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December 16, 2016
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May 23, 2005
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June 8, 1973
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LOFT f=I LE= Approved For Release 2005/06/06 : CIA-RDP75BOO380 ROOO700070001-1 FEDERAL EMPLOYEE ASSISTANCE = IN A REDUCTION IN FORCE HEARINGS SUBCOMMITTEE ON RETIREMENT AND EMPLOYEE BENEFITS COMMITTEE ON POST OFFICE AND CIVIL SERVICE HOUSE OF REPRESENTATIVES NINETY-THIRD CONGRESS FIRST SESSION ON I.R. 7731 A BILL TO AMEND TITLE 5, UNITED STATES CODE TO PROVIDE SPECIAL ASSISTANCE AND BENEFITS TO FEDERAL EMPLOYEES INVOLUNTARILY SEPARATED THROUGH REDUC- TIONS IN FORCE, AND FOR OTHER PURPOSES Serial No. 93-21 Printed for the use of the Committee on Post Office and Civil Service 0 Approved For Release 2005/06/06 : CIA-RDP75BOO38OR000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 CO'_I-III' fEE ON POST OFFICE AND CIVIL SERVICE THADDEUS J. DULSKI, New York, Chairman DAVID N. HENDERSON, North Carolina, Vice Chairman MORRIS K. UDALL, Arizona DOMINICK V. DANIELS, New Jersey ROBERT N. C. NIX, Pennsylvania JAMES M. HANLEY, New York CIIARLES H. WILSON, California JEROME R. WALDIE, California RICHARD C. WHITE, Texas , WILLIAM D. FORD, Michigan FRANIK J. BRASCO, New York WILLIAM (BILL) CLAY, Missouri PATRICIA SCHROEDER, Colorado JOHN JOSEPH MOAKLEY, Massachusetts WILLIAM LEHMAN, Florida H. R. GROSS, Iowa EDWARD J. DERWINSKI, Illinois ALBERT W. JOHNSON, Pennsylvania LAWRENCE J. HOGAN, Maryland JOHN H. ROUSSELOT, California ELWOOD HILLIS, Indiana WALTER E. POWELL, Ohio RICHARD W. MALLARY, Vermont ANDREW J. HINSHAW, California L. A. (SKIP) BAFALIS, Florida JOHN H. MARTINY, Chief Counsel VICTOR C. SMIROLDO, Staff Director and Counsel WILLIAM A. IRVINE, Assistant Staff DircCter THEODORE J. KAZY, Senior Staff Assistant ROBERT E. LOCKHART, Assistant Counsel FRANCIS C. FORTUNE, Coordinator ROY C. MnsKER, Stag Assistant RALPH J. DEVLIN, Staff Assistant SUBCOMMITTEE ON RETIREMENT AND EMPLOYEE BENEFITS JEROME R. WALDIE, California, Chairman FRANK J. BRASCO, New York LAWRENCE J. HOGAN, Maryland DOMINICK V. DANIELS, New Jersey ELWOOD HILLIS, Indiana CHARLES H. WILSON, California L. A. (SKIP) BAFALIS, Florida JOHN JOSEPH MOAKLEY, Massachusetts k'w Officio Voting Members THADDEUS J. DULSKI, New York If. R. GROSS, Iowa (DONALD F. TERRY, Staff Assistant, Room 406, Cannon Building-Ext. 56831 ) (II) Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 CONTENTS Statement by- Page Barnett, Jerome, special assistant to James K. Keefe, Department of Industry and Commerce, State of Maine--------------------- 43 Clewlow, Carl W., Acting Secretary of Defense for Manpower and Reserve Affairs, accompanied by William Sheehan, Director of Economic Adjustment; Dr. William Valdes, Staff Director, Office of Civilian Personnel Policy; Allan S. Kerr, Director, Base Requirements; and Robert Workman, Director, Staffing Policies and Programs, Assistant Secretary of Defense for Manpower and Reserve Affairs__ 19 Daicoff, Darwin W., professor, University of Kansas--------------- 133 Heckler, Hon. Margaret, a Representative in Congress from the State of Massachusetts--------------------------------------------- 71 Melman, Seymour, professor of industrial engineering, Columbia University, national cochairman, SANE----------------------- 2 Noel, Iion. Philip W., Governor of the State of Rhode Island, ac- companied by Glenn Kumekawa, chairman, Economic Renewal Coordinating Center; Keven A. McKenna, Chairman, State Man- power Planning Council; Wilbert E. Fritz, president, National Association of Government Employees; and Dominick Montano, president, Quonset Point Association, Local No. 7, Region I------- 104 St Germain, Ilon. Fernand, a Representative in Congress from the State of Rhode Island---------------------------------------- 88 Studds, Hon. Gerry E., a Representative in Congress from the State of Massachusetts-------------------------------------- 58 Tiernan, Iion. Robert 0., a Representative in Congress from the State of Rhode Island---------------------------------------- 91 Communication received from- Noel, Hon. Philip W., Governor of the State of Rhode Island letter dated June 29, 1973, received subsequent to hearing of June 8, 1973------------------------------------------------------- 126 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 FEDERAL EMPLOYEE ASSISTANCE IN A REDUCTION IN FORCE TUESDAY, JUNE 5, 1973 U.S. HOUSE or REPRESENTATIVES, COMMITTEE ON POST OFFICE AND CIVIL SERVICE, SUBCOMMITTEE ON RETIREMENT AND EMPLo m 2E TS,D.C. The subcommittee met at 9:35 a.m., in room 210, Cannon House Office Building, Hon. Jerome R. Waldie (chairman of the subcom- mittee) presiding. Mr. WALDIE. The subcommittee will come to order. Today the Subcommittee on Retirement and Employee Benefits begins a series of inquiries into the effects of military base locations on affected civilian Federal employees and their communities. If present Department of Defense plans take effect, within the fiscal year 1974 between 25,000 and 30,00 employees will have chosen either to retire or to shift their work location so that they can maintain their Federal employment. Those who do not take ad- vantage of these options will be unemployed until they find suitable jobs in the private sector. In some cases, periods of unemployment may be protracted, since the regions of the country negatively af- fected by the recent base closing announcements already have rather serious general unemployment problems. There are many problems which flow from the closing of military bases. A compassionate government must concern itself with finding employment for those whose jobs are affected, and it should make certain that personal income simply does not cease. The Federal Government should shield local unemployment insurance systems from excessive loads. It should also make certain that health in- surance benefits are guaranteed at a level which would prevent catastrophe if heavy illness overtook the family of a newly unem- ployed Federal worker. But these are only parts of a larger picture. A community which has a large number of civilian defense em- ployees, and whose economy has always been dependent to some de- gree on the location of a military base will have some serious adjust- ments to make when the base is closed. Real estate markets soften when large numbers of houses become vacant because Federal workers move. all at once to find jobs. The housing construction business suffers from this same effect. Local merchants find that their sales fall off, at least for a short period, and the community's tax base suffers. Impact aid to school districts which lose military bases slows and then ceases entirely-even while the pupil population remains about the same. Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 These are not problems of small importance, though they are often reported as more adjustments in some statistical index of our national quality of life. In reality, a small State like Rhode Island faces the worst economic crisis in its history-and many communities and individuals may be in similar straits. The purpose of our examination over these first days will be to find some way to minimize the interplay of possible negative conse- quences on individuals and communities as the readjustment from the Vietnam mobilization takes place. We have a distinguished group of witnesses from whom we expect to derive some kind of standard against which to measure the performance of the Government in these areas in the months and years ahead. As a related matter, I have introduced I1.R. 7731, a bill to provide special assistance and benefits to Federal employees involuntarily separated through reductions in force, and for other purposes. This bill would take account of the needs of any Federal employees whose jobs fall victim to the need for greater economy in government. It would offer readjustment allowances, job training and counseling, relocation allowances, early. retirement provisions. and the continua- tion of health care benefits. This bill is particularly important now, when there is underway a general reduction in the size of the Federal work force. These hearings focus on military base closings and their related effects as the best, not the only example of the need for Government action to mitigate the side effects of the actions it takes to achieve economy and good government. The first witness is Mr. Seymour Melman, professor of industrial engineering of Columbia University and national cochairman of SAND,. Your prepared statement will be included in the record in its entirety, after -your oral testimony and the questioning of the sub- committee members. STATEMENT OF SEYNOUR MELMAN, PROFESSOR OF INDUSTRIAL ENGINEERING, COLUMBIA UNIVERSITY, NATIONAL COCHAIR- MAN, SANE Mr. MELMAN. Congressman WTaldie. I wish to compliment, if I may, you and your colleagues for undertaking an inquiry into this subject. It is not the first inquiry into these matters of conversion from military to civilian economy, but it is one that focuses on the issue, especially the issue of base closing and its effect at a time when there may be an opportunity for a fresh view of these matters. Thank you for accepting the statement that I presented which I submit with the attached exhibits. The exhibits, I believe, include a considerable amount of valuable background material for apprecia- tion of the problem of conversion of a military base personnel and facilities to civilian activity. Mr. Chairman, there are two essential requirements for such con- version operations. The first is advance planning and the second is local responsibility. Their importance is not diminished, in fact it is big-blighted, by the fact that neither of these two requirements have been met until now by any of the efforts pursued in this field. Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 3 CIA-RDP75B0038OR000700070001-1 Advance planning is indispensible because there is no known method for coping with the provision of new employment op- portunity for the thousands of men and women except by thoughtful advance attention to this problem. In the absence of such planning, the record of many, many base closings in the past shows that even the most vigorous efforts pursued on an ad hoc and emergency basis result in a scattering of effects, result in great residual hardship to individuals and to the communi- ties involved, and characteristically leave a less than satisfactory result, even where positive economical alternatives of various sorts had been devised. Secondly, on a matter of local responsibility. Without delving into the deep issue of centralism as against decentralism, it remains that on a pragmatic basis no one knows how to do central planning in detail for the 500 major military installations inside the United States. That can only be done by people sharing responsibility and auth- ority in the particular localities. That is the best opportunity for marshalling the local specific data and for bringing to bear the oversight of persons who are most intimately concerned with the future of the community that is involved. I wish to emphasize that these problems of conversion are old problems and neglected problems. In fulfillment of what I consider to be a public responsibility, I could not appear here without under- scoring to you the reasons why this responsibility for economic con- version has been thus far neglected by the members of Congress and by the Executive. First, there is the national belief that war economy, military economy, is a good thing and that it is necessary, indispensible for economic well being. A second consideration is the assumption that has pervaded in our country that the cold war will endure for an indefinite future. The truth of the matter is that the cold war, unlike other military engage- ments, has had no definable termination as part of the understanding of its characteristics. Nevertheless, the assumption that this will endure indefinitely has had an important effect in making it seem unreasonable and unnecessary to do forward planning for conversion. A third factor : Members of Congress have been themselves pro- fessionally, personally involved in arranging for the location and continuation of military base activities. Members have become in- volved in the function of sales representatives for local communities and for the people involved. Fourth, the executive branch has pursued a policy of aggressive prevention of conversion planning and discouragement of local responsibility. In my prepared statement- Mr. WALDIE. What was your fourth one? I missed that. Mr. MELMAN. The executive branch of the Federal Government has pursued a policy of aggressive prevention of conversion planning and of local responsibility. Mr. WALDiE. I presume you will now elaborate on those points. Mr. MrLMAN. May I? Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06: CIA-RDP75B00380R000700070001-1 Mr. WALDIE. Yes. They are conclusions that you will now sub- stantiate. Mr. MELMAN. The latter point is, I believe, of very special im- portance. The single most significant attempt to file legislation on the conversion problem was the one that appeared in 1964 when parallel legislation was filed both in the Senate and in the House. In the Senate it was filed by Senator George McGovern, co- sponsored with 30 other members, and in the House it was initiated by Bradford Morse, by William Fitts Ryan, again with the co- sponsorship of numerous members. What happened to those bills in 1964 is of moment today. Hearings were held before the Commerce Committee of the Senate on May 25 and June, 22, 1964. At these hearings, to which public witnesses were not invited, representatives of the principal departments of the executive branch presented testimony. That testimony, was uniformly hostile to the proposed legislation, which was designed to set up a National Economic Conversion Commission and to- induce nation- wide conversion planning at all levels by all sectors of the economy, and to involve the Governors of the States, the officials of localities and various private groups in such planning. The concept here was rather similar to the one that was utilized at the end of the Second World War, when in 1944 and 1945 a national effort for what was then called reconversion planning was spearheaded by the Federal Government. That reconversion planning played a very important part in smoothing the changeover from a wartime to a peacetime economny. The history of the hearings on Senate 2274 included especially important testimony, both in length and in quality, by Cyrus Vance, the Deputy Secretary of Defense, who argued that this legislation was unnecessary at the time. Since the record of that hearing is available, may I dwell on some collateral aspects that are not generally available. One year ago I became concerned, on reading those hearings, with understanding what had happened at the time. For example, it seemed odd to me that such eminent members of the executive branch: would appear at a hearing whose total duration was not more than 6 hours in two sessions and on behalf of a bill that did not receive, extensive testimony and which was uniformly opposed by the execu- tive branch from the White House down. Fresh light on this subject was available from a reading of the Pentagon Papers, and I refer here to the Bantam edition published in 1971 by The New York Times. On the same day of the first day of these hearings, May 25, 1964, the record of the Pentagon Papers records the completion of the draft Congressional resolution on Southeast Asia, which draft resolution subsequently became the principal part of the text of the Tonkin Gulf Resolution. Furthermore, the record of the Pentagon Papers, all editions, shows that prior to that first date of hearings and until and after the second date of hearings, June 22, 1964, there was an accelerating process of military-political planning for military-political opera- tions in Vietnam and elsewhere in Indochina. Furthermore, the record of those papers shows that the principal administration spokesman at the 1.964 conversion hearings from the Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 5 Department of Defense, Messrs. Cyrus Vance and John McNaughton, were major participants in that process of military-political plan ning. Thus, the Gravel edition, of the Pentagon Papers, volume 5, containing a name index, shows on pages 13 and 19 of that index the extent of participation by Messrs. Vance and McNaughton. Cyrus Vance and John McNaughton therefore knew in full detail of the military planning for the operations that were being escalated in Vietnam. They came to these hearings to oppose planning for peace, being fully aware, as major participants, of the planning for war. The reasons that they gave to oppose the planning for peace did not include any statement or reference to the inappropriateness of that planning in view of the fulsome attention being given to the planning for war. In my prepared statement, Mr. Chairman, I indicated that in my judgment the manipulations practiced by the executive branch in squashing a legislative effort to plan for peace constituted a con- spiracy against the American people. I noted that it is a bitter fact that Senator Magnuson, Chairman of the Commerce Committee, and his associates thereafter, intended or not, collaborated in this oper- ation by failing to bring this bill out of committee to the floor of the Senate for an open vote. There is a fifth factor with respect to the prevention of conversion planning, again a factor which causes this committee to meet, and that is that there was established in the Department of Defense around 1962 or 1963 an Economic Adjustment Office and later under President Nixon an Interagency Committee on Economic Adjust- ment. These groups were specified as being available to help local com- munities make an adjustment from, say, a military-base-serving econ- omy to a civil-serving economy at a time when that adjustment seemed to be required. They have done that, and I am sure that this committee can hear witnesses from these agencies who will give the record of their performance in fulsome detail. Two crucial elements have been missing from their efforts in the past, are missing now, and may be depended upon to be absent in the future, and that is these groups have not encouraged advance plan- ning by these communities. Second, they have not encouraged the kind of local responsibility and control which is an indispensible re- quirement of such planning. Furthermore, it is an incongruity that such a unit, whatever its modus operandi, should be located in the Department of Defense rather than in a civilian economy oriented agency of the Federal Government. The consequence of all this, Mr. Chairman, is to produce economic shock effect whenever military base closings or modifications are proposed. Mr. WVArnIr. May I interrupt you a moment. Is there a similar effort, minimal as it might be, to consider adverse consequences to a community from the closing of a defense installation, not a military base, but the fact that it is totally oriented toward defense and war production? Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/063: CIA-RDP75B00380R000700070001-1 Mr. ME MAN. The conditions are similar. ':Ir. WAL.nrr. But is there an agency that has that responsibility? 