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LIMITATIONS

MOBILITY AND OPERATIONAL READINGS, PERFORMANCE IN EMERGENCY, OVERSEA PERSONNEL BASE, SECURITY, MANAGEMENT RESPONSIBILITY, FINAL REQUIREMENTS DETERMINATIONS, SUPERVISION OF AIR FORCE PERSONNEL, POLICE AND SECURITY

POWERS

There are additional limitations placed upon the use of contract services in areas where we consider the use of in-service personnel mandatory. Contract services will not be used when their use will impair mobility or operational readiness, or diminish our capability to perform essential activities under emergency conditions.

The use of contract services must not be allowed to grow so large that an inadequate base of in-service personnel exists to support combat or oversea rotational personnel requirements. Nor will they be used in areas where security would be compromised. In-service personnel will be used to carry out the day-to-day management responsibilities of the Air Force, although contractual advice and assistance in special studies is allowed. Similarly, the responsibilities for the final determination of Air Force policies and requirements must remain with the Air Force. Contractors will not be used to supervise Air Force personnel, except that supervision incidental to training, and will not exercise police and security powers for the Air Force, except facility protection services.

APPLICATION OF POLICY

COMBAT AND DIRECT COMBAT SUPPORT-INDIRECT COMBAT SUPPORT

The application of this basic policy through more specific functional regulations and day-to-day practice has occurred in recent years in an environment of rapid change. Time compression in technological advances has generated tremendous pressure on the capacity of the manpower resources to adjust. Increasing amounts of facilities associated with missiles, communications, and radars has brought new and different manpower requirements. The necessity and difficulty associated with meeting this change have been coupled with the requirement to obtain increasingly better use from those dollar and manpower resources made available to the Air Force.

Within this environment, the Air Force policy is considered a sound basis of action. To the extent that we maintain an in-service capability in the combat and direct combat support functions, readiness and combat capability can be assured.

The Air Force has done a reasonably good job of maintaining inservice capability in such functions. We have, however, granted more exceptions due to skills problems than we would have preferred, particularly in the electronics area. We have converted, or are in the process of converting, several areas from contractor to military manning, such as the operation and maintenance of SAGE powerplants, SAGE computers, and the Aleutian segment of the DEW line, but skills shortages in some fields still necessitate more than desirable levels of contracting.

Air Force requirements for personnel possessing highly technical skills have grown rapidly with the exploding technology. Training

leadtimes for such skills are long. In some of these skills, oversea requirements exceed those in the United States with the resultant heavy incidence of oversea duty for the personnel involved. The Air Force is continuing to experience difficulties in retaining airmen trained in highly technical skills. For example, we currently have only 66 percent of the total authorized senior aircraft control and warning radar maintenance airmen, and a reenlistment rate for A.C. & W. radar maintenance personnel of about 17 percent. The interrelationship of expanding requirements, long training times, some adverse balances between oversea and U.S. requirements, and an unsatisfactory retention rate prevents the Air Force from meeting all highly technical requirements in-service, and necessitates contractual assistance.

In the indirect combat support function, the Air Force has developed a number of well-controlled and highly successful contracting programs such as contractual feeding. We are periodically reviewing activities in the indirect combat support area to find improved uses of in-service and contract service resources, and, thereby completely realize our policy objective of effectiveness and economy.

With this framework of general policy and its application, I would now like to turn to specific data on Air Force practices, starting with the relationship between military, civilian, and contract services resources. As Mr. Imirie indicated in his statement, this relationship must be considered in terms of the total Air Force.

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The general trend in our total manpower resource from fiscal year 1957 through fiscal year 1962 is portrayed here. Man-year data was selected as being the most meaningful. All functional areas of in-service and contract services use have been included. Since contractors are not normally required to provide us with an actual count of personnel, we have developed contract services manyears based on a conversion formula which we have used for several years and have found reasonably reliable. Over the period shown, military man-years have declined 9 percent. The dip in fiscal year 1961 was due to unanticipated losses of officers and airmen which caused strength to fall below authorized levels. Civilian man-years, which includes all foreign nationals, have declined 18 percent, though the decline is less sharp in the more recent years. Most of the decline is in foreign nationals with U.S. civilians declining only 9 percent. Contract services man-years have increased 7 percent, although total man-years available to the Air Force have declined 10 percent.

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disproportionate costs, or clear unfeasibility. Because of our historical use of contracting, this bulletin has had a negligible impact on the Air Force.

DOD Directive 4151.1, dealing with maintenance, which we will discuss in more detail later and as an aside I believe Colonel Riemondy addressed himself in part to that yesterday.

Mr. HÉBERT. That is right.

Mr. COURTNEY. That is right.

Secretary IMIRIE (continuing). Has similarly not brought about major changes in Air Force practice. We are in accord with the principles set forth in this DOD directive, and no policy conflict exists. Neither of these directives apply to all areas of contract services which are of interest to the committee. In light of these facts, I will therefore concentrate on Air Force policy and procedures, which have been developed to meet our particular needs and to serve the best interest of the Government.

Air Force management and control of contract services requirements can be divided into three general types of activities: policy, budgetary reviews, and procedures and controls.

First, we exercise control over the use of contracting through policy directives issued by Headquarters U.S. Air Force. These policy regulations include a general directive applying across the board plus a series of directives pertaining to particular functional areas such as feeding or custodial services. Our basic policy is to perform combat and direct combat support functions with our own personnel to insure our combat capability. Specific regulations prescribe what may and may not be contracted and under what circumstances. Such policies provide responsible commanders throughout the Air Force with guidance on which to base proposals and actions for use of contract services.

