Library of Congress Catalog Card Number: 74-13506
For sale by the Superintendent of Documents, U.S. Government
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The United States Army has met an unusually complex challenge in Southeast Asia. In conjunction with the other services, the Army has fought in support of a national policy of assisting an emerging nation to develop governmental processes of its own choosing, free of outside coercion. In addition to the usual problems of waging armed conflict, the assignment in Southeast Asia has required superimposing the immensely sophisticated tasks of a modern army upon an underdeveloped environment and adapting them to demands covering a wide spectrum. These involved helping to fulfill the basic needs of an agrarian population, dealing with the frustrations of antiguerrilla operations, and conducting conventional campaigns against well-trained and determined regular units.
It is still necessary for the Army to continue to prepare for other challenges that may lie ahead. While cognizant that history never repeats itself exactly and that no army ever profited from trying to meet a new challenge in terms of the old one, the Army nevertheless stands to benefit immensely from a study of its experience, its shortcomings no less than its achievements.
Aware that some years must elapse before the official histories will provide a detailed and objective analysis of the experience in Southeast Asia, we have sought a forum whereby some of the more salient aspects of that experience can be made available now. At the request of the Chief of Staff, a representative group of senior officers who served in important posts in Vietnam and who still carry a heavy burden of day-to-day responsibilities has prepared a series of monographs. These studies should be of great value in helping the Army develop future operational concepts while at the same time contributing to the historical record and providing the American public with an interim report on the performance of men and officers who have responded, as others have through our history, to exacting and trying demands.
The reader should be reminded that most of the writing was accomplished while the war in Vietnam was at its peak, and the
monographs frequently refer to events of the past as if they were taking place in the present.
All monographs in the series are based primarily on official records, with additional material from published and unpublished secondary works, from debriefing reports and interviews with key participants, and from the personal experience of the author. To facilitate security clearance, annotation and detailed bibliography have been omitted from the published version; a fully documented account with bibliography is filed with the U.S. Army Center of Military History.
The author of this monograph, Major General Leonard B. Taylor, played
a key role in the financial management of the U.S. Army's Vietnam war activities.
From July 1966 to May 1971 he served as Assistant Director and subsequently
Director of Army Budget in the Office of the Comptroller of the Army. A
thirty-two year veteran of Army service, General Taylor served in the North
African Theater and in Italy during World War II. He holds the degree of
Master of Business Administration from the University of Maryland and has
done postgraduate work at Harvard University. General Taylor is presently
Commanding General, United States Army Administrative Schools Center and
Fort Benjamin Harrison, Indiana.
15 December 1973
|VERNE L. BOWERS
Major General, USA
The Adjutant General
"Vietnam is different." That phrase or some semblance of the words couched in different terms has been voiced by nearly everyone involved in the conflict about every phase of the war. To financial managers, it might have been more appropriate to say, "Vietnam was a nightmare." It was much like starting out a game of baseball with the normal rules and during the third inning, finding out that you were playing basketball. Those of us involved in financial management believed that we would handle this war much as we had done the Korean conflict. This meant that there would be no requirement for stringent accounting controls or budgeting and that a sufficient amount of funds would be available. This assumption was responsible to a large degree for the lack of an adequate organization for financial management in the early days of the buildup. Early in the conflict the Secretary of Defense, Robert S. McNamara, counseled the heads of departments and major field commanders concerning Vietnam: ". . . Under no circumstances is lack of money to stand in the way of aid to that nation." When the rules were clarified, and we found that we were expected to establish virtually a peacetime system for financial control and reporting, it was almost too late. Many transactions had already occurred which were impossible to document in the normal fashion. In some cases, we will never be able to specifically identify exactly who received the benefit of funds expended, but we did attempt in every way to bring the situation under control and to respond to the requirements of the Department of Defense and Congress.
To state that our efforts in this regard were as prodigious as those of the combat troops or the logisticians might seem somewhat vain, but in many cases the same tenacity was required. Certainly innovative thought and actions were taken in spite of high odds favoring failure. Most of the financial contention did not take place in Vietnam, since we did not want and were so directed not to burden the commander on the ground with the bothersome task of obtaining data necessary to furnish to those individuals in the Office of the Secretary of Defense and Congress who increasingly questioned our prudent use of resources. I think that the system
we developed, particularly the concept represented by the Centralized Financial Management Agency, was the most rapid, effective operation which could have been accomplished in the time required. The total effort resulted in a method for doing something which had long been considered impossible—budgeting for a war.