'tr. AtEL11MAN. There is. no agency, and it is this unit again Mr. WALDIE. The Economic Adjustment Agency-? Air. AIELMAN. Yes, sir. The record of their activity shows that they have been asked to appear, and they have appeared, bringing in rep- resentatives of other branches--of other agencies of the Federal Gov- ernment to assist in local situations where, for example, certain major military-industry units have closed down, where ammunition plants have closed down. Obviously, they have not attempted to intervene where there have been major military-industry cutbacks. '0_r. WALDrr. Before you go on, I warm to clarify in my own mind, is this the only wyency of which you are aware in the Federal Gov- ernment that has any responsibility toward this problem, whether it be a military base closing or a defense industry closing? M:lr. ,'~1rLMAN. The only other agency which formally may be said to have a responsibility in these respects is the Economic Develop- ment Administration of the Commerce Department. Mr. WArnrn. But that would be a peripheral responsibility; that is not their primary responsibility? Mr. MELMAN. It has not been given to them as a primary responsi- bility, and my recent information is that that agency or major parts of it are. being curtailed. M'tr. WAInrr. But thus far, am I correct in assuming that the Eco- nomic Adjustment Agency, or its successor in the Nixon Administra- tion, is the only agency or group in the Federal Government whose exclusive responsibility is to deal with this problem, the adverse im- pact on communities of closings? ,.ir. ,Irr, rAti. That is correct. Mr. IITAS,nrr. Mr. Moakley has arrived since we started. If you have any questions. Mr. MOAKLrY. No, Mr. Chairman. I was very interested in the situation, but I will. have to leave shortly. Ur. IITALDTr. Please feel free to interrupt any time you desire. Mr. ~'trr.MART As evidence of the shock effect upon diverse com- munities from the closing of military bases in the absence of advanced planning and in the absence of ordered local responsibility, may I submit for the record the article of June 3, 1973, in The New York Times entitled, "Adjusting to Closing of Military Bases." It includes in capsule form a series of reports from various States. Further, Mr. Chairman, may I underscore that if these conditions are to be altered. then one crucial requirement is a change in attitude by members of Congress or by the executive branch. T regard a change in attitude by the executive branch as not to be expected in the foreseeable future. I recall a visit; to the Office of Economic Adjustment in 1963 during which I asked: "Why doesn't this office encourage or require military-industry communities or mili- tary-industry industrial organizations to plan for the contingency of going to civilian work?" The response that I received was that Gen- eral LeMay would not like these groups to be thinking about other things than the Air Force or the service. to their military clients. While I understand that policy out of their self-;Interest, it under- Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/06 : 9A-RDP75B00380R000700070001-1 scores the importance of removing the. function of facilitating con- version to a civilian economy from the Department of Defense. Mr. WALDIE. May I interrupt a moment here, too? It is not directly on your point, but thinking about the general thesis of your com- ments, it seems to be that our deficiency is when we convert from a military to peacetime economy that there are greater adverse im- pacts. But what about other activities of the Federal Government where we are the major employer by contract, such as Lockheed? If you shut down the Lockheed plant, or Boeing, and decide not to build the SST, you may throw Seattle out of existence. That is a civilian responsibility, a civilian economy. Would your proposal involve the Federal Government having any responsibility for a city when you discontinue a Federal nondefense contract? Mr. MELMAN. Mr. Chairman, the two requirements of advance planning and local responsibility would go very far to meet the requirements either of the military-industry or the bases problem. In addition, there are plausible ways of cushioning the shock to those individuals that might not be taken care of even in the best laid con- version plans. Mr. WALDIE. Some of the biggest locations would seem to me to be in the civilian sector. Boeing is one, the SST, and Lockheed in Cali- fornia is the other, when we decided the issue should we loan them money to remain in existence, and they maintained that their prob- lems were due to deficiencies in Federal contracts. Those were peace- time production contracts. Mr. MELMAN. Mr. Chairman, the record of cost maximization that prevails in military-industry firms has rendered these organizations, as institutions, incompetent to function in the civilian economy. Therefore, your query opens up a related set of problems, namely, what can be done for the people involved if their institutions are organizationally incapacitated from making the move to civilian work? Mr. WALDIE. I am inclining to believe at this early stage in these hearings that we ought to assume the cushion of last resort, no matter what be the cause of the unemployment. Mr. MELMAN. I am prepared to comment on that cushion of last resort, Mr. Chairman, in concluding these remarks. When the Members of Congress decide to break their position of being professionally responsible for employment in their districts through DOD grants, contracts, and base facilities, and when they are prepared instead to encourage and facilitate local planning and local responsibility for a durable civilian economy, then it will be possible to legislate for those purposes. For example, advanced planning can be required; second, it can be encouraged; third, it can be given appropriate standards of quality by setting national criteria for the performance of these functions. For example, by requiring that alternatives for local economy be examined; by requiring that the planning indicate the capital re- quirements of alternatives and the employment consequences of alter- natives; third by Mr. WALDir. How can a member of Congress from Rhode Island give up his advocacy of employment for his constituents, no matter Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/06, CIA-RDP75B0038OR000700070001-1 what the source of that employment is, when they are out of work? 't'hey are out of work. With Rhode Island being shut down, due to defective planning in the past, what does that congressman do? Does he say, well, that is okay, because it was a mistake to have oper- ated Rhode Island as a defense installation over the years-and it has been a mistake-but what does the congressman confronted with an administration decision to shut down Rhode Island now do, in your theory? Mr. MIELMAN. Ile can proceed in one of two fashions. One, he can assume continued responsibility for finding and allo- cating military-industry and military base work for Rhode Island. Secondly, he could conceivably assume, to put it Huntly, that what had been done until now requires major modification and that the only course for a durable civilian economy for Rhode Island is locally planned and locally responsible civilian economic develop- ment in the name of which it is still possible at this juncture to take various steps to encourage and facilitate that. 'T'hirdly, the member of Congress from Rhode Island would have to face the fact that he bears a responsibility for the economic debacle in the shape of his own failure to participate until now in the ap- propriate planning and local responsibility steps. Ile can encourage those moves now and pass legislation that would cushion the impact on individuals through a period of changeover. Mr. WArDIE. But until. such time as that cushion is provided, would lie be acting irresponsibly to insist upon the maintenance of the de- fense installations upon which his constituents have to pay the bills and raise their kids? Mr. 1\'TELMAN. The question is, Mr. Chairman, who is lie being re- sponsible to? If his primary responsibility is to the people on that DOD payroll, then he fulfills that responsibility by getting them onto that payroll again, no matter what the other effects. if his primary responsibility is to the rest of a community and to the viability of the U.S. economy as a whole, then the requirement of his action is to enter into the necessary steps to convert to civilian economy. Mr. WTALnTE. Then he has a responsible position to advocate base closing on a gradual basis, not a precipitous basis? vanced planning. Mfr. ~Tr;r,nrn v. Every closure is precipitous where there is no ad- Mr. WALDTP. That is the situation we are confronted with now. Admittedly, it has been a disaster and a tragedy, but is it a greater disaster or a greater tragedy to have 5,000 families cast aside without any income than to have them tending a base every day, not doing anything but drawing on the Defense Department's budget? Mr. MELlMAN. If the matter is put sharply, then the welfare of the economy as a whole is best served by maintaining these people eco- nomically at whatever minimum level. illr. `'VALDIE. No law does that now, is that correct? M'tr. MELMZAN. That's correct. Tr. WAL,DIE. What does the congressman do that is confronted with this ad in the papers, saying, "We can't take it, Mr. President? We all goofed, but now you are putting the responsibility for the goof all on us." Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 g CIA-RDP75B0038OR000700070001-1 Isn't that true? It has been a national mistake, but the responsi- bility for the mistake is falling on the Rhode Island fellow who is trying to put his kid through school and go through the most sympa- thetic family situation that we are casting aside because it is a na- tional mistake. We participated in the mistake in Antioch, Calif., but the dislo- cation of the mistake is not going to be borne by any of my consti- tuents. Mr. MELINIAN. In the last decade, that mistake has been repeated at least 500 times over. -1 Mr. WALDin. I agree. ' Mr. MELMAN. If that is acknowledged, then the requirement is to ask what assumptions have been made in pursuit of that consistent mistake, as you call it; and second, what changes do you make now. Mr. WALDTE. I am ready to accept all your arguments, that the policy has been wrong, the intentions have been wrong, but I am looking for solution, both long term and immediate, for Rhode Island. What is the immediate solution for Rhode Island? Mr. MELMAN. I propose an immediate solution in a three-part movement. First, that the function of facilitating planning responsibility be placed in the hands of a civilian agency of the Federal Government forthwith. Second, that this planning and pursuit of local responsibility under Federal standards be pursued swiftly. Further, that for the cushioning of individuals, the Congress in- quire into the formulation of a defense employees bill of rights. That bill of rights should include practical measures to cushion a family through a period of changeover where their work and income is no longer attached to a military base or other military installations. Thus, such a bill of rights could include a minimum income pro- vision. I noted in my prepared statement that one base line for a minimum income provision is the social welfare standard that pre- vails in a particular state. Other provisions can include money for occupational retraining where necessary. Second, money for family relocation. Third, provisions for mortgage and allied credit payment mora- toria. There is a precedent for that, Mr. Chairman, in the steps taken during the Great Depression for various moratoria on mortgages and similar credit payments. A series of steps along those lines would be a visible act of re- sponsibility toward the people who are put out of their former work in military bases or military-industry. I can think of no more con- structive act by members of Congress than this combined response for the longer term and for the cushioning of individuals. That's m. y principal proposal, Mr. Chairman, to the query that you raised, but I underscore again that this can happen if and only if the responsibility of the Members to the ads such as you show, and to the hosts of local committees for saving our base, is to say the time has come to look after ourselves locally, with Federal assistance, with planning in a thoughtful way, and to do this all in the understanding that the Members of Congress are prepared to see to it that indi- Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 -(C)IA-RDP75B00380R000700070001-1 viduals not accounted for in new economic plans will be cushioned beyond through a changeover process. I think that is a maximum and responsible approach by members of Congress. I have come here and I have responded to your questions, Mr. Chairman, without assuming that such steps will be taken. That is to say I have yet to see the evidence that Members of Congress are prepared to withdraw from a primary posture of being sales agents for Defense bases and military-industry firms and the like. However, I wish to make It further effort in constructive response to this kind of problem, because I have the estimate that at some time Members of Congres will favor this change. They will see that other approaches are not feasible and that it would be a great boon to them as Members to be relieved of this kind of burden. That burden puts them in a client relation to one agency of the Federal. Govern- ment, the Department of Defense, which they are otherwise obliged to regulate and control. `B'eing relieved of that burden improves their position to fulfill the constitutional function for which they take offices in the Congress. There have been many hearings, Mr. Chairman, in the Congress and various committees on economic conversion. I am sure I have attended at least 10 of them as a witness. There has been no response to the issues that you have raised in your questions. The members have preferred to keep the old relationship. If you want a respon- sible response to people who are going to be discharged from their military base employment then you are obligated Mr. Chairman, to take a lead in proposing legislation for planning with local responsi- bility, for Federal encouragement, and for a defense employees bill of rights to cushion the residual effects on individuals. Mr. WALDIE. Do you find anything inconsistent with the Congress- man's responsibility when he acts as a salesman for a peacetime in- dustry dealing with the Federal Government? Mr. MELDIAN. My recollection of the reading of the Constitution of the United States doesn't bring to mind any clause that would' even remotely imply such a function by Members of Congress. Mr. WALDTE. Do you mean that you don't think that it is a respon- sibility of the Congressman to try to procure a Federal contract for a major employer in his district-a peacetime contract? Mr. MELMAN. It is not a proper responsibility of Congressmen. I appreciate that under the customs and practices that have grown up under the name logrolling, securing public works-- Mr. WArDIE. What about grants to educational institutions in his district or community, or action grants under OEO? Is that a func tion of the congressmen? Mr. MELMAN. No sir, I do not think it is. It is not a proper central professional function of the members of Congress to act as procurers of funds, grants, contracts, or special favors to their districts. The consequences result in all manner of anomalies and inequities. For- example, diligent members of the press have called attention to the otherwise unexplained movement of military installations, headquarters establishments and the like to the districts of members who have in the recent past become chairmen of certain committees. Mr. WArnri;. No question. I was merely asking about peacetime, Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/061 CIA-RDP75B0038OR000700070001-1 responsibilities at this point. Is there any sense in a black Congress- man seeking to get governmental facilities located in his congressional district to provide employment for his constituents who have been ignored because they have always had a white Congressman who got it elsewhere? Mr. MELMAN. Mr. Chairman, I hold the view that it would be proper for your hypothetical Congressman to plead the case that there be no discrimination on grounds of race in the allocation of such Federal grants or contracts or what. Mr. WALDIE. Beyond that, he has no responsibility to seek their location in his district of those facilities? Mr. MELMAN. I judge, Mr. Chairman, that the development of the principle of responsibility by the Members of Congress to perform this task has resulted in a warping of the capability of the Congress to function on the behalf of the national interest. Mr. WALDIE. Who should make those decisions? Just the executive branch? They should determine where all the military installations should be? Mr. MELMAN. No, sir. For example, in the recommendations I have made in my statement and previously in this discussion, I have called attention to the importance of standards of criteria for such planning for local responsibility. Mr. WALDrF.. But who decides where a base should be located? Mr. MELMAN. Suppose the principle is laid down that in the make- up of a local community group to do planning for conversion of a base facility or an industrial-military facility, such Committee shall be representative of the diverse economic and other groups of the community, however that may be phrased. It then becomes the obli- gation of those implementing that Act of Congress to perform in that fashion. The Congress, by setting that rule, lays down a major constraint or requirement for the decision-making, the detail of which is dealt with, is implemented by persons in the Executive Branch. In that way, the Congress indeed takes in fact a major part in the decision- making, but the Members of Congress do not become involved indi- vidual by individual, community by community, base by base, plant by plant, union by union. Mr. WALDTE. But the Executive Branch does? Mr. MELMAN. Yes, sir, they do, subject to the constraints set by the Members of Congress. Mr. WALDIE. Those constraints exist now. Aren't there general guidelines? Nobody pays much attention to them, but they exist. For example, there are guidelines about where bases should be located, though not as to when they should be closed down. I am really just trying to get a colloquy going here. I gather your assumption is that the maldistribution and the discontinuation of defense establishment facilities is essentially the result of actions by the Congress. My own conviction is that that is not so clear, but your solution is to remove Congress from that role. Mr. MELMAN. Mr. Chairman, I would say that if the Members of Congress would set the rule that military bases shall be located on the basis of well-defined criteria, be they military criteria or be they Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 i lA-RDP75B0038OR000700070001-1 economic cost criteria, then that would have the effect of placing a burden of proof at the minimum on the members of the Executive Branch who do that detailed allocation. In the present case, for example, there would be quite a burden of proof on the Department of Defense to explain how it is that there. is the special concentration of military base closures in the State of Rhode Island. But at the present time the members of the Executive Branch, in this case the Department of Defense, are under no con- straints, they are under no limits, they are under no rules of per- formance for this base location function. Mr. WArDIE. Mr. Hogan, do you have some questions? i.Ir. HOG AN. I have no questions, Mr. Chairman. Mr. W- rArnn. Professor, if you have more, please continue. If not. we will call Mr. Clewlow, the head of the agency to which you have been referring, of the Department of Defense, and