NEW OBLIGATIONAL AVAILABILITY Exhibit 1 compares new obligational availability, direct obligations and net expenditures of fiscal year 1960 and fiscal year 1961 with that included in the fiscal year 1962 request. Under the total amounts for operation and maintenance; procurement, research, and development; and revolving funds, adjustments are shown which permit year-to-year comparisons. The fiscal year 1961 new obligational availability figures have also been adjusted to include the fiscal year 1961 supplemental appropriation request totaling $95.4 million for requirements shown in exhibit 2 which is now before the Deficiencies Subcommittee. Exhibit 1 indicates a total new obligational availability of $12,237 million for fiscal year 1962. This is $223 million less than the comparable fiscal year 1961 availability of $12,460 million. SIGNIFICANT FACTORS IN 1962 REQUEST I shall now discuss some of the most significant factors in the fiscal year 1962 request. MILITARY PERSONNEL, NAVY (a) Military personnel, Navy: The fiscal year 1962 program for "Military personnel, Navy," requires a total of $2,645 million to support a beginning, end, and average strength of 625,000. This compares with $2,598 million in fiscal year 1961. The fiscal year 1962 estimate for this appropriation is $47 million more than the fiscal year 1961 availability. Although there is no significant increase in average strength, the number of career personnel, individuals in a married status, and the number of dependents per individual are increasing. This results in an increase in longevity pay, quarters allowances, and travel. Permanent change of station travel is funded at $121 million, which is less than fiscal year 1961. (b) Military personnel, Marine Corps: The fiscal year 1962 estimate for "Military personnel, Marine Corps," is $620 million compared with $607 million for fiscal year 1961. This provides funds to support a beginning, end, and average strength of 175,000 compared with an average of 174,414 in fiscal year 1961. This will permit the Marine Corps to continue to man three divisions, three air wings, and essential supporting units. The $13 million increase over fiscal year 1961 is required to fund a higher average grade of enlisted personnel and an increase in quarters allowances resulting from both increased numbers of individuals in a married status and increases in the number of dependents per individual. Funds for "Permanent change of station" travel are held at the fiscal year 1961 level of $33 million. e) Reserve personnel, Navy.-$84.6 million is requested in fiscal Year 1962, as compared with $87.6 million appropriated in fiscal year 1961. The funds requested for fiscal year 1962 will provide an average Strength of 129,000 in a paid status compared to 127,000 in fiscal year 1961. id Reserve personnel, Marine Corps.-The fiscal year 1962 request for $26.4 million is $1.6 million above fiscal year 1961 and provides for a modest increase in the average number of individuals in a paid status. IDENTIFICATION OF WITNESSES Mr. MAHON. If I may interrupt you at this point, Admiral? Mr. MAHON. I think it would be well to identify the other people here with you. Of course we know Captain Montgomery who works closely with us. We have the names of the witnesses. Will you identify them for us? Admiral HIRSCH. I will be happy to identify them, sir. On my left, Rear Admiral Holmes, representing the Office of the Chief of Naval Operations; and General Nickerson, representing the Commandant of the Marine Corps. Mr. MAHON. General, how long have you been coming before the committee in connection with these matters? General NICKERSON. This is my third year, sir. Mr. MAHON. How long will you continue in this capacity? Mr. MAHON. A 4-year tour? General NICKERSON. Yes. I will put in three complete budgets with a break in period with an overlap with my relief. Mr. MAHON. It is good to have you back. Admiral HIRSCH. Also we have Colonel Souder. Mr. MAHON. You have been here before, I believe, sir? Colonel SOUDER. Yes, sir. Mr. MAHON. How long have you been appearing before this committee? Colonel SOUDER. This will be my third year. Mr. MAHON. Who are our civilians? Admiral HIRSCH. I have on my right, Mr. Venn, who is head of the Office of Budget Estimates and Analysis. Mr. MAHON. How long, Mr. Venn, have you been in this position? Mr. VENN. I have been in this position since 