Question. There are a total of approximately 230,000 dependents located in West Germany which would require evacuation immediately following a NATO contingency; What plans do you have for coping with the situation at the same time you begin conducting ground, sea, and air operations?

Answer. We have plans that cover a wide-range of options, for the evacuation of DOD sponsored non-combatants located in West Germany. Depending on the situation, evacuation may range from a gradual, deliberate movement to the United States, to an urgent deliberate movement when non-combatants are moved as rapidly as possible by surface or air transportation to the CONUS or to a safehaven of greater relative safety [deleted]. The evacuation could be deliberate or accelerated depending upon the evaluation of the threat and the availability of transportation. In some instances it may not be prudent to move non-combatants when evacuation would place evacuees in a position of greater danger.

Question. What are the commercial sea and airlift assets of our allies and to what extent can they be relied on in a NATO contingency?

Answer. Our allies have relatively few commercial passenger ships but they possess a significant number of commercial passenger aircraft. Only a few of the allied commercial passenger ships or passenger cargo ships of 1,000 tons or more are likely to be immediately available. They remain in port for only two or three days and then sail to various parts of the world.

Civil aviation companies of NATO countries operate over 1,500 heavy transport aircraft. Most have a seating capacity of 20 or more passengers and about 25 percent of these aircraft are capable of flying the North Atlantic non-stop with a large passenger load.

The number of aircraft that could be relied on for evacuation purposes would be contingent on several factors. Most of the long range aircraft would not be immediately available due to their operation on world-wide route systems; a large number of medium and short range aircraft could be available on several hours notice because of their operation on regional European routes. It should also be noted that a small number of all of these aircraft are off-line for maintenance purposes. Another important factor is that use of these aircraft may be constrained by national laws and regulations.

Question. In your statement you say that DOD considers the F-14 contract a valid contract.

It has been reported that the contractor will refuse to continue to produce unless the contract is restructured.

What will you do if the contractor rejects Lot 5 for the 48 aircraft and refuses to perform?

Answer. First let me say that this issue could only arise if a decision is made to continue with the program and if a decision is made to exercise the option for production of Lot V aircraft. If the Navy exercises the option to purchase Lot V and if the contractor were to refuse performance, there would obviously be a confrontation which contained a potential for litigation. In my opinion, it would not be in the best interest of the Government for me to discuss at this time what might be the Navy's litigation or negotiating position under such circumstances. We will, of course, continue to consult with the Committee and keep you informed in a timely manner of the developments in this program.

Question. Provide for the record the accounting procedures employed for U.S. funding and payment of Laotian troops which are fighting against Communists in Laos.

(Information classified and furnished to the committee separately.)

Question. It has been reported that more than 6,500 Air Force officers and enlisted men work for other agencies at the direction of the Department of Defense.

Will you provide for the record the number of officers and enlisted men which perform duties outside of their service at the direction of DOD?

Indicate also why these duties must be accomplished with uniformed personnel. Answer. These personnel perform a wide range of duties where military expertise and knowledge are essential. For instance, personnel in joint commands

perform command and planning functions in preparation for employment of forces if required. Marine embassy guards have traditionally been military. Personnel assigned to MAAG, Missions or Military Assistance groups are providing assistance and training to allied military forces. Military assigned to Defense Agencies provide the military knowledge that assures that these agencies provide timely support to the military commands. Authorization of military personnel to these agencies are reviewed each year by the ASD (Comptroller) and ASD (Systems Analysis). I feel that they are required to perform essential missions of the Defense Department and U.S. Government.

I will provide for the record a table showing the number of personnel performing duties outside their service.

MILITARY PERSONNEL PERFORMING DUTIES OUTSIDE OF THEIR SERVICE, JUNE 30, 1971

Question. On page 98 of your statement you indicate that “we have found no evidence that the Soviet Union can produce comparable weapons systems at a lower cost than we do in this country." This needs elaboration, particularly when we consider the cost overruns that we have experienced with some of our major

systems and the fact that you also state on page 98 that the Soviet "defense sector is probably the most efficient and productive of any part of the Soviet economic system."

Answer. Our assessments as of now indicate that "the defense sector is probably the most efficient and productive of any part of the Soviet economic system." This is based on evidence that the Soviet defense and space sector, including Soviet industry, is considered a prestigious segment of this society and receives strong political support. Their industry, for example, is allocated their best trained scientists, engineers, and production people. In addition, it appears that the output growth within that sector surpasses the growth in their civilian products industries. N. N. Semenov of the U.S.S.R. Academy of Sciences attributes Soviet success in high-speed aviation, space and atomic energy to the fact that "our most important scientists and engineers work on these problems." Technological management in defense activities is experienced and enjoy stability, e.g., the airframe design bureaus are headed by prominent designers (Tupelov, Ilyushin, Mikoyen) who have headed bureaus for 20 or more years.

