Department of the Army Historical Summary: FY 1970

VIII.

Logistics

An Army logistics offensive was launched in fiscal year 1970. In a broad sense, the offensive is an Army-wide program to re-emphasize logistic principles, update and refine techniques, revise systems, and more clearly define training and career management objectives. The offensive was geared to support the four broad objectives stressed by the Chief of Staff—mission, motivation, modernization, and management.

General Creighton W. Abrams used the term "logistics offensive" at Phu Bai, Vietnam, in the spring of 1969 to describe what was required throughout the Army logistic system in Vietnam. He meant it as a compliment for the impressive improvement that had been made in all areas of logistics. In reality, he was issuing a challenge to professional logisticians when, as the senior combat commander in the field, he applied the term "offensive" to a military logistic operation:

Even as substantial progress has been made under the offensive to improve the Army's logistic system, many areas have been isolated that require improvement. Actions were taken in fiscal year 1970 to insure that the American soldier gets "what he needs, where and when he needs it, and in the condition required for his use."

In February 1970 an Army logistic policy council was formed, comprised of general officers representing major activities worldwide, to advise and assist the departmental headquarters in evaluating and developing logistic policy, logistic systems standardization, and logistic concepts to improve the Army logistic system.

Materiel Acquisition

For the last decade the procurement objectives for materiel support for the general purpose forces of all the military services have been determined by the Secretary of Defense and stated in his annual logistic guidance. Army budget submissions must support the guidance objectives. The guidance establishes a balance between programed forces and the inventories of equipment, ammunition, secondary items, and consumables to sustain them in combat. For the Army, it specifies the number of division force equivalents to be equipped and supported.

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The logistic guidance divides Army forces into categories and establishes logistic objectives tailored for the planned strategic employment of each force category.

In issuing his guidance the Secretary of Defense has consistently directed that all U.S. forces in Vietnam be fully equipped and supplied and be supported by a full pipeline to replace consumption and attrition. These forces are now being fully sustained by deliveries from the active production base, and the 1970 budget request provided for this support through the next budget year.

The table below shows total obligational authority for equipment and ammunition procurement programs by category and year since fiscal year 1965. The growth trend through fiscal year 1969 is reversed in 1970, a reflection of the reduction in estimated consumption rates in Southeast Asia. Fiscal year 1969 funding for direct support of the U.S. Southeast Asia effort was $4.9 billion; the comparable figure for fiscal year 1970 is $3.3 billion, a reduction of 33 percent.

The $6 billion in contracts awarded during fiscal year 1970 included $4.9 billion for the Army ($3.7 billion from current year and $1.2 billion from prior-year funds) and $1.1 billion for customers who buy and use Army equipment and ammunition. Sufficient ammunition was procured in the fiscal year to meet fixed Army requirements, assuming that anticipated Southeast Asia withdrawals take place.

ARMY PROCUREMENT PROGRAM

(In millions of dollars)

As a result of deliveries from procurement, the estimated value of principal items on hand at the end of the fiscal year was $20.9 billion. This decrease in assets from $21.7 billion in 1969 is the result of the high cost of Vietnam operations and Vietnamization and a decrease in total deliveries from $8.4 billion in 1969 to $6.4 billion in 1970.

In a period of competing demands for funds for both military and domestic needs, and with the pressures of inflation and the

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threat of cost overruns, effective use of public funds is essential. Weapon systems are especially costly, and to insure that the money spent on them is used to full advantage, the Army made a detailed study of the weapon system acquisition process. New control techniques were developed which represent a significant departure from former practices.

One of the first actions was to adopt a "should cost" analysis technique. In the commercial field, price competition stimulates efficient practices. In the area of defense procurement there is less pressure for efficiency, and in the case of sole source procurement, the incentive declines even further. Thus the government, as the purchaser, must insure that proposed costs represent what a contractor should incur assuming reasonable efficiency. Under new procedures developed from the study, analysis of a contractor's proposal against a number of actions in progress will provide a contracting officer with negotiating background.

The study also revealed the need for a management information system that would measure contract performance, weigh actual costs against planned costs, and identify problems as early as possible. It also confirmed the need to improve the methods of developing performance specifications to reduce technical risks, all with a view to minimizing redirections and contract changes, which contribute to cost growth.

The Cheyenne helicopter project is an example in weapon system acquisition of the problems of cost, contract performance, performance specification, and technical risk. In fiscal year 1966 the Army contracted with the Lockheed Aircraft Corporation for the development of an advanced aerial fire support system. The central component of the system is the Cheyenne helicopter (AH-56). Pursuant to an option clause in the development contract, a separate contract was negotiated on January 8, 1967, for the production of 375 aircraft. On May 19, 1969, the production contract was terminated by the Army for default. Lockheed appealed to the Armed Services Board of Contract Appeals, alleging that the Army erred and claiming an estimated $150 million as damages. The appeal, pending as the year closed, should be acted upon in fiscal year 1971. The Army formed a litigation group under the supervision of the General Counsel to present the Army's case.

Meanwhile, the development program continued during fiscal year 1970 and considerable progress was reported in resolving most of the technical problems that caused termination of the production contract. On March 3, 1970, however, Lockheed stated that it had exhausted its operating capital because of the size of its claims

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against the Department of Defense under this and other contracts and requested the Office of the Secretary of Defense (OSD) to provide relief pending settlement of the claims. As the year closed, the request was receiving careful study by the Office of the Secretary of Defense. The Army was particularly concerned with the effects of possible OSD action on further Cheyenne development and upon its plans eventually to purchase the advanced aerial fire support system. A decision on procurement of Cheyennes was deferred. The deferment will permit additional development and further evaluation of alternatives. The Lockheed financial request and the Cheyenne program received wide publicity.

Looking ahead to procurement of materiel in future years, the physical condition of the industrial facilities that are needed to support Army production has become a matter of primary concern. The Army owns a production base that consists largely of ammunition plants that were designed and constructed, for the most part, during World War II and the Korean War. Some of the manufacturing processes being used date back as far as World War I. This base has been severely taxed by intense operations during three major conflicts. Processes have become grossly inefficient and, indeed, unsafe, and working conditions in some instances are poor.

