JUSTIFICATION MATERIAL We will insert the letter from the Joint Committee dated February 18, 1977 together with the attachments in the record. [The material referred to follows:] CONGRESS OF THE UNITED STATES, Hon. GEORGE E. SHIPLEY, DEAR CHAIRMAN SHIPLEY: In response to your subcommittee's request for information and documentation on the budget request of the Joint Committee for fiscal year 1978, I am submitting the material which former Chairman Sullivan forwarded last fall to the Clerk of the House in order to satisfy a similar request. This includes a request for supplemental appropriations for the last half of fiscal year 1977. I believe that the figures and justification which Mrs. Sullivan submitted continue to be valid and constitute the Joint Committee's request. As you are aware, the Joint Committee's future status is somewhat in doubt, following passage of Senate Resolution 4, calling for the transfer of its functions to other committees of the Congress. Nevertheless, in the absence of legislation to accomplish this and on the chance that the House will not accept this Senate recommendation, I believe it would be prudent to plan for the committee's continued existence for the time being. The Joint Committee will be holding its organizational meeting March 1, at which time new officers will be elected. Following that event, I will insure that the new chairman and new vice chairman are aware of the need to present the Joint Committee's budget in testimony before your subcommittee. Thank you for your continuing consideration. Sincerely, WILLIAM PROXMIRE, Vice Chairman. CONGRESS OF THE UNITED STATES, DEAR MR. HENSHAW: Enclosed are budget data for the Joint Committee on Defense Production, including data on requests, supplemental requests and budget estimates for the period from fiscal year 1977 through fiscal year 1982, in accordance with your letter of August 25th. The committee seeks an increase in its fiscal year 1978 budget and a supplemental appropriation for the last 6 months of fiscal year 1977 in order to have funds available to carry out its increased oversight activity in the 95th Congress. The detailed justification for these additional expenditures is incorporated in the enclosure to this letter, as you requested. Anticipated cost-of-living increases are not provided for in any of the figures. You will note that the funds requested or estimated for fiscal years 1977 through 1981 are lower than the budget requests and estimates submitted to Mr. Jennings by the late Chairman Patman in correspondence dated September 29 and October 6, 1975. I believe that Mr. Patman's projections were entirely realistic and that the current submission represents the absolute minimum which the Joint Committee will require to carry out its assigned responsibilities effectively. In the past, the Congress has seen fit not to appropriate moneys for the Joint Committee over and above the $100,000 budget ceiling provided for in the Defense Production Act of 1950, as amended, except for additional funds required to cover cumulative cost-of-living or comparability salary increases. Through this procedure, the Joint Committee is now being appropriated funds at a level some 160 percent of its authorized ceiling. Last year the Senate voted to remove this limitation and to put the Joint Committee on the same authorization footing as other joint committees. I expect that a similar measure will be advanced next year when the Defense Production Act is again before the Congress and that the outdated and anomalous budget limitation will be removed, thus permitting the funding increases which the Joint Committee requires and which are provided for in the attachments to this letter. I hope you will consider this submission a complete response to your letter of August 25th concerning the fiscal year 1978 budget and, in addition, as a request for a supplemental appropriation for the forthcoming fiscal year. Sincerely, LEONOR K. [Mrs. John B.] SULLIVAN, Chairman. JOINT COMMITTEE ON DEFENSE PRODUCTION BUDGET NARRATIVE-FISCAL YEAR 1978 In the 94th Congress, the Joint Committee on Defense Production has been more active than at any time since the period of the Korean War. This increase in oversight activity has not been accidental or gratuitous. The end, first, of American troop involvement in the Vietnam War and, later, the end of that war itself have permitted attention in both the legislative and executive branches to focus on a number of long-neglected issues in the areas where the nation's military efforts and its civilian economy intersect. Other factors, such as the Arab oil embargo, a world-wide recession, and a short-term shortage of materials, have lent further urgency to the consideration of these issues, creating additional pressures that highlighted the inherent conflicts between providing an adequate defense and meeting civilian economic goals, conflicts that were masked or minimized during the steadily improving economic conditions of the 1960's. As the congressional institution with the primary responsibility for overseeing the harmonizing