Chapter VII: The Defense Environment of the 1950s

The Secretary of Defense under the National Security Act of 1947 had little authority over the three armed services. The first Secretary of Defense, James V. Forrestal, in fact, had been hoist by his own petard. As Secretary of the Navy he had helped convince Congress that the new Secretary should have a bare minimum of authority over the services and only a very small staff. As the first Secretary of Defense, Forrestal found himself embarrassed and harassed by open interservice rivalries which he lacked the authority to settle. Twice, in conferences with the joint Chiefs at Key West in March 1948 and at Newport in September of the same year, he thought he had negotiated an armistice only to discover that the services interpreted these agreements in terms of their own parochial interests. Another discovery was that he had little effective control over defense budgets either.1

Forrestal in 1948 recommended to the President amending the National Security Act of 1947 to provide the Secretary of Defense with greater authority and control over the military services. The Commission on the Organization of the Executive Branch of the Government established by Congress in July 1947 under former President Herbert C. Hoover agreed with the Secretary in its report. Acting on these recommendations Congress passed the National Security Act amendments of 1949 (Public Law 216 of 10 August 1949) which redesignated the National Military Establishment as the Department of Defense, provided the Secretary of Defense with a deputy and three assistant secretaries, including a Comptroller, and created a nonvoting chairman of the joint Chiefs of Staff. The service secretaries lost their seats on the National Security Council,

The National Security Act amendments of 1949 had also granted the Secretary of Defense greater control over financial management which he used to reorganize the military budgets along functional lines. The impetus for the reform came from industrialists outside the military establishment, in particular the Hoover Commission Task Force on National Security Organization headed by Ferdinand Eberstadt, a New York investment broker who had assisted Mr. Forrestal earlier in developing the Navy's unification proposals.3

The Hoover Commission in its recommendations for reforming federal administrative management to provide greater executive control over operations had taken-up where President Roosevelt's Committee on Administrative Management had left off ten years earlier. Before then the traditional focus of administration generally and of budgets in particular was honesty, efficiency, and economy epitomized in the Army's doctrine of accountability. The Roosevelt Committee, opposed at the time by traditionalists, had inaugurated a new period. of administration where the emphasis was on executive control over operations through vertical integration along functional lines, management engineering techniques for work measurement, and functional budgets. The Bureau of the Budget took the lead in this movement. In the Army the leadership had come from General Somervell and his Control Division. The demise of Army Service Forces at the hands of the traditionalists

The Army's budget reflected its fragmented organization. There were twenty-five major "projects" or appropriations classifications based upon the technical services, each with its own individual budget, which accounted for 80 percent of the funds spent by the Army. (Table 1) Neither the Secretary of the Army nor the General Staff possessed any effective control over these funds. Congressionally oriented procedures for spending and accounting for appropriated funds also made financial control difficult. The Army's various accounting systems only told Congress how much of the funds in any appropriation had been committed or obligated, not how much had been actually spent or when. They contained no information on what happened to mat6riel or supplies after their purchase. The existence at all levels of command of unfunded obligations, principally military pay, and expendable items were added impediments to rational financial control.

Congress emphasized the independence of the technical services in its traditional restrictions on transferring funds among major appropriations categories. Technical service chiefs could and did transfer funds freely among their various activities, functions, and installations, but neither the Secretary nor the General Staff could legally transfer funds among the several technical services or other staff agencies without going to Congress for approval.

Given these conditions there was no rational means of determining how much the Army's operations cost, no means of distinguishing between capital and operating expenses in most instances, and no means of determining inventory supplies on hand. Repeated requests for deficiency appropriations each year made even control by Congress over spending difficult.

LIST OF MAJOR PROJECTS AND SUB-PROJECTS INCLUDED IN FISCAL YEAR 1949 BUDGET OF THE ARMY MILITARY (ACTIVITIES) FUNCTIONS-Continued

priations with the military plans, missions, functions, and operations of the Army as a whole.5 After investigating these conditions Mr. Hoover told Congress that he and his committee thought the military budget

system had broken down. The Army and Navy budget structures were antique. "They represent an accumulation of categories arrived at on an empirical and historical basis. They do not permit ready comparisons, they impede administration, and interfere with the efficiency of the Military Establishment. Congress allocates billions without accurate knowledge as to why they are necessary or what they are being used for." Both Hoover and Eberstadt agreed that the efficient operation of the Defense Department required a complete overhaul of the military budget structure and its procedures and fiscal policies.

