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ite future on the development of improved procedures and administrative relationships to insure that the organizational changes will make a maximum contribution to the efficient management of the Department of Defense.

The new chain of command, running directly from the President and the Secretary of Defense through the Joint Chiefs of Staff to unified and specified commands, has been established. All of the unified and specified commands had been transferred to the new command structure by January 1, 1959.

The force structure and missions of unified and specified commands have been approved.

The organization of the Joint Chiefs of Staff has been strengthened to provide the military assistance required for effective strategic planning and operational direction. The former committee system of the Joint Chiefs of Staff has been replaced by seven new major staff groups, including one for operations.

The functions of the Joint Chiefs of Staff and of the military services have been revised to reflect the new chain of command for the operational direction of the Armed Forces. The relationships between the major components of the Department of Defense have been reviewed and brought into line with the 1958 Reorganization Act.

A director of Defense Research and Engineering, Dr. Herbert York, has been appointed with the mission to assure that all scientific and technological resources of the Department of Defense are put to the best possible use. Because of the importance of this new position, I should like to take a minute or two to discuss it.

The Director of Defense Research and Engineering will supervise and coordinate all Department of Defense research and engineering programs. He will be responsible for providing effective leadership, eliminating unnecessary duplication, encouraging basic research, and developing an integrated research and development program covering all operational needs.

We plan to continue the Advanced Research Projects Agency. It will be an operating agency paralleling the research and engineering organizations of the military departments. The Director of this Agency will report to me administratively. However, his research programs will be subject to the supervision and coordination of Dr. York's office just as are those of the military departments.

Just for clarification, it was never intended that the Director of Defense Research and Engineering would, himself, set up the major laboratory and technical facilities for carrying on these research and engineering projects.

It was intended that he would do the directing and supervision but that most of the actual carrying on of this research and engineering would remain with the Services.

Now additionally, for those programs which are assigned to the Advanced Research Projects Agency, that Agency would serve in the same relationship on the projects assigned to them as the services do on theirs.

So we have now in the Department of Defense four agencies for carrying on research and engineering projects. But all of these programs are under the supervision and direction of the Director of Defense Research and Engineering of the Department of Defense.

If any further clarification of that is required, I will be glad to take care of it in any questions.

Mr. Holaday's job as Director of Guided Missiles has had two quite different aspects. One has been to monitor and supervise all research and engineering work in the field of guided missiles; the other has been to assure appropriate priority handling of all guided missile problems in connection with their transition from the research, engineering, and testing stage into production and procurement. The research and engineering responsibilities of the Director of Guided Missiles together with the personnel involved will be transferred shortly to the Director of Defense Research and Engineering. And this has already been clearly discussed and understood both by Mr. Holaday and Dr. York.

We will proceed with deliberate caution with respect to the priority and production responsibilities in order not to lose any of the momentum the program has developed. Therefore, for a time at least, Mr. Holaday will remain as a special assistant to me with the assignment to continue to handle those special aspects of the program which are beyond the research, engineering, and testing phase. He also will continue as Chairman of the Ballistic Missile Committee to coordinate and accelerate high priority projects.

Returning to other organizational steps we have taken, the charters of most ofthe major officials in the Office of the Secretary of Defense have been revised to reflect the provisions of the 1958 Reorganization Act and to enable these officials to work effectively as the principal functional staff assistants of the Secretary of Defense. The revision of the remaining charters will be completed in the near future.

The reorganization of the civilian secretariats of the military departments, to include the reduction from four to three Assistant Secretaries prescribed by the new Reorganization Act, will be completed in early February.

Operating methods in the Office of the Secretary of Defense have been reviewed and the reporting requirements of the military departments reduced. Nearly 200 joint Department of Defense committees have been abolished.

Directives have been issued to facilitate the transfer of officers between the military services and to establish new review procedures for promotions involving three- and four-star officers.

All of these measures have contributed to the development of an increasingly effective organizational framework for our Defense Establishment. The job ahead is to establish within this framework, by day-to-day contacts on all organizational levels, the management relationships that will improve the decision-making process, clearly fix responsibilities, and provide to all agencies of the Department a full understanding of the broad national requirements that determine our military policy. The attainment of this objective will provide the teamwork that is essential for the continued maintenance of an effective and, at the same time, eflicient defense effort.

Changes in the manner in which our fiscal year 1960 budget requests are presented reflect for the most part a rearrangement of appropriations for the Department of Defense in terms of major purposes rather than of organizational units. These broad categories are: (1) Military personnel; (2) operation and maintenance; (3) procurement;

(4) military construction; and (5) research, development, test, and evaluation.

This rearrangement will not change the basic manner in which funds are to be appropriated for the Department of Defense. Specifically, under each title or category funds will continue to be appropriated for each military department and there is no proposal to appropriate all funds directly to the Secretary of Defense. Furthermore, to facilitate consideration of the budget request, the House Committee on Appropriations is being provided with all the information necessary to effect complete comparability between the new appropriation structure proposed for 1960 and the current appropriation structure.

The 1960 budget proposes that funds for operation and maintenance activities of the Navy be provided under a single appropriation for "Operation and maintenance, Navy”--this being a consolidation of the io present appropriations for this purpose in the Navy. This would provide some additional flexibility for the Navy. Aside from this proposal the 1960 budget provides for no additional flexibility or transferability over what was approved in the 1959 Appropriation Act.

In order to present to the Congress a clearer picture of the effort to develop new weapons and equipment, to simplify administration, and to carry out suggestions made by the Appropriations Committees, certain funds formerly included in other appropriations, particularly procurement, are now included in the appropriations for research and development, the scope of which has been broadened to include test and evaluation. These appropriations will continue to be made separately to each military department, as in the past.

