(PUBLIC LAW 216 - 81ST CONGRESS) (CHAPTER 412 - 1ST SESSION) (H.R. 5632) AN ACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01634R000100090046-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: November 16, 2016
• Document Release Date: August 6, 1998
• Sequence Number: 46
• Content Type: MISC

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[PUBLIC LAw 216-81ST CONGRESS]
[CHAPTER 412-1ST SESSION]
[Ii. R. 56321
AN ACT
To reorganize fiscal management in the National Military Establishment to
promote economy and efficiency, and for other purposes.
Be it enacted by the Senate and House of Representatives of Me
United States of America in Congress assembled,
SHORT TITLE
SECTION 1. This _Act may be cited as the "National Security Act
Amendments of 1949".
SEC. 2. Section 2 of the National Security Act of 1947 is amended to
read as follows :
"SEC. 2. In enacting this legislation, it is the intent of Congress to
provide a comprehensive program for the future security of the United
States; to provide for the establishment of integrated policies and
procedures for the departments, agencies, and functions of the Gov-
ernment relating to the national security,; to provide three military
departments separately administered, for the operation and adminis-
tration of the Army, the Navy (including naval aviation and the
United States Marine Corps), and the Air Force, with their assigned
..combat and service components ; to provide for their authoritative
coordination and unified direction under civilian control of the Secre-
tary of Defense but not to merge them ; to provide for the effective
strategic direction of the armed forces and for their operation under
unified control and for their integration into an efficient team of land,
naval, and air forces but not to establish a single Chief of Staff over the
armed forces nor an armed forces general staff (but this is not to be
interpreted as applying to the Joint. Chiefs of Staff or Joint Staff)."
. CHANGE IN COMPOSITION OF THE NATIONAL SECURITY COUNCIL
SEC. 3. The fourth paragraph of section 101 (a) of the National
Security Act of 1947 is amended to read as follows :
"The Council shall be composed of-
(1) the President;
" 2) the Vice President;
3) the Secretary of State;
"(4 the Secretary of Defense;
"(5) the Chairman of the National Security Resources Board;
and
"(6) The Secretaries and Under Secretaries of other executive
departments and of the military departments, the Chairman of
the Munitions Board, and the Chairman of the Research and
Development Board, when appointed by the President by and
with the advice and consent of the Senate, to serve at his pleasure:"
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CONVERSION OF THE NATIONAL MILITARY ESTABLISHMENT INTO AN
EXECUTIVE DEPARTMENT
"(d) Except to the extent inconsistent with the provisions of this
Act, the provisions of title IV of the Revised Statutes as now or here-
after amended shall be applicable to the Department of Deense."
Executive Departments :
"'First. The Department of State.
"'Second. The Department of Defense.
"'Third. The Department of the Treasury.
11 'Fourth. The Department of Justice.
"'Fifth. The Post Office Department.
11 'Sixth. The Department of the Interior.
"'Seventh. The Department of Agriculture.
"'Eighth. The Department of Commerce.
" `Ninth. The Department of Labor.'
"SEC. 201. (a) There is hereby established, as an Executive Depart-
ment of the Government, the Department of Defense, and the Secretary
of Defense shall be the head thereof.
"(b) There shall be within the Department of Defense (1) the
Department of the Army, the Department of the Navy, and the Depart-
ment of the Air Forte, and each such department shall oil and after
the date of enactment of the. National Security Act Ame~dments of
1949 be military departments in lieu of their prior status ad Executive
Departments, and (2) all other agencies created under ~itle II of
this Act.
"(c) Section 158 of the Revised Statutes, as amended, is amended to
read as follows :
"'SEC. 158. The provisions of this title shall apply to the' following
SEC. 4. Section 201 of the National Security Act 'of 1947 is
THE SECRETARY OF DEFENSE
SEC. 5. Section 202 of the National Security Act of 1947, a$ amended,
is further amended to read as follows :
"SEC. 202. (a) There shall be a Secretary of Defense, who shall be
appointed from civilian life by the President, by and with the advice
and consent of the Senate : Provided, That a person who ias within
ten years been on active duty as a commissioned officer in a Regular
component of the armed services shall not be eligible for appointment
as Secretary of Defense.
"(b) The Secretary of Defense shall be the principal assistant to
the President in all matters relating to the Department of Defense.
Under the direction of the President, and subject to the provisions of
this Act, he shall have direction, authority, and control over the
Department of Defense.
"(c) (1) Notwithstanding any other provision of this Acjt, the com-
batant functions assigned to the military services by sectionis 205 (e),
206 (b), 206 (c), and 208 (f) hereof shall not be transferred, reassigned,
abolished, or consolidated.
"(2) Military personnel shall not be so detailed or assigned as to
impair such combatant functions.
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"(3) The Secretary of Defense shall not direct the use and expendi-
ture of funds of the Department of Defense in such manner as to effect
the results prohibited by paragraphs (1) and (2) of this subsection.
