Department of the Army Historical Summary: FY 1977

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Logistics

The annual process of fixing military force goals and of allocating funds to attain them is an exercise in statecraft. The Department of the Army joins the Secretary of Defense, the President, and the Congress in yearly deliberations that affect the strength and security of the nation. Negotiations are conducted within the framework of change that is habitual in a world of shifting military, economic, and political conditions. Synchronizing competing demands and reaching reasonable divisions of resources calls for a high order of statesmanship at all levels. In service terms, the Army's continuity is fixed in that annual procedure; it is the process that takes the Army from where it has been to where it is going.

In developing the 1977 fiscal year budget, the Army recognized that the long-term strength of the United States depended upon the vigor of the economy as well as the strength of the defense establishment. Army planning and expectations were adjusted to budget constraints, and four considerations were influential in the preparation of the 1977 package: readiness, balance, stability, and quality.

As these terms were applied, readiness was interpreted as sufficient quantities of select equipment in the hands of trained soldiers led by experienced leaders and backed by a production base capable of providing additional supplies and equipment required for training, mobilization, and combat; balance, as the proper mix of men and equipment in the force structure and the resources to support them both today and tomorrow; stability, as a uniform growth in appropriations for manpower and resources that would make it possible to shape the force, set meaningful goals, and measure progress while compensating for inflation and obsolescence; and quality, as a standard that would allow mission performance and help compensate for a potential enemy's quantitative superiority.

Logistical considerations, by definition, ran through all four areas, for logistics continued to be, in the broad sense, those aspects of military operation that deal with the design, development, acquisition, storage, movement, distribution, maintenance, evacuation, and disposition of materiel; the movement, evacuation, and hospitalization of personnel; the acquisition or construction, maintenance, operation, and disposition of facilities; and the acquisition or provision of services.

The way in which the Army carries out the overall logistical function has changed in recent years. Modifications in staff and major command organization have shifted functional responsibilities; the Office of

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the Deputy Chief of Staff for Logistics has moved from an operating to a management role, while operating functions have been taken over by the Materiel Development and Readiness Command. The Deputy Chief of Staff for Logistics has responsibility that includes policies, plans, programs, doctrine, and standards. The Deputy Chief of Staff for Research, Development, and Acquisition has responsibility for research, development, test, and evaluation, and for the planning, programming, and budgeting for the acquisition of materiel of the five Army procurement appropriations. The U.S. Army Materiel Development and Readiness Command is responsible for the research and development of Army materiel, its procurement, and its logistics support after it is in the hands of troops-a mission it carries out through subordinate functional commands.

The logistical function in fiscal year 1977 proceeded within the framework of a total Army budget of $26.8 billion, a personnel strength just under 782,000, and a major unit structure of twenty-four divisions. Once again the Army's appropriation represented about six percent of the federal budget and about twenty-four percent of the Department of Defense budget. In presenting the Army's 1977 funding request to Congress, Secretary of the Army Martin R. Hoffmann noted that "the costs of national security, and the Army's share of those costs, cannot be appropriately measured as any static proportion of, or in any set ratio against, the costs of other domestic programs. The only real yardstick must be the security of our nation itself. There are no quick and ready answers to the question of how much is enough."

Outlays for logistics centered in the Operation and Maintenance, Procurement, Military Construction, and Army Stock Fund categories of the budget. The largest increase in the 1977 request was in procurement and was intended to narrow the gap between the Army and Soviet forces in almost every category of major land forces equipment. A central objective was to secure and maintain materiel for the 24-division force, including full combat equipment and replacement and support stocks. To obtain real program growth in an inflationary period, the Army emphasized improvements in existing models as well as the acquisition of new materiel. During the year that combination of procurement and modernization was applied in all categories: close combat, fire support, air defense, other combat support, command systems, combat service support, and intelligence-surveillance-target systems.

Logistics Readiness, Planning, and Management

The Army annually assesses logistical as well as operational readiness. In 1977 total force requirements developed under Army analytical procedures were used to assess the readiness of the logistical community to support combat operations under a North Atlantic Treaty Organization

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scenario. The Army examined requirements versus assets and addressed all classes of supply, logistical personnel, the industrial base, and logistical planning factors. In the latter area, the Army continued to develop and validate resupply, personnel, and supply origin data, and it provided material for the 1978 Joint Strategic Capabilities Plan. A joint logistical posture assessment was conducted to appraise the total U.S. support capability, and initial moves were taken to synchronize the Logistics System Master Plan with a new publication on total Army goals.

