Accounting for the Conflict


Most, if not all, governmental accounting systems concentrate on fund control, almost to the exclusion of accounting for managerial purposes. The system used by the U.S. Army focuses on fund control and aims at reporting to Congress how appropriated funds are spent. Congress has persistently displayed a keen interest in financial operations and seldom has relinquished tight controls or the need to account for funds. It would be untenable to question the interest of Congress when the 1969 fiscal year defense budget for support of Southeast Asia reached $29 billion. Given that the Army was charged with maintaining an accounting system designed, primarily, to function in a stable, peacetime environment, how was the task to be accomplished in a wartime atmosphere?

Accounting systems rely basically on capturing data closest to the point of origin and as soon as it is available. The fact that most of the information was generated in a tactical environment by nonadministrative oriented personnel presented a perplexing problem. The Army Chief of Staff established the policy, early in the conflict, that the Army in Vietnam would be relieved of as many administrative responsibilities as possible. This decision established a sizable roadblock and interfered with a basic accounting principle. It meant information would somehow have to flow to a remote accounting operation through a pipeline using minimum staffing.

Army financial planners began a search around late 1964 for alternatives as to where to locate the accounting operation and how to collect data. Basically there were two alternatives: to locate somewhere in the continental U.S. or to locate somewhere in the Pacific. Proximity to the theater of operations weighed heavily in favor of a Pacific site. Okinawa appeared to be an excellent choice as the logistical system was centered on that island outpost. Furthermore, some accounting was being done for the Military Assistance Advisory Group in Vietnam although the funds were allotted to the Military Assistance Program and transactions mainly involved reimbursement to the operation and maintenance, Army, allocation. Hawaii too was considered but decided against, although resources existed and several accounting operations were in being.


Once a site was selected, the job of setting up a collection system loomed high on the horizon. There were too few members of finance units in Vietnam. The units further had been designed to be more capable of paying the troops and selling piasters than of operating an accounting system. Comptroller staffs were almost nonexistent or constrained by size. The logistics system was primitive and lacked centralized control. Initial troop deployments correctly concentrated on combat units to the exclusion of support troops. It was to be a while before the support elements caught up with the volume of the war. With all these hurdles, the necessity for reporting to Congress prodded the Army into developing a workable system. In the end, Okinawa was chosen because it combined proximity with availability of data. The latter, it was decided, could be generated as a by-product of the supply system. Since logistics consumed most of the Army operations and maintenance funds, the planners believed the residual expenditures could be accounted for with minimal effort.

The Early Days

Thus, Okinawa was chosen, and accounting for Vietnam expenditures appeared imminent. In a normal situation, the operation and maintenance funds for the Army flow from Congress through the Department of Defense, the Department of Army, special operating agencies, and regular operating agencies to the final place where they are obligated. Okinawa had an operating agency, so again it appeared a good choice. The operating agency, it should be noted, is just an administrative activity which consolidates reports and channels funds. The major difference with Vietnam is that it did not receive the normal "allotment of funds" as would a stateside installation. This would involve more sophisticated accounting and budgeting in-country than allowed by Department of Army policy. Thus, the normal chain was broken at its bottom link.

Constrained by this departmental policy, an alternative vehicle to the allotment of funds was needed to inform the commanders in Vietnam of how much they could spend. This was not a unique problem. In numerous cases funds are required by an installation to finance a unit or activity which is absent from the installation. Therefore, several methods of funding or financing these absent activities have developed. One of the devices is an "Advice of Obligation Authority." This is a cumbersome document at best, chaos at worst. Let us digress for a brief explanation of the obligation authority. The home installation issues a Department of Army Form 14-114 to the installation where its absent activity is tempo-


rarily located. The authority is for a stated period and amount. Funds are normally spent for local procurement items required immediately and for items of a nonrecurring nature. The authority is usually limited to a thirty-day period from the date of issuance. The period may be extended to ninety days but normally no longer. A record of all obligations is maintained on the reverse side of the form. At the end of each month all supporting documents are forwarded to the issuing installation where the transactions are recorded in the formal accounting records. Almost immediately it was recognized that Okinawa would be inundated by the flood of fiscal papers flowing toward the island. Eventually, a high of over fifty million dollars was positioned in Vietnam under the obligation authority. This is not much money compared with what was eventually spent on the war, but the sum is significant when the number of documents supporting obligations for this amount is considered since an obligation authority is normally used for small, limited transactions.

