Mr. SIKES. Does this include the 10-percent cut in the National Guard and Reserves?

General DUFF. The fiscal year 1962 request, Mr. Sikes?

Mr. SIKES. Yes.

General DUFF. Yes. This will support a paid drill strength as far as the 1962 request is concerned of 630,000 men.

COST OF INCREASING RESERVE COMPONENT PAID DRILL STRENGTH

Mr. SIKES. Do you have at your fingertips the amount of money which would be required if the 10-percent cut on the Reserve components were not inflicted? I would like the record to show it, if it is now available.

General DUFF. Mr. Sikes, in the preparation of this budget, as contained in the statement which the former Comptroller of Defense, Mr. Lincoln, has made available for inclusion in the record there is a discussion

Mr. SIKES. It would be adequate for our purposes if you would simply give us the amount here so your statement will show that additional information.

General DUFF. Yes. It is estimated for the support of the Reserve forces at a 700,000 pay drill strength, the total amount required for fiscal year 1962 would be an additional $187.1 million.

Mr. SIKES. Thank you.

Mr. FORD. Is that just for military pay, or is that O. & M., all inclusive?

General DUFF. Mr. Ford, this is all inclusive. This is in all categories; and by appropriations, sir, it would amount to $33 million in the "National Guard personnel, Army" account; $22 million in the "Reserve personnel, Army," account; $4.6 million, "Operation and maintenance, Army National Guard"; $38.5 million in the "Operation and maintenance, Army," appropriation, and $20 million in the "Procurement of equipment and missiles" appropriation. In addition, $69 million is required to provide a balanced program in fiscal year 1962 and would be distributed to the following appropriations: "National Guard personnel, Army," $1 million; "Reserve personnel, Army," $18 million; "Operation and maintenance, Army National Guard," $9 million; "Operation and maintenance, Army," $15 million; "Military construction, Army Reserve," $14

million; and "Military construction, Army National Guard," $12 million. For the benefit of the record. I would like to insert at this point a statement consolidating these amounts by appropriation. (The statement referred to follows:)

Fiscal year 1962 cost for increasing Reserve component paid drill strength from 630,000 to 700,000

Reserve personnel, Army.

National Guard personnel, Army.

Operation and maintenance, Army National Guard_

Operation and maintenance, Army

Procurement of equipment and missiles, Army.

Military construction, Army Reserve...

Military construction, Army National Guard..

Total..

Millions of dollars

$40.0

34.0

13. 6

53. 5

20. 0

14.0

12.0

187. 1

MILITARY PERSONNEL ARMY

General DUFF. In the "Military personnel, Army" appropriation are provided funds for the pay, subsistence, clothing, and PCS travel of personnel of the Active Army. This budget estimate is based on the strength, composition, and deployment of Army forces. The $3,526 million estimated for this appropriation will support a planned beginning and end strength of 870,000 (including cadets of the Military Academy). There is a net increase of $18 million in this appropriation from the planned fiscal year 1961 obligations. This results, primarily, from implementation of the fourth phase of the E-8, E-9 program and full realization of the third phase of the proficiency pay program.

RESERVE PERSONNEL, ARMY

The "Reserve personnel, Army" appropriation provides for the pay, travel, subsistence, and clothing of the U.S. Army Reserve and the Reserve Officers' Training Corps. The fiscal year 1962 estimate for the "Reserve personnel, Army" appropriation is $199 million, as compared with $220 million in fiscal year 1961, and will support a beginning strength of 300,000 and an end strength of 270,000, including officer and enlisted personnel in 6-month training. The $21 million decrease is due, primarily, to decreases resulting from the reduced paid-drill strength and from reductions in the officer and enlisted 6-month training program in fiscal year 1962.

NATIONAL GUARD PERSONNEL, ARMY

In the "National Guard personnel, Army" appropriation, which provides for military personnel costs of the Army National Guard, $202 million is included for fiscal year 1962. This is a decrease of $28 million from fiscal year 1961 and is directly related to the programed reduction from a beginning strength of 400,000 to an end strength of 360,000. The number of guardsmen who will enter the 6-month training program will be reduced from 62,000 in fiscal year -1961 to 28,000 in fiscal year 1962.

OPERATION AND MAINTENANCE, ARMY NATIONAL GUARD

The "Operation and maintenance, Army National Guard" appropriation provides funds for expenses incident to training, organizing, administering, maintaining, and supplying the Army National Guard, and for supporting the onsite Army National Guard air defense program. Direct obligations in the amount of $171 million are requested for this appropriation in fiscal year 1962, an increase of $5 million over the fiscal year 1961 estimate. This increase provides for the larger number of man-years in fiscal year 1962 for support of the Army National Guard NIKE units and will also provide for the first time the employer's share of the retirement contribution for Army National Guard technicians.

