Department of the Army Historical Summary: FY 1969


Management, Budget, and Funds

The Army's management mission consists of continuing actions to plan, organize, direct, co-ordinate, control, and evaluate the use of men, money, materials, and facilities to accomplish missions and tasks. Its budgetary mission consists of determining how much money is required to carry out Army responsibilities, and its funding mission consists of allocating that money for specific purposes. In fiscal year 1969 these functions were shaped by the war in Vietnam, the Army's worldwide commitment, and the need to make the most effective use of all resources in a period of heavy expenditures, inflationary pressures, and competing demands.

Organizational Developments

The increasing development and installation of automatic data processing systems to support functional applications that may be similar in two or more major Army commands raised a need for better central planning and control. To satisfy that need, the U.S. Army Computer Systems Command (USACSC) was activated at Fort Belvoir, Virginia, on March 31, 1969. The command was designated a class II activity under the jurisdiction of the Assistant Vice Chief of Staff. It was assigned responsibility for development, installation, improvement, and other related support functions for Army multicommand automatic data processing systems, and will perform project management for assigned systems in response to functional requirements formulated by headquarters staff agencies. The command will insure effective communications planning and support for such systems and will conduct software research programs in co-ordination with the Chief of Research and Development.

Late in fiscal year 1968 the Directorate of Management Information Systems in the Office of the Assistant Vice Chief of Staff completed a study which revealed that certain organizational realignments at Headquarters, Department of the Army, level would benefit the Army's approach to information systems design and promote a more effective use of automatic data processing equipment. Thus in July 1968 the responsibilities assigned to the Director of Automatic Data Processing in the Office of the Comptroller of the Army were transferred to the management information systems directorate, including jurisdiction over the Computer Systems Evaluation Command. The latter was redesignated as the Computer Systems Support and Evaluation Command and was made a class II activity under the directorate. As a result of this realign-


ment, the management information systems directorate is now able to monitor, on an Army-wide basis, the design of information systems and the use of associated automatic data processing equipment. The directorate also has the professional capability to evaluate and select computers for all elements of the Army and provide a single point of contact with industry in this field.

In August 1968 the Chief of Staff directed that the Family Housing Division, Office of the Chief of Engineers, be transferred to the Office of the Deputy Chief of Staff for Logistics (ODCSLOG). This action was the result of a Department of the Army study to insure that the family housing program is organized and executed in a manner commensurate with its importance to the welfare and morale of married Army personnel. As a result of the transfer the Director of Installations, ODCSLOG, is the Family Housing Programs and Appropriations Director and is the principal Department of the Army witness on family housing matters before congressional committees.

In the area of facilities management, the Chief of Staff assigned the Deputy Chief of Staff for Logistics over-all responsibility for the design, development, and subsequent management of an integrated facilities system, and directed the development of a staff organization to carry out this responsibility. On September 21, 1968, establishment of the Integrated Facilities System Office under the Director of Installations was approved.

In July 1968 the mission responsibilities of the Special Assistant for Logistical Support of Army Aircraft and the Special Assistant for Logistical Support of Tactical Communications were expanded to the extent that redesignations were necessary to describe more appropriately their respective areas of responsibility. The Office of the Special Assistant for Logistical Support of Army Aircraft was redesignated the Aviation Logistics Management Office, and the Special Assistant for Logistical Support of Tactical Communications was redesignated the Special Assistant for Logistical Support of Communications-Electronics.

Management Programs, Systems, and Techniques

The purpose of resource related planning is to assist the Chief of Staff in programing the allocation of Army resources in the light of probable future budget constraints. Two major tasks are budget projection and allocation of funds to alternative uses. The Assistant Vice Chief of Staff early in 1969 established a working group to project Army budgets 10 years into the future and to develop a management system to assess the effects of future constrained budgets on the force development and weapon selection process. Budget projections are extrapolated from economic growth trends and historic budget levels, assuming a constant


baseline force. The original hand-operated resource allocation model is being automated. When this automation is completed, it will be possible to assess quickly the effects on future Army budgets of varying weapon modernization rates, force readiness levels, and theater of operation equipment priorities. The increased visibility of Army programs gained through this approach should permit more direct and timely guidance to the Army staff concerning weapon system and force composition issues.

