SLOWDOWN IN THE PENTAGON

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00446R000600260001-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 19, 2016
• Document Release Date: October 25, 2005
• Sequence Number: 1
• Publication Date: February 4, 1965
• Content Type: OPEN

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1965 CONGRESSIONAL RECORD - HOUSE 2005
Neither reason can be justified by men
of responsibility.
The recognition of the problem is nec-
essarily the first barrier to be broken
down. In many instances it is the major
barrier.
What I am discussing today was offi-
cially recognized and described in broad
outline little more than 3 months ago.
At that particular time there was a more
immediate problem facing our constitu-
ents and the Members of this Chamber.
This overshadowed the significance and
importance of the report made by the
House Subcommittee on Science, Re-
search, and Development.
In the report it was pointed out 15 per-
cent of the total Federal budget is di-
rected toward the Government's research
and development needs. An expenditure
of this size cannot help but have a
marked influence upon the course of
events. It has a direct influence on the
expansion of the body of knowledge and
the development of new products. It has
a major effect on the ebb and flow of
scientific and technical manpower be-
tween sections of the country. It is play-
ing an increasingly important role in the
economy of the various sections of the
Nation. These influences will not wane
in this century-nor are they likely to in
the next century.
The increase in knowledge, the devel-
opment of new products, more efficient
and economical processes are to be de-
sired and sought after. But all of this
is not taking place without some unde-
sired and widespread side effects.
One of these side effects has been de-
scribed by Dr. Elvis Stahr as a "brain
drain." Dr. Stahr, a former Secretary
of the Army and now president of Indi-
ana University, is not talking about a
surgical technique. He is pointing to
the migration of vitally important man-
power between different sections of the
Nation. The prognosis for the areas suf-
fering this "brain drain" is not critical
at this time. The deterioration to such
a point can take many years. But to
ignore treating the symptoms now can
only aggravate the condition and speed
up the decline.
The Middle West is a major producer
of scientific and engineering talent. Dur-
ing the decade of the fifties the major
universities in Illinois, Indiana, Iowa,
Michigan, Minnesota, Ohio, and Wiscon-
sin produced about one-third of all the
doctorate degrees in the biological sci-
ences and engineering. The same insti-
tutions awarded roughly one-fourth of
all the doctorate degrees in the physical
sciences and mathematics. But despite
these numbers this reservoir of talent-
of intellect-is being drained away by
those sections of the country which have
benefited most by the sudden expansion
of Government research and develop-
ment funds. This expansion of funds
has ballooned from less than 1 percent
of the Federal budget 20 years ago to 15
percent today.
The expansion of knowledge stimulates
industrial growth. The demand for more
scientists and engineers with advanced
degrees pyramids. This is in turn trans-
lated Into greater demands for expansion
of graduate study facilities and a corre-
sponding increase in graduate school
faculties.
Here we find the universities. caught in
a pressure squeeze. It becomes increas-
ingly difficult to maintain the proper
ratio between teacher and graduate stu-
dent enrollment. There is the vital need
for the maintenance and expansion of
research programs. The potential fac-
ulty member faces a choice between the
university and industry. He can have a
combination of both offered in those sec-
tions of the Nation blessed with a heavy
concentration of research and develop-
ment fund allocations.
The Middle West has not been stand-
ing still. Indiana University, for ex-
ample, is now spending almost six times
as much money in its research programs
as it did just 10 years ago. The other
great universities of this area can point
to similar tremendous increases in re-
search. But still the competition for
their homegrown talent continues at a
furious pace as the concentration of Gov-
ernment research and development
funds in other areas is increased.
My remarks up to now have been con-
cerned with the effect of ratio of research
and development fund allocations upon
the educational field. I now want to dis-
cuss briefly -another side effect which
could assume tremendous proportions in
the decades ahead. This is the effect of
such activity on the basic economies of
various sections of the country.
A recent report issued by the Depart-
ment of Commerce describes a similar
geographical pattern. In this case it is
concerned with changes in the relative
shares of personal income that each
region of the Nation receives.
This analysis reveals a significant geo-
graphical redistribution of income over
the postwar years. The southern and
western regions have increased their
share of the national total of personal in-
come by 15 percent while the northeast-
ern and central sections have recorded a
decline of the same amount.
Three growth components were con-
sidered in this analysis. The first is the
overall growth of our national economy.
If all regional characteristics had re-
mained the same there would have,-nat-
urally, been no redistribution recorded.
Two other factors provide the key for the
change. One is the factor of industry
mix and the other is the regional shifts
within individual industries.
In the industry-mix factor each in-
dustry's national growth rate is meas-
ured against the national all-industry
growth rate. This provides the composi-
tion of rapid and slow growth industries
within a particular area.
The regional shift factor measures the
rate of growth of a particular industry
in a particular area against the indus-
try's national growth rate. The declines
in the share of participation income re-
ceived in New England, the Mideast, and
the Great Lakes region have taken place
because four-fifths of their industries
suffered reductions in their share of cor-
responding industry national totals.
I think it can be considered significant
that those sections of the Nation which
have shown increases in income are the
same areas which have received the ma-
jor share of Government research and
development funds.
I do not maintain the geographic dis-
tribution of such funds is the only-or
even the major reason-for rapid growth
in one area. Nor do I imply a smaller
share of such funds is the major reason,
for a slowing down in the rate of growth
in another area.
But I do maintain it is having an effect
and it is a subject which requires the
most serious consideration and study.
I believe it is imperative we attain a
better adjustment between the immediate
goals of research and development and
the long term goal of establishing a
broadened national competence in re-
search and development. I am con-
vinced such a move will go far toward
correcting the imbalance which is devel-
oping between regions.
We are facing a fundamental problem
which can create weak links in the chain
of our national economy. It is not yet a
big problem. It can become one. The
time to begin corrective action is now.
It is my intention, Mr. Speaker, to ex-
pand on this subject in the immediate
future with specific recommendations.
FSLA LOANS FOR HOUSEHOLD
GOODS AND FURNISHINGS
(Mr. VANIK asked and was given per-
mission to extend his remarks at this
point in the RECORD.)
Mr. VANIK. Mr. Speaker, yesterday,
I introduced H.R. 4289 to authorize Fed-
eral savings and loan associations to
make loans for major household durable
goods and furnishings.
These items of property physically
constitute a home as much as the outside
structure of shelter. Since the lending
institutions have already determined
such vital information as the borrowers
credit and repayment record, they are
readily equipped to extend further credit
for home furnishings. -
The enactment of this legislation
should result in lower interest charges
for this type of lending for the benefit
of the homeowner and the consumer.
PERSONAL ANNOUNCEMENT WITH
REFERENCE TO AID TO THE
UNITED ARAB REPUBLIC
(Mr. SENNER asked and was given
permission to. address the House for 1
minute- and to revise and extend his re-
marks.)
Mr. SENNER. Mr. Speaker, I wish to
commend the majority of my colleagues
for voting to cut off any further aid to
the United Arab Republic under title I
of Public Law 480.
Circumstances compelled me to be in
Arizona on January 26, 1965, when this
vital matter came before the House for
consideration. Had I been here, how-
ever, I would have voted to end this self-
defeating, degrading policy of aiding a
cynical and dangerous foreign power.
President Nasser has at last been made
to clearly understand that he cannot
continue to slap the face of America
with one hand and at the same time ac-
cept its bounty with the other.
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CONGRESSIONAL RECORD -HOUSE February 4
Perhaps the other body will not concur
in the action taken by the House. Yet,
even so, the world now knows that the
patience of Americans is wearing thin.
There is much we will endure in the
cause of peace, but all too many nations
have confused tolerance with weakness.
We are setting the record straight.
VA CLOSURES ARE NOT
IRREVOCABLE
(Mr. RANDALL asked and was given
permission to address the House for 1
minute and to revise and extend his re-
marks.)
Mr. RANDALL. Mr. Speaker, yester-
day the other body was successful in
placing a rider on the supplemental agri-
cultural appropriations bill prohibiting
expenditure of funds to implement re-
cent directives by the Veterans' Admin-
istration closing 17 regional offices, 11
hospitals and 4 domicillaries in all parts
of the United States. Within a short
time House conferees will have to decide
whether to agree with or recede from this
particular amendment to the bill.
