(The criteria attached is as follows:)

MANAGEMENT METHOD CRITERIA

PURPOSE AND SCOPE

These criteria will be used to identify, code, and classify in accordance with the best materiel management technique, items of supply in categories of items agreed upon by the military departments and OSD. Application of these criteria will be in accordance with the prescribed sequence of steps included in the following sections. Implementing procedures for the application of these criteria will be developed by the Armed Forces Supply Support Center and published as an operational notice after the approval of the AFSS Council. A glossary of terms is attached. Terms defined are indicated by asterisks throughout this enclosure.

STEP I. CODING BY THE MILITARY SERVICES

The individual military services will review those items of supply which are in agreed upon Federal supply groups and classes, and which are in their respective supply systems, for the purpose of management coding in accordance with the criteria prescribed below. Items of supply will be coded under one of the following groupings in accordance with the stated criteria:

Group A. Individual military service materiel management

Items of supply which qualify under the following criteria are authorized to be coded for retention for materiel management purposes by the requiring military service.

1. Items of supply subject to continuous redesign or modification during the production phase.

2. Items of supply directly related to a weapon when the weapon is essential to a primary operational mission of a military service.

Group B. Integrated military materiel management

Items of supply not coded in group A above which qualify under the following criteria will be coded for retention within the Department of Defense for integrated materiel management.

1. Items of supply which are required to be stocked in mobilization or warreadiness depth.

2. Items of supply which are used exclusively within the Department of Defense.

Group C. For determination by designated classification agency

Items of supply not coded in groups A and B above will be coded in group C.

STEP II. CLASSIFICATION BY THE DESIGNATED CLASSIFICATION AGENCY

The individual military services will report to the designated classification agency, on an item or a Federal supply class basis, the results of their coding actions under step I above. The designated classification agency will take further classification action as follows:

Single manager

Items of supply which all users have coded in groups B or C under step I and which are a part of a homogeneous group will be classified for single manager assignment unless economic considerations as determined by the designated classification agency dictate other management techniques.

Interservice supply support

If one or more of the military services code an item under group A-2 in step I and the other military services code the item under groups B or C, the item will be classified as susceptible to interservice supply support furnished by a military service which codes the item in group A-2, provided the distribution system of that military service can furnish responsive support.

Coordinated procurement

Items of supply which have been coded by all users in group A-2 under step I. and which are a part of a homogeneous group in common use between two or more military services, will be classified for single department procurement program assignment unless economic considerations as determined by the

Designated Classification Agency dictate procurement by the requiring military service. Consideration of plant assignments will be given separately by the military services in accordance with the provisions of DOD instruction 4115.1 to be revised under project No. 60-12.

Determination by Designated Classification Agency, General Services Administration

Items of supply coded in group C under step I which have not been classified under step II for single manager or interservice supply support will be classifled for acquisition from the GSA if the Classification Agency determines that GSA can render effective and economical support.

Local commercial procurement

Items of supply coded in group C under step I which have not been otherwise classified under step II will be authorized by the Designated Classification Agency for local commercial procurement by the requiring military service. Secondard technique selection

In those cases where the above provisions under step II do not provide definitive guidance, the following principle will apply:

Items of supply which do not qualify after review for single manager assignment will be further reviewed for potential assignment under the interservice supply support or coordinated procurement program. Items of supply which do not qualify after review for interservice supply support will be further reviewed for assignment under the coordinated procurement program.

Residual items

Items of supply which have not been classified under step II for single manager, interservice support, coordinated procurement, General Services Administration or local procurement will be retained by the requiring military service for materiel management control.

Mr. HARDY. There has been reference earlier to this coding proposition.

Mr. BATES. Let me just ask

Mr. HARDY. I am going to let you follow right on up.

But if anybody has used this term before, of "susceptible to integrated management", I don't recall.

Mr. BATES. Let me just ask this thing, Mr. Secretary.

If an individual in the service that uses a single item, and no other service uses it, determines that he wants to retain that for his own, can DSA take that away from him?

