STATEMENT BY THOMAS D. MORRIS ASSITANT SECRETARY OF DEFENSE (INSTALLATIONS AND LOGISITICS) BEFORE THE HOUSE ARMED SERVICES COMMITTEE ON THE MILITARY CONSTRUCTION AUTHORIZATION BILL FOR FY 1964 ON MARCH 26, 1963

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP65B00383R000100170028-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 24
• Document Creation Date: December 15, 2016
• Document Release Date: February 13, 2004
• Sequence Number: 28
• Publication Date: March 26, 1963
• Content Type: STATEMENT

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Not for Publication
Until Released by the
Armed Services Committee
STATEMENT BY THOMAS D. MORRIS
ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS VD LOGISTICS)
BEFORE THE HOUSE ARMED SERVICES COMMITTEE
ON THE
MILITARY CONSTRUCTION AUTHORIZATION BILL FOR FY 1964
ON MARCH z-5, 1963
MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
It is our privilege to present for your consideration the Military
Construction Authorization Bill for Fiscal Year 1964. Significant portions
of this program were highlighted in Secretary McNamara's posture state-
ment, but we would like to present further overall perspective prior to the
detailed testimony by the Military Departments and Defense Agencies,
The FY 1964 MCA Bill contains two distinct parts;
A. Authority to construct new operational facilities in the
amount of $1,,128 billion to support the active and reserve forces. These
requirements are detailed in Titles I, II, III, IV and VII. You will note
that the amount requested is almost identical with that approved by the
Congress for FY 1963.
B. Authority for military family housing costs in the amount
of $734 million. This year, for the first time, the MCA Bill covers all
costs of housing to be appropriated in accordance with Section 507 of last
year's Bill. Of the total requested, $217 million covers costs of new
construction projects; 25% of these projects were authorized in last year's
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Bill but funds were not granted by the Appropriations Committees. The
remainder is required to finance acquisition, improvement, leasing, debt
service and operation and maintenance costs.
I would like to summarize each of these requests and then be avail-
able, with my associates, to answer your questions regarding our construc-
tion and real, property management policies and practices.
A. New Operational Facilities
As described to you by Secretary McNamara, the authorization pro,
gram for FY 1964 is based on a five-year projection of the missions and
forces to be supported through FY 1968. Such projections are particularly
important in planning military construction, in view of the lead-time required
for many construction projects. In general, the :authorizations
requested in
this bill will cover construction which we need to have in place no later
than end FY 1966.
The requests for new facilities originally submitted by the Military
Departments totalled $2 billion, exclusive of family housing which I will
discuss later. Each project was first evaluated to verify its justification
in support of military plans and to assure that it could not be met ade-
quately from existing assets. Following this screening, each required
project was then given an engineering and technical analysis against DoD-
wide standards covering size, cost, site location and design. In addition,
all projects costing in excess of $1 million were personally reviewed by the
Secretary of Defense or his Deputy. As a result of these evaluations
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which have been more extensive this year than in any prior year -
projects costing approximately $800 million were dropped or deferred.
Reviews by the Bureau of the Budget resulted in a further reduction of
$13.6 million. The resulting requirements, contained in the Bill which
you have before you, are distributed among the departments and agencies
as follows:
Department
Active
Forces
Reserve
Forces
Total
Percent
(Amounts i$ Millions)
Army
$ 226
$ 8
$ 234
20.7%
Navy
259
6
265
23,5
Air Force
582
20
602
53. 4
Defense Agencies
27
27
Z. 4
Total
$1,094
$34
$1, 128
100. 00/,
Almost half of the projects in this year's bill are to provide
operational and training facilities. Next in order of size are facilities
to house and support troops, including provision of medical and com-
munity facilities. The remaining items cover facilities requirements
for research and development; maintenance, supply, administrative
and base utilities,
The summary provided in the remainder of this section is ar-
ranged in accordance with the principal missions and defense programs
to be supported, as follows:
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AUTHORITY FOR NEW OPERATIONAL FACILITIES
(Millions of Dollars)
Missions & Programs
Army
Defense
Navy Air Force Agencies
Total
Percent
Strategic Retaliatory
-
$ 3,4
$202. 2
-
$ 205.6
18.2%
Continental Air &
Missile Defense
$ 9.1
4.6
81.6
-
95.3
8.5
General Purpose
63.1
111.8
86.8
-
261.7
23.2
Airlift & Sealift
-
-
13. 3
-
13.3
1.2
Reserve & Guard
8. 3
5, 7
20. 2
-
34.2
3, 0
Research &
Development
15.0
35.0
52.7
-
102.7
9.1
General Support
120.8
86.9
127.6
$27.0
362.3
32, 1
Emergency Unfore-
seen Requirements
17.5
17.5
17.5
-
52.5
4.7
Total
$233.8
$264.9
$601.9
$27.0
$1,127,6
100.07Q
I would now like to highlight the types of military construction projects
contained in each of the principal mission categories.
