The principal witness for this appropriation is Mr. Don R. Brazier, Deputy Assistant Secretary of Defense, Comptroller. Will you proceed. STATUTORY NONCONTRACTUAL CLAIMS Mr. BRAZIER. The "Claims, Defense" appropriation provides the necessary funds for the payment, as prescribed by law, of all noncontractual claims against the Department of Defense. 1970 UNPAID CLAIMS AND LAPSE OF FUNDS For fiscal year 1970, Congress appropriated $39 million. There were $1.8 million in claims unpaid at the end of fiscal year 1970, and there was a lapse of $553,000. This unfortunate situation resulted primarily from revised procedures implemented by the Navy in an attempt to improve the processing time on claims. There was a decentralization of adjudication authority, and some difficulties were encountered during the first year of operation. The Navy now believes that it has eliminated these problems while improving service for its personnel. 1971 APPROPRIATIONS AND ADJUDICATIONS Our fiscal year 1971 requirements are estimated at $52 million; $39 million was appropriated, and we have pending before the Congress a proposal to transfer $13 million from the "Defense production guarantees" account to "Claims, Defense" during fiscal year 1971. Chairman ELLENDER. As I indicated, Congress has provided the additional $13 million. Mr. BRAZIER. Yes; that has been approved. Preliminary reports indicate that obligations through March 31. 1971, will total $35.7 million; we have $7.6 million in adjudicated claims pending and expect to adjudicate and obligate an additional $8.7 million during the fourth quarter of fiscal year 1971. In sum, our current prediction indicates a requirement for $52 million in obligation authority. BUDGET REQUEST REEVALUATION For fiscal 1972 we are requesting an appropriation of $39 million. We have just completed a reevaluation of our fiscal year 1972 request in view of our fiscal year 1971 experience to date. As you know, our fiscal year 1971 obligations for personnel and tort claims have been substantially above our initial predictions. LAG IN PAYMENT OF PERSONNEL CLAIMS With regard to personnel claims we found generally that we are paving many claims that are related to the personnel strengths and PCS movements of fiscal year 1970. This lag appears to result almost entirely from the time elapsed between the date of the incident and the filing date of the related claim. We found no evidence indicating that it took longer to adjudicate and pay the claim; to the contrary, service in this regard appears to have been improved. On the basis of our fiscal year 1971 experience, we expect personnel claims for fiscal year 1972 to be approximately 15 percent or $5 million less than fiscal year 1971: reflecting the decreasing military personnel and PCS movements. TORT CLAIMS Our current estimate for tort claims for fiscal year 1971 is $20.2 million; the highest it has been since at least fiscal year 1966. This type of claim usually results from major accidents of some kind or another, for example, in fiscal year 1971 we are adjudicating a large number of claims involving an ammunition dump explosion in RVN, and we have no good reason to believe that tort claims will remain at the high fiscal year 1971 level. Tort claims are estimated at $12.1 million for fiscal year 1972, which is substantially the same as the $12.2 million obligated for this category of claims in fiscal year 1970. In sum, the fiscal year 1972 estimates appear adequate in view of our fiscal year 1971 experience as adjusted for decreases in military personnel and PCS movements for personnel claims and adjusted for a more normal year with regard to tort claims. SUMMARY OF ADJUDICATED CLAIMS A summary of claims adjudicated and related financing follows: (The table follows:) Mr. BRAZIER. The various types of claims for which provision has been made in this appropriation request are grouped into four major categories; namely, personnel claims, tort claims, admiralty claims, and other miscellaneous claims. PERSONNEL CLAIMS The personnel claims category which accounts for 67.7 percent of the appropriation request for fiscal year 1972 includes: (1) claims of military and civilian personnel for private property lost or damaged in the military services, (2) repayments of erroneous collections, and (3) claims arising from the correction of military or naval records. It is estimated that the general category of personnel claims will require approximately $26.4 million in fiscal year 1972. TORT CLAIMS The tort claims category which accounts for 31 percent of the appropriation request for fiscal year 1972 includes: (1) cases arising under the Federal Tort Claims Act, (2) foreign claims against the services under the act of October 9, 1962. Approximately $12.1 million is expected to be required for claims of these types during fiscal year 1971. ADMIRALTY CLAIMS Admiralty claims which account for 1 percent or almost the balance of the appropriation request for fiscal year 1972 include payment under authority of the