APPENDIX 4B.-WHITE HOUSE PRESS RELEASE RE EXECUTIVE ORDER No. 10958, AUGUST 14, 1961 The President asked Congress today for $73,200,000 in supplemental appropriations for the fiscal year 1962 for civil defense food and medical stockpiling activities of the Departments of Agriculture and Health, Education and Welfare. An additional $47,200,000 is requested for the Department of Agriculture to cover the costs of relocating 126 million bushels of federally owned wheat from current storage sites to areas in which food shortages could exist following attack. The stocks would be relocated close to 191 metropolitan areas with a total estimated population of 95 million, and would thus make available threefourths of a pound of wheat per person per day over a 4-month period. This is the first specific emergency food stockpiling proposal developed by the executive branch. Although further studies may indicate that additional food stockpiling measures are needed, this program represents a major first step which can be accomplished rapidly. The sum of $26 million is requested for the Department of Health, Education, and Welfare for medical supplies. The Federal Government now has a $200 million medical stockpile which includes 1,900 emergency hospitals. The 1962 budget for the Office of Civil and Defense Mobilization included funds for procuring an additional 1,000 emergency hospitals and related medical supplies. Appropriations included for this purpose in the independent offices appropriation bill will be transferred to the Department of Health, Education, and Welfare. The additional $26 million is needed to procure medical supplies sufficient to increase the operational capability of the 2,900 emergency hospitals from the present 4 days to 30 days. The President has delegated the responsibilities for carrying out the civil defense food and medical stockpiling functions to the Secretaries of Agriculture and Health, Education, and Welfare, respectively. The appropriations requested today will allow the food and medical stockpiling activities to keep pace with the expanded and strengthened civil defense program recently presented to Congress by the Secretary of Defense. Following the pattern set by the recent amendment to the budget of the Department of Defense, funds to carry out these stockpiling activities will henceforth be sought by the responsible departments, rather than by the Office of Civil and Defense Mobilization. APPENDIX 5.-BUREAU OF THE BUDGET ROLE IN CIVIL DEFENSE REORGANIZATION AND RELATED MATTERS (STATEMENT DATED AUGUST 17, 1961, SUBMITTED AT THE REQUEST OF THE SUBCOMMITTEE BY DAVID E. BELL, DIRECTOR OF THE BUREAU OF THE BUDGET) Hon. CHET HOLIFIELD, EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., August 17, 1961. Chairman, Subcommittee on Military Operations, Committee on Government Operations, House of Representatives, Washington, D.C. DEAR MR. HOLIFIELD: This is in reply to your letter of August 8, 1961, concerning the President's recent decisions respecting civil defense organization. I appreciate the subcommittee's courtesy in permitting me to furnish written answers to its questions." 1. Role of the Bureau of the Budget.-The Bureau's role in the conferences and discussions leading up to the President's decisions was its normal staff role as an office responsible for advising the President on matters involving the organization and management of the executive branch. Prior to the President's decision in May to assign major civil defense responsibilities to the Department of Defense, and to reconstitute the Office of Civil and Defense Mobilization as a small staff office advisory to the President, the Bureau participated in frequent discussions with the officials of the OCDM, the Department of Defense, and the White House office. The Bureau submitted recommendations to the President on these matters, as did the others concerned. The final decisions were made by the President after weighing all the considerations and viewpoints. Following the President's major decision in May, it was agreed by all concerned that the Bureau should contract with McKinsey & Co., who had conducted the earlier study leading to the consolidation of the Office of Defense Mobilization and the Federal Civil Defense Administration in 1958, to prepare a new study setting forth alternative groupings of functions and responsibilities that could be assigned to the Department of Defense and to the OEP in keeping with the President's decision. The McKinsey study was carried out with the close collaboration of staff members of the Bureau, the OCDM, and the Department of Defense. While the McKinsey survey was being completed, there were further conferences and discussions among officials of the firm and of the three agencies and the White House office. The outcome was Mr. Ellis' memorandum of July 7, which the President accepted. Thereafter the Bureau of the Budget prepared a draft Executive order to carry out the recommendations in the Ellis memorandum. Following the usual clearance process with the agencies concerned and with the Department of Justice, the President signed the Executive order on July 20. 