"(4) The Departments of the Army, Navy, and Air Force shall be
separately administered by their respective Secretaries under the
direction authority and control of the Secretary of Defense.
"(5) ~ubject to t'he provisions of paragraph (1) of this subsection
no function which has been or is hereafter authorized by law to be
performed by the Department of Defense shall be substantially trans-
ferred reassigned, abolished or consolidated until after a report in
regard to all pertinent details shall have been made by the Secretary
of Defense to the Committees on Armed Services of the Congress.
"(6) , No provision of this Act shall be so construed as to prevent a
Secretary of a military department or a member of the Joint Chiefs
of Staff from presenting to the Congress, on his own initiative, after
first so informing the Secretary of Defense, any recommendation
relating to the Department of Defense that he may deem proper.
"(d) The Secretary of Defense shall not less often than semi-
annually submit written reports to the President and the Congress
covering expenditures, work and accomplishments of the Department
of Defense, accompanied by (1) such recommendations as he shall
deem appropriate, (2) separate reports from the military departments
covering their expenditures, work and accomplishments, and (3)
itemized statements showing the savings of public funds and the
eliminations of unnecessary duplications and overlappings that have
been accomplished pursuant to the provisions of this Act.
"(e) The Secretary of Defense shall cause a seal of office to be made
for the Department of Defense, of such design as the President shall
approve, and judicial notice shall be taken thereof.
"(f) The Secretary of Defense may, without being relieved of his
responsibility therefor, and unless prohibited by some specific provi-
sion of this Act or other specific provision of law, perform any function
vested in him through or with the aid of such officials or organizational
entities of the Department of Defense as he may designate."
DEPUTY SECRETARY OF DEFENSE ASSISTANT SECRETARIES OF DEFENSE;
MILITARY ASSISTANTS; AND CIVILIAN PERSONNEL
SEC. 6. (a) Section 203 of the National Security Act of 1947 is
amended to read as follows :
"SEC. 203. (a) There shall be a Deputy Secretary of Defense, who
shall be appointed from civilian life by the President, by and with the
advice and consent of the Senate : Provided, That a person who has
within ten years been on active duty as a commissioned officer in a
Regular component of the armed services shall not be eligible for
appointment as Deputy Secretary of Defense. The Deputy Secretary
shall perform such duties and exercise such powers as the Secretary
of Defense may prescribe and shall take precedence in the Department
of Defense next after the Secretary of Defense. The Deputy Secretary
shall act for, and exercise the powers of, the Secretary of Defense
durin his absence or disability.
"(b There shall be three Assistant Secretaries of Defense, who shall
be appointed from civilian life by the President, by and with the advice
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[Pos. Lew 218.1
and consent of the Senate. The Assistant Secretaries shalt perform
such duties and exercise such powers as the Secretary of De ense may
prescribe and shall take precedence in the Department of Defense after
the Secretary of Defense, the Deputy Secretary of Defense, the Secre-
tary of the Army, the Secretary of the Navy, and, the Secretory of the
Air Force.
"(c) Officers of the armed services may be detailed to duty as assist-
ants and personal aides to the Secretary of Defense, but he shall not
establish a militariy staff other than that provided for lhy section
211 (a) of this Act.'
(b) Section 204 of the National Security Act of 1947 is ariended to
read as follows :
"SEC. 204. The Secretary of Defense is authorized, subject to the
.civil-service laws and the Classification Act of 1923, as ariended, to
appoint and fix the compensation of such civilian personnel as may
be necessary for the performance of the functions of the D partment
of Defense other than those of the Departments of the Aritny, Navy,
and Air Force."
CREATING THE POSITION OF CHAIRMAN OF THE JOINT CHIEFS OF STAFF AND
PRESCRIBING HIS POWERS AND DUTIES
SEC. 7. (a) Section 210 of the National Security Act f 1947 is
amended to read as follows : I
"SEC. 210. There shall be within the Department of efense an
Armed Forces Policy Council composed of the Secretary o Defense,
as Chairman, who shall have power of decision; the Deputy; Secretary
of Defense; the Secretary of the Army; the Secretary of ,he Navy;
the Secretary of the Air Force; the Chairman of the Joint Chiefs of
Staff; the Chief of Staff, United States Army; the Chief! of Naval
Operations; and the Chief of Staff, United States Air Force. The
Armed Forces Policy Council shall advise the Secretary cif Defense
on matters of broad policy relating to the armed forces and! shall con-
sider and report on su:;h other matters as the Secretary of Defense
may direct."
(b) Section 211 of the National Security Act of 1947 is amended to
read as follows :
"SEC. 211. (a) There is hereby established-within the Dep rtment of
Defense the Joint Chiefs of Staff, which shall consist of the Chairman,
who shall be the presiding officer thereof but who shall have no vote;
the Chief of Staff, United States Army, the Chief of Naval Opera-
tions; and the Chief of Staff, United States Air Force. The Joint
Chiefs of Staff shall be the principal military advisers to the Presi-
dent, the National Security Council, and the Secretary of Defense.
