Never before had the Department of Defense been called upon to budget for the activities of its components during a way, as was the case during the Vietnam conflict. Even during the Korean War, when reasonably accurate records were kept concerning the cost, there was no real attempt to limit the funds required to assure everything necessary to bring a successful conclusion. At the beginning of the Vietnam situation, Congress regarded the Vietnam requirements in much the same light as those for Korea, but as the nature of the war developed into one of attrition, there was an intense feeling of frustration created in the minds of Congressmen. They wanted to assure that the American fighting man was provided everything he needed, but his needs were often in direct competition with domestic programs. This change in Congress was a subtle one, with no real turning point, but the budget hearings slowly required more and more information concerning the appropriate use of resources. In this chapter, I will trace the budgetary actions of the Army primarily dealing with the operation and maintenance appropriation; it will be necessary, however, to briefly touch other appropriations which affected it.
In order to present a complete picture of the environment which existed during the period, it is desirable that the reader understand the normal planning, programing [sic], and budgeting system used within the Department of Defense. Chart 1 is a graphic representation of this cycle constantly in operation. For the most part, this method of arriving at a budget was used during the war, with certain deviations which I will point out as they occurred in the sequence of events. The chart is a rather complicated rendition of a simple basic concept. In theory, the development of a budget requires that one take the joint Strategic Operations Plan and with certain adjustments to fit the current situation simply assign dollar values to the desired actions. This would then become the budget. There are a number of pressures being exerted during the entire process which are covered on the illustration by the block "External In-
fluences." These could include decisions made concerning national policy by the President. They would most certainly take into consideration the economy of the nation and the "climate" existing within Congress with regard to defense spending. Disregarding these sometimes indeterminate factors which shape the budget, one is still left with the problem of calculating exact requirements in a peacetime situation, with the problem increasing in war. Just by examining the time frames involved in the process, the plight of a budgeteer becomes evident. The illustration depicts the cycle for the preparation of the 1973 fiscal year budget, which had to be ready to present to Congress in January of 1972. The funds appropriated by Congress as a result of this budget were to be used during the period 1 July 1972 to 30 June 1973. The major portion of the planning effort had to be completed during June of 1971, one year prior to the availability of any of the requested funds and two years before the exhaustion of the authority granted. Although refinements may be made until the last moment before presentation to Congress, at best, a budget has to include items which are anticipated needs for some eighteen months ahead. In other words, the Defense Department in time of war must anticipate what the enemy is going to do and the response we should make far in advance. Most field commanders would be pleased with one day's notice of enemy intentions and anticipated actions.
One other facet of the current budget process should be understood to appreciate some of the actions taken to finance the Vietnam War. The budget submitted by the Department of the Army is staff developed. This essentially means that the Department of the Army staff develops the entire budget with minimal input from the field. The installations throughout the world do submit budgets representing their requirements for the immediate fiscal year, but they do not impact directly on the Presidential budget submitted to Congress. As a matter of fact, these installation budgets are better described as a request for a certain portion of those funds appropriated by Congress. This is not to say that there is absolutely no input from commanders in the field, but there is little detailed information concerning programs which are anticipated. As a general rule, the commanders are allowed to indicate any major changes in the programs which were pursued in previous years. The staff of the Department of Army makes extensive use of factors to determine what is needed in the operations and maintenance appropriation. Basically, the number of divisions which will be required is established, and then factors for the various supporting activities are used in establishing funding levels for the Army. These
factors are usually based on historical information during like periods. As you can see, it was difficult to prepare a budget for Vietnam, when we had never been engaged in a war of this type before. Many of the initial factors proved incorrect and also were the subject of quite a number of debates not only before Congress but between the Department of the Army and the Department of Defense. These factors have been continually revised throughout the conduct of operations in Vietnam, and they have become rather accurate now (1972), but since we are diminishing our presence, they have not been useful in current budget preparations.
