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It's actually been reduced about 25 percent over the last 20 years. It's the only entity in the Defense Department, I might add, that has actually, by every measure, declined in size relative to all other parts over that period.

But, again, what do those people spend their time doing? They spend their time answering 160,000 queries from Congress, members, and subcommittees, answering some 300,000 telephone inquiries from Congress. Eighty percent of their time is spent in going to meetings and answering studies and queries, horizontally with other bureaucracies, and only 20 percent of their time is spent doing productive line work.

[EDITOR'S NOTE.-The Navy provided information indicating that Secretary Lehman was referring to Department of Defense wide statistics and that the actual figures for the entire Department of Defense are: 123,000 written enquiries and 600,000 telephone enquiries.]

So, the thing to remember is that, yes, in my belief, massive reductions can be taken across the board, but they have to be taken with all the players together because the bureaucracy is linked in its function. Much of our bureaucracy is driven by your bureaucracy. And the same is true for the Office of the Secretary of Defense and the other services. So, reductions should be taken across the board. That's not to say that we can't do anything unilaterally. We can. Last May, we abolished the entire Navy Materiel Command, which had a four star billet with a three star deputy and 650 people working there. We just completely abolished it and had a net savings of 450 billets. And since that time, we have reduced the three systems command headquarters by 600 people. So right there is a reduction of 1,000 headquarters' bureaucrats-and I include myself as a bureaucrat, as the chairman does-1,000 of them we've cut unilaterally in the last 12 months. So, the way to cut is to cut. Mr. HOPKINS. Secretary Rourke, in your brief time, do you know of the figures for the Air Force in the last 5 years as a comparison, say, with Secretary-

Mr. ROURKE. No, I don't, Mr. Hopkins, but I'm not aware of any additions. In fact, I would have to believe that the direction has been in another way. The spectre of Gramm-Rudman has been on us for quite some time, and not just the legislatively enacted activity, but also the anticipation of that kind of movement. So there's been a shoring up, I think, in all of the services, and an awareness that the salad days of the bureaucrat for the near term, in any event, are at an end.

[EDITOR'S NOTE.-Specifically, the Air Force Secretariat remained constant at 320 from 1979 until 1983, when it dropped to its current level of 304. These levels are down from highs of 550 plus in the 1960s and early 1970s. As I mentioned in my opening statement, excluding the public affairs and legislative liaison people who currently serve unique functions for both Secretariat and the Air Staff. I have 186 individuals to support me in my responsibilities for independent policy review and civilian oversight.]

Secretary Weinberger, I know from an excess of 2,000 meetings, if that seems imaginable because that's how many I participated in with him over the last 5 years, has made the point time and time again on the requirement to do better, do more with less. He's successfully called upon each of the gentlemen on my left and right, and my predecessor, to accomplish that task.

This isn't just my flag waving for the bureaucracy. This Defense Secretary, and those service Secretaries and Chiefs whom he has had serving with him, have done a damn good job in trying to shave down the bureaucracy because it strangles all of us.

What Secretary Lehman points out, what I know, Mr. Chairman, you and the members of your committee and your staff are painfully aware of the burdens placed on the Department of Defense by reporting requirements. We should report however, you should also see the extent to which those reporting requirements have gotten out of hand.

At the end of the trail when a reporting requirement leaves here, we're not saying you don't have a right to know every single thing that occurs within the Department of Defense, given security aspects that we've discussed. There is a mechanism for that, but you do have a requirement for information, for knowledge, and we have a requirement to pass that knowledge to you.

When a detailed report is requested-and indeed they are by the hundreds-someone over at the Department of Defense is sitting there at a desk responding to that with little people helping him in that chore. Those requests arrive by the thousands. I'm just passing through this scene, Mr. Hopkins, and I observed it, I hope, with some intelligence, some fairness, and with an honest refreshing viewpoint. The requests that come over are extraordinarily detailed and we want the product that comes back to the Congress to be informative, detailed, and accurate, to help you do your job. And if we don't have enough high quality people to do the job, it simply will smother some of the bureaucracy.