Assent to the rider sponsored by the
Senators from South Dakota and New
Mexico is not the only way this House
can express dissatisfaction with decisions
announced on that black 13th of Janu-
ary 1965. But It Is one of the most
effective ways to do so under the cir-
cumstances at hand. The rider Is not
only timely, but it serves as a sharp repri-
mand to the Veterans' Administration
for the highhanded manner in which
they made and announced their hurried
decision.
The other body has presented those
of us in the House who are concerned
about the closing of 32 VA facilities a
rare opportunity to make It crystal clear
to the new Administrator and his asso-
ciates the feelings of the House on this
issue.
Mr. Speaker, my present remarks are
not directed solely to those Members
whose districts are affected by the pro-
posed closing of facilities. Of course
those Members who have suffered a loss
of a VA facility should emphasize the
importance of this amendment to the
conferees. But every other Member of
the House who believes that there should
not be a reduction or impairment of ade-
quate services to our veteran population
should also be interested In sustaining the
action of the other body.
I respectfully urge the House conferees
to accept and agree to the rider, not-
withstanding any points of order that
will undoubtedly be evoked. Further
implementation of the VA's highly ques-
tionable decisionshould be brought to a
grinding halt--or as they say in some
parts of the country, to a "sliding
whoa"-until both Houses of Congress
have conducted complete and thorough
investigations of the whole affair.
The capable and distinguished chair-
man of the House Committee on Vet-
erans' Affairs has promised such an in-
vestigation. Adoption of the rider at-
tached by the other body will insure
that hearings do not become polite tea
parties which take up a lot of time in
fruitless discussion. Let us not be party members. I welcome his support of this
to any thinking that the decision is ir- legislation.
revocable. The SPEAKER. The time of the
gentleman has expired.
LONG-RANGE CROPLAND ADJUST- ------
MENT PROGRAM SLOWDOWN IN THE PENTAGON
(Mr. LATTA asked and was given per-
mission to address the House for 1 min-
ute and to revise and extend his re-
marks.)
Mr. LATTA. Mr. Speaker, I agree with
the President's statement in his farm
message that "farmers want freedom to
grow and prosper, freedom to operate
competitively and profitably in our pres-
ent economic system." but I doubt that
he could convince many American farm-
ers that they have that kind of freedom
today under his wheat, feed grains, cot-
ton, and tobacco programs.
Our farmers could, however, have the
freedom that the President says he wants
for them by enacting the farm bill I am
introducing today.
I have long advocated the adoption of
a long-range cropland adjustment pro-
gram, and I am pleased to learn that the
President is now supporting such an ap-
proach to our farm problems. Such a
program is included in my bill, and I
shall do all that I can to see that such a
plan is adopted. However, the President
fails to recommend corrective legislation
necessary to return the freedom to the
farmers producing crops that he says
they should have. My bill does this. I
would, for example, eliminate all market-
ing quotas and allotment programs for
wheat and feed grains and give the
farmer the freedom to plant on his own
land what he wants without fear of
penalty. A floor-rather than a cell-
ing-of the average world market price
during the preceding 3 years would
be available to all wheat producers and
our feed grains would have a floor of not
less than 90 percent of the average price
received by farmers during the last 3
years. The sale of CCC stocks at less
than 125 percent of the prevailing sup-
port levels plus reasonable carrying
charges would be prohibited. A program
patterned after these guidelines would
give our farmers the freedom they want
and the freedom the President has re-
ferred to in his message.
Mr. FINDLEY. Mr. Speaker, will the
gentleman yield?
Mr. LATTA. Yes. I will be very
pleased to yield to my colleague from
Illinois.
Mr. FINDLEY. Mr. Speaker, I would
like to commend the gentleman on his
statement and speak in support of the
legislation he has introduced. To me it is
a very potent measure which Is now be-
fore the Committee on Agriculture. It is
apparent from the President's statement
that he has expressed an Interest at least
in a part of this proposal, and I join the
gentleman in hoping that he will adopt
the entire proposal.
Mr. LATTA. I thank the gentleman
for his remarks. I need not point out
to the Members of the House that the
gentleman from Illinois [Mr. FINDLEY],
Is a member of our Committee on Agri-
culture and is one of Its most respected
(Mr. LAIRD (at !the request of Mr.
DON H. CLAUSEN i was granted permission
to extend his remark at this point in the
RECORD and to incldde extraneous mat-
ter.)
Mr. LAIRD. Mi. Speaker, In the
January issue of F$reign Affairs, there
is an outstanding trticle by the well-
known author on njlitary affairs, Han-
son Baldwin. Very appropriately en-
titled "Slowdown in the Pentagon,"
the article clearly said concisely reviews
the current state Of our defenses and
the decisions that lei: to our present con-
dition. Even more Important, It reveals
the thinking of th principally charged
with the responsibil y of those decisions.
It quickly becomes; apparent that the
thinking and dictate's of Congress have
been largely ignored.
Those of us who sIt on the committees
responsible for na onal security have
begun our hearings fo review new budg-
ets-and proposals. J urge all of my col-
leagues who are concerned directly or
indirectly with natitnal security to read
the very fine analysis by Hanson Bald-
win. Accordingly, it insert the article,
"Slowdown in the Pentagon," by Han-
son Baldwin, in the ttECORD at this point:
SLownowN IN, HE PENTAGON
(By Hanson, W. Baldwin)
In 1947, the "bible" of the Nation's mili-
tary c(ntractors-Arn ed Forces Procurement
Regulations--was a sltn volume about 100 to
125 pages long. Today, the AFPR, which
governs in minute dltail all those who do
business with the Pentagon, has expanded
to four huge volumes totaling something like
1,200 pages. with new; ones added daily.
Five to seven years a14o, according to a care-
ful statistical average k?ompiled by one major
defense contractor, it required 4 to 5 months
to execute a contract: from the time an ac-
ceptable price quotatl,n was received in the
Pentagon to the time the contractor received
the final document. Today, the same con-
tractor estimates that an average of 9 to 12
months is needed for die same process; a very
few may be completed In 30 days; some may
require 23 months.
Parkinson's law of bureaucracy-the less
there is to do the mote people it takes to do
it, and the simpler tie problem the longer
the time required for the solution-appears
to be operating In WI shington, particularly
to defense contracting There are many rea-
sons for this etate of airs.
Secretary of Defense Robert S. McNamara,
the apostle of cost-effectiveness these past
4 years, must share the blame for many of
them as well as the crtdit for some improved
management procedutas. But the lengthen-
ing delays in the devjrlopment and produc-
tion of new weapons hearted long before he
took office, and no oie man, no one cause,
is responsible.
A rough rule of thtmb used to hold that
it required about 7 ;years (in the United
States) from the glea*n in the eye of the de-
signer to the finished operational product.
This time span, which has been compared un-
favorably with the shad time required for
the development anti production of new
weapons in Russia. hats been steadily length-
ening, and there is nf) sign at the moment
that the process is being checked.
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CONGRESSIONAL RECORD - HOUSE
Even more important, there appears to have tional Aeronautics Space Council. Mr,
been in the first half of the 1960's a definite Ramey in a recent speech urged the Gov-
reduction, as compared to the 1950-60 pe- ernment to rid itself of what he called the
riod, in the evolution and production of new requirements merry-go-round. He pointed
weapons. The Republicans protest too much out that every new project had to be justified
when they allege that the Pentagon, under on the basis of military requirements, and
Mr. McNamara, has not produced a single that many promising developments-partic-
new weapons system. But it is at least true ularly in space-could never be pushed, or
that virtually all the major-and most of the even demonstrated, if development had to
minor-weapons systems in operation or in wait for the establishment of requirements.
development today (Polaris, Minuteman; B- Invention has never followed this path; the
70, TFX, or F-111; AR-15 rifle, etc.) were machinegun and the tank would still re.
i
d
l
-
f th
already in production, development or in pre-
liminary design and specification form back
in the 1950's. The Pentagon in recent years
has certainly instituted some much-needed
management reforms, effected some econ-
omies and added considerably to our ready
strategic strength and our conventional war
and general support forces. But it has prob-
ably canceled more development contracts
(the nuclear-powered aircraft Dynasoar; the
mobile medium-range ballistic missile Sky-
bolt, etc.). than it has initiated new ones.
Two principal and telling criticisms have
been leveled at the Pentagon's present pol-
icies, trends and procedures by scientists who
can be in no way accused of political pa-
rochialism.