As if the difficulties already stated were not enough for the budgeteer to overcome, he has one more deterrent to effective financial management. Historically, Congress has been late in making the final determination on appropriations for the services. The budget which is submitted in January and is to become effective on 1 July of that same year is normally not enacted into law until late in the fiscal year. The following listing reflects budget submission dates and appropriation act dates for fiscal years 1965-72.
|Fiscal Year||President's Budget Submission||Appropriation|
|1965||21 January 1964||19 August 1964|
|1966||25 January 1965||21 September 1965|
|1967||24 January 1966||11 October 1966|
|1968||24 January 1967||13 September 1967|
|1969||29 January 1968||17 October 1968|
|1970||15 January 1969||18 December 1969|
|1971||2 February 1970||29 December 1970|
|1972||29 January 1971||15 December 1971|
contacts with powerful personalities in Congress. The result of being forced to operate in this void of information is either to maintain a level of obligation which is below or above that which would have resulted in efficient use of resources.
With this as a backdrop, I would like to review the actions taken by the Department of Defense and the Congress during the period of the Vietnam War. There were some major innovations used to obtain additional funds, some of which were condoned by Congress and some which brought the wrath of certain Congressmen during hearings on the budget. The mood of both the people and certainly the legislature was different than. had ever been experienced before.
As I mentioned in Chapter 1, our support of Vietnam started with direct use of funds and other resources to sustain French operations. This fact was officially recognized in the Semiannual Report of the Secretary of Defense for the period January 1 to June 30, 1954. Charles E. Wilson, then Secretary of Defense, stated:
the western Pacific. This was used almost totally for operations in Indochina. Although an active insurgency existed in Vietnam, there were very few Americans directly involved and the amount of money being expended was relatively small when compared with the total defense budget.
This was the climate which existed in Congress from that time until well after the major buildup of U.S. forces had occurred. As a matter of fact, there is little record of Congressional interest in Vietnam as a major topic for discussion until funds were being requested for the buildup. Typifying the lack of opposition to our assistance efforts were the Senate hearings on the fiscal year 1964 appropriation. Senator Richard B. Russell, Chairman of the Senate Appropriations Committee, in querying the Army Chief of Staff, General Earle G. Wheeler, concerning our activities in Vietnam almost casually asked how many people were there, referring to the number of American military personnel. General Wheeler replied, "In the Armed Forces, as a whole, the figures are around 12,000, sir. The majority of those, oh, around 8,000-odd are from the Army." This number was noted as an increase over the last calendar year. When asked by Senator Russell if there were any plans which contemplated augmenting this force, General Wheeler replied, "No sizable increase, sir. We have had to make some changes in our maintenance units over there for helicopters, to beef up the maintenance. There will be other realignments of forces which may call for a small increase, but I wouldn't expect any sizable increase." The matter was promptly dropped in favor of a discussion on the co-operation which was being received from the Vietnamese, and then drifted quickly into an overall questioning concerning our armed forces located in 80 different countries around the world. It was plain that the Vietnam problem was virtually lost in the magnitude of our total support to other nations.
Although Vietnam escaped the intense interest of Congressmen, it is evident that such was not the case within the Department of Defense. It is difficult to state unequivocally that long range plans there envisioned such an increase in the involvement of the U.S. as that which actually occurred, but it is possible to establish the feeling of the Secretary of Defense, Robert S. McNamara, as of I March 1965. On that date, he signed a memorandum for all of the service secretaries which left little doubt of his position with regard to our support of South Vietnam. He stated:
It is somewhat paradoxical that only two weeks prior to the date of the above memorandum, the Army was defending before Congress its operation and maintenance budget for fiscal year 1966 which requested a modest increase for Southeast Asia over fiscal year 1965. In the House Appropriations hearings, General Ralph E. Haines, Jr., then Deputy Assistant Chief of Staff for Force Development, responded to queries concerning this increase in this manner: "The $10,100,000 increase in the Pacific is primarily for the support of the increased strength and the equipment in this theater, and primarily in the Southeast Asia area. The increased number of tactical aircraft in the Pacific occasioned by deployment of additional aviation units to Vietnam will require an increase of over $6 million for mission support, and for the O&M realignment of aircraft repair parts."
It was not apparent at this hearing that a major buildup was contemplated, and certainly there were no funds requested to support such a plan. The Congressional interest was increasing, however, but the tenor of comments was still to the effect that we should do everything necessary to provide support. This feeling was typified by House Appropriation Committee Member Mr. George W. Andrews' comment concerning supplies of petroleum, oils, and lubricants, "I do not want you to have a shortage down there."