During fiscal year 1969 the first phase of the resource management system, Project PRIME, was implemented. Under this application, attention was centered on expenses as a means of managing resources. Under the new procedures, military personnel costs were figured on the basis of grade rates, appropriations were realigned to differentials between expenses and investments, the approved operating budget was used to issue financial authorizations, and accrual methods were used to account for financial resources.

The second phase of the Program to Improve Management of Army Resources (PRIMAR) was conducted during the period January 1968-May 1969. The study examined the Army resource management system with the objective of improving the efficiency of Army planning, programing, and budgeting activities. Specific results of the study include (1) a proposed readiness measurement system consisting of displays which can provide improved management of forces, personnel, and equipment programs in meeting specific readiness goals; (2) a revised Army planning system to assist the Army in providing better force and resource recommendations to the joint Chiefs of Staff (JCS) and the Office of the Secretary of Defense (OSD) ; (3) improved programing processes to permit design of resource programs which balance with prescribed force structures and readiness levels; and (4) a guidance package to improve the communications of objectives, missions, and resource allocations to subordinate commands.

Implementation of the study recommendations is under way but, due to the wide variation in the state of development of various subsystems, installation into a fully operational system will require several years. Under the monitorship and guidance of the Assistant Vice Chief of Staff, the separate subsystems are becoming operational but require continual adjustment to insure that the over-all system is fully integrated and is responsive to the requirements of OSD, JCS, and top-level Army management.

The structure and composition system (SACS) is the Army's large-scale automated computational system. It consists of 137 computer programs and is used to generate line item authorization data for all units. SACS uses the force accounting system (FAS) file and matches the


selected force with appropriate authorization files to generate authorization data.

To date, SACS has been used over 50 times in major requirements computations. It was used to develop equipment requirements for the President's Budget, the 1970 budget estimate and apportionment, posthostilities force planning, and development of the Army Force Development Plan. SACS has also been of assistance in estimating personnel requirements and has proved useful in staff studies, estimates, and plans, including input to the Joint Strategic Operations Plan, OSD manpower reports, limited war reserve studies, and personnel high interest skill summaries.

To enhance further the effectiveness of the Army's basic resource management systems, a committee of general officers was established in May 1969. The committee, named the Keystone Management Systems Steering Committee, is chaired by the Assistant Vice Chief of Staff. Its main objective is to examine the Army's keystone authorization and asset reporting systems, to assure that they are responsive to managers' requirements at all levels.

In fiscal year 1968 the Army conducted a Study of Management Information Systems Support (SOMISS) to determine how Army operation in this increasingly active and important field could be improved. A number of recommendations were developed and were approved in July 1968. The study concluded that the departmental headquarters organization for managing automated data processing systems should be strengthened, and this was done with the creation of the Computer Systems Command and the organizational realignments described above. The SOMISS finding that a separate design agency for automatic data processing (ADP) systems be created and that departmental technical support to users be broadened was also inherent in that realignment, and during the year other steps were taken to carry out a recommendation that staff agency personnel in the various functional areas be made responsible for the functional design of automated systems in their respective fields. In conjunction with the SOMISS study, development began on a master plan for the entire complex of Army computer-based information systems. The first phase of this project was completed in December 1968 with the publication of an interim plan for the Army Management Information System under which guidance was issued for systems development, planning, procedures, and schedules for the first master plan due in September 1969.