1. STRATEGIC RETALIATORY FORCES
Projects to support. this mission are predominantly operational
facilities for missile and manned bomber forces as follows:
(Millions)
a. MINUTEMAN FACILITIES ................... $ 146
Construction of sixth base at Grand Forks,
North Dakota (150 silos) and additional
test and training facilities
b. ATLAS - TITAN Facilities .................. 10
Modifications to existing facilities to
improve their reliability and safety, based
on system tests.
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(Millions)
c. Post Attack Command and Control
System (PACCS) ...................... 28
First increment of construction of SAC
deep underground support center to
have long endurance in a post-attack
environment.
d, SAC Base Improvements .............. 19
General improvemerts to support
manned bomber program at 34
CONUS and 5 overseas SAC bases,
e. POLARIS Facilities ................ . . 3
Includes submarine and missile sup-
port on both east and west coasts
TOTAL $ 206
2. CONTINENTAL AIR AND MISSILE DEFENSE FORCES
The $95 million requested for this mission category is required
primarily for operational purposes:
~~. Dispersal of Fighter Interceptor
Squadrons ....... .................... $ 45
Provides facilities at a number of
dispersal bases to deploy about 1/4
of active interceptor forces for ex-
tended periods.
1). Warning & Surveillance Systems.....
Facilities in support of Dewline and
AC&W stations ($11 million); space
surveillance and tracking systems
($2 million); undersea surveillance
systems at 3 off-shore sites ($3 million),
c. NORAD Headquarters ............... 7
Provides special rock protection due
to unforeseen rock faults.
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(Millions)
d. NIKE HERCULES Facilities........... 9
Operational improvements to exist-
ing batteries, including fall-out pro-
tection ($5 million) for 37 batteries.
e. Other Air Base Facilities ............. 18
Support facilities at 22 fighter inter-
ceptor bases in CONUS ($13 million)
and a classified mission at Shemya
Air Station, Alaska.
TOTAL $ 95
3. GENERAL PURPOSE FORCES
This, the second largest of the principal mission programs is
estimated to cost $262 million, and the highlights are as follows:
Army Facilities CONUS... . ..........
$ 20
Modernization and improvement of
operational and maintenance support
facilities at 7 Division bases, including
2 ROAD Divisions and 2 STRAC units.
b. Army Facilities Overseas............ 43
Operational, maintenance and supply
facilities in Europe ($13 million),
Pacific Area ($16 million), Alaska
($2 million), Caribbean ($12 million),
Marine Corps Ground Forces and Air-
craft Wing Support ................... 17
$8 million for improvement of Marine
Corps Camps ($2 million CONUS and
$6 million Okinawa); and $9 million
for modernization and improvement
of 8 Marine Air Stations.
d. Attack and ASW Carrier Air Group Facilities 18
Improvements of existing shore facilities
to support operations and fleet air train-
ing at 10 CONUS locations.
6
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(Millions)
e. Fleet Shore Support Bases............ $ 37
Modernization of ship operating, repair
and support facilities at 7 shipyards and
11 support bases.
f. Fleet Aircraft Support Bases........... 40
$20 million for modernization and improve-
ment of 11 CONUS bases and $20 million at
6 overseas bases.
Tactical Air Command Facilities.......