In personnel and training, a committee was established at the departmental level to review logistic officer specialties, and division support commands were brought under the Logistics Board in the Centralized Command Selection System. Training with industry was expanded with the addition of the Atlantic and Pacific Tea Company, Boeing Vertol, McDonnell Douglas, Pacific Intermountain Express, and the Association of American Railroads as participating organizations. An active advertising campaign sought to interest enlisted members in the Noncommissioned Officer Logistics Program, and the Army distributed new training materials. In civilian career management, attention centered upon efforts to delineate responsibilities of functional chiefs and the Civilian Career Management Agency in light of departmental staff reductions.

Standard data elements are used in new systems and reports in most military functional areas, and standardization is a major concern of all functional agencies. The Materiel Development and Readiness Command, the executive agent for the Office of the Deputy Chief of Staff for Logistics in the Logistic Data Element Standardization Management Program, participated with the Army Logistics Center in reviewing 1,137 data elements between March 1976 and September 1977. In that period 33 items or elements were approved for standardization. Actions to improve the data elements in the Army Master Data File continued concurrently; each major installation was furnished a magnetic tape copy of the file each month, and a microfiche edition was distributed to users not equipped with automated data processing facilities.

For many years the Army has supported other military services and federal agencies, often without reimbursement and often when the Army was not the main user of the support. In the western Pacific, for example, the Army, with only twenty-six percent of the military population, provided ninety-three percent of the support. To correct that imbalance the Army in October 1976 began to transfer twenty-four functions to the other services in Japan and Okinawa, along with 1,200 foreign civilians and 500 military personnel.

In addition to correcting those imbalances, the Army moved to rectify supply deficiencies, especially in prepositioned stocks that had been drawn upon during the Vietnam and Arab-Israeli Wars. To make up overseas shortages in unit sets of prepositioned stocks, the Army withdrew or

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diverted supplies and equipment from continental-based units and from the reserve components as well.

A study of operations in Europe found voids in current concepts, policy, doctrine, and planning as they concerned supply, maintenance, and transportation, particularly in logistical organizations between the corps rear boundary and the ports and beaches-the area identified as the communications zone. The study, conducted in the current year, developed the doctrinal relationship between combat service support units in the communications zone and corps areas and wholesale and allied forces logistic systems. Working from the premise that wartime procedures should not be constrained by peacetime posture, the study addressed the size and composition of both the corps and communications zone general support base, theater war reserves, the role of the wholesale logistic system in the wartime theater, the theater commander's role in a multinational environment, and host nation support. Study results have been consolidated into twenty-two concepts which form the basis for detailed logistic policy and doctrine development.

The Inspector General of the Army and the Army Audit Agency conducted a special inquiry into property accountability during a four-month period in mid-1977 in response to high level concern over losses in Army units. The Inspector General's survey covered selected installations in the United States, Europe, and Korea, and included a 100 percent inventory of clothing, equipment, and tools in 118 representative company-size units. The Army Audit Agency audited records at fifteen installations in the United States and four division-size units overseas; the installations and units were representative of 93 percent of the active Army, and the audits were conducted at locations at which 50 percent of the personnel of the commands were stationed. The approximate value of the equipment in the inspected commands was $12.5 billion, and the shortages discovered when extrapolated for troop units of the entire Army, amounted to $118.5 million.

The inspection and audit disclosed both excesses and shortages of government property and indicated a need for increased involvement and training at all levels; improved security of property; simplification of supply accountability, policies, methods, and publications; and improved management. The subject was placed on the agenda of the Army Commanders' Conference schedule for the first week of October 1977, and the Army Chief of Staff directed that a property accountability task force be formed to review policies and procedures and recommend changes to correct deficiencies revealed by the inspection.

Logistic Systems

The size, complexity, and dispersion of modern military forces require maximum use of new technology if the forces are to be managed

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effectively. The Army has a variety of logistical management systems in various stages of operation and development. Although progress in any one system in any one year may appear to be less than dramatic, a gradual evolution occurs, and military efficiency and effectiveness improve steadily. Examples of systems in which technical advances continued during 1977 are the Standard Army Ammunition System, which provides integrated supply and maintenance management for conventional ammunition, guided missiles, and large rockets; the Standard Army Maintenance System, which deals with the life-cycle management of materiel; the Direct Support Unit Standard Supply System that is replacing two other systems for nondivisional and division-brigade support; the Standard Property Book System, which centralizes property book accounting; the Standard Army Intermediate Level Supply Subsystem, which aims at a single intermediate system Army-wide; and the Wartime Standard Support System for Foreign Armed Forces, which is being developed to provide more responsive materiel support to friendly foreign nations during wartime.

