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Air Force AFSC Management Conference, Monterey, CA, May 4, 1962
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Air Force AFSC Management Conference, Monterey, CA, May 4, 1962
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The original documents are located in Box D16, folder "Air Force AFSC Management
Conference, Monterey, CA, May 4, 1962" of the Ford Congressional Papers: Press
Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D16 of the Ford Congressional Papers: Press Secretary
and Speech File at the Gerald R. Ford Presidential Library
Paul
Please return to us. This is only
copy we have.
GERALD FORD LIBRARY
ADDRESS BY
THE HONORABLE GERALD R. FORD, JR.
TO THE AFSC MANAGEMENT CONFERENCE
MONTEREY, CALIFORNIA
MAY 4, 1962
A CONGRESSIONAL VIEW OF MANAGEMENT
General Estes, General Schriever, members of the military and repre-
sentatives of industry. I consider it a great privilege and high honor to
have the opportunity of being here and participating in this most worthwhile
conference. Unfortunately it has not been my privilege to be here as long as
I would have liked and perhaps I can't stay as long as I would prefer.
However, the short time here has been very enjoyable and, I am sure, will be
educational.
If I could divert from what I originally intended to say at the very
outset, I think it is someone's duty here to put certain facts on the line and
in perspective. I had no sooner arrived than I heard that there was some
feeling on the part of those who are here, and I presume this is indicative
of the way many people feel elsewhere, that the military and those engaged in
industry related to the military were somewhat suspect. About income tax time
every year anybody connected with the federal government or any industry that
to a substantial degree depends on the federal government are to a degree
under suspicion. And for one reason or another -- I don't know whose fabit
it is -- most of this suspicion is simed toward those who spend most of the
money for Uncle Sam.
It was my privilege a couple of days ago to speak to the Michigan Chamber
of Commerce when their representatives were in Washington. Each of us in the
-2-
Michigan delegation was asked to say a few words to this evening meeting.
I decided to take a look at how the increase in expenditures for the military
had increased for the last ten years and how the increases in expenditures
for the non-military agencies of our government had increased. It was surprising
to find that if you start with July 1, 1953 as a reference point, and include
the projected spending under the 1963 fiscal year budget, the increase in
spending for the Department of Defense and all its related agencies will have
gone up approximately twelverpercent; whereas, the increase in non-defense ex-
penditures, using the same reference point, will be ninety-four percent.
Unfortunately in my judgment the public doesn't appreciate these facts
and regrettably most of the adverse comment that you get from texpayers about
this time of the year is, "That can we do about holding down our expenditures
in the three military services?" I think it would be well for somebody somehow
to cast some suspicion at the increase, the percentage increases, that have
taken place in non-defense expenditures in recent years. This, I feel, is an
area that needs plenty of public attention and action.
Now I think it's well that your speaker be put in proper perspective.
Nothing is more obnoxious to me than a politician who seeks to place a hale
over his head. And, I have found in my experiences that there are two wonderful
ways to have this remedied, if a person is so dispesed: One, your colleagues
in the House do a remarkably good job; and Secondly, I am sure all of us would
understand that our wives can also do quite well. I hase a story to illustrate
each, but I'll take only the time to tell you the one that took place on the
floor of the House a few years ago. In 1951 I had just become a nember of the
House Committee on Appropriations during the Korean War. At that time I was
GERALD LIBRARY GERALD R. FORD
-3-
a very junier member of the committee that had jurisdiction over funds for
the river, harber, and flood control projects. During the Kerean War we felt
that it would be wise to not initiate any new projects and not go beyond the
budget in any of those that were underway. And so, the unanimous recommendation
of our committee was to be tight-fisted and tough. We took our bill to the
floor. We thought we would be acclaimed. The net result, however, was that
our colleagues didn't approve of our finm attitude for economy. This is not
surprising, I guess, even in those days because river, harber, and flood control
projects have a unique attractiveness to peliticians. Anyhow we did our best.
We were subjected to criticism and each of es on the committee, five in all,
took our respective turns seeking to defend our handiwork. Finally, as the
junior member of the minerity side I took my books and papers and went to the
podium to speak for about a half an hour, doing the best jeb I could. I con-
cluded with a feeling of sstisfaction.an@tpwide. It was my feeling that I had
done a nighty good jeb, I picked up my documents and walked up the center
sisle. Really I was very self-setisfied. About half way in the center aisle
a good friend of mine, a Texas Democrat, grabbed my arm and said, "Jerry that
was the best Taxas Longhorn speech I ever heard." I was apprehensive but
naturally asked him what he intended. He smiled very sweetly.--Ne had a
wonderful personality. He said, "Well Jerry, a lenghern speech is one that has
two points, far, far apart with plenty of bull in between."
May I again commend General Schriever and the Air Force for spensoring
this conference. I can assure you that our committee and myself wholeheartedly
endorse the stated purpose, which is included in the becchure, to exchange
views and gain mutual understanding of the problems we face together in
GERALD FORD LIBRARY
+
acquiring systems for the Air Force in the environment which exists today.