The Army developed a program in 1968 to rehabilitate and modernize this base; the work is to be carried out over the course of several years at an estimated cost of $2.3 billion. The demands of the Vietnam War have limited initial expenditures to $208 million and $119 million in fiscal years 1970 and 1971 respectively. Funding is essential if the production capability is to be kept responsive to future emergency needs.

Materiel Maintenance

To focus attention on the ever-widening gap between required maintenance skills and the complexity of equipment, and to improve resource management and the operational readiness of materiel, the Army established a project called Maintenance Support Positive (MS+). The current concept of performing maintenance as far forward as possible, coupled with piece and part repair and replacement, has required excessive proliferation of parts, special skills, and sophisticated test equipment at all levels of maintenance and has proven to be extremely costly. The new concept emphasizes component replacement in operating units rather than piece part repair, thereby reducing requirements for highly skilled personnel and sophisticated equipment at all levels of maintenance. The program will also evaluate generally all of the Army's materiel maintenance activities, policies, and practices.

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In April 1970, new instructions were issued prescribing standards for Army equipment worldwide. The standards relate to three categories of conditions: operationally ready, not operationally ready because of supply shortages, and not operationally ready because of maintenance work to be done. The standards are measures of equipment and logistic support performance, including delays for parts or maintenance.

In converting from The Army Equipment Records System to The Army Maintenance Management System (TAMMS) in October 1969, the Army preserved the standard record-keeping system, but made major changes in the requirements to process maintenance data by reducing reportable line items from 556 to 297. Among other benefits, TAMMS requires 25,000,000 fewer punch cards and 193 less man-years of key punch effort at the installation level, representing an estimated annual saving of $1.1 million.

Depot materiel maintenance and support activities amounted to $781.5 million in direct expenses in fiscal year 1970. Of the total, $616.8 million was used for depot maintenance activities, $6.6 million for base operations costs, $6 million for technical, administrative, and new equipment maintenance training, and $152.1 million for maintenance support activities.

The Seventh and Eighth Worldwide Depot Maintenance Programing Conferences were held at Rosslyn, Virginia, in December 1969 and June 1970 to revise the 1970 and review the 1971 and 1972 depot maintenance programs in the light of revised requirements, updated plans, and projected funding levels. All programs were adjusted and approved.

Conferences were also held to develop programs for the support of Army forces in Vietnam, Korea, Thailand, Okinawa, and Europe under the closed loop support system, the program established in 1966 to provide intensive management over selected items through the entire cycle of withdrawal, overhaul, and return to the Army supply system. As the year ended the program included ninety-seven major end items and sixty-four secondary items. Approximately 5,000 individual major and secondary items were withdrawn from and returned to Vietnam monthly under program schedules established for that command alone.

Aviation Logistics

Standardization is one of the more effective ways of reducing the range of needed repair parts, ground support equipment, avionics, armament, special tools, and personnel skills. A program to standardize the Army aircraft fleet worldwide was in progress dur-

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ing the year. It is designed to reduce the number of different missions, designs, and series of aircraft by command, consistent with operational requirements. By year's end, reductions had been made in Korea, Japan, Europe, and the Canal Zone.

Operational readiness standards were established at 80 percent for fixed wing and 75 percent for rotary wing aircraft in fiscal year 1970, with a weighted average of 76 percent for all aircraft. The year was one of high-level aviation activity. Army aircraft—a large percentage of them helicopters—flew over 550,000 hours in April 1970, one of the highest flying hour months in Army aviation history. It is interesting to note that, while achieving these flying hours, helicopters averaged 73 percent and fixed wing 79 percent in readiness, for an average of 74 percent.

With a fleet of over 12,000 aircraft, the Army aviation program consumes nearly half of the funds required by the Army for depot maintenance. To achieve a balanced work load in depot maintenance at the least cost, the Army overhauls about 65 percent of its first-line aircraft in Department of Defense activities, including the Naval Air Station at Pensacola, Florida. The remainder are overhauled by prime manufacturers.

The large number of aircraft in Vietnam has challenged Army management and led to a number of refinements and new techniques in Army aviation maintenance and support. The aircraft depot maintenance ship Corpus Christi Bay, deployed in 1966, continued to support Army aircraft in Vietnam by overhauling and repairing engines and components and by fabricating parts required for grounded aircraft as well as other equipment. The ship moved up and down the coast to provide maintenance close to operating aviation units.

The Aviation Closed Loop Support Program managed aircraft and supporting engines, components, and ancillary equipment through a full cycle, sending serviceable equipment to the field and returning unserviceable items from the field to the continental United States for overhaul and repair. The effectiveness of the over-all logistic system is measured by the fact that the Army has been able to support over 4,000 aircraft in Vietnam with the highest operational readiness and utilization rates ever achieved.

The integration of systems management procurement and overhaul programs has improved control over aircraft engines and other high dollar value components. In the last year a supply of spare engines and components with an acquisition value of about $136 million was identified that, when overhauled, may be installed in new aircraft at about 18 percent of the acquisition value when new.

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Experience in Vietnam also led to a weapon systems management concept for Army aircraft under which an aircraft is treated as a complete piece of equipment, including avionics, armament, and supporting materiel. The techniques of weapons systems management are being extended worldwide without compromising either the over-all logistic system or the command management structure. The aviation logistic program in Europe was reviewed by Headquarters, U.S. Army, Europe, and the Department of the Army during the year, leading to some changes which take advantage of Vietnam experience and will improve logistic support.

Supply and Depot Management

The Department of the Army Distribution-Allocation Committee (DADAC) , the agency that controls the distribution of certain items actually or potentially in short supply, continued to regulate well over 200 items during the fiscal year. The DADAC functions during periods of logistical turbulence when normal supply procedures and priority systems cannot be applied uniformily for selected items.

Major item distribution plans (MIDP) have been developed over the past three years to provide the departmental headquarters and major commanders with an efficient and effective mechanism to manage major equipment items. These plans reflect worldwide requirements for an item; display the assets on hand against the requirements; and show the planned receipts, losses, diversions, returns, requirements changes, and distribution for a two-year period. The major item distribution plans will be used to determine the Army's logistical capability to support unit reorganizations and war plans, forecast the allocation of future stocks, and determine if redistribution of stock from lower to higher priority claimants is justified. As of June 30, 1970, MIDP preparation was automated for all commodity areas except aircraft and missiles.