Materiel Development and Readiness Command's (DARCOM) Five-Year Automated Data Processing Program covers logistical operations of the subordinate DARCOM readiness commands, research and development commands, depots, and the International Logistics Command. With the adoption of the Commodity Command Standard System by the Tank Automotive Command in January 1977, all readiness commands were operating on a standard automated system. The System-wide Project for Electronic Equipment at Depots implemented the Department of Defense Maintenance and Cost Accounting System and fully automated Army industrial fund functions. At the International Logistics Command, the Centralized Integrated System for International Logistics became fully operational for automated logistics and financial management. Automated coordination was also achieved with the Security Assistance Accounting Center, which bills international logistic customers.

The Total Army Equipment Distribution Program seeks to relate projections of equipment distribution to current budgets and programs. The Department of Defense asked that the projections be related to time periods included in regular submissions of Army Program Objective Memoranda. The initial version was keyed to objectives for 1978 through 1982. Subsequent submissions are being used to establish a comprehensive equipment authorization and priority system that will introduce discipline into force planning, acquisition, distribution, and support.

Materiel Maintenance

Operation and maintenance take about a third of the total Army budget, including funds for such categories as individual and unit training, civilian pay and benefits, operating stocks, medical care, and facilities

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maintenance. One of the largest elements of the appropriation is materiel maintenance.

A total of $852 million was allocated for depot maintenance and support in fiscal year 1977, including $608 million for overhaul of unserviceable equipment, $11 million for technical, administrative, and new equipment training, and $233 million for maintenance support. Depot maintenance installations in Germany were assigned to the Materiel Development and Readiness Command, making that organization responsible for depot maintenance worldwide. Stabilized rates were introduced during the period, and customers are charged fixed prices for depot maintenance over a given period of operation, freeing the user from fluctuations in costs.

During 1977 the backlog of unfinanced maintenance and repair work shrank somewhat. The 1976 dollar value of the backlog, $1.19 billion, was reduced by 30 September 1977 to $1.14 billion, largely as a result of closer management of the program rather than increased funding.

To improve the readiness and capacity for sustained operations of combat forces, alternative concepts of logistic support at the direct and general support levels were developed and evaluated during the year. Those concepts included a forward orientation for weapon system support, integration of battlefield cannibalization with maintenance and supply, development of well-defined technical channels, and ways to mass and shift critical resources with the tide of battle. Testing took place in the last half of the fiscal year, with adoption expected to follow.

The Army has capitalized on experience gained in Vietnam by reducing the echelons of aviation maintenance from five to three: unit maintenance which gives company and troop commanders a direct support capability; intermediate maintenance which consolidates direct and general support for the division and army areas; and depot maintenance which continues generally along traditional lines, but includes some additional component repair and airframe overhauling. By the close of the fiscal year, the three-level concept had been instituted in Europe and South Korea. Full transition is to be completed by October 1979.

As phased maintenance was being improved and three-level maintenance was being introduced, a so-called on-condition .maintenance program was under development. Under its procedures, aircraft were to be inspected and evaluated annually by technical teams that establish condition profiles, fleet, condition, and maintenance schedules for depot overhaul on a "worst-first" basis. Army aircraft overhaul cycles have been progressively extended from five to eight years.

Supply Management and Depot Operations

Much of the materiel that flows through the Army depot system is financed by the Army Stock Fund, a revolving fund that finances in-

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ventories of supplies and other stores and provides working capital for industrial-type activities. The fund is replenished through annual appropriations in the Army budget. The fiscal year 1977 allocation was $100 million. Stock Fund obligation for the year totaled $3.9 billion in support of $3.9 billion in net sales. The Army was authorized to obligate $314.5 million of the procurement appropriation for secondary items ($234.9 million in direct Army expenditures and $79.6 million in reimbursable funds), as opposed to a $304 million obligation in 1976. Parts and assemblies returned by users for fiscal year 1977 were valued at $624 million, fifteen percent above the forecast.