These same hearings provided some indication that Congress expected normal methods of funding and reimbursement to be used in Vietnam. There was a discussion of the costs of converting the USNS Albermarle, a Navy seaplane tender scheduled for mothballing, into a floating maintenance facility for repairing helicopters. Lieutenant Colonel J. P. Cribbins, Office of the Deputy Chief of
Staff for Logistics, testified concerning the funding for this conversion, "Actually, the Army funded for the PEMA and OMA funds for conversion and operation of the Albemarle. This was a program coordinated with the Navy." Mr. Andrews then asked, "Will you reimburse the Navy for all the work they will do?" Colonel Cribbins replied, "We will reimburse the Navy for all the work they do." Since I will devote a later chapter to the problems caused by reimbursement procedures, I will not dwell on this point here. This represents only the beginning of the use of different funds for various purposes so intermingled as to defy identification, and the insistence that normal procedures prevail.
It was shortly after this period that Mr. McNamara demonstrated his new approach to budgeting which was to continue throughout the early stages of the war. He made extensive use of the supplemental approach to submission of budgets. Although this was not a new method, it was normally reserved for emergency situations and Congress challenged this quite sharply, as will be pointed out later. Calendar year 1965 was to see the major buildup begin and it would continue into 1966 with the greatest increase in troops and matériel in one location since World War II. The chain of events began in March 1965, when 3,500 marines were sent to establish a defensive perimeter around the air base at Da Nang. May saw the 173d Airborne Brigade land at Bien Hoa from Okinawa. In June, Mr. McNamara announced the deployment of an additional 21,000 troops, bringing the total in Vietnam to 75,000. In an address to the people during July, President Lyndon B. Johnson, announced that he had given authority to increase the strength from 75,000 to 125,000 men. He further stated, "Additional forces will be needed later and they will be sent as requested." The number reached approximately 200,000 by the end of the year.
In order to finance this tremendous increase, Mr. McNamara appeared before Congress during August 1965, requesting $1.7 billion in a separate account, "Emergency Fund, Southeast Asia." There was very little opposition to granting this amount, even though testimony indicated that this was necessary primarily for additional financing to gear up the production machine in order to have equipment and weapons available to support the buildup. It was evident that the current year's appropriation did not contain sufficient funds to sustain the effort in Vietnam, and I do not think that anyone in Congress was truly surprised when a supplemental request for fiscal year 1966 was submitted to Congress on 19 January
1966. Table 1 shows the total submission including the original fiscal year 1966 funds approved, the disposition of the $1.7 billion given to Department of Defense in August 1965, and the new requirements for the remainder of the fiscal year.
|NOA enacted excluding amendment||$1,700 million amendment||Military and civilian pay supplemental||Southeast Asia supplemental||Total NOA|
|National Guard personnel, Army||271,800||........||4,500||45,900||322,200|
|Reserve personnel, Army||238,600||........||.......||7,500||246,100|
|National Guard personnel, Air Force||71,300||........||3,500||5,700||80,500|
|Reserve personnel, Navy||105,100||........||4,600||.........||109,700|
|Reserve personnel, Marine Corps||33,000||........||1,600||2,200||36,800|
|Reserve personnel, Air Force||60,500||........||1,200||2,700||64,400|
|Retired pay, defense||1,529,000||........||71,000||.........||1,600,000|
|Total military personnel||14,600,291||........||761,100||1,620,000||16,981,391|
|Operation and maintenance:|
|Operation and maintenance, Army National Guard||208,796||........||2,000||35,700||246,496|
|Operation and maintenance, Air National Guard||238,000||........||1,000||8,100||247,100|
|National Board for Promotion of Rifle Practice, Army||459||........||.......||.........||459|
|Court of Military Appeals, defense||579||........||11||.........||590|
|Total operation and maintenance||12,492,556||........||102,421||2,316,269||14,911,246|
|NOA enacted excluding amendment||$1,700 million amendment||Military and civilian pay supplemental||Southeast Asia supplemental||Total NOA|
|Procurement of equipment and missiles, Army||1,204,800||504,500||........||2,465,000||4,174,300|
|Procurement of aircraft and missiles, Navy||2,220,387||190,200||.......||764,500||3,175,087|
|Shipbuilding and Conversion, Navy||1,590,500||........||.......||.........||1,590,500|
