CODE 2051: BREAD AND BAKERY PRODUCTS

As defined in DOD instruction 4100.16 dated March 8, 1954, a bakery is "a centrally located bakeshop, not a part of the galley or kitchen of a genera' mess, which supplies bread and pastries to

"(a) Messes for consumption, or

"(b) Commissaries for distribution to mess, or

"(c) For resale to services personnel as individuals."

A total of 16 bakery activities have been reported under the commercialindustrial activities survey program (BoB 60-2). Of this total eight were continued in operation by the Navy and eight were discontinued. One of the eight continuances was actually a bakeshop which was included as a function within the MARCORPS Supply Center, Barstow, Calif.

Seven of the continuances were justified on the basis of national security and one on the basis of clear unfeasibility (adm. imp.).

The justifications for continuance based on national security take into con sideration the necessity for providing essential training to bakers for eventual duty in the field and with the fleet, and the need for providing refresher training in advanced techniques to bakers who are rotated from sea duty and oversea shore billets. Baking is a trade which requires constant attention to changing methods and techniques. Sufficient billets must be maintained, therefore, to adequately support the training and rotation needs of the Navy and to provide for the absolute minimum requirements of mobilization capacity.

In addition to providing training and rotation billets, these bakers also supply troop mess bread requirements at the activities of which they are a part.

It is the policy of the Department to restrict the baking of bread in general messes of the Continental Naval Shore Establishment to baker's schools, naval training centers, and to a minimum of the other continental shore activities where it will serve a necessary training purpose. The baking of cakes, pies, and other pastries are restricted to all general messes for immediate consumption of military personnel. With these exceptions the general messes of the Continental Naval Shore Establishment procure bread from available local commercial sources.

Mr. HÉBERT. Now, to bring it into definite and sharp focus. Under 60-2, the discretion is allowed the local commander of the area as to the application of the directive.

Secretary BELIEU. I would have to look that up again, sir. I believe you are correct.

Mr. HÉBERT. That is important here.

Secretary BELIEU. Yes.

Mr. HÉBERT. Because while in one community or one area the laun-dry or the bakery deal may be cheaper to the Government, in another area it would be prohibitive.

Secretary BELIEU. This is the way it should be.

Mr. HÉBERT. So as I say, it is up to the commander locally to apply the conditions.

Secretary BELIEU. Again, going back—we discussed bakeries and laundries.

Mr. HÉBERT. I am using those examples.

Secretary BELIEU. Well, they are good examples.

If you have to go overseas and perform the mission and you can't take this contracting out facility with you, you better have it in house, so you can go with it, or it can go with you.

Mr. HÉBERT. Well, that is the thing I am trying to develop, Mr.. Secretary.

Secretary BELIEU. Yes, sir.

Mr. HÉBERT. Is to show that while the general principle and the expression of free enterprise on the local community, and all that sort of thing-it sounds pretty. It sounds well. It is put to music,.

and the melody is wonderful. But really when you get down to it, you find it is not so practical.

Secretary BELIEU. Not in all cases, no, sir.

Mr. HÉBERT. That is what I mean.

So where is the line of discretion? Is it the local commander, under 60-2, or is it directed from a central headquarters?

Secretary BELIEU. I can't answer specifically as to laundries on the thing. It should be on the basis

Mr. HÉBERT. Well, the overall directive: Is it elastic enough? Secretary BELIEU. I believe it is now. I have not had any case come to my mind where it hasn't been, as I indicated.

Mr. HARDY. If the chairman would permit.

Mr. HÉBERT. Yes.

Mr. HARDY. This is an observation in connection with it. I have had a good bit of experience in times past on matters of this nature, and I never have been able to find out that any local commander had the authority to make any change unless he got the approval of the chief of the bureau. And I think they have generally had to get it from the Secretary's office.

Secretary BELIEU. I am informed it is all the way, to the top, sir. I wasn't familiar with that particular.

Admiral BEARDSLEY. All these reviews, Mr. Chairman-they all have to come up and be reviewed all the way up.

So it isn't within the discretion of the local commander, you are

correct.