Tactical aircraft shelters in overseas areas
($30 million) and improvement of base
support facilities at 9 U. S. bases
($11 million)
h. Other Air Force projects ............. 46
Storage, maintenance, training & supply
facilities in CONUS and overseas areas
Total $ 262
4. AIRLIFT AND SEALIFT FORCES
$13 million is requested for the Air Force to provide support
facilities for troop carriers, cargo aircraft and MATS. The needs in this
area are related primarily to a runway extension at Pope Air Force Base
for C-130 aircraft, air freight and passenger terminals, miscellaneous
training and maintenance facilities and troop housing. As the Committee
knows, one of the major aspects of the build-up in our readiness status is
improvement in our airlift capability. It should be noted that the
relatively modest FY 1964 construction requirements are due to the fact
that our existing facilities are substantially adequate to support the
modernized and augmented airlift forces.
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5. RESERVE FORCES
In accordance with the practice reinstituted in last year's Act,
authorization for construction of Reserve Forces facilities is in the form
of a lump sum for each of the program components, namely: the Army
National Guard, the Army Reserve, the Naval and Marine Corps Reserves,
the Air National Guard and the Air Force Reserve, As provided by last
year's Act, the Congress will be furnished advance notification of the
projects to be constructed under such lump sum authorization. While any
identification of individual projects would be only tentative until that time,
current indications are that the new authorization will be required for the
following general categories of facilities:
(Millions)
a.. Armories and Training Centers........... $ 12
Army National Guard Armories, and
Training Centers for Army, Naval and
Marine Corps Reserves
b. Airfield Pavements ....................
9
Runway, taxiway and aircraft parking apron
extensions and overlays for Air. National
Guard and Air Force Reserve
c? Airfield Troop Housing and Messing Facilities 2
Almost exclusively replacement or rehabilita-
ticn of personnel facilities at Naval Air Stations
d. Miscellaneous Aviation Buildings....... 11
Maintenance docks and shops, hangar
additions, communications, administration
and training buildings at Air National Guard
and Air Force Reserve bases
Total $ 34
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6. RESEARCH AND DEVELOPMENT
The highlights of the research and development program Are
(Millions)
a.
TITAN III, and Satellite Control...... .
Primary item is space launch system
at Cape Canaveral ($5 million).
$8
b.
c.
Missile Range Improvements..........
Atlantic ($4 million), Pacific ($8 million)
Mobile Medium Range Ballistic Missile
12
Facilities (MMRBM) ..................
7
Facilities at Cape Canaveral and
Edwards AFB to support early
development .
d. Atlantic Undersea Test & Evaluation
Center ..............................
Second increment of shore base support
facilities at an off-shore location.
e. Laboratories & Support Facilities....... 70
Army: $14 million, major projects at
Redstone Arsenal, Natick, Mass, and
Aberdeen Proving Ground.
Navy: $22 million, major projects at
Naval Research Laboratory, Carderock
and White Oak, Maryland.
Air Force: $34 million, major projects
at Edwards AFB, Arnold Engineering &
Development Center., Sacramento Pe.ak.
TOTAL $ 103
7. GENERAL SUPPORT
This is the largest of the principal mission programs, and covers
all other facilities required by the Military Departments and facilities for
Defense Agencies. The highlights of this $362 million program are as follows:
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(Millions)
d. Communications & Navigational Aids...... 79
Includes security service site facilities.
Army: $11 million; Navy: $47 million, Air
Force: $21 million. Second increment of
VLF installation in Australia: $32 million,.
e. Defense Agencies Facilities............... 27
Primarily administrative space, DASA:
$2 million; DCA: $3 million; DIA: $17 mil-
lion; DSA: $3 million; NSA: $2 million.
a. Troop Housing .......... ................ $ 99
22, 636 barracks spaces and 1, 229 BOQ
spaces, & community facilities for general
support needs. Army: $73 million;
Navy: $6 million; Air Force: $20 million
b. Military Training Facilities .............. 44
Enlisted, cadet & officer personnel.
