PRESS RELEASE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-04718A001500060006-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 17
• Document Creation Date: December 12, 2016
• Document Release Date: June 13, 2002
• Sequence Number: 6
• Publication Date: April 4, 1955
• Content Type: PREL

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COMMISSION ON ORGANIZATION
OF THE
EXECUTIVE BRANCH OF THE GOVERNMENT
GENERAL ACCOUNTING
OFFICE BUILDING
WASHINGTON 25, D. C.
For release STerling 3-5200
April 4, 1955 Extension 45 91
Washington, D.C., April 3 -- The Federal Government, which spends
close to $3 billion a year in peace-time to haul passengers and freight,
needs a modern traffic management to eliminate waste, duplication and
inefficiency. Recommendations to accomplish this are contained in a
report which the Congress will receive tomorrow from the Commission on
Organization of the Executive Branch of the Government.
After exploring the transportation problems of military and
civilian agencies of the Government, the 12-man, bi-partisan Commission,
of which ex-President Herbert Hoover is Chairman, proposes a broad
overhauling of traffic procedures to reduce costs and to insure business-
like. operations.
The Commission also urges that the Government, as the largest
chipper of persons and property and as the operator of vast transport
facilities of its own, organize and manage its traffic in such a way
as to give full recognition to the "importance of an adequate and pros-
perous transportation system," in accordance with the intent of the
Congress.
Traffic management in the Department of Defense, the largest user
of transportation in the Government, needs a "new look" in the form of
strengthened central direction, according to a Commission task force
headed by Perry M. Shoemaker, president of the Lackawanna Railroad.
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The Commission, having the results of this task force's exhaustive
studies before it, recommends that a Director of Transportation be
established by the Secretary of Defense, this official to have "no
responsibilities except those pertaining to traffic and transportation."
This Director, the Commission says, "should have all necessary authority
to direct traffic management activities, passenger and freight, in all
the military services, including the coordination and consolidation of
functions and facilities.,,
The Commission emphasizes that it is "mindful of serious admin-
istrative problems and especially serious operating problems arising
from the organizational relationship between the Department of Defense
and the component Services." "The effective solution of many of the
immediate difficulties which we are considering in this and other
reports relating to Department of Defense activities will depend," it
says, "upon finding and implementing the right answer to the underlying
organizational problem. We are continuing to study this matter in con-
nection with the work of various task forces concerned" with the
department.
In parallel manner the Commission recommends centralizatian of
traffic management functions for all civilian agencies in the General
Services Administration, except for the movement of the mail and of
security classified goods.
Examples of disregard for costs and of lack of coordination in
the movement of personnel and freight are presented, showing widespread
dead-heading and hitch-hiking, cross-hauling, back-hauling and other
wasteful practices. The Shoemaker task force estimated that almost
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8,000,000 passengers were carried in Department of Defense aircraft
in the fiscal year ended June 30, 1954, and that about 4,800,000 of
this number were classified as hitch-hikers, or on leave status.
There is, the task force reported, "no better illustration of
poor traffic management than in the Federal subsistence services."
A Munitions Board staff report drew attention to the "handling of the
pack of canned salmon from the west coast to Bremerhaven, Germany, via
the east coast at almost twice the transportation cost had the same
movement gone from the west coast to Bremerhaven by all-water shipment,"
and "an analysis of the transportation of a seasonal pack of canned
peaches showed the same result."
Members of another task force "noted a quantity of sugar being
purchased at refineries in New York, shipped to the Army depot at
Schenectady, only to have much of it backhauled" and "one particular
carload was wanted for redistribution at Fort Totten, New York City,
so quickly that it was not even opened and unloaded at Schenectady."
Also questioned are such operations as the flying of ping-pong
balls from Westover Field to Berlin and of a substantial quantity of
dogfood from the west coast to Okinawa, evoking a task force comment
"that certain dogs in Okinawa had available to them dogfood at an
overall cost per pound probably setting a world's record.tt
Another example of "waste of Government funds" was the purchase
by one of the military Services of antifreeze in Philadelphia because
the price quoted there was one-half cent per unit less than quoted in
Oakland, Calif.., and the shipment of the antifreeze from Philadelphia
to Oakland for overseas shipment from there at a greater net cost.