1953, sir. Mr. MAHON. Is this the identical position you have held during these years? Mr. VENN. Yes, sir. Mr. MAHON. You are developing a great deal of familiarity with the subject, I would think. You are able to provide a continuity which might not be provided otherwise. Tell us a little bit about your background. Mr. VENN. My background, prior to World War II, was principally in engineering work. Then when I was called on duty in 1941 in the Marine Corps, I was injected into the budget business through the position that I held with the Bureau of Ordnance, representing the Marine Corps there. Following my service with the Marine Corps, I was taken in as a budget analyst with Mr. McNeil, in the Navy Budget Office. I have been with that same organization since that time, sir. I was a budget analyst and branch head from 1946 until 1953, when I came into this position. Admiral HIRSCH. Mr. Dick Jackson, who heads the Progress Reports and Statistics Division. Mr. MAHON. How long have you been associated with the job? Mr. MAHON. Where were you before then? Mr. JACKSON. Before that I was Director of Statistics and Analysis for the Military Sea Transportation Service, of which time I spent 6 years with them. Previous to that my experience was outside of Government in Utah Foundation, a tax research agency and with the Western Highway Institute as an analyst representing large trucking concerns. Mr. MAHON. Mr. Sheppard will conduct the hearing this afternoon. It is 12 o'clock. We will recess until 2. Thank you, gentlemen. AFTERNOON SESSION Mr. SHEPPARD. The committee will come to order. OPERATION AND MAINTENANCE, NAVY Admiral HIRSCH. (e) Operation and maintenance, Navy: This appropriation supports the operating and maintenance costs of the ships and aircraft of the active fleet and the Shore Establishment required for logistic support. These funds have a direct and controlling influence on the operational readiness of the fleet. The fiscal year 1962 request for $2,624 million is $27 million more than the fiscal year 1961 comparable figure of $2,597 million. The increase is required as a result of advances in military technology, new and essential programs such as POLARIS, and increased emphasis on combat readiness. As in fiscal year 1961, the Navy plans to operate 817 active fleet ships and 88 Naval Reserve training ships. As you know, a significant portion of the active fleet ships and aircraft will continue to be deployed in major trouble spots throughout the world. $100 million is included in this appropriation for the fleet rehabilitation and modernization program (FRAM) for modernization of World War II ships. This program, which was started in fiscal year 1960, is continued at approximately the fiscal year 1961 level. However, the mix of ships and the increased costs of more complex shipboard electronic equipment will reduce the number of ships being modernized from 27 in fiscal year 1961 to 21 in fiscal year 1962. The maintenance of the Shore Establishment has been a matter of interest and concern to this committee. To achieve better control and better utilization of funds, separate budget projects for the maintenance and repair of real property were established in fiscal year 1961. This budget requests funds for the Shore Establishment maintenance and repair program at approximately the fiscal year 1961 level. The operation and maintenance costs associated with the POLARIS program increase as additional POLARIS submarines join the fleet. By the end of fiscal year 1962 a total of nine POLARIS submarines will have been commissioned. Departmental employment reductions directed by the Congress have been made in fiscal year 1961. The fiscal year 1962 budget estimate continues to fund departmental administration at the reduced fiscal year 1961 level. (f) Operation and maintenance, Marine Corps: This appropriation has a direct and controlling influence on the combat readiness of Marine forces. The fiscal year 1962 request of $179 million is $2.3 million more than the amount appropriated in fiscal year 1961. The fiscal year 1962 budget request will support three Marine divisionMarine air wing teams, and the necessary supporting units. A major portion of the increased funds are required for the initiation of a phased overhaul program for tracked vehicles. PROCUREMENT OF AIRCRAFT AND MISSILES, NAVY (g) Procurement of aircraft and missiles, Navy: The appropriation