As a primary step toward the development of a cohesive and usable logistics management information system, the Army has conducted a design project supported by the Stanford Research Institute. The objective is to establish an integrated supply, maintenance, and materiel


readiness reporting system from the unit level up through intervening echelons to Headquarters, Department of the Army. Phase I of the study identified the essential elements of information required for management and decision-making at each echelon of the Army. Phase II covered design of the structure, organization, procedures, management indicators, and the data base for management at each echelon. The concept provides for the collection, processing, and storage of management data and output to management at all echelons. It has been designed to obtain this information from data banks supporting the horizontal operating system under development. Data bank input will come from reporting units in a "tap the source once" concept of reporting. It is the Army's intention that this effort will result in a standard worldwide information and operating system which will integrate supply, maintenance, and materiel readiness reporting into a single cohesive system which is vertically and horizontally integrated. Vertically it is integrated from Headquarters, Department of the Army, through all intervening echelons down to the operating unit level through the use of a uniform set of logistical management indicators, a minimum number of essential elements of information, and uniform reporting formats. It is designed so that only a relatively few selected key logistical management indicators and data elements flow from a given logistical management level to the next higher echelon of supervision. The selected indicators and data which flow upward are designed to give the supervising echelon a measurement of the over-all effectiveness of performance and variations from standards at the next lower level. The capability will exist, when required, of providing relevant detailed data from any echelon, from the lowest to the highest.

Horizontal integration is accomplished at each operating support and logistical control level by the use of the selected indicators and data tailored to satisfy the operating and management control requirements at each level. Reporting at each level will be on the "management by exception" principle, reporting to the commander only inadequate performance. Deficiencies will be pinpointed to identify the operating elements concerned and the specific logistic functional performance deficiencies requiring correction.

This concept will change the operating system now existing in the Army or currently under development, by introducing the selected indicators and data which are the salient characteristics of the integrated management information system. This is a first step in obtaining effective interface with the operating system, since management information can only be a product of the operating system and data base.

The final report on this 2-year design program has been co-ordinated with the Army staff and major commands. These comments were


evaluated and were being given a final project advisory group review as the year closed.

The role of the auditor in Army management is no longer limited to the area of finance and accounts; the principal purpose of today's internal auditing is to appraise the effectiveness of management—that is, the Army auditor functions as in-house management consultant, an instrument of Army management.

During fiscal year 1969 the departmental staff and major commanders, as well as higher authority, placed increasing reliance on auditing as a means of analyzing Army systems, reviewing Army management controls, and evaluating the use of Army resources. Whereas in fiscal year 1965 the Army Audit Agency devoted most of its effort to periodic audit of Army installations, activities, and commands, in fiscal year 1969 the agency used over half of its resources to perform Army-wide and commandwide audits and to provide special audit services requested by higher authority.

Because of increasing demands for these services, the Army Staff Audit Priority Committee was established to assist in insuring that audit effort is devoted to management areas of greatest importance to the Army. As a result, the Army's scheduled audit program for fiscal year 1970, in addition to audits of installations, will concern itself with a variety of subjects of major interest to the Army, including authorization documents, trained enlisted replacements, industrial plant equipment, communications security logistics, stock fund operations, depot maintenance, cost reduction savings, and research and development.

The Army Audit Agency also increased its permanent staff and extended its activities in Vietnam. Originally confined to the Saigon area, Army auditors moved out to the base camps and support enclaves all the way from the Central Highlands to the Mekong Delta. Concentrating their attention on evaluations which could be accomplished within short periods and which offered immediate returns to command action, Army auditors provided valuable assistance to commanders in such areas as ammunition management and accounting, requisition processing, control over receipt and distribution of materiel, depot operations, property disposal, and personnel management.

The development, installation, and use of accrual accounting principles and procedures by all federal departments and agencies have been required by statute for more than a decade. During fiscal year 1969, the stimulus provided by recommendations of the President's Commission on Budget Concepts and implementing directives issued by the Bureau of the Budget and the Treasury Department have resulted in significant progress in this area. Policies and procedures for accounting and reporting of accrued expenditures and revenues on a test basis be-


came effective July 1, 1968. It is anticipated that the improved procedures for fiscal year 1970 will provide a reliable base of data on accrued expenditures and revenues in support of the first accrual-based budget to be submitted for the budget year 1972.

The Army for the sixth year participated in the Defense Integrated Management Engineering Systems (DIMES) project to develop engineered time standards wherever possible. To date, about 70 percent of the potential personnel spaces in installations of the Army Materiel Command and Military Traffic Management and Terminal Service have been covered by performance standards. Favorable progress under DIMES had resulted in extension of its concepts to 165 activities by the close of the fiscal year, and about $55 million had been saved in Army installations up to June 30, 1969.