There's always a reason. I've given almost as many speeches as you have. I shouldn't say you individually. You've outspoken me, Mr. Chairman. You exceed my wildest dreams in terms of expression of personal viewpoint, but I've used some of the statements you attribute to your Governor, and it goes over very well with the public. When you look at some of the saddled bureaucrats, and those responsible for really carrying out the burden of conveying an accurate message back to you, there is a serious requirement. I'm almost embarrassed, at times, at how I've thrashed the bureaucracy in public speeches and gotten great applause for it. Then I look at those little people back in the building, and the Department of Defense at large. Now that I've had an enormous opportunity to get out and see those people, and to travel to the major commands, I think they're doing a heck of a job. I admire them; I commended them as all of you have. What I'm saying is it isn't that simple to cut all of them out. I say let's all work at it. Let's keep cutting the fat, but let us not, and I include myself in that bargain, get carried away with our own rhetoric, as I have tended to do in the past. I've gotten a refreshing new viewpoint of the whole system.

Mr. HOPKINS. Mr. Marsh.

Mr. MARSH. Mr. Hopkins, the size of that staff has been about the same for the last number of years.

Let me mention something to you that the Army does that many are not aware of. The Navy does some, and the Air Force does

some.

We serve as executive agent for 144 activities that are not really associated with the Department of the Army.

For example, we administer the Arlington National Cemetery. We run the National Defense Capital Telephone System. We run the Armed Forces Institute of Pathology. We do all the procurement of conventional ammunition Department-wide. We supported and executed the infrastructure support for the Olympic Games in 1982 and 1984, and we will sponsor the Pan American Games in 1986.

These are functions that are required, particularly those that are done in the Nation's Capitol. And the Navy, for example, did the 40th anniversary of the end of World War II, and on the west coast. We did the one in Europe on Normandy, and the east coast VE Day. These require enormous investments of time and people, and those are not insignificant activities that are conducted and are not really perceived.

We administer the Panama Canal, as another example. So those are obligations that go over and beyond the statutory duties that we think about as belonging to the Department of the Army.

Mr. HOPKINS. Let me, if I may, Mr. Chairman, say that we all take great pride in the areas that you gentlemen represent, and it is our Army, and it is our Air Force, and it is our Navy.

It is also our deficit, and that's not Republican, and that's not Democrat. That's easy to point that finger, at some administration, whatever you like, but it doesn't raise the fact that the same people are going to have to pay this deficit off, regardless of where they point the finger.

And we're looking at some $532 million a day in interest alone that could be spent for many of these programs that I would like to have it spent for, as would you.

So as we march toward this quickening date here of March 12, I personally am asking for your help as to how we can best approach your agencies to do the best job. Not just to pass a bill. I've been on this campus long enough to know that that's really not necessary, and that's not where I come from. We don't have to have another piece of legislation just because it's an election year.

That's the problem up here now. We have too many elections that I've been in, and they come around too frequently, and I don't say that selfishly. That, I think, has a lot to do with the probes that we have for you gentlemen, and the inquiries that we have for you gentlemen, because those of us on this side of the desk have to prove to the public our worthiness, you see.

And I would like to suggest to you that you help us come to the proper solution to this. At least help me because if I am not more comfortable with these proposed changes by March 12 than I am today, I'm not going to vote just for the sake of saying, “well, I voted yes. I voted no." I'd like to make changes that are necessary and those that are proper.

And I'm not speaking for anybody else, and that's not a criticism of anybody else. I know everybody is trying to do their job the best way they can. But I have to say to you again of this particular point, I am not very comfortable with these broad areas which we are attempting to grapple with in looking at the date of March 12 and saying I will be personally prepared to vote on that. I don't

know that I can. Maybe I can at least attempt to do it by your assistance.

So I thank you for being here. I appreciate the contributions that you all make to our society.

Mr. NICHOLS. Secretary Lehman, you have often spoken or published criticisms that tend to centralize defense management and functions. In your remarks you spoke about decentralizing buying, and I commend you on what you've done in your shop in that particular area.

I have a quote here where you said, for example, and I quote, "Is defense establishment overgrown?" Yes, no intelligent human would pay $700 for a toilet cover. It took a unified buying agency of 50,000 billets to do that.

We're going to be hearing from agencies a little later on, and I want to talk about DLA for just a little bit.