As a member of the House of Representatives, I an particularly pleased to be
here representing the 537 members of the legislative branch of our government
and more specifically the 13 members of the sub-committee on the Department
of Defense appropriations. Even though we are from the legislative branch, I
feel that we are a part, de integral part, of the team that has this
avesome responsibility. In the breadest sense, the 537 members of the Congress,
among their myriad of other responsibilities, are members of the Board of
Directors for the Department of Defense, which, as you know, is an organization
that has unbelievable responsibilities in this day and age for the 180 plus
million Americans, who are the real stockholders in this massive business operation.
the
Sometimes it's well to review, if even hurriedly,
Emajor
responsibilities
of this large board of directors. First, the Congress has the responsibility
to enact legislation and to establish policies demestically that will provide
an economy now and in the future sufficiently strong to meet any commitments
at home or to the free world. Secondly, we have the responsibility to provide
adequate funds and necessary legislation to insure fully our national security
from any externally or internally threat or challenge.
How, I know that there are many here, and I, myself, who might disagree
from time to time with that the House or the Senate or the Congress as a whole
does. Nevertheless, despite my disagreements and perhapd yours, I suspect
every American with very few exceptions will have to agree that the methods,
the system we have for accomplishing what is for the best insurest of all of
us is unsurpassed anyplace, anytime in the history of the world. But to
LIBRARY
-5-
visualize the magnitude of the operation that this Board of Directors of 537
has, it night be well to give you a few figures. We have to sensisow collect
and somehow disburse almost a hundred billion dollars every twelve months.
And this Boardoof Directors has the direct responsibility as the legislative
branch for the employment of approximately 2,500,000 civilians and approximately
2,800,000 men and women in uniform.
More specifically the sub-committee of which I an a member which handles
the Department of Defense appropriations has the annual initial, but also I
assure you a continuing, responsibility for the funding operations of the
Army, the Navy, and the Air Force. Although we deal primarily in dollars, we
are of necessity are concerned with policy, with programs, and may I emphasise,
most importantly with results. To implement policy, to execute programs and
to obtain results, we believe there must be effective management.
As I was trying to put together some remarks for this meeting this
merning, I tried to visualise where, on an organization chart, this sub-committee
of which I am a member would fit. It seems that the best location would be
where you would nermally have a finance committee in a corporate structure.
Or to some extent we could be labelled as comptrollers. Over the years I've
heard from many people in the various military services that it is horrible
to have just one comptreller. I suspect this is true in business as well as
in the military. I am positive that it is not considered advisable by the
operations people to have 13. But, nevertheless, to a degree we do fit in
this category.
May I add two footnotes right now. First may I make the observations
pee' If mySpt pe ABIJ RO SIAS Aon 9 gan trantes' M pass CO screpon correct
that finance committees or CUR those with similar responsibilities whether the
-2-
GERALD LISAARY
-5-
TIBUVE)
visualize the magnitude of the operation that this Board of Directors of 537
has, it might be well to give you a few figures. We have to semehow collect
add silm I van Seriy right assogdoof owd bbs I VAN
spre
obezerrone boobre DO рале 12' gup' to B qeffxes no go STF [f]
ods gd eldsalvhs beyeblanes for at at suits svistees ms I ads nt
as How as assented at GOOD at abds doeque I ono duot sved os
sidition at 32 sould accivies quasilis avoisev odd at elgosq your most based
ev'I exsey suid zoy0 buffedal ad blues bw desdite disea od 30
spone Aon monyq pass to [[wence commission TIP 17 comboners appacents'
OF syrop X est 0 unaper молта EEF' IF assue spep eye peap recerrow молрф pc
WOLDING I enroq DO speno's on gift cpass' spra anp-compress
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eviscalle ad 380m stads svatied BU ,ediuses alsido 03
bern amergove students of oT .ediusos d31v team
use of DECREBIER s.e concerney ATPP borreh' ATEP broWnems' eug and X subpensee'
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add 10 eds tol D you sweas
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nk money bns nom 000,008.S
bna anallivio 000,00E.S to anenyolque eds volt donsed
svidelalgel ads as worth ads and Roobzaod abile bas
edition avious vzevo suslich soillid beshaud a scomis serudalb workshee bas
pse* IF mg8pp po AGJI po STAR has 9 gan № pare to cerject
TEE 20 to bysed alidas sads collerage ods to studingsm ods
4
-6-
Congress, the military, or in a corporation seldom win popularity contests
Secondly I would be most remiss if I failed to indicate to you that there is
⑉6⑉
another finance committee in the
Congress; namely, the Senate Sub-Committee on Defense Appropriations. New,
although we traditionally have our differences, of necessity before we adjourn
we must resolve any disagreements.
The sub-committee's judgment has on occasion been challenged and perhaps
rightly so, on the basis that we were not qualified to make decisions involving
military policy and weapons systems on a 50-million-dollar annual appropriation
bill. Superficially one could argue that seven lawyers, one engineer, one
accountant, one newspaper publisher and three business men lack the essential
qualifications to pass judgment on the vital issues, the technical problems,
and the multi-billion dollar measure.
Perhaps I am pregudiced but I feel this view can be refuted and let me
give my own arguments. One, the members of this sub-committee have a long
tenure in the Congress and have had many years' service on this committee. We
have been most fortunate in my judgment to have as our Chairman, George Mahon
of Texas, who has been a member of this committee for over 22 years. Most of
the members of the committee hase service on the group of over ten years. Those
of you who have been privileged, and this is smatter of personal opinion
perhaps, to come before the committee I'm sure are familiar with one of our most
dramatic, unudual, and honestly most knowledgeable and constructive members,
Dan Flood. Dan's been a member of the consittee about ten years and I'm sure
some of you have heard him say, "Admirals and Generals come and go like greyhound
busses before this committee, but we've been here ten or more years." I think
ten years of continuity in office does make some difference.
