The CHAIRMAN. You are ready to proceed, Admiral, on this bill? Do you have a statement?

Admiral CARTER. Yes, Mr. Chairman, I have a prepared statement. With your approval, sir, I will read from it.

The CHAIRMAN. Very well. We have had some considerable legislation on this, haven't we?

Admiral CARTER. Yes, sir. Last year there was legislation passed at the instance of Mr. Sasscer of the House Naval Affairs Committee, to get the employees of the midshipmen store on a civil service status. The CHAIRMAN. Are they paid out of Government funds or out of the funds of the midshipmen?

Admiral CARTER. They are paid out of semiofficial funds, sir. With your permission, I will read a statement on that, sir.

The CHAIRMAN. Proceed.

STATEMENT OF REAR ADM. WILLIAM J. CARTER, CHIEF OF THE BUREAU OF SUPPLIES AND ACCOUNTS, ACCOMPANIED BY MR. NORWOOD B. CASSIDY, SPECIAL ASSISTANT TO THE CHIEF OF THE BUREAU OF SUPPLIES AND ACCOUNTS

Admiral CARTER. Mr. Chairman, the purpose of the subject bill is to reestablish the funds of the midshipmen's store, barber shop, cobbler shop, and tailor shop at the United States Naval Academy in the status quo which existed prior to the enactment of Public Law 238, approved December 3, 1945, Public Law 273, approved December 28, 1945, and Public Law 274, approved December 28, 1945.

The CHAIRMAN. Those are all laws putting the civil employees in the different positions under civil service?

Admiral CARTER. That is correct, sir.

The CHAIRMAN. Proceed.

Admiral CARTER. I would like to state here, sir, that I have no information as to the position of the Bureau of the Budget in reference to the enactment of H. R. 5640 and, therefore, the comment which I make is not intended to reflect the views of the Navy Department. Senator SALTONSTALL. Mr. Chairman, may I ask

The CHAIRMAN. Surely, Senator Saltonstall.

Senator SALTONSTALL. I cannot remember, but I believe that those laws were all passed within a very few months? Admiral CARTER. Yes, sir.

The CHAIRMAN. In other words, this is some correction of the law? Senator SALTONSTALL. A correction of those laws; it is repealing them, is it not?

Mr. CASSIDY. It repeals the first section of each of those laws.

Admiral CARTER. Well, it repeals them insofar as those laws make_ the funds subject to the over-all accounting of the General Accounting Office.

Senator SALTONSTALL. I see.

Mr. CASSIDY. That is right.

Senator SALTONSTALL. In other words, there was a mistake made; that section was a mistake?

Admiral CARTER. That is correct, sir.

The CHAIRMAN. Proceed, Admiral.

89104-46- -3

Admiral CARTER. The laws mentioned above had for their primary purpose the extension of full civil-service rights and benefits to employees of the midshipmen's store, barber shop, cobbler shop and tailor shop. It was not intended that the business administration of these activities be changed by the introduction of formalized appropriation accounting and procurement procedures. However, it is now considered that the language of Public Laws 238, 273, and 274, supra, would require such action, and for the reasons hereinafter stated, it is recommended that such changes not be made.

In the operation of the midshipmen's store, including the dairy farm, the barber shop, the cobbler shop, and tailor shop, it is necessary to conduct the business transactions in the usual informal manner common among businessmen. For instance, the midshipmen's store purchases books and exchanges books, as well as other items, for and on the account of the individual midshipmen. It buys many items approved by the Superintendent from proprietary vendors for sale to the midshipmen. In the operations of the dairy farm, cattle and produce are bought and sold in accordance with the usual practices prevailing among farmers. The formalizing of contracts in such business transactions are not done as a matter of day to day routine. All of these operations have been conducted under the general supervision of the Superintendent of the Naval Academy for many years and an accounting has been made to the Chief of the Bureau of Supplies and Accounts, pursuant to the Act of May 13, 1908 (34 U. S. C. 1102).

While the original capital of $24,500, used in the initial financing of the midshipmen's store, was advanced from appropriated funds in 1867 and 1868, no appropriations have been made for this activity since that time. However, the capital investment has increased to approximately $500,000, and this expansion is the result of the exclusive patronage of the store by midshipmen. This patronage has been encouraged by the reason of the fact that the Superintendent has been empowered, in his discretion, to purchase the essentials required by the midshipmen during their stay at the United States Naval Academy. In reality, therefore, these funds are considered as belonging to the midshipmen, not as individuals but as a class, since the midshipmen of each succeeding class have contributed through their purchases at the store to the greatly enhanced capital investment. The actual cash working capital is accounted for through a special deposit account maintained in the Treasury of the United States. It is the desire of the Navy Department to continue the same general administration of these funds as has proven a success over the past 75 years.