Dr. James R. Killian, Jr., chairman of the
Corporation of the Massachusetts Institute of
Technology, cautioned recently against an
attitude that is too prevalent in and out-
side of the Pentagon-a belief that the tech-
nological revolution 16 over. No one in the
Pentagon has ever explicitly stated such a
belief, but the attitude of skeptical show-me-
ism widely held there acts as a very definite
brake upon the excited enthusiasm which
should energize new research projects. Mr.
McNamara's "whiz kids," complete with slide
rules and computers, brushed aside the fac-
tor of professional judgment or scientific
hunch when they took office and their em-
phasis upon "perfection on paper" and the
cost part of the cost-effectiveness formula has
definitely slowed the pace of military devel-
opment.
Behind this attitude in the Pentagon is
an even broader trend. Part of it is a belief
expressed by many scientists-notably by
Dr. Jerome B. Wiesner and Dr. Herbert F.
York in a recent issue of Scientific Ameri- Development of nuclear weapons and nu-
can-that disarmament, or arms limitation, clear engines is. the responsibility of the
is the only way to political salvation, and that yet the only users are the military, and
therefore continued technological 'military AECthey, develop the devices which carry war-
development worsens the actuation. _ This heads and the vehicles which use the pro-
somewhat simplistic viewpoint has had an puysion systems. Over the years, an effec-
increasing public and political appeal and live system of liaison by interchange of
indeed has its adherents in the Defense De- officers, by committees and other means has
as Rep es. And even so hardheaded
chat i cha a man made. the AEC, quickly responsive to military
as Representative vrman of needs
but the mere process of two-headed
,
the Research and Development Subcommit- and complicates the system.
tees of the House Armed Services commit- control slows fense Research and Engineering, Dr. Harold
tee and the Joint Congressional Atomic En- , LASV (low altitude supersonic vehicle) Brown, who in his new political role in the
ergy Committee, recently warned that "we provides an enlightening case history of how Pentagon has become a remarkably un-
are entering a leveling-off period, a plateau, many heads produce many purposes, and no adventurous scientist.
in the total dimensions" of the Govern- final results. LASV was once hailed as a often the President's Scientific Adviser,
ment's research program. This feeling of highly promising project. The AEC was to whose contacts with Pentagon and other
disillusionment on the part of scientists, and develop a nuclear-powered ramjet engine Government scientists cut squarely across
of fear of economic limitations on future and the Pentagon would use the engine to organizational lines, has also acted as a road-
breakthroughs in weapons research, comes power a pilotless atmospheric missile, ca- block to new developments. He exercises tre-
at a time when the military technological pable of indefinite flight (perhaps 10 times mendous power without either specific re-
revolution is far from finished. around the world) at 3 times the speed sponsibility or specific authority; therefore,
Despite our present great strength, Dr, of sound. The weapon was envisaged as a his intervention often not only delays but
Killian has said, we cannot "rest on our possible future successor to, or supplement confuses. The Adviser's great power stems
oars," thinking the race is won. "We may for, ballistic missiles in case the Russians largely from his White House status; unfor-
be only at the beginning of unexampled should develop-as they now appetr to be tunately around him has grown up a small
scientific and engineering achievement," he doing-an antiballistic missile. to this but important office manned by men more
notes, and the "high confidence" and sheer instance the AEC, after overcoming many impressive as bureaucrats than as scientists,
size of the present research and development technical difficulties in its part of the job, who represent, in effect, another echelon of
effort may "obscure weaknesses still present was on the verge of outstanding success and delay. The old bogey of "no military re-
in our program and lead us once again into was ready to flight-test the engine, when Mr. quirements" has been invoked again and
complacency." McNamara, reversing prior judgments-and again by the Defense Department, with tacit
The second major criticism leveled at pres- as Dr. Edward Teller put it, for "the sake of support of scientists outside the Department,
ent weapons development policies comes an economy that amounts to less than 1 per- to stifle projects aborning particularly in
from James T. Ramey, Commissioner of the cent of the Air Force budget"-canceled the the military space field.
Atomic Energy Commission, and Dr. Ed- project after a prior investment of nearly The Central Intelligence Agency is another
ward C. Welsh, acting chairman of the Na- $200 million. Dr. Teller was caustic: "i organization which has gradually usurped
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r
eve
op
e
remain blueprint dreams i
ment had awaited the specifications of clear-
cut military requirements. One cannot state
a requirement for an inventor's hopes. As
Dr. Welsh has pointed out, "If we had re-
quired a clear-cut prior mission, we would
probably have developed no airplanes, no
spacecraft, or, in fact, no wheel."
Other causes for the delays in develop-
ment and production of new weapons have
their roots in the past, well prior to the
present administration, and the responsi-
bility extends far beyond the Pentagon. A
$50 billion annual defense budget attracts
the eager interests of many government
agencies. _
Defense Department has no direct authority,
including the Atomic Energy Commission,
the National Aeronautics and Space Admin-
istration, t__Central Intelligence Agency,
the Bureau of the Budget; congressional ieg
complexity of the Armed Forces; overcentra-
lization and overregulation in the Penta-
gon; too much service rivalry and not enough
service competition-all these and other fac-
tors have become builtin roadblocks in
defense development and contracting.
Big government itself is undeniably one
of the roadblocks to speedy performance.
Everybody must get in on the act, particu-
larly if a new development project involves
sizable sums of money or promises numerous
jobs, or involves systems or components
which must be provided by foreign govern-
believe this is the biggest mistake we have
made since the years following World War
II when we failed to develop the ICBM.
Whether Dr. Teller is correct or not in his
assessment of the importance of such a
weapon, the fate of LASV is illustrative both
of prevalent negativistic Pentagon philos-
ophy about new weapons systems and of the
difficulties of developing new systems under
hydra-headed controls.
The creation of the National Aeronautics
and Space Administration has provided an-
other type of problem. NASA stemmed from
the same kind of political philosophy that
nurtured the AEC. Atom bombs were too
powerful to allow the generals to play with
them; ergo, a civilian agency must control
nuclear power-and it must be channeled
away from nasty military purposes. The
same scientific-political pressure groups that
advocated this concept helped (with Presi-
dent Eisenhower's approval to establish
NASA, again on the theory that space ef-
forts must be controlled by civilians and
that space must not be used for military
purposes. The pragmatic absurdities of
this point of view are now self-evident; nu-
clear power so far has been more impor-
tant in the military weapons and military
propulsion field than in any other way, and
the most important applications of space
technology have been military-reconnais-
sance satellites, weather satellites, missile-
warning and navigational satellites.
But in the case of NASA, the problem has
been compounded. For while the AEC is
essentially a research and production agency,
NASA is an operating agency as well. From
a small highly efficient aeronautical research
agency, it has now expanded into a gargaa:i-
tuan multibillion-dollar empire, with ten-
tacles all over the country, managing the
biggest program on which the United States
has ever embarked-to place a man on the
moon.
In its early years, NASA was sluggishly if
at all responsive to military needs, and the
Pentagon itself was inhibited from any ef-
fective space developments (though, curi-
ously, the only effective space boosters avail-
able were military ballistic missiles). Grad-
ually the liaison, due to Dr. Welsh and others,
has been greatly improved. Numerous mili-
tary officers, active and retired, now hold
some. of the most important positions in
NASA, and in addition the Armed Forces
have furnished most of the astronauts and
by far the most important part of the fa-
cilities and services used by the agency. The
two-headed control still offers difficulties, but
today the main stumbling blocks to the rapid
development of military space projects are
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O1~+I ESSIONAL RECORD - HOUSE February 4
some of what were once primarily military
functions. Two factors-the creation of the
Agency and its tremendous Increase in power.
and the creation by Mr. McNamara of a De-
fense Intelligence Agency outside and above
the service chain of command, and directly
responsive to him-have greatly reduced the
importance of the now emasculated service
intelligence agencies--G-2. A-2, and the Of-
fice of Naval Intelligence. The service chiefs
no longer sit as members of the U.S. Intelli-
gence Board, the governing pI II Mng
organ of'the defense community. In opera-
tions as well as in procurement the results
is still another proliferation of agencies and
committees. The fiasco of the Bay of Pigs--
a military operation run principally by the
CIA instead of by the Pentagon-is one ex-
ample of the kind of problems this expansion
of the executive department can produce.
And until recently the V4&-not the Army-
was operating the Army's own special forces
counterinsurgency troops In South Vietnam.