"(b) Subject to the authority and direction of the Presid~nt and the
Secretary of Defense, the Joint Chiefs of Staff shall perform the fol-
lowing duties, in addition to such other duties as the President or the
Secretary of Defense may direct :
"(1) preparation of strategic plans and provision f6r the stra-
tegic direction of the military forces;
`(2) preparation of joint logistic Mans and assignrhent to the
military services of logistic responsibilities in' accordance with
such plans;
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"(3) establishment of'unified commands in strategic areas;
"(4) review of major material and personnel requirements of
the military forces in accordance with strategic and logistic plans;
"(5) formulation of policies for joint training of the military
forces;
"(6) formulation of policies for coordinating the military
education of members of the military force?; and
"(7) providing United States representation on the Military
Staff Committee of the United Nations in accordance with the
provisions of the Charter of the United Nations.
"(c) The Chairman of the Joint Chiefs of Staff (hereinafter
referred to as the `Chairman') shall be appointed by the President, by
and with the advice and consent of the Senate, from among the Regular
officers of the armed services to serve at the pleasure of the President
for a term of two years and shall be eligible for one reappointment, by
and with the advice and consent of the Senate, except in time of war
hereafter declared by the Congress when there shall be no limitation on
the number of such reappointments. The Chairman shall receive the
basic pay and basic and personal money allowances prescribed by law
for the Chief of Staff, United States Army, and such special pays
and hazardous duty pays to which he may be entitled under other
provisions of law.
"(d) The Chairman, if in the grade of general, shall be additional
to the number of officers in the grade of general provided in the third
proviso of section 504 (b) of the Officer Personnel Act of 1947 (Public
Law 381, Eightieth Congress) or, if in the rank of admiral, shall be
additional to the number of officers having the rank of admiral pro-
vided in section 413 (a) of such Act. While holding such office he
shall take precedence over all other officers of the armed services :
Provided, That the Chairman shall not exercise military command
over the Joint Chiefs of Staff or over any of the military services.
of"(e) In addition to participating as a member of the Joint Chiefs
taff in the performance of the duties assigned in subsection (b)
of this section, the Chairman shall, subject to the authority and direc-
tion of the President and the Secretary of Defense, perform the
following duties :
"(1) serve as the presiding officer of the Joint Chiefs of Staff
"(2) provide agenda for meetings of the Joint Chiefs of Stah
and assist the Joint Chiefs of Staff to prosecute their business
as promptly as practicable ; and
"(3) inform the Secretary of Defense and, when appropriate
as determined by the President or the Secretary of Defense, the
President, of those issues upon which agreement among the Joint
Chiefs of Staff has not been reached."
(c) Section 212 of the National Security Act of 1947 is amended to
read as follows :
"SEC. 212. There shall be, under the Joint Chiefs of Staff, a Joint
Staff to consist of not to exceed two hundred and ten officers and to be
composed of approximately equal numbers of officers appointed by the
Joint Chiefs of Staff from each of the three armed services. The Joint
Staff, operating under a Director thereof appointed by the Joint
Chiefs of Staff, shall perform such duties as may be directed by the
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Joint Chiefs of Staff. The Director shalt be an officer junior, in grade
to all members of the Joint Chiefs of Staff."
CHANGING THE RELATIONSHIP OF THE SECRETARY OF DEFENS:Z TO TIIH
MUNITIONS BOARD
SEC. 8. Section 213 of the National Security Act of 1947 is amended
to read as follows:
"SEC. 213. (a) There is hereby established in the Department of
Defense a Munitions Board (hereinafter in this section referred to as
the `Board').
"(b) The Board shall be composed of a Chairman, who shall be the
head thereof and who shall, subject to the authority of the Secretary of
Defense and in respect to such matters authorized by him,; have the
power of decision upon matters falling within the ~urisdicton of the
Board, and an Under Secretary or Assistant Secretary from each of
the three military departments, to be designated in each case by the
Secretaries of their respective departments. The Chairman shall be
appointed from civilian life by the President, by and with the advice
and consent of the Senate, and shall receive compensation at the rate
of $14,000 a year.