A distinguished economist who has studied the Soviet system for years notes three conditions that seem to favor military activities.

"First, the familiar and ubiquitous supply difficulties of Soviet industry succumb much more easily to the gentle coaxing of military priority and expediting. Second, Communist party interference is at a minimum in military work. Third, and most important, military R&D and production benefit from the close, interested and demanding supervision of the consumers of the product."

Despite the consensus that the Soviet defense sector is more efficient than their civilian sector, there is no evidence that they can produce comparable weapons systems with lesser resources than can the U.S. Keep in mind that we are talking about comparable weapons of the same general sophistication. We have generally gone for greater sophistication, more habitability plus some redundancy. This increases our cost.

Question. On page 92 of your statement you state that with a continuing Soviet effort that "we must expect the Soviets will be capable of reducing our technological lead in some areas, and at some point in the future, we could even lag in certain critical areas." Would you elaborate on this point with particular emphasis on the latter point, that is, our possibly lagging the Soviets in the future in "certain critical areas."

Answer. As I see it, there are two paths through which the expansion of Soviet technology could cause erosion of the technological superiority that we currently enjoy. One would be superior technological accomplishment in the identical weapons system areas. The other would be technological accomplishments in those particular areas capable of nullifying the value of our technology— technological countermeasures in the most general sense.

As an example of how both kinds of erosion can occur, consider the case of the strategic bomber. At the moment we believe we have a superior strategic bomber aircraft technology. However, additional prototypes of the Soviet supersonic, swing-wing strategic bomber, called "Backfire," are now being flight tested. This aircraft could go into production in the near future and, for a time, would be technologically superior to anything we have deployed.

On the other hand, it is certainly true that the Soviet air defense capability is impressive. At medium and high altitudes we believe it is the best in the world. Were they to improve their coverage at low altitudes, they could make the costs of low altitude bomber penetration, using current penetration technology, unacceptably high. In this case a critical area is the technology underlying low altitude penetration. The penalty for failing to advance in this area would be to yield our lead in penetration capability. We have chosen to provide some new technological options so as to deny paying that particular penalty.

Question. It is projected, on conservative estimates, that there will be 1.2 million military retirees by fiscal year 1980 and that the cost of military retirement pay in that year will be almost $7 billion. In this regard, what is the administration position on integrating the proposed changes in the military retirement system with any changes in recomputation and/or survivor benefits?

Answer. The military retiree survivorship proposal, the one-time recomputation proposal approved by the President, and the military retirement revision recommended by an Interagency Committee and now undergoing review in the Department of Defense, could each be handled independently since they are consistent.

The Department of Defense is particularly concerned that early action be taken on the survivor benefit proposal which, having already passed the House of Representatives, is now pending before the Senate. We strongly believe that early action is essential to establish a meaningful system for military personnel to share their retired pay with their survivors at a cost which is within reach of all segments of the military retired population.

The recomputation proposal, although devised to dovetail with the Interagency Committee's recommendations for revision of the non-disability retirement system, is not inconsistent with any foreseeable change which may be made in the military retirement system. Accordingly, the recomputation proposal could be considered either in conjunction with a proposed revision of the retirement system or separately.

Question. Would you provide for the record what the net U.S. balance of payments is as a result of having forces in Europe. Provide definitions, details, etc. where appropriate so that one can put any number provided in proper perspective.

Answer. During the four year period FY 1968-FY 1971, the net U.S. balance of payments deficit on the military account with NATO European countries averaged $1,020 million annually. These data exclude the impact of financial and other related measures under United States-Federal Republic of Germany offset agreements.

Data on the deficit on military account are derived as the net of gross U.S. Defense expenditures entering the international balance of payments in NATO Europe less Defense cash receipts from this area. The table below provides the detail by fiscal year for this period and also reflects the impact of financial and related transactions under US/FRG offset agreements.

U.S. DEFENSE EXPENDITURES ENTERING THE INTERNATIONAL BALANCE OF PAYMENTS IN NATO EUROPEAN COUNTRIES AND DEFENSE CASH RECEIPTS, FISCAL YEAR 1968-71

1 If financial and related measures undertaken to neutralize the balance-of-payments impact of Defense activities under US-FRG offset agreements are included, the average annual net deficit, over the 4-year period would be $692,000,000, and, by fiscal year, the respective net deficits would be:

1968. 1969.

