A total of $52,264,000 is included for classified pay increases enacted subsequent to the presentation of the 1959 budget and which are beyond the capability of the department to absorb within currently available funds. It is of note that the total increased Navy costs resulting from Public Law 85-462, Federal Employees Salary Increase Act of 1958 was $85 million. Wage Board increases during the year imposed an added cost of $71 million. Of this total civilian pay increase of $156 million, more than $104 million will be absorbed, leaving a balance of $52,264,000. The President's communication of February 11 (House Document No. 58) contains $39,640,000 of this amount and the remaining $12,624,000 is found in a subsequent communication.

MIDDLE EAST AND TAIWAN COSTS

As you will recall, it was in July of last year that the Navy was called upon to land marines in Lebanon. Scarcely a month later, on August 23, it became necessary to augment the 7th Fleet as a result of Communist pressure in the Taiwan area.

The increased and unabsorbed costs of these Middle East and Taiwan operations through the period ending October 31, 1958, have generated this request for $47,977,000. The largest increment of these costs is for the pay of military personnel retained on active duty beyond their planned release dates because of these critical situations. The remaining costs occurred in seven operating appropriations and resulted from accelerated operations and greater usage of supplies, spare parts and equipments, both in the Mediterranean and the Far East. Added costs were incurred because the increased tempo of operations necessitated a speedup of ship and aircraft overhaul and repair activity in the continental United States.

MEDICAL CARE

A deficiency of $9,050,000 exists in the appropriation "Medical care, Navy, 1958," and additional funds are required to liquidate obligations properly established under the dependents' medical care program. A report of violation of administrative control of appropriations regulation has been filed by the Department of the Navy.

This deficiency was due to increased patient load and higher hospitalization rates for the care of dependents of military personnel in non-Naval medical facilities. Because of the then-existing program regulations, dependents of military personnel in all services were permitted complete freedom of choice with respect to the medical care obtained through Government or through private medical facilities. As the program regulations were jointly agreed to by the Department of

Defense and the Department of Health, Education, and Welfare, obligations incurred in this program were not subject to unilateral control by the Navy.

On October 1, 1958, the program regulations were modified in order to limit the use of civilian medical facilities and to increase the use of military medical facilities to treat dependents of military personnel. A supplemental request for medical care, Navy, 1958, was denied by Congress last year. Such denial has not eliminated the overobligation and so the Department of the Navy is now requesting a deficiency appropriation in the amount of $9,050,000.

For fiscal year 1959, $7,457,000 is needed to augment medical care funds. Increased utilization of other Federal hospitals for care of active duty and retired naval personnel and their eligible dependents accounts for $3,214,000 of this total.

Mr. THOMAS. Let me interrupt you about your deficiency in your regular medical program. Most of that came about because of your medical care?

Admiral ENSEY. Yes.

Mr. THOMAS. I find when I do not pay my bills on time my creditors shut me off.

Admiral ENSEY. The Army pays the bills. They are given the bills, and as the financer of that account, pay the bill automatically, and then we owe the Army.

Mr. THOMAS. It is the Army that is trusting you?

Admiral ENSEY. Yes.

Mr. THOMAS. How long is the Army going to keep on trusting you? Admiral ENSEY. They are going to come at us with knives, I am afraid.

Mr. THOMAS. I would not want to do business with them on that basis. You may proceed.

Admiral ENSEY. Actual experience to date reflects a sharp increase in the use of other Federal hospitals over previous estimates. Additionally, hospital rates established after the beginning of fiscal year 1959 have been increased from $21.25 to $23 per patient-day.

A further shortage of funds exists in this fiscal year for medical care of dependents of military personnel in civilian facilities. As recommended by the congressional Committees on Appropriations, joint regulations of the Department of Defense and the Department of Health, Education, and Welfare have been revised to limit the use of civilian medical facilities by dependents of military personnel. In order to pay the increased costs for the full year 1959, an amount of $4,243,000 is requested in the supplemental for dependents' medical

care.

ANTARCTIC OPERATIONS COSTS

The Department of the Navy, as executive agent, is responsible for logistic support of Operation Deep freeze in the Antarctic. Added costs, due to unbudgeted transportation charges and, to a lesser degree, extension of the operation beyond the originally scheduled completion date, have created a need for $2,280,000 in supplemental funds. Mг. THOMAS. That is for the International Geophysical Year.

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