In addition, as many of you know, we hold extensive annual hearings plus
a number of on-the-spot investigations on n world-wide basis, not only by us
-7-
but by our staff. We have a career staff and we are fortunate to be able to
draw on some other highly competent and qualified people to make special in-
vestigations. I brought along several of these dnvestigative reports just to
show you that we have some evidence. Here's one, "Management and Procurement
of Aircraft Spares and Spare Parts." I might say that the content of this
report was helpful to our committee this year in drawing up the recommandations
for the bill that came to the floor in mid-April.' And fourthly, this particular
group of thirteen, as far as I know, approaches the appropriation bill for
the Defense Department on a completely non-partisan and nem-political basis
whether there is a Democrat in the White House or a Republican.
Could I add this final comment in this area? Certainly if we believe in
our form of government where we have the three equal branches, you must agree
that our subcommittee in the Congress has the responsibility and even more the
obligation to listen to the recommendations of the executive branch of the
government primarily and/or others and then make an independent judgment.
I concede the legislative branch is not infellible, but our betting
average over the years hasn't been too bad. And, I might just add this, that
a month or six weeks ago most of you are femilier with the problem we had on
the floor of the House about whether the Committee on Armed Services should
direct the Department of Defense or the Air Force to proceed with the proqure-
ment of the RS-70. The Defense Department, in order to justify its position,
did some research work on the question whether the Defense Department and the
Chief Executive had been following recommendations of the legislative branch
over the years on military matters. We had been trying for years to get some
opinion from the executive branch on this point without success. Finally when
GERALD FORD LIBRARY
&
it served their purpose, we got the best evidence one could imagine. The
Department of Defense in a detailed memerandum showed that over a period of
six years (fiscal years 1956 through 1961) the executive Branch of the
government followed the recommendations of the Congress 28 times in toto.
In nine additional cases during this same period the executive branch followed
the recommendations of the Congress more than 50 percent. New this is not a
bad besting average as I indicated earlier.
I imagine there are those who feel that in this day and age of automation
in industry, the Air Force and in our individual homes that the Congress itself
should update its management tools. However, I an willing to make a substantial
wager and give excellent odds that the Congress will be the last strongheld
against the enslaughts of automatic data precessing. An R&D contract to
automate politicians, I feel would be most suspect. As a matterof fact we have
and undesbtadly will continue to do most of our job by hand. This brings to
mind a story I heard a few months ago about a school superintendent way up in
the cold, hard, rugged area of northern Michigan. They had a relatively small
school district; they were faced with consolidation; and as they conselidated
and acquired more school districts, the school board decided they had to find
out about how to run their school system more efficiently. So the school
board decided to send their rather young and eager superintendent down to New
York to learn about management methods and automatic data precessing. He took
a plane from the northern part of Michigan and flow to New York, He arrived
there late in the evening and went to his hotel. He was a little fearful and
apprehensive, this being his first trip to this vast metropolis. The next
morning he got up bright and early and went to the building where there was a
+
convention for school superintendents and others connected with education.
In this facility there was 8 tremendous demonstration on how to improve the
management of your school system. He was particularly interested in how all
these new electronic devices would be beneficial to his district. So he took
the elevator from the first floor to the second floor. He get off and walked
in to see s tremendous bank of automatic data processing equipment. To him it
was just fantastic. He was so overwhelmad that he just turned around and walked
back toward the elevator. One stopped; he got on. He was the only person that
was on the elevator going up; the door closed; he went up one floor and for one
reason or another a whole mob of people on the third floor surged into the
elevator and he was pushed way over in one corner. Among those who had gotten
on on the third floor were one or two young ladies and as the elevater door
closed and the elevator started up, one of the young ladies said, Who pinched
me?" This poor school superintendent didn't say a word, but simply thought to
himself, "Thank God, something's still done by hand."
May I say with emphasis that it would be helpful to all parties in this
team operation, if we are to achieve maximum management objectives, if we could
increase the communication between all of us. You've heard this many, many
times-that a free flow of information and a better use of information would
be most helpful. As a member of Congress and particularly as a member of our
committee, may I say that we receive the benefit of the excellent brochuremenship
of industry and of the various military services. We feel this information is
helpful and we use it. But, may I suggest some reciprecity. Our committee and
other committees in the Congress hold extensive hearings and publish considerable
GERALD FORD LIBRARY
-10-
testimony. We submit committee reports. We discuss many of your problems on
the floor of the House. I sincerely believe it would be beneficial if you
gave us on our committee and those on other committees the same treatment that
we try to give you. We read your communications; will the responsible military
and industry people do us the same favor?
Let me add--and I hope that nobody here in the audience today is one
that has had this experience==there is nothing worse as far as our committee
is concerned than to have had our committee make a specific recommendation as
to policy in its report, and then have a witness come before the committee
the following year and show that he has not given the committee the courtesy
of having read the report. Unfortunately this happens. On the other hand, it
is most flattering and it creates a very desirable environment if any such
witness on a point has shown the initiative to read the report of the previous
year.
On the other hand, let me make another comment. I believe our committee
feels very strongly on theiissue of responsibility. Members of the Congress
who are a part of this team go before their constituents with their record,
good or bad, every two or six years. Depending on what the constituents feel,
a member of Congress is either returned or defeated. Now, some theorists contend
members of the House for example, should be elected every four rather than every
two years. Personally, I disagree. I strongly feel it's wholesome for members
of Congress to put their record on the line. This is a part of the peril
of the profession.
