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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.


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This is one field where a little more expenditure might result in much more economy.

The present small congressional committee staffs seem to me to be carrying a burden beyond the capabilities of the ablest people. This hampers detailed and continuous familiarity with the military budget. Only by continuous year-round scrutiny of the military budget from the early planning stages through appropriations and expendituresby permanent, well-qualified examiners-can the seasoned judgment necessary to produce clear and reliable information for the congressional committees be obtained. Investigations by such a staff would establish for congressional committees either verification or lack of justification for various items of the military budget, thus simplifying and expediting the hearings of the committees and freeing them for thorough_consideration of major policy aspects of the budget programs. By focusing their attention on essential points, such a staff

. could save the committees many valuable hours.

Accordingly, I suggest for your consideration the provision of such staffs to work with the military departments and the Bureau of the Budget on a year-round basis so as to follow the course of the military budget in its various stages from its inception, in the form of department budgetary estimates, through appropriations and expenditures.

Close cooperation between the armed services and Appropriations Committees of both Houses would fortify the efforts of the Secretary of Defense in tying authorizations and appropriations into a consistent and integrated military program.

Precedent for the foregoing suggestions, I understand, is to be found in the Joint Committee on Internal Revenue Taxation of the Ways and Means and Finance Committees.

In closing, may I say that I am particularly pleased to have been associated with this undertaking as it promises to be a substantial and concrete result of the tremendous efforts of Mr. Hoover and the other members of his Commission and of the task forces that worked with him. Although my own contribution has been modest, I thank you for giving me the opportunity of participating in this important task.

The CHAIRMAN. Mr. Eberstadt, I want to thank you again for this very comprehensive presentation of the over-all picture, and I am sure I express the thought of every member of the committee that we cannot begin to tell you how much it has helped us all to improve this bill and attain the objectives we have in mind.

I will pass up any questions I have at the moment and suggest that the committee members ask questions.

Senator Byrd, do you want to proceed?

Senator BYRD. I would like to ask Mr. Eberstadt, if I may, to endeavor to clear up any differences of opinion on the part of these officials who wrote these letters.

As I read the letter of the Secretary of Defense, he makes the suggestion as to the advisability of the departmental comptrollers to report to their respective chiefs of staff. Would you care to comment on that?

Mr. EBERSTADT. Yes; I will be glad to comment on it, Senator. The Secretary of Defense's letter, which I had not seen.until this morning,


I think it raises two points—one being the point that you just referred to. In one of the military departments the principal fiscal and budgetary officer, or comptroller, as we call him here, reports directly to the Secretary.

In the other two Departments
Senator KNOWLAND. What department is that?

Mr. EBERSTADT. That is the Navy. In the Army and in the Air Force, the principal fiscal and budgetary officer reports to the Secretary or an Assistant Secretary through the Chief of Staff.

Our recommendation is that the principal fiscal officer be directly under the Secretary or Under Secretary or an Assistant Secretary. I think Secretary Johnson raises the question without taking a definite position on it. I should say he doesn't take a final position; he raises the question for further consideration.

Senator BYRD. He raises another question. It has also been suggested that the requirements of a civilian deputy comptroller to serve under a military comptroller is unnecessary.

Mr. EBERSTADT. I would be pleased to comment briefly on that.

Senator BYRD. You think that the comptroller should report directly to the Secretary of National Defense and not to the Chiefs of Staff?

Mr. EBERSTADT. Senator, we are talking here about a comptroller in the office of the Secretary of Defense and counterpart comptrollers in the three Military Establishments. In the office of the Secretary of Defense presently the equivalent of the comptroller reports directly to the Secretary. There is no such question involved there at all.

In the Navy the counterpart of our proposed comptroller reports to the Secretary or an Assistant Secretary-I have forgotten which, but that is unimportant.

In the other two services, the principal fiscal officer reports through a Chief of Staff to the Secretary.

After very careful consideration, our conclusion is clear that in order to effect direct civilian control of the budget, it is advisable to have the comptrollers report directly to the Secretary of Defense in the Secretary of Defense's office, and to the three Secretaries or Under Secretaries or Assistant Secretaries in the three military Departments.

The question, of course, might be raised—and I anticipate it in my statement—that this might in some way obstruct or hamper or interfere with the line of military command.

I think experience indicates there is nothing to be feared along those lines, in the principal part of the organization-namely, the Office of the Secretary of Defense—there is not—and I think nobody would tolerate—any question as to whether the principal fiscal officer should report to the Secretary of Defense or not. I think that is perfectly clear. In the Navy for years this arrangement has existed.. I have never heard of any question as to its interfering with the military line of command or operations.

Senator BYRD. The Secretary says: I hold no pronounced views on these proposals, and am referring them to your committee merely for its consideration.

The Secretary then makes a suggestion in regard to the duties of the Munitions Board and the Research and Development Board and the Joint Chiefs of Staff.


Mr. EBERSTADT. That is another point. The bill as presently drawn purports to focus the entire authority of the establishment in the Secretary of Defense and affords the Secretary certain mechanisms such as the Joint Chiefs of Staff, the Research and Development Board, the Munitions Board, to which he can or cannot, as he wishes, resort for certain purposes and certain types of staff work.