In the past fiscal year the Department of Defense has intensified emphasis on the interservice logistic support program as a means of effecting economies among the services. To this end each of the military services has designated an agency within its headquarters to serve as a central point of contact with responsibility for administering the program servicewide. The Deputy Chief of Staff for Logistics was so designated for the Army. The program has also been the subject of a comprehensive survey by the General Accounting Office, both within the continental United States and overseas, indicating that still greater emphasis may be expected during fiscal year 1970.

During the past year the Army commercial and industrial activities program has received increasing scrutiny from congressional committees, the General Accounting Office, the Civil Service Commission, the Bureau of the Budget, and such diverse nongovernmental groups as employee organizations and trade unions. In response to the heightened interest, the Army commercial and industrial activities program was redefined and revitalized. Management controls were strengthened and personnel assigned to the program at Headquarters, Department of the Army, on a full-time basis.

Budget and Funds

In fiscal year 1969 the President submitted to Congress a national budget totaling $186,062 million. The Revenue and Expenditure Control Act, which became effective on the opening day of the fiscal year, reduced the budget by $6 billion. The Department of Defense's share of this expenditure reduction was $3 billion, the Army's share $900 million.

The Army had requested $31,363.8 million in new obligational authority in its fiscal year 1969 budget request. In the President's Budget this was reduced to $25,214.6 million. The Congress in turn reduced


this by appropriating $23,769.3 million, and a 1969 supplemental appropriation of $1,222.8 million led to a final fiscal year 1969 Army budget totaling $24,992.1 million.

To meet the $900 million expenditure, reduction imposed on the Army, it was necessary, because of the time lag between obligation and payment, to reduce obligational authority by $1,472.7 million. Of this amount, Congress reduced the appropriation by $1,468.9 million, while the Office of the Secretary of Defense and the Army reduced the $3.8 million difference. To offset the reduction in part, Congress authorized a transfer of $60 million in cash from the Defense Supply Agency stock fund, which had not been requested in the President's Budget. Thus the effective obligational authority reduction was $1,412.7 million, with the associated expenditure reduction of $900 million.

The following table traces the fiscal year 1969 Army budget through its various stages.


(in millions of dollars)


Department of the Army

President's Budget

Appropriated PL 90-580

Supplemental Appropriation 1969
PL 91-47

Total Fiscal Year 1969

Military personnel, Army






Reserve personnel, Army






National Guard personnel, Army






Operation and maintenance, Army






Operation and maintenance, ARNG




11.5 1


National Board for the Promotion of Rifle Practice



Procurement of equipment and missiles, Army






Research, development, test, and evaluation, Army




-1.5 1


Subtotal, excluding construction







PL 90-513


Military construction, Army






Military construction, USAR






Military construction, ARNG






Subtotal, construction accounts






Total NOA






1 $1.5 million transferred from research, development, test, and evaluation to operation and maintenance, ARNG.
Note, May not add due to rounding.

Further streamlining in the Department of Defense management system occurred in 1969. The number of Draft Presidential Memoranda (DPM) were reduced from 16 to 3 and a new document, the major


program memorandum (MPM), was introduced as a replacement for certain DPM's. Over-all, the number of Draft Presidential Memoranda, major program memoranda, and Defense Guidance Memoranda (DGM) was reduced from 20 to 12. Issue dates for this reduced number of documents were generally advanced in recognition of their relationship to the budget cycle. The advanced schedule allows more time to consider these documents and make decisions based on them in advance of submission of the budget. MPM are supported by resource annexes—an innovation that marked the 1969 cycle. These annexes are designed to facilitate the identification of the impact that MPM have on the Five Year Defense Program. In addition to the changes in DPM, MPM, and DGM outlined above, additional planning to improve even further the Department of Defense management and program systems was initiated in 1969. This planning addressed procedure, format, and the role of the JCS in the decision-making process as opposed to the role of the Office of the Secretary of Defense staff exemplified by the document cycle outlined above.