The Army Stock Fund finances much of the materiel that flows through the depot system. Stock Fund purchase authority in fiscal year 1970 amounted to $2.9 billion, about 20 percent less than in 1969, while the issue program was $3.6 billion, about 8 percent below the previous year. Because of the decline in demand, stockages were reduced at depot level. Technological advances, such as faster transportation, improved containerization, better movement control, and automated management systems that improve stock control, have enabled the Army to reduce stocks at all supply echelons.

The Defense Integrated Management Engineering Systems

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(DIMES) was being implemented in Army warehousing and inventory control activities worldwide as the year closed. Man-hour, work load, and performance data for these activities became available to management at all levels from depots and inventory control points to the departmental headquarters and the Office of the Secretary of Defense, to be used for production planning and control and for manpower management and budgetary purposes at all levels. Integration of the Department of Defense Warehousing Gross Performance Measurement System into DIMES was completed as the year closed, as was a test of DIMES in Army Materiel Command and U.S. Army, Europe, inventory control points.

Modernization of the depot storage system in the United States began in fiscal year 1967 as part of a $14.7 million three-year program to equip depots with the most efficient materiel handling systems and provide modern facilities, design capabilities, and layouts for effective storage operations. Through fiscal year 1970, $9.9 million had been spent on procurement of handling equipment and alterations to facilities, while $2.3 million was obligated for military construction under the program. "These expenditures saved 227 personnel spaces ($1.3 million in annual operating costs). When the modernization program is completed, depot storage operating costs are expected to be reduced by $3.9 million annually (524 personnel spaces).

Depot organization as well as modernization was a subject of attention in the fiscal year. In May 1969, a revised depot organization regulation was issued to assist depot commanders around the world to establish and maintain a uniform structure. The standard organization makes more effective use of resources and takes advantage of the latest organizational experience of the Army. The advantages to be obtained through uniformity are evident in some simple statistics: there were 49 Army depots, 38 depot activities, and 17 miscellaneous activities with a storage mission in nine countries (United States, Japan, Korea, Okinawa, Thailand, Vietnam, United Kingdom, Germany, and Italy) on December 31, 1969, storing some six million short tons of Army supplies and equipment and performing such wholesale functions as storage and warehousing, repair and rebuild, rail and motor vehicle traffic management, stock control, overhead and support functions, quality control, and property disposal, among other depot and tenant activities. Additionally, action was initiated to create a theater-oriented depot complex, to focus support efforts on U.S. Army, Europe, as a part of accelerated direct supply support to improve response time in meeting theater Army supply requirements.

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During fiscal year 1969 the joint Logistics Review Board began to revise the management procedures under which petroleum products are distributed to Army units throughout the world. Terminal reporting and inventory accounting were standardized and procedures for computation of reserves were revised to include reappraisal of consumption factors. Since commercial distribution facilities are used as much as possible, accounting procedures were revised to make civilian and military distribution systems compatible.

Transportation

In fiscal year 1970 the volume of Army cargo and the number of Army passengers moved varied slightly from the previous year. The Military Sea Transportation Service moved about 97 percent of the cargo that was shipped, that is, 16,015,400 measurement tons, about 2,886,200 less than the 1969 volume. The 227,045 short tons that the Army shipped by air was also under the figure for 1969.

Passenger movements continued to reflect the policy of using the most expeditious means to move personnel and save man-days of travel. During the year 1,673,300 Army-sponsored passengers were transported worldwide, 1,573,400 by air and 99,900 by sea. The ratio of passengers using airlift decreased along with the number of passengers moved.

A curb on the use of premium transportation was maintained through the year under the Airlift Challenge Program, which provides for automatic review, screening, and challenge of requests from field commands. An average of 3,400 shipments per month was diverted from airlift to sealift at an estimated savings of about $11.5 million per month. These diversions were without detriment to delivery dates.

Military Standard Transportation and Movement Procedures, the so-called MILSTAMP program, continued during the report period to provide a reliable standardized method for movement and documentation of cargo within the Defense Transportation System. To improve co-ordinated transportation and supply planning, a logistics intelligence file was established at the Army's Logistics Control Office, Pacific, enhancing automated management control over the materiel pipeline to Vietnam. This file is activated when a requisition is placed on a continental U.S. supply source; the file is updated to reflect each subsequent transaction along the supply and transportation path to arrival at the water terminal. Information is readily available on quantities and tonnages.

The Army's move into the field of container system operations met with some difficulty during the year. A contract for 2,000

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containers (to be called MILVANs) , negotiated with Baifield Industries of Dallas, Texas, in November 1968, failed to produce containers in the quantity and of the quality desired. The 224 containers delivered between May and September 1969 were only conditionally acceptable, and at mid-September, when all were deadlined for defects in workmanship and design, the contract was terminated for default. As the fiscal year closed, bids had been received for a new contract and preaward investigations were in progress. Meanwhile, deliveries of container chassis, also contracted in November 1968, were on schedule.

To launch the MILVAN pilot operation at the earliest possible date, the Army Materiel Command sought and was granted funds to lease 1,300 containers 8'x8'x20' in size. Contracts were signed with two container lessors in April 1970, and the Army arranged with the Military Sea Transportation Service to provide sealift between the west coast and Vietnam. The first ship departed the Military Ocean Terminal, Bay Area, in California on June 9, 1970. Subsequent sailings were scheduled at fifteen-day intervals.

The Mobility Equipment Research and Development Center at Fort Belvoir, Virginia, has prototypes of a number of items of equipment under consideration for future Army containerization systems. The Combat Developments Command was asked to study the problem of discharge of non-self-sustaining container transport systems.

To support current and future over-the-shore operations—a critical link in the logistical chain—a research, development, testing, and procurement program must be established to equip Army elements with modern lighterage that is compatible with the latest concepts in commercial shipping. The Army Materiel Command was conducting a study to identify deficiencies in the present fleet and to develop information required to modernize it. The Combat Developments Command, meanwhile, was studying lighterage requirements for the 1975-85 period.