Hoover urged reorganizing the budget "on a functional or performance basis, by which the costs of a given function can be compared year by year . . . ." Eberstadt recommended that the Secretary of Defense have full authority and control over the preparation and expenditure of the defense budget, assuring "clear and direct accountability to the President...and the Congress through a single official.6

Title IV of the National Security Act amendments reflected the recommendations of the Hoover Commission and the Eberstadt Committee on financial management. Section 401 established the Office of Comptroller in the Department of Defense and delegated broad authority to him over the financial operations of the department. The Comptroller was to direct preparation of the department's budget estimates, including the formulation of uniform terminology, budget classifications, and procedures. He was responsible for supervising accounting procedures and statistical reporting. Section 402 provided for comptrollers in each of the three services responsible directly to the service secretaries and acting in accordance with directions from the Defense Department Comptroller. The fiscal, administrative, and managerial organization and procedures of the several departments, it declared, should be compatible with those of the Office of the Defense Department Comptroller.

Section 403 called for adoption of "Performance" budgets and new accounting methods which would "account for and report the cost of performance of readily identifiable functional programs and activities, with segregation of operating and capital programs." It also required the service budgets to follow a uniform pattern. Section 405 provided for working capital funds to finance retail and industrial activities within each service such as Quartermaster depots and Ordnance arsenals.7

Performance budgets meant nothing until the new Department of Defense Comptroller identified what functional budget classifications to adopt. The first Comptroller of the Department of Defense was Wilfred J. McNeil who remained in this position for a record ten years. He was intimately familiar with defense budgets and financial practices as de facto Comptroller of the Navy since 1945, following similar service in uniform during World War II. He helped Mr. Eberstadt prepare his report on military financial management and participated in drafting Title IV of the National Security Act amendments of 1949.

Mr. McNeil later said "There were entirely too many fiscal masters; fiscal management was divorced from management responsibility; and there were no clear lines of authority for responsibility and management; it was all diffused. Money and responsibility should parallel each other in any business operation-otherwise there can't be any tight reins on spending. If the man responsible for operating something has to account for where the money goes, he's naturally going to make sure it isn't spent for something it should not be." 8

One of McNeil's first reforms was the inauguration on 17 May 1950 of the new performance budget with eight broad functional classifications in place of the traditional technical service oriented budget. For the Army they were military personnel, operations and maintenance, procurement and produc-

With this one directive McNeil wiped out the independent budgets of the technical services dating back in some instances to the Revolution. The chiefs no longer would defend their budgets before Congress. Instead this would be the responsibility of the several General Staff divisions. Congressional restrictions on transferring funds among appropriations would hamstring the technical services rather than the General Staff. Although they would continue to spend the largest amount of the Army's budget, the technical services would do so under the supervision and control of several General Staff divisions.9

The General Staff gained further control over technical service budgets through its membership on a new Budget Advisory Committee (BAC) (Army Regulation 15-35, 2 October 1951) . The technical services were not represented on this committee which passed on their budget requests. Under the old system the General Staff had little choice but to forward the technical services' requests. Under the new system the technical services had to justify their budgets in detail before the BAC. 10

The Army's functional budget was similar to those developed in modern industrial corporations to control their operations. It told in detail what it cost to support the Army in terms of men and material resources. It did not reveal the other side of the picture, the cost of the Army's operations at home or abroad. It did not reveal the gap which had grown, as General Marshall had warned, between American military commitments and the resources available to meet them following World War II.

and on 12 April 1950 announced the inauguration of the new system which would assist in the alignment of resources and military requirements. Theoretically the Army Programs were intended to be concrete operational plans designed to translate JCS strategic plans into action. They were to include a detailed time schedule for meeting specified program objectives, the resources required in detail, and a means of reviewing progress. The program cycle would contain three. phases: program development, when plans would be translated into operating programs; program execution, when they would be translated into budgets, later into appropriations, and finally carried out; and program review and analysis. The department assigned responsibility for program development to the Deputy Chief of Staff for Plans, for program execution to the Deputy Chief of Staff for Administration, and program review and analysis to the Comptroller.11

Translating these theoretical concepts into action required time to adjust and revise operating programs in practical terms to reflect planning missions at one end and at the other to relate as closely as possible to budget classifications. It also took more time to educate all levels of the Army in the mechanics of the new system.

