Mr. HARDY. As a matter of fact, I think the testimony in there will state that they had the same information and, if my memory is correct, it does so state, and if your statement is correct here today, Mr. Secretary, then somebody who testified before this committee before ought to come back here and change his testimony.

Secretary MCNAMARA. Mr. Chairman, we are talking about something we may not properly have identified, it is rather ambiguousMr. HARDY. That may be.

Secretary MCNAMARA. I would like to point out, if I may, that I read to the committee a moment ago from the commanders of unified commands, indicating that they are now receiving more information than they had before.

Now, the unified commanders are sources of estimates and their staffs are sources of estimates, and what they are therefore saying is that they now have more information as a foundation for those estimates than they had previously.

Mr. BATES. I think in executive session, in view of that last statement, which undoubtedly is correct, we also ought to get an idea of how many more people and what new equipment we have.

Secretary MCNAMARA. I would be very happy to discuss that.

Mr. HARDY. The House is going to be in session in just a few minutes.

I wonder, Mr. Secretary, could you come back this afternoon and try to see if we can finish up?

Secretary MCNAMARA. Surely; delighted to.

Mr. HARDY. Mr. Secretary, we have a few items left over. Mr. Bates has a conflict this afternoon. So maybe we could defer this to sometime later on in the hearing.

We will see if we can work out a mutually convenient time to get you back to finish exploring these points that we didn't quite conclude today.

Since the House is about to convene, I think this is a good time to adjourn, to reconvene tomorrow morning at 10, when we will take up the DSA and DCA.

Thank you very much, Mr. Secretary, and a little bit later on during the course of the hearings, we will be in touch with you, to try to work out a convenient time to get back together.

Secretary MCNAMARA. Thank you, Mr. Chairman.

Mr. HARDY. Thank you, sir.

(Whereupon, at 11:54 a.m., the special subcommittee was adjourned, to reconvene at 10 a.m., Tuesday, June 5, 1962.)

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON DEFENSE AGENCIES

INVESTIGATION, COMMITTEE ON ARMED SERVICES,

Washington, D.C., Tuesday, June 5, 1962.

The special subcommittee met at 10 a.m., Hon. Porter Hardy (chairman of the subcommittee) presiding.

Mr. HARDY. Let the committee come to order. We are glad to have General McNamara with us this morning to give us some information about the Defense Supply Agency. General, I see you have brought

some cohorts along to backstop you. I see you also have a very, very short statement. Will you just proceed, sir. The committee is very pleased to have you this morning.

STATEMENT OF LT. GEN. ANDREW T. MCNAMARA, USA, DIRECTOR, DEFENSE SUPPLY AGENCY; ACCOMPANIED BY REAR ADM. JOSEPH M. LYLE, USN, DEPUTY DIRECTOR, ROBERT MOOT, COMPTROLLER, AND CLARENCE SHORT

General MCNAMARA. Mr. Chairman, Mr. Bates, and Mr. Blandford, I am Lt. Gen. Andrew T. McNamara, U.S. Army, Director of the Defense Supply Agency.

I have with me Rear Adm. Joseph M. Lyle, U.S. Navy, the Deputy Director of the Agency; Mr. Robert Moot, my comptroller; and Mr. Clarence Short, of my office.

I have a very brief statement which I should like to read into the record and then, if you will permit me, have Mr. Short make a detailed presentation.

Last September I received word in Korea, where I was serving as deputy commanding general of the 8th Army, that I had been appointed by the Secretary of Defense as the Director of the new Defense Supply Agency.

In accordance with instructions, I reported for duty on October 1. For the next 3 months, assisted by a planning group which consisted primarily of military officers and civilians loaned to me by the military departments and the Office of the Secretary of Defense, I formulated plans for getting DSA into operation.

I am deeply grateful for the generous and willing support and cooperation the military departments gave me during this period, especially by loaning to me many of their most capable personnel.

