General ANTONELLI. Some background. This study is 6 years old. It was completed in March 1979, it has been around for a good bit of time. Unfortunately, I am not as current as to matters pertaining to the Defense agencies as I was at that time, but perhaps it could be useful if I were to present some background regarding our findings, our conclusions, and our recommendations.

Mr. NICHOLS. I might add, General, I think what the committee would be interested in is how your study was conducted, and what you looked at, and how you arrived at your conclusions and the major conclusions that you came up with.

General ANTONELLI. Yes, sir; the context in which the study was conducted, I think is important. This, again, was back in 1979 and it stems from a Department of Defense reorganization study requested by then-President of the United States Jimmy Carter.

There were three issues that emerged from studies that had been done at the White House and at OMB pertaining to Defense reorganization. One had to do with Headquarters Management, and that resulted in a study that was directed by Secretary Ignatius. The second was the National Military Command Structure, and that was a study accomplished by Mr. Steadman; and third, one on Resource Management, which was accomplished by Mr. Rice.

It was during the undertaking of the resource management study that it was determined that the Defense agencies had an impact considerably greater than that indicated by their budgets. At that time, they directly controlled budgets of about $2 billion; about 1.9 percent of the total Defense budget.

Hence, it was concluded that there ought to be a comprehensive review of the Defense agencies. Therefore, the study that I undertook was a spinoff, if you will, from the other three studies, and particularly, the resource management study.

Another important aspect is that our guidance, that is, our tasking, was to undertake an exploratory review, and I think that is very important. In other words, this was to be a first phase, if you will, of a possible follow-on study, in detail, about the Defense agencies.

We were asked to review the roles, functions, and responsibilities of the various Defense agencies. This we did. We conducted over 200 interviews of senior- and middle-level decisionmakers, both civilian and military, to include people in the Office of the Secretary of Defense.

I met with the heads of all of the Defense agencies, people in the services, both at the secretarial level and the level of the Chiefs. We visited several of the unified and specified commands, and talked to them and their staffs.

Now, if I may, sir, some of our findings: We found, especially in visiting and talking with the people in the Defense agencies, that they are very good people; especially those at the head. They were dedicated professionals, and, I think, the kind of people that can overcome organizational deficiencies.

Nonetheless, visiting the others, we developed a number of concerns which are expressed in our report in some detail. Among them are the following:

One is the continuing trend toward creation of agencies to undertake common support and services within the Armed Forces. And

in this category, while there wasn't so much objection to agencies as such, there was concern on the part of many in the services that service-particular items might be managed by the agencies and might not reflect the concerns and the needs and the requirements of the services and of the unified and specified commanders.

We found potentials for disconnects; concerns with the linkage between combat requirements and support to provide for these requirements.

A possibly-useful shorthand are the terms wholesale-retail, strategic and tactical. Generally speaking, the agencies deal in the strategic kinds of things like communications, intelligence and so on, rather than the tactical, which are the responsibilities of the services and the unified and specified commanders.

In supply, wholesale, which is what DLA handles, as do also the services, and retail, which are the responsibilities of the services and the component commands.

The potential for disconnects between these two; that is, between strategic and tactical, and between wholesale and retail became evident. I can give you a couple of examples of the concerns that were expressed back at that time. One very senior individual, whom we interviewed about communications talked about the problem he had when he was in Europe; that is, that of getting a down-link from a strategic communication capability to a tactical requirement which he had; in other words, getting the people at DCA to understand that important requirement and provide the kind of equipment and service that was needed.

With respect to supplies, there is no quarrel that Defense Logistics Agency was a well-managed outfit and, generally speaking, did quite well with respect to supply availability, and so on. But the potential for disconnect between the requirements on the part of those who consume the supplies and those who provide them is possible.

For example, if the service is going to phase out a weapon system, and if DLA is still procuring on the basis of old information, we may have funds that are potentially wasted on items that are no longer required.