There were interruptions. The Korean War pushed the new Program System into the background. Budget requests to support the Korean War were developed in a series of "crash actions" as deficiency appropriations requests in addition to the normal annual budget requests. Deadlines imposed by the Korean emergency did not allow time to translate plans into programs and then into budgets. It was not until after the

It took two years just to develop the "Program Budgets" themselves into sufficient detail for submission to Congress. The element that caused the greatest difficulty and required the most indoctrination was the program planning phase. The Army was accustomed to submitting its budget request six months before the President submitted his total budget to Congress and a year in advance of the fiscal year for which the funds were requested. Under the Army Program System the cycle for translating strategic plans into detailed operating programs began one year ahead of the budget cycle or two years before the target fiscal year. The programs in turn were based on JCS mid-range planning projected several years ahead of the target year. The Joint Strategic Objectives Plan, as it was designated to distinguish it from long-range planning estimates and short-range contingency or capabilities planning, set forth concrete military requirements in terms of major forces, strengths, facilities, and materiel. These became the Army Strategic Objectives Plan developed for two years before the target fiscal year that formed the basis for later developing Army Control Program Objectives. Concrete Program Objectives came next, accompanied by instructions, operating assumptions, and schedules for completing approved Control Programs in time to prepare budget requests for carrying out the programs. The co-ordination of plans and programs is indicated in Chart 24.12

Translating mission-oriented strategic plans into functionally oriented operating programs and again into functional budgets on schedule proved impossible. By the end of the decade the gap between military requirements laid down in strategic plans and the resources available in military appropriations was still enormous.13

The principal reason for this gap was the continued divorce at the very top of responsibility between strategic planning and budget preparation which General Marshall had warned against. The Joint Chiefs conceived their plans in terms of requirements for men and materiel without considering the

Another reason for the disparity between Army plans and budgets was that its programs were rarely completed in time to be incorporated into current budget requests. Since generally the organizations or agencies responsible for developing programs also prepared the Army's budget estimates, the pressing requirements of current operations hampered program planning for the future. This handicap continued despite repeated revisions of the Army Program System.

Beginning in 1954 the Army developed a different approach, finally designated in 1359 as the Army Command Management System (ACMS). Under this system installation commanders received budget guidance in the form of five-year projected estimates, based on Army mid-range planning, which were revised annually with changes in Congressional appropriations. These estimates, called "Control Programs," involved five major areas: Troop, Materiel, Installations, Reserve Components, and Research and Development. Using these estimates installation commanders were supposed to prepare detailed requests for funds under twenty-one major functions covering the Army's nontactical peacetime support activities. (Table 2) The ACMS was intended to provide both cost and performance data for the amorphous budget category, Operations and Maintenance, Army (O&MA). However, Mr. McNeil's continued insistence on archaic obligation and expenditure data remained a major obstacle. Another problem was the effort to develop a prototype Class I installation automatic data processing system at Ft. Meade which would integrate supply, personnel, and financial reporting. In this pioneering research project one officer involved said the actual programming was "like dropping a ping-pong ball into a box-full of mouse traps and ping-pong balls. If you've ever tried it, you know that all hell breaks loose. We hit problems that were far more complex than

Major Activity	Code Zone
Military Personnel, Army	1000.0000-1990.0000
Tactical Forces	2000.0000-2090.0000
Training Activities	2100.0000-2190.0000
Central Supply Activities	2200.0000-2290.0000
Major Overhaul and Maintenance of Materiel	2300.0000-2390.0000
Medical Activities	2400.0000-2490.0000
Army-wide Activities	2500.0000-2590.0000
Army Reserve and ROTC	2600.0000-2690.0000
Joint Projects	2700.0000-2790.0000
Procurement of Equipment and Missiles, Army	4000.0000-4990.0000
Research, Development, Test, and Evaluation	5000.0000-5990.0000
Military Construction, Army	6000.0000-0990.0000
National Guard Personnel, Army	7000.0000-7090.0000
Operation and Maintenance, Army National Guard	7100.0000-7990.0000
Reserve Personnel, Army	8000.0000-8490.0000
Military Construction, Army National Guard	8500.0000-8590.0000
Military Construction, Army Reserve	8600.0000-8690.0000
Operation and Maintenance of Facilities	9000.0000-9090.0000
Promotion of Rifle Practice	0500.0000-0590.0000
Army Industrial Fund Activities	3000.0000-3990.0000
Other Operational Activities	0800.0000-0990.0000