Section 1 of the bill therefore proposes repeal of section 1 in each of Public Laws 238, 273, and 274, all enacted by the Seventy-ninth Congress. This would immediately give statutory authority for the continuance of the business administration of the midshipmen's store. including the Naval Academy dairy, barber shop, cobbler shop, and tailor shop on the same basis as has prevailed for three-fourths of a century. It would remove any doubt that the granting of civil service status to the employees involved was intended to change the financial administration of the activities at which the individuals are employed.

The first proviso in section 2 of the bill would require the Superintendent of the United States Naval Academy to make a quarterly

accounting to the Bureau of Supplies and Accounts for all receipts and expenditures of money collected and expended incident to the operation of the midshipmen's store, barber shop, cobbler shop, and tailor shop. This authority would implement the provisions of the act of May 13, 1908 (34 U. S. C. 1102), which requires the Chief of the Bureau of Supplies and Accounts to make a full report annually to the Secretary of the Navy, on the receipts and expenditures of the storekeeper at the United States Naval Academy.

The second proviso in section 2 of the bill would specifically set forth what was clearly the legislative intent of Public Law 238, as shown by the committee hearings, by affirmatively denying civilservice benefits to employees of the United States Naval Academy dairy. This dairy is by law a part of the midshipmen's store, and, therefore, the failure to exclude the employees from the benefits of the civil-service status contained in Public Law 238 may, at a later date, result in a legal question being raised as to the status of the employees of the dairy farm, with the possibility of it being resolved contrary to the intent of Congress. To obviate this possibility, it is desired that the language of the last proviso in the bill be enacted into law so as to specifically exclude employees of the Naval Academy dairy farm from the provisions of Public Law 238.

The CHAIRMAN. What does the Comptroller General say about this? Admiral CARTER. Why, we have not heard a thing, sir. As far as I know, he offers no objection. We took it up to the House Naval Affairs Committee. It passed the House, and since that date we have had no word.

The CHAIRMAN. And unless this bill is passed, he would have jurisdiction over these funds?

Admiral CARTER. That is correct, the Comptroller General.

The CHAIRMAN. And you want to have corrected what you think is a mistake in drawing up the other bills?

Admiral CARTER. Yes, sir.

The CHAIRMAN. You are not changing the method of carrying on the business from what it has been in the past, in transferring them to the civil service?

Admiral CARTER. Mr. Chairman, I might say this: The primary purpose in passing the other bills was to put the employees into the civilservice status so that they would get all of the civil-service benefits. The CHAIRMAN. But it also operated to put these transactions under the control of the Comptroller General?

Admiral CARTER. That is correct.

Mr. CASSIDY. That is right.

The CHAIRMAN. And you do not want that?

Admiral CARTER. No, sir; because we feel that, due to the— The CHAIRMAN. Because they are really not Government funds? Admiral CARTER. Yes, sir; that is right.

The CHAIRMAN. That is, they are private, administered under the direction of the Superintendent of the Naval Academy?

Mr. CASSIDY. Yes, sir; that is right.

Admiral CARTER. That is correct.

The CHAIRMAN. Very well. Without objection, H. R. 5640 will be reported favorably.

S. 2245

The CHAIRMAN. We now come to Docket No. 204, S. 2245, a bill to authorize the Secretary of the Navy to construct a postgraduate school at Monterey, Calif.

(S. 2245 is as follows:)

[S. 2245, 79th Cong., 2d sess, Docket No. 204]

A BILL To authorize the Secretary of the Navy to construct a postgraduate school at Monterey, California

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Navy is authorized and directed to provide by contract or otherwise for the construction of a naval postgraduate school at Monterey, California, including the necessary school facilities, quarters, and collateral facilities and equipment, including the acquisition of the necessary land, at a cost not to exceed $28,750,000: Provided, That contracts may be entered into without regard to the provisions of section 3709, Revised Statutes.