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"An example of unnecessary cross-hauling was found," the Commission
says, "in the Veterans Administration which maintains three depots--
Somerville, N.J., Hines, Ill., and Wilmington, Calif. These depots
provide storage and issue functions for 235 hospitals, homes and
offices. About 70 per cent of the volume of shipments consists of
nonperishable food, and 30 per cent medical and general supplies.
Nonperishable supplies are purchased from vendors throughout the
country, f.o.b. Veterans Administration depots. These supplies are
then reshipped as required to its installations located in each of
the 48 states; yet the General Services Administration has twelve
stores depots located throughout the country, many of which are con-
siderably closer to the Veterans Administration consuming centers."
"It is not to be assumed," the Commission points out, "that such
examples are the result of negligence, but as clear evidence that our
existing system has not provided for an integration of inventory con-
trol, procurement, warehousing and management direction of transporta-
tion so as to avoid substantial wastage of transportation and storage
dollars. Someone is paying the cost. It is hard to visualize this
someone not being the taxpayer."
Attention, is drawn by the Hoover Commission to abuses of the
6-cents-a-mile allowance for military personnel travel. The Commission
recom'nends that the mileage allowance "be reduced to a point where
there is no profit in it," that the use of the allowance for automobiles
be restricted to bona fide car owners and that group troop movements
be used wherever practicable.
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The Commission finds that the storage and shipment of household
goods and private automobiles, provided as "fringe benefits" by the
Coagress for the armed forces, have. become a serious problem, not
only in term of expense but also in the magnitude of the operation.
The task force estimated that it costs the Government at least
$250 million a year to move household goods. Storage requires 3,500,000
square feet. From samplings, the task force concluded that almost
1,700,000 separate movements have taken place.
The weight allowed by the armed Services to military and some
civilian personnel varies with rank and depends upon whether there is
a temporary or permanent change in station. For temporary change, it
ranges from, 400 pounds for a private to 2,000 pounds for an Army
general, and for permanent change from 3,000 to 11,000 pounds.
The Commission grants that the movement of household goods is a
necessary service to personnel, but found many opportunities for
economy. The task force reported that much crating is unnecessarily
elaborate and that higher grades of lumber from distant points have
been used where suitable lower grades were available locally at lower
prices. The weight of household goods homebound is from 50 to 200
per cent greater than that of those shipped out.
It would be less costly, the task force said, for the Government
to provide adequate quarters with basic household effects in overseas
installations than the two-way hauls across the oceans to Europe and
Asia.
Increasing pressure is being applied by the Air Force for it to
handle its own household goods instead of having the Army do it as the
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practice has been, the task force reported, adding that this would
"lead to additional duplication of facilities and of personnel, and
might lead to more expensive movement by air."
The task force reported that "horrible examples" of waste and
carelessness could be "multiplied almost to infinity, such as packing
one overshoe in a box more costly than the article, crates around
junk tricycles, a huge box to house a 10-cent store lamp and another
for the paper shade."
The Commission recommends that the Secretary of Defense "explore
and effect improved methods to reduce costs of packing, storage and
transportation of household goods of military and civilian personnel
of the Department of Defense, and that he should place limitations on
excessive shipments.*
The overseas shipment of private automobiles of service personnel
has increased to a ,rate of 6,000 a month, the Commission was informed
by its task force. The sea lift of such automobiles in fiscal 1954
occupied 916,400 measurement tons of shipping space, equal to one third
of the capacity of the total nucleus fleet dry cargo traffic between
United States and foreign ports. This traffic is authorized by the
Congress and the law has been interpreted by the Department of Defense
to mean that only Government vessels can be used.
Since the volume cannot be accommodated on a space-available basis,
entire ships are devoted to this movement. The Commandant of the
Military Sea Transport Service is quoted as follows: ". . . we feel
that if the private vehicle lift continues on the same scale as it is'
now, we will require all those dry cargo ships" for the purpose.
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The Commission recommends that the "use of automobiles for official
duties in foreign countries be handled by a further use of regulated
automobile pools provided by the Government where feasible, and that
automobiles for personal use be rented from the pool at a reasonable
rate" and that "if a car is desired for personal use abroad by military
or civilian personnel, the owner should pay for its transportation to
and from his station overseas."