anyone ever dreamed. Every problem we hit begat a host of new ones, chain-reaction style. And on anything like this, you have to have all the kinks out." 14

The development of functional budgets and programs was the principal effort in the 1950s to improve the Army's financial management. During this period continued criticism from agencies outside the Department of Defense focused on other problems that made effective control over the Army's finances difficult. The Flanders Committee in 1953 investigated the efforts of the military services to carry out the fiscal reforms

The Davies Committee report in December 1953 recommended integrating the Army's financial management systems with its formal command organization. The new functional budget and programing system ought to reflect the actual cost of Army operations, it said, on the basis of the "missions" the Army had to perform rather than the functional means of accomplishing them. The committee also criticized the existence within the Army of more than thirty separate accounting systems which could not be correlated rationally. There should be a single, uniform system of accounting that would adequately measure the "costs of performance." That meant the adoption of modern, "accrual" cost-accounting systems and double-entry bookkeeping at all levels of the Army.16

President Eisenhower's first Secretary of Defense, Charles E. Wilson, appointed a special Advisory Committee on Fiscal Organization and Procedures within the Department of Defense, known as the Cooper Committee, which recommended replacing the traditional "obligation-allotment" form of accounting with modern "cost-of-performance" budgets as a more rational means of controlling defense costs. One committee member, Wilfred McNeil, disagreed. As Comptroller of the Department of Defense he was successful in preventing the adoption of this recommendation.17

The Second Hoover Commission on the Organization of the. Executive Branch of the Government in 1955 again criticized military budgeting and accounting systems as archaic and recommended that Congress require budgets and accounting systems based on a cost-of-performance or "accrual" basis. Congress passed such a law in 1956 (Public Law 863, 89th Congress,

Certainly one of the original reasons for the whole movement toward unification in the armed forces was the belief that separate service supply organizations were duplicating and wasteful. General Somervell's Army Service Forces was the principal champion of the idea of a completely unified supply and service system for the Army, Navy, and Air Force, and it was largely because of the ASF influence that the War Department, in the first phases of the unification hearings, supported the idea of a unified supply organization. General Lutes, wartime ASF Director of Operations and in 1947 Director of Supply, Services, and Procurement on the General Staff, had a study prepared in January 1947 that declared:

Procurement, supply and service operations will never be as efficient on the basis of voluntary cooperation as they can be if integration is required . . . . There are large savings to be had in unified service, supply and procurement for the Armed Forces. These are not only savings in money, but also savings in the resources that are scarce in time of war-men, material, facilities, time.19

By 1947, however, Lutes represented a voice crying in the wilderness as the Army in general backed away from the concept of a fourth military department handling supplies and services, even as it fragmented its own functions in this area by restoring the technical services to their former power and authority. The Navy had consolidated its own common supply functions in the 1890s under the Bureau of Supplies and Accounts but championed "voluntary cooperation" among the services in supply as well as in other fields. The fledgling independent Air Force, irked with its dependency on the Army supply system for many common supplies and services, sought to establish its own independent supply system. The Eisenhower-Spaatz agreement of 15 September 1947 provided that the Army and Air Force would use each other's services and facilities

The Army position by the early 1950s had changed similarly. A single supply service, the Assistant Secretary of the Army asserted in 1951, would mean the military would lose "command control of supply and thus direction of military operations." The necessity for unity of command over military operations became, in all three services, the basis of opposition to any revival of the Somervell-Lutes proposals 20

The principal champions of integrated supply systems were to be found in Congress and the business world, not in the military services. Under constant prodding from the outsideby Congress and the two Hoover Commissions-the movement toward increased co-ordination and integration of service supply systems gained momentum between 1947 and 1960. The impact on the Army's technical services was considerable.