1970. 1971.

Millions

$497

333

1,140

799

An explanation of the expenditure and receipts captions in the table follows: U.S. Defense Gross BOP Expenditures.-These data include gross expenditures entering the international Balance Of Payments (BOP) by U.S. military and civilian personnel and their dependents, including expenditures for foreign goods and services by non-appropriated fund activities; expenditures for foreign nationals (direct and contract hire); DoD expenditures for construction and procurement of equipment, materials supplies and services and expenditures under the Military Assistance Program; and Defense-related expenditures by other agencies.

Defense Cash Receipts.-These data include primarily (a) sales of military items through the U.S. Department of Defense and (b) sales of services and excess personal property. They do not include estimates of receipts for military equipment procured through private U.S. sources, except where these are covered by government-to-government agreements and data are available, e.g., the Federal Republic of Germany.

These data differ somewhat from data on the Defense account shown in the Department of Commerce publication Survey of Current Business. Commerce data exclude, on the payments side, small amounts representing retired pay,

claims and grants and net changes in DoD holdings of foreign currencies purchased with dollars. On the receipts side, Commerce data (generally on a delivery basis) exclude all military sales through commercial channels. These data are included in Commerce accounts under other entries.

The payments balance on the Defense account with NATO European countries obviously is a factor in the overall U.S. balance of payments position. However, direct comparisons between the military account deficit and the overall U.S. payments position appear inappropriate. We need to keep in mind that the U.S. payments position is derived from consideration of all U.S. transactions with foreigners. These transactions are very substantial. For example, according to the December 1971 issue of the Department of Commerce publication Survey of Current Business, exports and imports of goods and services, taken together, represented transactions of more than $122 billion in CY 1970.

Question. Two years ago when a Joint House-Senate Subcommittee cxamined the merits of CVAN-70 there were differences of opinion among the Joint Chiefs concerning the number of attack carriers that are needed.

Would you provide for the record—

1. The FY 73 recommendations of the Joint Chiefs on the CVAN-70?

2. The 5-year Defense Plan (F.Y.D.P.) active carrier force level through 1980?

3. The recommendation of the Joint Chiefs on the number of active carriers by year through 1980?

Answer. 1. The Joint Chiefs of Staff collectively and individually as Service Chiefs support the Defense program and budget proposed by the President for Fiscal Year 1973. [Deleted.]

2. As I noted on page 79 of my classified statement, the Five-Year Defense Program calls for [deleted].

3. The mid-term objectives plan (FY 74-81) of the Joint Chiefs of Staff specifies [deleted].

Question. Logistics capabilities of our NATO allies are a national responsibility. The United States must accept what each allied nation says its logistics capabilities are to fight a conventional war. How precise are our estimates of our NATO allies' logistics capabilities. Doesn't any imprecision in this matter magnify the problems we have in making realistic plans for potential conflict in Europe?

Answer. Each NATO nation determines war reserve requirements by applying factors which take into account its own deployment policies, tactics, planned weapons employment, and organizational and mission requirements. Annually, alliance members respond to the Defense Planning Questionnaire (DPQ) in which they report to the Defense Planning Committee the units and amounts of material and supplies available to support their forces earmarked for NATO. There is no reason to presume that allied reports are not accurate. Other information is available to SHAPE which indicates that Allies have additional stocks in the national reserves above those reported in the DPQ. These reserves would be available to support other national forces when they are committed to the defense of Europe.

After receipt of the DPQ, national plans are analyzed by the NATO Military Committee and the SHAPE staff. Countries which have imbalances in stocks are encouraged to plan for additional procurements. As a result of these reviews, and the Study on the Alliance Defense in the 1970s, the actual and planned changes that countries report for the 1971-76 time frame indicate that our allies are taking positive action to make significant improvements to their forces. Not only have our allies pledged $2 billion over the next five years, their defense budget reflect a 1.5 percent per annum increase measured in constant dollars. The United States and the FRG have the preponderance of the active duty combat ready force in central Europe. The FRG, which represents the largest national ground force in central Europe, has a highly organized logistic support system, to include adequate, trained logistic units in the active force structure, and about a [deleted] level of critical ammunition and significantly greater stocks of petroleum, oils, lubricants, equipment, and spare parts.

The United States makes its plans based on what will be required to move and supply the forces we will provide to a NATO conflict. These plans include using a portion of host nation resources such as transportation resources, labor, ports, and certain stocks such as petroleum. Our plans are carefully worked out with our allies to insure that US requirements do not unduly impinge on host nation resources which our allies will require for support of their own forces.