COMMENDATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00473A000500050007-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 18
• Document Creation Date: December 12, 2016
• Document Release Date: November 2, 2001
• Sequence Number: 7
• Publication Date: March 1, 1977
• Content Type: MF

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DDA 77-1096
k M R 971
MEMORANDUM FOR: Director of Data Processing
John F. Blake
Deputy Director for Administration
SUBJECT Commendation
1. Over the years, I have received many commendations
from other parts of the Agency and the community but the
one I have attached from the Director of Strategic Research
has to rank with some of the most expressive and laudatory
I have ever read and therefore worthy of special t ment.
Because of the extra efforts that were put forth b)
g
like to suggest you bring this to the attention of all
your office employees before an appropriate forum. I would
also like you to ensure that a copy of the attached be
placed in each of the respective employee's official file.
2. My personal thanks and congratulations for a job
well done go to each of them.
nificant savings anpower, I would
n si
John F. Blake
Attachment
Distribution:
Orig - D/ODP
,A'- DDA Subject w/cy of Att (DDA 77-0989)
1 - DDA Chrono
1 - JFB Chrono
1 - MJM Chrono
Att: Memo dtd 16 Feb 77 to D/ODP via DDA E DDI fr D/OSR,
subj: 0 erational Status Achieved for Strategic Cost
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A Dollar Cost Comparison of Soviet
and US Defense Activities
1966-1976
This report presents estimates of the dollar costs
of Soviet defense activities and compares them with
US defense outlays.
The military establishments of the Soviet Union
and the US are difficult to compare because they
differ considerably in missions, structure, and
characteristics. The common denominator used here
to measure the defense activities of the two countries
is dollar cost. The approach is to estimate how much
it would cost to produce and man in the US a military
force of the same size and with the same inventory of
weapons as that of the Soviets, and to operate that
force as the Soviets do. These estimated dollar costs
are then compared year by year with US outlays for
similar programs.
Such an approach can provide a general apprecia-
tion of the overall magnitude of the defense activities
in the two countries. Dollar cost data also provide
a means for aggregating dissimilar elements of each
country's military programs into comparable categories
and thus can show trends and relationships between the
two defense establishments that are difficult to dis-
cern and measure in other ways.
Price Base. The data presented here are expressed
in average calendar year 1975 dollars. Constant dollar
figures are used so that trends in the cost estimates
will reflect changes in military forces and activities
rather than the effects of inflation. The US data are
for fiscal years, while the dollar costs of Soviet
programs are for calendar years.
Comparisons. The definition of defense activities
used in this comparison encompasses those activities
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that in the US would be funded by the Department of
Defense (less foreign military assistance), defense
nuclear programs such as those funded in the US by
the Energy Research and Development Agency (ERDA),
and the activities of the US Coast Guard and the
Soviet militarized security forces (border guards
and internal security troops). Excluded from this
definition are space activities that in the US would
be funded by NASA, civil defense except for the pay
and allowances of uniformed personnel engaged in such
programs, and veterans' programs.
US Data. US dollar cost data are in terms of
outlays derived from the Total Obligational Authority
(TOA) series in The Five-Year Defense Program issued
by the Department of Defense in October 1976. Coast
Guard and Selective Service outlays and ERDA outlays
related to nuclear weapons and naval reactors are
included. The US data have been converted to constant
prices and have been adjusted to achieve accounting
coverage comparable with the dollar estimates made
for the USSR. The US figures in this report, therefore,
do not match actual budget authorizations or appropria-
tions.
reliability. The estimates of the dollar costs
of Soviet activities presented in this report should
be viewed as having a margin of error which could be
substantial for some items. Our confidence is highest
in the aggregate totals but is considerably less at
the lower levels of aggregation. Moreover, the
reliability of our dollar cost estimates varies from
category to category, depending on the reliability
of our estimates of the size and characteristics of
Soviet military forces and on the accuracy of the
cost factors applied to those estimates.
We place our greatest confidence in the investment
category--procurement of weapons and equipment and
construction of facilities--which makes up about one-
third of the total estimated dollar costs of Soviet
defense activities for the period.
