DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 1962

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HEARINGS

BEFORE THE

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

EIGHTY-SEVENTH CONGRESS

FIRST SESSION

SUBCOMMITTEE ON DEPARTMENT OF DEFENSE APPROPRIATIONS

GEORGE H. MAHON, Texas, Chairman

HARRY R. SHEPPARD, California

ROBERT L. F. SIKES, Florida JAMIE L. WHITTEN, Mississippi GEORGE W. ANDREWS, Alabama JOHN J. RILEY, South Carolina DANIEL J. FLOOD, Pennsylvania

ALBERT THOMAS, Texas

GERALD R. FORD, JR., Michigan

HAROLD C. OSTERTAG, New York

MELVIN R. LAIRD, Wisconsin

GLENARD P. LIPSCOMB, California

PHIL WEAVER, Nebraska

WILLIAM E. MINSHALL, Ohio

SAMUEL W. CROSBY and KELLY CAMPBELL, Staff Assistants to the Subcommittee

COMMITTEE ON APPROPRIATIONS

CLARENCE CANNON, Missouri, Chairman

KENNETH SPRANKLE, Clerk and Staff Director

DEPOSITED BY THE UNITED STATES OF AMERICA

DEPARTMENT OF DEFENSE APPROPRIATIONS

FOR 1962

MONDAY, FEBRUARY 20, 1961.

DEFENSE BUDGET SUMMARY

Mr. MAHON. Before we hear the witnesses who are present this morning, I would like to say that Mr. McNamara, the Secretary of Defense, appeared before the committee on February 16. After a brief hearing the committee adjourned out of respect for the memory of the gentleman from Arkansas, Mr. William F. Norrell, a member of this committee.

General Lemnitzer, the Chairman of the Joint Chiefs of Staff, briefed the committee on February 17. The testimony presented on the 16th and 17th by Secretary McNamara and General Lemnitzer will be included in a later volume of the printed hearings.

I asked for a statement from the former Assistant Secretary of Defense (Comptroller), Mr. Franklin B. Lincoln, Jr., on the fiscal aspects of the Defense budget submitted to the Congress on January 16. His statement will be available to the committee and will be placed in the record at this point.

(The statement referred to follows:)

STATEMENT OF FORMER ASSISTANT SECRETARY OF DEFENSE FRANKLIN B. LINCOLN, JR.

Secretary LINCOLN. Secretary Gates in his statement submitted to this committee outlined the policy framework within which the 1962 budget for the military functions of the Department of Defense was formulated.

DEVELOPMENT OF THE FISCAL YEAR 1962 DEFENSE BUDGET

Even to a greater extent than last year the entire top management of the Defense Department participated in the review of the 1962 budget. The service Secretaries, the Director of Defense Research and Engineering, the Assistant Secretaries of Defense, and the Chiefs of Staff, both in their individual and corporate capacities-together with the Defense Comptroller and his staff--assisted the Secretary and Deputy Secretary of Defense in the evaluation of the programs and budgets proposed for 1962.

Last year I stated to this committee that we intended to enlarge and improve on our new working relationship with the Joint Chiefs of Staff organization. This we have done and it has enabled the Joint Chiefs to participate in the 1962 budget review in much greater detail than has ever been feasible in the past. I believe the 1962 program and budget have benefited greatly from this cooperative +fort.

Recognizing that each annual Defense budget is essentially another increment of a continuing program, it was decided jointly by the Secretary of Defense and the service Secretaries to use the fiscal year 1961 budget as the initial starting point for the preparation of the 1962 budget. In order to achieve some grading of priorities of various programs or levels of program, the services were requested to develop the fiscal year 1952 budget in four increments:

(1) An "A" budget to support a balanced program of the highest priority requirements, within an amount equal to the fiscal year 1961 new obligational availability (new obligational authority plus transfers from the revolving funds and unprogramed carryovers into fiscal year 1961)-minus 5 percent.

(1)

(b) A "B" budget increment consisting of the next highest priority requirements equal to 5 percent of the 1961 obligational availability-bringing the total to the fiscal year 1961 obligational availability.

(c) A "C" budget increment consisting of the next group of highest priority requirements equal to an additional 5 percent of the 1961 obligational availability. (d) A "D" budget increment consisting of all other priority items which were considered by the military departments to be of sufficient importance to warrant serious consideration by the Secretary of Defense.

Each service was asked to screen carefully all going programs to ascertain the necessity for their continuation, and thoroughly review and realign priorities where necessary.

As Secretary Gates pointed out in his statement, it was not considered feasible to make any significant changes in deployments or reductions in the active duty strength of the services. For initial planning purposes, therefore, each service was requested to continue its planned fiscal year 1961 strength through fiscal year 1962.

Attachment A to this statement shows, by service, the initial planning objec tives, the initial service submissions related to those objectives, and the amounts provided in the President's budget-in terms of both new obligational authority and expenditures.

Subsequent to the issuance of the initial planning objectives, the Congress enacted a civilian pay increase and the President later ordered certain additional readiness measures to be undertaken. These unanticipated costs-shown in the third column of attachment A-raised the base from which the service submissions were to be developed by about $260 million. These initial service submissions, including all of the addendum amounts, totaled $50.5 billion in terms of new obligational availability and are shown in the fourth column. In terms of expenditures, they totaled $46.6 billion and are shown in the fifth column. This compares to $42 billion in new obligational availability and $42.9 billion in expenditures in the President's budget as shown in the last two columns.

Attachment B to this statement provides a comparison, by appropriation, of the total new obligational authority requested by the services with the amounts contained in this budget.