To finance the supplies for Vietnam, it was decided that the stock fund would be used and reimbursed from the Army operation and maintenance allocation, using established Army procedures. The stock fund is a revolving or working capital fund and is one of the many types of funds used in the federal government. The basic concept of any revolving fund is that the capital of the fund theoretically remains constant since there are established procedures for adjusting the capital. At the time of initial capitalization, the fund is given an allocation of funds with the U.S. Treasury. The Army Stock Fund uses these funds to procure inventory for resale. Thus the stock fund is generally composed of funds with the Treasury and of inventory. When supplies are procured, there is an increase in the amount of inventory, but since payment must be made to the source of procurement, there is a corresponding decrease in funds with the Treasury. When a sale is consummated, there is a reduction in the amount of inventory; but since the customer must pay for the items received, there will be a corresponding increase in funds with the Treasury. Normally, supplies are purchased by the major command stock fund from Army Materiel Command and the Defense Supply Agency. These act as wholesalers and purchase the supplies from civilian producers. The command stock fund then retails or sells the supplies to the users and is reimbursed from the user's funds.

One requirement for an orderly interface, the common boundary of different organizations, is that the users must estimate, rather accurately, their needs for the fiscal year. This requirement suffered


from the impact of a 1965 memo from Secretary of Defense McNamara. At that time, Mr. McNamara said that unlimited appropriations were available to finance the U.S. involvement in Vietnam. This policy was reiterated later by the Secretary during a visit to Headquarters, Pacific Command. With a blank check, and no supply discipline to constrain requisitioners, forecasting was almost impossible. Compounding the problem was the lack of supply accounting. Many requisitions were probably submitted without an underlying requirement because no one knew what was available. The stock fund was never furnished accurate forecasts, and the supply requirements were overwhelming. Also, the troop level increased so rapidly that the financial procedures could not keep pace. Financial managers in the theater had no idea at what rate troop levels would accelerate or what the final base line would be.

Other procedures complicated a tenuous situation. "Push packages" prepared by the Army Materiel Command were being shipped automatically to Vietnam and Okinawa, and Army operation and maintenance funds were being charged. The push shipments were packaged by the various National Inventory Control Points and sent to Vietnam without processing requisitions. National Inventory Control Points are organizational elements of a wholesale stock fund assigned responsibility for integrated matériel inventory management of a group of items. The packages were assembled based on engineering estimates, experience gained from other theaters, and the end item density or the level of supplies needed for sustained operations. The logistical concept and rationale for push packages is probably sound but presented budgeting and accounting problems. For example, demand data were sometimes not recorded, so that the pipeline could be filled. In many cases, before the push package could be identified and supplied to the customer, he would have initiated requisitions, thereby inflating actual demands on the National Inventory Control Points in the continental United States.

Another technique devised was the "Stovepipe." This was a management technique designed to supply special types of equipment such as for missiles and helicopters. Requisitioners dealt directly with U.S. suppliers and by-passed all normal supply channels. Once again, the goal of expediting supplies was attained at the expense of financial management. This idea proliferated until there were over ten systems all submitting bills to Okinawa. These logistical solutions further degraded the accounting system's integrity and added to the problem of keeping the stock fund liquid. Additionally, shortages of qualified personnel and data processing machines combined to make accurate projections of stock fund


requirements impossible. Sales data were not recorded promptly nor accurately, thus delaying reimbursement. Cash availability became critical and at times the fund was illiquid. This was in violation of U.S. statutes which were later changed. Now (1972) cash must exceed accounts payable only at the home office or headquarters. This legislative change eased conditions somewhat. A complicating factor was that obligation authority was often insufficient to procure items from inventory because of poor forecasting and inaccurate supporting data. Chart 3 shows the financial environment in which Okinawa was operating. This can be compared with Chart 4 which shows a prototype financial network. In essence, just bringing all the fiscal paper together at Okinawa was a major problem. Processing the paper once it was received was hindered by limited automatic data processing equipment and numerous breakdowns of this equipment. The hectic planning and the failure to consider all aspects of the potential operation dealt the coup de grace. One of the most important aspects was the shortage of available personnel. Individuals capable of operating the system were in short supply and sufficient numbers could not be hired. Thus, a bad situation worsened from the start.