2. Role of McKinsey & Co., Inc.—As indicated above, the Bureau of the Budget engaged McKinsey & Co., Inc., on May 31, 1961, to assist in the development of detailed assignments of functions to the Department of Defense and the Office of Emergency Planning to carry out the President's decision announced May 25. During the following 3 weeks, there were extensive discussions among staff of the firm, OCDM, the Department of Defense, the Bureau of the Budget, and the White House office. 3. Cost of contract with McKinsey & Co.-The total cost of the recent contract work was $9,200. The survey of nonmilitary defense organization made by McKinsey & Co. in 1957-58 cost $62,357. 4. Report by McKinsey & Co. The alternatives developed by McKinsey & Co. are fully described in the final report submitted to the Bureau on July 14, 1961. I am enclosing a copy of the report. 5. Bureau recommendations on Defense Department assignments.-The Bureau was in full accord with the recommendations made in the Ellis memorandum and embodied in Executive Order 10952. 6. Role of the new Office of Emergency Planning.-So far as civil defense functions are concerned, I can add little at the present time to the language of Executive Order 10952. The concept of OEP's role in civil defense that is set forth in the order is essentially that of the typical Presidential staff agency-one that does not have independent statutory powers but instead is responsible for advising and assisting the President in the exercise of his powers. Specifically, the OEP will aid the President in planning and coordinating the total civil defense program, determining appropriate assignments to departments and agencies, and reviewing and evaluating progress under those assignments. In addition, as you know, the Director of OCDM also has a number of important functions deriving from statutes other than the Federal Civil Defense Act. These include strategic and critical materials stockpiling programs and planning for the management of national resources, as well as others which were described to your committee in some detail by Mr. Ellis on August 2. The Bureau does not now have any judgment on the optimum size of the staff of the OEP. This is a matter we will be reviewing carefully in connection with the preparation of the 1963 budget. In the meantime, the congressional action limiting Washington employment to 310 appears to be an undesirable limitation on the President's flexibility in adjusting the present staff of the OCDM to their new duties. 7. Further Presidential delegations of civil defense functions.-The President has signed Executive Order 10958, dated August 14, 1961, making assignments of food and medical stockpiling responsibilities to the Departments of Agriculture and Health, Education, and Welfare respectively. It is anticipated that some additional civil defense and defense mobilization assignments, which were continued in effect by Executive Order 10952, will be replaced by direct Presidential delegations. No time schedule has been set for the issuance of such orders. 1 8. Possibility of return to problems of FCDA-ODM overlapping and duplication. We do not believe that under the new arrangements there will be any recurrence of the overlapping and duplication which characterized FCDA and ODM. The conception which underlies the present arrangement is quite different from that which underlay the pre-1958 arrangements. The statutory powers of both ODM and FCDA are now vested in the President and operating func tions will be delegated by the President to the Department of Defense or (as in the case of food and medical stockpiling) to other departments and agencies. Responsibility for coordinating the civil defense operations of all executive departments and agencies, as well as for broader aspects of defense mobilization, remains in the President, and in carrying out these responsibilities he will be advised and assisted by OCDM (OEP). With operating functions clearly delegated to the departments and agencies, and staff advisory and assistance functions clearly assigned to OCDM (OEP), we do not expect to encounter any significant problems of overlapping and duplication. 9. OEP and DOD roles with respect to other departments and agencies.-As indicated above, the OEP itself will not assign functions or responsibilities to other departments or agencies; instead, it will advise the President in doing so, and assist the President in reviewing performance under those assignments. The Department of Defense, under section 1 of Executive Order 10952, is instructed to work "as necessary or appropriate through other agencies by contractual or other agreements" in performing the functions delegated by the President to the Department under the order. In carrying out this part of the order, the Department will be expected to establish a series of working arrangements with other departments and agencies, but these will be in the nature of contracts or agreements, and not in the nature of Presidential delegations. 