The moratorium on the turn-in to property disposal officers of excess items owned by the Army but managed by the General Services Administration or the Defense Logistics Agency, initiated in December 1975, was continued through fiscal year 1977. Procedures were developed under which some of that property was returned to Army depots to satisfy requisitions. At the same time, the shipment of certain stocks from Defense Logistics Agency sources to the New Cumberland Army Depot in Pennsylvania to improve supply to Army and Air Force elements in Europe was completed on schedule in February 1977. The New Cumberland Depot also served as the base installation in a test of air delivery of repair parts from the United States directly to support units in an overseas theater. Repair parts were palletized at New Cumberland, moved by commercial truck to Dover Air Force Base in Delaware, flown to Rhein-Main and Ramstein air bases in Germany by the Military Airlift Command, and delivered by military truck to eighty-eight support units of U.S. Army, Europe. Over 1,700 short tons were shipped monthly with a fifty percent reduction in order-ship time and a general improvement in equipment serviceability.

Transportation

Army transportation involves all modes of travel, all types of conveyances, and all categories of cargo under all kinds of circumstances. In the year just concluded, the Army participated in economic analyses for developing a Defense Intransit Item Visibility System and a Transportation Operational Personal Property Standard System. Various subsystems of the Terminal Operations and Movements Management System were improved, and the Army participated in the Military Traffic Management Command's test of the Carrier Evaluation and Reporting System.

In air transportation the success of the six-month test which allowed the military services to deal directly with the Military Airlift Command Passenger Reservation Center led to the extension of that procedure to all continental U.S. installations during the fiscal year. Responsibility for validating special assignment airlift missions was transferred from Headquarters, Department of the Army, to the Military Traffic Management Command (MTMC) on 1 April 1977, and the administrative airlift

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validation function was transferred from- the Office of the Deputy Chief of Staff for Logistics to the U.S. Army Service Center for the Armed Forces on 30 September.

In coordination with the military services, MTMC began to evaluate a competitive rate filing system for the movement of household goods between the United States and overseas to replace a noncompetitive rate equalization procedure. Its success in shipments to Okinawa led to its expansion to shipments for Germany starting on 1 November 1976. Cost avoidance for the 1977 fiscal year was projected to be $20 million for the Department of Defense and $7.7 million for the Army. The year also saw full implementation of the Do-It-Yourself moving program under which personnel are furnished a monetary incentive in lieu of transportation by a conventional household goods mover, if they move themselves by rental vehicle. Over 5,000 individuals participated, incentive payments totaled $1.2 million, and the government saved an estimated $700,000.

A stevedore strike delayed MTMC assumption of Army water terminal operations on Okinawa from November 1976 to the end of fiscal year 1977; a survey of those operations was conducted at Yokohama, Japan, where transfer to MTMC was scheduled for January 1978. Meanwhile, plans to relocate watercraft within the Pacific region were dropped, while repair of two De Long piers earmarked for Europe proceeded on schedule; both will be moved during the coming year. Watercraft and terminal unit requirements were reviewed in 1977, and a structure to support a corps with a worldwide contingency mission was developed, to ensure an over-the-beach logistic capability. The Army also sponsored an analysis' by the Concepts Analysis Agency to assist in verifying the levels of prepositioned war reserves of ammunition.

The Army revised its regulations relating to the maintenance of military-owned containers. A General Accounting Office report had emphasized the need to publish a comprehensive container system development plan. A bill proposed in the House of Representatives would establish uniform requirements for intermodal cargo containers moving in international trade. It would require periodic inspections, coding, marking, and registering of DOD-owned containers.

Facilities and Construction

In fiscal year 1977 the Army requested $1.2 billion for the fiscal year 19'78 military construction program and received $1.1 billion in total obligational authority, including $500 million for the production base, and a supplemental appropriation. The soldier-oriented request included improvements in bachelor housing and dining and medical facilities; construction of medical stations for new divisions; improvement in pollution abatement, energy conservation, nuclear weapons security, and the industrial base; and real estate acquisition.

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The following chart shows the Army's military construction projections for the five-year Defense program as reflected in the fiscal year 1978-83 program objective memorandum submission (in millions of dollars).

a New TOA approved by Congress.

The government-commercial production base must be maintained during peacetime if it is to meet wartime requirements. Although current requirements and foreign military sales keep production lines active to a degree, construction and modernization of facilities are long-range needs. During fiscal year 1977 almost $84 million in modernization projects was placed under contract while construction was completed on projects of equal value. Design work continued on projects with a value of about $425 million.