then call you back, if you would like. Mr. MrLMAN. I have concluded my testimony. Mr. WAr.m1 . Why don't you remain, though, if you don't mind, to listen to Mr. Clewlow and Mr. Sheehan, and we may very well want to ask some additional questions of you. Mr. MELMAN. Certainly. Mr. WAr nrr. Thank you very much. Thank you for your patience and tolerance. i_The prepared statement submitted by Mr. Melman follows:] PREPAREII STATEMENT By SEY-AMUR ;17F.LMAN (Professor of Industrial Engineering. Columbia University; Vice President. New York Academy of Sciences ; Co-Chairman, SANE ; author, Our Depleted Society. Holt, Rinehart, Winston, 1965; Penta- gon Capitalism, McGraw-Hill, 1970; ed., Conversion of Industry Teemn Military to Civilian Economy (a series) Praeger, 1970: ed., The War Economy of the U.S., St. 1lartin':s Press, 1971 .; Planning for Conversion of Military-Industrial and 11 litary Base Facilities, 1972) Within the United States 1 million federal civilian employees and 1'/ million uniformed military personnel are located on 500 major military bases. These bases are dispersed throughout the states of the union and involve payrolls of $10 billion per year to military employees. The military base system and the pattern of competition for securing and maintaining the location of these facilities in particular districts and states has proceeded on the basis of specific military, economic and national policy assumptions. It has been assumed that it is necessary and proper for the United States to design and operate armed forces appropriate to conduct one nuclear war and two conventional wars at the same time. Further, it has been assumed that these armed forces are necessary and proper not only for deterring possible external attack on the united States, but also for estab- lishing "world hegemony" by the government of the United States and an accompanying Pax Americana (U.S. Army 1965 contract proposal). That is why approximately /, of the U.S. military budget during the last decade has been devoted to the General Purpose Forces and the system of military bases at home and abroad (the bases overseas are in about 36 countries and number more than 400 major installations). These military policy assumptions are summarized here since they con- stitute the policy basis for the design of armed forces and hence the system of required bases. Economic assumption : military bases have come to be regarded as a permanent part of the national economy and in particular of the economies of the communities and the states where they are located. They are regarded as an economic boon, putting money into circulation and stimulating local Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/068 CIA-RDP75B0038OR000700070001-1 trade, local real estate values and the local level of living. Unseen in this perception is the degree to which military bases, like all other military activity constitute a net drain on the civilian economy as a whole. For these instal- lations and their operations, whatever else their desired function, do not contribute either goods or services to the level of living of the society, nor to the means of production for the fabrication of further goods or services. Even a very large military system undergoes change including changing requirements in the military base system. That is certainly the case at the present time and accounts for the announcement by the Secretary of Defense on April 17, 1973 detailing the consolidation, reduction or closing of 274 military base installations in the United States. (Note that this includes many smaller bases not counted in the 500 major bases noted above.) The problem of what may be done to facilitate civilian adjustment by the people working in and around military bases is a major aspect of a larger problem of conversion from military to civilian economy. I have prepared a comprehensive analysis of the principal requirements for Planning for Con- version of Military-Ifl(in8trial and Military Base Facilitieq. A paper on this subject was prepared for the Economic Development Administration of the U.S. Department of Commerce and is herewith made available to this com- mittee. The problems induced by the closing and readjustment of various bases as announced by the Secretary of Defense in 1973 are but one part of a larger problem : the problem of economic conversion in the perspective of major re- duction of the size of U.S. armed forces. Such major reduction can come about under two conceivable circumstances : first, as the United States changes its own foreign policy perspectives and withdraws from goals of "world hegemony," Pax Americana and the associated preparations for the conduct of a proces- sion of Vietnam-type wars ; second, reduction in the size of armed forces can take place as international agreements are concluded and implemented for mutual reduction of armed forces under agreed timetables. It is entirely possible that ingredients of these two policy change factors will be involved in a foreseeable future. The size and character of General Purpose Forces are subject to major change by single-handed decision of the United States on its own policies. So too are the Strategic Forces (with their massive overkill). Both the Strategic and the General Purpose Forces (like those based in Western Europe) are likely to be affected by international arms limitation or disarmament agreements. In response to either or both forms of policy change there is bound to be major impact on the necessary size and character of the military base system in the United States, thereby raising the problem of conversion from military to civilian work. The elemental requirements for conversion of military bases to civilian uses are two fold: adveeced planning of a conversion process; and organized responsibility and initiative for the planning process and for its implementation in the hands of the local community. Long experience with respect to military bases in particular, and problems of designing and planning industrial operations in general, underscore the importance of these two considerations. Without advance planning in the range of one to three years, it is not feasible to carry out anything but crash, emergency, operations. Inevitably, such accommodation to military base closings or major reductions are bound to be costly in economic and human terms, and are frought with high likelihood of failure. The advance planning period is what is required to carry out the appropriate studies of the geography, natural resources, human resources and physical plant in and around military base areas. The military base conversion problem can be understood as one species of general economic development problem. It is like the problem that is faced by a major builder-developer who seeks to undertake a comprehensive, many-sided development of a given area, providing for long-term economic viability of housing, enterprises, and the community and other infrastructure needed by a durable economic society. Local initiative is an essential feature because central planning is either inadequate to such a task or destructive of many of the desirable values of self-governing communities. It has been assumed in recent American tra- dition that central control over economic activities, even for a population of 200 million, is a feasible mode of operation. There is a considerable weight Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 : f lA-RDP75B00380R000700070001-1 of evidence, characteristically ignored, that speaks to the limitations on. centralism and concentration of control from the point of view of economic efficiency, let alone political acceptability. The sum of experience is that the action toward indu?~ing advance planning and local responsibility is the centrally important action with respect to facilitating conversion of military bases to civilian use. One way of appreciating the importance of these considerations is to examine the consequences of little or no planning and little or no local responsibility. The volume by John E. Lynch, Local Economic Development After Military Base Closures (Praeger, 1970), includes abundant data on the consequences of failure to plan for economic development in advance of closure. Also my paper on Planning for Conversion includes material to this point. I think it is worth something for this committee to learn from the case of the New York Naval Shipyard. From 1961 to 1964 there was growing discussion as to the possibility of closure of this shipyard with its long history and approximately 9,000 em ployees. During late 1963 and 1964 a "Save the Shipyard" committee was formed in New York City; which carried out all the usual public relations and political pressuring operations. In November, 1964 the yard was formally ordered shut and the shutdown was completed by 1966 with the loss of 9,000 jobs in the New York Metropolitan area. On February 1, 1967 the Economic Development Administration of the Commerce Department commissioned the Institute for Urban Studies at Fordham University and the consulting firm of Tippetts-Abbett-McCarthy-Stratton to prepare a study for redevelopment of the area, and these people delivered a report on "The Brooklyn Navy Yard : A. Plan for Redevelopment" on May 1, 1968. All the classic features of the failure of planning were visible here. Instead of advance planning there was organization for political pressure and the expenditure of major funds in such operations. None of the public or private parties that might be considered to be in a responsible position in this matter took any initiative whatever for advance planning operations on behalf of the New York Naval Shipyard. During that time graduate students in the Department of Industrial and Management Engineering at Columbia University participated in a Seminar on Problems of Conversion from Military to Civilian Economy under