The new centralized organization of intel-
ligence can also affect weapons procurement.
for military requirements must be measured
in part against Soviet capabilities; If the
centralized control of intelligence reduces
those capabilities, obviously force levels and
weapons requirements are altered. This is
not an imaginary problem. For instance.
the strength and speed of mobilization of the
Soviet Army has been sharply reduced. In
the Pentagon's Intelligence estimates, during
the McNamara administration.
The Bureau of the Budget with its per-
vasive influence over the source of all power-
the dollar-has now developed military "ex-
perts" who literally can doom a weapons
system or foster Its growth. Even Congress'
watchdog-the Comptroller General-has be-
come his own "expert" on tactics and mill-
tary supply.
Thus the "advice"-and the actual con-
trol-exercised on military projects by exec-
utive agencies outside the Pentagon is
sweeping but almost completely negative.
They delay and they criticize and they inT
hibit; they do not expedite.
Congressional legislation and executive
regulation complicate, restrict and delay
research and procurement contracts. The
contractor must comply with hundreds of
laws or executive orders. Accounting pro-
cedures, minimum wages, civil rights, veter-
ans' preferences, subcontracting, profit
limitations and so on and so forth, all are
roadblocks to speed. The Armed Forces
procurement regulations reflects In its bulk.
size and complexity how social, political and
economic considerations, as well e.g those
that are military and technical, influence
the awards of contracts?
Economic considerations-the need, for
instance, to funnel defense contracts into
depressed areas-and political pressure-the
need to win an election or placate a pressure
group-play their part In consideration and
delay in contracts. Normally, as the TFX
investigation brought out, no major defense
contract is awarded without Presidential ap-
a AFPR regulations require the proposals
of the contractor to be reviewed before sub-
mission by engineering, pricing, auditing,
data, legal, civil rights, subcontracting and
many other experts, and in turn various
Pentagon and government agencies must re-
view the proposals for compliance. Even so,
AFPR regulations are sometimes vaguely
worded. A Congressional investigating sub-
committee recently requested the Depart-
ment of Defense to alter those regulations
dealing with employee health and recreation
expenses. The wording of some of the regu-
lations permitted the charge-off of losses
for operating factory cafeterias, and eoi4-
tractors could also charge cocktail parties
to the taxpayer if they were billed as "em-
ployee welfare."
proval,-and the Democratic (or as the case titban, In the happi
tunity to urge contractual rewards to the cored by the then
party faithful. The F-111 (TFX) contract which the United
tape---lest growed" as part of big Govern-
ment and a big defense budget.
11
But the Major causes of recent delays are
to be found in the Pentagon itself, and they
stem from the overcentraltzed organization
established by Mr. McNamara and the at-
tempts made to achieve perfection on paper
before any steel is bent.
Central lzation-"unification," the public
calls It-has been steadily Increasing, par-
ticularly since the passage of the 1958 modi-
fications to the National Security Act. But
Mr. McNamara has used the power every Sec-
retary of Defense has always had to a far
greater extent than any predecessor. There
is no doubt that be has run the show. Any
major contract must be approved by him;
even relatively minor modifications must
pass the gauntlet of his numerous assistants.
The checkrein Secretary McNamara has
used were, without doubt, needed to halt the
proliferation of unneeded weapons systems
and the expenditure of billions on projects
that turned out to be "duds" or duplications
of others.
It Is an axiom of sound military research
practices that in the early stages two or more
parallel lines of development should be fol-
lowed leading to the same end-a weapons
system of given characteristics. In case an
unexpected engineering problem of insuper-
able difficulty is encountered in one develop-
mental effort, the second may offer an al-
ternative. But to avoid unnecessary dupli-
cation and expense once the teething troubles
are over one of the two lines should be aban-
doned and full efforts concentrated on the
more hopeful one. In the pre-McNamara
era this decision was often left until too late.
This was the case, for Instance, when the
Air Force developed the Thor intermediate-
range ballistic missile and the Army de-
veloped Jupiter. Because of service rivalries
and pressures, both missiles were developed
to final "hardware" stage and both were pro-
duced In small but expensive quantities, al-
though one virtually duplicated the other
and either could have done the job of both.
Mr. McNamara, therefore, had some justifica-
tion for his show-me attitude and for the
elaborate system he has established of evalu-
ating and analyzing all new projects. But
he or "the system" has overcompensated.
The cost part of the cost-effectiveness form-
ula has been emphasized and underscored at
the expense of speedy development and new
ideas. Never in the history of competition
have so many been able to say no, so few to
sav Pea.,
in the past, technological development and
research and procurement contracting were
largely decentralized; the Individual services
were responsible to a major degree for their
own weapons development. Service compe-
' Management experts and contractors have
pointed out that the exercise of centralized
control by the Department of Defense over
the services requires Information and reports
from the services. The self-generating and
self-defeating nature of the workload im-
posed becomes apparent. The tighter and
more centralized the control, the more re-
ports that are required. The more authority
taken away from the working level, the more
paperwork that Is required from those at
the working level to back up their dimin-
ished authority.
st sense, produced the
gins (sponsored by the
tates fought and won
air. One without the
en incomplete; service
both.
was required, the serv-
ned the characteristics
ie specialized missions
etitive contracts were
Ing companies were 11
production contract ,
who built the best p,
mined in the air.
ions between compet-
eld, with the big payoff
?oing to the contractor
lane, as actually deter-
The services form ?Iy had, within overall
policy and budget 1 itatlons, a considerable
degree of autonomy, , and weapons develop-
ment and procuremg1~tt were largely decen-
tralized. What can be done when redtape
is cut, authority 4nd responsibility are
coupled, and organlzation is decentralized to
the working levels IsIshown by the produc-
tion of the Polaris -missile and the A-i1 air-
craft. The highly successful and extremely
complex Polaris was ! pushed to completion
as an operational wea)mn in about 3Y2 years,
well ahead of schedule. One man, Vice Adm.
WV. F. Raborn, was given authority and re-
sponsibility to cut acr organizational lines,
and he was fully bac d by the Navy and the
Department of Defe e. There was then no
such centralization the Pentagon as exists
now. The A-li, su ssor to the famed U-2
high flying reconna nee plane, was a secret
project, amply fund by the CIA and by the
Air Force. With ample fundss;`authority
and responsibility, 4nd a high degree of
autonomy. Lockheed ircraft was twice able
to produce-in the 2 and its successor-
world-beating aircraft in an abbreviated time
span. Similarly, Vice. Adm. Hyman 0. Rick-
over, who wore two hats-one Navy, one
AEC-sad whose authority therefore spanned
the bifurcated organs ational structure, was
able to produce what was essentially a new
weapons system with minimum delay. The
key to these and other successful develop-
ment and production! efforts is the coupling
of authority and responsibility at working
levels.
Today the entire picture has changed
violently. Under the!! law, separate service
departments must b~ maintained and the
services cannot be directly merged; Mr.
McNamara has merged them indirectly, as
John C. Ries points but in his new book,
A fourth service-th4 Office of the Secre-
tary of Defense-has ! been built up as an
all-powerful apex. 1$ is far more than a
policymaking and cootdinating agency, as it
was originally IntendejI to be under the Na-
tional Security Act o 1947; it administers,
operates, contracts, develops, procures, and
commands. Superagrncies, superimposed
over the service depar{ments, are answerable
only to the Secretar$ of Defense and the
Joint Chiefs of Staff.
Former service functions have been as-
sumed by the Defense Supply Agency, which
procures items commdn to the services; by
the Defense Intelllgentie Agency, the National
Security Agency (corimunications, intelli-
gence, and security; les and ciphers, etc.),
the Defense Oommunii ations Agency (com-
mon and long-lines Qommunications) and
the Defense Atomic St4pport Agency. These
have added new super-helons to the Penta-
gon bureaucracy.
Mr. McNamara came into office intending-
he let it be known-td streamline top eche-
lon Defense Department management. There
were some 15 Presidential appointees of the
"The Managements of Defense." Balti-
more: the Johns Hopl~ins University Press,
1964.