Unnecessary and uneconomic use of Government seagoing vessels in
competition with traffic-hungry private facilities, with consequent
increases in Government subsidy payments, is described. The Department
of Defense was found to be "ignoring the purpose of the Congress to
build up a strong privately operated merchant marine for peace and a
greater reserve for war."
Although there is a memorandum of agreement between the Secretaries
of Defense and Commerce "to the effect that Military Sea Transport
Service should perform no services which private industry can render,"
the Commission says this Service has been enlarged and is "carrying
large amounts of commercial-type cargo." Thus, the Commission points
cut, the Department of Defense "is competing unnecessarily" with the
merchant fleet which the Congress is"endeavoring to establish."
"There cannot be," the Commission asserts, "two American merchant
marines, one military and one civilian, operating independently and
at times in competition with each other. Cooperation from the Secre-
taries of Defense and Commerce, assisted by American ship operators
and the Congress, is needed to end this situation."
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The task force reported that more than 85 per cent of all
Military Sea Transport Service traffic is "general" or "special"
category merchandise which is "very similar to commercial commodities
and could be carried in commercial ships." "There appears to be,"
the Commission points out, "questionable justification for labeling
much cargo 'non-susceptible' for private carriers."
Passenger transportation accounts for about one third of
"recorded cost" of operating the Military Sea Transport Service,
according to the Commission, quoting from a General Accounting Office
report. "The task force believes," the Commission says, "that
excess capacity of private ships, particularly during 'off' seasons
and in peacetime, could be utilized to a greater extent, principally
to transport military dependents.
"The private carriers need this traffic. From 1952 to 1954
international commercial sea travel to and from the United States
increased slightly from 1,102,000 to 1,164,000 passengers. In the
same period, however, the share of United States commercial passen-
ger ships in this traffic declined from 45 to 40 per cent (from
496,000 to 466,000 passengers), and nine out of the 49-privately
operated United States ships in operation in 1952 were retired from
service."
The task force, referring to "directional imbalance of traffic"
handled by the Military Sea Transport Service to and from the
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United States, shays an outbound movement of 12,857,000 measurement
tons and inbound of 1,965,000 in the fiscal year ended June 30,
1954, or a ratio of more than six to one.
Accurate cost comparisons between Military Sea Transport-owned
nucleus fleet and the privately operated United States flag ships
are impossible, the task force faxnd. The real cost of using ocean-
going nucleus freight ships would be increased greatly, it is
pointed out, if several important unrecorded items which are not
out-of-pocket costs to Military Sea Transport, but which the tax-
payer must pay, were included.
The Commission -recommends that the Military Sea Transport,
Service's reported operating costs should include military pay and
allowances, vessel depreciation, interest on investment, Panama
Canal and other tolls, insurance costs and, to the extent feasible,
the value of use of Government docks and other facilities.
Of the 16,200,000 tons of petroleum carried under the direction
of the Military Sea Transport Service in the fiscal year ended
June 30, 1954, Government-owned ships hauled 11,900,000 tons and
privately-owned ships 4,300,000 tons. The figures for the previous
fiscal year were 17,000,000 total, 11,300,000 in Government ships
and 5,700,000 in private vessels.
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The Commission also gives figures showing that the privately-owned
tanker fleet of the United States increased from 6,673,000 tons in
1950 to 6,875,000 tons in 1954, while the fleets of other nations
grew in the same period from 19,431,000 to 29,070,000.
The task force is "especially insistent," the Commission says,
"that the maintenance of the private fleet is essential" to national
defense. "Use of private in place of Government-owned ships," the
task force is quoted as saying, "will prove more economical to the
taxpayer on the basis of current evidence, particularly if all direct
and indirect costs to Government are considered."
To "assist the prospect of reaching congressionally-approved goals,"
the Commission recommends that Government-owned tankers should be
replaced with more modern, privately owned ships, and the Government
ships placed in a mothball reserve, "provided the total cost to the
Government is not increased after consideration of all factors, includ-
ing taxes and subsidy recapture."
