Mr. CASE. That would sound logical, but in my area the general announcement made has been they were looking for riding horses, and that is what they were always shown. I have been at the remount station where the officer was buying, and the only thing shown there was riding stock.

Mr. HARDY. I think the reason for that is that we have bought so many more riding horses than we have draft horses.

UNIFORMS FOR GRADUATES OF OFFICER CANDIDATE SCHOOLS

The CHAIRMAN. General Gregory, we were referring awhile ago to supplying graduates of the officer candidate schools with uniforms. I have since been advised that a bill has passed the Senate and is now on the House Calendar, to grant graduates of such schools $150 for uniforms.

General GREGORY. Most of these graduates of this officers' candidate school are selectees who are selected for their qualification and not for the money they have. They have been receiving a soldier's pay for at least 6 months, and the most of them have to go in debt to buy their uniform. So that I think a uniforms allowance is a very good idea. That is my personal opinion only.

CONSOLIDATION OF APPROPRIATIONS OF QUARTERMASTER CORPS

The CHAIRMAN. General, on page 5 there is an item which looks as if it might be of considerable importance, to make one fund of all appropriations under your branch, with the addition of the appropriation "Welfare of enlisted men. That proposal has been submitted to the subcommittee on the regular supply bill I believe? Colonel HELMICK. Yes, sir; it has.

The CHAIRMAN. What would be the advantage of that change? Colonel HELMICK. A great deal of that equipment is equipment procured by the Quartermaster General such as athletic equipment, library and service club equipment. It will also permit interchangeability with other funds in the Quartermaster General's appropriation. Mr. TABER. You have this thing fixed so that we won't be able to tell what anthing costs?

Colonel HELMICK. No, sir. The estimates will be defended, the justifications will be put in just as before and they will be accounted for just as before.

Mr. TABER. Why do you need this language then? So as to let it be interchangeable completely?

Colonel HELMICK. Yes, sir.

Mr. TABER. That is, you can shift any of it to another spot?
Colonel HELMICK. Yes, sir.

Mr. WIGGLESWORTH. What are the limitations you are going to take off down in that last paragraph? It says

That said appropriation shall not be subject to any limitations contained under the appropriation titles named in this paragraph except the limitations on the unit cost of light and medium passenger-carrying automobiles.

What limitations are you going to take off?

General GREGORY. Mr. Davis, do you have a list of them here? Mr. DAVIS. No, sir; I have not a list. I know what they are.

Mr. WIGGLESWORTH. Suppose you put in a list so that we can see what they are when we come to mark up the bill.

General GREGORY. I will have it inserted in the record.

(The matter referred to is as follows:)

(a) Restriction on the purchase of oleomargarine, appearing under "Subsistence of the Army."

"Provided, That none of the money appropriated in this Act shall be used for the purchase of oleomargarine or butter substitutes for other than cooking purposes, except to supply an expressed preference therefor or for use where climatic or other conditions render the use of butter impracticable."

(b) Restriction on purchases of subsistence not grown or produced in the United States, appearing under "Subsistence of the Army."

"Provided further, That no part of this or any other appropriation contained in this Act shall be available for the procurement of any article of food or clothing not grown or produced in the United States or its possessions, except to the extent that the Secretary of War shall determine that articles of food or clothing grown or produced in the United States or its possessions cannot be procured of satisfactory quality and in sufficient quantities and at reasonable prices as and when needed, and except procurements by vessels in foreign waters and by establishments located outside the continental United States, except the Territories of Hawaii and Alaska, for the personnel attached thereto."

(c) Limitation on the cost of a suit of civilian outer clothing to $30, appearing under "Clothing and equipage."

66* * * for a suit of citizens' outer clothing and when necessary an overcoat, the cost of all not to exceed $30, to be issued each soldier discharged otherwise than honorably, * * *"

(d) Regulation of laundry charges by Government-owned laundries, appearing under "Clothing and equipage.'

"Provided, That laundry charges, other than for service now rendered without charge, shall be so adjusted that earnings in conjunction with the value placed upon service rendered without charge shall aggregate an amount not less than $50,000 below the cost of maintaining and operating laundries and dry-cleaning plants.'

(e) Limitation of allowances for living quarters abroad, appearing under "Incidental expenses of the Army."