Mr. HÉBERT. We are not being critical. And we don't want you to respond beyond your knowledge. We merely want to find out what the facts are.

It does have to go topside?

Admiral BEARDSLEY. Yes.

Mr. HÉBERT. Now, Mr. Hardy, any questions?

Mr. HARDY. Yes.

Mr. Secretary, I am interested in your general interpretation of 60-2.

In times past I have encountered interpretations which seem to say that we will not maintain any in-house capability for the performance of a service which can be procured from outside.

Now, that, it seems to me, is a little bit of the reverse of the position which you have taken. I hope I am properly interpreting your position.

Secretary BELIEU. I think you are sir. I have also had people approach me with this interpretation of it, sir.

Mr. HARDY. I have found that interpretation in some quarters in the Navy in times past. And I wanted to be sure that we have a general interpretation over there now, and just what it is.

Mr. HÉBERT. That is very important, I think.

Mr. HARDY. Just let us pin this right down a little bit.
Secretary BELIEU. Right.

Mr. HARDY. Even in your own policy statement, beginning at the bottom of page 1 and at the top of page 2, you list three categories there, which you say are not in conflict with Bureau of the Budget Bulletin 60-2.

Your statement, however, does not treat with the converse of those situations and say that you will procure, or will not contract out for other items, or that you will maintain in-house capability for the other items.

You say you will contract out for these, but you don't say that you are going to perform as an in-house capability all of the others, not by a jugfull. Now let's clarify that.

Secretary BELIEU. Well, again my policy would be, unless I am directed otherwise that as I have said here: "Nonmission essential weapons and components when military control and performance is not required."

You could reverse this and just say the opposite. "That for all mission essential weapons we should have an in-house capability." We should have an in-house capability where it meets training requirements or mobilization requirements or other requirements for rotation overseas. Now in many instances in new weapons it would be desirable if we had an in-house capability, because in-house capability gives you the better ability to inspect and to review and to know what you are doing and to plan your program better.

Unfortunately in this case technology expands so fast and the cost of building plants and of doing these things has prohibited all the inhouse capability that I think probably is essential to a military establishment in this country.

Now, where these things do not affect the military mission or we do not have to take them overseas in a rapid expansion, do not have to take the art with us, and where the cost is cheaper, I see no reason not to contract out.

Mr. HARDY. But now, can that be determined? Can determinations of that nature be made with respect to your installations generally, or do they have to be made on an individual installation basis as the chairman was discussing a moment ago?

Secretary BELIEU. I think the policy obviously has to come all the way to the top on the thing, pretty much.

Mr. HÉBERT. You didn't ask that question

Mr. HARDY. No.

Secretary BELIEU. That is the way I understood it.

Mr. HARDY. The policy with respect-if it is of general application. But what might apply in one area might be directly inapplicable in another area.

Secretary BELIEU. That is completely correct, sir.

Mr. KITCHIN. On practically everything.

Secretary BELIEU. This would happen certainly in the case of laundries and other facilities of that nature.

I have not had enough experience with this to talk as precisely as I should for the committee's sake. I would assume-take two laundries, one in one part of the country and one in another, where the local commander says "I can do this cheaper here." He should come in and make his recommendation for it.

I think there is no question that the 60-2 says "You will go outhouse wherever you can.'

Mr. HARDY. It says "wherever you can."
Secretary BELIEU. Yes.

Mr. HARDY. Does it mean wherever you can and maintain military capability, or does it say you must contract out if there is anybody on the outside that can produce it?

Admiral BEARDSLEY. No.

Mr. KITCHIN. There is an escape clause in there.

Secretary BELIEU. No, I don't think it goes that far. I don't interpret it that way.

I interpret it so you should go out-house-you should contract out, where you do no damage to your military posture.

Mr. HARDY. Well, let me get a little more specific.

I can recall-now, for instance, in here you made reference to noncombat aircraft maintenance.

(Secretary BeLieu nods.)

Mr. HARDY. You also the Navy also got involved in proposals to contract out for the maintenance of combat aircraft. Now I don't know how far they got actually with putting that into effect, but I do know that a good many aspects of it were under consideration, and a lot of time and money was wasted in considering it.