The National Security Act of 1947 gave the Secretary of Defense an ill-defined authority to eliminate duplication and overlap among the services in the supply area and created a co-ordinating authority in the Munitions Board which, along with other functions, was to work toward these ends.21 The accomplishments of the Munitions Board along this line were not great, at least in part because some regarded it as the forerunner of a. single defense supply service, but it did initiate some important programs that laid the basis for future developments, and it conducted many studies. Its main work was in the area of procurement where it originated what was later to be known as the Coordinated Procurement Program under which one service acted as purchasing agent for certain categories of items for the others. This arrangement provided benefits of consolidated purchasing such as lower prices and fewer purchasing personnel. It did not provide effective control over inventories nor eliminate the duplication created by the existence of

Meanwhile, in 1948, Congress passed the Armed Forces Procurement Act, requiring the development of uniform procurement procedures for all the military departments. The main purpose of the act was to free the military services from the prewar requirement that all procurement in peacetime be by open competitive bidding, a requirement that was impractical in many cases. The act spelled out specific requirements that must be met to justify negotiated contracts. To carry out the purposes of the act a special committee drafted a set of Armed Services Procurement Regulations (ASPR's) that became, with their periodic revisions, the bible of procurement procedures for the Department of Defense.

Not unexpectedly performance did not live up to ASPR's promise. The Second Hoover Commission Task Force on Military Procurement in 1955 stated the ASPR lacked adequate coverage. Consequently it had spawned a mass of subordinate individual service regulations. There was also, it said, a wide gap between the ASPR and actual procurement procedures at the working level in the field which frustrated contractors. The Task Force recommended rewriting the ASPR to take care of these deficiencies.23

Other important steps in the 1947-50 period included the establishment of the Military Sea Transportation Service (MSTS) and the Military Air Transport Service (MATS) with responsibilities for handling ocean surface transportation and air transportation, respectively, for the three services. The

activation of MSTS removed the Army Transportation Corps from the field of shipping in which it had been engaged since the Spanish-American War. On the other hand, insistence on unity of command over operations frustrated efforts to create an integrated military land transportation service in the United States until 1956.24

The First Hoover Commission report in 1949 did not, as the second report was to do, recommend a radical alteration of the DOD logistics structure. However, it did recommend that ". . . the National Security Act of 1947 be specifically amended so as to strengthen the authority of the Secretary of Defense in order that he may integrate the organization and procedures of the various phases of supply in the constituent departments of the National Military Establishment."25 The provisions of the National Security Act amendments in 1949 concerning the establishment of performance budgets, stock and industrial funds, and cost-of-performance accounting made greater integration of defense activities possible. The stock fund principle introduced in the Army as a result-the Navy had long had one and the Air Force was never to use stock funding to any considerable degree-greatly facilitated cross-servicing and provided a mechanism for the later operation of single managers.

Another outgrowth of the Hoover Commission report was the Federal Property and Administrative Services Act of 1949 creating the General Services Administration (GSA) with government-wide responsibility for central purchasing and management of common supplies and services. However, it provided that the Secretary of Defense might use his discretion in exempting the military services from purchasing common supplies through GSA. For the most part successive Secretaries of Defense did so, but under a policy that provided for maximum use of GSA facilities where it would promote efficiency and economy. As the situation developed, GSA assumed responsibility for providing general office supplies and equipment for the armed services and for planning, constructing, managing,

and operating buildings occupied by the military establishment in the United States. Beyond this the extent to which each service used GSA as a purchasing agent for common supplies was a decision to be made by that service 26 Indeed defense policy quite specifically stipulated that there should be separate service supply establishments. The philosophy under which successive Secretaries of Defense proceeded, at least until 1955, was set forth in 1949 by Secretary Louis A. Johnson: "Each of the services is responsible for the logistic support of its own forces except when logistic support is otherwise provided for by agreement or assignments as common servicing, joint servicing, or cross servicing at force, command, department or Department of Defense level." 27

