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Training in the FY 1985 Program Objective Memorandum. Funding for 10 contractor personnel to support the NTEC effort was also requested.

In summary, our analysis confirms the NAS finding that NTEC procurement practices has been resulting in additional costs in excess of one million dollars annually. We believe immediate corrective action is necessary.

During the audit, we found indications that the condition identified in the report may be occurring in other activities, both within the Navy and outside the Navy. Consequently we plan to initiate an interservice audit of this area, and address any problems found on a system-wide basis.

Recommendations

We recommend that the Chief, Naval Education and Training direct the Naval Training Equipment Center to:

1. Determine if net savings can be achieved on current procurements, especially on ISILS 7 and 8 on the Sperry contract, and if so, amend or cancel the related procurements.

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3. Obtain all items with National Stock Numbers where available, from Defense Logistics Agency and Military Department supply systems.

4.

Obtain source manufacturer prices

for the items not

having National Stock Numbers and procure those items from the manufacturer when the prime contractor's prices

source higher.

are.

Because this is a quick-reaction report it is requested that you provide written comments on the actions to be taken on the recommendations within 15 days from the date of this report. If you concur, indicate the specific action(s) taken or planned to Any be taken and the actual or estimated date(s) of completion.

nonconcurrences

should

be fully

explained.

Please contact

Mr. Harold Bloom on 694-8333 if you have any questions concerning this report.

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Mr. LEHMAN. DCASMA is part of DLA.

Mr. LALLY. They were procured through the prime source rather than

Mr. LEHMAN. By DCASMA. That's what the paragraph says. I would be happy to send the paperwork which I had much too much familiarity with at the time.

Mr. NICHOLS. Will you do that, Mr. Secretary? In the interest of time we need to get away from here. Our staff feels very strongly about the letter.

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In our hearing yesterday, an issue was raised about the famous $110 diode and "whodunnit." The short answer is Navy gets the blame for the decision and the Defense Logistics Agency (DLA) gets the blame for negotiating a ridiculous price. The point of disagreement was over what office negotiated the excessive price for the diodes. As stated in the DoD IG report, #83-121 of May 9, 1983, the Defense Contract Administration Services Management Area--Baltimore (DCASMA-B), an organization within the DLA, negotiated the price of $110 for each diode on January 18, 1983.

Please do not infer the Navy was blameless, because the Naval Training Equipment Center (NTEC) actually ordered the diodes at the price negotiated by DCASMA-B. We disciplined the NTEC officials who permitted the procurement of the overpriced spare parts, and we instituted several management and organizational changes in our procurement procedures. But the fact remains that DCASMA-B negotiated the price for the diodes.

We continue to strive to improve our procurement and acquisition procedures. The solution to the problem of overcharges for spare parts is continued hard work, more accountability and less bureaucracy.

Sincerely,

You

John Lehman

Secretary of the Navy

Mr. NICHOLS. I've got one other question. I'm not going to ask it but I want you to give me a report on it.

I've got a senior Member of the House that has come to me and he's very much concerned about the fact that the Chiefs don't give you all the information they get and arrive at in the JCS meetings. I wonder if that is a problem. He wants to put that into law, that by law, they have to give you that.

Mr. LEHMAN. You mean the Chiefs, sir?

Mr. NICHOLS. Just give me that somewhere in a letter, if you would. Thank you.

Hon. WILLIAM F. NICHOLS,

SECRETARY OF THE ARMY, Washington, DC, 6 March 1986.

Chairman, Subcommittee on Investigations, Committee on Armed Services, House of Representatives, Washington, DČ.

DEAR MR. CHAIRMAN: I appreciated the opportunity to appear before your Subcommittee on February 19, 1986. It was productive and rewarding.

At the outset of the hearing, you mentioned that perhaps you should have asked the Service Secretaries to advise the Committee on how to protect the Joint Chiefs of Staffs' right to express dissenting views to the Secretary of Defense. Your bill H.R. 3622, as amended by the floor debate, contains such a provision. I agree with permitting the expression of an individual view by a member of the Joint Chiefs of Staff.

You also commented at the outset that you were aware of the desires in the Department of Defense that the current procedure of rotating the acting Chairmanship among the members of the Joint Chiefs of Staff be perpetuated. You then suggested that we make our positions known to the Senate Armed Services Committee since your bill dealing with the Joint Chiefs of Staff had already been reported out. In a letter to Senator Goldwater on February 3, I stated that I was not opposed to the addition of a Vice Chairman, but that I strongly opposed that position outranking the Service Chiefs. I went on to state that the current policy or rotating the duties of acting Chairman among Service Chiefs should be retained. This view has been shared by Secretary Weinberger my fellow Service Secretaries, and every member of the Joint Chiefs of Staff, including the Chairman, in testimony before the Senate Armed Services Committee, as well as your Subcommittee.

