of departments be made fully responsible for the conduct of their departments, and urged that each department head should receive from the Congress adminisistrative authority to organize his department and to place him in control of its administration.

A number of the provisions of sections 401 and 402 of the May 3, 1949, draft of a proposed amendment to S. 1269, are inconsistent with the recommendations of the President for amendments to the Security Act and with the findings and recommendations of the Commission on Organization of the Executive Branch with respect to departmental management generally.

Section 401 (a) would establish by statute in the Office of the Secretary of Defense an office to be known as the Office of the Comptroller. I recommend that, in lieu of establishing this office by statute, language be used which will authorize the Secretary of Defense to appoint a comptroller. The creation of an "Office of the Comptroller" or other suitable internal organizational arrangements could then be accomplished by administrative action.

Section 401 (b) would place statutory duties upon the Comptroller of the Department of Defense. We recommend that the bill be worded in such a way as clearly to place those duties in the Secretary of Defense and authorize him, in his discretion, to have the Comptroller advise and assist him in carrying out those duties. Suitable language to accomplish that purpose would be language parallel to that which now appears in S. 1269, which describes the relationship between the Secretary of Defense and the Munitions Board, the Research and Development Board, and the Joint Chiefs of Staff.

Section 402 (a) would require that budgeting, accounting, and related activities in the military departments be organized and conducted in a manner consistent with the operation of the Office of the Comptroller of the Department of Defense. I recommend that reference to "the Office of the Comptroller" be deleted and that "Office of the Secretary of Defense" be substituted.

Section 402 (b) contains provisions with respect to the organization for budgeting, accounting, and related activities in the military departments which are even more detailed and restrictive than is section 401 with respect to the Office of the Secretary of Defense. This section would establish by statute an Office of Comptroller in each military department. It would place authority and responsibility for all budgeting, accounting, and related activities in the departmental comptrollers. It would require that the comptroller of each military department report directly to either the Secretary, the Under Secretary or an assistant secretary of that department. I recommend that section 402 (b) be rewritten to authorize the secretary of each military department to appoint a comptroller; to place authority and responsibility for budgeting, accounting, and related matters in each departmental secretary who, in his discretion, could have the comptroller advise and assist him in performing those duties; and, finally, to include no provision which would prevent the Secretaries of the military departments, subject to appropriate direction by the Secretary of Defense, from organizing their staffs in a manner which, in their judgment, will best equip them to discharge their responsibilities.

Section 409 (b) would authorize the Secretary of Defense, with the approval of the Director of the Bureau of the Budget, to adjust the civilian personnel strengths of the three military departments when functions or activities are transferred among them. At the present time there is a fixed statutory ceiling upon civilian employment in the Navy Department and a similar ceiling covering both the Army and Air Force Departments. It is not clear whether the effect of section 409 (b) would be to supersede the existing law fixing the numerical ceilings for personnel referred to above or whether adjustments would have to be made within those ceilings. I believe this point should be clarified and would have no objection to the elimination of this statutory personnel limitation. Another alternative would be the establishment of one ceiling for the entire Department of Defense.

Section 412 would authorize the Secretary of Defense to cause property records to be maintained in the three military departments,” so far as practicable on both a quantitative and monetary basis," under regulations which he would prescribe. It is not known at the present time the extent to which quantitative and monetary data should be maintained covering the property of the Department of Defense. I would suggest, therefore, that the phrase "so far as practicable on both a quantitative and monetary basis" be deleted from this section.

It is my understanding that the proviso in section 413 is intended to insure that the provisions of this title in no way infringe upon the Government-wide

budgetary, accounting, reporting and related responsibilities of the President, the Bureau of the Budget, the Treasury Department or the Comptroller General. While this title makes certain provisions for the handling of budgetary and fiscal matters for the Department of Defense, it does not affect budget and accounting affairs which are the responsibility of any officer or agency not a part of the Department of Defense.

I appreciate the opportunity to comment upon these proposed amendments to S. 1269.

Sincerely yours,

F. J. LAWTON, Acting Director.

Mr. EBERSTADT. It is particularly pleasing to be able to advise the committee that ex-President Hoover and Mr. Bernard M. Baruch have been so kind as to review these proposals. I am authorized to state that Mr. Hoover endorses them and recommends their favorable consideration. Mr. Baruch has permitted me to state that he regards them as constructive and as promising to improve the means of determining the needs and expenditures of the military.