Although the Army is the land element of U.S. military forces, water is often an obstacle to ground operations and the Army has always required organic marine craft and equipment to cross or surmount water obstacles in carrying out its mission. The roles and missions that might be assigned to transhydro craft in the 1975-85 decade have been under study. The term "transhydro" includes craft that float on the surface, those supported by air cushion or foils, and those that fly over water.

A number of factors have given some urgency to such a study. A significant portion of the Army's marine fleet is wearing out,

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while bloc obsolescence is overtaking many models of Army floating craft. It has been necessary to depend on the Navy to provide waterborne tactical mobility. Doctrinal and organizational literature has been both inadequate and inconsistent; many functions and missions have been assigned to Army floating craft units in Vietnam. New concepts as well as types of equipment have been developed to perform transhydro roles and missions. Thus the Combat Developments Command developed a study plan in this field and preliminary efforts began in the last quarter of the fiscal year.

The extensive requirement for lighterage in Southeast Asia to support tactical and logistical operations practically depleted depot stocks of landing craft. To meet the requirements, all LCM-8's and LCU's prepositioned in Europe were withdrawn and shipped to Vietnam. Except for forty LCM-8's, the landing craft in the Army system were procured in 1950-52 and are now reaching an age when repair and spare parts support are difficult. Landing craft have had wide and hard use in Vietnam, reducing their economical life expectancy. Present procurement includes only sixty-one LCM-8's.

Containerized shipment of ammunition was tested during the last fiscal year. Some 226 containers were loaded with military explosives at four inland production plants and one depot. The containers were moved by highway to the Naval Weapons Station at Concord, California, where they were loaded aboard a crane-equipped container ship, transported to Cam Ranh Bay in Vietnam, offloaded, and moved by a combination of coastal vessel and highway to Ban Me Thuot, Qui Nhon, Pleiku, and Landing Zone ENGLISH. No intermediate handling of the ammunition was required between the production plant and the Vietnam destination.

Participating in this test were the Army Materiel Command and the Military Traffic Management and Terminal Service. Because the test was a one-time operation to be completed at an early date, certain adverse features were unavoidable. For example, moving loaded containers to the west coast by road instead of rail increased land movement costs considerably. The combination of a large container and a 75-percent safety limit on the lifting crane resulted in a low cube utilization of the container. Blocking and bracing standards imposed by the U.S. Coast Guard resulted in a complex blocking arrangement that was costly to install and remove and added significantly to gross weight. Furthermore, the one-time test did not allow negotiators to offer continuing shipments to highway and ocean carriers, which meant higher costs for one-time transportation.

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Operationally the test demonstrated that real benefits could be attained through the shipment of containerized ammunition. Vessel turnaround was improved by 500 percent over break-bulk handling. Manpower efficiency was increased by 600 percent. These improvements promise a significant increase in the port throughput (berth and anchor discharge, onward movement, destination reception) capacity over that achieved in break-bulk handling. Increased manpower work loads at points of origin and destination were more than offset by over-all savings. The number of handlings was reduced from a possible eight by break-bulk to only two. The ammunition was in better condition on delivery, and lot integrity was preserved. The reduction in pipeline time would foster pipeline inventory savings when containerized shipments were routine. As fiscal year 1970 closed, actions were being taken to develop a total system for the containerized shipment of ammunition.

To protect national interests, Public Law 90-500 of 1969 restricted the acquisition of foreign-manufactured buses, either by purchase, rental, or transportation services contract. To comply with the law, foreign-leased buses were to be replaced. The program schedules replacement of 100 buses in Korea from 1968 procurement and 250 in Thailand, Japan, and Okinawa from 1969 procurement. Another 519 buses are to be procured in the United States with fiscal year 1970 funds.

Logistic Improvements in Supply, Maintenance, and Transportation Operations

A wide range of management techniques have been developed to "do more with less and do it better," which resulted in estimated cost benefits of over $2 billion. Costly and critical items have been brought under more visible control; weapons system management has been intensified; maintenance and repair cycles have been formalized and emphasized; and direct exchange practices have been expanded. All of these procedures help insure that the right amount is at the right place at the right time. One of the more significant facets of the logistics offensive referred to earlier is inventory in motion. This is a supply management program that works to lower stock levels at immobile depots in the combat zone. Integrated supply and transportation planning, real time control of in-transit stocks, and more intensive management will accelerate resupply, lower inventory levels, and reduce requirements for static stocks on the ground.

Early in the fiscal year the Army was faced with the challenge of improving logistic efficiency and readiness worldwide within

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current and projected reductions in manpower, money, and materiel. The primary concern was how, in the face of reductions, the Army would continue to carry out logistic functions and support services efficiently and effectively, so that combat forces would continue to be supported adequately.

The major commands and oversea theaters dramatized the problem in the logistic operations STREAMLINE, considering reductions in materiel procurement authorization, operating funds, and personnel; improved logistic management and operations concepts and techniques that would capitalize on advancing technology in military equipment; and communications. The concept addresses all facets of logistics concurrently and includes the elimination of unnecessary stock and echelons of supply, the improvement of transportation capabilities including containerization, and the modification of maintenance procedures to permit more maintenance at less cost. The program was initiated in U.S. Army, Pacific, in the third quarter of fiscal year 1970 and will be executed in other commands in fiscal year 1971.

As a part of the logistic offensive, stockage policies for support activities of the Army in the field were modified. The number of items to be stocked below the continental U.S. depot level were reduced from 1,063,000 federal stock numbers on July 1, 1969, to 509,000 on June 30, 1970. Goals were established for the number that can be on a stockage list. The aim is to reduce inventory investment by eliminating stockage of slow-moving items below depot level. Since fewer items would be stocked, management would be improved. More economical ordering will reduce requisitions and transaction volume both in administration and handling.

Excess supply levels have been created worldwide as a result of force reductions and logistic improvements. Thus Project Clean was established in November 1969 to weed excess materiel from the entire Army supply system, to identify and redistribute it within the Army and to other Department of Defense agencies where possible, and to dispose of unneeded supplies. Departmental teams visited oversea commands to provide on-the-spot disposition instructions for excess materiel.

A major constraint in the rapid disposition of excess materiel has been the long screening time required by current regulations. To reduce the screening cycle, it was proposed under the project for utilization and redistribution of materiel (PURM) in the Pacific area that present sequential screenings through a variety of agencies be made concurrently. This procedure will begin in October 1970.

