General DUFF. It has been our experience over a number of years with regard to our capital appropriations, and particularly the "Procurement of equipment and missile" account, normally the obligations in this appropriation are liquidated to the extent of not more than about 15 percent during the year of obligation. They become expenditures to the extent of about 15 percent during the first year. During the second year, about 55 percent additional, with the balance in the third and subsequent years.

Mr. SHEPPARD. That is getting your expenditures out. My question was directed to the time element involved in your delivery schedule. Pursuant to the contract limitations on the industrial production line, are you having difficulty in that field? It is one thing to get your money out and another thing to get the end result

back.

General DUFF. I think in this particular fiscal year we have had greater success in the placing of our contracts, sir, as early as possible in the year than has been normally the case. I do not believe, sir, our experience this year, as far as deliveries are concerned, is less favorable than it has been in past years.

Mr. SHEPPARD. With the experience we have had industrially speaking, it should be better.

General DUFF. It is improving slightly, sir.

I might ask General Myers, who is from the Office, Deputy Chief of Staff for Logistics, if he would care to make a statement in this regard.

General MYERS. I do not think I could categorically say there was going to be any major increase in deliveries this year because of the effort that has been expended to make obligations more rapidly. It certainly will be reflected in future years. As far as the time it takes to produce these items is concerned, we have put a great deal of effort into a reduction in production time, and that may be reflected somewhat in deliveries this year.

Mr. SHEPPARD. Would you say the report that has been somewhat eminent that we are not getting our electrical contracts consummated as rapidly as we should is factual or not?

General MYERS. There have been some difficulties in some of the new-year items in the electrical field, and they have not entered production as rapidly as we would like to have had them do. Every effort is being expended to overcome that deficiency. I do not know at this time any appreciable delay that will be incurred with the possible exception of one or two items we are presently having a bit of trouble with.

Mr. SHEPPARD. In the past year have the people who checked out your accounts uncovered any excessive cost factors? There has been much discussion of this problem recently.

General MYERS. If so, it has not been brought to my attention. Mr. SHEPPARD. Who would have jurisdiction in that field?

General MYERS. I would think the General Accounting Office would have that jurisdiction.

Mr. SHEPPARD. On the Army level?

General MYERS. Deputy Chief of Staff for Logistics at the Army staff level.

Mr. SHEPPARD. Do you know whether or not at this time any check has been made to see if there have been any excessive cost factors?

General MYERS. The Army staff has been investigating some of the aspects of the electrical manufacturers antitrust case in connection with the actions of the Department of Justice.

Mr. SHEPPARD. What have you found?

General MYERS. The report has not been completed. I do not know of any evidence of excessive costs.

Mr. SHEPPARD. When do you assume that report will be consummated?

General MYERS. I would like to confer with the staff to determine the specific date. I can submit that for the record later.

Mr. SHEPPARD. At the time the report is consummated, will you furnish this committee with a copy of it for the purpose of review? General MYERS. Well, yes.

Mr. SHEPPARD. Send it to the clerk, please.

General MYERS. Yes.

(The following statement was submitted:)

The report referred to will be a compilation of information on certain Army procurement contracts with the electrical manufacturers involved during the period between January 1955 and September 1960. When this compilation is completed the information will be furnished to the Department of Justice and to this committee. It is estimated that this information will be available about September 1, 1961.

Mr. MAHON. Any further questions?

DIRECT OBLIGATIONS, NEW OBLIGATIONAL AUTHORITY, AND

EXPENDITURES, 1960-62

Mr. FORD. General Duff, you submitted in your prepared text a number of charts.

Do I see charts that would show for each of the three categories, obligation authority, direct obligation, and expenditures, comparative tables for fiscal 1960, 1961, and 1962?

I think it would be helpful to have comparative charts in those three categories for the 3 years mentioned.

General DUFF. I have the figures here and I can give them to you, or I can put them in the record.

Mr. FORD. I suggest you put them in the record.

General DUFF. Yes, sir.

(The information referred to follows:)

Direct obligations, new obligational authority and expenditures amount in 1962 President's budget

[In thousands]

STATUS OF OBLIGATIONS FISCAL YEAR 1961

Mr. FORD. What is the obligation picture for fiscal 1961 as of the last reporting date for each of the several account categories here, and for the Army as a whole? Can you read those off for the record, please?

General DUFF. The latest figures that we have available are the figures through 31 December.