Manpower costs, comprising about 40 percent of the
total estimated dollar costs of Soviet activities, are
the largest and most reliable component in the oper-
ating category. For other operating costs, repre-
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senting some 15 percent of the total dollar cost of
defense activities, both the quantity and quality of
information are less reliable.
The estimated dollar costs for Soviet RDT&E should
be regarded as significantly less reliable than those
for either investment or operating.
On balance, we believe that the overall dollar
cost estimate for Soviet defense activities is unlikely
to be in error by more than 15 percent. This judgment,
while informed, is nonetheless subjective and not the
result of statistical measurement.
Limitations. Because of the problems of comparing
such disparate activities, the uncertainties of the
Soviet data, and the organization of the US data, the
comparisons in this paper should not be considered
precise measurements. Any common denominator used
for comparative sizing is imperfect, and its limita-
tions must be understood in interpreting such com-
parisons. Any conclusions drawn from this dollar
cost analysis must be tempered by an appreciation of
what it does not do:
-- It cannot be used alone to draw inferences
about the relative military effectiveness or
capabilities of US and Soviet forces. Other
data, such as the size and technical charac-
teristics of the forces, the geographical loca-
tions of the two countries, their allies'
capabilities and requirements, strategic
doctrine and tactical concepts, morale,
command and control capabilities, and other
information must also be considered for such
judgments.
It does not measure actual Soviet defense
expenditures or their burden on the Soviet
economy. These questions are addressed by
different analytical techniques yielding
estimates of the ruble costs of Soviet mili-
tary programs.
It does not reflect the Soviet view of the
distribution of the USSR's defense effort.
The price structures in the two countries are
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substantially different. Additionally, neither
the system of accounts nor the structuring of
expenditures by military mission is the same
for the Soviet Ministry of Defense and the
US Department of Defense.
Index Number Problem. Finally, dollar cost cal-
"ulations tend to overstate Soviet military activities
relative to the US because of a basic measurement
oroblem common to all international economic compari-
~ons and known to economists as the index number
~)roblem. If Soviet decisionmakers were confronted
,iith the US dollar price structure that is used for
:cur dollar cost analysis, rather than the ruble prices
i:hey in fact have to pay, they undoubtedly would choose
i different and cheaper (in dollar terms) mix of man-
power and equipment. While we cannot measure the
i_iegree of overstatement that this consideration in-
a_=roduces, it clearly is not large enough to alter the
)asic conclusion that Soviet military activities over-
ll are growing and currently are significantly larger
._han those of the US.
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Dollar Cost Comparisons
Total Defense Costs
For the 1966-1976 period as a whole, the cumula-
tive estimated dollar costs of Soviet defense activi-
ties and US defense outlays are about the same. As shown
in Figure 1, however, the trends of the defense activi-
ties of the two countries are quite dissimilar. When
expressed in constant US prices, which measure growth
in real terms, the trend of the dollar costs of Soviet
defense activities is one of continuous growth through-
out the period, averaging about 3 percent a year. Growth
is evident in nearly all the major elements of the
Soviet defense establishment.
The trend of US defense outlays is in sharp con-
trast. Despite increases in current doZZar terms,
US outlays in constant doZZars show a continuous
decline after 1968, and since 1972 they have been
below the 1966 level. This decline reflects reduc-
tions in nearly every major component since the Viet-
nam buildup of the late sixties.
As a result of these diverging trends, the esti-
mated dollar costs of Soviet defense activities ex-
ceed US defense outlays by a widening margin in every
year after 1971. At about 120 billion dollars (1975
prices) the estimated costs of Soviet defense activi-
ties for 1976 are about one-third higher than total US
defense outlays. If pensions are excluded from both
sides--leaving only the costs of current defense
activities--the estimated dollar costs of Soviet
activities in 1976 exceed those of the US by about
40 percent.
If all personnel costs are removed from both sides,
US defense outlays exceed the estimated dollar costs
of Soviet defense activities by about 10 percent over
the 1.966-1976 period as a whole, although by 1976 the
Soviet level is about 30 percent greater than the US.
