Are you making changes in that present system? Is it reasonable to have an average of one permanent station move a year?

Mr. KELLEY. No; it's not reasonable in the sense of being efficient, but the frequency of those moves has been driven by conditions over which the services have very limited control. One of the conditions that drove those frequent moves was, for example, the large number of individuals on 1-year tours in Southeast Asia. Another was the 2-year draft obligation. Another was the requirement that the services, particularly the Army, had to accept releasing people early in order to stay within the limitation of man-years authorized for the individual services.

Senator BYRD. You are getting away from the 1 year, you still have the 1-year limitation but that will apply to fewer and fewer men as far as Vietnam is concerned. You are not drafting to any great extent now, so the 2-year draft requirement will be to some considerable extent eliminated.

Mr. KELLEY. Yes, sir; and that will be reflected in a lengthening of the assignment tours of individuals. The average assignment tour will be longer in fiscal 1973 than it was in 1972.

Senator BYRD. I noticed you put the cost at $1 billion. Do you think that will be reduced?

Mr. KELLEY. Yes, sir; it has to be reduced and it will be reduced as the period of assignment is lengthened. My characterizing of the effects of turbulence is recent past tense and not a forecast of things as they will be in fiscal 1973.

Senator BYRD. So you expect an improvement for 1973 in that respect?

Mr. KELLEY. We expect a modest improvement in 1973. The reason that I included this as a chief manpower issue is because I think it bears a causal relationship to so many of the problems that we have with people in the Armed Forces today. I think the problems associated with frequent moves should be a compelling force that drives us to build stability into the system and to consider every one of our major programs and every one of our personnel policies in terms of whether they contribute to stability rather than to turbulence.

DISCIPLINE

Senator BYRD. As one who is responsible for personnel policy, how do you size up the discipline in the Armed Forces now with particular reference to the Army?

Mr. KELLEY. I think it is tremendously improved, Senator Byrd, over what it was, say, 2 years ago. I think this is a reflection of two major factors, and I am sure there are others. One of the factors is that the Vietnam war, particularly because of the extent of our manpower involvement, certainly confused many of our young people and more or less polluted the atmosphere.

The second factor was that the turnover of command personnelpetty officers, squad leaders, first sergeants, company commanders, platoon leaders was so high that the individual just never had an opportunity to establish an effective working relationship with a group of people, and without the force of good leadership, the breakdowns of discipline were frequent.

As the Army has the opportunity to keep people in place a little longer and is doing an increasingly better job in training people, supervisory as well as non-supervisory, there is a better environment for control and discipline. I think the Army and the other services have made great strides. This is reflected in, if not a lowering, at least an apparent plateau in what had been a disturbing rise in the number of absentee incidents and the rate of desertions in the services.

There are some indications in the first quarter of this year that this picture has seen its worst and is beginning to improve.

Senator BYRD. The desertion rate has seen its worst?

Mr. KELLEY. It has seen its worst.

Senator BYRD. What was the average assignment prior to fiscal year 1964, which is before the Vietnam war? Was it somewhere around a year, slightly over a year?

Mr. KELLEY. I have figures for Army tour lengths in Europe in fiscal year 1964. I will supply them for the record.

(The information follows:)

In fiscal year 1964, the earliest year for which statistics have been maintained, the Army experienced in Europe an average tour-completion rate of 26 months for enlisted personnel and 32 months for officers. In fiscal year 1971, the average had dropped to 16 months for enlisted personnel and 23 months for officers.

RELATED COSTS

Senator BYRD. If my recollection is correct, and if it was not much more than a year, it seems to me there may be other policies within the Defense Department which leads to the short tour.

On page 19 you use the figure 57 percent or 52 percent, as the case might be, that is allocated to pay and related costs; 57 percent in fiscal 1973 of the outlays, 57 percent of the outlays will be for pay and related costs.

My question is this. When you speak of related costs, have you included such things as troop housing, recruiting expenses, medical expenses, other than the command post program. Are all of those reÎated costs included?

