Ample evidence over the past decade leads inescapably to the conclusion that the Soviets have made investments in their shipyard facilities and indeed, in all facets of their shipbuilding and repair industries. All of the major naval shipbuilding facilities and other facilities engaged solely in naval and merchant ship construction and/or repair have undergone considerable expansion and/or modernization since about the mid-1950s. However, it is not possible in most cases to identify precisely the extent and nature of the expansion and/or modernization that has been accomplished, particularly with regard to the equippage and operations. The overall impact has been to not only increase the physical capacity for ship production but to considerably improve the technological capacity of the facilities as well. 58-991 O-75-6 24 FEBRUARY 1975 7111y ONI-CS-83-3-75 The net results of this expansion program, and of the advances in shipbuilding technology are new and more sophisticated types of ships, and decreased building and fitting-out times per given unit, both submarine and surface. Soviet shipyards have the physical facilities and technology to assure a level of shipbuilding output, merchant as well as naval, at least as great and potentially much higher than that which they have maintained over the past five years. M. Future Trends In view of the foregoing examination, no sophisticated forecasting methods are required to anticipate that Soviet naval shipyards will benefit greatly from the massive investments in plant and technology that have already been made and are apparently continuing. Indeed, judging by the rates at which new and sophisticated submarines, surface ships and auxiliaries have entered the Soviet Navy's order of battle in recent years, the most significant questions may well center about the capabilities of Soviet yards to maintain, overhaul and repair the growing numbers of ships rather than the production capabilities of these yards. For the near term, however, Soviet shipyards, both naval and merchant, are increasingly being faced with a practical problem of potentially critical proportions. The key factors in the U.S.S.R.'s rise to maritime power in recent years have been the burgeoning size and complexity of their naval and merchant fleets, the dramatic rise in the Soviet Navy's at-sea time out-of-area operations (especially in the Mediterranean, but significantly, now, to the Indian and other distant oceans), and the increase in the numbers of Soviet merchantmen plying the world's trading routes. These same factors, however, are now calling to serious question the adequacy of Soviet ship repair facilities, and capabilities to meet the overwhelming repair, maintenance and overhaul requirements they engender. The Soviets have a number of options with which to meet this growing problem, and it is expected that in the next five years or so they will follow all of them to a greater or lesser degree. These are: Construction of more auxiliary support ships (tender, repair ships, Diversion of some existing and projected ship construction capacity to ONI-CS-83-3-75 7111z 24 FEBRUARY 1975 Continued construction and more intensive utilization of floating drydocks for repair purposes, Increased efforts to obtain foreign bases or access to foreign facilities for Soviet ships. In any event, the intensity of the U.S.S.R.'s drive toward maritime predominance is not likely to be permitted to diminish for want of adequate ship repair facilities. Mr. SIKES. As you know, there is a great deal of pressure on Congress to reduce defense spending. You have talked about excessive personnel. Do you have any other suggestions about how the Navy could reduce its expenditures without reducing its effectiveness? MILITARY DISABILITY AND PENSION PROVISIONS Admiral RICKOVER. I have already touched on the layering in the Defense Department and the critical need to reduce it. I also think the Defense Department should be required to focus on strictly military matters and get out of the business of social reform and other welfare programs. The purpose of the military is to be able to fight a war; activities which do not relate to this purpose should be eliminated. One aspect of this is the overly high pension and disability provisions available. Disability benefits, for example, include not only tax breaks on retirement income, but sick pay exclusion and, occasionally, special Veterans' Administration benefits. Senior officers especially appear to benefit from the disability system. In one case, an Air Force general who received flight pay up until retirement applied for a 40 percent disability rating from the Veterans' Administration. In another recent case, an Air Force general was fully flight qualified until the day he retired, and then was judged to have a 70-percent disability. It should be understood that a 70-percent disability means 70 percent of the recipient's active duty base pay is free from tax. Since the typical flag officer retires on 75 percent of his base pay, the retirement pay of a 70-percent disabled veteran would be nearly all tax free. I think these cases are a ripoff of the taxpayers. I do not see how it is proper for high ranking military officers to receive disability benefits when they are basically fit. I know of no other profession that has a system as generous as this. Disability benefits ought to be given only to permanently disabled service personnel wounded in war or injured on the job. I recommend that all disability retirement benefits presently in force be realistically reviewed. This review should be conducted by an independent group appointed not by the DOD, but by the Congress. In cases where a person is working and in good health, his disability benefits ought to be terminated. Finally, new formal rules approved by Congress should be implemented to prevent future abuses. The other forms of special benefits you give to military people ought also to be eliminated. I think the military ought to be given one salary and not be entitled to other nonessential things. COMMISSARIES Mr. EDWARDS. Will you yield? How do you feel about commissaries? Admiral RICKOVER. I would pay the people for what the job is worth and eliminate the other things such as commissaries, except where adverse conditions exist such as in war zones. This of course was the original intent of these kinds of facilities. If necessary I would increase the pay and stop all of the allowances and special facilities. Mr. EDWARDS. Do you think the pay would be too low as it presently is if we knocked off these allowances? Admiral RICKOVER. Not across the board, sir. In my opinion, there are naval officers who certainly could never get a job in civilian life with the pay they receive in the military. Now that is an opinion but I will stick by it. If you made a change I do not think you would lose many officers. I also think military people are allowed to retire too soon. This is probably one of the biggest giveaways there is insofar as the military is concerned. You are building up expenses for the Government that will go on for many, many years. The defense of the country will suffer. It already has in that we are spending about 55 percent of our defense budget for personnel costs compared to about 35 per cent in the Soviet budget. I would adopt a retirement policy more reasonable for the Government and eliminate special allowances. I would have salaries and that is all. This may be very unpopular with the military, but I believe it is the correct thing to do. Since what I am recommending would affect the amount of money I get, I believe you can see I am not saying this for personal gain. I do not believe in talking about what should be done to other people if I cannot include myself. GOVERNMENT PROCUREMENT PRACTICES One other area in which the Congress can save money is in Government procurement. I want to discuss several aspects of this later in this hearing, but with your permission, Mr. Chairman, I will summarize my recommendations at this time. Mr. MAHON. Please proceed. Admiral RICKOVER. Regarding shipbuilding claims, Congress should support efforts to hire outside counsel and other professional support to assist in handling these claims. You should require by statute that top corporate officials certify to the completeness and accuracy of their claims. To place the Government on an equal footing with contractors, the Department of Defense should be given legal authority to appeal adverse decisions of its Armed Services Board of Contract Appeals. Congress should drastically reduce the large sums being spent for independent research and development. The Defense Department should contract directly for that research and development it considers necessary for the national defense. All contractors should be required to comply with the Truth-inNegotiations Act. Those that do not comply should be ineligible for awards of future Government contracts. The Defense Production Act should be used when necessary to direct contractors to accept and perform defense contracts in accordance with the Truth-in-Negotiations Act and other applicable procurement regulations. The Congress should continue to support the work of the Cost Accounting Standards Board. The Board is doing good work but defense contractors and their lobbyists are trying to sabotage this effort. DAVIS-BACON AND SERVICE CONTRACT ACTS One issue I have not previously covered with this committee is the excess cost imposed on the Government by the Department of Labor's administration of the Davis-Bacon and Service Contract Acts. Instead |