Secretary of Defense Johnson has given his approval to our efforts but without commitment to the exact wording of the present draft. Our drafts were transmitted to the three military departments who, while generally favorable, raised certain points which I am sure your committee will wish to consider carefully before reaching your final conclusions.

And so while some differences of view as to form and language have been expressed, we met with an extraordinary unanimity of purpose and all along the line received encouraging constructive assistance and support.

Thus we can lay before you today a draft of the proposed new title IV which, generally speaking, represents the composite views and combined efforts of a broad group. It is not presented in any dogmatic spirit as the last word on this important and complicated subject. We offer it simply as a fair starting point for your committee's deliberations.

For your convenience, we accompany the draft with an explanatory statement and some charts. The statement reviews the various provisions of the proposed new title IV, section by section, setting forth the reasons for each provision, and, generally, their operation and effect.

Since those who have been working on the preparation of the proposed new title IV have not been officially advised as to the action taken by your committee on section 3 of S. 1269, which proposes to convert the National Military Establishment into a single Department of Defense, the draft of title IV submitted herewith, as well as the supporting statement, are presented in the alternative. The provisions of the proposed new title are equally essential and applicable whether the National Military Establishment remains in the form of three Executive Departments, as it now is, or is converted into a single Department of Defense.

The immediate purposes of the proposed new title IV are twofold: (1) to provide for the presentation of the budget estimates and authorized programs in readily understandable form so as to afford the Secretary of Defense, the President, the Congress, and the people, a convenient means of grasping clearly the purposes for which funds are being requested and the various amounts which are to be devoted to these specific purposes, and (2) to put at the disposal of the Secretary of Defense and the Secretaries of the three military departments, the

assistance and technical advice, the organizational mechanisms, and the forms and procedures essential to effective implementation of their budgetary and fiscal responsibilities.

Its broad aim and purpose are to promote efficiency and economy throughout the Military Establishment.

Enactment into law of this proposed new title IV will result in furnishing, in concise and intelligible form, the information essential to clear understanding and firm control of our very substantial military needs and expenditures by the Secretary of Defense, the Bureau of the Budget, the President, the Congress, and the people. Especially, it promises to be of aid to the Secretary of Defense in carrying his heavy responsibilities. By setting up sound budgetary forms, organizations, and procedures, you will give all of those responsible for the formulation and execution of our defense policies up-to-date tools adapted to their present needs.

There will undoubtedly be some suggestions for improvement in the form and language of the proposed title IV and also some objections to certain of the provisions. For example, the point was raised that authority already exists, or at least would exist under the language of S. 1269, for appointment of comptrollers in the Department of Defense and in the military departments, and that the Secretaries could now assign to comptrollers such powers and duties as they deemed proper, including those prescribed under the proposed new title IV. This may or may not be so, but the fact remains that this authority has existed in certain departments for years without the accomplishment of the steps that we recommend. Furthermore, legislation has been enacted from time to time in the past diffusing some of these duties among different bureaus and technical services. There has not as yet, however, been any provision for a consolidated approach to these problems. One way to make absolutely sure that this is done promptly and in a manner acceptable to the Congress is to enact title IV into law. Therefore, I recommend that congressional intention in this matter be clearly set forth by statute.

Another question relates to the placing of the military comptrollers directly under their respective civilian Secretaries, Under Secretaries, or Assistant Secretaries rather than under Departmental Chiefs of Staff. The budget is one of the most effective, it not the strongest, implement of civilian control over the Military Establishment. This would seem to support the proposition that the comptrollers would report directly to the civilian heads of the Military Establishment. Nor would this arrangement interrupt or hamper the chain of military command. It exists in the office of the Secretary of Defense today and has to advantage been in effect in one of the military departments for years without in any way prejudicing military command or operations. The question of the desirability of specifying the qualifications of the principal and departmental comptrollers has also been raised.

This is a point of substance, but there are difficulties in expressing the necessary qualifications in statutory language. Obviously, unless the several comptrollers are properly qualified for the performance of their respective tasks, the system will break down. The fact that a man is a professional accountant would supply one-but by no means all-of the qualifications essential for these important posts. Experience and demonstrated capacities in this field are essential criteria. I

invite your further consideration of this important point in the hope that you can find statutory language to meet this need which would be neither purely pro forma nor exclude well qualified people from appointment to these posts.

In order to put into proper perspective the purpose and effect of the measures that are now proposed to you, and to identify their position in the budgetary process, I take the liberty of outlining briefly the basic steps involved in formulation and execution of the military budget.