Again, with respect to concern about the linkage between combat requirements and support, the feeling on the part of many was that the CINC's and the JCS were not really in the loop with respect to what the agencies were required to do.

Another concern that was raised was the trend toward civilianization. Here, they weren't so much worried about whether a civilian or a military would be at the head of the agency, but the possibility that over time-because it may be more economical to get civilians to accomplish the task-that the military in the agencies would be phased out, and we might lose some of the critical skills, knowledge, and understanding of military requirements.

With repect to heads of agencies, especially regarding some of the agencies with critical combat support requirements, there was a concern that if the trend toward civilianization continued, we might lose military expertise. One senior military interviewee expressed concern that if the Defense Nuclear Agency were civilianized completely, DNA might focus on other areas than military.

Another concern raised was the matter of priorities having to do with allocation of shortages. As one agency head told us, the squeaky wheel does get the grease, but that may not necessarily be where the support for supplies should be going.

I should emphasize at this time that our interviews were conducted on a nonattribution basis. This (i.e., nonattribution) is the principal reason why the people interviewed were candid, and forthcoming and cooperative.

This candidness elicited the concern that the CINC's and the JCS might not be sufficiently in the loop to express priorities and to help allocate shortages.

There were concerns about the degree to which the agencies participated in the planning, programming, and budgeting process; that the Defense agencies didn't receive a sufficient scrubbing, if you will, in the PBBS process, the degree of scrubbing the service budgets and programs might get.

There was some feeling that the Defense agencies would be getting a free ride. There were concerns about performance measurements. There seemed to be general agreement that the Defense agencies, particularly DLA, could be better. This is attributable in part to the belief that the Defense agencies are funded adequately. Further, in some cases, they have items that are easier to manage; so the point is that they ought to do better. The question is therefore: Are they doing as well as they ought to be. Further, who sets the performance standards; what are the performance measurements; who measures and so on?

Many senior interviewers asked: "Who is in charge?" Understandably, the Secretary of Defense's span of control cannot be spread out to cover directly all of the agencies; hence for very good reason, there is delegation of responsibility.

But the Assistant Secretaries oftentimes are very, very busy people, so that the day-to-day management and guidance of the Defense agencies tend to go to an even lower level. Little fiefdoms get created; they get very protective, defensive, and so on; and that was a serious concern, and that the matter of "Who is in charge" should be examined.

There were some candid expressions that if you took some of these functions and transferred them back to the Services, that they wouldn't be funded properly, hence transferring back to the Services is not necessarily the solution.

We also found in the conduct of our review that there are a variety of other organizations and other organizational concepts providing support and services, not just Defense agencies. For example, we found that there were a number of identifications of Services as single managers. There were also services as executive agents. There were so-called lead services. There were field activities, and

so on.

Some of these terms are interchangeable. But the thing is that when you look at Defense agencies, you must also look at all of these other organizations providing support and services. Hence it begged the central question, and really, this was the summary of our study, that is; what is the optimal future organization for the provision of support and services to the Armed Forces.

We found a proliferation of activities providing support and services. So, our recommendation was that indeed, there should be a follow-on study, in detail, seriously undertaken, to look at the whole concept of the provision of support and services to the Armed Forces.

Let me examine briefly, if I may, sir, some other issues. I touched upon them a little bit, and I might expand. One is the amount of efficiency and economy that we actually receive. Who measures efficiency, economy and effectiveness; what measurements are used? Another is the capacity of the existing system to support the fighting forces in crises or wartime. Exercise Nifty Nugget had taken place at that time, and that exercise revealed a number of disconnects.

Nifty Nugget revealed many of the same concerns expressed in our study. The effectiveness and accountability of the chain of command for the agencies, the adequacy of the PPBS procedures, the authority and responsibility among the agencies are additional issues.

The agencies are not alike and do different things. But there may be some mechanism to bring them together, so that they are performing their missions in a cooperative way toward a common purpose.