Army: $14 million; Navy: $19 million;
Air Force: $11 million
c:. Medical Facilities ....................... 35
Hospitals (6), dental clinics & dispensaries,
and facilities directly supporting medical
programs. Army: $9 million; Navy: $0. 2 mil-
lion; Air Force: $26 million
f. Missile & Space Program Support......... 9
For advanced space technology &
ballistic missile support
Other Facilities ........................
Utilities, miscellaneous operational, supply,
maintenance & administrative` facilities.
Army: $14 million; Navy: $15 million;
Air Force: $40 million.
69
Total $ 362
8. EMERGENCY UNFORESEEN REQUIREMENTS
. Sections 103, 203 and 303 request contingency unfunded authoriza,
tion for the three Military Departments in the amount of $17. 5 million each --
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a total of $5Z. 5 million. This authorization amounts to less than 5% of
the total authorization requested. Its availability during the past years
has enabled the Department of Defense to proceed with construction made
necessary by changes in missions and responsibilities due to unforeseen
security considerations, new weapons developments, new and unforeseen
research and development requirements, or improved production schedules.
We have and will continue to request the use of this authority only when
justified by these criteria. The amount requested is thus 4. ceiling figure
and we would use only that part found necessary after careful review by my
office in each case.
As you know, Mr. Chairman, unused portions of this emergency
authorization automatically expire on September 30th of each year following
enactment, thus preventing the accumulation of unused balances. In this
way it serves as a true emergency contingency, available for use if needed,
but automatically rescinded if not used.
9. 13ALANCE OF PAYMENTS
Secretary McNamara has informed you of measures taken dur-
ing the past year and a half to reduce defense overseas expenditures. At
the beginning of the current fiscal year the Secretary directed that no
commitments be made on construction starts in overseas areas until such
time as a program was developed to reduce the foreign exchange cost of the
FY 1963 construction program, I wish to report that studies in this area
have been completed and approved by the Secretary of Defense. The same
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principles have been applied in planning our FY 1964 program and the
foreign exchange cost has been reduced from $153 million to $$9 million -*
a reduction of $64 million, or 42%.
To achieve this improvement in the balance of payments, we will
purchase a maximum of construction hardware, materials and equipment
from United States sources, to be shipped in U. S. vessels; use U. S. con-
tractors wherever possible, and troop labor when feasible.
MILITARY FAMILY HOUSING
In accordance with Section 507 of'last year
porated in the FY 1964 MCA program the total authorization for military
family housing costs as follows:
Army
Navy
(Millions)
Air Force
Defense
Agencies
Total
1.
Construction of
dousing
$47.6
$81.2
$88.2
$217.0
2.
Trailer Parks
.7
.3
1.6
2,6
3.
Acquisition, Improve-
ments, and Planning
9.0
13.2
7.0
29.2
4.
Rental Guarantee
.1
-
1.1
1.2
5.
Leasing
12.4
2.3
3.9
18.6
6.
Operation and
Maintenance
126.1
65.3
105.0
2.5
298. 9
7.
Debt Payment
30.9
90.4
172.1
$246.7
$193.2
$297.2
$2.5
$739.6
Less anticipated reimbursement
5.2
Total To Be Authorized
$734.4
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Ou.:r ability to present in this year's MCA bill a total financial pro-
gram for all elements of family housing represents a major milestone in
management improvement. Prior to FY 1963, housing costs were contained
in 16 different appropriations. The Military Family Housing Management
Account provided by Congress last year has now made it possible to obtain
full financial control of all these amounts, and to institute budgeting and
cost accounting systems which are enabling the military departments to
measure and compare their performance and to set improved standards
covering all elements of cost. This year we are proposing that Congress
establish a single appropriation as a further step to simplify and integrate
financial management of family housing.
While we wish to make a separate detailed presentation to the
Committee on the housing program, I would like to highlight its prin-
cipal elements:
1. Construction of New Housing
Last year Secretary McNamara reported to you that our long-
term family housing deficit was 70, 000 units. In FY 1963, Congress appro-
priated funds for 7, 500 units, leaving a firm requirement, which has been
revalidated, for 62, 500 units. It is our desire to meet this need by an
orderly, evenly-scheduled program over the next 5 years. Accordingly,
this year's program requests $217 million to finance 12, 100 units .a
approximately one-fifth of our firm requirements, distributed by Services
as follows:
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artment
De
Domestic
Foreign
Total
p
Army
1,867
644
2,511
Navy
4, 031
566
4, 597
Air Force
3,842
1,150
4,992
Total
9,740
2,360
12, 100
one-fourth of the above quantity has been authorized in prior years.