Congress, demanding greater progress in integrating supply management, became disenchanted with the Munitions Board. In the Defense Cataloging and Standardization Act of 1952 it transferred the board's functions to a new Defense Supply Management Agency. The Eisenhower Reorganization Plan No. 6 abolished both this agency and the Munitions Board, replacing them with a single executive, an Assistant Secretary of Defense for Supply and Logistics.28

The Korean War led to several investigations by Congress of military supply management which threatened to impose a common supply service on the military services from the outside. The investigation begun in 1951 by the House Committee on Expenditures in the Executive Departments, known as the Bonner Committee, was the most important. It charged that, contrary to the Eisenhower-Spaatz agreement, the Air Force in developing its own supply system had included items commonly used by both the Army and Air Force. It criticized the lack of co-ordinated supply management among the Army's technical services, citing conspicuous examples of waste in competitive buying, overstocking, and duplication in the use of personnel, space, and facilities. It accused the services of giving only lip service to the principles of integrated supply manage-

The Bonner Committee concluded that supply management within the Department of Defense and the services lacked adequate centralized control. As a result of its recommendations Congress adopted the O'Mahoney amendment to the Defense Appropriations Act of 1953 prohibiting the "obligation of any funds for procurement, production, warehousing, distribution of supplies or equipment or related supply management functions, except in accordance with regulations issued by the Secretary of Defense." Complying with this provision, Secretary of Defense Lovett on 17 November 1951 issued DOD Directive 4000.8, Basic Regulations for the Military Supply System, ordering the Air Force to abide by the principles of the Eisenhower-Spaatz agreement, among other things. It listed eleven general principles governing the management of defense supply and service activities, including cross-servicing, single procurement, cataloging and standardization, conservation, surplus disposal, transportation, and traffic management. It expressly prohibited the addition of new independent or expanded supply functions involving standard, common-use items without the approval of the Secretary of Defense. One provision required the services to establish "one single supply and inventory control point for each specified category of items." By 1960 there were twenty-four such "National Inventory Control Points" in the Army. 29

The Bonner Committee became the Riehlman Committee in January 1958 with the change in Congressional control to the Republican party and continued its investigations. Later that year it reported that the services were still too slow in improving their management of supply, asserting that one major reason was that each service was "dedicated to its own systems and procedures." The new Assistant Secretary of Defense for Supply and Logistics, Charles E. Thomas, and his successor, Thomas P. Pike, both disagreed with these findings and opposed further efforts to integrate common supply activities as a fragmented approach which did not recognize "the

While the Riehlman Committee produced no tangible results, the Commission on Organization of the Executive Branch of the Government created by Congress on 10 July 1953 and known as the Second Hoover Commission did. Its Task Force on the Business Organization of the Department of Defense charged the Department of Defense and the military services with continued waste, overlapping, and duplication of effort in nearly all aspects of supply management. Co-ordination was piecemeal and fragmentary. Substantial economies and greater efficiency could only be achieved by creating within the Department of Defense a civilian defense supply and service administration, which would perform common supply and service functions all over the world.31

The military services opposed a civilian common supply agency even more than a military one. They charged it would be less responsive to military requirements and so jeopardize the success of military operations. An Army staff study, The Fourth Service of Supply and Alternatives, prepared in the Business and Industrial Management Office of the Office of the Deputy Chief of Staff for Logistics in September 1955 followed this line of argument. The Hoover Commission and its Task Force on the Business Organization of the Defense Department, it said, did not give adequate attention to the military aspects of military supply management. They emphasized peacetime operations. The Task Force's assertions concerning the inefficiency of military supply management were based on "unsupported assumptions."

It admitted the existence of deficiencies in supply management, but it said the best way to correct them was to improve management practices within the existing organizational framework rather than create a separate agency. Among the alternatives it suggested were to accelerate adoption of uniform inventory management practices, the standardization of supply documents, and some form of integrated management for subsistence and for medical supplies.32

Congress did not appear as impressed with the argument of military necessity as it was with the Hoover Commission's indictment of waste and inefficiency in the military services. To avoid having Congress take the matter away from the services entirely, the Department of Defense did an about face. A prime mover in bringing about a more favorable attitude toward greater integration in supply management was the new Deputy Assistant Secretary for Supply and Logistics, Robert C. Lanphier, Jr., a Midwestern electric and utility company executive. Beginning in late 1954 a task force in his office spent several months exploring how best to achieve a maximum degree of integration with a minimum of disruption to the existing service organizations. The solution proposed and approved by the Secretary of Defense was to appoint "Single Managers" for a selected group of common supply and service activities.