"(c) Subject to the authority and direction of the Secretary of
Defense, the Board shall perform the following duties in support of
strategic and logistic plans and in consonance with guidance in those
fields provided Ey the Joint Chiefs of Staff, and such other; duties as
the Secretary of Defense may prescribe:
"(1) coordination of the appropriate activities with ;regard to
industrial matters, including the procurement, production, and
distribution plans of the Department of Defense;
"(2) planning for the military aspects of industrial mobili-
zation ;
"(3) assignment of procurement responsibilities ainong the
several military departments and planning for standardization
of specifications and for the greatest practicable allocati' n of pur-
chase authority of technical equipment and common use items on
the basis of single procurement;
"(4) preparation of estimates of potential production procure-
ment, and personnel for use in evaluation of the logistic feasibility
of strategic operations;
"(6) determination of relative priorities of the various seg-
ments of the military procurement programs ;
"(6) supervision of such subordinate agencies as are or may
be created to consider the subjects falling within the scope of the
Board's responsibilities;
"(7) regrouping, combining, or dissolving of existing inter-
service agencies operating in the fields of procurement, product
tion, and distribution in such manner as to promote efficiency and
economy ;
"(8) maintenance of liaison with other departments and agen-
cies for the proper correlation of military requirements with the
civilian economy, particularly in regard to the procurement or
disposition of strategic and critical material and the mainte-
nance of adequate reserves of such material, and making of rec-
ommendations as to policies in connection therewith; and
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"(9) assembly and review of material- and personnel require-
ments presented by the Joint Chiefs of Staff and by the produc-
tion, procurement, and distribution agencies assigned to meet
military needs, and making of recommendations thereon to the
Secretary of Defense.
"(d) When the Chairman of the Board first appointed has taken
office, the Joint Army and Navy Munitions Board shall cease to exist
and all its records and personnel shall be transferred to the Munitions
Board.
"(e) The Secretary of Defense shall provide the Board with such
personnel and facilities as the Secretary may determine to be required
by the Board for the performance of its functions."
CHANGING THE RELATIONSHIP OF THE SECRETARY OF DEFENSE TO THE
RESEARCH AND DEVELOPMENT BOARD
SEC. 9. Section 214 of the National Security Act of 1947 is amended
to read as follows :
"SEC. 214. (a) There is hereby established in the Department of
Defense a Research and Development Board (hereinafter in this sec-
tion referred to as the 'Board'). The Board- shall be composed of a
Chairman, who shall be the head thereof and who shall, subject to the
authority of the Secretary of Defense and in respect to such matters
authorized by him, have. the,power of decision on matters falling
within the jurisdiction of the Board, and two representatives from
each of the Departments of the Army, Navy, and Air Force, to be
designated by the Secretaries of their respective Departments. The
Chairman shall be appointed from civilian life by the President, by
and with the advice and consent of the Senate, and shall receive com-
pensation at the rate of $14,000 a year. The purpose of the Board
shall be to advise the Secretary of Defense as to the status of scientific
research relative to the national security, and to assist him in assuring
adequate provision for research and development on scientific prob-
lems relating to the national security.
"(b) Subject to the authority and direction of the Secretary of
Defense, the Board shall perform the following duties and such other
duties as the Secretary of Defense may prescribe :
"(1) preparation of a complete and integrated program of
research and development for military purposes;
"(2) advising with regard to trends in scientific research relat-
ing to national security and the measures necessary to assure
continued and increasing progress ;
"(3) coordination of research and development among the mili-
tary departments, and allocation among them of responsibilities
for specific programs;
"(4) formulation of policy for the Department of Defense in
connection with research and development matters involving
agencies outside the Department of Defense; and
"(5) consideration of the interaction of research and develop-
ment and strategy, and advising the Joint Chiefs of Staff in
connection therewith.
"(c) When the Chairman of the Board first appointed has taken
office, the Joint Research and Development Board shall cease to exist
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[Pun. Lsw 218.
and all its records and personnel shall be transferred to the Research
and Development Board.
"(d) The Secretary of Defense shall provide the Board; with such
personnel and facilities as the Secretary may determine to be required
by the Board for the performance of its functions."
COMPENSATION OF SECRETARY OF DEFENSE, DEPUTY SECRETARY OF DEFENSE,
SECRETARIES OF MILITARY DEPARTMENTS, AND CONSULTANTS
SEC. 10. (a) Section 301 of the National Security Act of 1947 is
amended to read as follows :
"SEC. 301. (a) The Secretary of Defense shall receive the compen-
sation prescribed by law for heads of executive departments.
"(b) The Deputy Secretary of Defense shall receive compensation
at the rate of $14,500 a year, or such other compensation plus $500 a
year as may hereafter be provided by law for under secretaries of
executive departments. The Secretary of the Army, the Secretary of
the Navy, and the Secretary of the Air Force shall each receive com-
pensation at the rate of $14,000 a year, or such other compensation as
may hereafter be provided by law for under secretaries o' executive
departments."
(b) Section 302 of the National Security Act of 1947 is 4mended to
read as follows :
"SEC. 302. The Assistant Secretaries of Defense and the Under Sea
retaries and Assistant Secretaries of the Army, the Navy, and the Air
Force shall each receive compensation at the rate of $10,330 a year or
at the rate hereafter prescribed by law for assistant secretaries of
executive departments and shall perform such duties as the respective
Secretaries may prescribe."