However, we a Fe in full agreement that we should cancel all unfunded prior
authorizations and present to this Committee each year the program which
we wish to fully fund and place under construction in the ensuing fiscal year.
Today there are over 978, 000 military families eligible to occupy
public quarters. (This number will grow to 1, 022, 000, an increase of
44, OQO, within the next five years.) Only 36% of these families now occupy
military housing. The remainder buy or rent housing. We have analyzed
the quarters available to these families and find that almost 300, 000 are
inadequately housed, or paying excess cost; many are separated due to the
unavailability of suitable accommodations in the community. Our policy is
to require maximum reliance on private housing, and we have assumed that
8 out of 10 of those inadequately housed will find adequate accommodations
in the community during the next 5 years. Hence, we are programming
construction to meet only 20% of the total deficit.
Further to illustrate the conservatism in our planning, the 12, 100
units requested for authorization and funding in FY 1964 are aimed at meeting
only cases of military necessity and decent living conditions for inadequately
housed and separated families. No construction project is programmed solely
because of excess cost or distance factors. The chart on the following page
shows the distribution of our 5..year program, by justification criteria, and
that fraction which we propose to construct with FY 1964 funds.
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ANALYSIS OF FIVE YEAR FAMILY HOUSING CONSTRUCTION PROGRAM
SHOWING JUSTIFICATION FOR PROJECTS AND FY 1964 PROGRAM
20,733
5-YEAR REQUIREMENT =
62,100 UNITS
FY 1964 PROGRAM =
12,000 UNITS (20%)
1 1, 175
6,508
3, 105
2, 061
2,518_(28%)
(39%)
1 2, 608
MILITARY ISOLATED SATURATED SUB- EXCESS
NECESSITY COM- COM- STANDARD DISTANCE
MUNITIES MUNITIES HOUSING OR COST
REPLACE-
MENTS
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Finally, the analysis of each project in the 1964 program, con-
tained in the detailed back-up books furnished to the Committee, shows
that this program will help bring together over 5, 600 separated families,
and support expansion in military missions requiring 4, 700 married
military personnel.
We are taking steps to control construction costs and design
standards. A design portfolio is being developed to standardize unit
designs, reduce costs, and expedite project development. A relocatable
house has been designed which can be fully erected at an average cost
of $15, 000, and which can later be moved to another site if necessary,
salvaging approximately 50% of the original investment. 1, 000 of these
units are being erected at isolated Air Force bases and AC&W sites in
FY 1963. Further, we are developing a procedure to ship U. S. -built
component-type houses to overseas locations for erection at a minimum
foreign exchange cost. Recently we embarked upon a long-range pro-,
gram -- in collaboration with FHA and industry -- to test new materials,
designs and construction techniques which may engender increased
productivity and reduced costs in the residential construction.
2. Trailer Parks
$2. 6 million is requested to provided 1, 539 spaces for
families who prefer to live in private trailers.