In this monograph, I have attempted to record some of the major steps taken, but certainly not all details have been included. These steps are representative of the work done at all echelons to insure that every means at our disposal was used to obtain the needed funds and to prove that they were used effectively. The topics covered included areas where events might have been handled better or where some changes in laws, directives, or general concepts could have made our job a little easier. If after reading this treatise someone involved in planning for financial management will take action to gain early approval for changes that are necessary, I will have attained one of my goals in writing it. Further, if I can interest commanders in giving impetus to these plans perhaps on a par with logistics support, our task in the future will be considerably easier.
Criticism of our actions will be made, but it is easier to quarterback from a chair. This criticism may yet prove helpful if ways to improve the situation are explored. We attempted in Vietnam not only to account for costs, but to introduce discipline into the supply system as well. Perhaps this requirement was at fault and not those who answered. There is doubtless room for improvement in our financial management, but many of the necessary changes must begin at the level of the Secretary of Defense and must be approved by Congress. I believe that Congress will be willing to grant some changes if they are asked and given sufficient reason to do so. I have never found them deaf to new ideas provided that the presentation clearly detailed the need for action and the consequences for lack thereof. I am sure that Congress will co-operate in any endeavor to improve financial management in the Army.
I would like to thank the many individuals who have contributed material to this monograph, especially Lieutenant Colonel Charles T. Lynn, Jr., and Major Richard O. Felton of the staff and faculty, U.S. Army Finance School. It would have been impossible to compile the data without their assistance. I was deeply impressed with the co-operation I received at every level. Once the basic idea of the subject was conveyed to the present financial managers, they were eager to assist in the documentation of this facet of the war, in the hope that future conflicts will provide for a better method at the beginning of our involvement.
The views and interpretation of the data given are based on many years
of intense interest in the Army's management of resources. Should these
opinions not coincide with those of the reader, I trust that they will
be given an objective appraisal before dismissal. We both should be interested
in building the strongest Army possible within the resources provided,
and this can only be accomplished through an effective financial management
|Fort Benjamin Harrison, Indiana
15 August 1972
|LEONARD B. TAYLOR
Major General, U. S. Army
|I. PLANNING FOR FINANCIAL MANAGEMENT OF LIMITED WAR||
|The Roots of U.S. Involvement||
|The Need for Plans||
|II. BUDGETING FOR WAR||
|Background for Budgeting||
|The Early Budgets||
|Growing Congressional Concern||
|The Fiscal Year 1968 Budget||
|The Fiscal Year 1969 Budget||
|New Problems in the Seventies||
|A Review of Army Actions||
|A Reputation for Responsibility||
|III. ACCOUNTING FOR THE CONFLICT||
|The Early Days||
|In More Recent Times||
|IV. THE REIMBURSEMENT PROBLEM||
|The Crisis Builds||
|More Studies and Audits||
|Reimbursements by Allies||
|V. ORGANIZATION FOR FINANCIAL MANAGEMENT||
|Management of a War||
|New Horizons for Financial Management||
|VI. FUTURE FINANCIAL MANAGEMENT||
|INDEX [Not included]||
|1.||Planning Programing Budgeting Cycle||
|2.||Direct Budget Plan in Million Dollars||
|3.||Okinawa Financial Management Environment||
|4.||Prototype Financial Network||
|5.||Revised Financial Network in Fiscal Year 1968||
|7.||Financial Environment and Document Flow||
|8.||Requisition Fund Control System Channels||
|9.||Reimbursable Issue Information Flow||
|10.||CFMA Reimbursable Transaction Process||
|11.||Framework for Financial Management||
|12.||Department of the Army Influence Network||
|13.||Top Financial Management Channels||
|1.||Financial Summary of Fiscal Year 1966 Budget||
|2.||Economic Aid for Vietnam||
|4.||Adjustments, Reclamas, Restorations||