66* * including not to exceed $900 for any one person for allowances for living quarters, including heat, fuel, and light, as authorized by the Act of June 26, 1930 (5 U. S. C. 118a),*

* * ""

(f) Limitation on expenditures for activities of chaplains, appearing under "Incidental expenses of the Army."

66* * * not to exceed $53,600 for activities of chaplains (excluding ritual garments and personal services);

* *

(g) Limitation on the amount appropriated for encouragement of breeding of riding horses, appearing under "Horses, draft and pack animals."

66* * * (including $87,515 for encouragement of the breeding of riding horses suitable for the Army, in cooperation with the Bureau of Animal Industry, Department of Agriculture, including the purchase of animals for breeding purposes and their maintenance)

*

Mr. CASE. Is this the way the matter was handled in the World War appropriations?

General GREGORY. Yes, sir.

Mr. CASE. That is, you preserved the separated items, you preserved the individual appropriations for the items, but provided for a blanket interchange?

General GREGORY. Yes, sir. In general, the purpose of the blanket expenditure under one title is to enable a simplification of procurement and accounting in the field. Inexperienced individuals who are spending funds in the field will have much less trouble in accounting if they can expend their funds under one title, than if they have to expend them under half a dozen different titles.

Mr. CASE. The subcommittee had considerable testimony on this proposal the other day by a representative, as I understood it, from the Finance Department of the Army.

General GREGORY. Yes, sir.

Mr. CASE. And also a representative from the Budget, and it was the definite understanding in that informal meeting, and I would like to have it as a matter of record, that if this language should stay in the bill this will not reduce in any way the separate accounting and bookkeeping for the several classifications of funds.

General GREGORY. That is correct.

Mr. CASE. Further, in the way the bill is presented, is it expected that this should apply also to funds for the officer schools?

Colonel HELMICK. No, sir. The officer schools are not included in this consolidation. It was under discussion the other day. However, the Bureau of the Budget forwarded this language which excludes the officers schools from this consolidation.

Mr. CASE. Now, in one of the other appropriation bills that is pending now, under the language suggested by the Budget, it is also proposed in a bill which has nothing to do with the Army or Navy to eliminate itemized appropriations and substitute lump sums. Have you any information that would indicate that this represents a desire on the part of the Budget to eliminate itemized appropriations and substitute lump-sum appropriations?

Colonel HELMICK. Not at all, sir.

Mr. CASE. As far as you are concerned, this is merely because of problems of field bookkeeping?

Colonel HELMICK. Of field bookkeeping, particularly for the man in the field on a small expeditionary force. This permits him to use all Quartermaster funds for any purpose under that appropriation and the accounting will be made when the reports of expenditure are made.

General GREGORY. In other words, it is an attempt to eliminate some of the so-called red tape which ordinarily surrounds the expenditure of funds in the field, and still preserve the same limitations.

The CHAIRMAN. General, summing up the whole testimony given today on the estimates for your corps, you do not know, on reconsideration, of any item in here which could be reduced or omitted? General GREGORY. No, sir.

The CHAIRMAN. It is your best judgment that all appropriations recommended here are urgently needed for the prosecution of the war? General GREGORY. Yes, sir.

The CHAIRMAN. If there is nothing further, thank you,

General.

THURSDAY, FEBRUARY 12, 1942.

SIGNAL SERVICE OF THE ARMY

STATEMENTS OF MAJ. GEN. DAWSON OLMSTEAD, CHIEF SIGNAL OFFICER; BRIG. GEN. R. B. COLTON; COL. J. T. WATSON, Jr.; LT. COL. K. B. LAWTON; LT. COL. C. E. SNOW; AND MAJ. RAYMOND C. MAUDE, SIGNAL CORPS, UNITED STATES ARMY

The CHAIRMAN. General Olmstead, we have an estimate before us for the Signal Service of the Army, amounting to $1,349,000,000. Just how do you plan to use this money?

68725-42--5

General OLMSTEAD. Mr. Chairman, I have a brief statement that I would like to submit, if I may.

The CHAIRMAN. We will be glad to hear it.

General OLMSTEAD. Estimate "D" for Signal Service of the Army amounts to $1,349,000,000.