Alternatively, if RDT&E (for which estimates are con-
siderably less reliable than those for other activities)
and pensions are subtracted from each side, the esti-
mated Soviet figure in 1976 is about 35 percent higher
than that of the US, and the cumulative totals are
about the same.
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Figure
Total US and Soviet Defense Activities, 1966-1976
A Comparison of US Outlays and Estimated Dollar Costs
of the Soviet Activities if Duplicated in the US
Military Forces
Billion 1975 Dollars
120
1966
RDT&E
The dollar cost estimates reflect the cost of producing and manning in the US a military force of the same inventory of weapons
and size as that of the Soviets, and operating that force as the Soviets do. The costs for Soviet investment and operating are best
estimates, with possible error margins of 15 percent displayed. The estimated costs of Soviet RDT&E are derived in the aggregate,
using a less certain methodology, and should be viewed only as rough measures. For this reason, they have been excluded from the
totals and are shown separately. Military pensions, which reflect payments for past rather than present defense activities, have also
been excluded from the totals and are shown separately. The US defense costs are in terms of outlays based primarily on Department
of Defense Total Obligational Authority (TOA) in The Five-Year Defense Program, October 1976. The US data are for fiscal years,
and the estimated dollar costs of Soviet programs are for calendar years.
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Military Investment
The trends in the cost of military investment--
the procurement of weapons and equipment (exclusive
of RDT&E costs) and the construction of facilities--
follow closely those for total defense costs in both
countries. The dollar costs of Soviet investment in-
crease continuously over the period, driven primarily
by advanced weapons programs, particularly new air-
craft and succeeding generations of missile programs.
US military investment grew rapidly during the Vietnam
buildup and has declined steadily since 1968. Thus
the dollar costs of Soviet investment exceed US out-
lays by increasing proportions after 1970, and in
1976 are about twice the US level. For the 1970-1976
period, the Soviet total is about 50 percent greater
than that for the US.
operating Costs
Operating costs make up the largest share of the
total defense figure for both countries. US outlays
for operating military forces exceed the dollar cost
of Soviet operating activities until 1973. Since
then, the Soviet activity level has been higher in
dollar cost terms. For 1976, the estimated dollar
cost of Soviet. operating activities, exclusive of
pensions, is about 15 percent above US outlays.
Military Manpower
Military manpower trends parallel those for total
costs in the two defense establishments. Estimated
Soviet military manpower grows throughout the period,
increasing by more than 800,000 men between 1966 and
1976. Most of this is in the ground forces, although
there are important increases in strategic forces as
well.. The level of US military manpower has fallen
steadily since the peak of the Vietnam buildup in
1968, and in 1.976 is less than in 1966.
The Soviets have historically maintained a large
military force which has a broader range of responsi-
bilities than the US military does. In Figure 3, the
"USSR Total" line includes border guards, internal
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Figure 2
US and Soviet Investment and Operating, 1966-1976
A Comparison of US Outlays and Estimated Dollar Costs
of the Soviet Activities if Duplicated in the US
Total Defense Costs
(less pensions)
Dollar Cost of Soviet Activities and US Dollar Cost of Soviet Activities as a
Defense Outlays Percent of US Defense Outlays
1966 68 70 72 74 76 1966 68 70 72 74 76
Investment
50 50
20100
10 Note: Scale for this graph is significantly
different from others.
1966 68 70 72 74 76 1966 68 70 72 74 76
Operating
(less pensions)
250
1966 68 70 72 74 76
Cumulative 1966-76
us lr s r nt .,
USSR
Investment includes all costs for procurement of military hardware and for the construction of
facilities, but excludes RDT&E. Operating includes all personnel-related costs (with the exception of
pensions) and all costs associated with the operation and maintenance of weapon systems and
equipment.
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Figure 3
US and Estimated Soviet Active Military Manpower,
1966-1976
Million Men (mid year)
5
1966 68 70 72 74 76
The USSR total includes border guards, internal security troops, and construction troops, for which the US
Armed Forces have no counterpart. The lower USSR line excludes these men.
security troops, and construction troops--forces for
which the US has no counterparts. These forces are
excluded from the lower Soviet line, but even so,
Soviet military manpower in 1976 is about twice the
US total for that year.