I know that certain capability related to combat aircraft maintenance were under scrutiny and under study, and a lot of money was spent on them, and I recall one little item-and this is the kind of thing that would involve overall top policy, I think.

I recall one specific proposal to discontinue the operation of an electroplating facility required in connection with the maintenance of naval aircraft, and to procure that service under contract. I know that in one locality it was determined that there was no local contractor capable of performing, so distant contractors were invited to bid on that proposition.

I know that finally, after a long period of time, somebody topside was prevailed on to understand that the quality requirements could not be maintained by such a procurement at a far distant point.

But the reason I am bringing this up is, here is something that— an awful lot of money was spent on something that was absolutely foolish from the beginning, when you couldn't maintain your quality requirements, and if you made a topside policy determination with respect to the contracting out for this service, generally you would be getting in one "gosh-awful" situation, plus an expensive one, plus the possibility that you would have a lot of aircraft going bad because of inadequate inspection.

Now, I am trying to understand how your top policy decision up in the Bureau on a blanket basis can result in meeting the need for a proper determination on these specifics. Now haven't we got to handle each on its individual basis, instead of trying

Secretary BELIEU. That is correct, sir. Certainly you can make the overall statement that I did on page 1 and 2 there.

Admiral BEARDSLEY. That is right.

Secretary BELIEU. Then you have to apply this as a yardstick to most individuals and the particular example you speak of I don't know precisely. They may well have to take these aircraft overseas and maintain them, and you have to take this capability with you.

If you lose it here, how are you going to take it with you when you go? Now in my mind, this is almost a direct clamp on keeping it in, of refusing to let it get out.

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Mr. HARDY. Well, let me give you one other little silly one that the Navy did. This was a real silly one. The Navy issued an orderand this hasn't been so very long ago-that they would maintain no ladders, fire ladders in a shipyard if there was a ladder company maintained by the local governmental installation within a certain distance of it, of the shipyard.

Now on the surface that might sound like it was fine thing to do, but it can result in an awful stupid situation, and it did in one with which I have a personal familiarity. But the decision was made at the top that we are going to abolish all these things, and it took an awful lot of head cracking, by golly, to keep from dissipating a capability in the shipyard of essential firefighting service which couldn't be met elsewhere.

Now if you are going to that is the thing the chairman was talking about.

(Mr. Hébert nods.)

Mr. HARDY. Where is the decision made? And this was a complete overriding of the local commander.

Secretary BELIEU. This is part of the difficult responsibility of leadership in this town, and all these decisions presuppose understanding of what you need to do and actual factual information of what the local situation requires. If you don't have these two conditions, decisions are going to be bad.

Mr. HARDY. Let's talk about one other one, if I might, because I want to try to see if we can have an understanding that we are approaching this thing on a commonsense basis, and that is the way I read your general statement.

Secretary BELIEU. I hope so, sir.

Mr. HARDY. But is hasn't always been done, and I hope to goodness that we are getting this policy squared away.

Let's talk about another one. Now you mentioned the maintenance of automotive equipment. For a considerable period of time there was a program underway of trying to contract out for the maintenance of all the automotive equipment in the Norfolk Naval Shipyard. And to show you how silly it was, they found they couldn't contract for it on any reasonable basis without knowing exacty what was going to have to be done to the vehicles. So you had the shops in the shipyard tearing the vehicle down to find out what was wrong with it, putting it back together, and then sending it outside to be repaired.

Secretary BELIEU. This is precisely what I meant a while ago when I said if you do not keep an in-house capability, you don't know what you are doing sometimes. How can I let a contract to buy something if I do not know what I want to buy? You just can't do it.

Mr. HARDY. Now there is one other facet to this that I wonder about, and this has to do with your ancillary activities, and one which you mentioned, and this one has been talked about a good many timesgas manufacture.

Now I don't know, but it seems to me there are some functions that have to be maintained as a matter of good business operations. I was talking to a private shipyard one time about the question of gas manufacture. I said "Do you manufacture your own gas?"

He said, "Yes."

And I said, "Why?"