DERALD FORD LIBRARY
-11-
This ought to be a peril of your profession. In our committee we have
many military officers come before us. In instance after instance they have
been there in their job one month or four months, or maybe a year. They are
testifying on a subject or about a problem on which they didn't make the decision
three or four years ago that created the difficulty today. When confronted
with this situation our committee cannot condemn the witness who is testifying.
We can only feel frustrated that there is something wrong with the system. If
the decisions are wrong, there has to be a means of reprimand, perhaps failure
of promotion. If we don't get responsibility with success for those who are
right and failure for those who are wrong, we aren't going to solve the problems
in the future.
And may I say, this also holds true in industry. You have a price, you
have a delivery schedule and you have specifications to meet. We must find
techniques or procedures so that you in industry also meet that test of respon-
sibility.
From these two observations, and particularly the latter, I would like to
address myself to what I and our committee think the government wants. Manage-
ment can and must achieve this or we are not doing our job in this problem area.
We want a product which has reliability, which has maintainability. We want
a product that's delivered on schedule. And, we want a product at a price.
Unfortunately at times, and perhaps the Congress is a contributing factor to
this, there is a tendency to overemphasize or go overboard on price. I firmly
believe that it's dubious management for the procurement officer or the supplier
to make a judgment on price alone when there is an honest doubt that the de
718848
-12-
delivery schedule will be met or that threr will be non-confornity with the
specifications. Even greater doubt is cast on the contracting parties if
there is the expectation that those responsible will be bailed out by the
change order technique.
Now what is the remody, or what is the management tool that can be used
to achieve these objectives? You are much more familier than I with all names
and designations used to identify the multitude of contracts types, the myriad
of procedures and methods. But there is one in the contracts area that has
more or less come along rapidly in the last several years that appeals to us
based on our knowledge of its objectives. This is the incentive type contract.
We are sympathetic to the incentive type approach with the government and the
supplier jointly benefiting from the achievements or the results. I'm not an
expert in how this contract can be written nor in the techniques that can be
used precisely to achieve it. But, I an sure we will be able to find a
contracting technique between industry and the military services that will
provide three things: One, a reward for cost reduction; two, a reward for
delivery pursuant to the schedule; and three, a reward for performanze according
to specification with emphasis on reliability, maintainability, and standardi-
sation.
Perhaps this is an oversimplification of = very complex problem. But
there is certainly ample evidence that for one reason or another the past
techniques, procedures, and methods have to a varying degree failed to meet
the challenge in this complex industrial age. Previous techniques have created
uncertainty at the outset; they have created uncertainty at the end. I strongly
GERALD FORD LIBRARY
-13-
suggest that we should maximize our efforts to come lup with a soletion to
this confounding and perplexing difficulty.
However, the incentive type contract brings up a point, a problem that
is not new to our committee and certainly not new to you. And if we go to
the incentive type contract on a broad basis, this problem must be licked.
Congress itself can't legislate in this area. It is the problem of inadequate,
unreliable initial cost estimates. The solution, as we see it, must bome from
the Air Force, the Army, or the Navy and from industry. I don't think you can
have a bonafide incentife type contract that will satisfy the Congress unless
you can come up with greatly improved initial cost estimates.
Related to this point it would be the consensus of our committee that
program packaging with long-range cost projections are sound. This approach
is a very helpful tool to our committee. We have been urging a program of this
nature for several years. However, its validity, the validity of the program
packaging program with a five-year projection is predicated on the reliability
of the initial cost estimates. I can only say that if two or three years from
now our committee finds that the projections given to us in '62 on which we
made basic decisions are unsound because of invalid original cost estimates,
I don't think the committee would be as endeared to program packaging as we may
appear to be today.
Now, one final point. I think it is the concensus among us on the com->
mittee that the Defense Department should not become either a massive 1962 version
of WPA or the headquarters for a new group of sociological rehabilitators. In
my judgment the DOD must resist unjustified pressures by members of Congress,
GERALD 1888817
-14-
lecal chambers of commerce, industry, labor, and the partisans in the respective
services. Good management obvieusly cannot condone the preduction of an
obsolete or even an obselescent weapons system. Furthermore, management, good
management of course, cannot condone the further use of bases or facilities
that have outlived or are about to outlive their utility.
Under no circumstances should the Department of Defense assume new res-
ponsibilities as a department of social welfare. Enough federal agencies, in
my spinion, such as the Department of Health, Education, and Welfare, which
this year is spending two billion seven hundred million dollars on welfare
projects and programs, and the Department of Labor, which is spending in this
current fiscal year about five hundred and and sixty-sight million dollars on
such projects, are assigned the responsibility to administer broad welfare
programs and to establish employment and education standards. The Department
of Defense has more problems than it can handle to achieve desired management
effectiveness without carrying she additional torch for the eradication of all
alleged social injustices. I hope and trust that you in the military or in
industry concentrate on your weapons systems and let other departments assume
these responsibilities.
My final comment is that ve in the Congress want to be a part of the
team. We hope that you will acept us in good faith. I don't think any of
us, whether it's industry, the military services or the Congress, deserve some
of the castigation that has been given to us by the press and particularly some
of the cartoonists. We are conscientieus, and by fair standards, pretty good
GERALD, FORD LIBRARY
-15-
citizens. Over the years the team has done a good job. The best evidence is
America's strength. Our major problem is convincing the American people that
we have managed effectively and economically the vast sums of tax dollars and
provided the forces and equipment necessary to protect our beloved America and
the Free World. Thank you very much.
FORD id LIBRARY 9FRA70
HEADQUARTERS
AIR FORCE SYSTEMS COMMAND
ANDREWS AIR FORCE BASE
Washington 25, D. C.
