WEDNESDAY, MARCH 4, 1959. OPERATION AND MAINTENANCE, ARMY WITNESSES MAJ. GEN. D. W. TRAUB, DIRECTOR OF ARMY BUDGET, OFFICE, COMPTROLLER OF THE ARMY MAJ. GEN. ROBERT S. MOORE, SPECIAL ASSISTANT TO ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) MAJ. GEN. S. B. HAYS, THE SURGEON GENERAL BRIG. GEN. T. F. BOGART, DIRECTOR OF PROGRAMS AND BUDGET, DEPUTY CHIEF OF STAFF FOR MILITARY OPERATIONS BRIG. GEN. F. L. WERGELAND, CHIEF, OFFICE OF DEPARTMENTS MEDICAL CARE, OFFICE OF THE SURGEON GENERAL BRIG. GEN. L. G. VAN WAGONER, DIRECTOR OF FINANCIAL OPERATIONS, DEPUTY CHIEF OF STAFF FOR LOGISTICS BRIG. GEN. T. R. STOUGHTON, DIRECTOR OF PROGRAMS, DEPUTY CHIEF OF STAFF FOR PERSONNEL BRIG. GEN. CHARLES B. DUFF, OFFICE, DIRECTOR OF ARMY BUDGET, OFFICE, COMPTROLLER OF THE ARMY BRIG. GEN. S. F. GIFFIN, DIRECTOR, ARMED FORCES INFORMATION AND EDUCATION, OFFICE OF SECRETARY OF DEFENSE COL. CLARENCE W. CLAPSADDLE, OFFICE, DIRECTOR OF ARMY BUDGET, OFFICE, COMPTROLLER OF THE ARMY COL. W. B. LATTA, OFFICE, DEPUTY CHIEF OF STAFF FOR LOGISTICS COL. G. P. SAMPSON, OFFICE, CHIEF SIGNAL OFFICER DR. ROLFE L. ALLEN, OFFICE, DEPUTY CHIEF OF STAFF (OPERATIONS) "Emergency fund, Department of Defense" (72 Stat. "Operating expenses, National Archives and Records "Operation and maintenance, Air Force" (63 Stat. "Salaries and expenses, Secretary of Defense" (63 Stat. Transferred (72 Stat. 243) from "Salaries and expense, Secretary of Defense" "Contingencies, Department of Defense". Appropriation (adjusted). Proposed supplemental due to pay increases. -$53, 157, 195 -$7,371, 624 -10, 000, 000 -256, 742, 510-335, 769, 000 -84, 262, 525 -69, 535, 000 -$365, 927, 000 -71,000,000 -43, 210, 191 43, 210, 191 -33,000,000 1,697, 386 3,053, 785, 000 3, 182, 020, 000 3,091, 294, 815 3, 236, 288,800 3,078, 208, 000 3,053, 785, 000 NOTE.-Reimbursements from non-Federal sources are principally from sale of goods and services to authorized individuals and include such items as laundry services, subsistence of hospital patients, surcharges on commissary sales, and unofficial telephone service. Mr. SHEPPARD. Gentlemen, we are ready to proceed on the consideration of the budget detail for the first of the operation and maintenance appropriations. OBLIGATIONS BY PROGRAM The table of the justification showing the obligations by program will be inserted in the record at this point. (The table follows:) NOTE. The obligations through December 31 shown above include reimbursements; conversely, the annual estimates for all 3 years exclude reimbursements. The tabulation below presents the statement on a more comparable basis at the program level. Mr. SHEPPARD. General Traub is our first witness. May I say before you begin, General, that without objection the staff will see to it that the appropriate pages of the justifications are inserted in the record at their proper places in the hearings. I see that one of our witnesses, General Bogart, has not appeared before the committee previously. General, will you include in the record just prior to your prepared statement a biographical sketch for the committee's benefit. I wish you would proceed, please, General Traub, and without objection we will take up our interrogation at the conclusion of your statements. STATEMENT OF DIRECTOR OF ARMY BUDGET General TRAUB. Mr. Chairman and members of the committee: with your permission, sir, I will now begin a discussion of the Army's request for fiscal year 1960 for the "Operation and maintenance" appropriation. At the outset of this discussion I wish to emphasize the widespread responsibilities of the "Operation and maintenance" appropriation and the relationship of these responsibilities to the combat effectiveness of the Army. The scope of these responsibilities may be inferred from the first sentence in the budget narrative, stating that "Operation and maintenance" funds are "For expenses, not otherwise provided for, necessary for the operation and maintenance of the Army." Therefore by deduction this appropriation supports all Army activities except the pay of military personnel, the procurement of major items of equipment, research and development, and construction. The major responsibilities of the "Operation and maintenance" appropriation are, in general, reflected in the titles of the eight budget programs of the appropriation. Although I will later discuss these briefly, the point I wish to make at this time is that the "Operation and maintenance" appropriation is the Army's operating budget. It would be perfectly possible to have an adequate and well balanced force structure equipped with modern weapons and yet be totally ineffective due to the inadequacy of operating funds. It is also significant to note that the "Operation and maintenance" appropriation supports the soldier as an individual-contributes to his standard of living. Morale is a relatively intangible factor, but it is a very important element in our objective to reduce the turnover of military personnel and to strengthen our Reserve components. In order that you may have a composite view of the many functions for which $3,053.8 million are requested in "Operation and maintenance" funds for fiscal year 1960, I will now highlight for you the major activities included within each of the eight "Operation and maintenance" budget programs. TACTICAL FORCES As the title implies, the tactical forces program supports the Army's tactical forces. These include our divisions and supporting units deployed in oversea locations, our Strategic Army Forces in the United States and the units of the Army Air Defense Command. This pro gram also