SEC. 2. The provisions of section 4 of the Act approved April 25, 1939 (53 Stat. 591), as amended, shall be applicable to all public works and public utilities authorized by this Act: Provided, That the fixed fee to be paid the contractor as a result of any contract entered into under the authority contained herein shall not exceed 6 per centum of the estimated cost of the contract, exclusive of the fee, as determined by the Secretary of the Navy.

SEC. 3. There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to effectuate the purpose of this Act.

The CHAIRMAN. The witnesses on this bill are Admiral Denfeld, Admiral Manning, and Captain Spanagel.

Will you come forward, gentlemen?

STATEMENT OF VICE ADM. LOUIS E. DENFELD, CHIEF OF NAVAL PERSONNEL, NAVY DEPARTMENT; ACCOMPANIED BY REAR ADM. JOHN J. MANNING, CHIEF OF THE BUREAU OF YARDS AND DOCKS, CAPT. H. A. SPANAGEL, COMMANDING OFFICER, POSTGRADUATE SCHOOL, UNITED STATES NAVAL ACADEMY; AND CAPT. ANDREW MURPHY, JR., REAL ESTATE DIVISION, BUREAU OF YARDS AND DOCKS

The CHAIRMAN. Admiral Denfeld, I suppose you will make the statement on behalf of this bill?

Admiral DENFELD. Yes, sir; I have a prepared statement here, Mr. Chairman.

The CHAIRMAN. You may proceed.

Admiral DENFELD. Education in the Navy is a continuing affair. It does not cease when an officer graduates from the Naval Academy, or receives a commission from a Naval ROTC school. As early as 1909 systematic postgraduate instruction for line officers was started in the Naval Academy. The mission of the Naval Postgraduate School is to conduct and direct the advance education and training of commissioned officers in order to meet the requirements of the naval service. As modern implements of war have increased, and as the operation of the Naval Establishment has grown in complexity, the scope of the Naval Postgraduate School has enlarged.

The broad base of the pyramid of naval postgraduate education is the general line course which is undertaken normally by the time an

officer has been commissioned 7 years. The peak of the pyramid is the National War College to which a quota of highly selected officers who have held their commissions for approximately 22 years is sent.

The plan for officer education, approved by successive Secretaries of the Navy since 1920, is that all line officers that shall take the general line course when ordered to their first tour of shore duty. Attendance in this course, the keystone to the postgraduate scheme of professional education for naval officers, is from all sources of line officer procurement: Naval Academy, 52 naval ROTC units, enlisted ranks, and direct civil appointment. It provides the unifying factor in the naval education of officers of varying previous backgrounds. Its educational program covering all phases of operational command, administrative command, engineering and damage control, ordnance and gunnery, seamanship and navigation confirms academically the practical experience of junior officers and serves as the focal point for transmitting to the largest number of officers new developments in these fields.

A plan of immediate concern is to provide, by means of the general line school, professional education for Reserve and temporary officers transferring at the present time to the Regular Navy. It is the obligation of the Navy to afford them a sound professional background and an equal opportunity for advancement. The total number of Reserve officers transferring to the Regular Navy who should pass through this general line school within the next 7 years is approximately 11,300. In addition, approximately 3,000 of their contemporaries who are graduates of the Naval Academy should also attend. The general line course is also open to quotas from the other services (Army, Marine Corps, Coast Guard). It must always be kept in mind, however, that the program for general line education in the postgraduate school is a continuing one, and will operate on a full scale even after the bulk of Reserve officers now being transferred has been cared for.

In order to get under way with this huge educational plan an interim general line school accommodating 600 will begin at Newport on July 1, 1946. It is necessary, therefore, that a program triple. this size should begin elsewhere by January 1, 1947. A careful sur vey of all possible locations for this large general line school was made by the Spanagel Board in September, October, and November of 1945. Governing factors in the choice of a location were the following requisites: That the chosen site should be

(a) Adjacent to a large body of water to permit instruction and research in underwater methods of attack and defense.

(b) Within a reasonable distance of a deep anchorage to accommodate large ships for training and indoctrinational purposes.

(c) In close proximity to an airfield for necessary training and experimentation for naval aviator students and to afford ready means for aviators to maintain flying proficiency in an area where climatic conditions are favorable for year round flying.

(d) Adjacent to a large body of water for CIC and electronic instruction, which requires a radar sweep over open water for tracking ships.

Considering all factors this board recommended that the Del Monte properties, Monterey, Calif., be purchased as the site on which to establish not only the general line course of the postgraduate school,