Second, we conduct a thorough review of proposed expenditures for contract services during the course of periodic budgetary reviews both at major air command and Headquarters, U.S. Air Force level. Representatives from all concerned staff agencies are involved. These reviews are designed to insure that proposed contracting is in accordance with policy and that amounts are in proper relationship to to program requirements and priorities.

Third, we have various management procedures and controls which apply to particular contract services programs. Since there are obvious differences involved in contracting the overhaul of aircraft engines and the feeding of troops, the Air Force must and has tailored its contract services procedures to the functional area involved.

Procedures are established which cover the manner and levels at which the specific contract service requirements can be approved. Some contracting programs or individual proposals are processed to Headquarters, U.S. Air Force level for approval due to their size, nature, sensitivity, or statutory requirements. For example, requirements for contract technical services are approved at Headquarters, U.S. Air Force level.

Authority to act on other contract services which are small in size and local in character is delegated to base level, subject to Headquarters, U.S. Air Force policy guidance and periodic budgetary reviews. In an organization the size of the Air Force, such delega

tion to the lowest level where a proper decision can be made is necessary to take account of local conditions, maintain adequate flexibility, and avoid hopeless clogging of higher headquarters in paperwork.

Illustrations of the types of contract services in this category include maintenance of office machines, motor vehicle maintenance done in local garages, and custodial services.

The discussion of policy, budgetary review, and management procedures applicable to the contract services resource leads to an important point concerning the programing of resources to accomplish the Air Force workload-whether those sources are contract services, military personnel, or civil service employees. This point is particularly significant in light of your expressed interest in the question of replacement of military and civilian personnel with contract services.

The relationship of military, civilian, and contract service resources must be reviewed in terms of the Air Force as a whole, not just in terms of a particular activity. This view is necessary because of the manner in which resources are obtained.

Based on Air Force requests and review by higher authority, the Air Force is given a total quantity of military manpower, civilian manpower, and dollar resources. Once established, there is little flexibility in the total amounts. We must then distribute these resources to subordinate levels in a fashion to insure maximum utilization of amounts available in each category and the accomplishment of the most important workloads first.

one.

This distribution process is not a one-time effort, but a continuous. For while the total resource available in each category is relatively inflexible, workloads are changing continuously. We must adjust our resources within totals available to meet these changes. This is a never-ending process.

For example, at one of our Air Force Logistic Command facilities, it was necessary to increase the in-service civilian capability for missile managment. Not having additional civilian manpower available, it was determined that the necessary authorizations could be obtained from the engine maintenance shop where the work being done was eligible for contracting under policy and criteria. What appeared to be solely a replacement of civilians by contract from the standpoint of the engine shop was, in fact, a realinement of resources to meet a vital requirement without change in total civilians available to the Air Force.

I believe this example illustrates why the relationship between in-service and contract resources and the question of replacement must be looked at in terms of the total Air Force rather than the individual case if it is to be meaningful.

Since the committee has also expressed an interest in cost comparisons, I would also like to touch briefly on this subject. This complicated matter is one with which the Air Force has wrestled for years. In areas such as depot maitenance where plant and equipment are involved, exact valid comparisons are, frankly, not feasible. Not only the Air Force, but other congressional investigations have found this to be the case. This situation is caused by several factors. First, it is normally impossible to find two work projects one inservice and one on contract-that are exactly comparable. Both work

content and amount normally change from one project to the next or from a past time to the present. Second, the cost-accounting systems between industry and Government are sufficiently different to present problems. Third, there is a lack of comparability in the treatment of depreciation of facilities which industry accounts for and the Government normally does not, and in determining what overhead to attribute to a particular job. Finally, it is often not possible to segregate such costs as those associated with the support furnished a contractor by the Government.

This is not to say that costs are not important, but only that exact comparisons between contract and inservice costs are often not possible. In those areas where primarily labor is involved such as food service, cost comparisons are feasible and are, in fact, used.

Mr. Chairman, this concludes my prepared statement to the committee. I believe that we are making a concerted effort to manage the use of contract services effectively.

With your permission, I would like to further demonstrate this view and provide the more detailed information of interest to the committee by proceeding with a presentation by Col. James E. Hill from the Air Staff on the general use of contract services. And as we previously noted, Colonel Riemondy presented the detail yesterday on depot level maintenance contracting.

Having done this, sir, and at your pleasure, we will try to answer the questions you gentlemen of the committee may have.

Mr. HÉBERT. Colonel Hill you say is present?

Colonel HILL. Yes, sir.

Secretary IMIRIE. Colonel Hill, to my far left.

Colonel HILL. Mr. Chairman and members of the committee:

CONTRACT SERVICES

In this presentation I shall state the contents of our policy on the use of contract services, how successful we have been in applying that policy, and the specific uses of contract services from fiscal year 1959 through fiscal year 1961 in the functional areas of interest to the committee. With the exception of one overall trend chart on the use of military, civilian, and contract services manpower, this presentation will be confined to contract services used by the active Air Force for work in areas other than research and development, real property maintenance and repair, and depot maintenance which was covered by Colonel Riemondy yesterday.

DEFINITIONS

CONTRACT SERVICES-INSERVICE PERSONNEL

Since I will be using two terms frequently during the course of this presentation, let me commence by defining them. Contract services are those services obtained from non-Air Force sources to perform Air Force work. Contract services provide a work force supplementary to our military and civilian manpower resources. Contract services include contracts in such areas as maintenance, overhaul and modification of equipment and facilities, operation of facilities such as the distant early warning line, training, and housekeeping services.

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