request in fiscal year 1962 totals $2 billion. This is $142 million less than the amount appropriated in fiscal year 1961. The fiscal year 1962 request provides for procurement of 644 Navy and Marine Corps aircraft, comprised of 12 models, all of which are in current production; $473 million is requested in this appropriation for the procurement of missiles, drones, and related equipment, as compared with $544 million in fiscal year 1961. Of the $473 million, $193 million provides missiles in support of the POLARIS program. SHIPBUILDING AND CONVERSION, NAVY Shipbuilding and conversion, Navy: This budget requests $1,825 million for fiscal year 1962 compared with $2.246 million in fiscal year 1961. The fiscal year 1962 shipbuilding request provides funds for 30 new ships, including 5 fleet ballistic missile submarines. and provides funds for 22 ship conversions. Also requested are funds for long leadtime components for five POLARIS submarines. Twenty of the thirty new ships will have an antisubmarine capability. In addition, 19 of the 22 conversions are antisubmarine ships. In this budget, as in the fiscal year 1961 budget, ship construction and conversion costs represent the full amount required to complete the ships in the program. OTHER PROCUREMENT, NAVY 1o. Other procurement, Navy: The request of $625 million in fiscal mar 12 will provide a balanced program for the procurement of Mipment, improved weapons, and ammunition. This reÇƏSİ PROSEnts an increase of $200 million over iscal year 1961; $147 million of this mcrease is required for the POLARIS program. Promennt, Marine Corps: The scal year 192 request is In fiscal year 1961. $91 milion was approprated, and allorca 87 mire ne anlable from miprogrammed prior year Its provided a total of $14 min = nl year 1961. -programed prer year funds are not available for iscal year 1962. 35.3.19 23 LOPMENT, TEST, AND BALTDI UT 1 Beach develonment, test, and archatice. Narm The fiscal be less that set rear Two hundred and eighteen million dollars is contained in this request for antisubmarine warfare research. The $50 million added to his area by Congress in fiscal year 1961 has been apportioned and programed to antisubmarine warfare research. POLARIS The amounts requested in this budget for POLARIS are sumnarized in exhibit 3. The fiscal year 1962 program totals $1,393 nillion as compared with $1,413 million in fiscal year 1961. Five POLARIS submarines will have been commissioned before the end of fiscal year 1961 and four more will join the fleet in fiscal rear 1962. The Navy has awarded contracts for the five POLARIS submarines. authorized in fiscal year 1961 and has recently awarded contracts for ive additional POLARIS submarines as a result of the President's lecision to accelerate the POLARIS program. Unobligated prior rear funds are being used for this acceleration. These funds are needed to complete ships now under construction, and repayment will be made to the programs from which borrowed, upon approval of the fiscal year 1962 request. PACIFIC MISSILE RANGE As you know, the Pacific Missile Range (the National Range) provides range services for all military departments and for other agencies. As shown in exhibit 4, $113.7 million is requested for the Pacific Missile Range in fiscal year 1962 as compared with $78.9 million in fiscal year 1961. The $27.6 million increase in research, development, test and evaluation funds is required to provide additional tracking and range faciliies related to the support of Project MERCURY and the SAMOS, MIDAS, ADVENT and NIKE-ZEUS projects. UNEXPENDED BALANCES Exhibit 5 shows the unexpended cash balances for fiscal years 1960, 1961, and 1962, and an analysis of the factors affecting the status of beginning and end year balances. Page 3 of this exhibit shows that at end fiscal year 1962, approximately $9 billion or 78 percent of the $11.7 billion unexpended balance is accounted for by the procurement appropriations. Exhibit 6 provides a graphical comparison of unexpended balances As of June 30, 1960, 1961, and 1962. Net unpaid obligations in the general fund accounts increased from $8.1 billion (72 percent of the 'otal) at end fiscal year 1960 to $9.5 billion (80 percent of the total) at end fiscal year 1962. This increase of about $1.5 billion occurred n the procurement area and results to a considerable extent from the ast rate of growth in the POLARIS program. |