tary Marsh-the general counsels of each of the military departments are assigned one of the most essential and important functions we have. It should not be integrated with the JAG function, which is a very different judicial function. But the head of the JAG Corps reports directly to me and to CNO. We both write fitness reports on him. That's true of nearly every function. I would have no objection to formalizing this in a formal integration of the two headquarters staffs. Again, it's all in how it's done. We have, de facto, moved to that over the last 5 years and we've found it has saved us a lot of time and duplication. It has worked well for the Navy. And so, I would have no objection to having it enacted into legislation. However, I would caution, there is nothing absolutely good about pretending that every military department is the same and must be an exact cookie-cutter copy of the other ones. Each has very different kinds of functions. The Navy Department has both the Marine Corps, and the Navy. It is unique. It has unique problems, including large kinds of business enterprises, such as the shipyards, that are not found in any of the other military departments. Each service is different, and what is good for one is not necessarily good for one of the other military departments. As for the Defense agencies, I believe that, as Secretary Taft said this morning, there is plenty of room for improvement. I disagree with Secretary Marsh about the Defense Contract Audit Agency. I think that is a function that should belong to the services. It should be devolved back to the military departments. My project managers and my superintendents of shipbuilding should be able to audit their contractors. They can't today. They do not have a direct say in whether auditors come in or don't come in to help them on a project. They can request, and I must say the DCA auditors are very good, very responsive, but it should not be a function that is centralized. It should belong to the contract executing executives, and they are in the military departments. So, I would support devolving this authority back to where it belongs, to the military departments. We pay huge overhead for this layering. One of our most successful programs has been the F-18 program. We have it on a firm fixed-price contract. Unlike Chrysler automobiles, for example, we can say that we have reduced the price substantially of all of our Navy aircraft over the last 5 years. We've got them on fixed-price contracts. And yet, in our F-18 plant we have 1,000 auditors and investigators per week, average, that go through the St. Louis plant. We have bureaucrats permanently looking over the shoulder of that contractor even though he is obligated to a fixed price contract and to meet a spec. Yet, we are paying, in the price of that F-18, nearly 200 percent overhead on direct costs because of the huge centralized bureaucracy that has evolved in micromanaging our contractors. We pay a huge price, throughout Defense, for that. [EDITOR'S NOTE.-The Navy indicated that the actual statistics for the F-18 are: on the average, 1,200 auditors and investigators and other official visitors per month, over 800 bureaucrats overseeing the contractor.] So, in addressing the Defense agencies, in my judgment they're clearly too big. They have taken on far too many functions that go well beyond what their intention was, and I think Secretary Taft has begun a reexamination of those proper functions. The Defense Logistics Agency, today, buys 65 percent of my end items, and I have very little say over the policy under which they are purchased. They do a fine job. They're dedicated people, 52,000 dedicated people, who do a very credible job, given the approach, which is a bureaucratic process. I have said, and I repeat the offer, that, if half of those activities were returned to the line executors in the Department of the Navy, I would take all those functions back if DLA is reduced, for instance, in half, without adding a single person to any Navy staff. And the reason is, we already have those buying functions. We have the contracting officers. We have the machinery to do it, and adding more would simply be redundant. Now, I don't, by the way, blame this on any lack of effectiveness, or lack of devotion, on the part of the Defense Logistics Agency. Indeed, much of it was foisted off on the Defense agencies by the military department bureaucracies. So it's not a question of blame. It is a question of what has resulted from that bureaucratic process over the last 30 years. So, I applaud your addressing the issue. I think that we need to thin down and greatly reduce the functions of these agencies, and return to line accountable management. The suggestion that the number of Assistant Secretaries should be reduced in Defense, or the military departments, is a very bad idea. We don't have too many senior, high-powered, high-quality officials. The problem is we have too many lower level and middle range officials, some 80,000 inside the beltway, for instance. If anything, we need more high-prestige positions that can compensate for the woefully low compensation that the congressional pay cap forces on senior executives. At least a Presidential appointment, and the prestige of