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3. Acquisition, Improvements, and Plannin
$29. 2 million requested for the following purposes,
(Millions)
a. Completion of Wherry Acquisition...... , ... $ 3. 0
2, 023 units (Army: 356; Navy: 1, 667)
b. Improvements to Acquired Wherry Units... 6. 4
c. Convert 1, 418 Sub-standard Units to
904 Adequate Units. ........ . ... < ..... 4. 5
d. Improvements to 8, 974 Adequate Quarters.. 10, 8
e. Minor Construction... > . , o ................ 3, ,5
f, Planning for New Construction ....... ..... 1.0
Total $ 29. 2
The improvement of these 1, 418 units which can be converted
into 904 adequate quarters at a reasonable cost ($4..5 million - or about
$5, 000 per residual unit), will complete the improvement of all sub-
standard quarters capable of being brought to reasonable standards of
adequacy. Of the remaining 45, 500 substandard quarters we hope to
achieve continuing benefits from approximately 20, 000 units which,
although they cannot be converted to adequate public quarters, are
considered safe, decent, and sanitary, have a continuing economic life,
can be operated at no cost to the Government, and are located in areas
where there is a need which cannot appropriately be met by private
housing. We propose in Section 506 that authority be granted to exempt
such units from the existing statutory requirement that they be improved,
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demolished, or otherwise disposed of by July 1, 1965. All other units
which do not meet the above criteria will be disposed of by the stated date,
4. Rental Guarantee
We believe that we can meet the greater part of our foreign
requirements through a rental guaranty program, and we are proposing
that such authority be established in Section 508 of this year's Bill. This
program contemplates extending to foreign builders guaranties of speci-
fied levels of rental income (not to exceed an average of $150 per month)
for periods up to ten years, in consideration for construction of housing
in designated localities for occupancy by American military families.
This produces controlled housing at no investment cost. Hence, this
program offers a most economical means of meeting our needs in cer-
tain foreign countries. If the level of occupancy is maintained, the only
costs to the Department of Defense will be the normal housing allow-
ances paid to the military families. Past programs have produced
5, 538 units, generally under a 5-year guarantee. Actual guaranty pay-
ments under past programs have averaged about $6. 50 per unit per
month for the total units produced. The liability for Fiscal Year 1964
is estimated at $1. 2 million.
5. Leasing
Last year the Congress granted authority to lease housing
for non-tactical installations as a means of meeting urgent current needs
in the United States where our long-term need is not sufficiently firm to
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warrant on-base construction, or where leasing is a more economical
means of meeting the housing deficit. As you know, we are limited to a
maximum of 7, 500 leased units in CONUS. Section 505 requests an ex-
tension of this authority for this year. In addition, under existing stand-
ing authority, we are leasing 1, 574 units overseas, primarily in Germany,
Our total annual leasing cost is projected at $18. 6 million in FY 1964,
6. Operating and Maintenance Expenses
These costs, projected at $298. 9 million in FY 1964, offer the
principal opportunities for savings in annual costs. A uniform cost ac-
counting system for family housing operation and maintenance was in-
stalled July 1, 1962, and results for the first six months of FY 1963
have just been analyzed, revealing some variation in cost experience
among the Departments. Economies initiated to date will save
lion, which has been reflected in the FY 1964 budget. Our objective
is to increase this savings to $19 million in FY 1965, and $25 million
by FY 1967, We will be pleased to review these efforts in greater
detail should the Committee wish,
7. Debt Payment
Our payment for debts for Capehart, Wherry, and Commodity
Credit and for Serviceman's Mortgage Insurance is estimated at $172. 1
million. The debt payment is a long-term obligation and will remain
essentially at this level for many years to come,
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IMPROVEMENTS IN MANAGEMENT OF INSTALLATIONS & LOGISTICS
In conclusion, Mr. Chairman, I would like to refer briefly to our
progress in achieving increased military readiness at the same or less
cost through improving our methods of managing Defense logistics,
The FY 1964 budget is over $1 billion less than it would have been
had Secretary McNamara not launched a vigorous program of management
improvement in Defense procurement, logistics, and facilities during
Calendar Year 1961,
These improvements are in five principal areas.
1. First, buying only what we need.
The greatest progress in cost reduction has been made in
this area during the past two years. As a result, the FY 1964 budget
has been cut by more than $600 million through (1 D sharply reducing
inventory replacement requirements for spare parts; and (2) assuring
that excess stocks in each Military Department are made available to
the other two Departments in order to prevent purchasing additional
quantities of items already excess to our needs. The application of
high speed electronic computers is making it possible to keep current
information on the millions of items stored in our depots. Many of
the military construction projects which this Committee has author-
ized in the past have enabled us to install this equipment and improve
our inventory management methods, We are now reaping large
dividends from this investment,
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2. Second, by buying at the lowest sound price,
As this Committee has frequently stressed, we must constantly
strive to cut Defense costs in contracting for construction, weapons,
services and supplies. One of the most effective means of accomplish-
ing this is by obtaining competition and making awards on a fixed-,price
basis to the lowest responsible bidder. Starting early in Calendar 1961,
the Military Departments established goals to increase competitive
procurement, As a result, $760 million in contract awards was con-
verted from sole source to competitive procuren-e nt in FY 1962. We
achieved, on an average, savings of 25% and thus reduced our procure-
ment costs by an estimated $190 million, We expect to do even better
this fiscal year, and by the end of FY 1965 our objective is to increase
competitive procurement by $2 billion annually.