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Under the aegis of this program, special attention was given to the supply posture in Vietnam. With the gradual lessening of the conflict, a troop withdrawal in progress, the gradual assumption of battlefield responsibility by the Vietnamese, and eventual American withdrawal in prospect, stock levels could be lowered and the wastage that followed the termination of several past wars avoided. Review of the supply stockage in Vietnam indicates that, during fiscal year 1970, levels were reduced by over 250,000 short tons valued at over half a billion dollars. This reduction was accomplished by a combination of limiting requisitions for supplies for U.S. and Free World forces to careful levels; by normal attrition; by redistributing materiel in the country; and by withdrawing some stocks from Vietnam. Additionally, Project Stop and See provided for the cancellation of requisitions for items valued at $221 million which were already in sufficient supply in Vietnam or which would overburden the storage capability there.

Also during the fiscal year, 75,500 short tons of materiel valued at $158.5 million were withdrawn from Vietnam and sent to bases in Japan and Okinawa, while another 137,000 short tons of both serviceable and unserviceable but repairable materiel, valued at $870 million, were shipped to the United States for return to stock or for repair and return to use. Planning envisions ending fiscal year 1971 with no significant excess materiel in U.S. Army, Vietnam, depots.

As the year closed, the departmental headquarters had developed procedures for testing, beginning in July 1970, a direct support system that would involve a theater-oriented depot complex in the United States and the 3d Infantry and 4th Armored Divisions in Europe. The system is expected to reduce the present order and ship time—approximately ninety-five days from continental U.S. supply sources through U.S. Army, Europe (USAREUR), depots to the direct support unit of the divisions—to thirty-five days from the continental United States. Operation of the system with these divisions will be compared with supply operations of the other divisions in Europe, and should the test prove effective, the direct support system will be expanded to all USAREUR direct support units. In general, the new system will permit static storage on the ground to be reduced by the amount in transit; reveal when, where, and how stocks will arrive; eliminate multiple handling; curtail pilferage; and reduce inventories.

Along similar lines, a concept was developed and agreed upon in April 1970 for a pilot project under which commissaries in Europe would be supported by direct deliveries. The Defense Per-

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sonnel Support Center would receive requisitions from six commissaries, presently supported by the depot at Giessen, Germany, consolidate requirements by item, procure the goods at its Philadelphia depot, and prepare and ship direct to the commissaries in Europe. The program would reduce inventory and investment in pipeline supplies; reduce brand name resale functions at the Giessen depot; improve customer service; and supply fresher products. If the pilot program proves successful, the system will be extended worldwide.

A logistic system that operates worldwide using every mode of transportation to serve a million and a half people with products and services is inherently complex and requires a library of printed rules and regulations to operate effectively. Both the Department of the Army's board of inquiry on the Army logistic system and its inspector general inquiry into Army regulations and related publications in 1967 concluded that from the user's point of view most regulations were hard to read and understand. The practice of promulgating policies and procedures in small, topically oriented directives, while easier for the author, usually resulted in excessive cross-referencing, needless repetition, and conflicts between separate regulations. On the other hand, they cited as good, usable regulations those that consolidated a number of previous regulations into the single, more self-contained type of directive.

In line with this philosophy, corrective action was begun in July 1969 to consolidate 128 existing Army regulations on logistics into 14 comprehensive ones. As the work progressed, outdated regulations received badly needed attention. By the close of the year one of the fourteen regulations had been completed and three were being edited. The remainder will be completed in fiscal year 1971.

Under study during the year was a proposal that airlift be used as a routine method of delivery for selected commodities, if use of air produced over-all economies in the pipeline. Under this procedure, the increased cost of airlift would be offset by savings in procurement, reduction in stock levels, and improved supply control. Commodities were being reviewed to identify eligible items for the airlift program. Through Research Analysis Corporation investigations and the C-5A Heavy Lift Aircraft Study, selection techniques and formulas were being developed based on pipeline savings and holdings, transportation, and packaging cost differentials.

The Army's requirement for logistic readiness has the same consistency and importance as the nation's requirement for the Army as an instrument of national security. However, the omnipresent competition for resources makes the Army's fulfillment of that

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requirement a challenge under the best of conditions and a most difficult task during periods of declining resources and increasing budgetary constraints. Therefore, in the effort to insure fulfillment of its responsibilities in the area of logistic readiness, the Army developed intensive management techniques to monitor readiness, detect and correct problems in their early stages, and insure that the logistic system is responsive to valid command requirements. These special techniques were employed through intensive management programs in U.S. Army, Europe; Continental Army Command; Eighth U.S. Army; and U.S. Army, Alaska, and applied to those units and resources where the most critical logistics readiness problems were being encountered.

During fiscal year 1970, these programs contributed to achievement of the highest level of logistic readiness on a worldwide basis that had been possible since U.S. Army direct involvement in Southeast Asia (1965).

Logistic Doctrine and Systems

Installation of a division logistic system continued during the report year. The system is designed to standardize the logistic systems in divisions by automating functional tasks; to improve the compatibility of division and supporting installation logistic systems; to improve the quality and flow of logistic data; to simplify division logistic procedures for soldiers with limited service; and to promote a smooth transition to future automated logistic systems. It provides for automatic property books and equipment and status reporting, establishing a central issue facility, automating the division's class IX repair parts system, reorganizing the supply office, and establishing a division data center.

The Supply and Maintenance Plan and Report, an improved control system developed for supply and maintenance activities financed from the Army's operations and maintenance appropriations, has been successfully tested in supply operations and is being extended to other program elements. The system, which isolates key performance indicators and brings together work load, manpower, and financial data, is designed to serve operational, manpower, and financial managers. The Army Materiel Command prototype will be completed in fiscal year 1971 and Army-wide implementation is planned for fiscal year 1972.

During the past year the Army developed its concept and policy for use of the Air Force C-5A Galaxy and other heavy lift aircraft, such as the C-141 Starlifter and the Boeing 747 of the Civilian Reserve Air Fleet, in the resupply role. To satisfy the Army con-

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cepts, a series of actions to correct specific deficiencies or voids in existing logistic systems have been assigned to selected Army elements. This running level of preparedness will permit logistic structure modifications to accommodate increasing air lift capabilities.