|Other procurement, Navy||1,135,000||167,090||.......||607,500||1,909,590|
|Procurement, Marine Corps||43,800||149,100||.......||516,600||709,500|
|Aircraft procurement, Air Force||3,516,700||158,800||.......||1,585,700||5,261,200|
|Missile procurement, Air Force||771,900||4,000||.......||63,700||839,600|
|Other procurement, Air Force||829,100||360,600||.......||1,016,400||2,206,100|
|Procurement, defense agencies||15,200||........||.......||.........||15,200|
|Research, development, test and evaluation:|
|Emergency fund, defense||19,426||........||.......||.........||19,426|
|Total, research development, test and evaluation||6,639,800||........||.......||151,650||6,791,450|
|Air Force Reserves||4,000||........||.......||.........||4,000|
|Army National Guard||10,000||........||.......||.........||10,000|
|Air National Guard||10,000||........||.......||.........||10,000|
|Loran stations, defense||5,000||........||.......||......||5,000|
|Total military construction||1,096,289||165,710||.......||1,238,400||2,500,399|
|NOA enacted excluding amendment||$1,700 million amendment||Military and civilian pay supplemental||Southeast Asia supplemental||Total NOA|
|Family housing: Defense||665,846||.......||........||.........||665,846|
|Office of Mobilization||64,066||........||.......||.........||64,066|
|Research, shelter survey, marking||42,700||........||.......||.........||42,700|
|Total civil defense||106,766||........||.......||.........||106,766|
|Total military functions||46,928,935||1,700,000||863,521||12,345,719||61,838,175|
|Military assistance: Executive||1,470,000||........||.......||.........||1,470,000|
|Total Department of Defense||48,398,935||1,700,000||863,521||12,345,719||63,308,175|
It is interesting to note that at the time Congress was considering the 1966 fiscal year supplemental, the budget for fiscal year 1967 had already been submitted by the President. This fact was addressed several times during testimony, and Mr. McNamara indicated through his comments that the fiscal year 1967 budget was based on current plans and would support the anticipated activity through June 1967. Although he did not specifically outline his new ap-
|U.S. fiscal years||AID and predecessor agencies||Public Law-480 (all titles)||Total|
proach to budgeting to Congress at this time, he certainly gave several hints to this effect. In discussing the basis for formulation of the budget for this fiscal year, he said, "With regard to the preparation of the FY 1967-71 program and the FY 1966 Supplemental and the FY 1967 Budget, we have had to make a somewhat arbitrary assumption regarding the duration of the conflict in Southeast Asia. Since we have no way of knowing how long it will actually last, or how it will evolve, we have budgeted for combat operations through the end of June 1967."
This, then, became the pattern for budget submissions for Vietnam. The assumption was always made that enemy activity would continue at the level which existed at the time of budget preparations and that the war would be over by 30 June of the fiscal year under consideration. This, naturally, would require a supplemental request should either of these assumptions prove invalid.
During the proceedings of the Senate subcommittee of the Committee on Appropriations, it became increasingly evident that the cost of the Vietnam War was of growing concern to the Congress. As an illustration, the following dialogue between Senator Stuart Symington, Member, Senate Armed Services Committee, and me is furnished from the Congressional Record.
include those direct expenses in Vietnam and the Pacific, but also those expenses in the continental United States training base, which could be considered as being directly related to training of replacements for that area. Here, again, the concept of the "blank check" reared its ugly head. There is little evidence to support the general feeling which prevailed concerning this new expense account, but it was almost universally assumed that any costs which could be logically charged to Vietnam would be funded completely. At the training centers, it was difficult, if not impossible, to identify each individual who was destined to go to Vietnam upon completion of training. Additionally, it was equally difficult to specifically identify accurately all of the costs on an installation and pinpoint whether or not it should be included in the Vietnam account. I think it is common knowledge now (1972) that the prevailing trend at the time was, "When a doubt exists, charge it to Vietnam." As these costs were subsequently accumulated and provided in bulk to Congress, they became concrete evidence, not only of the cost of the war, but also that those funds would not be needed should our presence in Vietnam be no longer required. This mistake will plague us for some time in attempting to establish a meaningful base line for the cost of a peacetime force.