We thought that there might be some useful groupings of agencies for future examination or for some organizational change. For example, those that support the operating forces, the Defense Logistics Agency, the Defense Intelligence Agency, the National Security Agency, and the Defense Mapping Agency.

With respect to the NAS-that is an agency that is unique. It is not just a DOD agency, and I think this is important. It is an agency that really relates to the whole apparatus of national security. Its clients or customers, if you will, are not just the DOD, but the State Department, the White House, Executive agencies, hence NSA really is quite different from the other agencies, and would need to be looked at more carefully in terms of how you would bring them together or combine them with others, and so on.

We found a grouping of what we would call staff support agencies, the Defense Security Assistance Agency, DARPA, and DNA, the Defense Nuclear Agency.

We saw a third_grouping, i.e. Audit and Investigations. These would include the Defense Audit Service, the Defense Investigation Service and the Defense Communications Agency.

We also present in our report some near-term alternatives. I don't know whether any of these were taken. Those who are more current might be able to answer whether they were, and maybe whether they are worth taking.

We found that there was a considerable lack of information among some of the people who we interviewed about the responsibilities of Defense Agencies. Hence we thought there ought to be an effort undertaken to inform managers about the current system, provide courses in the schools to inform the students and so to get a better understanding of what the agencies are about and how they work, and so on.

We also thought there should be clarification of what we saw as current ambiguities in the chain of command i.e., who is in charge. As one agency head told us, he felt he was a "blob on the organiza

tional chart." Depending on his problem: he looked to see who in the OSD structure would be most sympethetic. In the area of nearterm altenatives to improve readiness and responsiveness in event of a crisis or war, we thought the agencies should have greater participation in readiness exercises, there ought to be periodic review of their readiness plans. There ought to be a system of readiness reporting, and there was a need to ensure that the agencies retain a sufficient number of military personnel, in key areas, to retain military expertise.

We suggested also that the Secretary of Defense improve the PPBS system so as to give greater attention to Defense Agency programs and budgets. We were concerned also that over time, some critical military skills might be lost, such as cryptology, foreign languages, mapping and so on, and that this ought to be reviewed. Further we recommended that the CINC's be brought into the process of looking at agency performance, articulating requirements, reviewing procurements and so on.

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How to do this, I am not quite sure. We thought possibly "policy councils" might be appropriate. Perhaps the CINC's ought to be asked to provide a master resource priority list.

Well, Mr. Chairman, I may have given you too long a verbal summary of what can be found in detail in our study. I'll be pleased now to respond to questions.

Mr. NICHOLS. General, thank you, sir.

I guess the most troubling aspect of your report is the shortcomings of the readiness and responsiveness of the agencies to the needs of the operating forces. Are you aware of any changes in the 7 years since this report was rendered that might improve those problems that you noted?

General ANTONELLI. As I mentioned at the beginning, sir, I am not current. I would hope that there have been some changes that would address the concerns we raised. I am informed that with respect to the PPBS process, that there now is, at least in the last year and a half, a book with respect to issues pertaining to Defense agencies, and these may relate to readiness and responsiveness. But I don't know, sir.

Mr. NICHOLS. More than one report that has come before this committee has criticized the supervision of the Defense agencies by officials of the Office of the Secretary of Defense to whom they report.

It has been suggested that busy OSD officials have relatively little time to give the agencies, and because of that, perhaps the agencies themselves may be a little more independent and a little more autonomous than they might be if they had more supervision. Does your study in any way address that problem? General ANTONELLI. Yes, sir, it did.

Mr. NICHOLS. Would you comment on that?

General ANTONELLI. Yes, sir. I would like to repeat the matter of the professionalism, the dedication to duty of the people in the agencies, and that they really seek to address the problem.

Nonetheless there was the concern that there was not a mechanism to harness the matter of requirements and the provision of support and services to the fighting forces. On the matter of supervision, possibly to the credit of the agencies and the competency of