Historically, the methods by which supplies and services are procured and supplied to the field have been developed through logistic systems operated independently by various Army command echelons. To achieve centralized control over system developments in order to eliminate duplication, and to reduce costs, a project called Turn the Corner was launched in December 1969 that would make full use of automation and associated communications networks. It is the first step in establishing vertical control over logistic system development. Under the project, a common baseline of logistic requirements will be established. Existing operating systems will be examined and analyzed against the baseline and brought into alignment.

Looking even further into the future, an ad hoc review and analysis group was convened in November 1969 to establish the concept, principles, and objectives for a readiness-oriented logistic system for 1975 and beyond. The group examined the requirements for changes in logistic doctrine and for new subsystems or changes to existing ones. Its report was included in the master planning in progress at the U.S. Army Logistics Doctrine, Systems, and Readiness Agency at the New Cumberland Army Depot in Harrisburg, Pennsylvania.

As the year closed the first phase of a new selected item management system (SIMS) was ready to go into operation to improve control over about 4,000 high value items, both reparables and consumables. This system will be expanded eventually to some 26,000 items representing 80 percent of dollar procurement and 80 percent of demand. SIMS will ultimately eliminate the need for separate reporting systems, by establishing one standard system. It is anticipated that the system will enhance the readiness of units around the world, permit reduction of inventories, reduce procurement actions, and utilize stocks to the maximum through repair and return to stock.

The five-year automatic data processing program being conducted by the Army Materiel Command to develop standard systems that would operate on standard equipment with standard computer programs and software moved ahead during the year. Destined for commodity commands and national inventory control points, depots, arsenals, laboratories, test and evaluation activities,

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and data banks, it will be applied by activity beginning in the fall of 1970.

Facilities and Construction

The 1970 Military Construction Authorization Act approved on December 5; 1969, provided $280 million in new funding authorization for the Army. An additional $12.7 million had already been approved in November under Public Law 91-121 for research, development, test, and evaluation facilities at the Kwajalein Missile Range. A fiscal year 1970 military construction appropriation of $287.2 million in new obligational authority was approved in December 1969.

The Army in fiscal year 1970 thus had available for military construction a total of $932 million, exclusive of $248,250 transferred to the General Services Administration (GSA) for office rental; $287 million in current appropriations; $622.6 million in unobligated carryover from prior-year appropriations; $12.1 million transferred from Secretary of Defense contingency funds; $1 million for the civilian pay raise; and $9.3 million derived from recoupments in the infrastructure program. The funds for new work were available as follows (in millions of dollars)

The delay in congressional action on the fiscal year 1970 appropriation bill limited construction starts during the first half to projects authorized and funded in prior years. In addition, the President on September 4, 1969, directed all agencies of the federal government to reduce contracts for government construction by 75 percent in an effort to east inflationary pressures in the construction industry. Under Bureau of the Budget guidelines issued September 12, 1969, the following categories were excluded from the base program subject to the 75 percent deferral requirement: land acquisition, planning and design, access roads, Vietnam construction in the country, obligations for local labor and materials or use of foreign currencies for oversea projects, urgent national security requirements, and restoration of facilities damaged or destroyed by fire, flood, or other natural disasters. The approved Department of Defense program permitted the Army to obligate $82.9 million for Army military construction projects, $15.7 million for family housing, and $2.3 million for Army Reserve construction. The Bureau of the Budget, in subsequent actions, released all pollution abatement and family housing projects which were ready for award, and

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advised that effective July 1, 1970, the direct federal construction deferral would be replaced by the requirement that executive departments and agencies proceed with construction projects in their 1971 budget plans on a selective basis if and as necessary to avoid aggravating congested inflationary conditions in local construction market areas.

Despite these restrictions, the Army made major progress in reducing unobligated balances from $622.6 million at the end of fiscal year 1966 to $409 million on June 30, 1970. Obligations for major projects totaled $172.8 million in areas outside of Vietnam and Thailand, excluding Safeguard. Some $100.1 million was obligated for new work in Vietnam and Thailand, while $197.1 million was obligated for Safeguard, $28.2 million for infrastructure, and $24.8 million for planning, minor construction, and access roads. Major contributions to support worldwide Army operations included the start of construction to support Safeguard deployment.

Construction awards for improving and updating industrial facilities at government-owned plants totaled approximately an additional $125.4 million. During the year, fifty-two projects were completed at a cost of $70.7 million.

At the beginning of fiscal year 1970, there was $113.9 million of unobligated funds and $54.4 million of unapportioned funds available for construction in Southeast Asia. Due to the availability of these funds and the decision to limit the type of projects on which new starts would be initiated, it was decided not to request additional construction funds in the fiscal year 1970 program for support of Southeast Asia operations. By the end of fiscal year 1970, the unobligated balance had been reduced to $68.2 million including unapportioned funds of $34.2 million. Over $1.3 billion in regular, contingency, and military assistance funds have been applied to military construction in support of Southeast Asia operations during fiscal years 1965-70.

The Army's military construction program consists of three basic elements: providing facilities that installations need but do not have; replacing aged and obsolete facilities; and improving and modernizing existing facilities. Based upon an assumed long-range permanent Army peacetime strength of 925,000, there is a facilities deficit of about $7.5 billion (excluding Safeguard construction). It was the Army's objective to invest $800 million in construction funds annually to overcome the deficit in about ten years. However, projected budget limitations will allow only a $325 million annual investment for facilities, possibly making' it necessary to extend this objective an additional ten years. The $100 mil-

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lion authorized and funded by Congress in fiscal year 1970 for replacement and modernization is indicative of the restraints placed on the amount of new construction to be undertaken until the war in Southeast Asia is ended.

On October 29, 1969, and again on March 6, 1970, the Secretary of Defense announced actions to consolidate, reduce, realign, or close various defense installations in the United States. The major actions which have been completed or which are under way are the disposal of the Army Pictorial Center, Long Island, New York, and of major portions of the Granite City Army Depot in Illinois and Fort Holabird in Maryland, and the inactivation of Fort Irwin in California. Additionally, both the Navajo Army Depot in Arizona and the Fort Wingate Army Depot in New Mexico will be stocked with war reserve ammunition and placed in a standby status. The Army will also dispose of the majority of the Military Ocean Terminal, Kings Bay, Georgia. Included in the action were reductions in authorized base operating strengths and in numerous Army installations worldwide.