The single manager concept was the most significant advance toward integrated supply management within the Department of Defense or the armed services since the end of World War II. Basically it was an expansion of the Single Service Procurement Program to provide more effective control over inventories at one end of the supply cycle and greater control over wholesale distribution at the other. Like the Single Service Procurement Program it superimposed a new organiza-

When the concept was presented to the Secretary of Defense and the services the Navy, adhering to its traditional opposition to integration in any form, opposed it on principle. A new Deputy Secretary of Defense for Supply and Logistics, Reuben B. Robertson, Jr., a paper company executive who had served as vice chairman of the Second Hoover Commission's Committee on the Business Organization of the Department of Defense, overruled the Navy's objections and approved a directive outlining the procedures and principles to be followed in setting up single managerships.

Under this directive the Secretary of Defense would formally appoint one of the three service secretaries as single manager for a selected group of commodities or common service activities, and he, in turn, would select an executive director to operate the program. Single managers in the Army were established within the existing technical service organizations. The Secretary of the Army designated a major general as executive director who served under the chief of the technical service responsible for the particular type of commodity or service involved. The Single Managers for Subsistence and for Clothing and Textiles operated under the Quartermaster General, while the Single Manager for Military Traffic Management was under the Chief of Transportation.

The responsibility of the single managers for determining requirements involved common cataloging and standardization as well as inventory control. They operated under a stock or consumer revolving fund, buying what they needed, selling to the military departments and consumers, and using the funds paid to replenish their stocks. This eliminated the expense and delay in calling for open bids each time supplies were requested. Through their control over wholesale storage they were able to direct distribution to consumers from the nearest depot, regardless of the service operating it, in such a manner as to avoid the needless and expensive cross-hauling involved when each service maintained its own completely separate distribution systems.

normal command channels, reporting to the Secretary of the Army through the chiefs of the technical services and the Deputy Chief of Staff for Logistics, who was assigned Army staff responsibility for the single manager programs. The impact of losing control over their inventories was minimal because this was a function the technical services had never chosen to exercise effectively. They continued to calculate their own requirements, and they retained their own wholesale and retail distribution systems. The chief difference was that they operated their wholesale depots now as agents of the single managers rather than the several technical services. In sum, the single manager concept balanced demands for greater integration of supply management with the military services' insistence that effective military operations required each service to maintain its own independent supply system.

According to Mr. Lanphier, in late 1955, the most appropriate categories for initial single manager assignments were subsistence and clothing and textiles, both of which were assigned to the Army's Quartermaster Corps, and petroleum and medical and dental supplies, both of which were assigned to the Navy's Bureau of Supplies and Accounts. These were areas of largely common-use items, where common cataloging was relatively complete, where some defense-wide co-ordination existed, and where much of the wasteful duplication of inventories and cross-hauling existed. The Military Subsistence Supply Agency was the first to be inaugurated on 4 November 1955, followed in the next year by the three others. The coordination of transportation services was also far advanced. Creating single managerships out of the existing Military Air Transport Service and the Military Sea Transportation Service was simply a change in designation. The single manager for land traffic management, the Military Traffic Management

Assignments in 1959 of single managers for general supplies to the Army's Quartermaster Corps as the Military General Supply Agency (MGSA), for industrial supplies to the Navy's Bureau of Supplies and Accounts as the Military Industrial Supply Agency (MISA) , for construction supplies to the Army's Corps of Engineers as the Military Construction Supply Agency (MCSA), and for automotive supplies to the Ordnance Department as the Military Automotive Supply Agency (MASA) were the result of studies undertaken by the Armed Forces Supply Support Center mentioned below. They required much more work in common cataloging, standardization, accurate inventorying, and the installation of cost-of-performance accounting. Further studies by the Armed Forces Supply Support Center in 1960 envisaged an additional single managership for electrical and electronic supplies.35