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1965 CONGRESSIONAL RECORD - HOUSE
rank of Assistant Secretary of Defense or because one staff person with no responsibil- the gauntlet between the Charybdis of Mr.
higher in January 1961 when he took office; ity but with authority had on his own de- Hitch and the Scylla of Dr. Brown; but many
there are 16 today. There were 11 Deputy cided" against the purchase. In March 1964, other high and low echelon perils confront
Assistant Secretaries of Defense 2 years ago; he testified before a House Appropriations it also. The McNamara administration has
there are about 30 today. Subcommittee on the question of nuclear established "for all large endeavors" (and for
The Joint Staff of the Joint Chiefs of power for a new aircraft carrier. The carrier some that are not so large) what it calls a
Staff was originaly limited by law by Con- itself was already approved by both Congress Project Definition Phase (PDP in Pentagon
gress to 100 officers, then increased to 400, and the Defense Department. The Navy and jargon). In Secretary McNamara's words,
a specific limit intended to prevent the de- most Congressmen felt that such a major "before full-scale development is initiated,
velopment of a super-General Staff; it now new investment should be as modern as the specific operational requirements and the
numbers the full 400, plus another 1,170 possible, and that it should be powered with cost effectiveness of the system must be con-
military and civilian personnel. The addi- nuclear reactors rather than with oil, even firmed, and goals, milestones, and time
tional personnel are labeled members of the though the initial cost would be consider- schedules must be established, * * * All the
Organization of the Joint Chiefs of Staff, ably greater. But the subject was studied to aspects of a development are tied together
a euphemism which permits evasion of the death. Admiral Rickover testified: "The De- into a single plan which defines, for Gov-and legal restriction (with both executive de- partment of Defense itself caused much of how ernment is to in dstiy alike
andhat is,wanted,
hpartment and Congress winking at the extra- the delay. They considered the Navy's re-it be gned legality). This staff, rich with rank, now quest to change it to a nuclear carrier for a will be used, what it will cost, and what
has three lieutenant generals or vice ad- year. The Department of Defense kept on systems and techniques will be used to
mirals assigned to head its more important asking for more information, more studies, manage program.
the' Pentagon's search
sections or divisions, and its director-a more analyses. New studies and analyses are The PDP represents
-
three-star general-may be given four stars underway now on nuclear propulsion for the for begins. "perfection There pis no doubt that aper" before any oetra is
if current suggestions are carried out, next carrier and other surface ships. These ion As one would expect with a gigantic staff studies never end, and we don't build ships." an attractive theoretical management tool,
which tends to generate its own paperwork, The services still have the legal responsi- but here is also not much doubt that it has
the workload of the Joint Chiefs of Staff bility for development and procurement but delayed development and procurement of new
the form of whether r or not ot he
the and steadily increases-from 887 papers or re- not the authority to implement their rfor end e- systems
ports about some action by the JCS in sponsibility. and executions has beensseparated is actually any better or less expensive, it is
1958 o double that at number today. planning
Sobout hlike a de e facto hierarchical gen- The Joint Chiefs no longer legally command still too soon to tell' The TFX (F-111) air-
Something
eral staff now exists, with the Chairman of anything; in the procurement field the serv- craft for the Air Force and Navy has been
the Joint Chiefs as a kind of overall Chief ices must often execute or carry out pro- programed and evaluated, analyzed, and
of Staff; and it busies itself with the ridicu. curement plans they have not formulated costed in detail on paper in the "PDP"; it is
the TFX still in the development stage and may not
i and. the ey as well as the crucial and (i.e. ) be operational for years to come .6 This
immp portant. (petty Joint t Chiefs, for Instance, In an admirable attempt to promote some
determine the details of the administration much-needed long-range planning in the plane, which can vary the sweep of its wings
and curriculum of the National War College Armed Forces and to control costs, Mr. Mc- (their angle to the fuselage) in flight, was
and other joint service schools and have Namara instituted what is called the 5-year forced into a preconceived and theoretical
even solemnly considered such important force structure and financial management mold in the PD phase. Mr, McNamara in-
matters as the advisability of establishing program, often dubbed "the book." "The sisted, against service objections, that Navy
an all-service soccer team which might com- book" tries to chart and elaborate all major needs and Air Force needs could be satisfied
pete with European all stars, and the num- details of service force structures (including by a single all-purpose plane, which could be
bers of cooks, and which services should sizes, types) and weapons systems required, flown from land fields and carrier decks on
furnish them, for a U.S. headquarters in being procured or developed, for the next 5
Europe.) Representative CHARLES S. Gus- years. Any significant change in "the book," a Stanley Bernstein, of the Raytheon Co.,
SEE, of California, has estimated that there including research expenditures, requires
consideration by hundreds of people, includ- in a paper "The Impact of Project Defini
s-
sp
are onownsible a to the of Office o34,000 f the of the employees Secretary o re-f ing the Joint Chiefs of Staff and the Secre- tion on Aerospace System Management," de-
and of of t the
Defense (exclusive of separate service de- tary himself, and an elaborate process of livered a at Institute the firs t of annual nnual meeting
he
partments in Washington). Statistics like justification, review, and approval all alon
g o ics
these indicate the revolutionary changes that the line from lowest to highest echelons. nautics (June 29-July 1964), used the
have occurred within the Pentagon in the Contracting, budgeting, progress on weapons mobile le medium-panrange pointed out ballistic that missile issile as a
as contractors
past 15, particularly in the past 4, years. As systems-and even lawn cutting-are pro-
Mr. Ries puts it, the dogma of centralization gramed and controlled in detail from various were expected to meet some 20 different re-
has triumphed. echelons of the Secretary's office, with quirements in a final PDP report, "one may
Many beside Mr. Ries worry about, the ca- streams of reports required. The services consider the several contractors who par-
pability of the present defense organization have complained that there is an inherent, ticipated in the MMRBM effort," he said.
to withstand the strain of real war or pro- built-in inflexibility and rigidity in this "Even prior to Department of Defense pro-
tracted crises. There have been some dis- system. gram authorization in January 1962, com-
turbing signs of faltering and confusion In addition to the Secretary of Defense and panies like Hughes, Thiokol, Martin, and
during the Berlin crisis, the Cuban missile his deputy and the Chairman of the Joint many others had been engaged in significant
crisis, and one of the Gulf of Tonkin inci- Chiefs and the 1,570 supporting staff, all of engineering efforts. When program -defini-
dents. the Assistant Secretaries of Defense have be- tion was authorized, originally as a 4-month
The present Secretary of Defense has a come, not de jure, but de facto, line operators effort, nine prime companies and many sub-
computer mind, capable of absorbing and re- as well as staff assistants. By virtue of contractors and suppliers geared for maxi-
cording immense quantities of detailed data. authority delegated by the Secretary, they mum effort. The 4 months stretched to
He also has ferocious energy. The combina- can and do cut across service lines and inter- almost 1 year. Motivation has to be main-
tion of these two qualities has enabled him, vene at the lowest echelons. Two offices, in tained. The present status of MMRBM is
so far, to deal with what Mr. Ries calls the particular, have a major influence in weapons clouded. [Since this paper, MMRBM has
minutiae that floods upward in a centralized development and procurement; unfortu- been virtually killed.] Yet the participants
organization. But even Mr. McNamara has nately they are to often delaying factors must retain a level of interest in order to
several times given evidence of strain, and rather than expediters. be ready to proceed if the program should
after Mr. McNamara, who? To decentralize The Office of the Assistant Secretary of become active. The maintenance of this
the Department so that the Secretary could Defense (Controller) has completely changed motivation is a major management chal-
have time, opportunity, and assistance to its character under the McNamara regime. lenge. The requirement for stated perform-
cope with major decisions would require a Charles J. Hitch, the incumbent, has, with ance incentive goals will, inevitably, lead to
decrease rather than an increase in the staff the Secretary's approval, applied the methods more conservative design and engineering
of the Secretary, something that no demo- he developed as an economic theorist at the during the program definition phase. * * *
cratic bureaucracy seems capable of accom- Rand Corp. to military strategic programing, PD contracts should not be used as a means
plishing. The cost effectiveness of various weapons of postponing difficult government decisions
The centralized organization of the Penta- systems is analyzed on paper by his office, or to decide what kind of military capability
gon and the accompanying growth of a bu- and he and his associates have a powerful is required."
reaucracy-particularly in the upper eche- voice in determining what kind of weapon r' The practice of "superstudy" is extending
Ions-explain in part the delays in develop- will do to what service. Dr. Brown, the beyond the Pentagon. The SST, or super-
ment and procurement fo new weapons sys- Director of Defense Research and Engineer- sonic commercial transport, is now called the
tems. In effect, responsibility and authority ing, does another analytical job, supposedly super-studied transport. Najeeb E. Halaby,
have been separated in the Pentagon. Vice from the technical and engineering feasibil- head of the Federal Aviation Agency, recently
Admiral Rickover gave several instances of ity point of view. His analyses are particu- said that "whether or not it ever flies, it will
delays caused by bureauracy in testimony to larly important in the research and develop- easily be the most analyzed project in the
a Senate committee in 1958. Purchase of ment stages. Government's history." If so, this is quite
nuclear cores was delayed for 6 months "just Any projected weapons system has to run a record.