my direction, and prepared various research papers n the New York Naval Ship- yard. In 1964 I prepared a proposal for "Utilization of the New York Naval Shipyard Area for an Ultramodern, Economically Viable Shipbuilding Enter- prise." This memorandum was brought to the attention of the Mayor, his Economic Development committee, trade union officers, bankers and others with a broad economic interest in the New York Metropolitan area, including Members of Congress and members of the Executive Branch of the federal government. None of these persons responded in any constructive way whatsoever. All the people in leadership positions who were directly or indirectly involved in the case of the New York Naval Shipyard devoted themselves to the "Save the Shipyard" committee and its political pressure operations. One consequence is that the shipyard area and the surrounding neighborhood suffered economic deterioration so that there was not only a net loss to the city, but an accumu- lation of social cost burdens thereafter. In this entire process Members of Congress played a part that was character- istic of the role that Members have played with respect to military base operations generally. During the last decades of high level military expenditures Members of Congress have assumed that these activities will continue indefinitely. Members of Congress have undertaken- the role of sales representative for their states or districts, selling the labor and talents of their constituents and selling regional natural resources for purchase by the Department of Defense in particular. Such a function by Members of Congress has been facilitated by the abundant representation of the Department of Defense on Capitol Hill. The convergence of national, military, political and economic pressures, with the collaboration of Members of Congress has corn;ributed to locking in military base communities to dependence on this activity as a source of livelihood-without any plausible alternatives being contemplated. The inevitable result of the absence of planning and the assumption of in- definite continuation of this work, with implied assurance that Members of Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 15 Congress would "take care" of their interests, has led military base com- munities to suffer economic dislocation and disruption as a consequence of decisions to close or reduce military base operations. Wherever this has oc- curred and will occur it will have been due to. systematic avoidance or pre- vention of actions designed to induce planning for other-than-military use of the manpower and other resources involved in military base operations. During the last decades Members of Congress have collaborated with the policies of the Executive Branch toward preventing the development of eco- nomic alternatives for military-industry and military bases. The record of the last decades is in sharp contrast to the pattern followed at the end of the Second World War. By 1944, and with increasing intensity during 1945, the federal government sparked a national effort called "Post- war Planning" designed to get every company and every town involved in military work to prepare plans for going civilian. Under strong government tutelage the Committee for Economic Development was formed to see to it that conversion planning became a wide-ranging activity throughout American industry. The Mayors of cities, Governors of states, trade associations, Cham- bers of Commerce all took a hand in this effort. Every firm of size had a senior officer in charge of "Postwar Planning." The press was filled with articles, discussions, debates on these issues. The range of prognoses ran from optimistic judgments about employment to the forecasts of Cassandras to the effect that the worst of the Great Depression would be replicated. Following the conclusion of major hostilities it became swiftly evident that the detail industrial and other planning operations paid off in the form of blueprint-ready capability for going civilian. This was evident in the speed with which industrial and other facilities were reconverted to their prior civilian functions. In 1973 there is not much to be done by way of reconversion. For the larger part of the military base and military-industrial facilities were specially constructed for the military task and have little or no history of prior civilian work. Therefore the problem is one of conversion from the military to civilian use. This task, while technically definable, has as its major roadblock the popular concensus, strongly reinforced by Congressional and Executive Branch collaboration, maintaining the idea of the military base system and military- industrial as a durable and desirable form of livelihood. The consequence of these attitudes, given powerful institutional support in the near-universal absence of planning for peace, produces the presently visible dependency on the military dollar. On May 25th and June 22nd, 1964 the Committee on Commerce of the United States Senate conducted hearings on S. 2274, a bill To Establish a National Economic Conversion Commission, and for Other Purposes. This legislation initiated by Senator George McGovern and cosponsored by 30 Members of the Senate was designed to establish a National Economic Conversion Commission and to induce nationwide conversion planning at all levels and by all "sectors of the economy." The bill provided for the convening of a national conference on economic conversion, a report to the President on appropriate policies and programs to be carried out by the various departments and agencies of the federal government, consultation with the governors of states to encourage appropriate studies and conferences at the state, local and regional levels, and the requirement that every contract and grant entered into by the Department of Defense and by the Atomic Energy Commission should include provision for setting up a conversion committee to plan "for conversion to civilian work arising from possible curtailment or termination of such contract or grant." The two sessions of hearings on this bill permitted no testimony from public witnesses and featured statements and formal comments from the various de- partments of the federal government. The General Counsel of the Department of Defense, John T. McNaughton, held, in his formal statement, that no formal planning for conversion was required because the composition of military pur- chases include many civilian-type items, and further because the Department opposed the provision of the legislation that would require its contractors to establish committees within their organizations to plan for conversion to civilian work, and that such planning should be left to each firm-for "if company management is convinced of the value of such an effort, it would surely under- take it as it would undertake any other planning project which is in the com- pany interest." Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 :1 IA-RDP75B0038OR000700070001-1 The Deputy Secretary of Defense, Cyrus R. Vance, in his formal testimony to this committee, opposed this legislation, mainly on the grounds that it was unnecessary. Mr. Vance pointed to the existence of a special Subcommittee on the Economic Impact of Defense Spending as part of the Defense Industry Advisory Council. This is a body composed of chief executives of principal military-industrial firms. In 1972 I reread the hearings on S. 2274 and was struck by the unanimity with which the representatives of the Executive Branch found that this legis- lation was inappropriate and unnecessary. 1 was also nterested in the fact tiiat t ho, In int'y `h-erotary of Defense and Gardner Ae1.ley of the Council of Economic Advisers made personal appearances at this hearing which lasted only a few hours, which had no public witnesses, and which concerned legis- lation that the Executive Branch was obviously interested in burying. I asked myself, in 1972, how could one explain the pattern of behavior that is displayed in the published hearings on S. 2274. What else was going on at that time? I picked up a copy of The Pentagon Papers (as published by The New Yorrk Times, Bantam Books, 1971) and soon got an answer. On May 25, 1961 The Pentagon Papers records the completion of the "Draft Resolution For Congress on Actions in Southeast Asia." This was the document, which subsequently formed the largest part of the Tonkin Gulf Resolution. May 25, 1964 was also the first day of the hearings on the bill to establish a National Economic Conversion Commission. During the months prior to that day and subsequently, including June 22nd, the second day of hearings on this bill, The Pentagon Papers gives an abundant display of escalation and inten- sification of military and political planning for enlarged military-political oper- ations in Indochina. it is noteworthy that the two senior officers of the Department of Defense who figured in the Hearings on S. 2274, Assistant Secretary John McNaughton :and Deputy Secretary Cyrus Vance, were important eotatributors to or par- ticipants in the war planning development that is reported in The Pentagon Papers. (See The Pentagon Papers, The Senator Gravel Edition, Beacon Tress, 1972, Volume 5, The Name Index, pp. 13 and 19.) I nsccn to the M mhcrs of ('ongress and to the American people the adminis- te atiou in 1961 w s preparing for enlarged war operations in Vietnam. 