Mr. KELLEY. No, sir, they are not. I wonder if Mr. Detwyler might respond to that. Can you tell us, Carl, specifically what items are included in the account "pay and related costs"?

Mr. DETWYLER. Yes, sir, we have the military personnel appropriations for both the active forces and the Reserve components. We have retired pay, the cost of our volunteer program, family housing, our medical CHAMPUS program and the civilian payroll. Senator BYRD. Do you have troop housing?

Mr. DETWYLER. No, sir.

Senator BYRD. Should not that be part of related costs?

Mr. DETWYLER. It could be, but we have difficulty trying to put a cost factor on it, sir. We have tried to identify things that we could specifically put a cost tag on and not have to estimate.

Senator BYRD. How about recruiting expenses?

Mr. DETWYLER. They are not in here.

Senator BYRD. In other words, the 57 percent is really a minimum, then?

Mr. DETWYLER. It certainly does not include all the costs, sir; you are entirely correct.

Senator BYRD. The point I am suggesting is, it seems to me a rather serious one. I am not saying salaries should not to be what they are, but for every defense dollar we spend we are going to have considerably less than 50 cents that can go into military hardware.

Mr. KELLEY. Yes, sir.

Senator BYRD. With outlays it goes up to 57 percent for fiscal 1973, even though some of the costs really are not, recruiting, for example, and troop housing is not included in that figure. So what the Congress and the Defense Department, as I see it, are faced with for the future is that we have our personnel costs so high that we are going to have difficulty in buying submarines and destroyers and aircraft and guns and tanks and so forth. Does that seem a fair assumption?

Mr. KELLEY. That is a good statement of the problem.

Senator BYRD. How many personnel do we have? What is the total personnel in the Pentagon now?

Mr. KELLEY. The total personnel, military and civilian, is about 30,000. I can get a more exact figure for the record.

(The information follows:)

The actual number was 24,988 as of 31 December 1971.

Senator BYRD. Approximately 30,000.

To get back to the previous question, perhaps maybe I should address it to you, with the Secretary's permission. The Pentagon spends about a billion dollars each year on beef for the messhall. Is that included in the 57 percent?

Mr. DETWYLER. Yes, sir.

Senator BYRD. And all of the food for the messhalls?

Mr. DETWYLER. Yes, sir, plus the allowances for subsistences.

HEADQUARTERS IN SHAPE

Senator BYRD. I have some questions in regard to NATO but I am not certain from your responses to other members of the committee whether they should be addressed to you or to someone else. What is your feeling in that regard?

Mr. KELLEY. I do not know what kind of questions you have in mind, Senator.

Senator BYRD. We will start and see how it works out. I understand there are 22 NATO headquarters in SHAPE. Is this not a needless number of headquarters? Do you feel each of these headquarters is essential?

Mr. KELLEY. I think questions of that variety should be directed to Secretary Laird and Admiral Moorer. However, we would be happy to supply that information for the record, but I think they can speak directly to it.

(The information appears on p. 74-77.)

RESPONSIBILITY FOR PERSONNEL ASSIGNMENT TO EUROPE

Senator BYRD. Let me ask you this and I think it is along the line of Senator Thurmond's question but it will not hurt to ask you again.

Who determines whether the number of U.S. personnel assigned to Europe should be 310,000, 250,000, 350,000, or what, or some other figure?

Mr. KELLEY. That is a determination which is made between the Secretary of Defense, the Joint Chiefs, and National Security Council.

OVERSTAFFING

Senator BYRD. Just one final question. You in your colloquy with the chairman very candidly stated you thought that there was overstaffing and that that overstaffing applied elsewhere as well as the military. In private industry, if management runs into problems financially, that sort of tends to take care of the overstaffing, does it not?

Mr. KELLEY. Yes, sir; it does.

Senator BYRD. And we do not have that same situation in Government.

Mr. KELLEY. There are many dissimilarities between private industry and Government. That is one of them.

Senator BYRD. As Assistant Secretary for Manpower, would it not be a logical top priority program to reduce the overstaffing? Mr. KELLEY. Yes, sir; I think that is a logical priority. Senator BYRD. Thank you, Mr. Secretary.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator.

