$185 million; (b) readiness measures, $52 million, covering certain strategic mobility exercises, increased field exercises, and rehearsal of emergency defense plans for the Army; additional deployment of certain carrier air groups and supporting vessels, including Marine attack squadrons for the Navy; and augmentation of airlift related to Army requirements supported by the Air Force; (c) single manager support, $12 million for construction, automotive, industrial, and general supply responsibilities for which funds were not included in the 1961 appropriations: (d) claims against the Department of Defense, $6 million, resulting from a more recent computation of our requirements. Separate and complete justification covering our supplemental requests has been submitted to the committee.

APPROPRIATION COVERAGE

Operation and maintenance appropriations provide for the necessary day-today costs of the Defense Establishment. These costs are largely related to the size of the forces, the tempo of operations, readiness, and deployment; to the inventories of weapons and supporting equipment and systems; to the number and type of military facilities to be operated and maintained; and to the numbers of military personnel and their families.

To illustrate the coverage of these appropriations, it may be pointed out that that these funds will support almost 21⁄2 million military personnel, their equipment, and their communities. In the broadest sense, we are dealing with the operating and support requirements of 14 Army divisions, 817 active ships, 3 Marine Corps combat divisions, and an active aircraft inventory of approximately 30,200. In addition, the operation and maintenance accounts cover the expenses incident to supporting Reserve components with a drill pay strength of 936,000 men, their training facilities and their equipment. Some of the major factors affecting operation and maintenance costs are summarized on attachment B.

In assessing the 1962 request of $10.8 billion now before you, we believe it important to note that the services submitted estimates totaling approximately $12.1 billion. The reduction-$1.3 billion, or 11 percent-was accomplished to the maximum extent possible without major changes in operational and tactical activities. For example, the numbers of flying hours, steaming hours, ships, aircraft, tactical vehicles, and their related immediate support are substantially those originally presented. We believe that these appropriations reflect an effort to concentrate spending in operational activities in greater proportions than in prior years.

At this point, may we say that there continues to be a noticeable improvement in the quality of the justification material submitted in support of the services' requests. We feel sure that during the course of your hearings this improvement will be noted- especially in the presentation of substantive workload data and costs.

OPERATING FORCES

Many of the advanced weapons systems funded in procurement accounts in recent years are being delivered to our operating forces in 1962 and the operation and maintenance costs of these weapons are reflected in the estimates before you.

In the Army, the first PERSHING and SERGEANT battalions will be activated in 1962 and deployment of HAWK and LITTLE JOHN units will substantially increase. Five additional aviation companies will be activated, including two helicopter companies, and the new armored personnel carrier (M-113) and the main battle tank (M-60) will become available to high-priority Army units. As estimated in this budget, 28 nuclear-powered submarines, of which 9 are POLARIS submarines, will be in the fleet by the end of 1962. Two additional Forrestal-class aircraft carriers will be commissioned during 1962, including the nuclear-powered carrier Enterprise, bringing the total number of Forrestal-class carriers in the fleet to seven. The attack carrier forces will be augmented by delivery of the A3J supersonic, all-weather bomber aircraft; additional A4D2N light attack bombers; and all-weather F4H and F8U-2N interceptors. The Navy's antisubmarine warfare capability will be improved by delivery to the fleet of HSS-2 all-weather helicopters and the carrier-based S2F-3 search and attack aircraft.

The first TITAN squadron and additional ATLAS squadrons are scheduled to be operational during fiscal year 1962. The first MINUTEMAN squadrons, although not operational, will be activated and begin to receive equipment in fiscal year 1962. Our strategic forces will be further strengthened by delivery of additional B-52 and B-58 bombers and substantial quantities of the QUAIL and HOUND DOG missiles. As these newer strategic weapons are added to our

arsenal, the B-47 medium bomber is being gradually phased down. However, the B-47 remains a significant part of our total deterrent force and its costs through this budget period.

Activation of two BMEWS sites during fiscal year 1961 and completion of the SAGE program in the United States in fiscal year 1962 will result in a requirement for approximately a quarter of a billion dollars in operation and maintenance funds in 1962, nearly double the amount required for these two programs in 1960.

Our tactical capabilities will be enhanced by the first substantial deliveries in 1961 and 1962 of the F-105 and of the BULLPUP missile.