that, is a draw, and helps to compensate a little. Although it's getting harder and harder to draw good people in any case. So I would urge against any reduction of Defense Department Assistant Secretaries, or service military department assistant Secretaries. Those were the main questions you addressed in your letter, and I'd be happy to answer any further questions as the hearing goes along. Thank you, Mr. Chairman. PREPARED STATEMENT OF HON. JOHN LEHMAN Mr. Chairman: It is always a pleasure to appear before your Subcommittee to discuss defense organization. This is The interest in this issue that has arisen over the past four years has been accompanied by numerous proposals for change from Washington think-tank groups, from some retired military officers, and from Congressional staff all of which have received considerable attention both here, in Congress, and in the Defense Department. the third series of Congressional hearings on this issue at which I have testified in the past year. Over the past four years, officials of the Department of Defense and its senior officers have delivered more than six days of testimony in five different such hearings, held by this subcommittee and others. At a conservative estimate, hundreds of manhours have been devoted to responding to Congressional questions and requests for information on the subject. Ninety-five separate answers were prepared in response to the questions which the 1984 Conference Committee addressed to Departmental officials and officers -the Secretary of Defense, the Military Department Secretaries, the Joint Chiefs of Staff, and the Commanders of the Combatant Commands. We have also carefully and responsibly considered numerous, voluminous reports and recommendations by think-tank groups and Congressional staff. The consensus in all these responses has been highly supportive of the current management philosophy of the Department, as it has been reformed under Secretary of Defense Caspar Weinberger. From increasing accountability through line management under the Military Departments; to reinforcing the importance of joint military advice, through the Secretary's weekly meetings with the Joint Chiefs of Staff (JCS) and daily meetings with their Chairman; from strengthening defense resource decisionmaking by adding the Military Department Secretaries to the Defense Resources Board; to increasing the level of direct input to Departmental planning by the Combatant Commanders; from improving joint coordination through the establishment of the Joint Requirements Management Board; to enhancing the procedures this administration has reinvigorated the Department and restored its effectiveness. That fact is demonstrated in the improvements in cost-efficiency and accountability in the procurement process, and in the Department's operational effectiveness, put to the test in Grenada and in the capture of the Achille Lauro terrorists. In this light, your willingness to consider the views of those who manage the Department or command our forces is greatly appreciated. But whatever specifics emerge from our lengthy deliberations on the issue of organization, there are two fundamentals about which we should be clear. NO change in organizational structure will substitute for individual excellence, whether of military officers or civilian officials. Mediocrity will remain mediocrity, whatever the organizational charts say. On the other hand, bad organization will defeat the efforts of even good leaders, by drowning them in a sea of bureaucracy. Moreover, NO organizational change can alter the responsibility of elected leaders to make the final, buck-stops-here choices to commit adequate resources to national security; to use appropriate military force in our defense choices that are critical to effective national defense. Allowing organizational placebos to distract us from this reality is defense malpractice. The prescription for a healthy system is clear: we must concentrate on meeting the real threats to our security, while putting organization on a diet to free our top-notch officers and civil servants from the layers of bureaucratic fat that keep them from doing their jobs. The latter approach has been the policy of this Administration, and it has proved successful. Do we have further to go? Yes. But we must reject false detours. The restoration of our defenses demands that we continue the progress Secretary Weinberger has made. That depends on understanding clearly the objectives of defense organization, and designing sound policies to achieve them. ORGANIZING FOR A PURPOSE The goal of American defense may be complex in practice, but it is straightforward in principle: maintaining the security of the United States. The goals of defense organization, however, are several. Defense organization must enhance strong civilian leadership, on the one hand, and a strong, effective military, on the other. It must also center defense policy in the hands of top officials, and then decentralize the execution of that policy to achieve the most effective results through the Military Depart - ments, which maintain our expertise in the many dimensions of modern joint warfare, and through the on-scene combatant commands, which in war would meet our enemy face-to-face. |