MANPOWER COSTS

Going back to this thing, I want to make clear when we talk about the personnel costs, retirement costs and manpower costs, that is no reflection on the manpower. If we put a little more money on quality servicemen and stop retiring so many in their forties, we can clear up this manpower cost picture a little, and have a little more money left to buy weapons because they are skyrocketing right along. We want to try to get into that procurement, too. I know you and Mr. Laird do.

On this manpower cost, Senator Byrd, the figures that I have, this was 4312 percent of the Defense budget in fiscal year 1964, and in this budget they are 56.8 percent. If housing, recruiting and similar items are added the figure approaches 67 percent.

Senator BYRD. Mr. Chairman, would you yield at that point? The CHAIRMAN. Yes.

Senator BYRD. You mean, in other words, two-thirds of each dollar spent is for manpower and pay and related costs.

The CHAIRMAN. Yes, really related. If you add housing, recruiting and so on-and recruiting is increased by this increased number of men you are handling, in part at least-you get 67 percent. But I think in the hard thinking that is better to use the 56.8 percent.

Senator BYRD. But, in any case, if the Nation agrees to spend $80 billion on defense, the Nation will get very little military equipment, very little military hardware for that $80 billion?

The CHAIRMAN. The relative percentage is what I have said.
Senator BYRD. About a third.

The CHAIRMAN. Matters that go directly and indirectly to the manpower levels approach that 67 percent.

Senator BYRD. Is that not another reason then that every effort should be made to reduce the total manpower that we have in the military?

RETIREMENT PAY: ACTUARIAL TECHNIQUES

The CHAIRMAN. Yes, I think it is necessary that we stop retiring them at such an early age.

General, you gave us the $129 billion figure, accrued liability for retirement pay. It would be that at the end of fiscal 1973 ?

General BENADE. That is right, sir.

The CHAIRMAN. How do you calculate that?
General BENADE. Through actuarial techniques.

The CHAIRMAN. What are those actuarial techniques?

General BENADE. It represents the liability incurred for services already performed. It represents that amount of money which if invested at interest, in this case 312 percent, would be required to pay retirement benefits for service already performed.

The CHAIRMAN. To hold it down to $129 billion would we have to appropriate it into a trust fund?

General BENADE. That is right, sir.

The CHAIRMAN. What rate of interest would it draw?

General BENADE. 311⁄2 percent.

The CHAIRMAN. Would we accumulate enough by that time to pay off this obligation?

General BENADE. Yes, sir.

The CHAIRMAN. Suppose we do not put up the $129 billion, what is the situation then?

General BENADE. As it is today, sir. It is handled each year as part of the annual appropriation and the amount steadily rises each year. The CHAIRMAN. If we do not deposit the $129 billion obligation in a trust fund and let it draw interest, how much is it going to cost the Treasury year after year to pay it off in addition to the $129 billion? General BENADE. I cannot answer that, Mr. Chairman. I would point out that by not having it in a fund the Government, of course, is getting the use of that money, so one balances off against the other. The CHAIRMAN. I am trying to get the figures from you. How much would that $129 billion earn if we put it now in a trust fund? Do you have any calculations on what the earnings would be from now until the time it was paid out?

General BENADE. I do not have it, sir.

The CHAIRMAN. Do you know anyone in the Pentagon who does? General BENADE. No, sir. We can certainly make such a calculation as to how much interest $129 billion would earn. It is a simple calculation. I just do not have it with me.

The CHAIRMAN. I think your answer of $129 billion should have that qualifying factor. It would be $129 billion provided you put up the money now and let it draw interest, but if you do not you are going to have to pay a billion more.

Senator BYRD. Just to make the record more complete, I wonder if we could ask the general if he would supply for the record the figures for the unfunded military retirement liability beginning with, say, fiscal 1964, 10 years ago. Bring it year by year to fiscal 1973.

General BENADE. I have the figures with me from 1967, sir, which I can provide now and I will be glad to provide the others. (The information follows:)

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