CIVILIAN EMPLOYMENT

The salaries and wages of our civilian personnel constitute the single largest element of cost in these appropriations. Our efforts to reduce civilian manpower levels and curb any unjustified use of contractual services are known to this committee. Each of the services is ready to add further substantiating data to that record.

During 1961 we have again reduced the number of direct hire civilians employed under this title by 9,567. During the 3-year period from the end of 1959 to our estimated position for the end of 1962, we believe the reduction will total approximately 39,000.

For your review, attachment C-1 to this statement shows the total direct hire civilian employees of the Department of Defense under this budget. Attachment C-2 shows the direct hire civilians paid from the operation and maintenance appropriations as herein requested.

OPERATION AND MAINTENANCE OF SHIPS

The operation and maintenance of ships is a major element of cost under title II. Under this budget, the number of ships in the active fleet will total 817 at the end of both 1960 and 1962. However, during this 2-year span, the size of the fleet will increase to 824 during the latter part of 1961, with a subsequent reduction to 817 during 1962.

The total steaming hour program shows a moderate decline from 1,984,000 in 1960 to 1,923,000 in 1962. The cost of fuel, water, and utilities services associated with this program is estimated at $128 million for 1962 and represents an increase of $25 million over the 1960 level. The major part of the increase in this program is related to procurement of replacement nuclear reactor cores required for the increased number of nuclear-powered vessels scheduled for fleet operations.

We are requesting funds in these appropriations to continue the fleet rehabilitation and modernization program in 1962 at a level of about $100 million. You will recall that the first major increment of this program was accomplished under these appropriations in 1960 at a cost of approximately $85 million. In 1961 the program is estimated at a level of about $104 million. During this period the Navy will have rehabilitated and modernized 56 antisubmarine warfare vessels, 11 amphibious ships, and 7 major auxiliary ships with operation and maintenance funds. The FRAM program is demonstrably the most practical method by which we can extend the useful life and combat readiness of the older combatant ships of the fleet.

In addition to the rehabilitation program, $175 million is requested for other active fleet ship overhauls during 1962, representing a decrease of $4 million from the 1960 level and $9 million from the level planned for 1961.

AIRCRAFT AND FLYING HOURS

The operation of aircraft of the Army, Navy, and Air Force is another major element of cost under this title. The total number of aircraft in the active inventory of the Defense Department as reflected in this budget will decline from about 33,000 at the end of 1960 to about 30,200 at the end of 1962. The reduction of 2,800 aircraft during this period is the net result of an increase of about 200 aircraft for the Army and a decrease of approximately 3,000 aircraft for the Navy and Air Force.

Flying hours, supported by the operation and maintenance appropriations, will decrease from a total of 11.6 million in 1960 to 11.1 million in 1962. This results from an increase of approximately 200,000 hours for the Army and Navy and a reduction of approximately 700,000 hours for the Air Force.

We believe that you will note with interest the fact that the Air Force and Navy report a combined decline in proficiency flying hours totaling almost 300,000 during this period.

AIRBORNE ALERT

This budget for 1962 requests the inclusion of funds to continue the program of on-the-shelf airborne alert capability for the B-52 bombers. Inasmuch as the funding of this activity should be considered in its entirety, instead of just as an operation and maintenance request, we should like to discuss the total dollar amounts.

The 1961 budget request as submitted to Congress included a total of $85 million for stockpiling of long leadtime spare parts and for indoctrination training of crews in order to provide a capability to fly an actual airborne alert if such a requirement should develop in the future. Congress added an additional $85 million for this program in 1961, making available a total of $170 million, of which $130 million is in procurement accounts and $40 million in the operation and maintenance accounts. These additional funds are being utilized for the purpose intended. Additionally, we have reprogramed $61.9 million within our current resources for initial on-shelf provisioning of spare parts for the HOUND DOG air-to-ground missile.

The 1962 budget estimates now before you include $89 million for airborne alert capability, of which $41 million is for additional procurement of HOUND DOG spare parts for the on-shelf program, and $48 million is to provide for continuation of the accelerated rate of indoctrination training to be achieved in the last half of 1961. The cost of actually mounting a continuous airborne alert would, of course, require additional funds and we are accordingly requesting the continuation of our current authority as specified in section 512(b) of the Department of Defense Appropriation Act for 1961.