10. Extent of OEP influence.-It will be the President, of course, and not the OEP who will supervise the performance of the Department of Defense under Executive Order 10952. In assisting the President in the exercise of his powers, the OEP, like any other Presidential staff agency, will have influence and effect in direct proportion to the competence of its performance. A Presidential staff agency cannot exert influence except as it can make a real contribution to the execution of governmental functions. It must demonstrate its value not only to the President but to the departments and agencies as well. We expect that the new OEP, slimmed down and freed of operating burdens, will be able to make such a contribution. 11. Field organization for OEP and DOD.-The question of the appropriate size, nature, and functions of field organizations of the OEP and the Department of Defense is still under study, and I would prefer to reserve comment for the time being. 12. Funding.-With respect to the funding of civil defense programs, our plans are that each agency will be responsible for budgeting for those civil defense functions specifically assigned by the President. Under this concept, the Secretary of Defense will, of course, be responsible for obtaining funds for any programs or activities which have been assigned to him but which he arranges to have carried out by agreement with another agency. This should create no problems different from those generally arising in connection with interagency contracts. 13. Shelters in Federal buildings. The problem of agency responsibility for funding shelters in Federal buildings is one which is still being studied, and I would prefer to reserve comment for the time being. 14. Other comments or observations.-The only other matter which occurs to me as being relevant to the committee's inquiry is the process we envisage for reviewing budgetary proposals submitted by the different departments and agencies having civil defense or defense mobilization assignments. As you know, the annual budget is the President's budget, and it is the responsibility of the Bureau of the Budget to assist the President in assigning priorities for expenditure, in assuring that the various elements of the budget are consistent with each other and with the President's program, and in assuring that the administrative plans are soundly conceived. At the same time, as I indicated in testimony on August 1 before the Subcommittee on National Policy Machinery of the Senate Committee on Government Operations, it is our intention in this administration to make sure that planning and budgeting are always in stepthat we plan to do only what we are willing to budget for, and budget fully for what we plan to do. To this end the Bureau of the Budget has established close working relationships with the White House office and with the other units of the Executive Office of the President that are involved in advising the President on policy matters. In keeping with this concept, we expect to consult with OCDM (OEP) in the course of reviewing the budgetary proposals from different departments and agencies relating to civil defense and defense mobilization activities. 73266 0-61-26 I appreciate the opportunity to respond to these questions. I shall, of course, be pleased to furnish any other information which the committee might desire. Sincerely yours, DAVID E. BELL, Director. APPENDIX 6.—UPGRADING OF STRATEGIC MATERIALS (STATEMENT DATED AUGUST 23, 1961, SUBMITTED AT THE REQUEST OF THE SUBCOMMITTEE BY FRANK B. ELLIS, DIRECTOR, OFFICE OF CIVIL AND DEFENSE MOBILIZATION) JUSTIFICATION The Stock Piling Act, passed in July 1946, provides in section 3(c) for converting materials to a form "best suitable for stockpiling" and the Defense Production Act of 1950, as amended, provides in section 303 (d) authority for processing and refining materials. The vulnerability of the U.S. metals industry to enemy attack by nuclear weapons is now so acute that it is imperative we upgrade some of the materials in the stockpile. We need a minimum readiness inventory in order to assure military and essential civilian production for survival. Major savings that can be effected by upgrading in advance of an emergency are: 1. For nuclear war: (a) Saves manpower, materials and investment required to rebuild severely damaged or destroyed plants. (b) Saves capacity which may survive for other manufacturing purposes. (c) Saves transportation. (d) Saves time. 2. For limited war: (a) The same reasons listed in (b), (c), and (d) above. (b) In addition, upgrading now would save money by avoiding the higher prices which are likely to occur in a period of mobilization. 