In the "Military personnel, Army" appropriation, through the 31st of December, we had obligated $1,869,100,000, or 50.8 percent of the total for the appropriation.

Mr. FORD. What do you expect to have unobligated at the end of that period?

General DUFF. We anticipate this appropriation will be completely obligated at the end of the fiscal year.

For the "Reserve personnel, Army," appropriation, we had $116.1 million obligated through the same date, or 52.6 percent of this appropriation.

The only amount we would anticipate would be unobligated in this appropriation, as I stated in my prepared statement, is $14.4 million which currently has not been made available to the Army, and as stated by General Schewe, this is still under discussion. If an additional amount is released to us by the Bureau of the Budget, it would be released we believe in an amount the Army could obligate effectively by the end of the fiscal year.

For the "National Guard personnel, Army" appropriation, the total obligated was $122 million, which is 52.7 percent of the appropriation. For the "Operation and maintenance, Army," appropriation, $1,798,500,000, or 48.7 percent of the appropriation.

Operation and

Mr. FORD. How much, if any, will you have unobligated?

General DUFF. We anticipate this appropriation will be fully obligated at the end of the year.

"Operation and maintenance, Army National Guard," $77.2 million, or 46.4 percent of the total.

For the remainder of these accounts, as far as one-year accounts are concerned, we anticlpate they will be fully obligated by the end of the

year.

Mr. FORD. On the point of the "Operation and maintenance, Army," as you know there was $18,100,000 reserved, or earmarked for the Army Reserve and $20,440,000 earmarked for the Army National Guard.

General DUFF. Yes, sir.

Mr. FORD. Are those two items to be fully obligated?

General DUFF. We anticipate, sir, these two will be fully obligated. For "Promotion of rifle practice," $200,000, or 40 percent of the appropriation, and "Operation and maintenance, Alaska Communication System," $3,500,000, or 48.6 percent of the appropriation.

As far as the capital accounts are concerned, sir, for the "Procurement of equipment and missiles," through December 31, $655.1 million, or 28 percent of the appropriation has been obligated.

As far as the obligation and commitments are concerned, as of the latest reporting period, February 11, 61 percent of this total amount has been obligated or committed.

Mr. FORD. Was the total amount of $1,682 million made available at the time of the beginning of the fiscal year?

General DUFF. No, sir.

With regard to the $158 million additional appropriated by the Congress over the President's budget request, we have available for obligation all but $45 million of that, and this has been made available at various times during the fiscal year. Thirty-seven million dollars was made available immediately in the OSD financial plan and an additional amount of $76 million has been made available subsequently.

Mr. FORD. At the beginning of fiscal 1961, how much was made available for obligation?

General DUFF. The amount available right from the very beginning was approximately $1,513,000,000.

Mr. FORD. And all but $45 million has currently been made available?

General DUDD. That is correct.

Mr. FORD. As of December 31, only 28 percent of it had been obligated?

General DUFF. Only 28 percent of our direct and customer programs. I am speaking of the entire accounts, not only the $1,637 million of Army accounts, but $701 million for customer accounts. The total of $2,338,700,000.

Mr. FORD. How much do you anticipate obligating by June 30 out of the total?

General DUFF. We anticipate that the full program, or $2,338,700,000, will be obligated. This does not include the $45 million which is currently withheld for utilization in fiscal year 1962.

Mr. FORD. It seems to me your obligation picture in this account, bearing in mind the amount you have available, is not as good as it

should be.

General DUFF. I believe the obligation account is extremely favorable, comparing our situation at this time in this fiscal year with the same period in past years.

As I stated, on the 11th of February, which was our latest reporting date on obligations and commitments, 61 percent of this appropriation of the total amount was either obligated or committed.

Mr. FORD. What do you mean?

What is the difference between an obligation and a commitment? General DUFF. An obligation is the actual legal contract for the use of funds. A commitment is the preliminary procedure in preparing to make a contract, but with the final obligation of funds not having vet been made at the particular moment. So this is very close. to the obligation date, sir, but not quite to the point where the actual legal obligation of the fund has occurred.

Mr. FORD. Out of the 61 percent, how much falls in the commitment category, and how much in the obligation category?

General DUFF. Thirty percent would be commitment and 31 percent obligations.

Mr. FORD. Then between December 31 and February 11, you have only gone up from 28 percent to 30 percent in obligations? General DUFF. That is correct, sir.

Mr. FORD. That is not very much progress.