been done inhouse by the Army? Bakeries is

Secretary IGNATIUS. That is one.

Mr. HÉBERT. All right. No. 2.

Secretary IGNATIUS. That we mentioned.

Mr. COURTNEY. Aircraft maintenance.

Secretary IGNATIUS. Yes. In the field of aircraft maintenance, we have had a situation where as we began in recent times having larger numbers of aircraft in the Army, we did not have a capability to maintain them.

Mr. HÉBERT. Then it was not a substitute?

Secretary IGNATIUS. No.

Mr. HÉBERT. It was an overflow?

Secretary IGNATIUS. Well, we just didn't have the capability.

Now, I think what we have done and General Bunker will go into this represents what I think is basic Army policy in this whole area, to build some capability inhouse. We are building about 40 percent of our depot maintenance requirement and the rest we will do outside. Mr. HÉBERT. Now, we have bakeries and airplane maintenance. What else was changed?

Secretary IGNATIUS. Well, sir, as the Army has always placed a lot of emphasis on its own arsenal system and the preservation of various skills there, we have found that as technology expands very rapidly it is difficult sometimes to keep up with all of these skills. And occasionally it is necessary now to go out and hire consultants to do technical studies.

Mr. HÉBERT. Now, you are leaving the area of maintenance and hardware and going into the area of "think" factories.

Secretary IGNATIUS. Yes, sir.

Mr. HÉBERT. No. Let's hold it straight down the line.
Secretary IGNATIUS. Yes, sir.

Mr. HÉBERT. So then I am to understand, the committee is to understand, there were only two areas in which there were changeovers. One was in bakeries and one was in airplane maintenance.

Secretary IGNATIUS. No, there are more.

Mr. COURTNEY. There is housing maintenance.

Mr. HÉBERT. Marine maintenance.

Secretary IGNATIUS. Yes, sir.

Mr. HÉBERT. Only those two areas.

Secretary IGNATIUS. I think that a good deal was done also in the area of janitorial services-this kind of thing. More has been let out. Mr. HÉBERT. That is leasing out janitorial. What else? There are three.

Secretary IGNATIUS. I have a list here of activities approved for discontinuance during the period 1954 to 1959. This is a 5-year period. Ice cream manufacturing plants, 5.

Bakeries, 17.

Mr. KITCHIN. May I interrupt right here?

Secretary IGNATIUS. Yes, sir.

Mr. KITCHIN. All of these were supplemented by private contracts, contracting out, when they were discontinued as far as the Army was concerned?

Secretary IGNATIUS. I believe so, yes, sir. This is well before my time.


Can you help me on that, Colonel Dennison?

Mr. KITCHIN. The service still continued through contracting out when they were discontinued by military personnel?

Colonel DENNISON. The rules under which the decision was made, sir, under the BOB bulletins, only provided us with a decisionmaking process. And in some cases we just don't know whether it was replaced totally or in part, because all the bulletin required us to do was to make the decision.

Then in the field and under other directives as to how you get out of business, how you get out of something like this, and how you contract for replacement if required, this was done as separate actions-not necessarily related to the decision to close. We have no way at this moment of pulling back in and saying: This much of this work went to contract.

Mr. HÉBERT. What happened after you closed them down? You had to have the facilities. You had to have the production.

Mr. COURTNEY. You had to have the ice cream.

Mr. HÉBERT. You had to have the ice cream and you had to have the bread. What happened? Somebody just closed down the ice cream factory and he didn't know what would happen?

Mr. KITCHIN. Let me ask this question.

On some of these closures, such as ice cream, did you have additional facilities that were not closed that were adequate to supply? Colonel DENNISON. Not in ice

cream, sir.

Mr. KITCHIN. What about in your bakeries? You had, I believe, 17 left. One was used for training and the others were for bringing the boys back in, for inservice training, so to speak. And in addition to that, they were supplying the bread to the Army.

(Secretary Ignatius nods.)

Mr. KITCHIN. Now, did that supply all of the total needed by the Army in continental United States, or were you contracting out other facilities for bread in addition to the 17 still maintained?

Colonel DENNISON. In relation to the ice cream, sir, it is safe to say that all of that went to contract.


Colonel DENNISON. In relation to the bread, probably all of the bread being produced by the bakeries which were closed because of a question of location went to contract.

In some other areas, such as some tire retreading facilities—they were closed down, but some were kept on.

Again, here, part of the workload came back into those which were retained, because among the things which we could do under the bulletin was to compress what we had.

Mr. KITCHIN. So the list that the Secretary is getting ready to read does not mean that any of the items mentioned in the closures have been contracted out in their entirety.

Colonel DENNISON. That is right, sir.

(Secretary Ignatius nods.)

Mr. KITCHIN. And there is no way to tell whether you maintain a partial production within the military and a partial contracting out, all contracting out, or whether the facilities are just closed down and you don't use them?

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