(c) Section 303 (a) of the National Security Act of 1947 .is amended
to read as follows :
"(a) The Secretary of Defense, the Chairman of the National
Security Resources Board, the Director of Central Intelligence, and
the National Security Council, acting through its Executive Secretary,
are authorized to appoint such advisory committees and to employ,
consistent with other provisions of this Act, such part-time advisory
personnel as they may deem necessary in carrying out their respective
functions and the functions of agencies under their control. Persons
holding other offices or positions under the United States for which
they receive compensation, while serving as members of such com-
mittees, shall receive no additional compensation for such service.
Other members of such committees and other part-time advisory per-
sonnel so employed may serve without compensation or may receive
compensation at a rate not to exceed, $50 for each day of, service, as
determined by the appointing authority."
REORGANIZATION OF FISCAL MANAGEMENT To PROMOTE ECONOMY AND
EFFICIENCY
SEC. 11. The National Security Act of 1947 is amended kjy inserting
at the end thereof the following new title :
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"TITLE IV
"PROMOTION OF ECONOMY AND EFFICIENCY TmiouGH ESTABLISHMENT
OF UNIFORM BUDGETARY AND FISCAL PROCEDURES AND ORGANIZA-
TIONS
"COMPTROLLER OF DEPARTMENT OF DEFENSE
"SEO. 401. a There is hereby established in the Department
of Defense the(Comptroller of the Department of Defense, who shall
be one of the Assistant Secretaries of Defense.
"(b) The Comptroller shall advise and assist the Secretary of
Defense in performing such budgetary and fiscal functions as may
be required to carry out the powers conferred upon the Secretary of
Defense by this Act, including but not limited to those specified in
this subsection. Subject to the authority, direction, and control of the
Secretary of Defense, the Comptroller shall-
" (1) supervise and direct the preparation of the budget estimates
of the Department of Defense; and
"(2) establish, and supervise the execution of-
"(A) principles, policies, and procedures to be followed in
connection with organizational and administrative matters
relating to-
i) the preparation and execution of the budgets,
"(ii) fiscal, cost, operating, and capital property ac-
counting,
"(iii) progress and statistical reporting,
"(iv) internal audit and
"(B) policies and procedures relating to the expenditure
and collection of funds administered by the Department of
Defense; and
"(3) establish uniform terminologies, classifications, and pro-
cedures in all such matters.
"MILITARY DEPARTMENT BUDGET AND FISCAL ORGANIZATION--
DEPARTMENTAL COMPTROLLERS
"SEO. 402. (a) The Secretary of each military department, subject
to the authority, direction, and control of the Secretary of Defense,
shall cause budgeting, accounting, progress and statistical reporting,
internal audit and administrative organization structure and manage-
rial procedures relating thereto in the department of which he is the
head to be organized and conducted in a manner consistent with the
operations of the Office of the Comptroller of the Department of
Defense.
"(b) There is hereby established in each of the three military
departments a Comptroller of the Army, a Comptroller of the Navy,
or a Comptroller of the Air Force, as appropriate in the department
concerned. There shall, in each military department, also be a Deputy
Comptroller. Subject to the authority of the respective departmental
Secretaries, the comptrollers of the military departments shall be
responsible for all budgeting, accounting, progress and statistical
reporting, and internal audit in their respective departments and for
the administrative organization structure and managerial procedures
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relating thereto. The Secretaries of the military departments may
in their discretion appoint either civilian or military personnel as
comptrollers of the military departments. . Departmental comptrollers
shall be under the direction and supervision of, and directly riesponsible
to, either the Secretary, the Under Secretary, or an Assistant'
ssistant Secretary
of the respective military departments : Provided, That nothing herein
shall preclude the comptroller from having concurrent responsibility
to a Chief of Staff or a Chief of Naval Operations, a Vice Chief of
Staff or a Vice Chief of Naval Operations, or a Deputy Chief of Staff
or a Deputy Chief of Naval Operations, if the Secretary oaf the mili-
tary department concerned should so prescribe. Where the depart-
mental comptroller is not a civilian, the Secretary of the department
concerned shall appoint a civilian as Deputy Comptroller.
"PERFORMANO;G BUDGET
"SEC. 403. (a) The budget estimates of the Department of
Defense shall be prepared, presented, and justified, where practicable,
and authorized programs shall be administered, in - such !form and
manner as the Secretary of Defense, subject to t1ie authority and direc-
tion of the President, may determine, so as to account for, and report,
the cost of performance of readily identifiable functional programs
and activities, with segregation of operating and capital programs.
So far as practicable, the budget estimates and authorized programs
of the military departments shall be set forth in readily comparable
form and shall follow a uniform pattern.