11hv aoa sly, thr? prim1pals of the administration, planning for war, opposed IN, legislation to plan for peace. The effort by Senator McGovern and his colleagues in 1963 and 1964 to intro- duce this legislation, and the collateral effort in the House by Bradford Morse, were frustrated not only by the voiced opposition of the chiefs of the Executive Branch, but also by the parallel ploy of establishing a Committee on the Eco- ui,e iio imicwt of Defense And Disarmament chaired by Gardner Ackley of the Council of Economic Advisers. By establishing this committee only a short time before these hearings were to be begin, President Johnson and his associates could allege that they were taking care of this problem. The fact is that the subsequent Ackley Report merely delivered another shipment of the conven- tional wisdom that there really was no conversion problem and that such issues, if they arose, could be dealt with by appropriate national fiscal and monetary policies. For the rest, according to the Ackley Report, some frictional adjust- ments might be involved. In my judgment, the manipulations practiced by the Executive Branch in squashing a legislative effort to plan for peace constituted a conspiracy against the American people. It is a bitter fact that Senator Warren Magnusen, Chair- man of the Commerce Committee, and his associates, thereafter, intended or not, collaborated in this operation by failing to bring this bill out of committee and to the floor of the Senate for an open vote. In place of a national efrort to plan for economic conversion there was es- tablished in the Department of Defense in 1963 an Office of Economic Adjust- ment. This unit has continued to the present day, serving as an arm of the Interagency Committee on Economic Adjustment. The handful of men and women engaged in that office were empowered to do little more than "help(s) the community help itself," as one of its reports is titled. At no time has this unit attempted or proposed initiative to require advance planning for conversion. rndeed. when T called on their offieea in 1963 and suggested that this be done I was told that the Generals of the Air Force wouldn't like it. They want their people thinking about the requirements of the Air Force and not about doing Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06117CIA-RDP75BOO38OROOO7OOO7OOO1-1 something else. And that's where the matter stands to the present day. Hence, assuming even the most conscientious preformance of their individual duties, the functioning of this staff group and its overseeing interagency Committee resulted in a condition of no-planning that was highly visible as Secretary of Defense Richardson announced his base closings program with 48,000 job terminations on April 23, 1973, and his unplanned helter-skelter effort to assist the impacted communities. The conversion of military base operations to civilian uses is one part, and an important one, of a larger issue of conversion of the economy as a whole to civilian work. In the larger perspective what is required is appropriate plan- ning for capital investment that will utilize the talents of Americans for eco- nomically productive purposes. During 1965 I prepared a general statement on economic conversion which summarized many of these considerations There is reason to expect that predictable conditions will bring renewed and recurring pressure for coping with problems of conversion of military bases to civilian work. First, it is likely that the international arms race will be restricted. Second, it is reasonable to expect that continuing and intensifying economic pressures will bear on the government of the United States, requir- ing it to limit its public expenditures. Owing to the fact that the budget of the Departnient of Defense represents the ]ion's share of the federal budget, it is the natural place to look for money savings. Third, many people are becoming aware of one of the peculiar features of the military-industry and the military base system-namely, the way it serves to draw wealth from certain parts of the country and deposit it in other parts. Based upon an Analysis of Federal Revenues and Expenditures for States and Regions prepared for the House Committee on Governmental Operations, Professor James R. Anderson has diagnosed "The Balance of Military Payments Among States and Regions." The Congressional document is U.S. Congress, House of Representatives, 90th Congress, 2nd Session, 1968, Committee on Government Operations, Federal Revenues and Expenditure Estimates for States and Regions, Fiscal Years 1965-67. Anderson's paper appeared in S. Mel- man, editor, The War Economy of the United States, St. Martin's Press, 1971. The annual data for the last available years, 1965-1967, shows that certain states (New York, New Jersey, Pennsylvania, Ohio. Illinois, Michigan) paid out to the federal government in personal and business taxes many billions of dollars more each year than was received back in all forms from the federal government in those states. By contrast, other states (California, Texas, Vir- ginia) each received from the federal government more than $1 billion each year in excess of the taxes paid by individuals and firms from those states. What is reflected here is a pattern of interstate exploitation on behalf of the operation of the military economy. As the economic and the fiscal problems of many states, and especially large cities, intensify, these military economy re- lationships will be examined with an increasingly critical eye. It is to be ex- pected that the governors and mayors of states and cities that have long been strongly disadvantaged owing to the operation of the military economy will bring ever-greater pressure to bear for budget reductions in that realm. Whenever the Members of Congress feel disposed to change their role from being special sponsors, guardians and semi administrators of military economy, to a concern for the economic well-being of their constituents as a whole and of this country as a whole, they have open to them a series of workable options : First, to provide by law for encouraging and renniring advance planning for conversion to civilian activity of military base facilities and their work forces ; Second, to require that this planning be done on a cooperative basis with representatives of the local community and that this planning be based upon professionally competent economic surveys and thoughtfully conceived planning options, including capital funds required and timetables for conversion, alter- native possible capital sources and the employment consequences of particular planning options. (An especially thoughtful discussion is in B. Stein, The Com- munity Context of Economic Conversion, Center for Community Economic De- velopment, Cambridge. 1972.) Third, to provide cushioning for individuals and families who cannot be accounted for in conversion planning in the same nlace, the Congress could enact a Defense Employees' Bill of Rights. Such legislation could include pro- visions for (a) minimum income during a year of transition, using the public welfare income of the state as a minimum base; (b) provision for a mora- Approved For Release 2005/06/06 : CIA-RDP75BOO38OR000700070001-1 Approved For Release 2005/06/06 : CiA-RDP75B00380R000700070001-1 torium- on mortgage and other credit payments; (c) provision for costs of education required for occupational retraining; (d) provision for family relo- cation to another community, where required. (The committee considering these matters should take into account the conventional pattern among Americans with respect to individual and family mobility. It is reasonable to assume that there is a large and growing body of opinion in the country that the United States can ill-afford a sustained extravaganza of military base and allied spending that is either designed to serve ill-con- ceived military aims, or to serve as a convert welfare system, or as an ex- travagant "make-work" program that yields no productive economic return to the society. Experience with conversion of military bases and with problems of area economic development indicates that a great array of exciting, constructive possibilities can be opened up throughout the country by prudent planning and responsibility on a local basis. The options range from similar functional use of certain bases-like the use of a military air base as a civilian airport. But the range of possibilities ex- tends on to the exciting prospects of integrated economic planning for entire new communities and industrial areas in regions where other conditions make that appropriate and where the sheer size of the military base area lends itself to such alternative use. The Fort Dix, New Jersey area is a case in point. With its tl square mile;: on the northeast seaboard, thoughtfully planning could very well- make possible an entire new town that could be a. model for what this country should be trying to do, moving into the next century. [Vie following exhibits which were attached to the prepared state- inent are retained in the files of the subcommittee..] F,rhibit 4.-News Release, Office of Assistant Secretary of Defense (Public Affairs), Secretary of Defense Elliot L. Richardson Announces 274 Actions Affecting Military Installations, April 17, 1973. F,xhibit B.-S. Melman, Planning for Conversion of Military-Industrial and Military Base Facilities, for U.S. Department of Commerce, Economic Develop- ment Administration, Office of Technical Assistance, August, 1972. Exhibit C.-S. Melman,"Utilization of the N.Y. Naval Shipyard Area for an Ultra-Modern Economically Viable Shipbuilding Enterprise," a proposal, 1964. -Exhibit D.-S. Melman,'"Economic Conversion," 1965. Exhibit E.-TJ.S. Bureau of the Census, Statistical Abstract of the U.S., 1973, p. 36, Table No. 44. Exhibit F.-Economic Adjustment Assistance `Helps the Community Help Itself', January 1969 thru January 1972. Exhibit G.-Remarks by Secretary of Defense Elliot L. Richardson to News Media at the Pentagon, Monday, April 23, 1973. Mr. WALDIE. The Chair nows calls Mr. Clewlow, Acting Secre- tary of Defense for Manpower and Reserve Affairs, who is accom- panied by Mr. William Sheehan, Director of Economic Develop- ment of the Department of Defense. Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/08/061:9CIA-RDP75B00380R000700070001-1 STATEIMIENT OF CARL W. CLEWLOW, ACTING SECRETARY OF DEFENSE FOR MANPOWER AND RESERVE AFFAIRS, ACCOMPA- IIIED BY WILLIAM SHEEHAN, DIRECTOR OF ECONOMIC ADJUST- MENT; DR. WILLIAM VALDES, STAFF DIRECTOR, OFFICE OF CIVILIAN PERSONNEL POLICY, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE FOR MANPOWER AND RESERVE AFFAIRS; ALLAN S. KERR, DIRECTOR, BASE REQUIREMENTS, OFFICE OF THE DEPUTY ASSISTANT SECRETARY, INSTALLATIONS AND HOUSING; AND ROBERT WORKMAN, DIRECTOR, STAFFING POLICIES AND PROGRAMS, ASSISTANT SECRETARY OF DEFENSE FOR MANPOWER AND RESERVE AFFAIRS Mr. CL rWLow. I am Carl Clewlow, the Acting Assistant Secre- tary of Defense. I have on my right Dr. William Valdes, who is the staff director of the Office of Civilian Personnel Policy. I have on my left Mr. William Sheehan, who is the Director of the Office of Economic Adjustment. I have also Mr. Allan Kerr and Mr. Robert Workman with me, who had been asked to answer additional questions. Mr. Chairman, Mr. Hogan, gentlemen, I appreciate this oppor- tunity to explain the steps being taken by the Department of Defense to meet our obligation of Federal employees who are adversely affected by base realignment actions and to assist in relieving the economic impact on affected communities. We have the two parts of this, the one personnel, the other the impact on communities. We share the concern of the subcommittee over the effect of major reductions, closures and transfers on our career civilian workforce. Because of the frequent turbulence which affects our civilian ,employment, we have developed over the past 9 years a com- prehensive program aimed at easing the adverse effects of civilian manpower adjustments on individual employees. This is our program for stability of civilian employment, which incorporates a combination of policies and programs, including a computerized priority placement program to match the skills of displaced employees with vacancies occurring anywhere in the Department of Defense. Mr. WALDIE. I will be interrupting occasionally. It takes me a -while to understand your bureaucratese. The phrase: The adverse effects of civilian manpower adjust ments-that means a reduction in force, doesn't it? Mr. CLF,WLOW. It could be a reduction in force. It could be the transfer of a function in one location to another. It could be a com- bination where two headquarters are combined into a single one. There are a wide variety of things that may be considered adverse Mr. WAS DIE. Affecting only your civilian work force? Mr. CLEWLOW. We are talking about the civilian work force, yes, sir. Approved For Release 2005/06/06 : CIA-RDP75B0038OR000700070001-1 Approved For Release 2005/06/06 :201A-RDP75B00380R000700070001-1 Mr. WALDrE. Please continue. MMIr. Cn waow. Our program of stability of civilian employment includes a computerized priority placement program which is de- shgned generally to match the skills of displaced employees with vacancies which occur elsewhere in the Department of Defense. 11r?. WAZnrr. liow long has that bean in existence? Air. Ci.wr.ow. That has been in existence approximately 9 years, Si r?. i\lr. WALDrE. How many people are employed in that program? A D% Cr,uwr.ow. I would have to supply that for the record. A1 V. W TAr1mi. Just a mess? Mr. (1rriwr.ow. It is a fairly small number. I would guess 11 or 12 people are cinpioved in that program, sir. Hr. WALDIE. 'c'hat is nation',t-1(10? All'. Ci.Ewrow. That's correct. ilr. 1VALDrr. Does that include clerks and secretaries? Mr. (,,r,r,.wrLow. This would include clerks and secretaries. .'dr. W117ALDtr3. has there been any increase with reductions in force drat have been taking place in recent months? Mr. Cr,nwr.ow. Aniy increase in the size of that staff? Ofr. 1VALDIE. )eS. Alr?. CIuwi.ow. We. have a collateral organization which works on am informal basis and consists of a zone coordinator in each of four zones throughout the United States. 11r?. W ALDrE. Has there been an increase in the staff working in the priority placement program ? Mr?. (s rwr.ow. It is essentially the name, sir. Mr. 11,'ALDTE. I-1as there been uny reduction in that staff? Mr. Cr.rwr.ow. Not to my knowledge. Air. W anu . Will you provide the committee with the answers to t13nt ? Mr. Ci,rwr,ow. Y'es, sir. The information follows:] The staff of the Department of Defense Central Referral Activity in Dayton, Ohio consists of thirteen persons. The staff operates the computer man-job match system and has not been increased due to the recent base closure an- nouncement because the computer facility has the capacity to handle additional ri ist'atiorrs without more staff. The computer products of the Central Referral Activity go to the placement staffs of 1)efeuse activities throughout the country. These installation placement staffs are devoting a greater proportion of their tune to the piaeemrnt of employees affected by reductions in force as are the personnel staffs at the activities being closed or reduced. Air. WALmji. Your information is that it has remained the same size though there has been a great amount of work assigned to it if it is in fact matching the skills of displaced employees. Mr. ('.r Ewr.ow. This is a continuous kind of program. This is not the only reduction in force that has occurred in the Department of Defense. Mr. IVALDII. It is a major reduction in force, and I assume the same staff that has been in operation over the years of high employ- ment would have to be augmented to hit the years of low employ- nient. would it not? Mr. CLEWLOW. I would like to ask Mr. Valdes to address himself to that. Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 21 Mr. VALDES. Mr. Chairman, in addition to the staff which the Sec- rotary referred to which operates our computer facility in Dayton, Ohio, on a nationwide basis and which has the capacity for absorb- ing large numbers of registrations and referrals, we have throughout the country people who have part-time responsibilities. We call them regional. coordinators. Mr. WALDIE. Are they Department of Defense people? Mr. VALDES. Yes; we have four people who are zone placement coordinators and 43 who are regional placement coordinators. Mr. WALDiE. Are they civilian employee? Mr. VAi.DES. Yes, they are civilian employees. As the activity in the out-placement function increases, their time is devoted increas- ingly to that function. They have responsibility for hiring and plac- ing people. So the basic point that I would like to make is that there is a great deal of additional manpower and time that is devoted to placement of people during periods of reduction in force. It is built into the system. Mr.'. WALDn;. I presume you can give me an objective report as to how many people have been placed as a result of the computerized operation in the priority placement program in the last 1.2 months? Mr. VALDES. Yes, Sir. Mr. WALDIE. Any figure that might come to mind. Mr'. VALDFS. I think I could give you for the past 5 months. Mr. WALDIL. That would be fine. Those were directly attributable to this function? Mr. VALDES. Yes. From January 1 through May 30, 1973, through this particular program, there were 1,468 placements. The number has been steadily increasing each month, starting with 95 in January, 105 in February, 272 in March, 405 in April, 591 in May. So the activity is stepping up and placements are sharply increasing. Mr. WALDIF. For further clarification, tell me how that works. You have a fellow who is in Rhode Island who has been notified that the base is going to be cleared and then he says "I would like to remain employed by the Federal Government." Do the names of all the people in Rhode Island that are being displaced go into the computer somewhere along the line? Mr. VALDrs. Yes, sir, if they so desire. Mr. WALDn . They have to indicate a desire? Mr. VALDES. Yes, sir. What is done is persons are registered for the skills for which they are qualified and for the locations at which they are willing to work. These are the two basic factors. The area of registration is normally for the zone in which the registrant is currently employed. We have divided the country into four zones. We will expand the area of registration beyond a zone if it is necessary, as it very well may be with regard to people in Rhode Island. These registrations then go into this central computer referral activity that I referred to and what the computer does is to send out what have become known as "stopper lists" to all the activities for which people have registered. This then tells that activity there are people with a specific skill Approved For Release 2005/06/06 : CIA-RDP75B00380R000700070001-1 Approved For Release 2005/06/06 :OA-RDP75B0038OR000700070001-1 at a specific grade that are available for placement, and it further tells them that they are not to hire from any other source. The activity then, when it gets a vacancy in one of those skills that it has to fill, submits a requisition to the central referral activ- ity in Dayton. It receives back a computer printout of the skills and personal. data concerning the individuals who are available for placement. The agency then contacts the activity that has registered the em- ployee for replacement and it effects the placement. If the placement involves a geographical move, the employee, his family, and household effects are moved at government expense to the iwew location. Tbat, in essence, is the way the system operates, Mr. Chairman.. Mr. WAALnrr. Thank you. Please proceed. Mr. CLrwLoiv. At the time that the Secretary of Defense all- nouneed the major base realignments on April. 17, 197.), we immedi- ately placed restrictions on the filling of vacancies throughout the Department. Our main purpose was to stockpile these vacancies in order to provide a basis whereby these surplus employees could be placed throu