Design guides were begun for maintenance facilities, dependent youth activities centers, and music and drama centers, augmenting a dozen already completed for various other facilities. These guides provide criteria to aid planning, design, and modernization of facilities. Also during the year, a computer-aided architectural design review system was tested in the Norfolk Engineer District, one that promises to provide more timely and complete reviews of architectural concepts than had been possible with existing manual methods.

In other design developments, a commercial contract was let to revise the manual used for the design of health care facilities, a report on design data for construction in Alaska was adopted, and new criteria for making facilities accessible to and usable by the physically handicapped were evaluated.

Peacetime and wartime fluctuations have affected the number, size, location, and population of installations, and in recent times the cost of maintaining and operating them has led to substantial realignments, consolidations, and reductions. The Department of Defense base structure consists of some 440 major bases and over 3,700 other properties in the United States supporting 2.3 million Defense personnel. These installations and properties consist of 25.6 million acres of land and improvements acquired at a cost of over $36.1 billion. Since 1969 over 2,700 base realignments in the United States have reduced annual costs by over $4.3 billion, and 336 installations and properties, including 80 major bases, have been closed. A long-range study begun in July 1976 identified major bases that will probably be required in 1996 and beyond and set the general standards for base development over the long term.

The Federal Property Council was revamped by executive order on 7 January 1977. As reconstituted, it consists of the Director of the Office

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of Management and Budget (chairman), the Chairman of the Council of Economic Advisors, the Chairman of the Council of Environmental Quality, and such other members as the President may specify from time to time. The order provides for the General Services Administration to issue standards and procedures and to continue to survey and identify excess federal property and to report to the council on the utilization of federal properties. That agency surveyed twenty-six Army-controlled properties from July 1976 through June 1977 and recommended that 1,289 acres of land be declared excess at Camp Bullis, Texas (425 acres); Kansas Army Ammunition Plant (557 acres); Camp Sherman Rifle Range, Ohio (260 acres); and other sites (47 acres). The Army agreed to declare as excess only 12 acres at the Defense Mapping site, Herndon, Virginia.

The Corps of Engineers continued to acquire land for the Army and for civil works. Approximately 1,050 acres with improvements were acquired for about $6.7 million to expand clear zones at twenty-one Air Force bases. Land was also purchased for the Energy Research and Development Administration, the Federal Energy Administration, and the National Park Service. Three of six sites to be used eventually for underground oil storage were acquired. The Corps of Engineers expended $4.1 million in relocation assistance to 958 applicants displaced by corps projects during the fiscal year.

The Department of the Army controls approximately 12.6 million acres of land which, with improvements, cost over $13.2 billion. In the twelve-month period from July 1976 through June 1977, the General Services Administration disposed of 3,894 acres of Army land and improvements in the United States, with an acquisition cost of over $33 million. Another 99,077 acres with improvements and with an acquisition cost of $218.3 million were reported excess. On 30 June 1977 the government was receiving $11.9 million in annual rental on 36,500 parcels comprising over 7 million acres of land.

The Department of Defense directed the services to study the feasibility of consolidated interservice maintenance of real property at military installations within thirty-five miles of designated locations. They Army is directing studies for Northern Oahu, Hawaii; Fayetteville, North Carolina; Tacoma, Washington; Fort Dix, New ,Jersey; and the Panama Canal Zone. During the period of this report the Army developed a plan to consolidate Wheeler Air Force Base and all Army installations on Oahu under the U.S. Army Support Command, Hawaii. Meanwhile the Army Construction Engineering Research Laboratory completed a cost analysis and feasibility study of consolidating Pope Air Force Base and Fort Bragg in North Carolina. Planning by the Air Force also began for a major consolidation in the San Antonio, Texas, area, which will include Fort Sam Houston.

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Although funds allow a reasonable level of real property maintenance and may permit a minor reduction in the large maintenance and repair backlog, the personnel picture does not appear bright. New sophisticated facilities are being completed each year with a consequent heavy call upon maintenance and management staff. Thus a study was launched of operation and maintenance under the Army's Real Property Management System, with one phase to be done within the Army to define ways of improving production and efficiency, and a second phase to be done by outside consultants looking at new organizational and management alignments.