Several conferences have been held with representatives of approximately twenty manufacturers who are capable of producing the equipment listed in this estimate and who will be given negotiated contracts as prime contractors. Each prime contractor is required, according to his contract, to subcontract to small manufacturers approximately 40 percent of the original contract. This provision is made so that the engineering facilities of the prime contractor may be utilized in assisting the subcontractor in producing idential equipment. It also permits the utilization of many small factories which do not have engineering staffs to assist them in producing some of the more complicated types of equipment.

The information furnished by the communication industry and verified by my own production engineers has led me to the conclusion that this equipment can generally be delivered by the specified time.

The unit costs as listed in this estimate have been arrived at by taking into consideration the unit costs of previous contracts of similar equipment under competitive bidding, the present price of labor and materials and the quantity production which is being required due to the large number of identical items which are being contracted for. The unit cost of new items which have not previously been contracted for is determined with the assistance of two organizations: (1) The Cost Estimates Section in the Legal Division of my office which is composed of cost engineers and accountants, and (2) an awards committee composed of qualified officers who make a thorough study of the cost of the item, utilizing pertinent data from the Signal Corps laboratories and informal estimates from several manufacturers. Although the cost of labor and material has recently risen partly due to the payment of time and a half and partly due to the fact that it is generally conceded that where three shifts are used, over all production is only about two and a quarter times that of a single shift, the unit cost has not risen in most cases due to the fact that there are repeat orders and the quantities of items are so large that the manufacturers can make the items on the assembly line basis.

In general, all critical items are produced by at least two companies, and, therefore, we are still able to obtain informal competition before the price is determined on a negotiated contract.

I have with me members of my staff and particularly General Colton who is in charge of the Matériel Branch of my office and who assists me in the contracting, inspection, and delivery of this equipment. I shall be glad to furnish any further information which you may desire.

STATUS OF PROGRAM

The CHAIRMAN. Can you tell us what is the status of your procurement program? Is your equipment coming through in a satisfactory way, or do you have any delays?

General OLMSTEAD. May I make an extemporaneous statement along that line: When I came in about 6 months ago, the great impetus

was given to the effort to get funds, as you know, and the time element was stressed. We went to work to obligate those funds.

Our next step was to get this equipment. I would like to read a statement I had prepared for General Knudsen on what had been accomplished in the way of deliveries. I stated that there was a reorganization of the office to accelerate the procurement of Signal Corps supplies and equipment. This included the establishment of four branches, each containing the divisions with related functions; the establishment of an executive control division to exercise staff supervision over all activities for which the chief signal officer is responsible; the establishment of a coordination and equipment division, with officers on duty from the other arms using signal equipment, in order to expedite the coordination necessary to effect standardization of new equipment; the establishment of a Řadar division to coordinate the development of Radar equipment; the issuance of awards against funds previously appropriated for equipment but lacking final approval for procurement; the issuance of letters of intent to award contracts for items of equipment included in supplemental estimate "D," for which funds have not been allotted to date; a survey of contractors to effect a 24-hour, 7-day week operation; a survey to determine all possible additional plants capable of manufacturing equipment on the program; conferences with representatives of the larger contractors, the organization of a communications production advisory board to assist in solving common problems. I am chairman of this board, and we discuss ways and means of getting this work done. We have set up six committees, of which Army officers in my office are chairmen. For instance, there is an expediting committee. This committee is charged with responsibility for contacting subcontractors as well as contractors to speed up deliveries.

The CHAIRMAN. Just on the face of it, that would appear to be a very efficient set-up. Are you getting materials promptly, or are there any undue delays?

General OLMSTEAD. We are getting results, but we never can get in a state of mind where we are satisfied, because this increase in our requirements requires the procurement of a tremendous amount of material. I never dreamed that we would have to deal with such sums, but I know that you have to do the job through organization. The CHAIRMAN. You make the statement that you are not satisfied with your accomplishment, but that you are moving onward. I notice your statement here with reference to these three shifts and the 24-hour service, and in that connection you make the statement that instead of giving you three times the production, you get only about two and a half times the production. However, I take it from your statement that you are profiting from the three shifts.

General OLMSTEAD. Yes, sir; time is considered a most important element.

The CHAIRMAN. You say you have informal competition.
General OLMSTEAD. Yes, sir.

The CHAIRMAN. Do you think that that is as effective as competitive bidding?

General OLMSTEAD. If we were in peacetime, I would require bids, but in these times, since we have to speed up deliveries, we find it necessary to make negotiated awards.