Confusion was not limited to Okinawa. Some Army supply activities used their own funds obtained from the Department of the Army; others requested funds from the U.S. Army, Pacific, to pay for issues to U.S. Army, Vietnam, or requested bills to be forwarded to Vietnam, Okinawa, Hawaii, and many separate offices in the United States for payment. It was not known if the issues should be billed to stock funds or consumer funds. Requests were received from many sources for funds to support U.S. Army, Vietnam, issues; these requests could not be refuted or verified. The result was that funds were widely dispersed; piecemeal funding actions became the rule; and the overall Vietnam budget, fund requirements, and responsibilities could not be established. Budgetary actions became so numerous that funding actions had to be handled on an emergency basis to meet the support requirements. Thus, a current status of funds in support of U.S. Army, Vietnam, could not be determined; requirements could not be identified or forecast; adequate controls could not be exercised to assure that the U.S. Army, Vietnam, supply support funds were actually being applied to this purpose; nor was it possible to "pin down" information with regard to total Vietnam support costs.

The situation needed change which was soon coming. During 1966, the Department of the Army completed a study of the U.S. Army, Pacific, logistic system in support of forces in Vietnam. This

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study was made under the direction of a steering committee composed of Dr. Robert A. Brooks, Assistant Secretary of the Army for Installations and Logistics; General Creighton W. Abrams, Vice Chief of Staff; Lieutenant General Lawrence J. Lincoln, Deputy Chief of Staff for Logistics; and Lieutenant General Ferdinand J. Chesarek, Comptroller of the Army. In addition to recommendations concerning realignment of the Army Pacific logistical system, the committee also recommended that the financial management functions for all support systems for Vietnam be centralized and performed by Headquarters, U.S. Army, Pacific, in Hawaii. There were to be several more important Department of Army studies, but none had the effect of the Brooks Study. Financial procedures for Vietnam assumed a new character.

Planning started in November 1966 under the direction of the Materiel Management Agency, an activity of the U.S. Army, Pacific, Deputy Chief of Staff for Logistics. After much planning, writing of computer programs, co-ordination, and correspondence, on 1 July 1967 centralized accounting started in Hawaii. In June 1968 the organization was renamed the Centralized Financial Management Agency and established as a separate table of distribution and allowances organization under the operational control of the Deputy Chief of Staff, Comptroller, Headquarters, U.S. Army, Pacific. To eliminate confusion, the term Centralized Financial Management Agency (CFMA) will be used for all time periods discussed.

In 1968 there were six major features of the computerized CFMA system. The first concerned the release of supply documents from Vietnam without financial restriction. Vietnam requisitioners were not constrained by fund limitations, but accounting for supplies was initiated.

The second feature, concerning the centralized obligation of funds on receipt of billing, discontinued the use of the stock fund for Vietnam requisitions. However, this meant consumer funds of the operation and maintenance appropriations had to finance depot and unit inventories. Another significant technical change was that funds were not obligated until a bill was received from the supplier. Normally, funds would have been obligated at the time a requisition is submitted. This change reduced the time consumer funds were tied up. When a requisition was received, it was edited and entered in the fund reservation file. A reservation was equivalent to a formal commitment which is an administrative earmarking of funds. When a matching bill was received from the supplier, the requisition resulted in an obligation which is a legal earmarking of funds.


The third feature concerned the forecast of fund requirements. Using priorities assigned to supply actions and statistical methods based on past experience, forecasts were made of fund requirements.

Fourth, regarding the centralized reimbursement billing function, all documentation for support furnished by the Army to other military departments or agencies on a reimbursable basis was funneled into CFMA for preparation of billings and receipt of collections. Inter-Service Support Agreements between the Army and other activities or customers were the basis for most billings and covered all appropriations whether military personnel, operations and maintenance, or procurement of equipment and missiles. (Chapter IV discusses reimbursements in detail.)