DATE 8 May 1962
MEMORANDUM FOR: Mr. Frank Meyer
Please excuse the rough draft that is attached.
It appears exactly as taken from the tape. If
you will please edit and then call me, I will
see that it is picked up and reproduced. We
plan to include the speech in the final report of
conference proceedings, but are receiving re-
quests right now for immediate release. So, I
plan to reproduce the speech separately and will
furnish you the number of copies you desire.
Luonard LEONARD Lt Colonel, W. USAF filley LILLEY
Plans Officer
Office of Information
2
is
spity I
offin
FORD & LIBRARY GERALD
ADDRESS BY
Car see
THE HONORABLE GERALD R. FORD, JR.
speeches
TO THE AFSC MANAGEMENT CONFERENCE
MONTEREY, CALIFORNIA
fice
MAY 4, 1962
A CONGRESSIONAL VIEW OF MANAGEMENT
General Estes, General Schriever, members of the military and
representatives of industry. I consider it a great privilege and
high honor to have the opportunity of being here and participating
in this most worthwhile conference. Unfortunately it has not been
my privilege to be here as long as I would have liked and perhaps
However The short time here
I can't stay as long as I would prefer. But, has been a very
enjoyable and, I am sure, will be educational. If I could divert from
what I originally intended to say at the very outset, I think it is
someone's here
facts on The line
somebody8s duty to put a certaih thing in perspective. I had no sooner
arrived than I heard that there was some feeling on the part of those
who are here ) and I presume this is indicative of the way many people
feel elsewhere that the military and those engaged in industry related
to the military were somewhat suspect. About income tax time every
year anybody connected with the federal government or any
industry that to a substantial degree depends on the federal government
are to a degree suspect. And for one reason or another--I don't know
aimed
that
whose fault it is-most of this suspicion is cast toward the people
who seem to spend most of the money for Uncle Sam. P It was my privilege
a couple of days ago to speak to the Michigan Chamber of Commerce when
their representatives were in Washington. Each of us in the Michigan
was
delegation were asked to say a few words to this evening meeting.
to
In trying to find what H should talk about I decided T would take a
FORD
a
look at how the increase in expenditures for the military had increased
LIBRARY
for the last ten years approximately and how the increases in expenditures
2
for the non military agencies of our government had increased.
It was surprising to find that if you start with July 1, 1953 as
1963
a reference point, and include the projected spending under the next
fiscal year budget that the increase in speriding for the Department
of defense and all its related agencies will have gone up approximately
non-defense
twelve per cent; whereas, the increase in A expenditures, using the
same the same reference point, the non defense
F
ninety-four
spending gene will n fork per cent. Unfortunately
in my judgment the public doesn't appreciate
these this facts and regittlebly tynately
most of the adverse comment that you get from taxpayers about this
time of the year is, "What can we do about holding down our expenditures
in the three military services?" I think it would be well for somebody
somehow to cast some suspicion at the increase, the percentage increases,
that have taken place in non-defense expenditures This, I feel, is an
in recent years
public
section
area that needs plenty of attention New at the outset, I think to its well
that your speaker be put in proper perspective. Nothing is more noxious
who
to ine than a politician/seeks to place a halo over his head. And, I have
found in my experiences that there are two wonderful ways to have this
remedied, if a person is so disposed: One, your colleagues in the House
do a remarkably good job; and Secondly, I am sure all of us would under-
also
stand that our wives can 1 do quite well. I have a story to illustrate each,
but I'll take only the time to tell you the one that took place on the
2n1451
become
of
floor of the House a few years ago. 1 I had just been a member mill the
House Committee on appropriations during the Korean War. At that time
I was a very junior member of the committee that had jurisdiction over
funds for the river, harbor and flood control projects. And, During the
FORD it LIBRARY CERALD
Korean War we felt that it would be wise to not initiate any new projects
3
and not go beyond the budget in any of those that were underway.
And so, the unanimous recommandation of our cammittee was to be
gilck tight-fisted and tough. We took our bill to the floor. We
though we would be acclaimed. The net result, however, was
that our colleagues didn't approve of our attitude. this is
from And
not surprising, I guess, even in those days because river, harbor
and flood control projects have a unique attractiveness to politicians.
Anyhow we did our best. We were subjected to criticism and each of
,
five in all,
us on the cammittee/took our respective turns seeking to defend our
handiwork. Ame, finally, as the junior member of the minority side
I took say books and papers and wend to the podium and spoke for
to speak
about a half an hour, doing the best job I could. [concluded with a feeling
+ pride feeling lit
of satisfaction. MI had done angbod job. and I picked up my documents
and walked up the center aisle. Really I was very self-satisfied.
work up bout half way in the center aisle and a good friend of mine,
my myarm arm
a Texas Democrat, reached ever and grabbed and he said, "Jerry that was
the best Texas Longhorn speech I ever heard." I was apprehensive but
naturally asked him what he intended. He smiled very sweetly and he He had a
was wonderful very Wonderful with tris personality, and He said, "Well, Jerry,
a longhorn speech is one that has two points, far, far apart with
plenty of bull in between. nil Wolling at the outset ay I again
commend General SMERI Schriever and the Air Force for sponsoring this
conference. I can assure you that our committee and myself ar wholeheartedly
endorse the stated purpose, which is included in the brochure, to exchange
views and gain mutual understanding of the problems we face together in
acquiring systems for the Air Force in the environment which exists today.
am
12222 As a member of the House of Representatives, I particularly pleased
LIBRARY
to be here representing the 537 members of the legislative branch of our
4
government and more specifically the 13 members of the sub@committee
on the Department of Defense appropriations. Even though we are from
the legislative branch, I feel that we are a part, an integral part, of
the team that has this awesome responsibility. In the broadest sense,
the 537 members of the Congress, among their myriad of other responsibilities,
are members of the Board of Directors for the Department of Defense,
which, as you know, is an organization that has MMXE unbelieveable
responsibilities in this day and age for the 180 plus million Americans,
who are the real stockholders in this massive business operation.