Secretary MORRIS. No, sir.

I would like to respond further, Mr. Bates, by saying that on page 2 of the DSA directive, as promulgated in November 1961, the definition of common supplies "as used in this directive, are those items of supply which are determined through application of approved criteria to be susceptible of integrated management by a single agency for all of the military services.

Mr. BATES. Well, is there anything that would not include?

Secretary MORRIS. Weapon related items, sir, under the criteria. Mr. HARDY. Under the required criteria, whether or not they conform to a statute. Supposedly, they would have to.

Mr. BLANDFORD. Mr. Secretary, isn't it true that if a project study is submitted to the Department, as many of them have been, and the Secretary of Defense were then to direct that DSA would take over an integrated management mission, that the services would have no one left to complain to? In other words, we would then have an integrated management system in DSA, notwithstanding the objection of the military department.

That would follow, would it not?

Secretary MORRIS. Sir, of course, they would appeal to the Secretary of Defense. This is the proper channel.

Mr. BLANDFORD. Well, the Secretary of Defense-for example, the Secretary of Defense, on May 31, directed certain personnel in his office as responsible for: "The review and the preparation of coordinated recommendations on the major proposed program changes," as itemized in a classified memorandum of May 18, 1962, subject, "Selective Review of Major Proposed Program Changes."

Now, in that were quite a number of weapons systems: Hound Dog, Skybolt, Minuteman missile, and the force level. The KC-135 tanker, and Navy and Marine tactical aircraft.

Now, you have stated that in your opinion DSA would have no legal authority-I think I understood you to say, "would have no legal authority"-to take over weapons procurement and weapons development.

Supposing a project study were to recommend that there be centralized procurement and centralized distribution at the wholesale level of fighter aircraft. Wouldn't DSA then be in the weapons system, right up to its ears?

Secretary MORRIS. Sir, I think we are confusing a number of things. DSA by its charter is responsible only for items of supply, which means parts and stockage items in support of all kinds of systems. Mr. BLANDFORD. Yes, that is what they testified to, Mr. Secretary, that that is according to their charter.

This is a piece of paper which was prepared, and can be changed with a stroke of the pen.

Now, what is there in the law-in response to Mr. Bates question, you said that DSA has no authority today to take over weapons procurement and weapons development.

What provision of the law would preclude DSA from becoming a ministry of supply? Is there any provision in the law that would prevent that?

Secretary MORRIS. Sir, I am not speaking at all to the law, and I have not during this hearing so far.

I said that under DSA's charter it has no authority to do other than what was assigned to it.

Mr. BLANDFORD. I understand that, Mr. Secretary.

I have read the charter. And perhaps I do not fully understand it. But I understand that the charter is merely what the Secretary said what they would do.

My point is that you indicated under the law they cannot do it. You think under the law they can take over weapons systems?

Secretary MORRIS. I have no opinion as to what we can or cannot do under the law.

All I know is what we have agreed upon as being legal for DSA, sir.

Mr. BLANDFORD. That is exactly the point that Mr. Bates and Mr. Hardy have been trying to develop here for 2 months.

And that is what can be done under the law. And apparently under the law we are always told that a regulation prohibits something or that a charter prohibits something.

This is all well and good, just so far as the present organization is concerned.

But the charter-the sentence in the charter that prohibits it can be deleted by the stroke of a pen.

And that could put DSA into the entire weapons development system and the weapons procurement system.

You then convert an organization that is supposed to be dealing with common items into a complete procurement activity comparable to a ministry of supply.

Secretary MORRIS. It seems to me you make one fallacy in that line of reasoning; namely, that this directive could be changed at the stroke of a pen under the law.

I assume that any directive has to be in accordance with law. If law would not permit the change you speak of, it could not be made. Mr. HARDY. Of course, that is what we are trying to determine.

Mr. BLANDFORD. Exactly what we have been trying to find out for 2 months and have not been able to find it out yet, as to just what cannot be done.