The Security Act of 1947 sets up a sound and, subject to certain improvements, adequate framework for the conception, development, and execution of the military budget. The process starts with the National Security Council upon which the statute lays the obligation of striking a balance between our foreign risks and commitments and the size of our armed forces, so that our military establishment shall be neither too large nor too small, weighed in the light of our national security needs and resources. The importance of sound conclusions at this early stage of the budgetary process is sometimes overlooked but it vitally affects the size of our military budget.

In order that its recommendations to the President shall be valid, the National Security Council must obviously be fully and correctly informed as to potential enemies' intentions and resources. For this purpose, the Council has the benefit of the views of the Central Intelligence Agency which the National Security Act soundly placed directly under the National Security Council. The act also wisely included the Chairman of the National Securities Resources Board among the membership of the National Security Council, so that our domestic economic capabilities should receive due consideration in determining the size of our military and other defense measures.

Possessed of the views of the National Security Council and of such other advice as he desires, it is contemplated that the President should lay down, in general outline, the initial dimensions of the military budget, which then passes through the Secretary of Defense to the Joint Chiefs of Staff. Their functions in this connection are threefold: (1) To prepare strategic plans, (2) to assign logistic responsibilities in accordance with such strategic plans to the three military services which thereupon translate their military responsibilities into terms of personnel and material; and finally (3) to review the major material and personnel requirements of the military forces in accordance with such strategic plans and logistic assignments.

At this point strategic plans, translated into personnel and end-item requirements, are in turn converted into monetary terms grouped under the individual programs and objectives which we call the performance budget. Here is a particularly favorable opportunity to spot and to eradicate excessive duplications and expenditures.

Here, too, occurs the preliminary pricing of these detailed plans in order to reflect the dollar cost of the proposed military programs. If this cost is in excess of the amount deemed by the President to be necessary or available for military defense, the Joint Chiefs of Staff must develop alternative and less expensive programs.

The budget staffs of the Secretary of Defense and of the three military departments should participate actively with their counter numbers in the Joint Chiefs of Staff in the planning and the scheduling of this work, developing criteria as well as carrying on continuous analy

ses of budget estimates from the standpoint of the price tags attached to the proposed programs.

In the process of developing the military budget estimates, the Research and Development Board and the Munitions Board have important roles to play in seeing that the various programs for research and for procurement are soundly conceived and economically integrated.

When the strategic plans of the Joint Chiefs of Staff have been brought within the prescribed fiscal limitations, final budget estimates within the military departments are made. Thereupon, they are ready for submission to the Secretary of Defense for final analysis, review, and integration. With the advice of the War Council, if the Secretary of defense desires it, he is then in a position to place his stamp of approval on the budget estimatees and to submit them through the Bureau of the Budget to the President, who in turn transmits them to the Congress. When Congress has acted the fiscal years military budget is set and the responsibility of the Secretary of Defense is to see that the programs are carried out within the limitations of expenditure provided in the congressional appropriations.

Every step in this process has a vitally important relation to both economy and efficiency in our Military Establishment-five in particular.

First. The National Security Council's responsibility to advise the President on bringing the size of our Military Establishment into sound balancee with our foreign risks and commitments and our domestic economic capabilities.

Second. The Joint Chiefs of Staff responsibility to see that their strategic plants and the logistic implementation thereof by the military services are soundly integrated so as to produce the maximum military strength within the prescribed fiscal limitations.

Third. The preparation and presentation of the military budget, throughout its various stages, in such clear and comprehensible terms that those responsible for preparing it, passing upon it, and executing it, can readily understand the purposes, objectives, and programs which it is intended to serve, and the amount of funds allocated to these several purposes. This is the phase with which we are particularly concerned today and this is a purpose which the proposed new title IV is intended to accomplish.

Fourth. A clear understanding by the Congress of the purposes which the military budget is intended to implement, so that the Congress authorize the programs which it approves and appropriate therefore the sums that it regards as essential for their cousummation. Fifth. A system of follow-up or audit in the broadest sense of the term to make sure that the funds appropriated by Congress have been used for the purpose intended by Congress in the most economical and efficient manner.

Each of these steps is important; each is directly related to efficiency and to economy. The passage of the proposed new title IV will be a long step forward, but it alone cannot assure either economy or efficiency. In order to achieve these goals, the entire budgetary processes as outlined above must operate effectively.

With your permission I would like to say a word about congressional organization and procedures for dealing with the military budget.