On January 1, the Defense Supply Agency became operational. In addition to Admiral Lyle, my Deputy, and Mr. Moot, my comptroller, my principal staff assistants at headquarters are: Maj. Gen. Roy T. Evans, U.S. Army, Executive Director for Plans and Systems; Rear Adm. Charles A. Blick, U.S. Navy, Executive Director for Procurement and Production; Maj. Gen. Donald Hardy, U.S. Air Force, Executive Director for Supply Operations; and Maj. Gen. Francis Gideon, also of the Air Force, who is the Executive Director for Logistics Services.

Here again, I am indebted to the military departments for making these high-caliber assistants available to me out of their allotted general and flag officer spaces.

Briefly stated, the Defense Supply Agency's primary job is to act as the wholesale supplier of selected common supplies and services for the military services.

In doing this job, my first and foremost objective will be to provide effective logistic support to the military services, in war and peace. My second objective will be to provide that support at the lowest cost. In other words, although one of our objectives is economy, our most important job is to get the military services what they want, where they want it, and when they want it.

Now, Mr. Chairman, with your permission, and based on the suggestion of Mr. Blandford who has seen it, Mr. Short will give a presentation on the Defense Supply Agency, including a review of its historical background; a discussion of its responsibilities, organization, and relationships; and our plans for the future.

Mr. HARDY. Thank you, General. That would be fine to have Mr. Short give us that presentation.

Before he does, I would like to ask you just one question in connection with your statement. In the middle of the second page, you state very concisely the primary job of the Defense Supply Agency, "to act as the wholesale supplier of selected common supplies and services." Is Mr. Short going into detail concerning a definition of "selected common supplies and services," or would you do that now?

General MCNAMARA. I would prefer, if the chairman will permit, to let Mr. Short go through this. In this presentation, he does have a definition of common supplies and services which I think will fit into the presentation of the

Mr. HARDY. We will defer our discussion of that until his presentation. That is one that we are going to want a pretty good understanding of.

General MCNAMARA. I have a definition here, but I think it will be more visible to all of us through the presentation.

Mr. HARDY. Mr. Short. Mr. Short, just proceed, if you will. Mr. SHORT. Mr. Chairman, in discussing the Defense Supply Agency, we would like to cover briefly its background, how it was established; some organizational aspects, including external and internal relationships; some functional aspects, including DSA's responsibilities and its external relationships; progress to date; and a look at the future.

Earlier this year, in talking about the Defense Supply Agency, Secretary McNamara said:

One of the most productive fields for the economic application of centralized management is in the provision of common supplies and related services to all the military departments.

After a rather comprehensive study of this entire problem, we came to the conclusion that considerable economy and efficiency could be gained if all common supply management activities were consolidated in a single agency. Accordingly, a new Defense Supply Agency was established last year and placed directly under the Secretary of Defense.

Behind this concise statement was a long series of events, occurring over a period of several years, out of which evolved the Defense Supply Agency, or "DSA." I know you gentlemen are thoroughly familiar with these events. However, with your permission, we would like to review some of them briefly, because we feel that the major ones are essential to an understanding of what DSA is, why it was established, and its organizational and functional relationships.

Interest in how the military establishment should organize for the most efficient management of common supplies and related services dates back to World War I. It was suggested at that time to Mr. Bernard Baruch, who was Chairman of the War Industries Board, that one agency buy all military supplies for all the military services. Mr. Baruch rejected the idea.

However, since 1920 various congressional committees, individual Congressmen and other Government officials, both military and civil

ian; the Defense Department; the Bureau of the Budget; the General Accounting Office; special commissions such as the Hoover Commission; and other groups have been greatly interested in this subject. Many of these, including some prominant military men, notably Generals Somervell, Lutes, McNarney, and Collins, advocated, in some degree or form, the creation of a separate, consolidated supply agency in the Military Establishment. Others opposed this idea.

Mr. BATES. Who are they? Do you have their names?
Mr. SHORT. Those who opposed?

Mr. BATES. Yes.

Mr. HARDY. You gave us one who supported it, so I think it might be a good idea

Mr. BATES. Let's keep it balanced.

Mr. SHORT. Shall we submit them for the record?

Mr. BATES. Yes.