MAJOR OVERHAUL PROGRAMS

The total cost of aircraft overhaul and modernization decreases approximately $100 million from 1960 to 1962, reflecting the decline in the total aircraft inventory. However, all of this decrease occurs in the procurement appropriations, which finance the modernization portion of the program, while the overhaul costs chargeable to operation and maintenance appropriations remain at about $670 million from 1960 to 1962. These trends are shown in attachment D which also indicates the distribution of the total workload between contract and inhouse facilities. As a result of the relatively fixed capacity for in-house overhaul, the decline in the total workload results in a decrease in the percentage to be contracted to private industry from 45 percent in 1960 to 43 percent in 1962. Some of the unit overhaul costs associated with the newer high performance aircraft are substantially more than for the older aircraft. For example, the cost of overhauling the KC-135 tanker is more than twice that of overhauling the KC-97 tanker which it is replacing. At the same time, unit costs of many of the aircraft being retained, for example the F-100, also continue to rise due to increasing age or to special maintenance requirements such as corrosion problems being experienced by the Navy.

As a result of the substantial numbers of missiles and associated equipment becoming operational during the last few years, there has been an increased requirement for depot level overhaul. The 1962 estimate includes $54 million for this purpose, compared to $30 million in 1960. Depot overhaul costs of electronics equipment also continue to increase, rising from $74 million in 1960 to $89 million in 1962.

COMMUNICATIONS

This committee has expressed considerable interest during the past 2 years in our efforts to integrate the communications systems of the military departments. Because of the large number of individual segments that make up the various communications systems and because of the critical operational requirements for continuity and reliability in communications, the transition to an integrated Department of Defense network is not an easy task. The Defense Communications Agency, which was established on May 12, 1960, is expected to assume operational control of the integrated system-the defense communications system-during March 1961. Witnesses from the Defense Communications Agency are scheduled to appear before your committee and will be prepared to give you detailed information on the Agency's progress and plans.

Last year the Congress reduced the operation and maintenance requests for communications systems by $24.3 million. We have made every effort to live with the reduction without degrading the ability of the systems to meet expanding operational requirements and to accomplish the desires of the Congress with

regard to achieving economies. However, it has been necessary this year to reprogram $3 million to the Navy communications system for support of POLARIS and other urgent operational requirements. In view of your interest in this matter, we reported this reprograming to you on September 26, 1960. Air Force funding requirements indicate some reduction in installation costs for SAC missile intersite communications systems. This decrease in operation and maintenance costs results from the fact that certain of these systems are being directly procured rather than commercially leased.

Reductions have already been made in the 1962 budget estimates to reflect anticipated economies which we expect the Defense Communications Agency to be able to make primarily in the area of rerouting of leased communications lines to provide for common utilization of the communication relay centers. We would hope in the future to see further economies through consolidation of relay centers and heavy trunking lines.

In spite of these reductions, the budget reflects substantial increases in required communications as the demand to support advanced weapons systems continues to grow. For example, the cost of commercially leased communications support of SAGE increases from $31 million in 1960 to $58 million in 1962. The BMEWS requirements increase from $4 million to $15 million during the same period.

Attachment E shows comparative costs of major elements of the communications systems for 1960, 1961, and 1962. During this period, the total cost of communications is budgeted to increase from $259 million to $344 million. We wish to assure the committee that every effort is being made to hold these communications costs down and to prevent duplication of facilities.

REAL PROPERTY MAINTENANCE COSTS AND FACILITIES

In the Defense Establishment, we are continuously faced with the problem of achieving an optimum balance between military forces both current and planned and the facilities required for their support. Each of the military departments and the Assistant Secretary of Defense (Installations and Logistics) are intensively and aggressively seeking a practical solution.

We know that you appreciate the difficulties involved in the closing of installations. In many instances, costs during the year in which installations are closed are higher than in a normal operating year. Our estimate of major installations for June 30, 1962, as reflected in this budget totals 723. This is a sizable reduction of 49 from our June 30, 1960, actual position.

Despite our program of installation closings, we estimate that the total defense bill for the operation and maintenance of real property will again increase. We have defined these costs as covering such areas as maintenance, repair, and operation of in-house utilities, purchased utilities and water, maintenance and repair of buildings, pavements, grounds, railroad trackage and other structures, fire protection, minor construction and modifications, etc.

In 1962 these costs will be approximately $1.9 billion, or approximately $40 million more than our 1960 experience and $25 million more than our 1961 estimate. This is a result of adding required covered space, pavements, and housing at those installations being retained and the increasing cost of labor, materials, and utilities.