of these sometimes competing requirements of a strong national defense and a strong national economy, the Joint Committee on Defense Production has undertaken a number of comprehensive reviews in order to assure the adequacy of current programs and to fulfill its additional function of recommending appropriate legislative initiatives to the standing committees of the Congress for their consideration. Three issues in particular were singled out for committee attention: (1) the adequacy of current civil preparedness measures, including civil defense and nonmilitary crises which affect the economic well-being of our citizens; (2) the condition of the defense industrial base, both in terms of its productive capacity and its ability to survive a nuclear attack under the new strategic doctrine of limited nuclear war; and (3) the availability of critical materials, not only to support contingency war plans but also to provide for essential civilian requirements in war or peace. In addition, the Joint Committee has continued its review of Department of Defense contract and procurement procedures with the aim of ensuring that the costs of the nation's military effort are consistent with sound management and accounting techniques and with overall defense needs. In carrying out its oversight mandate during the 94th Congress, the committee will have held 20 days of hearings. This is 1 day of hearings less in an 18month period than the committee held in the 20-year period from 1955 through 1974. In addition, the committee, at the request of the Senate and House Banking Committees, assisted in the preparation of hearings on the renewal of the Defense Production Act of 1975, preparing the extension amendments, nominating witnesses, and, in the case of the Senate, writing the committee report and assisting with the floor management of the bill. The committee has published or has in preparation a number of oversight reports, as follows: Annual Report for 1975, Report on the Defense Priorities System, Report on Federal Preparedness Effort, Report on Conflict of Interest and Standards of Conduct, Report on the CONDOR Missile program, and the Annual Report for 1976. Completion of all of these reports is anticipated before the end of calendar year 1976. In order to provide for informed discussion of issues lying within its oversight jurisdiction, the joint committee has asked a number of agencies to prepare studies or reports for the use of the committee and the Congress generally. They are: Congressional Research Service Federal Materials Policy, 1950-1975-two parts General Accounting Office (major reports) Report on Suspected Violations of the Civil Selling Law, Report on Defense Contract Cost Allocation and the Effect of the DOD Contractor-Weighted-Average-Share-in-Cost/Risk (CWAS) Program, Report on Progress Payments for F-16 Fighter Program. Private consultants Economic and Social Effects of Limited Nuclear Attack (forthcoming) Federal Preparedness Agency (major reports) A Study of the Effect of Lead-Times, Substitution, and Civilian, Austerity on the Determination of Stockpile Objectives, A Study of U.S. Civil Preparedness (forthcoming). These reports do not include the submissions made annually to the joint committee by some three dozen departments and agencies on their preparedness activities. These annual submissions also require analysis and evaluation by the committee staff for use in the committee's annual report. Beyond these reports, the joint committee has taken an active role in the development of GAO reports on items of particular interest to the committee, specifically that agency's reports on the defense priorities system entitled "Impact of Shortages of Processed Materials on Programs of Vital National Interest" and its forthcoming evaluation of Federal preparedness organizations and programs. In like manner, the committee has relied heavily on the expert assistance of the National Commission on Supplies and Shortages, the General Accounting Office, the Congressional Research Service, and the Office of Technology Assessment in the committee's review of Federal programs, in formulating its oversight program, and in preparing its final reports. The Congressional Research Service, for example, besides preparing studies of Federal materials policy for the joint committee, has provided a national security policy expert to assist the committee in writing its assessment of Federal preparedness efforts. JOINT COMMITTEE WORKLOAD AND STAFF REQUIREMENTS While the committee has been able to extend its oversight capacity by maximum use of these other institutional resources, heightened activity in areas of joint committee oversight jurisdiction has taxed the committee's resources to the utmost. As noted, expansion of civil preparedness agencies and programs, increased concern over the condition of the defense industrial base, the increased salience of materials problems, and innovations in defense contracting and cost accounting in recent years have greatly increased the committee's oversight workload. The joint committee has always