The fifth feature concerned budgeting and accounting outside the combat area. Except for in-country expenditure requirements, all budgeting and accounting functions were performed at Headquarters, U.S. Army, Pacific.

Finally, in regard to the daily status of funds, the master files for fund reservation, obligation, and disbursement were updated daily. This procedure kept records on a more current basis and related amounts obligated to the annual funding program.

These major features are a part of CFMA today (1972) and are discussed later; however, the second feature warrants additional comment at this point. Normally, requisitions submitted to the Army Materiel Command would result in an obligation of funds at the time of submission. This procedure caused difficulty for Vietnam because of the uncertainty in the supply system, extensive lags in receipt, or nondelivery of many items requisitioned. Thus, funds available would be reduced needlessly, and many obligations would never result in a bill. Therefore, the Department of Army decided in 1967 that a fund reservation would be established and the obligation would be recorded when the bill was received. This procedure has been challenged and discussed over the years. As late as 1971 approval of Headquarters, Department of Army, and Office of the Secretary of Defense was underscored, and it was noted that neither the General Accounting Office nor the Army Audit Agency had questioned the technique. While the procedure may appear to be a splitting of hairs, it was a most important deviation and an example of the will to bend when needed. More of this philosophy was required, however.

The scope of CFMA's mission can be appreciated when one considers the numerous support subsystems operating in Vietnam. In 1972, these included the following:


1. Milstrip (Normal supply system)
2. Army Marine maintenance activity
3. ARVN base depot supplies (Realigned Military Assistance Program)
4. Aircraft Materiel Management Center
5. Hawk parts
6. Commercial vehicle repair parts (Philco-Ford)
7. Special Services depot supplies
8. Armed Forces Radio and TV service supplies
9. Bulk petroleum, oils, and lubricants
10. Offshore local procurement (San Francisco Procurement Agency and Japan Procurement Agency)
11. GOER vehicle parts
12. Military Interdepartmental Purchase Requests and Intra-Army Orders (Out-of-country performance)
13. Non-standard repair parts depot (PA&E)
14. Supply directives /support lists
15. Milstrip requisitions placed with other services in Vietnam
16. Medical supplies
17. Red Ball Express/Red Ball Expanded

There were also in Vietnam almost 500 authorized requisitioners, submitting documents through numerous channels, who could introduce an action which could end up as an obligation. A major feature of CFMA was simplification of the funding network even though it placed more of the burden on one agency. In the 1968 fiscal year, only two allotments were issued as compared to fourteen in the 1967 fiscal year. (Chart 5) This chart should be compared with Chart 3. Headquarters, U.S. Army, Vietnam, received an allotment to pay for such items as local procurement, rental hire of local nationals, and pay for Department of Army civilians. CFMA received an allotment for all out-of-country requirements. Even with streamlining, there were many procedural routines for the diverse types of requisitions and customers. These variations complicated the administrative process and increased the probability for errors and the probability that documents would by-pass the system. Also during the 1968 fiscal year, to underscore the scope of CFMA, requisitions, bills, cancellations, and other support documents entered the centralized file at an average daily rate of almost $4.5 million.

Sophisticated procedures were still stymied by the fact that CFMA was tangential to the supply system. Reservation documents were received from the initiator or some intermediate agency, while

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actual fund obligation documents came from the billing by the supplier. In fiscal year 1968, 67 percent of the dollar value of requisitions (over $1.8 billion) were wiped off the records due to various actions, some because an obligation document was never received. Further, the fund reservation technique is designed to be used to earmark funds for later obligations; however, in fiscal year 1968, 67 percent (over $1 billion) of the total obligations were established without a matching fund reservation. These statistics certainly portray how hectic it was to budget and manage in an orderly manner. It also points out that CFMA was still not receiving all the documents necessary to account for the Vietnam conflict. The logisticians concentrated on providing information and documentation to the various supply organizations. As CFMA was not in the direct supply channels, it had difficulty in obtaining the required documents from the logistical operators. The agency was not idle. In April 1968 a series of messages went from the Department of Army to the Army Materiel Command, the Defense Supply Agency, and General Services Administration asking for help. The goal was to ascertain the validity of fund reservations in excess of $500 million which had not been billed. Magnetic tapes and punched cards were handcarried to CFMA to help reconcile the files as soon as possible. Also, computer routines were developed to identify which units requisitioned supplies but failed to send CFMA the necessary documents.