"(b) In order to expedite the conversion from present budget and
Recounting methods to the cost-of-performance method prescribed in
,this title, the Secretary of each military department, with the approval
of the President and the Secretary of Defense, is authorized and
directed, until the end of the second year following the date; of enact-
ment of this Act, to make such transfers and adjustments within the
military department of which he is the head between appropriations
available for obligation by such department in such manner a~ he deems
necessary to cause the obligation and administration of fonds and
the reports of expenditures to reflect the cost of performance of such
programs and activities. Reports of transfers and adjustments made
pursuant to the authority of this subsection shall be made currently
by the Secretary of Defense to the President and the Congress.
"OBLIGATION OF APPROPRIATIONS
"SEC. 404. In order to prevent overdrafts and deficiencies inany fiscal
year for which appropriations are made, on and after the beginning of
the next fiscal year following the date of enactment of this Act appro-
priations made to the Department of Defense or to the military depart-
ments, and reimbursements thereto, shall be available for obligation and
expenditure only after the Secretary of Defense shall approve sched-
uled rates of obligation, or modifications thereof : Proprvided, That
nothing in this section shall affect the right of the Depa~tment of
Defense to incur such deficiencies as may be now or hereaftdr author-
ized by law to be incurred.
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"WORKIN(- CAPrrAL FUNDS
"SEC. 405. (a) In order more effectively to control and account for
the cost of programs and work performed in the Department of
Defense, the Secretary of Defense is authorized to require the estab-
lishment of working-capital funds in the Department of Defense for
the purpose of-
"(1) financing inventories of such stores, supplies, materials,
and equipment as he may designate; and
(2) providing working capital for such industrial-type activi-
ties, and for such commercial-type activities as provide common
services within or among the departments and agencies of the
Department of Defense, as he may designate.
"(b) The Secretary of the Treasury is authorized and directed to
establish on the books of the Treasury Department at the request of
the Secretary of Defense the working-capital funds established pur-
suant to the authority of this section.
"(c) Such funds shall be-
"(1) charged, when appropriate, with the cost of stores, sup-
plies, materials, and equipment procured or otherwise acquired,
manufactured, repaired, issued, and consumed and of services
rendered or work performed, including applicable administra-
tive expenses ; and
"(2) reimbursed from available appropriations or otherwise
credited for the cost of stores, supplies, materials, or equipment
furnished and of services rendered or work performed, including
applicable administrative expenses.
Reports of the condition and operations of such funds shall be made
annually to the President and to the Congress.
"(d) The Secretary of Defense is authorized to provide capital for
such working-capital funds by capitalizing inventories on hand and,
with the approval of the President, by transfer, until December 31,
1954, from unexpended balances of any appropriations of the military
departments not carried to the surplus fund of the Treasury : Pro-
vided, That no deficiency shall be incurred in any such appropriation
as a result of any such transfer. To the extent that such methods
do not, in the determination of the Secretary of Defense, provide
adequate amounts of working capital, there is hereby authorized to be
appropriated, out of any moneys in the Treasury not appropriated for
other purposes such sums as may be necessary to provide adequate
working capital.
"(e) Subject to the authority and direction,of the Secretary of
Defense, the Secretaries of the military departments shall allocate
responsibility within their respective military departments for the
execution of functions which each military department is authorized
by law to perform in such a manner as to effect the most economical
and efficient organization and operation of the activities and use of
the inventories for which working-capital funds are authorized by
this section.
(f) No greater cost shall be incurred by the requisitioning agency
for stores, supplies, materials, or equipment drawn from inventories,
and for services rendered or work performed by the industrial-type
or commercial-type activities for which working-capital funds are
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authorized by this section, than the amount of appropriations or funds
available for such purposes.
"(g) The Secretary of Defense is authorized to issue; regulations
to govern the operation of activities and use of inventories authorized
by this section, which regulations may, whenever he determines the
measures set forth in this subsection to be required by the needs of
the Department of Defense, and when such measures are authorized by
law, permit stores, supplies materials, and equipment to be sold to,
and services to be rendered or work performed for, purchasers or
users outside the Department of Defense. In such cases, tie working-
capital funds involved may be reimbursed by charges against appro-
"(h) The appraised value of all stores, supplies, materials, and
equipment returned to such working-capital fund's from any depart-
ment, activity or agency, may be charged to the working-apital fund
concerned and the proceeds thereof shall be credited to;the current
appropriations concerned; the amounts so credited shall e available
for expenditures for the same purposes as the appropriations credited:
Provided, That the provisions of this subsection shall not permit
credits to appropriations as the result of capitalization of inventories
authorized by subsection (d) of this section.
priate appropriations or by payments received in cash.
"MANAGEMENT FUNDS
"SEC. 406. The Act of July 3,1942 (56 Stat. 645, c. 484), as amended,
is hereby further amended to read as follows :
"`(a) For the purpose of facilitating the economical and efficient
conduct of operations in the Department of Defense which ire financed
by two or more appropriations where the costs of the operations are
not susceptible of immediate distribution as charges to such, appropria-
tions, there are hereby established the Navy Management Fund, the
Army Management Fund, and the Air Force Management I Fund,each
within, and under the direction of the respective Secretayries of, the
Departments of the Navy., Army, or Air Force, as the case may be.