As had been anticipated by Senator Symington, the "gigantic" supplemental for fiscal year 1967 was submitted to Congress by the President on 24 January 1967. The request was for a total of $12,275,780,000, of which $1,968,000,000 was for operation and maintenance, Army. This was perhaps the most difficult time for those individuals who were charged with the responsibility of justifying this budget. The climate in Congress had definitely changed and many of the Congressmen felt as if Mr. McNamara had overstepped his authority in administering the funds appropriated to the department. The concern of Congress is adequately stated by Mr. Glenard P. Lipscomb, Member, House Committee on Appropriations, in the following excerpt from the Congressional Record of hearings on the fiscal year 1967 supplemental before the House subcommittee:
I don't believe that it is ever wise for a department to submit to you requests for appropriations in advance of the leadtimes required for those appropriations and especially when we are so uncertain as to the requirement as to not be able to document it. That is exactly the condition we were in last year. I explained it very carefully to this committee and to other committees. You may have a different view. I think the process we are following leads to the most prudent financial management possible under the circumstances. I believe it gives the Congress the greatest degree of potential control over the budget. I guarantee you that we are going to come out of this military operation with a better financial control and with less waste than was incurred in the Korean War. I think that result will be entirely a reflection of the change in the way the budget has been prepared and presented to the Congress.
Mr. Lipscomb. Mr. Secretary, why does the Department of Defense have a different approach to the budget than is required of other Government agencies?
Secretary McNamara. The main reason is we are fighting a war and they aren't and it is absolutely impossible for us to predict the actions of our enemy 21 months in advance.
Mr. Flood. Is that an answer?
General Wheeler. I didn't know to which point your question was directed.
Mr. Flood. I know you are not short of ammunition.
Secretary McNamara. The answer is that we are not short, and they are shooting a lot of ammunition.
Mr. Flood. just so they are not having fun with this hardware.
General Wheeler. I don't think you could characterize it that way, Mr. Flood.
Mr. Flood. It is just a question of waste and not a question of shortage. I never thought there was a shortage. I know there was once a certain line [type of ammunition] but that didn't last long. It was about a year now. Now it is coining out of your ears and you are all right, with an extra line standing by. There is such a thing as waste in war.
General Wheeler. I think General Westmoreland can be trusted to keep a proper control over the assets given him.
Mr. Flood. General Westmoreland [in Saigon] is a long way from that hill [Artillery Hill near the demilitarized zone] you are talking about.
General Wheeler. He is up there quite frequently. I was with him there the other day.
Mr. Long. Is the cost of artillery shells, bullets, and that sort of thing a very important part of the cost of the war?
General Wheeler. Substantial.
Mr. McNamara. It is substantial but I think in relation to potential gain to us it is not something we are seeking to hold down. We have encouraged our commanders to request whatever they wanted in the way of ground ordnance and to use it freely.
There was one specific point of disagreement between the Army and the Department of Defense which resulted in almost all of the cuts. The budget had been based on the anticipated number of troops to be supported in Vietnam. More importantly, a factor of tons per man-year was used to obtain the total amount of funds to be requested. The fiscal year 1967 regular budget had been sub-
mitted using a factor of 5.5 tons per man-year. This was obviously incorrect, but the question of just what it should be was the point of discussion. Figures accumulated by the Army during 1966 and the first quarter of 1967 indicated that it should be 9 tons per man-year. The Department of Defense believed the correct factor to be 7.8 tons per man-year. Since this is a bulk factor covering all types of equipment and supplies, it is naturally a judgment decision as to which is correct. Even though the Army submitted a reclama concerning the decision, the Department of Defense factor was used in developing the budget. From this point on the blank check was obviously gone. Service submissions since have been carefully scrutinized by the Department of Defense before submission to Congress, and more and more effort has been expended to control the cost of the Vietnam War. Financial management and responsibility in this conflict began here after the major buildup was accomplished.
Compared to the discussions of the fiscal year 1967 supplemental appropriation, the hearings on the fiscal year 1968 budget were mild. Congress had evidently vented its wrath during the earlier deliberations, and further, had been told that a change in the method of budget preparation had been made for fiscal year 1968. The major change was the estimate that the war might extend beyond 30 June 1968 and that continuation of the current level of activity would be experienced. This would negate the necessity for another large supplemental as had been required in fiscal years 1966 and 1967. The hearings on the regular budget did bring out one new twist in funding which was later to generate considerable verbiage in the Congressional Record concerning its propriety. Under a program, known as AID/DOD Realignment, the Department of Defense (DOD) was to assume some of the functions in Vietnam previously performed by the Agency for International Development (AID). This was a logical shift of responsibility, since projects such as building roads, repairing the railway system, providing medical supplies, construction of ports and waterways, and other normal developmental actions were just as necessary to the war effort as they were to the improvement of the Vietnamese infrastructure. In fact, many of the same requirements existed in both programs.