In military construction 98% of our contracts are placed on a
competitive, fixed-price basis. During the past year, a survey was
made of architect-engineer selection procedures, utilizing the services
of an advisory panel of outstanding consultants. As a result of the
survey, a. new DoD Directive was issued which prescribes uniform
procedures to insure that all qualified professional firms desiring to
furnish services are given equitable consideration for contract awards.
An informational pamphlet has been issued for distribution to architect-
engineer firms describing the policy.
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3. Third, improved utilization of real property,
Retention of unneeded real estate and facilities constitutes one
of the largest hidden costs in Defense operations. Among the first in-
structions issued to DoD by President Kennedy in 1961 was that we thorough-
ly review our utilization of real properties, and, wherever possible, con-
solidate activities in order to eliminate unnecessary overhead costs9 free
personnel for higher priority duties, and release property which could be
put to more productive use by local economies. We have instituted a per-
manent program of inspection and review to achieve these benefits. During
the past two years we have initiated actions at 330 locations in the U. S.
and overseas. When completed, these actions will release 274, 000
acres of real property as excess to Defense needs, and effect annual
savings of $270 million. Local economies also are benefitting. The
Administrator of GSA recently advised us that in Calendar Year 1962,
26 industrial plants released by Defense were sold at fair market
value, and that these plants are now employing 27, 000 workers. In
addition, we have an active program to assist employees and communi-
ties affected by reduction or termination of Defense operations, and
have been successful in minimizing loss of employment as well as in
turning the excess properties to productive non-Defense uses.
4. Fourth, consolidation of common supply and service activities.
We have been particularly gratified with the benefits of bring-
ing under single management the purchase, storage and distribution of
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over 1 million items of common supplies and parts used by the Military
Services, These responsibilities, which have been assigned to the De-
fense Supply Agency, have resulted in a reduction of 3, 700 personnel
formerly required to perform these duties, with operating savings of
$33 million reflected in the FY 1964 budget, By storing these common
supplies in 11 instead of 77 different locations, a further savings of
$9 million will be obtained by FY 1965, Closer inventory control is
also resulting. DSA? s inventory by end FY 1963 will be bout 10%
less -- a one-time savings of $232 million -- for the items over which
it has assumed control.
The Defense Communications Agency has achieved savings in
the procurement of leased lines services which have reduced the FY 1964
budget by $18 million.
This Committee has contributed importantly to the establishment
of these Agencies by authorizing improvements to the facilities in which
their operations are now conducted.
5. Fifth, maintenance of properties and equipment.
We are attacking the huge labor and material costs required
to maintain our aircraft, missiles, other end items, facilities and
family housing. Thus far equipment maintenance costs have been re-
duced by $71 million and facilities maintenance costs by approximately
$30 million. We have far to go to achieve the full potentials for economy
in these areas. The first step is to install detailed cost accounting
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systems which enable us to know accurately what each Service is spending,
so as to compare performance and set standards.
The above are highlights of the management improvements in
Defense logistics which have been inaugurated during the past 2 years.
As Secretary McNamara stated in his posture briefing, we have set a
goal of reducing procurement and logistics costs, within 5 years, by
over $3 billion per year. We are well on the way toward identifying
the opportunities for such improvements, and with the aggressive
attention. of our top military and civilian managers -- and the assist-
ance of the GAO and Congressional Committees in spotlighting areas
of greatest opportunity -- we are convinced that this goal can be met.
Mr. Chairman, I appreciate your patience and courtesy in
receiving this statement. My associates and I wish to provide this
Committee with any information it desires in connection withits con-
sideration of this legislation,
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