supports basic training of individuals including Army Reserve and Army National Guard personnel during their 6-month period of active-duty training. TRAINING ACTIVITIES This program finances specialized or school training in the Army. For example, the U.S. Military Academy, the Army War College, the Command and General Staff College, the various branch and service schools and training in civilian institutions are all financed under this program. The training necessary to capitalize on the potentialities of missiles, electronics and similar equipment has had a significant impact on this program. CENTRAL SUPPLY ACTIVITIES This budget program supports the Army's central supply and distribution system. The functions of this system begin with supply management and procurement activities and extend through depot storage to maintenance and distribution, including transportation services and port operations. Disposal of excess property is now also included under this program as a reimbursable activity. This is a change in budget structure which became effective in fiscal year 1959 with the elimination of the former preparation for sale and salvage of military property account. MAJOR OVERHAUL AND MAINTENANCE OF MATERIEL The Army's basic rebuild activities are included in this program which supports the rebuild and rehabilitation of combat and combat support equipment. This work, which is beyond the maintenance capability of organizational units using the equipment, is done centrally at appropriate depots. MEDICAL ACTIVITIES The title of this program is self-explanatory. The dependent's medical care program and medical support of military personnel are included in this program. ARMYWIDE ACTIVITIES The armywide activities budget program includes support for both administrative and logistic services that are armywide in nature. These include the operation of major command headquarters, communications, intelligence functions, including military surveys and mapping and finance, audit and similar specialized services. ARMY RESERVE AND ROTC This program supports the operations and training of Army Resere units and of the Reserve Officers Training Corps, including its summer training. JOINT PROJECTS This program supports activities that are considered to be joint in nature. The joint projects budget program also differs from the other budget programs in that the subdivisions of Budget Program 2700 are in terms of organizations or commands rather than functions. The major activity under this program is the National Security Agency. The Armed Forces special weapons project, Joint Task Force 7, the Armed Forces Information and Education Division, the National War College, and the Industrial College of the Armed Forces are also financed by this program. BUDGET STRUCTURE Members of the committee will recognize that this is the same eight program structure as for fiscal year 1959. This structure was approved in fiscal year 1958 and, with minor exceptions, has worked out well. The eight budget programs will be presented to you in more detail by the respective program directors, representing the elements of the Army staff having primary staff responsibility for the functions included in the respective programs. In the interest of saving time and with your permission, I propose to follow the procedure initiated last year of holding down the number of formal statements to the committee. Three program statements are planned. The first statement is for the tactical forces and training programs which are closely related; the second statement will be for budget programs 2200, 2300, and 2400 all of which are in the areas of logistics; the third presentation will be for the remaining three budget programs-2500, 2600, and 2700. There is one further point that I wish to explain in connection with the "Operation and maintenance" budget structure. This concerns the distinction between the so-called direct, or mission, funds and the indirect, or support, funds. The support funds, which provide for common administrative and logistic services, such as welfare and utility services at installations, were formerly identified in separate budget programs. Effective with fiscal year 1958, however, these funds lost their separate identity by being integrated with the direct, or mission, funds to provide the total requirement for the activity or program under consideration. For example, the funds requested for budget program 2100, "Training activities" include both the direct, or mission, funds for training aids, civilian technicians, temporary duty travel, tuition, and similar costs and the support funds for indirect costs such as heat, water, electricity, local communications and related services now classified as "Operation and maintenance of facilities." This method of financial administration is consistent with the intent of section 403 of the National Security Act of 1947, as amended, "To account for, and report, the cost of performance of readily identifiable functional programs and activities. Although the principle underlying this arrangement is considered by many to be quite sound, its implementation does cause some complexities. The operation of the commissary at Fort Benning, Ga., may well be taken as a typical illustration. The commissary is classified as a local logistical service. The costs of operating the commissary at Fort Benning are therefore classified as supporting or operation and maintenance of facilities costs. These costs, in turn, have to be included with the costs of performance of readily identifiable functional programs or activities conducted at |