We are pleased to report to this committee that the services have advised us that the "deferred" maintenance backlog estimated for the end of 1962 indicates a reduction of $37 million below that estimated for June 30, 1960. We are also advised that the level of funds being applied to this effort in 1961 is substantially that presented in the request to the Congress. However, the Defense Department will continue to make every effort to preclude any but the most necessary real property improvements at facilities which foreseeably may be scheduled for inactivation.

TRAINING

The training budgets of the three services continue to reflect the shift in Subemphasis to the new weapons systems being phased into operational use. stantial increases are required in those skills which support the new weapons systems. For instance, the great emphasis on electronics has required the Navy to increase its student input into electronic technician training by 50 percent over the period 1960-62. In the Air Force, student input into ATLAS training in 1962 will increase by over 50 percent above the 1960 level, and TITAN training will be more than three times the 1960 level.

Through rigid control of the training systems and student loads, the services have been able to accommodate an increasing number of new requirements without an overall expansion or a significant increase in funds. For instance, in the case of the Air Force ballistic missile training, the total student input will increase from approximately 5,000 to 9,000 from 1900 to 1962, yet the costs will decrease by nearly $4 million. This results from a shift from relatively costly contractor training of instructor personnel to training conducted at Air Force bases. The result is the development of an "in house" capability and a reduced requirement for contractual support.

Pilot training in both the Navy and Air Force for 1962 reflects the reduced cockpit requirements in the operating forces. Under this budget, the combined rate of pilot production in the two services will drop from 3,700 in 1960 to 3.000 in 1962. Within the Air Force, the number of pilot training bases will be reduced from 12 to 7, reflecting reduced rates and a consolidated system. In addition, navigator production in the Air Force will drop from 1,700 in 1960 to 1,200 in 1962.

Army training on the PERSHING surface-to-surface missile is being initiated as preparations are made to introduce this weapon into operational use. Training on air defense missile control systems, such as Missile Master and Missile Monitor, are also increasing in 1962. Partially offsetting these increases is the reduction in training on other types of equipment, such as certain types of conventional artillery.

Each of the services will be prepared to present substantial detail on their training systems and programs which will demonstrate the flexibility of this essential military operation.

COMMUNITY SERVICES

One of the continuing problems with which the military services are faced is the need to attract and retain high caliber personnel. To do so, living conditions and benefits comparable to those in the civilian economy must be offered. Within the "Operation and maintenance" appropriation, funds are provided for several major programs which are designed to meet this need. One of the most important of these is the housing program.

Funds in title II pay for utilities, structural maintenance, major repair and modification, grounds maintenance, administration, equipment repair, services, and many of the other costs incident to operating and maintaining a community of family homes. Your interest in this matter, together with our efforts to improve inventory and cost estimates, have made it possible this year to present a clearer picture of this important area.

Our inventory of family quarters supported by these appropriations has in creased significantly over the past several years. At the end of 1959 we had in being 276,223 units. By the end of 1962 we estimate that the inventory will reach 351.733 for a net gain of 75,510 units. Our 1962 inventory will consist of 39.6 percent military-construction-type public quarters, 45.4 percent WherryCapehart units, and 14.9 percent rental, Lanham, and miscellaneous units. All of these homes are dependent upon these appropriations for the funds required to maintain them at levels which will protect our substantial acquisition investment.

As the annual operation and maintenance costs of family quarters, we are pleased to report that each of the services provided initial 1962 estimates which are considerably more precise than those in our presentation of last year. The Army estimates an average per unit cost of $761, the Navy $699, and the Air Force $639.

There are valid, demonstrable reasons for the differences between the service estimates. Immediately evident are those caused by location and age. For example, the Army's inventory contains 54 percent of the older military-construction-type quarters as compared to 29 percent in the Navy and 32 percent in the Air Force. Over 60 percent of the Air Force quarters are WherryCapehart types as contrasted to 35 percent for the Army and 36 percent for the Navy. The Navy also has a heavy concentration-35 percent-in rental, leased, and other housing categories.

Each of the service stands ready to amplify this presentation of costs and inventories. In addition, this committee will be given copies of the report covering extremely detailed cost analyses of the housing at selected installations due to be submitted to the Senate Appropriations Committee by April 1, 1961. May we again state our appreciation of your interest which has been of substantial aid in bringing this area into better focus.