The National Security Act as it exists today, gives the Joint Chiefs of Staff, the Research and Development Board, and the Munitions Board certain clear and statutory functions. These are to be performed, to be sure, subject to the authority of the Secretary. They are not independent grants of power.

The same question arises here, and I might say that this same point, I think, constitutes the main reservation on the part of the Bureau of the Budget. Does the Congress desire to set up the comptrollers with the fiscal machinery as a convenient facility for the Secretary of Defense, if he decides to use it, or may he use something else for this purpose if he wants to, or does the Congress wish to set up, under the Secretary and subject to his direction, certain organizational forms and mechanisms?

We have recommended the latter course, and in my statement I dealt with that subject also in an anticipatory sense. I think it could be said properly that authority has existed in two of the three military Departments—perhaps also in the office of the Secretary of Defensefor many years to do these things.

I recommend strongly to you the wisdom of setting up this structure and expressing congressional intention in the statute.

Senator Byrd. The Secretary concludes his letter by saying:

In view of the shortness of time that we have had to study the amendments, the Military Establishment may wish to recommend technical changes at a later time, but in general the document appears to be in excellent form.

I think we can take that as an endorsement of the amendment as prepared by you.

The Comptroller General, as I understand it, has endorsed the essence of practically the entire amendment.

Mr. EBERSTADT. I think we would regard the Comptroller General's letter as a complete endorsement, particularly on the last point that I have spoken to you about. The Comptroller General feels as strongly as we do that a certain stability of structure there, particularly at this time, would be conducive to good results.

Senator BYRD. The Treasury Department has endorsed it.

Mr. EBERSTADT. The Treasury Department letter raises two points, which in the meantime we have fully met, so that I think we can regard that as a complete endorsement.

Senator Byrd. The Bureau of the Budget, can you comment on the different suggestions?

Mr. EBERSTADT. The letter came in just before the hearing, but I think I could tell you what their views are. Shall I read the letter?

The CHAIRMAN. If you care to.
Mr. EBERSTADT. This is addressed to you, Mr. Chairman?

I am happy to give you the views of the Bureau of the Budget on the draft of a proposed title IV to S. 1269, which was prepared under the direction of Mr. Ferdinand Eberstadt at the request of your committee. The Bureau of the Budget subscribes to the general objectives of this proposed title. In several

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sections of the draft, however, Mr. Eberstadt has proposed language with which we are not in accord.

In his March 9, 1949, message to the Congress recommending improvements in the National Security Act, the President cited as one of the major flaws in the act the assignment by statute of many of the key responsibilities of the Secretary of Defense, not to the Secretary, but to boards, agencies, or other subordinate units in his office. The President recommended that the duties now placed by statute in the Munitions Board and the Research and Development Board should be recognized as responsibilities of the Secretary of Defense. He recommended that the act be amended to make possible the flexible use of both of those agencies and of the Joint Chiefs of Staff, as staff units for the Secretary of Defense.

May I comment there? That is the point I mentioned before. I would be inclined to differ a little bit with the language of this last paragraph of the letter. I think the present statute makes it perfectly clear that each one of these functions, assigned to certain groups, must be performed under the direction and authority of the Secretary; but a question, for example, arises under your present bill as to whether the Secretary could take the functions of the Munitions Board and assign them to the Research and Development Board, or take those of the Research and Development Board and assign them to the Joint Chiefs of Staff, if he thought that were advisable.

I do not think that is possible under the statute as it now exists. I think it might be possible as a legal matter, perhaps not as a practical matter, under the language that is suggested by the Bureau of the Budget

It certainly would not be possible under title IV in the form that we propose to you. I emphasize that the comptroller and the subsidiary comptrollers can do nothing except subject to the direction, authority, and control of the Secretary; but if these functions are to be performed under the direction of the Secretary, it is this agency and not some other extraneous group that performs it.

I think the Bureau of the Budget has a very basic point, Mr. Chairman, and I hope you do not regard it as an impertinent suggestion if I suggest it would be worth the while of the committee to hear them. I do not want to be their advocate. I am an unworthy advocate of a point of view to which I am opposed.

The CHAIRMAN. I think right here we might ask Mr. Mudge to get in touch with the Bureau of the Budget and have them suggest alternative language that we might consider, at least from the standpoint of measurement.

Mr. EBERSTADT. I will proceed with this letter, with your permission.
Mr. EBERSTADT (reading):

In its report on general management of the executive branch, the Commission on Organization of the Executive Branch of the Government, un the heading of "What is wrong with the executive departments and agencies,” noted that the line of authority from department heads through subordinates is often abridged by individual authorities granted to bureau or division heads and that department heads in many cases lacked sufficient authority to assign within their departments such responsibility as would promote economy and efficiency. The Commission also criticized many statutes and departmental regulations on the basis of the department's procedures. The Commission recommended that, under the President, the heads of departments be made fully responsible for the conduct of their departments, and urged that each department head should receive from the Congress administrative authority to organize his department and to place him in control of its administration.

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