The Commission also recommends that Department of Defense policy
directives be revised to reduce the Military Sea Transport nucleus
fleet "in view of the actual services which private industry can render."
The Department of Defenses air transport was also subjected to
close scrutiny by the Commission and its task force. This department
operates, in addition to a large number of administrative aircraft,
"what amounts to at least three airlines." The operating units are
Military Air Transport Service (MATS), Fleet Logistic Air Wings
(F,LCGWINGS), and Air Materiel Command (LOGAIR). Methods of eliminating
duplication of services and of reducing competition with commercial
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airlines are proposed by the Commission.
The Military Air Transport Service has, the Commission found,
"undertaken increasingly large operations," using 536 aircraft for
transport activities alone. "Its route patterns," the Commission
says, "parallel United States commercial airlines in both domestic
and international routes, except in a few instances such as the
Arctic and northern Canada." The cost of operations rose from
$390,700,000 in the fiscal year ended June 30,1952, to $481,400,000
in the year ended June 30, 1954.
"Bearing upon this question of military carriage of. passengers
and freight," the Commission asserts, "are the subsidies paid by
the Federal Government in part to maintain an adequate civilian
reserve of aircraft. While United States domestic trunk airlines
are now mostly free of mail subsidy, this is not yet so of the
United States international air carriers. The subsidy to them was
intended to permit them to attain, among other things, 'such stature
in passenger and cargo capacity as to constitute in crisis an ade-
quate logistical air arm of the national defense establishment.'
"These carriers receive mail pay in accordance with the Civil
Aeronautics Act of 1938 whether or not full loads of mail are carried.
When military passengers or freight are not carried by the commercial
airlines but are carried by the military, the United States Government
pays the bill twice. To reduce the overall subsidy to the commercial
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international airlines, these airlines should be filled to their
capacity with military traffic instead of being paid to haul
'imaginary' sacks of mail."
If the United States international airlines could have obtained
25 per cent of the passenger volume and 50 per cent of the military
mail shown as moved by Military Air Transport Service alone for the
fiscal year ended June 30, 1954, the Commission says, the Govern-
ment could have reduced the international commercial carriers'-
subsidy by $42,900,000, almost 88 per cent of the total amount.
Moreover, to the extent that Military Air Transport Service curtailed
its operation to conform to this proposal, the Government, according
to the Commission, would effect actual out-of-pocket savings through
a proportionate reduction in Military Air Transport Service costs,
making a double saving.
The fact is noted that while the Hoover Commission's task force
investigation was proceeding, the Department of Defense decided to
take; some steps to this Find which it is estimated will result in an
$18 million increase in revenue for the international airlines with
a corresponding reduction in their subsidy requirements.
"Due to the availability of planes there has been use of the
Service for cargo movement of a type which would be unthinkable in
commercial operations and impracticable of accomplishment in wartime,"
the Commission says. "During July, 1954, about 13,000 pounds of
furniture was flown from Bermuda to the United States, and in
September 25,000 pounds of cement was flown to Bermuda."
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"It was found that an Air Force band was flown about once a
month from Westover, Mass., to Bermuda, where no band was available,
so that large open-air dances and concerts could be held as morale
boosters. The task farce did not question the necessity, from a
military morale point of view, of sending and returning an Air Force
band. However, it would appear that one of the two United States cer-
tificated airlines serving Bermuda with a number of daily flights
could have readily accommodated the band in its regular scheduled
pattern at less cost to the Government. 'Deadheading' would have been
avoided and the revenues earned by the airlines would have reduced
their subsidy bill."
The service of Fleet Logistic Air Wing was inaugurated by the Navy
to "operate air transport essential to naval operations where require-
ments could not be it by the Military Air Transport Service."
"However," the Commission says, "the task force found that FLCGWINGS
does not confine itself to hard-to-reach places. The main route pat-
terns of FLCGWINGS in the Atlantic and Pacific parallel the route
patterns of Military Air Transport Service to a precise degree. Along-
side these two military airlines, commercial air carriers provide
regular scheduled services.
"Complete maintenance and servicing facilities independent of
Military Air Transport Service have been set up to support FIAG*INGS
operations. Thus, maintenance, overhaul bases, communications facili-
ties and other attendant activities have been duplicated.