Mr. HARDY. We want to see it before it goes in there. Go ahead. (The following information was provided:)

OPPONENTS OF SINGLE SUPPLY AGENCY

Perhaps two of the best known instances of major opposition to a single logistic agency are to be found in the studies made under Admiral Richardson, the ranking member of a Joint Chiefs of Staff group, and by Mr. Ferdinand Eberstadt. Although the whole area of Defense unification was under consideration in both instances, the subject of a separate logistic organization was also examined. In both instances, opposition to such an agency was indicated in the case of a substantial number of military personnel.

Mr. C. E. Wilson, former Secretary of Defense, also opposed the establishment of a separate agency for common supply.

Mr. SHORT. Proponents of this idea felt that since many supplies were used by two or more military services, and since each military department procured and distributed these separately, there was duplication and overlapping which led to inflated inventories and overhead, crosshauling and backhauling, and concurrent buying and selling, interservice competition in procurement, and inadequate standardization, all of which they felt was wasteful of materiel, personnel, facilities, and money.

The opponents of the idea agreed that there were deficiencies. They believed these deficiencies, however, were correctable without creating a separate agency. Some of these urged more use of cooperative arrangements among the military services. Some urged greatly expanded use of the General Services Administration, and some urged expanded use of single service assignments.

During the period 1920 to 1947, numerous bills were introduced in the Congress to consolidate some logistic functions, and the procurement function was invariably included. In 1945 a Special Committee of the Joint Chiefs of Staff concluded that a separate supply agency should not be established as a part of the first step of reorganization, but following the establishment of a single Defense Department the creation of a single supply and service agency might be advisable.

The National Security Act of 1947, however, did not provide for a separate supply agency. But it did enjoin the Secretary of Defense to eliminate waste and duplication in procurement, supply, transportation, and storage.

During the following 10 years, 1948 to 1958, there were some outstanding events in connection with this subject. The recommendations of the first Hoover Commission in 1949 resulted in the establishment of the General Services Administration. The law which established GSA, among other things gave broad authority to the Administrator, on his determination that it would be advantageous to the Government, to take over supply of the military services. However, it also gave the Secretary of Defense authority to exempt the Military Establishment from such action, provided the Secretary of Defense was not prohibited by the President from exercising that authority.

The O'Mahoney amendment to the 1953 appropriations act prohibited obligation of funds by the military departments for procurement, production, warehousing, distribution, except under regulations issued by the Secretary of Defense.

This was one of the first things which put some teeth in the Secretary of Defense's control over the supply operations of the Departments.

In 1955, the second Hoover Commission recommended creation of the Defense Supply and Service Administration. This Administration, which would be organized separately from but coordinated with the military departments under its Administrator would supply com mercial-type, common-use items to all the military services.

It would operate general and specialized hospitals, both in the United States and overseas. Its Administrator would be a civilian appointed by the President. The Administration would be civilian managed and civilian manned. It would operate depots and hospitals in the continental United States and overseas. Some examples the Commission gave of items which this Administration might handle were food, clothing, medical, petroleum, hardware, household and office equipment and supplies, and commercial vehicles and parts.

In 1956 and 1957, after the recommendations of the second Hoover Commission, external pressures on the Defense Department increased. At one time 18 bills were pending in Congress to implement the Hoover Commission's recommendation. Outside organizations such as the U.S. Chamber of Commerce and the Citizens Committee for the Hoover Commission were active in support of implementing this recommendation.

In 1958, the McCormack-Curtis amendment to the Reorganization Act empowered the Secretary of Defense to provide for the carrying out of any supply or service activity common to more than one military department by a single agency or such other organizational entities as he deemed appropriate.

While all these events were taking place externally, progressive steps were being taken in the Department of Defense which culminated in the creation of the Defense Supply Agency. Some of these major steps, probably began with the Armed Services Procurement Regulation, which provided uniform policies on various aspects of procurement and inspection.

Then came the defense standardization program which, while much progress needs to be made, nevertheless did reduce the variety of items and increase the potential for interservice utilization of system assets.