The integrated Facilities System, a management information subsystem encompassing the life-cycle management of real property, was extended to twenty-five installations in 1977. It has proved of considerable value in improving productivity and highlighting deficiencies in management that are being corrected as the system is extended and expanded.

The Corps of Engineers in coordination with the General Services Administration continued the recruiting facilities program, establishing new offices and relocating, expanding, or upgrading existing ones. At the close of the year approximately 6,000 recruiting offices were supporting the four military services.

Health facilities projects in progress at the end of the fiscal year included four new hospitals, five hospital additions and alterations, three hospital electrical and mechanical upgrades, ten dental clinics and a regional dental facility, and two health clinics, with total costs of $357.9 million. Authorized and pending construction were a new hospital, two hospital alterations, two hospital electrical and mechanical upgrades, four dental clinics, and three health clinics with a total value of $98.1 million. Eight medical construction projects were included in the 1978 program submitted in fiscal year 1977. Among major medical construction projects, the 760-bed Eisenhower Army Medical Center at Fort Gordon, Georgia, was completed in May 1977, and the 1,280-bed Walter Reed Army Medical Center in Washington, D.C., was almost completed at year's end.

The sharp increase in construction costs, highlighted in Army presentations to Congress, led Army officials to invite several proprietary hospital corporations and other knowledgeable parties to testify on procedures, costs, and methods for new hospital construction. The Department of Defense was directed to study hospital design and construction in the light of information derived from the hearings.

In medical logistics, procedures for designating significant items for unit readiness reporting were being revised during the year, and a revised table of equipment for the medical supply, optical, and maintenance unit was issued. Storage techniques and facilities were also being studied

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to permit decentralized prepositioning of nondeteriorating components of medical packages. Modernization funds were distributed to major medical commands to support their capital investment programs, and additional components of the Medical Unit, Self-Contained, Transportable (MUST) category were issued to sixteen combat support hospitals and one evacuation hospital in the United States and Europe. MUST equipment for training was issued to six REFORGER combat support hospitals in the continental United States, six combat support hospitals and five evacuation hospitals in the Army Reserve, and six combat support hospitals and two evacuation hospitals in the Army National Guard.

As the construction agent for other Defense Department elements, the Army awarded $657 million in 1977 for U.S. Air Force designs and construction, including an Aeropropulsion Systems Test Facility at the Arnold Engineering and Development Center in Tullahoma, Tennessee. Three contracts were awarded for U.S. Coast Guard long-range navigation stations, and design and construction projects for the U.S. Navy totaled $23 million. A number of projects were also handled for the Defense Nuclear Agency, the Defense Logistics Agency, and the Defense Mapping Agency.

Other government agencies also received Army construction assistance through the Corps of Engineers. In the energy field the Corps supported the Energy Research and Development Administration's Fossil Energy Demonstration Plant Program for experimentation with the chemical conversion of high sulfur coal into clean liquid or gaseous fuels. Contracts were issued for the development of two pipeline-gas demonstration plants; the government will fund the design and join an industrial partner in construction and demonstration. The Army also completed construction for the U.S. Postal Service during the year, closing ten projects and holding fifteen contracts open for the settlement of claims.

Construction for foreign governments continued in 1977. Saudi Arabia received a wide range of support services. Under bilateral arrangements the Army provided engineering, construction, and training support for Saudi Ministry of Defense and aviation projects, the Saudi naval expansion program, the Saudi Arabian National Guard modernization program, and the Saudi ordnance corps program. These programs included housing, facilities for storage and port operation, medical care maintenance and training, water supply systems, and road construction.

The Corps of Engineers completed designs for a Central Supply and Maintenance Complex to support the improved Hawk Missile System program in Kuwait, and the Army continued negotiations with Jordan for the construction of an armor rebuilding facility. The Engineers also completed design and continued construction contract work on a number of facilities for Iran.

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In the area of facilities security, military police began training dog teams in explosives detection in July 1976. Units were allowed to convert patrol dog teams to patrol explosive detection teams. Over thirty of these teams had been formed throughout the Army by the end of fiscal year 1977.

Security Assistance

Security assistance seeks to reinforce national security and foreign policy objectives by selectively providing allied and friendly foreign nations with military materiel and services. It also creates employment in the United States, helps maintain the production base for military equipment, reduces unit costs through volume production, and reduces the American balance of payments deficit. Specific restrictions on use and transfer by recipient nations helps ensure that equipment is used as Congress intended.