Expenditures for real property maintenance activities at Army installations in fiscal year 1970 were slightly over $1 billion, approximately equal to expenditures for the previous fiscal year. Army building space decreased by over 800,000 square feet, or less than 1 percent of the previous fiscal year's total, as a result of the discontinuance of some facilities. Unfinanced real property maintenance and repair at the end of the fiscal year was approximately $385 million, an increase of about 15 percent over the previous fiscal year.

Real property maintenance in Southeast Asia was done primarily by contractors. In Vietnam, one firm with a work force of about 21,000 furnished all normal facilities engineering support to about 500,000 U.S. Army and allied assistance personnel at 105 locations. The same firm, with a force of about 2,400, provided the same type of services to U.S. Army forces in Thailand. Another contractor operated and maintained high voltage electric generation plants and their distribution systems, including four steam floating barge sites and two diesel land-based sites in Vietnam.

The Army, through the Corps of Engineers, provided construction support to numerous agencies and projects, among them the Air Force (including its National Guard and Reserve), the Navy, the National Aeronautics and Space Administration, various Department of Defense agencies, the Agency for International Development, the U.S. Information Agency, the trust territory of the Pacific islands, the Robert F. Kennedy gravesite, national ceme-

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teries, and selected foreign governments. During the fiscal year 1970, Army Engineers contracted for approximately $142 million of construction for these other U.S. agencies and foreign governments. In December 1967 the Secretary of the Army was assigned responsibility for the Homeowners Assistance Program, under which military or civilian employees of Department of Defense activities are given financial assistance to reduce their losses if they are required to dispose of a home when a military installation is closed. Through June 30, 1970, 7,892 applications for assistance had been received and 4,592 applicants had been given financial assistance totaling $11,589,000. Over 1,100 mortgages totaling $8,589,000 were assumed, while 1,904 applications were rejected.

Standard engineering designs for the major tactical Safeguard facilities were completed and adapted for the sites in the vicinity of Grand Forks, North Dakota. Construction of the major tactical facilities at both of the North Dakota sites began under a $138 million contract awarded on March 31, 1970. Construction also started at both of the sites in the vicinity of Great Falls, Montana, under preliminary contracts pending completion of engineering design for these sites. The major construction contracts for the Montana sites were to be awarded during fiscal year 1971.

The 1970 Military Construction Appropriation Act, approved in December 1969, provided $287.2 million in new obligational authority for the Army. Congress approved a total obligational authority of $410.1 million with $100.9 million to be financed from prior-year unobligated balances; however a general reduction of $22 million was imposed, bringing the Army's fiscal year 1970 military construction appropriation to $287.2 million. The $22 million reduction, made without reference to specific projects, required the Army to defer certain items which are considered to be urgently required.

To deploy Exercise Reforger units rapidly and achieve a high level of combat readiness almost simultaneously with their arrival in Europe, unit equipment must be prepositioned on the European continent and maintained in a high state of readiness. An essential element in the ability to attain such a state of equipment readiness, as well as in facilitating the rapid issue of equipment to Reforger units on arrival in the theater, is controlled humidity storage. Present plans call for the storage of all Reforger prepositioned equipment in controlled humidity warehouses.

In the first quarter of fiscal year 1970 a plan was approved by the Department of the Army to establish a line of communications for wartime emergency support of U.S. forces in central Europe.

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The purpose of this action is to replace the capability sacrificed by the withdrawal of U.S. forces from France. In addition, steps were initiated to realign the peacetime line of communications in support of U.S. Army, Europe. The dependence upon the port of Bremerhaven in Germany was being reduced through its combined use with Belgian and Dutch ports. The combined costs of cargo handling and onward movement influenced port selection and made it possible to reduce support operations in the Bremerhaven area and achieve maximum economies in cargo transportation operations.

Under the military construction program, the Army continued to fund the U.S. share of the NATO Common Infrastructure Program. The Congress authorized and appropriated the $50 million budget request. The other NATO nations agreed to share the cost of relocating U.S. facilities from France, and reimbursements began in the fourth quarter of the fiscal year.

The Military Liquidation Section, established on February 1, 1967, to dispose of U.S. installations and other interests in France, was phased out and inactivated on June 30, 1970. During this period the section released 386 U.S. installations to the government of France. The United States acquired $21.2 million as proceeds from the sale of U.S. real and related personal property and from the rental of surplus commodity housing. Responsibility for the disposal of four remaining surplus commodity housing areas in France has been assigned to U.S. Army, Europe.

Support Services

The Army continued to administer eighty-five national cemeteries during the year. The proposal that the National Cemetery System be transferred to the Veterans Administration, under consideration for several years and reintroduced when the 91st Congress convened in January 1969, was not acted upon. During fiscal year 1970, a total of 38,028 interments were made in the eighty-five cemeteries, 1,198 of them Vietnam casualties interred in sixty-two cemeteries. Fifty of the cemeteries had gravesites available at year's end, while thirty-five others had gravesites available only for Vietnam casualties or for second interments under the single gravesite policy. A total of 200,445 grave markers were furnished to national and private cemeteries.

The Army operated ten mortuaries overseas and one at the Oakland Army Terminal in California, providing mortuary service for 10,306 deceased military personnel, dependents, and other eligible categories for whom the service is authorized. In the conti-

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nental United States, funeral homes, through contract arrangement with military installations, provided mortuary service for 2,093 deceased.

The bodies of seven World War II and Korean War dead were recovered and identified in the last year from Germany, Holland, Korea, and New Guinea. Army representatives visited the next of kin in each case to report the recovery circumstances and identification procedures.

Army mortuary teams were employed on an emergency basis during the Hurricane Camille disaster on the gulf coast, when regional establishments were unable to cope with the situation.

An important element of the Army's responsibility to deceased personnel and their families is the processing of personal effects. In Vietnam a personal property depot receives property from units and mortuaries, corresponds with the next of kin, and ships the personal effects to the person eligible to take custody. In other areas of the world, summary courts are appointed to carry out this responsibility.