At the close of the hearings, you asked us for our views on requiring the Secretary of Defense to keep the Service Secretaries informed on matters before the Joint Chiefs of Staff. I would not object if this provision is contained in the statute. Thank you for the opportunity to express these views. With warmest personal regards, I am

Sincerely,

JOHN O. MARSH, Jr.

Hon. BILL NICHOLS,

DEPARTMENT OF THE NAVY,
Office of the Secretary,
Washington, DC.

Chairman, Subcommittee on Investigations, Committee on Armed Services, House of Representatives, Washington, DC.

DEAR BILL: During the Subcommittee hearings on Consolidating Service Secretaries and the Military Headquarters Staffs, you inquired whether the Joint Chiefs of Staff (JCS) kept the Service Secretaries informed of decisions by the JCS.

DOD Directive 5100.1 of 1 May 1985, “Each member of the Joint Chiefs of Staff, other than the Chairman is responsible for keeping the Secretary of his Military Department fully informed on matters considered or acted upon by the Joint Chiefs of Staff." I support changing that directive so that the Joint Chiefs are required to provide to the Service Secretaries an information copy of (1) operational orders transmitted by the National Military Command Center (NMCC) and (2) operational proposals made by Unified/Specified Commanders.

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If you need further assistance, please do not hesitate to let me know.
Sincerely,

JOHN LEHMAN, Secretary of the Navy.

Hon. CASPAR WEINBERGER,

Secretary of Defense, The Pentagon,
Washington, DC.

DEAR MR. SECRETARY: The Investigations Subcommittee of the House Armed Services Committee will hold hearings on the organization of the Department of Defense (DOD) beginning immediately after the February congressional recess. It is intended that these hearings be concluded in time for the subcommittee to draft legislation, if such action is deemed necessary, for the consideration of the full committee during the mark-up of the FY 1987 Defense Authorization Bill

As you are aware, the House has already passed a Joint Chiefs of Staff reorganization bill. The purpose of the organization hearings this year is to consider other elements of the defense structure. Specifically, the hearings will focus on the following areas:

(1) The unified and specified commands. The subcommittee will seek to determine whether the unified commanders (CINCs) should be strengthened and, if so, in what ways. The subcommittee will examine the adequacy of the command authority exercised by the CINCs; whether each CINC should have greater control over the chain of command within his command; the assignment of forces to the combatant_commands; the adequacy of arrangements for combatant command support and administration; whether the CINCs have sufficient influence in DOD resource allocation decisions, the organizational structure of their commands, and the training, equipping, and structuring of their forces; whether each CINC should have his own "operational forces" budget for selected training, operations, C3I, etc.; the adequacy of CINC staffs; the CINC's capability to evaluate the adequacy of their forces to accomplish assigned missions; and arrangements for reviewing and altering the unified command structure to meet changing worldwide conditions.

(2) The military personnel system as it relates to officers who perform joint military duties. The subcommittee has received testimony over the years since the JCS hearings began in 1982 suggesting that the education, training, and experience of joint officers has been insufficient to equip them for the crucial tasks they perform. Some witnesses also claimed that the subsequent careers of joint officers in terms of promotions, assignments, and other factors affecting future advancement and retention have not, as a group, equalled those of their peers who avoided joint duty. The subcommittee will explore various measures to institutionalize the recognition of joint duty as among the most important of assignments including: creation of a joint speciality similar to that proposed in the "Report for the Chairman, Joint Chiefs of Staff by the Chairman's Special Study Group,” April 1982; giving the joint military arena an official voice through the chairman of the Joint Chiefs of Staffs in service promotions and assignment of officers who have served in joint billets; requiring that a joint assignment be a prerequisite for promotion to star rank; and revamping professional military education to place more emphasis on joint military operations and planning. The subcommittee will also explore proposals to establish a fullfledged Armed Forces general staff.

(3) Consolidating the military department headquarters staffs. For years the apparent redundancy in the three top Department of Defense management headquarters-the Office of the Secretary of Defense, the military department secretariats, and the service military headquarters staffs-has been the target of studies calling for reduced layering and duplication. The subcommittee will explore whether it is feasible and desirable to reduce the three management layers to two. The most common proposal is to consolidate the service secretariats and the military headquarters staffs and thereby strengthen civilian control. The subcommittee will, however, be interested in hearing discussion of other schemes such as eliminating service secretaries and creating undersecretaries of defense for land, sea, and air.

(4) The defense agencies. Increasingly, the Congress hears calls (sometimes from incumbent DOD officials) for the elimination of several, or all, defense agencies. The subcommittee will consider the viability of the defense agency concept; whether agencies with missions of support combat forces are sufficiently responsive to combat-related operational requirements and capable of performing their war-time missions; and the adequacy of financial oversight of the defense agencies within the Department of Defense.

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