Military Mission Comparison
Another way to compare costs of military activi-
ties is by the mission they are designed to support.
The mission definitions in this report accord with
the guidelines outlined in the Department of Defense's
Defense Planning and Programming Categories (DPPC).
Strategic Forces. Strategic forces include all
those forces assigned to intercontinental and periph-
eral attack, strategic defense, and strategic com-
mand, control, and warning. Over the 1966-1976 period,
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US and Soviet Major Missions, 1966-1976
A Comparison of US Outlays and Estimated Dollar Costs
of the Soviet Activities if Duplicated in the US
Strategic Forces
Dollar Cost of Soviet Activities and US Dollar Cost of Soviet Activities as a
Defense Outlays Percent of US Defense Outlays
50 400
Note: Scales may vary
10
General Purpose Forces
75
50 50
25
Support Forces
150
125
50
25
1986 68 70 72 74 76
Cumulative 1966-76
US
USSR
1005
Support
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Strategic General Purpose
10
125
100 us=ioir"
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Figure 5
US and Soviet Forces for Strategic Offense, 1966-1976
A Comparison of US Outlays and Estimated Dollar Costs
of the Soviet Activities if Duplicated in the US.
Billion 1975 Dollars
15
5 \ - .
Bomber
. e. ,?'-I{
Submarine
Billion 1975 Dollars
15
-
1966 68 70 72 74 76 1966 68 70 72 74 76
Note: The strategic offense mission is defined according to the US Defense Planning and Programming Categories of April 1976.
Minor adjustments have been made to attain comparability with Soviet data. Costs for pensions, nuclear materials for warheads and
RDT&E are excluded.
571874 1-77
the level of Soviet activity for strategic forces
measured in dollars has been two and one-half times
greater than that of the US. Estimated dollar costs
for Soviet strategic forces have greatly exceeded US
outlays throughout the period, with the difference
growing since 1969. In 1976, the Soviet level is
over three and one-half times that of the US.
Within the strategic force mission, Soviet forces
for intercontinental attack account for about 45
percent of the total for the 1966-1976 period. US
outlays for intercontinental attack forces, while
only half of the estimated dollar cost of the Soviet
forces, account for about 70 percent of US stra-
tegic outlays for the period. Soviet peripheral
forces, for which the US has no comparable force,
account for about 15 percent of the total Soviet
strategic mission.
Within the respective intercontinental attack
forces, the differing emphasis on weapons is re-
flected in the costs. Over 60 percent of the esti-
mated dollar costs of Soviet activities are for the
ICBM force, compared to only about 20 percent for
USSR
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the US. On the other hand, outlays for the US bomber
force comprise about 40 percent, compared to a Soviet
share of 5 percent.* While the Soviets exceed the
US level of activities for ICBMs and submarines in
every year of the period, the US outlay for bombers
is higher every year.
General Purpose Forces. General purpose forces
inclu e a 1 ground, tactical air, naval, and mobility
(airlift and sealift) forces. Over the 1966-1976
period, US outlays for general purpose forces exceed
estimated dollar costs of Soviet activities by about
10 percent. Since 1971, however, the Soviet level
is larger than that of the US--one-third greater
in 1976.
Within both the US and Soviet general purpose
forces, land forces take the largest share of the
cost. Outlays for US land forces decrease after 1968,
however, while the estimated dollar costs of Soviet
activity increase steadily. In 1976, the Soviet
level of activity for these forces, measured in
dollar terms, is about 80 percent greater than that
of the US.
The second largest share for both countries, in
terms of dollar costs, is for the naval forces. The
costs of these forces remain relatively constant for
both countries over the period. In 1976 estimated
dollar costs of Soviet activities are about 20 percent
higher than US outlays.
The US outlays for tactical air forces (including
naval attack carriers) are greater than the estimated
dollar costs of comparable Soviet forces. Soviet
activities are increasing, however, while US outlays
have been decreasing since 1968. US outlays in 1976
are about 20 percent greater than dollar costs of the
Soviet force.
Support Forces. The support forces include those
falling iw thin the categories outlined in the DPPC as
auxiliary forces, mission support forces, and central
* Backfire aircraft assigned to Long Range Aviation are included
in peripheral attack forces and those assigned to the Navy are in
general purpose forces.