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CONGRESSIONAL RECORD - HOUSE February 4
several entirely different types of missions-
The attempt to achieve this--in theory and
in blueprint form--required many months
before designs acceptable to both services
were evolved. The development contract was
finally awarded to Convair and the first of
the developmental TFX planes is nearing
completion. The Navy fears the finished
version may be too heavy for carrier decks.
The finest fighter in the world today. the
Navy's McDonnell F-4B Phantom II, which
the Air Force is now buying in quantity in a
slightly modified version, was the product of
flight competition back in the fifties when
the PDP in Its present rigid form was un-
heard of. and centralization in the Pentagon
had not reached today's extreme. The Mc-
Donnell and Chance-Vought aircraft com-
panies, in response to a Navy need for a
supersonic fighter of certain given specifica-
tions, were each awarded developmental con-
tracts for a small number of planes. The
results were then actually flight-tested In
competition. McDonnell won, but the
Chance-Vought product was also good and
was procured in more limited quantities for
specialized reconnaissance and other missions
for the fleet.
Many believe that this type of flight and
interservlce competition produces the best
dividends. One service evolves the plane or
engine and (after actual competition be-
tween several bidders) contracts for and pro-
cures the one best suited to Its own special-
ized needs. That one may well be adapted--
after it is operational-to the needs of an-
other service! Each gets the type it wan It;.
and a better plane or weapon than if it had
been forced, on paper, Into a common mold.
For there frequently are incompatible re-
quirements between service weapons systems.
and the attempt to provide "commonality" in
the interest of reducing costs may well in-
crease cost and reduce combat effectiveness.
It is true, of course, that major weapons
development projects have become far more
complex and costly than they were 10 to 20
years ago. In theory, the attempt of the De-
partment of Defense to define a project and
to refine it on paper before the steel is bent
has a great deal of attractiveness. Many au-
thorities who are loud in condemning the
delays of the PDP system do not believe it
is economically feasible--at least in all
cases--to return to the old era of actual
competitive service teats. Others, however,
think that competitive testing of several
different models, while more expensive Ini-
tially, may actually save money eventually,
chiefly because it may result in a better
product. Eugene E. Wilson, retired naval
officer and retired vice chairman of United
Aircraft Corp., wrote in the September-
October 1964 issue of Shipmate, the magazine
of the U,S. Naval Academy Alumni Associa-
tion, that "the current practice of awarding
production (and development) contracts to
a single supplier, on the basis of contract
guarantees unsubstantiated by competitive
prototype performance ? ? ? will not pro-
tect a hapless purchaser (the Government)
willing to risk his all on computation." The
fundamental difficulty with PDP is that it
has been invoked as an answer to all develop-
ment and production problems, that It Is in-
terpreted too rigidly, and that there has been
far too much dependence in the Department
of Defense on what is essentially a manage-
ment tool at the expense of judgment and
enginering and scientific Intuition.
It Is only fair to add that recently the
complaints of the services and of industry
have resulted in a recognition In the Defense
Department of some of these faults. A new
' There are countless instances of this kind
of adaptation. In addition to the liquid- and
air-cooled engines and the F-4B, the Air
Force, for instance, uses the Navy-developed
Sidewinder and Bullpup missiles.
and standardized procedure for rating, evalu-
ating and selecting the winning contractors
in a screening competition has been under
preparation for 2 years and is now being pre-
sented--possibly for final approval-to the
Office of the Secretary of Defense. For any
large projects (exceeding $100 million in pro-
duction costs) authority will still remain at
the highest levels; for smaller projects au-
thority may be delegated to lower echelons.
The procedure may---but probably will not-
lessen the timelag; certainly It will not
change the recent emphasis on "perfection
on paper."
In the program definition phase of weap-
onsdevelopment three high hurdles, In addi-
tion to countless evaluation procedures,
cause many projects to stumble and fail.
One In the eruption of interservice rivalry
Instead of-in the best sense- in terserv lee
competition. A proposal for a new weapon
or aircraft by one service Is now picked to
pier-as and studied on paper by all services
before even a minor development contract Is
approved. Now that their former degree of
autonomy is restricted and actual develop-
ment competition discouraged, the services
know that the PD phase offers a now-or-
never chance. Each service may produce a
different concept or a different set of desired
performance figures; a long hassle ensues
to try to put them all into one weapons sys-
tem. This occurred, notably, in the case of
the TFX: It is happening now with the new
Coin (counter-Insurgency) aircraft which
the Marines want to develop. The result Is
delay, sometimes a compromise as to per-
formance.
A second factor causing delay and dtfncul-
ties is the attempt by the Secretary's nu-
unerous assistants to eliminate what they call
goldp)ating. or unnecessarily high perform-
ance figures or standards. The attempt is
laudable, but it is sometimes carried to ex-
tremes, and It has been difficult, as Adm.
George W. Anderson, former Chief of Naval
Operations, pointed out, for men In uniform
to adjust to the Idea that a 10-mile-an-hour
speed differential between our own aircraft
and enemy planes may not-in the eyes of
the Department of Defense-be Important.
To a pilot, that 10 miles an hour, even
though costly in terms of dollars, may be the
difference between life and death.
It is In the PD phase, too, that the old
bogey of "no operational or military re-
quirement" becomes a major obstacle to
weapons development. It is invoked at both
high and low levels. Mr. McNamara has
been rigid--though with some signs of a
slight relaxation recently-about the state-
ment of specific needs before development
can start. The "operational requirement,"
as an experienced naval officer puts it, "is
another of the paper obstacles which are
intended to Insure proper planning but
which, when operated by people who have
no real knowledge of the problems Involved,
frustrate progress."
In the military exploitation of a new med-
ium, like space, it is completely impossible
to define. In the terms required by the
PDP evaluations, the need for, or the per-
formance characteristics of, a new vehicle.
How can even a prescient scientist predict
what usefulness a manned orbiting labo-
ratory will have? Yet the invocation of
"no specific operational requirement" has
delayed Air Force development of this highly
important new project for at least 2 to
3 years.
Representative Carr HoLrrsz a'a Military
Operations Subcommittee of the House re-
cently gave Its view of what's wrong with
the Pentagon. After a thorough study of
Mr. McNamara'e protracted efforts to merge
military and commercial satellite systems,
the subcommittee reported that 2 years had
been wasted. It said: "We still detect un-
certainty and overeconomising in the De-
fense Department approach ? ? I there has
been overmanagent it and underperform-
anee ? ? ' toa layers of supervision,
the lack of clear-c t responsibility
and sluggish channels of ? ? * communi-
cation."
Senator JOHN S xrs, in common with
many others, has d led the tendency to be
negative, to object, o try to refine require-
ments in too much 3detaiI, to evaluate and
study too much. Sofas weapons systems, he
has said, "have litrally been studied. to
death." He cites tie B-70 (which dates
back In inception to,1954) as a prime exam-
ple of what happen to a weapons system
development "when it is subjected to re-
peated stops and s its and when there is
not a strong, orderly 4nd continuous program
to bring it to com !etlon." This bomber,
designed for long-ra ge, high-altitude flights
at three times the s ,eed of sound, has en-
countered many tee nical difficulties and Is
well behind even a evised schedule. This
was made certain by toff-again-on-again pro-
grams in the Penta on and by the multi-
layered, centralized 4rganizatlon there.
Before a final co tract for a project is
signed and actual ievelopment starts, an
average of at least 501 signatures or approvals
is required-somet es as many as 100 to
200. Some indlvidu9ls, required by legal or
administrative reaso(ie to sign twice, have
had to be briefed vice; by the time the
second signature w needed they had for-
gotten what the co tract was about.
It is true that cen ralization in the devel-
opment and procur ment field, epitomized
by the 5-year force tructure and the pro-
gram definition ph a+, was In part the out-
growth of inadequate management by the
services of some res}arch and development
contracts. It was lso the result of the
failure of past Sec etaries of Defense to
exercise the power t ey have always had by
eliminating-not se vice competition-but
duplicatory and unnecessary service rivalry.