And I might say in summary on this question of the proposal for consideration by the Appropriations Committee of a new way in which appropriations be made, is that there is no intent in that, nor is there any likelihood of there being granted, any important additional flexibility to the Department of Defense.

The money is not intended to be appropriated other than to the services for the functions that are indicated.

This, in the opinion of the Department of Defense, was a proposal for consideration only by the Appropriations Committee of a way in which the Congress, itself, and the public could better understand the purposes for which this money is being appropriated. And if the Congress does not believe that, of course they won't appropriate it that way. But we feel as if it is our obligation to make such proposals to the Congress when we believe a better public understanding can be achieved. But there is nothing under the rug on this, Mr. Chairman, and members of the committee.

This is solely an attempt to try to reflect better to the people of this country just what their very large sums of military appropriations are going for.

The CHAIRMAN. Thank you, Mr. Secretary.

Secretary McELROY. Mr. Chairman and members of the committee, I said last year, “The Nation is prepared to meet the threat it faces today.” That statement is still true now in February 1959. Our forces are fully capable of carrying out their assigned missions and will continue to have this capability during the foreseeable future.

Our research and development programs are being pressed vigorously to make certain that the statement will be true regarding our future capability. It is always a pleasure to appear before a committee which is so thoroughly conversant with the problems of the Department of Defense. I thank you for letting me take so much of your time with this statement, and I shall be glad to answer to the extent of my ability, any questions you may care to ask me.

The CHAIRMAN. Thank you, Mr. Secretary.

Members of the committee, you will recall a few moments ago I stated that we worked out the hearings to proceed along the line, that when the Secretary had finished his prepared statement, then we would go in executive session and hear General Twining, whose statement will relate considerably to the prepared statement of the Secretary. Then, later on, either today or tomorrow or some other time, in a continuation of this hearing, we will have the Secretary back in public session to answer questions.

Now the committee will go in executive session.

All people in the room who have no relation to the Department of Defense and are not cleared by the Department of Defense are respectfully requested to retire.

(Whereupon, at 10:50 a.m., the committee proceeded in executive session.)

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ARMED SERVICES,

Washington, D.C., Tuesday, February 3, 1959. The committee met at 10:15 a.m., Hon. Carl Vinson (chairman) presiding.

The CHAIRMAN. Now, members of the committee, we get back now to our executive hearing.

This is highly classified information that is being revealed to you by General Twining.

Now it is necessary for me to go before the Rules Committee at 10:30, and I will ask Mr. Gavin to go with me.

Then I will ask Mr. Kilday to preside over the committee and to take the testimony in executive session. When the testimony has been completed in executive session, I will ask Mr. Kilday to have an open hearing with the Secretary of Defense.

I have a great many questions I am anxious to ask him, and ask him in public.

So, therefore, I am going to ask that the committee meet this afternoon at 2 o'clock.

Now, General Twining, you may proceed. (Reporter excused.)

(Whereupon, at 10:17 a.m., the committee proceeded in executive session.)

AFTERNOON SESSION
The CILARMAX. Now let the committee come to order.

I understand, members of the committee, from Mr. Kilda y that General Twining gave his classified statement this morning. Later on during our inquiry, if we find it necessary to call him back, why we will respect fully request him to reappear.

I think we should now open the hearing before the full committee, in open session, with the Secretary.

Mr. Secretary, I want to compliment you on your statement.

In general, it gives the committee firsthand information about the Department of Defense in a general manner. Perhaps it might be that you cannot go into into detail on certain questions that will be asked during the hearing this afternoon. And if you cannot, have no hesitancy to pass them over until we can have an executive session.

Now, at the outset, Mr. Secretary, I want to say that when the President submitted his budget message I read the proposed new method of appropriating funds. It caused me considerable concern. I addressed communications to each member of the Appropriations Committee and pointed out the dangers that I saw in it from the interpretation I placed on it.

I was happy to note from your statement that probably I was anticipating things that would not arise and that appropriations will be continued to be made to the separate services as they have in the past, is that correct?

Secretary McELROY. That is correct, sir.

The CHAIRMAN. I want to read this in the record. The Secretary says: This rearrangement will not change the basic manner in which funds are to be appropriated for the Department of Defense. Specifically under each title or category funds will be appropriatedI wish the reporter would underscore thisfor each military department, and there is no proposal to appropriate all funds for the Secretary of Defense.

I want to thank you for clearing that up. At that point I think it might be pertinent that I place in the record correspondence that I had with the Appropriations Committee, and in particular my letter to Mr. Mahon in response to one from him wherein I pointed outand I think this should be in the cognizance of every member of the committee that under any interpretation of the law the only way we can make appropriations to the Department of Defense is in three instances, which are specified in the statute.

The law makes it absolutely necessary to appropriate to the separate departments. I refer to the statutes in here, which are the statutes in reference: Nowhere in the law directly or by interpretation is there any authority to appropriate funds to the Secretary of Defense, except in three instances.

1. Appropriations to the Office of the Secretary of Defense for the immediate operation of that office with regard to salaries, office supplies and so forth.

2. Specific authority contained in section 203(b) of the Nationad Security Act which creates the Director of Defense, Research and Engineering.

3. The authority contained in Public Law 85, 325, with respect to Advanced Research Projects Agencyreferred to as ARPA.

Now those are the only three instances where I can find in statute that we have given the Appropriations Committee authority to appropriate directly to the Department of Defense. And I repeat, I am happy to note that the appropriation this year will continue to go as it has in the past, and that is to the military departments.

(Secretary McElroy nods.)

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