been manned on an austere basis in terms of staff and the members of the committee continue to consider that this is an appropriate approach in peacetime to its responsibilities for oversight of civil preparedness and industrial readiness programs. Yet in the 94th Congress the joint committee found itself severely handicapped in effectively carrying out these responsibilities by exceptional limitations on its administrative budget and on its staff. Somewhat in contrast to other committees, the visible signs of the oversight effort of the joint committee represent only a fraction of the committee's staff work. Beyond its hearings and reports, the committee staff is continually engaged in the monitoring, analysis and evaluation of Federal programs pertaining to civil and industrial preparedness and to defense procurement, such as the work of the CASB. The results of this effort are frequently not reflected in the committee's hearings or reports (except, in brief, in the annual report) either because the findings reported to the committee were satisfactory of because they were not of sufficient importance to warrant such treatment. Nevertheless, these activities consume a major portion of the total staff years available to the committee. In order to meet its greatly increased workload, the joint committee has in the 94th Congress resorted to special measures to keep within its budget. It has realined its staff salary structure in order to provide the funds necessary to pay for a significantly expanded program of hearings and oversight inquiries. It has been forced to end the long-standing committee practice of returning significant surpluses at the end of each fiscal year. It has foregone a number of planned hearings and inquiries. Committee staff travel expenses have been paid only on the basis of exact, actual costs, instead of on the basis of the customary $50 flat per diem rate. During fiscal year 1976, the staff director took a temporary reduction in salary of $1,500 in order for the committee to stay within its budget. Finally, while long hours are commonplace for congressional staff personnel, the joint committee has had to require staff members, all of whom have been selected on the basis of professional competence, to work evenings and weekends to an extent far beyond the norm, a practice that cannot be sustained indefinitely without a serious impact on morale and efficiency. In order to continue its program of effective and orderly oversight in the 95th Congress, therefore, the joint committee seeks a supplemental appropriation of $23,655 for fiscal year 1977 and a total appropriation of $215,272 for fiscal year 1978. These requests, if met, would represent a 14-percent increase in the committee's fiscal year 1977 budget and a 28-percent increase in its fiscal year 1978 budget, relative to the fiscal year 1976 appropriation and expenditures. (See budget data sheet attached; figures do not reflect any future cost-of-living or comparability increases.) Excluding the cumulative effect of cost-of-living increases awarded by the Clerk of the House, the joint committee has not had an increase in its authorization or appropriation in the 8 years since 1968, when Public Law 90-370 raised the committee budget limitation to $100,000. It is fair to say that the committee has been able to live within its current appropriation only by converting a portion of the cost-of-living increases awarded over the years into funds available for hearings and other administrative expenses. Currently, committee staff salaries are generally lower than those paid for similar positions and qualifications by other congressional committees, especially in view of the fact that five of the staff members possess graduate or law degrees. ADMINISTRATIVE EXPENSES About one-quarter of the increase in the committee's fiscal year 1977 supplemental and fiscal year 1978 budget requests is accounted for by the increased frequency of committee meetings and hearings and by a similar increase in travel expenses occasioned by hearings and inquiries. As mentioned earlier, the committee held nearly as many hearings in calendar years 1975 and 1976 as it held in the period from 1955 through 1974. The dates and subjects of these hearings were as follows: JOINT COMMITTEE HEARINGS: 94TH CONGRESS May 1975: Defense priorities system, 2 days; August 1975: Compliance with cost accounting standards, 2 days; April 1976: Preparedness review (civil defense), 1 day; June 1976: Purpose and organization of economic stockpiles, 2 days; June 1976: Preparedness review (Federal, State, and local programs), 3 days; September 1976: CONDOR misile program (executive session), 6 days; November 1976: Preparedness review (defense industrial base), 2 days. Due to the small amount appropriated to the committee's use for this purpose in fiscal year 1976 and in the transition quarter, fiscal year 197T, the committee will have to use funds in its fiscal year 1977 budget to defray the cost of taking sworn testimony in executive session in September 1976, further reducing the amounts available for