The Army-administered portion of the Security Assistance Program since its inception in 1950 has been $26.3 billion. In the early years much of the assistance was in outright grants; in recent years most of it has been in the form of foreign military sales. Grant aid declined from a 1973 level of $2.8 billion (including service-funded support to Vietnam) to about $150 million in 1977, and foreign military sales dropped from a 1974 peak of $4.2 billion to approximately $2.61 billion in fiscal year 1977. Arms control policies announced by President Carter in May 1977 and embodied in the International Security Assistance and Arms Export Control Act of 1977 limit the spread of advanced weapons and restrict the export of sophisticated technology, except to NATO countries, Japan, Australia, and New Zealand. The act listed countries entitled to receive grant aid, prohibited grant aid and military sales to nations that engage in activities inimical to U.S. interests, and placed certain controls upon U.S. military personnel overseas who manage security assistance.

Under the 1977 act, eight countries were authorized continuing grant aid in fiscal year 1978: Greece, Indonesia, Jordan, the Philippines, Portugal, Spain, Thailand, and Turkey; however, the Turkish program remained suspended. Instructions were issued to terminate grant aid to all other countries by 30 September 1977.

In Europe the Federal Republic of Germany has been a major purchaser of American military equipment, and grant aid has given Portugal the weapons and equipment for a NATO committed infantry brigade. In the Mediterranean, despite interruptions resulting from differences over Cyprus, Turkey and Greece have been major recipients. The Middle East continues to be heavily involved with large programs for Iran, Israel, and Saudi Arabia. Assistance to African nations included active programs for Morocco, Tunisia, and Zaire. A long-standing rela-

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tionship with Ethiopia ended with the U.S. withdrawal from that country, however.

Assistance was reduced in several parts of Latin America because a number of countries would not accept U.S. human rights initiatives. In the Far East agreement was reached for Thailand to purchase ammunition stored there last year by departing American military forces.

In foreign military sales the Army in fiscal year 1977 handled 7,108 orders, each requiring logistic or fiscal action. Highlights of foreign sales during the period appear in the following tabulation (in millions of dollars)

Foreign customers require spare parts, tools, technical publications, and training concurrently with their equipment. In meeting such needs, the United States must guard against adverse effects on Army readiness. Customer countries therefore furnish funds in advance to prime the U.S. supply pipeline for spare parts needed later; afterwards they receive timely supply support without a detrimental effect upon U.S. operating levels.

The Army also participates in coproduction programs, approved by the State and Defense Departments, for foreign manufacture or assembly of U.S. defense materiel. In fiscal year 1977 the cumulative value of pending, active, and completed coproduction programs amounted to $3.5 billion, of which about $1.8 billion would be spent in the American economy. Nineteen active projects were under way with a value of $2.1 billion. Countries engaged with the United States in these projects were Italy, Japan, the Netherlands, the Republic of China, the Philippines, South Korea, Turkey, and the NATO Maintenance and Supply Agency. Germany, Iran, Japan, Norway, Switzerland, and the United Kingdom were actively considering coproduction agreements with an estimated value of $2.5 billion.

Materiel produced in such coproduction included small arms, howitzers, armored personnel carriers, antitank rockets, air defense missiles, Nike and Hawk air defense systems, UH-1H helicopters and associated 2.75-inch rockets, radars, tactical radios, ammunition, and production facilities. The programs have bolstered national pride and self-reliance and strengthened the industrial and defense capabilities of America's allies and friends.

Self-financed visits to the United States by officials of countries concerned with security assistance increased nearly threefold in 1977, while security assistance visits by American representatives to participating nations continued essentially unchanged. Foreign visitors came from

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Argentina, Canada, Ecuador, Germany, Iran, Israel, Italy, Japan, Jordan, South Korea, Kuwait, Lebanon, Pakistan, Peru, Portugal, Saudi Arabia, Senegal, Spain, Sudan, Switzerland, Taiwan, and Tunisia. U.S. representatives, meanwhile, visited Belgium, Germany, Iran, Italy, Japan, Jordan, Kuwait, Luxembourg, Panama, the Philippines, Portugal, Saudi Arabia, Singapore, South Korea, Spain, Thailand, Turkey, and the United Kingdom. The visits improve communications between the United States and its allies and friendly nations, and tend to develop foreign interest in American culture and foster pro-American attitudes.

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