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"FLOG#TNGS now operates 131 transport aircraft. By June 30,
1957, it expects to increase its fleet by 11 per cent in number,
and 16 to 20 per cent in capability. In 1954 FLO(IINOS performed
550,000,000 passenger-miles and 39,000,000 cargo and mail ton-miles.
"Our task force, by sampling and otherwise, estimates that during
1954 FLOGfIfINGS carried at least 195,000 passengers within continental
United States who might have been carried on commercial lines and some
325,000 passengers between continental United States and overseas.
All of these overseas points were served by both Military Air Transport
Service and commercial airlines."
LOGAIR was started by the Air Force to distribute aircraft parts and
accessories in critically short supply, or aircraft parts having unit
values of $500 or more. It is presently operated as an all-cargo airline.
"Preliminary reports for June, 1954," the Commission asserts,"indicated
that the eighth ranking commodity tonnage moved comprised 'blank forms,
publications and drawings'. Also moving via LOGAIR during the same month
were additional commodity items identified as 'religious goods', 'athletic
equipment', 'musical instruments', 'lumber'., and 'laundry and dry-cleaning
equipment.'"
The task force reported that the existing air-lift capacity now
present in Military Air Transport Service leads to the conclusion that
the services of LOGAIR are superfluous.
The Commission recommends that the Secretary of Defense "issue a
superseding and controlling directive to eliminate the duplicating air
transport services within the Department of Defense and merge the entire
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operation into Military Air Transport Service, except necessary
administrative aircraft."
A further recommendation by the Commission is that the number of
airplanes used by administration officials be "drastically reduced."
The Commission also proposes that the "peace-time operations of the
integrated Military Air Transport Service be restricted and realistically
limited to persons and cargo carefully evaluated as to necessity for
military air transportation and, only after commercial carriers have been
utilized to the maximum practicable extent, should transportation on
Service carriers be authorized."
"The task force finds it necessary," the Commission says, "to com-
ment on a phase of transportation controlwithin the Department of
Defense from the viewpoint of what may be considered 'the military mind'."
Many military officers were interviewed and, as a "broad generalization,"
the task force reports that "they are, almost without exception, fine
and competent men, carrying out their responsibilities with sincerity
and loyalty." But, the task force says, they have been schooled from
their early days in each Service that the military commander must have
absolute control of his supply line.
"Out of this," the Commission adds, "arises the desire of the
military to keep separate Service control of their respective supply
lines and separation of control between the three Services. Thus from
zeal of tradition and long training we find the military opposed to any
infringement of this concept. The maintenance of separate supply lines
adds a tremendous dollar cost to the taxpayer. It is contrary to the
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principles of integration. It is contrary to the principles of good
business management as practiced in industry. These ideas of the
necessity of separate service belong to a period when the tonnage of
required military supplies was measured in thousands and the items
in hundreds of thousands, instead of millions of tons and millions
of items as today."
The Commission estimates that potential annual savings from the
adoption of its recommendations would exceed $150 million.
A separate chapter of the Commission's report is devoted to
Federal activities in the Panama Canal Zone. Recommendations are
directed to greater economy and efficiency. In addition to a study
by its task force covering Federal shipping and the Panama Railroad,
the Commission had the benefit of a report made by Representative
Clarence J. Brown, a member of the Commission, based upon his personal
inspection in the Zone.
The Commission recommends that the Congress examine the competing
commercial-type enterprises conducted by the Government in the Canal
Zone and determine which of these should be eliminated.
In response to an inquiry by the task force as to whether the
Panama Railroad "any longer had military justification," an Assistant
Secretary of the Army replied that "insofar as military necessity is
concerned, the railroad can reasonably be discontinued." The task
force so recommended, but the Commission asks that the Congress inquire
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into the matter before it authorizes or appropriates in favor of
new highway construction.
Representative Chet Holifield, a member of the Commission,
presented a dissent and separate statement with respect to a number
of the Commission's recommendations. Two other members of the Com-
mission, Attorney General Herbert Brownell, Jr., and Director of the
Office of Defense Mobilization Arthur S. Flemming, made separate
statements relating to one of the Commission's recommendations.
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