There are authorized to be appropriated from time to time. such funds
as may be necessary to accomplish the purposes of the funds.
"'(b) The corpus of the Navy Management Fund shall consist of
the sum of $1,000,000 heretofore transferred to the Naval Procurement
Fund from the Naval Emergency Fund (17X0300), which amount,
and all balances in, and obligations against, any accounts in the Naval
Procurement Fund, are hereby transferred to the Navy J anagement
Fund; the corpus of the Army Management Fund shall consist of the
sum of $1,000,000, which shall be transferred thereto from any unobli-
gated balance of any appropriation available to the Department of
the Army ; the corpus of the Air Force Management Fund shall consist
of the sum of $1,000,000, which shall be transferred theret' from any
unobligated balance of any appropriation available to the Iepartment
of the Air Force; in each case together with such additional funds as
may from time to time be appropriated to any of said funds Accounts
for' the individual operations to be financed under the respective man-
agement funds shall be established only upon approval by the Secre-
tary of Defense.
" `(c) Expenditures may be made from said manageiient funds
from time to time for material (other than material for stork) and for
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3 puB. Lew 218.1
personal and contractual services under such regulations as may be
prescribed by the Secretary of Defense : Provided, (1) That no obliga-
tion shall be incurred against any such fund which is not properly
chargeable to available funds under an appropriation of the depart-
ment within which the fund is established or, whenever necessary to
effectuate purposes authorized by this Act to funds of another depart-
ment or agency within the Department of Defense, and (2) that each
fund shall be promptly reimbursed from the appropriate appropria-
tions of such department for all expenditures properly chargeable
thereto. Nothing herein or in any other provision of law shall be
construed to prevent advances by check or warrant, or reimburse-
ments to any of said management funds from appropriations of said
departments on the basis of the estimated cost of a project, such esti-
mated cost to be revised and necessary appropriation adjustments
made when adequate data become available.
"'(d) Except as otherwise provided by law, amounts advanced to
the management funds under the provisions of this Act shall be avail-
able for obligation only during the fiscal year in which they are
advanced : Provided, That nothing contained in this Act shall alter
or limit the authorized period of availability of the funds from which
such advances are made. Final adjustments of advances in accord-
ance with actual costs shall be effected with the appropriate funds
for the fiscal year in which such funds are advanced.
"I (e) The portion of the Naval Appropriation Act, 1945 (58' Stat.
301) 310), relating to the Naval Procurement Fund is hereby repealed.,
"ADJUSTMENT OF AccouNTS
"SEC. 407. (a) When under authority of law a function or an activity
is transferred or assigned from one department or agency within the
Department of Defense to another such department or agency, the
balances of appropriations which are determined by the Secretary of
Defense to be available and necessary to finance or discharge the func-
tion or activity so transferred or assigned may, with the approval of
the President, be transferred to, and be available for use by, the depart-
ment or agency to which said function or. activity is transferred or
assigned for any purpose for which said funds were originally avail-
able. Balances so transferred shall be credited to any applicable exist-
ing appropriation account or accounts, or to. any new appropriation
account or accounts, which are hereby authorized to be established
on the books of the Treasury Department, of the department or organ-
ization to which such function or activity is transferred, and shall be
merged with funds in the applicable existing or newly established
appropriation account or accounts and thereafter accounted for as.
one fund. Balances transferred to existing accounts shall be subject
only to such limitations as are specifically applicable to such accounts
and those transferred to new accounts shall be subject only to such
limitations as are applicable to the appropriations from which they
are transf erred.
"(b) The number of employees which in the opinion of the Secretary
of Defense is required for such transferred functions or activities may,.
with the approval of the Director of the Bureau of the Budget, be
deducted from any personnel maximum or limitation of the depart-
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(PUB. LAw 21&) 14
ment or agency within the Department of Defense from; which such
function or activity is transferred, and added to any such personnel
maximum or limitation of the department or agency to which such
function or activity is transferred.
"AVAn ABILr r of REIMBURSEMENTS
"SEC. 408. To carry out the purposes of this Act reimbursements
made under the authority of the Economy Act 31 ii. S. C. 686), and
sums paid by or on behalf of personnel of any department or organi-
zation for services rendered or supplies furnished, may be credited to
authorize replacing or other accounts. Funds credited to such accounts
shall remain available for obligation for the same period as the funds
in the account so credited and each such account shall constitute one
fund on the books of the Treasury Department.
"COMMON USE OF DISBURSING FACILITIES
" SEc. 409. To the extent authorized by the Secretary of Defense,
disbursing officers of the Departments of the Army, Navy, and Air
Force may, out of accounts of advances available to them, make dis-
bursements covering obligations arising in connection with any func-
tion or activity of any other department or organization within the
Department of Defense and charge upon vouchers the proper appro-
priation or appropriations of the other department or organization :
Provided, That all said expenditures shall subsequently be' adjusted in
settlement of disbursing officers' accounts.