UTILIZATION OF APPROPRIATIONS IN EXCESS OF THE PRESIDENT'S BUDGET REQUEST FOR FISCAL YEAR 1961

Last year the Congress provided $1,923 million of additional appropriations (excluding a $15.5 million increase in transfer authority) over and above the President's January budget request, offset in large part by congressional reductions of about $1,454 million. Of the total "add-ons" about $1,697 million (less $82 million for the 3 percent across-the-board cut in all procurement appropriations) has been applied to the 1961 financial plan and a net amount of $220 million has been carried over and applied to 1962 program requirements. The details of these transactions appear on attachment C to this statement.

It will be noted from attachment C that $802 million, added by the Congress to the President's January budget, was either requested by the Department of Defense of the House Appropriations Committee or recommended to the Senate Appropriations Committee as shown in the second and third columns. Of the balance, all the additional funds provided for the Army Reserve and National Guard, the Army National Guard technicians program, the promotion of rifle practice, airborne alert capability, and SAMOS, will be used for the purposes intended.

Of the additional net amount of $158 million (of which $29.5 million was recommended by the Department of Defense to the Senate) for Army modernization, $113 million has been applied to the 1961 program and $45 million has been carried over and applied to the 1962 program.

Of the additional net amount of $382 million provided for POLARIS (of which $153 million was requested in the revised Department of Defense budget), all but $17.5 million has been applied to the 1961 program. The unused portion, representing the cost of long lead-time components for one POLARIS submarine, has been applied to the 1962 program.

Of the additional funds provided for antisubmarine warfare over and above the amount requested in the Department of Defense revised budget and recommended to the Senate, $105 million has been applied to the 1961 program; $111 million. representing the cost of two nuclear-powered attack submarines which were included in the President's budget but eliminated in the April 6, 1960 semiofficial revised budget, has been applied to the 1962 program.

Of the additional net amount of $194 million provided for airlift modernization (of which $150 million was recommended by the Department of Defense to the

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Senate), all but $22.4 million has been applied to the 1961 program. utilized balance has been applied to the 1962 program.

This un

All of the additional net amount of $97 million provided for additional fighter aircraft has been applied to the 1962 program.

Of the additional net amount of $184 million provided for the B-70, all but $29.3 million has been applied to the 1961 program. The balance has been applied to the 1962 program.

In the military construction appropriations, the Congress provided an additional $20.4 million for the Army Reserve, the National Guard, and Air National Guard; $11.2 million has been applied to the 1961 program and the balance of $9.2 million has been applied to the 1962 program.

FISCAL YEAR 1962 FINANCIAL PLAN

There should be placed in the record at this point the financial plan for fiscal year 1962 for the military functions of the Department of Defense.

This plan brings together in one table a presentation of all the financial resources anticipated to be available to the Department of Defense for obligation and commitment in 1962, and the planned application of these resources. It is one of the principal tools for managing the financial resources of the Department and serves as an overall control on the obligation, commitment, and apportionment of funds. The plan is both a planning and working document and is kept up to date by periodic revision.

The first block of figures appearing in this plan-columns 2 and 3-analyze the unobligated balance brought forward into fiscal year 1962; the second block of figures columns 4 through 12-shows the resources available for obligation in fiscal year 1962; the third block-columns 13 through 17-shows the planned apportionment program for that year; and, the last block-columns 18 through 20-shows the unobligated balances expected to be carried over into fiscal year 1963.

Column 4 indicates that a total of about $5.9 billion in unobligated balances will probably be carried into fiscal year 1962. Of this amount, about $5.4 billioncolumn 2 is available for completion of projects which will already have been Started by June 30, 1961, and $550 million in unprogramed funds-column 3has been applied to finance 1962 programs in lieu of new appropriations.

Column 5 shows the new obligational authority in the bill currently being considered by the committee, and in the case of military construction, the amounts to be considered later.

Column 6, "Proposed Supplemental," consists of one item-$31 million for retired pay.

Column 7 shows the amount-$150 million-recommended in the President's budget to be provided by transfer from the revolving funds of the Departinent of Defense in lieu of new appropriations.

Column 8-anticipated reimbursements from military assistance program orders-is necessarily incomplete since there is no firm basis at this time for determining either the value or distribution of the bulk of such orders that may be recieved by these appropriation accounts next year. If the Congress approves the 1962 military assistance program recommended by the President, the anticipated reimbursements from this source may total $700 to $800 million.

Column 9 reflects the amounts-$129 million-subject to automatic apportionment under arrangements worked out with the Bureau of the Budget. These are reimbursable orders involving, primarily, work or services rather than equipment or supplies. This arrangement encourages cross-servicing, by eliminating the need for specific Bureau of the Budget reapportionment action to cover the "out of pocket" costs of increased workloads caused by these orders.

Column 10 represents anticipated reimbursements from all other sources→→ amounting to a total of $1,619 million. Approximately $1 billion of this amount represents reimbursements arising from intradepartmental transactions, which serve to increase the apparent, but not the actual, total resources shown on the books as available for obligation. This is because certain transactions are concurrently treated as direct obligations by the ordering service or appropriation, and as reimbursable obligations by the service which performs the work or procures

the articles.

Column 11 is simply the total of columns 8, 9, and 10.

Taking all of these resources into account (recognizing that about $1 billion represents reimbursements arising from intradepartmental transactions), the total tigational availability for fiscal year 1962 would amount to about $49.6 billion as shown in column 12. Based on this gross availability, the planned apportiontient program would include: $43.4 billion for direct obligation for service account