Sometimes its well to review, if even hurriedly, what our sum of the
major, or other major responsibilities of this large intial board of
our
directors. First, the Congress has the responsibility to enact legislation
and to establish policies domestically that will provide an economy now
and in the future sufficiently strong to meet any commitments at home or
to the free world. Secondly, we have the responsibility to provide
adequate funds and necessary legislation to insure fully our national
security from any externally or internally threat or challenge. Now,
I know that there are many here, and I, myself, who might disagree from
time to time with what the House or the Senate or the Congress as a whole
does. Nevertheless, despite my disagreements and perhaps yours, I
suspect every American with very few exceptions will have to agree that
the methods, the system we have for accomplishing what is for the best
interest of all of us, is unsurpassed anyplace, anytime in the histary of
the world. But to visualize the magnitude of the operation XX that this
directors
board of 537 has, it might be well to give you a few gigures, We have to
GERALD FORD LIBRARY
somehow collect and somehow disburse almost a hundred billion dollars
every twelve months. And, this board of directors has the direct responsibility
5
as the legislative branch for the employment of approximately
2,500,000 civilians and approximately 2,800,000 men and women in unifform.
P More specifically, the sub-committee of which I annual am a member, which that handles
also
the Department of Defense appropriatmions has the initial, but I assure you
the
continuing responsibility for frending the operations of the Army, the Navy and
the Air Force. Although we deal primarily in dollars, we, of necessity
are concerned with policy, with programs and, may I emphasize, most importantly
with results. To implement policy, to execute programs and to obtain
results, we believe there must be effective management. P As I was trying
to put together some remarks for this meeting this morning, I tried to
visualize where, on an organization chart, this sub-committee, of which I
am a member, would fit. And, Lt seems table that the best location would
in a corporate structure
be where your would normally have a finance committee. Or, to some extent
labelled
Oner the years
we could be indicated as comptrollers. New, I've heard from many people
hornble
in the various military services that it is to have just one
comptroller. I suspect this is true in business as well as in the military.
that
I am positive/it is not considered advisable to have 13. But, nevertheless,
by The openations people
to a degree we do **** fit this category. "P May I add two footnotes right
Gart
now. May I make the observation that finance committees are or those with
similar responsibilities whether in the congress, the military or in
a corporation seldom win popularity contests. The second footnote at
this point. Secondly I would me most remiss if I failed to indicate to you that
FORD
there is another finance committee in the congress; hamely, the Senate
Sub-Committee on Befense Appropriations. Now, although we traditionally
LIBRARI
have our differences, of necessity before we adjourn we must resolve any
disagreements R The sub-committee's judgment oh occasion has been challenged,
and perhaps rightly so, on the basis that we were not qualified to make
6
decisions involving military policy and x weapons systems on a 50 billion dollar
annual appropriation bill. Superficially one could argue that seven lawyers,
one engineer, one accountant, one newspaper publisher and three business men
lack the essential qualifications to pass judgment on the vital issues,ant the
technical problems and the multi-billion dollar measure. Perhaps I am prejudiced,
but I feel this view can be refuted and let me give my own arguments. One,
the members of this sub-committee have a long tenure in the congress and have
had manypes 10mg service on this committee. We have been most fortunate in my
Hudgment to have as our chairman, George Mahon of Texas, who has been a
member of this committee for over 22 years. Most of the members of the
committee have service on the group of over ten years. Those of you who
have been privileged, and this is a matter of personal opinion perhaps, to
I'm sure
one of
come before the committee/are familiar with/our most dramatic,
of honestly most Enowledgeble Y condinature
and unusual members, Dan Flood. Well, Dan's been a member of the committee
about ten years and I'm sure some of you have heard him say, "Admirals
and Generals come and go like greyhound busses before this committee,
but we've been here ten or more years I think ten year in continuity
in office does make some difference. H In addition, as many of you know,
we hold extensive annual hearings plus a number of on-the-spot investigations
on a world wide basis, not only by us/but by our staff memers. We have a career
shew
staff and we are fortunate to be able to draw on some highly competent
and qualified people to make special investigations. I brought along
investegative reports
several of these just to show you that we have some evidence. Here's one,
"Management and Procurement of Aircraft Spares and Spare Parts." I might
say that the content of this report was helpful to our committee this
GERALD FORD LIBRARY
year in drawing up the recommendations for the bill that came to the
floor in mid April. And fourthly, this particular group of thirteen, as
far as I know, approaches the appropriation bill for the Defense Department on
7
a completely non-partisan and non-political basis/ whether there is a
Democrat in the White House or a Republican. R Could I add this final
comment in this area? Certainly if we believe in our form of government
where we have the threew equal branches, you must agree that our sub-
committee in the Congress has the responsibility and even more the
obligation to listen to the recommendations of the executive branch
primarily
of the government/and/or others and then make an independent judgment.