The funds required to pursue the program was another matter, not so clearly defined. In attempting to obtain sufficient funds it was sometimes difficult to correlate figures which the Agency for International Development was willing to relinquish with the sums
requested by the Department of Defense to administer these activities. This was brought rather forcefully to light in this comment during the fiscal year 1968 hearings.
Although the fiscal year 1968 budget had been prepared using different guidelines, there was a need for another supplemental as the year progressed. Its size, however, was only approximately one-third that of the supplementals for fiscal years 1966 or 1967. Whether Congressmen had resigned themselves to the supplemental form of budgeting, or they were relieved that it was so small in comparison, is not clear, but this supplemental passed virtually as requested with none of the innuendoes concerning the possibility of mismanagement of funds which had characterized the fiscal year 1967 supplemental hearings. There were instances when the Army's obvious attempt to institute a form of financial management was lauded by certain members of the subcommittee. It was evident that some measure of control had been initiated at least and that we were truly underway toward having more meaningful data on which to base future submissions.
The fiscal year 1969 budget discussions were equally mild, although the budget represented a slight increase over fiscal year 1968. The budget plan shown in Chart 2 was submitted to Congress to illustrate the budget plans for fiscal years 1967, 1968, and 1969.
Also indicated on the appropriation total lines are the costs for Vietnam. The explanation which accompanied this illustration emphasized the larger numbers of personnel planned for support in 1969 than had been accomplished in 1968 with a modest increase in funds required. In fiscal year 1968, the active Army strength was quoted as 1,477,525, compared with an anticipated support requirement for 1,501,397 during fiscal year 1969, while an additional 39,000 free world military armed forces were envisioned. The realignment program received the anticipated scrutiny during the hearings, and the Army was asked to specifically identify costs with programs for the new fiscal year. The Army's submission is shown in Table 3.
The fiscal year 1969 supplemental arrived on schedule as expected and was made quite acceptable by two factors completely unrelated. The first was that it was smaller than the request had been for the fiscal year 1968 supplemental, and, second, there was much discussion at this time concerning the Vietnamization program, which was looked upon by many as the beginning of the phasedown of the U.S. presence in that country. The actual submission date for this budget was 17 January 1969. Even though the initial amount requested was less than the fiscal year 1968 supplemental, additional changes in policy by the new administration called for re-evaluation of the request. Reductions were presented to Congress formally on 27 March 1969, and during hearings other areas of possible reductions were identified. Apparently, Congress adopted a wait-and-see attitude to determine just exactly what would be required to finance the needs of the Department of Defense for fiscal year 1969. The supplemental appropriation was finally passed on 22 July 1969 after the end of the fiscal year, and represented approximately a 15 percent reduction from that originally requested in January. The end of massive budgets to support this increasingly unpopular war was in sight, but the problems of a diminishing budget for the Army had just begun.