"REPORTS OF PROPERTY
"SEc. 410. The Secretary of Defense shall cause property records to
be maintained in the three military departments, so far as practicable,
on both a quantitative and monetary basis under regulations which he
shall prescribe. Such property records shall include the fixed prop-
erty, installations, and major items of equipment as well as the supplies,
materials, and equipment held in store by the armed services. The
Secretary shall report annually thereon to the President; and to the
Congress.
"REPEALING AND SAVING PROVISIONS
"SEG. 411. All laws, orders, and regulations inconsistent with the
provisions of this title are repealed insofar as they are inconsistent
with the powers, duties, and responsibilities enacted hereby : Provided,
That the powers, duties, and responsibilities of the Secretary of Defense
under this title shall be administered in conformance with the policy
and requirements for administration of budgetary and fiscal matters
in the Government generally, including accounting and financial
reporting, and that nothing in this title shall be construed as eliminat-
ing or modifying the powers, duties, and responsibilities of any other
department, agency,,or officer of the Government in connection with
such matters, but no such department, agency, or officer shall exercise
any such powers, duties, or responsibilities in a manner that will render
ineffective the provisions of this title."
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+rr+ 1 ~'Yrrn. Lsw 216.1
MISCELLANEOUS AND TECHNICAL AMENDMENTS AND SAVING PROVISIONS
SEC. 12. (a) The National Security Act of 1947 is amended by
striking out the term "National Military Establishment", wherever it
appears in such Act, and inserting in lieu thereof "Department of
Defense".
(b) Section 207 (a) of the National Security Act of 1947 is amended
to read as follows :
"SEC. 207. (a) Within the Department of Defense there is hereby
established a military department to be known as the Department of
the Air Force, and the Secretary of the Air Force who shall be the head
thereof. The Secretary of the Air Force shall be appointed from
civilian life by the President by and with the advice and consent of
the Senate."
(c) Section 207 (b) of the National Security Act of 1947 is repealed.
(d) The first sentence of section 208 (a) of the National Security
Act of 1947 is amended by striking out the word "under" and inserting
in lieu thereof the word "within".
(e) Section 308 (b) of the National Security Act of 1947 is amended
to read as follows:
"(b) As used in this Act, the term `Department of Defense' shall be
deemed to include the military departments of the Army, the Navy,
and the Air Force, and all agencies created under title II of this Act."
(f) The titles of the Secretary of Defense, the Secretary of the Army,
the Secretary of the Navy, the Secretary of the Air Force, the Under
Secretaries and the Assistant Secretaries of the Departments of the
Army, Navy, and Air Force, the Chairman of the Munitions Board,
and the Chairman of the Research and Development Board, shall not
be changed by virtue of this Act, and the reappointment of the officials
holding such titles on the effective date of this Act shall not be required.
It is hereby declared to be the intention of Congress that section
203 (a) of the National Security Act of 1947, as amended by section 6
of this Act, shall not be deemed to have created a new office of Deputy
Secretary of Defense but shall be deemed to have continued in exist-
ence, under a new title, the Office of Under Secretary of Defense which
was established by the Act entitled "An Act to amend the National
Security Act of 1947 to provide for an Under Secretary of Defense",
approved April 2, 1949 (Public Law 36, Eighty-first Congress). The
title of the official holding the Office of Under Secretary of Defense
on the effective date of this Act shall be changed to Deputy Secretary
of Defense and the reappointment of such official. shall not be required.
(g) All laws, orders, regulations, and other actions relating to the
National Military Establishment, the Departments of the Army, the
Navy, or the Air Force, or to any officer or activity of such establish-
ment or such departments, shall, except to the extent inconsistent with
the provisions of this Act, have the same effect as if this Act had not
been enacted; but, after the effective date of this Act, any such law,
order, regulation, or other action which vested functions in or other-
wise related to any officer, department, or establishment, shall be
deemed to have vested such function in or relate to the officer or depart-
ment, executive or military, succeeding the officer, department, or
establishment in which such function was vested. For purposes of
this subsection the Department of Defense shall be deemed the depart-
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tPos. Lew 218.1 161
merit succeeding the National Military Establishment, and the raili-
tary departments of Army, J avy, and Air Force shall be deemed the
departments succeeding the Executive Departments of Army, Navy,
and Air Force.
(h) Section 208 (e) of the National Security Act of 1947 is amended
by substituting the word "three" for the word "two" appearing therein.
(i) Reorganization Plan Numbered 8 of 1949, which was trans-
mitted to the Congress by the President on July 18, 1949, pursuant to
the provisions of the Reorganization Act of 1949, shall not :take effect,
notwithstanding the provisions of section 6 of such Reorganization
Act of 1949,
Approved August 10, 1949.
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