I concede the legislative branch is not infallible, but our batting
average over the years hasn't been too bad. And, I might just add this
the
that a month or six weeks ago most of your are familiar with x problem
the
we had on the floor of the House about whether Committee on Armed Services
should direct the Department of Defense or the Air Force to proceed with
the procurement of the RS-70. The Defense Department, in order to justify
its position, did some research work on the question whether the
Cheef
Craydis
Defense Department and the Executive had been following recommendations
on matters
over the years of the Legislative Branch. We had been trying for years
matters
port without quesns,
to get some opinion from the Executive Branch on this and Finally when
amazone
it served their purpose, we got the best evidence I over saw. They came
The Datio un Defense ma detailed
SUB
and showed that over a period of pothánic,
about Rix eight years
based on their analysis that the Executive Branch of the government had
INSERT
followed about 70 per cont of the major recommendations of the Legislative
decream
Branch as far DE the military were concerned. Now, this is not a bad
batting average as + indicated earlier. Pa New I suspect smoghe there are those who
FORD
817
feel that in this day and age of automation in industry, the Air Force and
individual
BARY
in our/homes that the Congress itself should update its management tools.
However, I am willing to make a substantial wager and give speekent the best of odds
that the Congress will be the last stronghold against the onslaughts of automatic
8
data prozessing. An R&D contract to automate politicians, I feel,
would be most suspect. As a matter of fact we have, and undoubtedly will
continue to do most of our job by hand. And his brings to mind a story
I heard a few months ago about a school superintendent way up in the cold,
hard, rugged area of northern Michigan. They had a relatively small school
district; they were faced with consolidation; and as they consolidated and
acquired more school districts, the school board decided they had to find
out/how about to run their school system more efficiently. And So, The they decided to send
shoul and
young + layer
their rapher native superintendent and send him down to New York to
methods
learn about management tools and automatic data processing. KEEXUM
the
And so took the plane from wakkern northern part of Michigan flew to New
York. He arrived there late in the evening, went to his hotel. He was a
of appretmone, this being his frot Inj to This Not metorpolis
little fearful. The next modning he got up bright and early and went to
The this building place where was a convention for school superintendents and there school connected
will elucation. In this facility there was a
people and where they had this tremendous demonstration on how to improve
the management of your school system. He was particularly interested on
how all thèse new electronic devices would be beneficial to his district.
took the elevator
Snd so he wont from the first floor to the second floor on the elevator
He got off and be walked in Find he saw this tremendous bank of automatic
a
To him
no
data processing equipment. It was just fantastic. He was overmhelmed
He was so fearful that he just turned around and walked back toward the
elevator. One stopped; he got on. He was the only person that was on
he
the elevator going up; the door closed; they went up one floor and for
GERALD FORD LIBRARY
one reason or another a whole mob of people on the third floor surg ed onte
the elevator and he was pushed way over in one corner. Among those who
had gotten on on the third floor yas were one or two young ladies and
as the elevator door closed and XX the elevator started up, one of the young
9
ladies said, "Who pinched me?" This poor school superintendent didn't
say a word, but simply thought to himself, "Thank God something's still
done by hand. PNOW, May may I say with at the enghases cutset again that it would be
achieve
helpful to all parties in this team operation if we are to get maximum
management objectives if we could increase the communication between
many many tembs
of information
all of us. You've heard/this that a M free flow/and a better use of
information would most be helpful. Wall, may T say that a member of
Congress and particularly those of us of our committee, we receive the
as a member
benefit of the excellent brochuremanship of industry and of the various
military services, and feel this information ishelpful and Pank we use it.
But, may I suggest some reciprocity. Our committee and other committees
in the Congress hold hearings and publish testimony. We submit got cut committee
extensive
condeptly
reports. We discuss many your problems on the floor of the House, and I think sencerely belowe
can our committee + Than on the committees
read your communications will The wesponsible maletary x industry peopleds us the same from?
it would be beneficial if you gave us the same treatment that we try to
give you. /Let me add and I hope that nobody in the audience Today
after an
is one that had this experience there is nothing worse before our
is concerned
committee, amphow than to have had our committee in its - the
in its report,
- Ymake a specific recommendation as to policy and then w have a
witness come before the committee the following year and and when the issue
thathe has not
or the problem is brought upy not to have had the witness show, ^ the
guin committee the courtesy of having read the our report. Unfortunally This happens.
the
On the other hand, it is most flattering and it creates a very desirable
FORD
environment if any such witness on a point has shown the initiative to
have read the report of the previous year. Pon On the other hand, let me
LIBRARY
make another comment. I believe our committee feels fery strongly on the
issue of responsibility. Members of the Congress, who are a part of this
with their record, good or bad,
team, have to go before their constituents/every frux or six years.with
two
10
Depending on what the constituents feel, a member of Congress is either
returned or defeated. Now, some theorists contend members of the House,
for example, should be elected every four rather than every two years.
Personally, I disagree. I strongly feel its wholesome for members of
a
Congress to put their record on the line. This is part of the peril
of your the profession. May R. this ought to be part of the peril of
your profession. On occasions in our committee we have many military
In enotence after enotance
officers come before us. They have been there in their job one month
or four months, or maybe a year. They are testifying on a subject or
about a problem munhich where they didn't make the decision three or four agod
when imported with this setuation our committee Lannot condern years The witness who is
that created the difficulty today. Semehow, If the decisions are
We
wrong from the military point of view, I think there has to be a means
of reprimand prhape a tax failure of promotion. If we don't get responsibility, bruntrated
only feel
with sucons In Those who are night & Auture for Thore who are wrong
we aren't going be able to solve the problems in the future. RAnd, And,
that There
in
smithing
may I say, this also holds true to industry. You have a price, you have the with
a delivery schedule and you have specifications to meet. And I think
system
N procedure
must find z techniques so that you in industry also meet that test of
responsibility. P From these two observations, and particularly the latter,
I would like to address myself to what I and our committee think the
government wants. Management can and must achieve this or we are not
area
doing our job in this problem We want a product which has reliability,
which has maintainability. We want a product that's delivered on schedule.