Establishment of the Logistic Control Office, Pacific, has greatly facilitated the chore of maintaining a current fund reservation file. This office informs the CFMA of the status of requisitions and controls "Redball" requisitions. The latter is a system designed to expedite certain items of supply. In 1969 the Department of Army instituted changes to place CFMA in the regular supply channels for status information. However, there was still no central control in Vietnam for requisitions-a problem that was to last several more years.

As mentioned, the Brooks study had the most significant impact on the financial network. However, a Department of Army task group which reviewed the financial management system in 1967 also had several major findings. The main thrust of the task force review is related to the reimbursement problem and is discussed in a separate chapter. Some of their findings are included at this point to highlight organizational weaknesses and staff philosophy which clouded an already confused picture.

A small fiscal accounting office staffed with two officers and eleven enlisted men had been operating as an integral part of the


U.S. Army, Vietnam, Comptroller organization. This office administered the in-country allotment of funds which was $500 million in 1966. The task force found that accounting for reimbursements was accomplished by this activity. The group saw no need for an expanded accounting capability merely for the reimbursement program. However, the group concluded that CFMA was an expedient until the U.S. Army, Vietnam, had a requirement to accomplish its own financial management. In 1967 the emphasis was on more staff systems accountants to provide managerial accounting assistance. The U.S. Army, Vietnam, had estimated that 400 additional personnel would be required to accomplish expanded responsibility for finance and accounting. These spaces would have had to be filled by military as recruiting of civilians was impossible.

The task group found further that inherent weaknesses in the Okinawa finance and accounting office were not properly evaluated when the decision to use Okinawa was made. The concurrent activation of the 2d Logistical Command received most of the command emphasis to the detriment of the financial requirement. The group further recommended placing CFMA under the Comptroller of the U.S. Army, Pacific, to provide a focal point for financial management rather than a sharing of responsibilities with the G-4.

During the Vietnam buildup, staff responsibility for accounting at the Pacific headquarters was under the budget and accounting staff officer. The emphasis was placed on the budget process and less effort on the accounting capability necessary to support the emerging situation. This organizational arrangement had a deleterious effect on an inherently worsening situation. In May 1967, the responsibility was transferred to the staff finance and accounting officer as in continental U.S. army headquarters and other major headquarters.

In More Recent Times

As time passed, CFMA changed and operating procedures evolved to present day methods. Many actions required long periods for modification because of the geographical dispersion and the subsequent multitude of commands. There are still today in 1972 significant operating problems, and it is unlikely they will soon abate as the withdrawal continues. Currently, an important issue is ensuring that only needed supplies, not available in Vietnam, are requisitioned and that stocks in Vietnam are exhausted. This issue is complicated by the fact that staff planners and field operators do not know the true withdrawal rate or schedule of units far enough in advance.


All problems aside, it would be beneficial to review the current mission, organization, and staffing of CFMA as it is at this time of writing in 1972. There are several key features of the mission that warrant mention, some of which were listed in the discussion of the earlier period. Today in 1972 the CFMA:

1. Operates under the operational control of the Deputy Chief of Staff, Comptroller, U.S. Army, Pacific, and acts as the fiscal agent for the Deputy Commanding General, U.S. Army, Vietnam. The agency receives the Approved Operating Budget for out-of-country funds, that is, the operations and maintenance fund and military personnel fund, in support of U.S. Forces, Republic of Vietnam Armed Forces, Free World Military Assistance Forces, and the U.S. Agency for International Development in Vietnam.
2. Formulates policies, plans, and procedures for the management and control of the operation and maintenance funds and the military personnel funds for Vietnam.
3. Maintains accounts to reflect current status of approved program and funds; issues statements of program and fund availability; records, reconciles, analyzes, and reports program and accounting transactions pertaining to Vietnam funds.
4. Performs the accounting and billing function for all supplies and services furnished by elements of the U.S. Army, Vietnam, to other Department of Defense services, other government agencies, commercial activities, and individuals on a reimbursable basis.
5. Prepares numerous cyclical and special reports on all financial aspects discussed above which are common to many finance and accounting offices plus reports unique to CFMA, provides analysis and interpretation of fund data.
6. Prepares periodic operation and maintenance budget estimates, for example, the Command Operating Budget and Budget Execution Review, with direct co-ordination with the U.S. Army, Vietnam; maintains records required to permit evaluation of progress toward program goals; initiates action to reprogram, as required, subsequent to periodic evaluations.
7. Computes and issues operation and maintenance requisition ceilings to the Commanding General, 2d Logistical Command, and the Deputy Commanding General, U.S. Army, Vietnam, while the 2d Logistical Command, located in Okinawa, handles certain classes of supply as well as matériel excesses in addition to military assistance items; reviews cyclical requisition ceiling status to ascertain its adequacy and initiates necessary changes—this important item is discussed more fully later.

Accomplishing the above is truly a major job and requires


liaison with numerous commands dispersed over a wide geographical area-from Southeast Asia to the continental United States. This is all done with only three officers and fifty-one civilians. Computer support is not organic and does reduce manpower requirements somewhat. Also, the actual disbursement is accomplished by another office. The organization in 1972 is shown in Chart 6. The elements accomplish actions indicated by their name, and a detailed listing of their functions is not necessary. The key point is the simplicity and orderly flow of data within CFMA. To laymen, CFMA can be compared to the accounting division of a finance and accounting office or the program and budget division of a comptroller office.

Earlier the financial environment was discussed along with the simplification of the funding network in fiscal year 1968. Chart 7 shows the 1972 financial environment and document flow between CFMA and activities providing information. Requisitioning channels are now (1972) more centralized and the sources of input to CFMA have been reduced from twenty to four. Concurrently, while the budget was around $1 billion in 1966-1967, it is now approximately $143 million for Program 2, U.S. Forces, and $278 million for Program 10, other nations. However, the workload has not decreased but increased. The difference is that the individual requisitions are for fewer numbers of an item; e.g., when 1,000 tires were on a requisition in 1966, there were probably 100 in 1971. Also, CFMA is acquiring more data than in earlier days and is getting more information from the supply sources. The Army Materiel Command alone published several letters on insuring documents reaching CFMA. As mentioned, this was a reversal of earlier policies when CFMA was excluded from direct channels by supply regulations. This is reflected in the decrease in "surprise bills." These are bills for which CFMA has no matching requisition in the fund reservation file. These amounted to $174.9 million or 25 percent of obligations in 1971. This compares to $1 billion or 67 percent in the 1968 fiscal year. For four months in the fiscal year 1972, the figure was $32.2 million or 14.3 percent. Fund reservation adjustments are also down to $492.7 million or 38 percent for fiscal year 197 1, and $58.3 million or 19 percent for four months of fiscal year 1972, as compared to $1.8 billion or 67 percent in fiscal year 1968. CFMA is also matching (in 1972) its tape files against those of the supply agencies in Vietnam to keep the fund reservation file more accurate. Most surprise bills are now the result of administrative procedures and not the failure to receive the necessary documents. Requisitions arriving after receipt of billing are the cause of most surprise billings.

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In early 1969, General Chesarek, then Assistant Vice Chief of Staff, headed a team to the Pacific headquarters in Hawaii, Okinawa, Japan, and Vietnam. One of the purposes was to examine Army operation and maintenance fund control. This marked a turning point away from the blank check philosophy to financial controls. However, General Chesarek reiterated the caveat that controls would not impair mission accomplishment. General Haines, the commanding general of the U.S. Army, Pacific, immediately dispatched a personal message to Lieutenant General Frank T. Mildren, Deputy Commanding General, U.S. Army, Vietnam, on the subject of "Improvements in Management of Logistic and Financial Resources." General Haines warned of severe financial constraints and reduced funding levels in the 1969 and 1970 fiscal years. He also emphasized the belief of the Bureau of the Budget and the Secretary of Defense that management and control techniques were needed. A staff paper written several weeks later recognized, as in the message, that significant actions had been taken. However, the fund reservation system was still plagued by problems and this was a key stumbling block to resource management. General Haines directed, among other things, that an objective be established to: "Apply financial management techniques at HQ USARV and at agencies authorized to requisition out-of-country that will instill financial responsibility through establishment of financial goals. These techniques should provide a framework within which supply action can be specifically related to and controlled by fund availability should such be required."