During the fiscal year, excess, surplus, and foreign excess personal property with an acquisition cost of $1,293 million was turned over to Army property disposal activities for disposition by redistribution or transfer, donation, sale, or other authorized disposal action. Usable property with an acquisition cost of $340 million and 383,000 short tons of scrap were sold. Proceeds amounted to $52 million; the cost of operating the disposal program was $31 million.

Inventories of usable property for disposal increased during the year from $502 million to $564 million. The major causes of the increase were returns from Southeast Asia, increased efforts to remove unneeded or obsolete items from the supply system, and a phasing down of activities and installations. Increased emphasis was placed on disposal activities, and plans were being developed to simplify and streamline the disposal process.

Military Assistance

The materiel portion of the 1970 Army Military Assistance Program (MAP) totaled $337 million and included varying degrees of support for countries and international organizations. Grant aid recipients received $222 million in materiel, for which the Army was reimbursed, and $296 million without reimbursement during the fiscal year. Materiel delivered was predominantly from prior-year undelivered balances or from Army excess.

In addition, aid to Thailand and Laos continued to require

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increased attention as a result of the conflict in Vietnam. During fiscal year 1970, $152 million in materiel orders were received for Thailand and Laos, and deliveries of $90 million were made.

Continuous surveillance and close scrutiny have been applied to limit to the absolute minimum the gold flow resulting from the grant aid program. Foreign currencies instead of U.S. dollars were used wherever possible; offshore procurement was reduced; and oversea travel was curtailed. In this connection, the aid mission assigned to U.S. Army, Japan, was eliminated during the year.

During the year the Army continued to transfer to the Military Assistance Program, at no cost, materiel that was in long supply or excess to needs. This program was initiated during fiscal year 1969, and refined and expanded during fiscal year 1970. During the year, materiel with an acquisition value of $229 million was transferred to the Military Assistance Program and $2 million in Laos and Thailand under this program. In furtherance of MAP objectives, the program encourages recipients to accept major items of materiel "as-is" with rehabilitation and shipping expenses being assumed by the recipient. Principal recipients of materiel under this program were the Republic of China, Korea, Turkey, and Greece.

With the spread of the Vietnamese conflict throughout Indochina, aid to Laos, Thailand, and Cambodia became increasingly important. During the year M16 rifles, armored cars, and communications equipment were furnished to Laos to modernize its forces. Thailand received M16 rifles, vehicles, construction equipment, and communications equipment. Military aid to Cambodia resumed during 1970 for the first time since fiscal year 1964. The extent and content of this aid was modest and rather limited as the year closed.

Through a combination grant-aid military sales agreement, equipment for an additional air defense (Nike) unit was being supplied to the Republic of China. A large portion of this materiel was being made available from Army excesses under the program described above; therefore, no reimbursement from MAP funds will be required. To improve Korean mobility and counterinsurgency capabilities, the shipment of equipment for an additional helicopter company was completed during the year. Helicopters were also supplied to the Philippines to provide much needed mobility.

During the year the Army actively participated in negotiations covering military assistance aspects of the extension of the Spanish Base Rights Agreement.

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To further the MAP objective of making recipient countries self-supporting by building up their economy and industry, military aid to nations achieving a satisfactory state of economic development was being discontinued. As part of this objective, the MAP materiel program for Iran was discontinued in fiscal year 1970.

During the fiscal year, the Army sold materiel and services valued at $319.1 million to fifty-four countries and five international organizations under the auspices of the foreign military sales program. In the conduct of its sales activities, the Army adhered to the policy that materiel readily available through commercial sources would be sold directly by U.S. industry to the recipient. Through intensive management procedures 1,590 outstanding sales cases were balanced and closed out in supply records.

The Army's Logistical Orientation Tour Program brought seven groups of high-ranking military personnel from seven countries to the United States during the fiscal year to acquaint them with new military systems and equipment of mutual interest in Free World defense. A demonstration of the M-561 (Gama Goat) vehicle was conducted in Europe for members of the NATO community. Similarly, briefings were given to representatives of these same countries on the Redeye weapons system, TACFIRE (an automated system for artillery fire control) , and modernization of the Nike-Hercules missile system.

During the fiscal year, the Army participated in seventeen coproduction programs with six foreign nations and one international organization, NATO. Under this program, and based on a government-to-government agreement, a foreign nation may assemble or manufacture major end items or weapons systems of U.S. origin. The programs are valued at $1,482.2 million with expenditures for goods and services in the United States valued at $556.2 million. Participating countries are the Federal Republic of Germany, Italy, the Netherlands, Norway, Japan, and the Republic of China. Items of U.S. origin being coproduced include the M-113 armored personnel carrier family of vehicles, the M-60 tank, the UH-1D and UH-1H helicopters, the Nike-Hawk missile, the M109 self-propelled howitzer, wheeled vehicles, a light antitank weapon, and small arms.

Under the auspices of co-operative logistics, the Army maintained supply support arrangements with seventeen foreign countries and one international organization, NATO. These programs provide participating countries with continuous follow-on support for major end items and weapons systems of U.S. origin on a reimbursable basis. This program was valued at $158 million during

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the fiscal year and involved the support of a variety of items such as conventional weapons, vehicles, Sergeant, Pershing, and Hawk.

International logistic management activities were substantially expanded during the fiscal year. Within those management improvements initiated in prior fiscal years, Department of the Army objectives were established on a progressive basis which would further strengthen the management and overview of each area.

In response to numerous requests from Military Assistance Advisory Groups and foreign country representatives, named-ship manifests were developed which would provide specific detailed information of the materiel loaded on each ship, for which the recipient country would then plan for offloading and receipt. This manifest is provided for grant aid recipients and select sales countries. It is airmailed immediately following the loading of each vessel, and has proven to be a most useful tool.

Time frames were established for international logistic billing actions in previous fiscal years. During this fiscal year, intense management in this area resulted in marked improvements; bills were being processed within the appropriate period. Army operating and capital accounts were thus receiving reimbursement on a timely basis.

Support to foreign countries improved during the fiscal year, and extensive progress was made by all national inventory control points. The support of international logistics was accorded a high priority, and performance improved accordingly. A program of tight control was initiated and the fill rate improved. Concurrent with the increased fill rate there was a reduction in back orders. A system of control and validation was established for both major items and repair parts, which will insure continued high performance.

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