3. In peacetime: (a) Reduction of bulk ores to upgraded materials in some cases will provide savings in storage space and costs. (b) Payment in kind eliminates cash outlay by the Government at a time when defense expenditures are rising. (c) Despite sizable gains in U.S. employment, we still have notable pockets of unemployment in areas where upgrading can be done. BACKGROUND The stockpiling program, initiated shortly after World War II, provided generally for accumulating inventories of materials in the lowest form practicable for long-term stockpiling. The predominant idea was to provide protection against loss of foreign sources of supply in an emergency. Manganese and chromium, for example, were stockpiled in the form of crude ores and concentrates, because it was practicable to meet stockpiling needs in those forms. Bauxite was stored to provide a source of crude material for aluminum. An aluminum metal stockpile objective was not added until 1949 when it was determined that the refining capacity could not match requirements for an emergency. Copper, lead, and zinc, however, have been stored in the form of metals from the beginning of the program in 1946, because it was not practicable to store the ores and concentrates. An additional step in upgrading the stockpile was taken in 1950 when it was determined that the manganese, chromium, and tungsten stockpiles should be partly in the form of ferromanganese, ferrochrome and ferrotungsten, respectively, all key materials for the Nation's steel industry. The following year, 1951, stockpiling of tungsten metal powder, ferromolybdenum and molybdic oxide was added to the crude forms of these materials. In 1953 oxygen-free copper and in 1954 beryllium-copper master alloy and tungsten carbide powder were added to the list of upgraded forms for stockpiling. The President placed into effect in 1954 a recommendation of the President's Cabinet Committee on Minerals Policy that upgrading of stockpile materials should normally be done when it could be accompished at favorable prices and in periods of lowered economic activity thus providing domestic employment opportunities and maintenance of plants and facilities which are essential ele ments of the mobilization base. The committee, however, did not recommend any new programs for upgrading. In 1956 a determination was made that a small part of the manganese and chromium stockpiles should be in the refined-metal forms, as well as in the ferroalloys that were approved in 1950, in response to the rapid growth in recent years in the use of the high-purity metals. In 1957 and the early part of 1958 various studies were made of the need for further emphasis on upgrading. These were undertaken by the Department of Commerce, various Government task groups and committees and by a Special Stockpile Advisory Committee, consisting of nongovernment personnel. This committee recommended a minimum readiness inventory of upgraded materials at or near the site of consumption. Defense Mobilization Order V-7, effective on June 30, 1958, stated the policy which in essence was that a part of the objective for a basic material should be in an upgraded form when there is danger of a processing bottleneck developing in an emergency because of damage to facilities or other reasons. Under this upgrading policy, the strategic materials situation has been reexamined to ascertain the extent to which further upgrading is necessary. Attention has been given especially to what have come to be known as the spaceage materials. As is well known, much of the problem of achieving improved performance in missiles and space vehicles depends on providing materials that will withstand the rigorous conditions that are encountered in the conquest of space. Therefore, special-property materials are given prominent consideration. Up to the present time, a total of 25 subobjectives has been established for upgraded forms of strategic materials. A list of the materials is attached. The size of the objectives and inventories cannot be shown inasmuch as they are classified data. Because of the recent introduction of many of the subobjectives for the upgraded forms, procurement is not as far along as for the stockpile generally. Only 9 of the 25 upgrading subobjectives have been met, as against 62 of the 76 overall maximum objectives for the strategic stockpile. Procurement is going ahead under the Stock Piling Act, using surplus materials as payment in kind to meet the cost of processing whenever feasible, and by bartering surplus agricultural commodities for the upgraded forms. UPGRADED FORMS OF STRATEGIC MATERIALS FOR WHICH STOCKPILE SUBOBJECTIVES HAVE BEEN ESTABLISHED Beryllium copper mastor alloy. Chromium ferro, low carbon. Chromium ferro, silicon, low carbon. Columbium metal. Columbium carbide powder. Columbium, ferro. Copper, oxygen free. Manganese, ferro, standard high carbon. Manganese, ferro, medium and low carbon. Manganese, metal, electrolytic. Manganese, silicon, low carbon. Molybdenum, ferro. Molybdic oxide. Sebacic acid. Tantalum metal. Tantalum carbide powder. Tantalum-columbium, ferro. Tungsten, carbide powder. Tungsten, ferro. Tungsten metal powder, hydrogen reduced. |