Cost Reduction

The Army continued its efforts to encourage greater efficiency and economy in all aspects of Army activity under the cost reduction program. An outstanding unit award was established in August 1968 to recognize the over-all excellence of a unit's cost reduction program, as well as its noteworthy savings accomplishments. The U.S. Army Infantry Center, Fort Benning, Georgia (Continental Army Command), was selected by the Office of the Secretary of Defense, along with units from the other military departments and the Defense Supply Agency, to receive an outstanding unit award presented by the President of the United States during cost reduction week ceremonies. Initial nominations for this award were made to the Department of the Army by the major Army commands on the basis of the subordinate unit's fiscal year 1968 accomplishments.

Army recognition was extended to other command nominees that met the Office of the Secretary of Defense award criteria but were not selected: Red River Army Depot, Texarkana, Texas (U.S. Army Materiel Command) ; Seventh Army Support Command (U.S. Army, Europe) ; 25th Transportation Center (U.S. Army, Pacific) ; 115th Military Intelligence Group, Presidio of San Francisco (U.S. Army Intelligence Corps) ; Headquarters, 40th Artillery Brigade, Presidio of San Francisco (U.S. Army Air Defense Command) ; and the U.S. Army Combat Developments Command Experimentation Command, Fort Ord, California '(U.S. Army Combat Developments Command).

Progress in the cost reduction program continued during fiscal year 1969, when $379.4 million was saved against a goal of $263 million. The


actions taken in the fiscal year are estimated to have a 3-year savings effect of $792.8 million for fiscal years 1969-71 against a goal of $525 million. The following examples are illustrative of field participation in the program.

A special study of the order and shipping time for individual combat meals, made by the 1st Logistical Command, Vietnam, resulted in reducing the days of supply in the pipeline from 180 to 165, with 1-time savings of $1,637,400 realized for fiscal year 1969.

A value engineering study conducted by the U.S. Army Engineer District, Savannah, Georgia, resulted in the modification of design requirements for the construction of the Fort Jackson Hospital, Columbia, South Carolina. Rather than requiring that the high rise portion be structurally completed prior to beginning construction of the low portions of the hospital, the change permits simultaneous construction of both portions—except for the bays connecting the two, which will be constructed after structure settlement has occurred. The resulting 8- to 10-month reduction in construction time produced savings of $328,800.

Military Pay System

As a part of the OSD program to reduce gold flow expenditures, the services were requested to consider the possibility of withdrawing the military pay function from oversea areas and administering it from a CONUS location. The original memorandum concerning this subject was dated May 3, 1967. At that time, the Army's position was that the desired reduction could be accomplished by the implementation of the joint Uniform Military Pay System (JUMPS-Army).

On May 29, 1968, a memorandum was received from the Office of the Assistant Secretary of Defense (Comptroller) requesting that the Army again consider the possibility of a centralized pay record procedure. This request was prompted by the Air Force's success along this line and an apparent delay in the implementation of JUMPS-Army. The. Army's response to this memorandum indicated that a plan would be developed to accomplish the desired relocation of military pay administration.

A conceptual plan for the subject relocation was developed which envisioned the establishment of a military pay service center for oversea areas (MPSCOA) at the U.S. Army Finance Center, Fort Benjamin Harrison, Indiana. The service center would maintain pay records for all members stationed in oversea areas. Additionally, the plan called for a test of the concept using the units in Europe currently being paid by JUMPS-Army. The test phase of the plan was approved for implementation in November 1968.

Pay clerks of the 44th Finance Section (Disbursing) involved in pay record maintenance and computation were relocated to the MPSCOA


on March 15, 1969. Pay clerks from the 3d Infantry Division arrived in mid-April 1969. With these two segments as a base, the concepts outlined in the basic plan will be tested for a period of six months. At that time an evaluation will be made to determine whether further expansion in Europe and in other oversea areas is warranted.

As a part of the plan, it was determined that a communications system that would link finance offices in Europe with the MPSCOA was a necessity. Such a system was established for the units involved in the test. Evaluation of the concepts and the communications will determine the feasibility and desirability of administering the oversea military pay system at a central location in the continental United States.


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