EXHIBIT 9

Analysis of availability of funds and apportionments, general accounts, as of Jan. 16, 1961

FUNDING OF INCREASED RESERVE STRENGTH

Mr. SHEPPARD. Thank you, Admiral.

I am not going to have many questions myself.

I would like to call your attention to something that appears on page 6.

(c) 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.

That would indicate an increase in this year's personnel level of 2,000 and you are doing it for approximately $3 million less. How will you accomplish this?

Admiral HIRSCH. You will recall of the $87.6 million appropriated in 1961, we have not requested the apportionment of $2 million. We have not requested this because our drill strength in 1961 has not until this time come up to expectations.

Mr. SHEPPARD. Briefly, your answer is you have $2 million in an unexpended balance that you are going to utilize in this field? Admiral HIRSCH. Unapportioned as of now.

Mr. SHEPPARD. That would still leave you $1 million short?
Admiral HIRSCH. Yes.

Mr. SHEPPARD. Where are you going to get that money if you are going to use that number of men ?

Admiral HIRSCH. If I may refer to 1962, the reason we can get along with less money in 1962 than we did in 1961 and have more people is the mix of people in drill pay status. There are fewer officers and more enlisted men basically under a drill status, and the cost per individual-the average cost per individual is reduced so this permits you to have a few more people.

There is a possibility we will have to go to the Bureau of the Budget and request the apportionment of the additional $2 million held in reserve in fiscal year 1961 in order to meet our drill strength requirements for the remainder of this year.

PROCUREMENT OF ELECTRONICS EQUIPMENT

Mr. SHEPPARD. With reference to your statement in the middle of page 7:

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 the fiscal year 1961 to 21 in fiscal year 1962.

What is your experience in the electronics field, not only regarding the expenditure of your funds in getting contracts out, but getting back the end products that you order? What is your time element? What is the leadtime? What is the story in that element of procurement?

Admiral HIRSCH. At the moment I cannot speak to the leadtime element.

I would like to speak to our problem of the present moment, and that is our having on hand many items of equipment that are now awaiting installation on these ships. These are radars and new improved electronic items that should be installed on the ships as soon as we can get them into the yards, and as rapidly as we can install

them. I think our delivery of electronics equipment in most areas. has been very good. There are a few areas where development has been a little slower than we anticipated, and they have been delayed, but generally speaking, the delivery of the items we need badly and have on order are being prosecuted and are being delivered to us. So we find ourselves with items right now on the shelf, and we are trying to scrape up O. & M. money to install them.

Mr. SHEPPARD. Am I right in assuming that as long as you have your other work up to requirement, timewise, and you are being delayed because of a lack of money to put appurtenances on board ship, you not only delay the program but increase costs?

Admiral HIRSCH. It is desirable to install equipment as quickly as you can, and not have it sitting around. It costs more when the equipment sits around, and we have been making a very concerted effort to take money from other programs, and have done this in shipbuilding, and delayed overhauls, and other things, in order to get these urgently needed equipments on board ship. Historically, we are never able to overhaul the number of ships we would like, and one of the reasons is, we have to divert these dollars to installation of items like this, or take care of emergency repairs that develop during the year. Delays do cost money.

Mr. SHEPPARD. Is your cost factor up because of a maladjustment of personnel in your yards?

Admiral HIRSCH. No, I do not believe it runs the cost up due to maladjustment. There is some impact that makes our management job much more difficult, but we do have heavy workloads in all our yards and requirements generally for all the skills.

As you know, from time to time, there is a reduced requirement for certain skills and an added requirement for others.

Mr. SHEPPARD. Your flexibility within the yards themselves might possibly prevent an overage in personnel?

Admiral HIRSCH. That is true.

Mr. SHEPPARD. Because of their adaptability to other duties in the yard?

Admiral HIRSCH. That is correct.

CURRENT BUDGET REVIEW

Mr. WHITTEN. I do not know how far we should go into this, and I will yield to the judgment of the Chair and yours, but with regard to the proposed budget which we are considering here which is known as the Eisenhower carryover budget, what is the present status as far as any review is concerned, being made of the overall military planning insofar as its effect would be on this budget that you now have. I am asking what is occurring mechanically now so far as you know in reviewing the overall plan and any effect it might have on these figures. Can you give us that in a general way?

Admiral HIRSCH. Yes, I can.

I would like to start with the beginning of the year, and the emphasis on increased readiness and the deployment of additional carriers. At that time it was recognized by the President and all concerned we would need additional money for the operation of these carriers, we would need about 6,000 additional people, and the dollars to pay them and deploy the additional aircraft and ships.

So we have developed a request for a supplemental appropriation, so far as it affects the Navy. We are requesting $15 million in "Military personnel, Navy," for the pay of the additional 6,000 people.

We are requesting $35 million additional for the operation of the additional ships we have in the fleet, and the increased tempo of the operation. That supplemental, along with $43.5 million for the 712 percent classified pay raise, is now before the Deficiency Appropriation Subcommittee awaiting their action.

In this area, one of our critical problems is the limitation on travel. With the additional 6,000 people and the increased readiness that were not contemplated at the time Congress looked at our appropriation and established the limitation, we simply do not have flexibility within the current travel limitation to do our work.

So much for the supplemental. We are very anxious to have the supplemental passed to provide relief from the travel limitation, and so we can pick up the tabs for the work that has already been done getting ships ready and to pay for the additional people.

So far as what is going on now in the Pentagon, as you know, when the new administration came in, they started looking over the entire Defense budget, and the service Secretaries began looking over their financial requirements for 1961, and also in the 1962 budget.

The Secretary of Defense set up some task force committees to study specific areas, and those committees have been working diligently to review the requirements.

We have received no information as to what decisions will be made, or what decisions have been made, or how they will affect us. We have supplied all the information requested of us, and have made known our requirements for both 1961 and 1962.

That is about as well as I can cover it. If you have something specific, I will try to answer.

Mr. WHITTEN. I thought the record should show it at this point. In connection with the so-called task force study, or the review the new Secretary of Defense will make, have you been called upon to supply tentative figures, if one thing is done or another thing is done?

Has that type of request been made of you, or would those figures be gotten up by the Secretary's Office?

Admiral HIRSCH. We have been asked for a lot of information and figures. I think the basic assumptions, and the factors on which the decisions will be made by these subgroups, will take into consideration all of the information we have given them, but as to how they are going to adjust it, I do not know.

They have one committee working on strategic requirements, one on limited war, one on research and development, and one on installations, various areas of specialization. The assumptions they are using or how they will address certain aspects of this problem, I can

not answer.

Mr. WHITTEN. Was the supplemental that has come down submitted by the outgoing administration, or one by the new administration? Admiral HIRSCH. It was actually submitted, or developed by the old administration, and submitted by the old administration. Mr. WHITTEN. So the fact it has been submitted Admiral HIRSCH. It was on January 18.