But the cure has roved worse than the
disease.
Healthy service c mpetition can be en-
couraged and unhea3thy service rivalry can
be discouraged by- i
1. Abandonment ok attempts-keyed pri-
marily to costs, not; effectiveness-to force
service weapons eye ms into "all-purpose"
molds. "Commonal y" develops naturally
from actual technol gical accomplishments,
not from "PDP'a" or paper plans.
2. Return, insofar possible, to competi-
tion in hardware rat er than competition on
paper. The end pr ct Is almost certain to
be better, and uitl tely may cost less,
3. Sponsorship, wt An a service, or by two
or more services, of mpetitive research and
development projec , all having a common
goal, but each folio ig different technologi-
cal paths to that go I.
4. Definite selects t by the Defense De-
partment at the carli at possible stage of the
best project; cancell ion of the others.
The key lessons or tomorrow are two.
Responsibility and ithority must be cou-
pled at working 1ev s in the management
of research and devel pment and production
contracts. And there must be a much higher
degree of job stabs ty and continuity in
management than t e rotational policies of
the services have is
e possible In the past'
'II
Mr. Ries. whose st dious book on defense
organization cannot to accused of service or
political partisanshl quotes Ernest Dale as
writing In the Ameican Economic Review
' As Representative MdmvIN PRicE notes, one
reason, for example, that the Army (nuclear)
reactor program (a program for developing a
small portable nuclear reactor which could
provide power in remote areas) has fallen flat
on Its face Is that the Army kept transferring
out the managers of the program. There
were six different managers in 5 years.
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CONGRESSIONAL RECORD - HOUSE 2011
for May 1961; "The greatest single bane of
management today is its growing absolutism,
its refusal to discuss or listen to different
opinions." Mr. Ries declares that "fantastic
though it may seem, defense reformers have
succeeded in turning the calendar back 60
years."
Whether one agrees with this strong state-
ment or not, there can be no basic disagree-
ment with the testimony given to the Senate
Armed Services Committee in 1949 by Fer-
dinand Eberstadt, one of the most perceptive
students of defense organization. He said,
"From shattered illusions that mere passage
of a unification act would produce a military
utopia, there has sprung an equally illusory
belief that present shortcomings will imme-
diately disappear if only more and more au-
thority is conferred on the Secretary of De-
fense, and more and more people added to his
staff. * * * I suggest that great care be
exercised lest the Office of Secretary of De-
fense, instead of being a small and efficient
unit which determines the policies of the
Military Establishment and controls and di-
rects the departments, feeding on its own
growth, becomes a separate empire."
Today the separate empire exists. Parkin-
son's law must be reversed if the Pentagon
is to stop "feeding on its own growth" and
if ideas, weapons development and imagina-
tive policies are to be encouraged.
TEXTILE MILL MARGINS BIGGEST
IN 19 YEARS
(Mr. FINDLEY (at the request of Mr.
DON H. CLAUSEN) was granted permission
to extend his remarks at this point in
the RECORD and to include extraneous
matter.)
Mr. FINDLEY. Mr. Speaker, during
consideration of the supplemental ap-
propriation last week for the U.S. De-
partment of Agriculture, I charged that
textile mills have not kept their end of
the bargain under which they were to
drop consumer prices to reflect the ad-
vantage they gain from multimillion-
dollar payments they receive in the new
cotton subsidy program.
Since then I have had communica-
tions from the industry both supporting
and challenging my charge.
The very proper and valid question still
remains: Have the textile mills, which
have already received over $300 million
in taxpayer-financed payments under
this new program, kept faith by drop-
ping their prices?
Today I received statistical informa-
tion supplied by the U.S. Department of
Agriculture which, frankly, is shocking
and suggests that the textile mills have
knot kept faith. The information is pub-
lished in Cotton Situation, CS-216, is-
sued for release February 1.
The purpose of the cotton legislation
was to make cotton more competitive so
farmers could have expanding markets.
Because the domestic price has been kept
TABLE 14. Fabric value, cotton price and mill margin, per pound, United States, by months, August 1900 to date
[In cents]
62
86
78
68
61
12
60
00
61.00
32. 52
34.84
36.89
35.33
27.64
30.34
23.94
25.23
25.27
33.36
August-------------------------------------
September -- --------------------------------
.
61.90
60
64
.
59.78
60
32
.
60.93
71
60
.
60.99
61
34
61.02
61.25
32.25
32.05
36.16
36.35
35.23
35.08
35.19
35.11
26.82
26.80
20.65
28.69
24.62
24.97
25.70
26.63
25.80
26.23
34.20
34.45
October-------------------------------------
.
98
59
.
60
45
.
60
68
.
00
62
81.48
31.99
35.46
35.10
36.27
26.98
27.99
24.99
26.58
26.73
34.80
N ovember ----------------------------------
December -----------------------------------
.
58.81
06
58
,
60.54
60
63
.
60.67
55
60
.
62.29
62.34
62.27
--------
32. 00
32.01
35.58
36.78
36.30
34.45
35.37
35.47
27.30
26.61
26.05
24.96
24.85
25.37
25. 10
26.92
26.87
34.97
January -------------------------------------
February -----------------------------------
.
67.78
64
57
.
60.76
81
07
.
60.47
49
60
62.40
62
45
--------
--------
32.41
33.32
35.82
35.98
35.66
35.96
35.65
35. 58
25.37
24.32
24.94
25.09
24.81
24.54
26.85
26.87
March - - ------------------------- ----------
.
57
46
.
61
23
.
26
60
.
00
62
--------
33.46
35.85
36.08
35.63
24.00
25.38
24. 18
26.37
April---------------------- -------- ----------
.
54
57
.
19
61
.
00
60
.
61
62
------
33.86
36.13
36.16
35.67
23.68
25.06
23.84
25.95
May----------------------------------------
J
-
.
57.60
.
61.24
.
60.11
.
60.87
--
___-_-_
34.09
36.34
35.86
35.76
23.51
24.90
24.25
71
4
25.11
35
25
---------------------
une------------------
July----------------------- -------------
57.88
61.29
60.28
60.95
--------
34.45
36.19
35.57
35.60
23.43
25.10
2
.
.
Crop-year-average4___________________
artificially high, in recent years the U.S.
cotton industry- has been losing out to
manmade fibers and to cotton textile
imports.
The Cotton Situation bulletin reports
that cotton textile imports have trended
upward in the months since the new
cotton program began. Meanwhile, cot-
ton textile exports have remained below
the same months in 1963.
Exporters of U.S. textiles, so the offl-
cial report states, "are finding it more
difficult to sell in foreign markets be-
cause of first, rising prices for domesti-
cally produced goods, resulting in part
from inventory demand; and second, the
elimination of equalization payments
under the cotton products export pro-
gram."
The same bulletin reports "cloth prices
slightly higher." It continues:
Prices paid by mills for cotton used in the
20 constructions have trended upward in
recent months but not as fast as have cloth
prices. As a result, mill margins have con-
tinued to widen. -
The bulletin's statistics indicate fur-
ther that U.S. exports of both raw and
textile cotton are down.
What has happened? The statistical
table published on page 17, identified as
table 14, in Cotton Situation suggests
the answer:
I The estimated value of cloth obtainable from a pound of cotton with adjustments
for salable waste.
2 Monthly average prices for 4 territory growths, even running lots, prompt ship-
ments, delivered at group 201 (group B) mill points including landing Costs and brok-
erage. Prices are for the average quality of cotton used in each kind of cloth. Begin-
ning August 1964, prices are for cotton after equalization payments of 6.5 cents per
pound have been made.
You will note that fabric value has
held fairly steady throughout a 41/2-year
period. As of December 1964, it was
62.27 cents per pound, about the same
as a year ago-62.29.
However, the price of cotton to the
mills dropped sharply - during that same
1-year period, declining from 35.37 cents
a pound, to 27.30 cents-a decline of
more than 8 cents a pound. The mill
margin-the gross profit per pound-
therefore jumped from 26.92 cents to
34.97 cents-an increase of more than
8 cents.
Curiously, the increase in mill margin
from the month before the new mill-
subsidy program became effective-July,
25.35 cents-to the month after. it be-
came- effective-August, 33.36 cents-is
2 Difference between cloth prices and cotton prices.
4 Starts Aug.1 of the year indicated.
Source: Cotton Division, Agricultural Marketing Service.