And, we want a product at a price. Unfortunately at times, and perhaps
the Congress is a contributing factor to this, there is a tendency to
overemphasize or go where overboard on price. I firmly believe that
it's dubious management for the procurement officer or the supplier
BERALD FORD LIBRARY
11
doubt
to make a judgment on price alone when there is an honest/that
the delivery schedule will be met or that there will be
Even
non-conformity with the specifications. which may I say this,
greater doubt is cast on the contracting parties if there is the
responsible
expectation that those responsibility will be bailed out by the
change order technique. R Now what is the remedy, or what is the
management tool that can be used to achieve these objectives?
You are much more familiar with all the titles of the kinds of
than 2 names of designations used to identify the
multitude I contracts Types the myrial of and procedures the + muhods
and the procedures techniques than I. But there
is one 1 that has more or less come along readly in the last several years
in The contracts area
Hand an knowledge of its objectives
I think it's growing in interest that appeals to us. I this is the
1
incentive type contract. I believe w are sympathetic to the incentive
type approach with the government and the supplier jointly benefiting
from the achievements or the results. I'm not an expert in how this
contract can be written nor in the techniques that can be used
l sure we will
precisely to achieve it. But I am an optimist when HH eay that we
must be able to find an agr eemont between industry and the metter services
a contracting Technique
that will provide three things: One, a reward for cost reduction;
two, a reward for delivery presankxkm pursuant to the schedule; and
three, a reward for performance according to specification with emphasis
on reliability, maintainability and standardization. P Perhaps this is
an oversimplification of a very complex problem. But there is certainly
ample evidence that for one reason or another the past techniques,
procedures and muthods devices have, to a verying degree, failed meet the challenge the an
complet
Previous Techniques
They have created uncertainty at the outset; they have created uncertainty FORD
at the end. And, stormply I suggest that we/maximize our efforts to come up
should
GERALD LIBRARY
t This confusiting + peopleting diffectly
12
with a solution. However, the incentive type contract brings up a point,
a problem that is not new to our committee and certainly not new to you.
And if we go to the incentive type contract on a broad basis, this
liched
in
problem must be solved. Congress itself can't legislate on this
area
the prdlem
problem and is probiscly, inadequate, unreliable initial cost
estimates. The solution, as we see it, must come from the Air Force,
the Army, or the Navy and from industry. I don't think you can have
a bonafide incentive type contract that will satisfy the Congress unless
you can come up with sound initial cost estimates. P- Related to this point
greatly improved
it would be the consensus of our committee that program packaging with
long range cost projections are sound. And this approach is a very helpful tool
We have been cargony a frogram 2 This mature for several years
to our committee. However its validity, the validity of the program
packaging program with a five-year projection is predicated on the
reliability of the initial cost estimates.
I can only say that
our committee
if our comminitee two or three years from now finds that the projections
given to us in 162, on which we made basic decisions, are unsound
because of invalid original cost estimates, I don't think the committee
would be as endeared to program packaging as we may appear to be today.
on
Now, one final point. I think it is the concensus among us and the
committee that the Defense Department should not become either a
massive 1962 version of WPA or the headquarters for a new group of
sociological rehabilitators. In my judgment the DOD must resist
unjustified pressures by members of Congress, local chambers of
commerce, industry, labor and the partisans in the respective services.
Good management obviously cannot condone the production of an obsolete or
FORD
even an obsolescent weapons system. Furthermore, management, good management
LIBRA
of course, cannot condone the further use of bases or facilities that have outlived
13
R
or are about to outlive their utility. Under no circumstances should the
Department of Defence assume new responsibilities as a department of
social welfare. Enough federal agencies, in my opinion, such as the
Department of Health, Education and Welfare, which last years or this
year I should say is spending two billion seven hundred million dollars
welfare
xpryrano
on 4 such projects, and the Department of Labor, which is spending in
about
this current fiscal year five hundred and sixty-eight million dollars
on such projects, are assegned sufficiently the responsibility well qualified to administer XXXX Gread
welfare programs and to establish employment and education standards.
I believe the Department of Defense has more problems than it can
handle to achieve desired management effectiveness without carrying
the additional torch for the eradication of all alleged social injustices.
m The melting - an endustry
And I hope and trust that you concentrate on your problems and let
weapon systems
other departments assume these responsibilities. P In will final
comment, we in the Congress want to be a part of the your team and We hope
what
that you will accept us in good faith. I don't think any of us, weeklt
whether it's industry, the multing services or the Congress, deserve some of
the cartagation treatment that has been given to us by the press and particularly
consumtration + by far standards are
some of the cartoonists. I think are pretty good citizens. and I
Over The years have the Team has done a sport pl. The but evidence in amenus strength.
think WA pretty well done job the years. + think our major
problem is convincing the American people that we have do as managed well as weldo. effectively +
communically the much. rant seems of the our dollars, beloved and fronded The forces &
cquipment messonsing to protest america of The Free world.
Thank you my much
FORD is LIBRARY GERALD