At the time of submission of the fiscal year 1970 budget, withdrawal of American troops had already begun. The Army found itself in the unique position of trying to anticipate the phasing of troops out of Vietnam, which proved just as difficult as projecting the buildup in many instances. This was somewhat paradoxical, since we had just accumulated quite accurate data on which to base budgets for continuing activity in Vietnam. We even had some factors concerning the costs of increasing American troops in
|1. MEDCAP: Supply medicines for Military Civic Action Teams. These Supplies are used by US, RVNAF and FWMAF medical personnel conducting the Medical Civic Action Program (MEDCAP)||$ 3.0|
|2. Medical supply: Provide funds for procurement of common use medical supplies in treating civilian population by medical personnel working for the Ministry of Health. AID and DOD will share costs equally (50-50)||15.8|
|3. Railway sabotage replacement: DOD will assist the GVN Directorate of Vietnam Railway Systems to continue implementation of the USAID planned restoration of VN railroads. Assistance will consist of commodity support and technical assistance||3.8|
|4. Commodity support of GVN police: To provide supplies or funds for financing items used by the National Police Field Forces involved in paramilitary operations||12.4|
|5. Highway maintenance: Originally this program was to furnish supplies and technical assistance to the GVN Ministry of Public Works for the Directorate General of Highways. It has been expanded to include contractor and troop maintenance of some major highways and streets||23.1|
|6. Ports and waterways, commodity support: Commodity assistance for rehabilitation and development of RVN ports by the GVN Ministry of Communications and Transport. AID continues to provide technical assistance and training but DOD finances the commodity support||.8|
|7. Revolutionary development: DOD provides commodities to support 3 military affairs projects: (1) Military Civic Action; (2) Popular Force Dependent Housing; (3) People's Self Defense||3.0|
|8. Vietnam TV: DOD finances the Vietnamese Television Service as an integrated adjunct of the U.S. Armed Forces Radio and Television Service and as a separately managed program by JUSPAO. As an essential psychological warfare effort JUSPAO co-ordinates with GVN Ministry of Information and Open Arms and the Director of Television||2.5|
|9. Chieu Hoi program: Provides encouragement to NVN defectors and care, including educational program for these defectors||2.0|
|10. Port handling and off-loading charge: Formerly reimbursed by AID is now budgeted as a direct Army expense||7.0|
|11. Subsistence, consumable, and associated air transport for military personnel families and refugees||5.3|
The hearings on this budget brought to light a problem which had heretofore been lost in all of the activities to support our troops with everything necessary to carry on combat-excess supplies and equipment. I will discuss the matter of "push" shipments of supplies and the methods used to insure that no shortages existed in Vietnam in a later chapter. The Army had just begun to identify
those items which were in long supply, and this became a subject for debate during the deliberations on the fiscal year 1970 budget. Mr. Robert L. Sikes, Member, House Committee on Appropriations, issued this prophetic understatement during the House appropriation hearings: "You will get some criticism for shipping too much material in there, but I would rather err on the side of too much than on the side of not enough." The criticism did, in fact, materialize, and in the very same hearing. The following excerpt is only one example:
But I should be able to think it out, probably.
General Taylor. No, sir. May I respond?
Mr. Lipscomb. Yes, I would be glad to have you respond.
General Taylor. Mr. Lipscomb, this is the first time in the history of our country that we have ever conducted a war where we have attempted for the first time to institute in an active theater of operations any type of financial inventory accounting or actual monetary controls. Even this was not started until, I guess it was, 1968.
General Hayes. 1968; right.
General Taylor. 1968, after the war had been going on for a period of 2 years, we are now attempting to do this. I think we are well on the way. But this is part of our problem. We have never attempted to have an actual inventory of supplies on hand in an active theater of operations, nor have we attempted in the past to maintain a strict monetary accounting system in-country. We actually have not instituted financial accounting, per se, in-country, but it is in the theater at Headquarters, USARPAC at this particular time and we are now starting to make improvements. I am not trying to tell you that we will be perfect because I would be foolish.
Mr. Lipscomb. I do not expect you to. You just happen to be across the table. I am not being critical of the present officers but I have never before been under the impression, sitting on this side of the table, that we have been other than carefully prudent about appropriating money and sending supplies necessary to our men over there. I thought that the Department had the best available system to do this—to get these supplies over there. In fact, I have thought from time-to-time that we have been too close in what we sent. There was a time a few years back they were short of clothes, and they were short of ammunition in some areas. You remember the shortages talk. Well, at that time we were being criticized because we were holding it too much in line. So I have never had the impression that we have been just shipping supplies out, tires
For the first time since fiscal year 1966, no supplemental was required for the 1970 fiscal year. This was made possible to a large degree by the decision to further reduce the number of troops in Vietnam during the year. The required funds were supplemented by
|OSD adjustments||Army reclama||OSD restoration|
|Operation, tactical forces aircraft||-12,800||.....||.....|
|Other support activities||-7,797||7,797||+842|