General Mildren soon replied: "USARV is applying all financial management techniques available to reduce the level of requisitioning to that considered minimum essential to combat operations; however, the support of the combat units is paramount and cannot be constricted by financial restraints which may interfere with successful mission accomplishment. Therefore, I would hope that an army in combat would never be limited by a financial goal."

The Pacific Army Command decided to proceed with financial guidelines and a 26 March 1969 letter to the Commanding General of U.S. Army, Vietnam, announced that "Program Dollar Goals" would be assigned. Assignment of such goals was not restrictive in the legal sense, as an allotment would be for example, but were to serve as a target against which performance or fund utilization could be measured. The system was also to be used to support budget and reprograming requests. Targets were issued for the first and second quarters of the 1970 fiscal year. The program was not successful and was dropped. There evidently were still too


many requisitioning points and no way to truly enforce the goals or discipline the system.

The financial planners never gave up. Effective 1 July 1971, a Requisition Ceiling Fund Control System (RCFCS) was implemented in Vietnam. This system was developed as a part of the Logistics Support System 1971 of the Pacific headquarters study to improve managerial control over the CFMA allotment of funds.

CFMA in 1972 computes and issues three ceilings: two to the commanding general of the 2d Logistical Command for the Army of the Republic of Vietnam Military Assistance Service Funded and Republic of Korea Overseas Replacement Training Command programs; and, one to the commanding general of U.S. Army, Vietnam, for out-of-country procurement of supplies and associated services. Chart 8 shows this distribution. All requisitions are processed through a routine against the appropriate ceiling. If the ceiling is reached, the requisition is suspended for management review. The ceiling can be exceeded for certain high priority requirements. Data are captured on magnetic tape and used for report purposes and to update the CFMA fund reservation file. The system appears to be working because of more centralized control and better reporting procedures.

The foregoing covers the major elements of CFMA and reflects its current procedures in 1972. More changes will be necessary to meet the challenges of the drawdown.

In Retrospect

Looking back, the Army had little choice but to account for the war using modified peacetime techniques. This may have been done more at the insistence of the Office of the Secretary of Defense than of Congress. The defense office was exercising caution and attempting to validate their budget requests and document the use of funds. Decisions made along the way seemed appropriate at the time albeit problems with Okinawa started almost immediately. If CFMA had been started earlier, better asset control and utilization may have occurred. I did take exception several times with the Office of the Secretary of Defense about imposing a peacetime accounting system on a combat environment. When one considers that many requirements were instituted after the buildup, it demonstrates that timing may be as critical as the system.

The establishment of CFMA was probably the best decision that the Department of Army made in the financial area. It must be remembered that CFMA was activated and designed for a specific purpose. It is better suited for emergency situations than normal or


sustained operations. Along these lines actions must be taken to retain accurate files of routines and procedures to aid future financial planners. Accounting out-of-country did interfere with obtaining more accurate, complete data. The alternative was a full fledged financial operation in Vietnam which was unacceptable given departmental policy and manpower ceilings. I am not sure such an operation would have been cost effective. One thing is for certain, in the future, a systems approach must be used to insure that financial management is an integral part of logistical management and not a peripheral nuisance.

Care must be exercised to avoid repetitive errors in judgment. For example, in 1970, the Department of Army was seriously considering moving CFMA back to Okinawa. Most of the disadvantages that led to the earlier failure still existed. Fortunately, this proposal was finally disapproved.

The end of CFMA is contingent on the future involvement in Vietnam, but it appears it will play a vital role in the withdrawal. Unfortunately, systems development takes time; for example, not until 1969 was the Department of Army able to report to Congress that the logistical system was complete. As CFMA reached its operating optimum, it was time for a phasedown.

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