OPERATION AND MAINTENANCE, ARMY

The "Operation and maintenance, Army" appropriation provides for the day-to-day support for the Army's training, maintenance, and operating activities. The sufficiency of this appropriation provides a true measure of the ability of the Army to provide an effective combat ready force. This appropriation supports, and is directly related to, the strength, training, and deployment of the Army, the number and types of combat units maintained, and the extent of the basic establishment in terms of posts, camps, stations, and other installations. It also provides the operation and maintenance support for the U.S. Army Reserve and the Reserve Officers' Training Corps.

For fiscal year 1962, the budget estimate for the "Operation and maintenance, Army" appropriation is $3,257 million; this amount will support continuance of day-to-day operations and the maintenance of facilities and equipment at approximately the 1961 level. The increase of $61 million over the amount shown in the fiscal year 1961 column results from the higher costs of the activities supported: by this appropriation, such as more complex and costlier equipment, increased operational readiness measures, implementation of additional single manager assignments, and increases in joint activities, particularly the activation of the new Defense Communication Agency.

PROCUREMENT OF EQUIPMENT AND MISSILES, ARMY

The appropriation for "Procurement of equipment and missiles, Army" provides the funds necessary for the procurement, remanufacture, or conversion of major end items of combat and support. equipment, ammunition, vehicles, aircraft, and missiles. The provision and layaway of production facilities is also supported by this appropriation. In this, the largest of the Army's capital investment accounts, an estimated $1,848 million in direct obligations will be incurred during fiscal year 1962 as compared with the $1,637 million in fiscal year 1961, an increase of $211 million.

This increase in funds will be utilized for further modernization of the Army's combat equipment. The major portion of the funds made available in this appropriation will offset consumption and annual wear-out and obsolescence through the purchase of combat and support vehicles, modern aircraft, items in the new family of small arms,

ammunition, and other items, and will provide the support capability for production of new items and other fixed costs.

Mr. SIKES. In fact, this slight increase in procurement of equipment and missiles for the Army is primarily replacement and does not reflect any major procurement of new modern equipment; is that correct?

General DUFF. It indicates, Mr. Sikes, a modest increase over the restoration of the items which are consumed in training and which are lost by obsolescence and annual wear-out. We consider, of course, that procurement of these replacement items does, in itself, result in a qualitative improvement of our inventory of weapons and equip

ment.

Mr. SIKES. At a very slow rate?

General DUFF. At a very slow rate; yes, sir. It does not provide for any gain toward closing the gap difference between what we now have in our current inventory and what we feel is absolutely necessary in order to be able to effectively carry out operations.

RESEARCH, DEVELOPMENT, TEST, AND EVALUATION

The fiscal year 1962 budget estimate for "Research, development, test, and evaluation, Army" is $1,130 million, which is $29 million less than the $1,159 million available this fiscal year. Despite the overall decrease in this appropriation all areas of effort, except guided missiles, will have increased funding. These increases are made possible through an $85 million decrease in funding of guided missiles projects resulting from diminishing fund requirements for two of the more costly projects, PERSHING and NIKE-ZEUS, as these weapons near the end of their development cycle.

The category "Other" combines the two appropriations "Operation and maintenance, Alaska Communication System," and the "National Board for the Promotion of Rifle Practice"; the funds programed will support approximately the same program objectives as were presented to the Congress last year.

NEW OBLIGATIONAL AUTHORITY, DIRECT OBLIGATIONS AND NET

EXPENDITURES, 1962

The fiscal year 1962 Army budget, excluding construction, is $10,340 million in direct obligations as shown on chart No. 3. On this chart is shown, by appropriation, the new obligational authority, which totals $10,170 million needed to support the direct obligational program of $10,340 million I have just described. Net expenditures resulting from obligation of prior years' funds and from the new obligational authority requested for fiscal year 1962 are estimated at $9,845 million.

(The information follows:)

New obligational authority, direct obligations, and net expenditures, fiscal year 1962

General DUFF. The amounts in direct obligations included in the President's budget request for construction are $217 million for "Military construction, Army"; $18 million for "Military construction, Army Reserve"; and $18 million for "Military construction, Army National Guard," for a total of $253 million. This amount added to the $10,340 million in direct obligations shown on the chart makes a total overall Army budget for military functions of $10,593 million.

FINANCIAL PLAN, FISCAL YEAR 1962

This next chart, which also excludes construction, shows the proposed method of financing the fiscal year 1962 obligation program, both direct and reimbursable. It also shows comparative data for fiscal years 1960 and 1961. In fiscal year 1962, the total obligation program is estimated at $11,303 million. This program will require appropriation of $10,170 million of new money and use of unobligated balances of $395 million from fiscal year 1961. The unobligated balance expected to be available at the beginning of the next fiscal year is much less than that which has been available in past years. The $125 million shown as transfers is expected to be derived from cash assets of the Army stock fund. Anticipated reimbursements (orders received for goods and services provided other Government agencies) will provide $886 million in fiscal year 1962. After deducting an estimated $273 million in year-end unobligated balances to be carried forward into fiscal year 1963 from all these sources, we arrive at an obligation program of $11,303 million. Of this amount, $10,340 million is for Army accounts, and $963 million is for goods and services for other U.S. Government agencies.

(The information follows:)

66865-61-pt. 1-4