Mr. HARDY. Under the interpretation of the Department of Defense. Secretary MORRIS. Sir, my only responsibility is to help implement this directive, and that is as far as I can go.

Mr. HARDY. So that, Mr. Secretary, if your directive is modified and it says you shall buy fighter aircraft, you will undertake to do it, is that right? You would work on the assumption that it was a legal modification.

Secretary MORRIS. I will do anything that my boss directs that he finds his General Counsel tells him is proper.

I would say, as I said earlier, that under no circumstance would I personally support a service supply agency getting into more than common supply and service activities at the wholesale level.

Mr. HARDY. Now, you have come to common supply and service activities. You have gone away from your "susceptible to integrated management."

Secretary MORRIS. No, sir, I have not.

Mr. HARDY. Well, then, you are applying both of those criteria. Secretary MORRIS. Sir, as I read you from the directive, the definition of common supplies is what I have been using.

Mr. HARDY. Oh, the definition of common supply and service activities are those which are susceptible to integrated management? Secretary MORRIS. Precisely.

Mr. HARDY. Now we have another interpretation.

Mr. BLANDFORD. Let me ask the Secretary if you, in your own words, could tell me what you think these words mean, "He shall provide for the carrying out of any supply or service activity common to more than one"-to more than one "military department."

Now, if something is peculiar to one service, is it your opinion that under your definition, since it is susceptible to integrated management, it therefore, by legerdemain, becomes an activity common to more than one military department.

Secretary MORRIS. Sir, I am not speaking to the language in that provision. I am speaking to our coding criteria and the determinations made by the military departments, who now manage the item.

Mr. HARDY. But you have already said that you defined an item as common-what is the language? You have interpreted the language

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"supply or service activity common to more than one military department" as being "any supply or service activity which is susceptible to integrated management.'

Secretary MORRIS. I have not made such an interpretation.

Mr. HARDY. Well, who made that interpretation?

Secretary MORRIS. This directive sets up these ground rules which were worked out in 1959 by the military departments. These are the ground rules I live with, sir.

Mr. BATES. How do you reconcile————

Mr. HARDY. Wait.

So the directive, then, makes that interpretation of what is an item which is "a supply or service activity common to more than one military department."

The directive makes that determination, is that correct?

Secretary MORRIS. The directive makes the determination as to what is susceptible to integrated management. That is what our concern is with, sir.

Mr. HARDY. Well, I think we are not getting very far.

Mr. BLANDFORD. Mr. Secretary, may I ask you if you would express, if you care to, a personal opinion, from your experience here, as to whether or not you can foresee or would be in favor of or would recommend against the DSA being operated on a completely civilian basis?

sir.

Secretary MORRIS. I would be happy to express my personal opinion,

I think it would be impossible to operate an agency of this magnitude and with these responsibilities without using the very finest talent available within the Department of Defense.

It happens that the most highly trained professional people in military logistics are people in uniform.

We have many qualified civilians and they, too, should participate. This could neither be all military nor all civilian, in my opinion. Mr. BLANDFORD. Well

Mr. HARDY. You mean all civilian

(Chorus of "No.")

Secretary MORRIS. It could neither be all military nor civilian, sir. Mr. BLANDFORD. Could I imply from that that you could foresee the time when you will have enough competent civilians trained in DSA so that it could become a civilian organization?

Secretary MORRIS. I would not favor any structure that was purely civilian, sir.

Mr. BLANDFORD. Would you favor at any time an organization such as DSA being headed by a civilian?

. sir.

Secretary MORRIS. I think it is conceivable that this could happen,

Mr. BLANDFORD. Would you be in favor of it or opposed to such a provision?

Secretary MORRIS. The test should be the most qualified person to manage this kind of enterprise.

I think we applied that test in choosing General McNamara.

Mr. BLANDFORD. Then, your viewpoint is that the person, whether he be civilian or military, who in the opinion of the Secretary is the hest qualified to operate DSA, could logically be the head of DŠA.