It is a big agency. Have you encountered any particular problems from centralization as you carried out your duties? I'd like for each of you to respond to that.

It just seems to me that a centralized buying agency makes a lot of sense. I mean, you don't have duplication in buying belt buckles, or buying items that are common to all three services. It just looks like it should make a lot of sense.

What are the problems that you've encountered with it?

Mr. LEHMAN. Mr. Chairman, the problem is one of scale. Centralization can bring savings and efficiency at a certain point, but when you carry it beyond that point it brings dysfunction and unwieldiness just by the vast size. You saturate markets with the vastness of your buy.

I don't often agree with everything that the Defense Inspector General says, but he coined a very good phrase in explaining the phenomenon of what has happened with the toilet seat, and the other spare parts scandals. It's what he called the clericalization of the process. That's what I meant in the remarks you quoted. It destroys the chain of common sense when you clericalize and bureaucratize a buying process. And that toilet seat cover was bought through that clericalized process. No one human being, no matter how far you try to track, was then, or is now, responsible for buying that item.

Six different subgroups of the Defense Logistics Agency and two in the Navy were involved in making that purchase. That was the same story on the hammers and on the diodes, and so forth.

Centralization has been carried to a grotesque extreme, and it is

not

Mr. NICHOLS. If I might interrupt. Did DLA buy the diodes? I understood the Navy bought the diodes?

Mr. LEHMAN. No, that unfortunately is the common perception. It was DLA that bought the diodes and bought the toilet seat cover. They bought them for the Navy. Part of the problem is due to that, the original concept of a centralized buying agency that I provided, by the way, the exact chain of events to the committee last year. What happened in the diode case was the buying agency in Orlando, our Navy computer support group, requested that the diodes be bought for kits from Sperry, and that request was processed through the Defense Logistics Agency, DCAMA-B [defense contract

administration services management area-Baltimore] for the regional DECAS Division of DLA, and so forth.

The problem is that the end items that are service unique have been included often, I might say, at the initiative of the service, not DLA. DLA is simply responding to work that is given to it, and too many entities have taken the easy way out and said we won't do it. Let DLA buy it.

And, the Defense Logistics Agency is a very large bureaucratic entity. The regulations they have to work under are much more cumbersome than the streamlined line-accountable authority that we're trying to give to project managers who have only one command CEO to report to between the ultimate decisionmaker and his program.

So that's what I mean by decentralization. And even in the commodities I'm not convinced that today that oil, for instance, is more cheaply bought by one vast centralized buying authority. It could be possible, but I don't know for sure because I don't think it's universally applicable either way. But taking advantage of a much more complex market is very often done better by a decentralized buying authority.

So I think it's gone too far, and centralization on the scale of what we're talking about has gone well beyond where the optimum efficiencies lie.

Mr. NICHOLS. Well, I guess I'm just trying to equate it to the private sector. I would think Holiday Inns buying towels would buy them centrally out of Memphis, TN rather than-

Mr. LEHMAN. Sometimes, but if you read more recent accounts of, say, the last 10 years, of the more successful businesses like in the book "In Pursuit of Excellence," and others, the successful companies have decentralized and put authority back in the profit centers. They have given them budget goals, and profit targets, and not micromanaged them on how to do it.

It's very hard to generalize. Some things are more effectively bought in large quantities as when there's kind of a generic market, and the strength of a large buy gives you the best price. But, that is a much rarer situation than the more complex market situations where individual buying is better.

Mr. NICHOLS. Well, you've educated me. I'll get my Forbes magazine and do a little reading.

What about your experience?

Mr. ROURKE. Mr. Chairman, as I keep pleading, with my vast 2 months of experience, I'll have to be a little bit cautious in how I respond to some of your questions.

But I did happen to review this particular arena with Secretary Taft today following his testimony, and the question is the value of the utility function of the Defense Logistics Agency. The short answer, Mr. Chairman, is they do perform a very valuable function in that commonality area where they can purchase in economic quantities for servicewide functions, indeed, as Secretary Lehman points out, the single unique situations for the service.

The question is, as always with a bureaucracy, have they gotten too far out? Have they engrossed too much? Have they gotten past their charter? Those are the kinds of things I think with the unique responsibility Secretary Taft has, and, indeed, the respec

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