Admiralty Claims Act and Maritime Claims Act for claims arising from marine accidents and incidents involving vessels of the military departments. Admiralty claims are expected to require $415,000 in fiscal year 1972. OTHER MISCELLANEOUS CLAIMS The other miscellaneous claims category accounts for only twotenths of 1 percent of the appropriation request for fiscal year 1972 and includes: (1) amounts for the indemnification of the Post Office Department for funds embezzled or for claims arising from error, loss due to defalcation of unbonded mail clerks and commissioned officers, and (2) claims for damage to accidents arising under training contracts with contractors caused by the negligence or military trainees. It is estimated that $75,000 will provide for such miscellaneous claims in fiscal year 1972. In summary, the appropriation request of $39 million for fiscal year 1972 represents in our judgment a reasonable estimate of the requirements for all types of noncontractual claims against the Department of Defense. STATUTORY AUTHORIZATIONS All payments made from this appropriation are authorized by various statutes governing the settlement of claims. ADMINISTRATIVE COSTS No provision is made for any of the administrative or personnel costs required to process the claims under this appropriation. This completes my prepared statement on the subject. I will attempt to answer any question which the chairman or members of the committee may have. Chairman ELLENDER. How are management personnel paid? Mr. BRAZIER. Those are paid as part of the normal administrative expenses for the military departments. Chairman ELLENDER. All administrative work and other necessary expenses are so paid? Mr. BRAZIER. Yes, that is right. Chairman ELLENDER. The amount of $39 million is used to pay the claims. Mr. BRAZIER. Exclusively for the claims. ADJUDICATION PROCESS Chairman ELLENDER. I have one more question: What is your process for adjudicating claims? Have you a commission that looks into these claims and adjudicates them? Mr. LANMAN. That may vary depending on the statute. There are about 12 or 15 statutes that are involved. Chairman ELLENDER. Generally speaking, how do you handle them? Mr. LANMAN. Normally the claimant fills out a form and it goes into an investigation by both administrative and legal officers to develop what the facts are, and they conclude on the basis of evidence presented and all of the required documentary evidence and testimony and so forth, at which time they are settled with advice of counsel for the amounts deemed to be equitable and fair. Under the statutes there are limits with respect to how much we could pay. ADJUDICATION PERSONNEL Chairman ELLENDER. Where are those people located? Mr. LANMAN. Generally in field areas of the military departments and subject to review at headquarters. Depending on the amounts. Mr. BRAZIER. It is possibly in the field. Chairman ELLENDER. How many people are involved in adjudicating these claims? Mr. BRAZIER. That can be very difficult to estimate, Senator Ellender, because a large part of this is part of the normal operations of the administrative office. That is an office that provides legal advice to a headquarters; this would be one of the functions that they would perform. Chairman ELLENDER. The work is done by people who do similar tasks for the departments? Mr. BRAZIER. On some or similar types of work. Chairman ELLENDER. They are not specifically designated as employees to administer this program? Mr. BRAZIER. NO. Chairman ELLENDER. Does the same thing apply to civilians? Mr. BRAZIER. Yes, the same thing applies. As a matter of fact, I would imagine that most of the support is by civilians. PROGRAM ADMINISTRATION Chairman ELLENDER. What is the cost of administering this program? What do you figure it is? Mr. BRAZIER. I really would have a very difficult time making a judgment. Let me give you an example. The time that our office performs on reviewing the budget estimate, for example, for the claims account is a very minute part of the function. I would suspect it would be small. Chairman ELLENDER. I am talking about adjudication of claims. Mr. BRAZIER. The same point would apply, we might be able to get some estimate of how many hours would be applied to adjudication of an average claim and price that at some average salary, to give you a general impression, but since these are processed by offices that are also engaged in other administrative or legal work, it would be a most imprecise estimate. Chairman ELLENDER. I thought you had special aides to adjudicate claims. Mr. BRAZIER. No, sir. Chairman ELLENDER. Are these individuals who do nothing but attend to these claims? Mr. BRAZIER. This is a very, very minute part of our function, just as it would be throughout the organization. I probably spend less than an hour a year of my time. Chairman ELLENDER. What is your normal function? Mr. BRAZIER. I am the Budget Officer for the Department of Defense. Chairman ELLENDER. Are there any further comments? |