The impact of the single manager system within the Army was greatest on the Quartermaster Corps, which was, by 1960, responsible for three of them. Three of its four identifiable procurement systems were single managerships, and the Quartermaster General asserted that nearly all his supply and procurement personnel were involved either with the single managerships or other efforts to integrate defense supply management.36

Another program designed to eliminate duplication and prevent waste by permitting the transfer of surpluses among the services was the Interservice Supply Support Program begun in 1955. It consisted of six area co-ordination groups under a joint council of the services and governed thirty-three commodity co-ordination groups.37

Finally, in June 1958, the Department of Defense created the Armed Forces Supply Support Center (AFSSC) to administer the common cataloging, standardization, and Interservice Supply Support programs, the latter redesignated as the Defense Utilization Program. It was also to study military supply activities continually and recommend improvements in their management. From such analyses came proposals leading to the creation of the four additional single managerships in 1959 and 1960, referred to above.38

While all these efforts were being made within the Department of Defense to improve supply operations, Congress continued its criticisms of waste, duplication, and overlap and of the slow progress being made to eliminate them. In 1958 nearly a dozen different bills were introduced into Congress to establish a fourth service of supply. The outcome was the addition of the McCormack-Curtis amendment to the Defense Reorganization Act of 1958 which granted the Secretary of Defense explicit authority to consolidate or integrate the supply and service functions of the three services, subject to a Congressional veto where this involved legislative changes. The amendment stated:

Whenever the Secretary of Defense determines it will be advantageous to the Government in terms of effectiveness, economy, or efficiency, he shall provide for the carrying out of any supply or service activity common to more than one military department by a single agency or such other organizational entities as he deems appropriate.39

At the end of the fifties the Secretary of Defense and the Joint Chiefs of Staff possessed much greater authority and control over the three military services than Congress had provided for or intended in the National Security Act of 1947. The cold war, the revolution in technology, mounting defense costs, and pressure from industry and Congress were responsible for this increase in power. It was most apparent in four

The first substantial increase in the authority of the Secretary of Defense and the Joint Chiefs of Staff came with the passage of the National Security Act amendments of 1949. The Secretary of Defense's increased authority over defense budgets, calling for their reorganization along functional lines, was perhaps the most significant change. At the same time the Secretary's civilian staff and the joint staff serving the joint Chiefs of Staff were also increased in size.

The Eisenhower Reorganization Plan No. 6 of 1958 brought about further increases in the authority of the Secretary of Defense and the Joint Chiefs. The various functional boards set up under the 1947 act, stymied by interservice rivalry, were replaced by a series of functional assistant secretaries with authority to act on behalf of the Secretary. The civilian staffs of the service secretaries were also reorganized on functional lines, reflecting the changes within the Office of the Secretary of Defense. The joint staff was again increased in size and the chairman of the joint Chiefs given greater authority over the joint staff's operations.

Congressional prodding and Soviet technological achievements led to the Defense Reorganization Act of 1958 which centralized authority over the services in the Secretary of Defense and his office even further. The chain of command over military operations was changed to run from the President and Secretary of Defense through the joint Chiefs rather than through the service secretaries who had acted as executive agents since 1953. The JCS, its staff doubled to four hundred, was completely reorganized along conventional military staff lines, replacing the system of JCS committees, most of which were abolished. The authority of the chairman of the joint Chiefs of Staff over the joint staff was increased, and at the request of President Eisenhower he was given a vote in JCS decisions previously denied him by Congress.

This increasingly centralized control by the Secretary and the Department of Defense obviously diminished the role of the services. They had become support commands, responsible for training, administration, and logistical support of military operations, limited further by the authority of the new Director of Defense Research and Engineering over the development of new weapons.

The Department of the Army became responsible largely for functions performed by the Army Ground Forces and the Army Service Forces during World War II. There was continual discussion of whether the Secretary of the Army should act as an independent spokesman for the Army or as an executive vice president for the Secretary of Defense. The answer depended somewhat on the personalities involved and their length of service. The long tenure of Mr. McNeil as Defense Comptroller and Secretary of the Army Wilber M. Brucker undoubtedly increased their personal influence, but generally the tour of duty for top-level civilian administrators was relatively brief as it had been in the past. Other things being equal, under a strong Secretary of Defense the service secretaries were more likely to act as his executive agents than under a weak one. 41