|Revolutionary development cadre, Vietnam||+2,694||9,100||.....|
|JCS directed and co-ordinated exercises||-9,000||.....||.....|
|Republic of Vietnam supplies and matériel||-252,700||211,100||.....|
|Air pollution abatement program||-228||.....||.....|
|Army civil defense training||-92||30||.....|
|Real property maintenance||-34,398||34,398||.....|
|Automatic data processing||-11,400||11,400||.....|
|Reactor support activities||+1,700||-1,000||.....|
|Air Defense Forces||-409||158||.....|
|Military assistance activities||+6,700||.....||.....|
|Administration and associated activities||-905||905||+228|
|Reduction of costs in Europe||-31,455||13,222||+10,869|
|General purpose forces||-155,103||7,499||+10,500|
|Strategic and Reserve Forces air defense||-10,624||10,286||-552|
|General purpose forces air defense||-9,992||9,992||.....|
|Southeast Asia attrition and consumption||-160,000||.....||.....|
the identification of more excess supplies and equipment which could be used by other commands, thereby reducing their need for new obligational authority. Financial management improved throughout the year, and the Army was finally bringing all aspects of funding and supply under firm control. As evidence of the renewal of interest in eliminating unnecessary spending, a Chief of Staff Action Memo was issued by Headquarters, Military Assistance Command, Vietnam, to all commanders. It urged conservation of resources in these words:
In submitting the 1972 fiscal year budget to the House subcommittee, the Assistant Director of the Army Budget, operations
and maintenance, Office of the Comptroller of the Army, Brigadier General John A. Kjellstrom, provided an insight into the actions taken by the Department of the Army to establish a viable financial management arena for the operation and maintenance appropriation. His remarks included the following:
The group researched and studied the validity of historical workload indicators such as student loads, items processed, short tons shipped, and patient loads. In addition, they studied the application of the accepted business practice which recognizes that some costs vary with volume or output while other costs remain essentially fixed. This was found to be applicable in many of the OMA programs, but it was particularly so in the force related programs. The group found that the dollar requirements in these programs are quite variable and relate to the average number of military personnel in the Army.
The group also found that many of the costs which OMA supports cannot be related directly to the average number of military personnel supported. These costs, which we have chosen to call "static costs," closely resemble what the business world calls fixed costs in that they do not vary directly with volume or output. A good illustration of static costs occurs in base operations where costs vary only somewhat with volume or output but do not vary in direct proportion. For example, the annual base operations cost to operate Fort Hood, Texas, which supports two divisions, is approximately $27 million. If we moved one of the two divisions from Fort Hood, we would have reduced the troop strength by one half, but would not be able to reduce the base operations by one half. The reason is that some costs continue whether there are 10,000 or 20,000 soldiers at an installation. For example, there are the same miles of roads to maintain and essentially the same number of buildings to repair. Since the buildings remain, the cost of fire protection remains the same. The base services, such as commissary, laundry and dry cleaning, can reduce some costs by reducing the number of people they employ and, to some extent, by limiting the hours of operation. However, if the level of services is to be maintained, the costs cannot be cut in half solely because the military population has been reduced by one half.
I believe the Army's efforts in this direction hold great promise in improving the management of manpower related programs as well as our base operations activities. We are continuing within my organization to refine and improve these management techniques. I would like, however, to emphasize that this approach is not designed to replace our proven workload indicators nor our field commanders' estimates. It is an additional management technique which has been used along with many others in developing this request.
Continental Army Command Base Operations
A third effort to improve our management began in June 1970 when the Comptroller of the Army, in coordination with the Commanding General of the Continental Army Command, undertook an analysis of
The Army has emerged from the Vietnam conflict with a reasonably good reputation with Congress. Even in the years when frustrations resulted in sharp comments and sometimes ridicule, it was the Department of Defense which bore the brunt of the attacks. Numerous instances arose, in which Army budgeteers were more successful in obtaining funds from Congress than they had been with their requests at the Department of Defense level. The general impression created throughout was that the Army was making every effort to maintain a reasonable degree of financial control while insuring that no commander in the field was deprived of anything absolutely necessary to pursue the war as he deemed necessary. This is a difficult tightrope to walk, but the dividends to be derived in future budget submissions will be evident. At least with Congressmen, the Army has no credibility gap at the moment. I think it is also evident that the Congressmen were walking the same tightrope with their constituents. There will always be competition for the limited funds available, but with the reputation developed through this period of extreme turbulence and the institution of measures such as described above, the Army should be in an excellent position to defend its requirements. While some belt tightening will be necessary, proper financial management should provide for a strong, responsive force.
page updated 30 May 2001
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