hearings in the 95th Congress. The vigorous approach to its oversight duties that the committee has pursued in the 94th Congress has also entailed a significant increase in travel costs. As the following table indicates, the bulk of the travel by committee staff was accounted for by investigations authorized by the committee leadership. Most of these investigative trips were to the Eastern Shore of Maryland during the committee's inquiry into entertainment provided to officials of the Department of Defense by contractors. Noninvestigative travel by committee staff included attendance in February at the Materials Shortage Workshop in Reston, Va., sponsored by the DOD Materials Shortages Steering Committee; participation by majority and minority staff in REX 76, the annual civil preparedness exercise held in March 1976, in Virginia; presentations by majority and minority staff at the Defense Science Board's Task Force on Industriay Readiness Plans and Programs in San Diego in August 1976 at the invitation of the Department of Defense; and attendance at the fourth biennial Engineering Foundation Conference on National Materials Policy in New Hampshire in August 1976. Reports on each of these events were prepared for committee use. 1 Excludes cost of sending committee counsel to a 2-week procurement attorneys course at the School of the Army Judge Advocate General in Charlottesville, Va., during September 1976; estimated cost is $500. Like the hearing expenses, these costs were significantly greater than those experienced for similar purposes by the committee in past years. Moreover, they reflect actual costs appreciably in excess of the amounts budgeted for hearings and travel in the committee's original fiscal year 1977 budget request, indicating that the committee will have to cut back its hearing and travel plans severely in the 95th Congress if its supplemental and fiscal year 1978 budget requests are not approved. The committee's request for an additional $6,166 in fiscal year 1977 and an additional total of $12,310 (including the supplemental amount) in fiscal year 1978 for hearings, meetings, investigations, and travel combined is a modest amount; it reflects actual experience and the minimum amount the committee feels is necessary to continue carrying out an effective oversight program. STAFF COMPOSITION Some three-quarters of the additional monies requested in fiscal year 1977 and 1978 would provide funds for three purposes: (1) Increase the salary of the minority counsel as requested by the ranking minority member in May, 1976; (2) Hiring of an additional majority professional staff member with a specialty in auditing or accounting; and (3) Hiring of an additional minority staff member to aid the minority counsel in the capacity of a research assistant and secretary. The experience of the Joint Committee in the 94th Congress has shown that an increasing amount of its oversight has to do with defense contracting and auditing procedures, primarily as a result of the Cost Accounting Standards Board legislation enacted in 1970. While the committee has, to some degree, been able to avail itself of auditing/accounting expertise on the staff of the Cost Accounting Board, the Defense Contract Audit Agency, and the Comptroller General, it feels that it should have the services of an independent staff member with program evaluation skills and the ability to formulate audit requests to these agencies and, more importantly, to review the programs and proposals of these and other agencies. Without the services of a staff program evaluator and auditor, the committee is in very great measure dependent solely on the agencies which it oversees for the review of their own programs. This, the committee feels, is not an ideal situation for an oversight committee. If provided with a program analyst with auditing skills, especially one with experience in the field of defense contracting and procurement, the committee would be in a far better position to evaluate D.P.A. programs, as well as the many and complex proposals of the Cost Accounting Standards Board and the Armed Services Procurement Regulations Committee (ASPR Committee). Heretofore, the minority counsel has relied for administrative support and secretarial assistance on the majority staff or on the personal staff of minority members of the committee. The sharp increase in the committee's administrative workload (resulting primarily from the growth in the number of hearings, reports, and inquiries) as well as the parallel growth in its substantive oversight effort suggest strongly the advisability of obtaining additional research and administrative assistance for the exclusive use of the minority counsel. If approved, the addition of two new staff members would bring the total committee staff to ten, five majority professionals, one minority professional and four administrative support personnel. This number the committee considers to be fully adequate to carry out its oversight mandate effectively for the foreseeable future. If the requests for additional personnel and overhead |