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support forces. Included are military space programs,
the US Coast Guard, Soviet border guards, civil de-
fense, major headquarters, and all logistic support
activity. Over the 1966-1976 period, the US level of
support activities exceeds that of the Soviets by about
25 percent when measured in dollar terms.
For the US, support activities account for almost
50 percent of total defense outlays during the period,
while for the Soviets the share is about 40 percent.
In absolute terms, the US level of activity for
support has been declining since 1970, while the
Soviet level has been rising throughout the 1966-1976
period. The Soviet level surpasses that of the US
for the first time in 1974; in 1976 it is about 10
percent greater.
Comparison With Previous Estimate
Estimates of the dollar costs of Soviet defense
activities are revised each year to take into account
new information and new Figure 6
assessments of the size, US Total Obligational Authority
composition, and techni- and Outlays for Investment
cal characteristics of 1966-1976
the Soviet forces as well
as improvements in cost- Investment
ing methodologies. The
US data used for compara- 60
tive purposes is simi-
larly revised each year 50
to take into account
changes in The Five Year
. %%
ao
Defense Program. Both
the Soviet and US data 30
are updated annually to TOA
reflect the most recent 20 - ~` Outlays
price base possible. In
addition to those usual
changes, this year's com-
parison contains a redef-
inition of mission cate-
gories and a change in
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the basis of the US data from total obligational
authority (TOA) to outlay terms.
Principal Changes
A number of important changes have been made in
this year's comparisons on both the Soviet and US
sides.
-- The estimates of Soviet defense manpower were
completely reexamined during the past year,
resulting in an overall downward revision of
about 6 percent in the total manpower of the
Soviet defense establishment, including
civilians working for the Ministry of Defense.
This resulted in a reduction in estimated
costs of about $3 billion per year.
-- To remove an element of double counting in
previous estimates, costs for Soviet con-
struction troops have been excluded from mili-
tary personnel costs. These costs are more
properly captured in construction costs, which
are estimated directly and carried under invest-
ment costs. This resulted in an estimated
reduction of about $4 billion per year.
-- New intelligence information and improved
costing methodologies have caused numerous
changes in estimates of production and costs
of Soviet military equipment. On balance,
however, these changes had little effect on
the total dollar cost estimates.
-- The price deflators used to convert US data
from current to constant dollars have been
refined. The use of new deflators has, on
balance, raised the constant price costs,
with the largest effect in earlier years and
almost no effect in recent years.
-- Coast Guard and Selective Service outlays have
been included, adding about $1 billion per year,
to achieve better comparability.
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-- The change from TOA to outlays makes the US
data more compatible with the data used for
estimating the dollar costs of Soviet activi-
ties. For the period of this report, outlays
have averaged about 3 percent lower than TOA.
The difference, however, fluctuates in any
given year. Most of the difference is in the
investment category because money authorized
for investment in one year is generally spent
over several years. Investment TOA in 1976,
for example, is $3 billion higher than for
1975, but investment outlays decline almost
$1 billion because some of the authorized
amount will be spent in 1977 and later. (see
Figure 6.)
Changes affecting both sides:
-- This year the mission categories follow the
definitions outlined in the DPPC. This
revision provides mission categories that
are more familiar to US planners than those
used last year.
-- This year's comparison is in constant 1975
dollar prices instead of 1974 prices. The
change in base year results in an apparent,
not real, overall increase in dollar costs
for both sides throughout the period.
Effect of Changes on Comparisons
This years's comparison shows a somewhat smaller
difference in recent years between the dollar costs
of Soviet activities and those of the US. Last year
we estimated dollar costs of Soviet defense activities--
less military pensions--to be nearly 50 percent greater
than those of the US for 1975. In this year's compari-
sons the difference is closer to 40 percent, for the
reasons noted above. Our general assessment remains
the same in its essential aspects, however--cumulative
costs for the two countries for the period from the
mid-sixties to the mid-seventies are essentially equal;
the Soviet level began to exceed that of the US in the
early seventies; and the margin has increased steadily
since.
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