8.01 cents, almost exactly the amount
of reduction in the price of cotton.
Meanwhile, fabric prices started a new
upward climb, instead of going down.
From this, it is not unreasonable to
conclude that the multimillion pay-
ments to the mills went into net profit
rather than into lower prices on finished
products.
After receiving the bulletin from
USDA I checked with the Department
and learned that since the new subsidy
program began, the cost of cotton to the
mills has dropped to the lowest point
since the Korean war period 19 years
ago. Likewise, mill margins are at the
very highest point since the Korean war.
What of the plight of the cotton
farmer? Is he better off as the result
of this program? Far from it. The
farmers who produce over 70 percent of
the cotton are worse off, incomewise.
Even the small producer, who has re-
ceived a special direct payment under
the program is only slightly better off
incomewise. When the plight of cotton
is measured from the standpoint of world
and domestic markets for U.S. cotton,
all cotton farmers are worse off.
Where are the champions of the cotton
farmer? -
This program certainly has not helped
the farmer. It has not helped the con-
sumer. Definitely it has helped the
profit situation of the textile mills.
To sum up, after more than $300 mil-
lion in handouts to textile mills, con-
sumer prices are up, U.S. exports of raw
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CONGRESSIONAL RECORD HOUSE February 4
cotton and textiles are down, and mills
are showing the biggest margins in 19
years.
AMENDMENT TO THE INTERNAL
REVENUE CODE OF 1954 TO PRO-
VIDE THAT CONTRIBUTIONS TO
FOREIGN CHARITIES BE DEDUCT-
IBLE FROM GROSS INCOME
(Mr. CURTIS (at the request of Mr.
DON H. CLAUSEN) was granted permission
to extend his remarks at this point in the
RECORD and to include extraneous mat-
ter.)
Mr. CURTIS- Mr. Speaker, I am in-
troducing today a bill to amend section
170(c) (2) of the Internal Revenue Code
of 1954 to permit a charitable contribu-
tion made to a foreign charity by a U.S.
taxpayer to be deductible for Income tax
purposes.
The nondeductibility of such contribu-
tions was brought to my attention by a
constituent and his wife who during the
past several years have made contribu-
tions to Protestant religious groups in
Japan. The constituent's father estab-
lished a mission in Japan in 1895 and
this mission today is known as the
"Church of Christ in Japan." A college
classmate of his wife built a settlement
house in Japan and both of these worth-
while organizations have received finan-
cial and moral support over the years
from these two Americans. These
Americans are quite interested in the
progress and work of these Japanese or-
ganizations and have generated a great
deal of good will and friendship for our
people. Deductions or gifts to these two
religious charities and similar organiza-
tions have been disallowed by the In-
ternal Revenue Service for the reason
that under the present law they do not
qualify for such treatment.
Section 170(c) of the 1954 code pro-
vides in part that for the purposes of this
section, the term "charitable contribu-
tions" means a contribution or gift to or
for the use of :
2. A corporation, trust, or community
chest, fund, or foundation-
(A) created or organized In the United
States or In any possesion thereof, or under
the law of the United States, any State or
territory, the District of Columbia, or any
possession of the United States.
After I looked into this matter I wrote
Mortimer M. Caplin, then Commissioner
of Internal Revenue, and he replied stat-
ing that the legislative background of
section 170(c) (2) of the 1954 code indi-
cates the intent of Congress that only
contributions made to "domestic" chari-
ties be deductible. He said this restric-
tion which was first enacted into the law
as section 23(c) of the Revenue Act of
1938 limits the deduction for contribu- called domestic organization requirement_ to domestic oment in 1936 and 1938,
tions to those made to or for the use of ELIMINATION or THE DOMr.9TIC USE the Treasury Depart Departatie nt believes that the
a domestic charity. In his letter he quot- REQUIREMENT limitation should no be maintained for
ed from the report of the House Ways As noted above, a corporation, under Ares- the strong eli administrative elimination of the eases. domestic Wg feel that
ion organization
and Means Committee on section 23(o) ent law, may only deduct a contribution to requirement, which would allow tax deduct-
of the Revenue Act of 1938, H.R. 1860, unincorporated donees If the gift Is to be ibis gifts to be mad directly to foreign
75th Congress, 3d session-1938-pages used exclusively within the United States or charitable organizations without providing
7
1 20, as 9 and follows, so wit: any of Its possessions. However, since the a domestic entity thro gh which the Internal
code does not specifically require gifts by a Revenue Service could Insure that the pro-
Under the 1936 act, the deductions of corporation to a charitable corporation to be vision of the income tax law allowing deduc-
charitable contributions by corporations is used exclusively within the United States lions for charitableganizations are fol-
limited to contributions made to domestic or any of Its possessions, the Service has lowed, would prevents the effective super-
institutions (see. 23(q) ). The bill provides taken the position that a gift by a corpora- vision over charitable funds expended abroad.
The exemption from taxation of money or a domestic organiza
revenue by its relief from financial burden cord with the congr
the benefits resulting from the promotion to gifts made by non
recipient, however, Is a domestic -organ iza- liar to that present
li
h
on, t
e fact that some portion of its funds of contributions b
is used In other countries for charitable and Accordingly
this De
,
,
other purposes (such as missionary and edu- objection to the rem
catlonai purposes) will not affect the deduct-
ibility of the gift.
The policy reasons cited for limiting the
deduction to domestic organizations might
have had some validity in 1938, but it sounds
almost strange In 1963, particularly when we
think In terms of our mutual security pro-
grams, the purposes of point 4, Peace Corps,
student exchanges, and so forth. It seems
to me that the time has come for the Ways
and Means Committee to again consider
these basic policy reasons established back
In 1938 to determine whether or not they
are still valid or whether or not some
changes should be made to more accurately
reflect our present policies and attitudes.
When I introduced this bill during the
last session, I received a report from Mr.
Stanley S. Surrey, Assistant Secretary of
the Treasury, giving me the Treasury's
views on this bill. I include that re-
port In the RECORD at this point:
TaEAsuny DaPARTMENT,
Washingon, D.C.. December 23, 1963.
Hos. Wu.sua D. MILLS.
Chairman, Committee on Ways and Means,
House of Representatives, Washington
D.C.
DEAR Ma. CHAIRMAN: This is in reply to
your request for the views and recommenda-
tions of this Departmenton H.R. 8367 (88th
Cong., 1st Bess.), entitled "A bill to amend
the Internal Revenue Code of 1954 to pro-
vide that contributions and gifts to foreign
charities shall be deductible from gross than corporations be :also restricted to con-
Income." tributions made to !domestic institutions
.
The bill, if enacted, would make two The exemption from taxation of money or
changes in the present provisions dealing property devoted to obi iarltable and other pur-
with Income tax deductions for gifts to for- poses is based upon the theory that the
eign charities. The first change would be to Government Is comRnsated for the lose of
second change would eliminate the present recipient, however. Is
language contained in section 170(c) (2) (A) tion the fact that son
which requires that all deductible contribu- Is used in other count
tions must be made to a charitable orga- other purposes (sucl
nizatlon "created or organized In the United educational purposes)
States or in any possession thereof, or under deductibility of the
the law of the United States, any State or Irrespective of the
ich activities are in ac-
saional grant of an in-
of section 170(c) (2)' (the domestic use re-
quirement).
SL IMINATION OP THE t DOMESTIC ORGANIZATION
REQ CEMENT
The second Chang which would be made
by the bill would to broaden the pro-
visions allowing d
contributions so as
by noncorporate don4,rs prior to the enact-
ment of the Revenue Act of 1938. The ex-
pressed Intent of t
upon income tax de
contributions to dos
Is present restriction
luctions for charitable
,estic charities, which
was enacted in that year with respect to
gifts made by noneoop~porate donors, was to
Insure that the United States would obtain
an offsetting benefit for the revenue loss
tributions to domestic organizations should
be deductible under? the Income tax law.
Thus. the report of ~ the Ways and Means
rmm financial burdens
ie have to be met by
public funds, and by
from the promotion of
The United States de-
gifts from foreign
proposed limitation is
above theory. If the
a domestic organ)za-
ie portion of its funds
ries for charitable and
as missionaries and
will not effect the
falidlty at the present
kvhich led Congress to
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