there should be a Defense Supply Council composed of the Deputy Secretary of Defense, the service secretaries, the chairman of the Joint Chiefs of Staff, and the Assistant Secretary of Defense for Installations and Logistics. This council would actively supervise DSA's operations. Secretary McNamara made the council a purely advisory agency and granted the director broad executive authority to run the Defense Supply Agency. Second, he did not limit the choice of the director specifically to a military officer as recommended by the committee. The man he chose, however, was a former Quartermaster General of the Army, Lt. Gen. Andrew T. McNamara. Finally, at the request of the JCS which did not want the responsibility for DSA, Mr. McNamara ordered the director to report directly to him instead of through the JCS as was the case with nearly all the other joint defense agencies.21

When the Defense Supply Agency was set up, it took over the eight commodity single managers, the Military Traffic Management Agency, the Armed Services Supply Support Center, the thirty-four Consolidated Surplus Sales offices, the National Surplus Property Bidders Registration and Information Office, the Army and Marine Corps clothing factories, and the management of a proposed electronics supply center. DSA was to administer the Federal Catalog Program, the Defense Standardization Program, the Defense Utilization Program, the Coordinated Procurement Programs, and the Surplus Personal Property Disposal Program.

The Defense Supply Agency staff included both military and civilian personnel from all services on a joint basis, but 95 percent of its staff were civilians. Originally nearly 60 percent of its staff came from the Army, including most of the Quartermaster's supply management personnel. By the end of June 1963, DSA was managing over a million different items in nine supply centers with an estimated inventory value of about $2.5 billion.

In general DSA was to act as a wholesale distributor of supplies to the services within the continental United States. The military services would decide what they wanted, where they wanted it, and when. DSA would decide how much to buy, how much to stock, and how to distribute it to meet the

♫ Fairburn, Integrated Supply Management, pp. 32–47.

needs of the services. The services retained responsibility for selecting those items which should be placed under integrated management.

22

(1) "Annual Report of the Defense Supply Agency," annexed to Annual Report of the Secretary of Defense for Fiscal Year 1962 (Washington, 1963), pp. 67-70; Ibid., Annual Report of the Secretary of Defense for Fiscal Year 1963, pp. 78-79. (2) The Defense Supply Agency, Presentation to the Special Subcommittee on Defense Agencies of the Committee on Armed Services, House of Representatives, 5 Jun 62, pp. 29-40. OCMH DSA files. (3) Robert W. Coakley, A Review of the Logistics Organization Created by Projects 80 and 100 and Subsequent Changes, in Three Studies on the Historical Development of Army Logistical Organization, prepared for the Board of Inquiry on Army Logistics System, Jul 66, pp. 17-19. In OCMH.

CHAPTER IX

Project 80: The Hoelscher Committee Report

Of all Secretary McNamara's study projects the one known as Project 80 entitled Study of the Functions, Organization, and Procedures of the Department of the Army was the most important for the Army. In substance, it took up the question of functionalizing the technical services where previous studies and reorganizations had left it.

As in the case of Project 100 Secretary McNamara assigned responsibility for this study to Cyrus R. Vance, who appointed Solis S. Horwitz, the Director of Organizational Planning and Management, to supervise the project directly under him. They agreed and informed the new Secretary of the Army, Elvis J. Stahr, Jr., that the Army would be allowed an opportunity to study and evaluate its own organization and procedures. On the recommendation of the Chief of Staff, General Decker, Secretary Stahr selected the Deputy Comptroller of the Army, Leonard W. Hoelscher, as the project director to work directly with Horwitz's office.1

Mr. Hoelscher brought to his task greater knowledge, experience, familiarity, and professional accomplishment in the area of Army administration, organization, and management than anyone, civilian or military, associated with the Army's previous reorganizations as far back as Secretary Root. He had come to Washington in 1940 as a colleague and protégé of Luther Gulick and John Millett from the Public Administration Service in Chicago where he had been a specialist in municipal administration after a decade as city planner and city manager of Fort Worth, Texas. He had joined the Bureau of the Budget after its transfer to the Executive Office of the President in 1940 as a consultant on the organization and management of federal agencies. During the war he had as

1Martin Blumenson, Reorganization of the Army, 1962, OCMH Monograph No. 37M, c. Apr 65, p. 409. Hereafter cited as Blumenson, Project 80 History.

sisted the Army Air Forces in its reorganization under the Marshall plan and later worked with General Gates in develop

ing the concept of program planning. He also assisted in improving the War Department's manpower statistics through the Strength Accounting and Reporting Office. After the war he became Chief of the Management Improvement Branch of the Bureau of the Budget at a time when it was actively seeking to rationalize the federal bureaucracy along functional lines. From 1950 on, as Special Assistant to the Army Comptroller, and from November 1952, as Deputy Comptroller, he was actively involved in developing the Army's functional program and command management systems, in attempting to secure the adoption of modern cost-accounting systems, and in improving the Army's management procedures generally. With General Decker he had also worked to develop a mission-oriented Army budget. Over a period of twenty years he had developed an unparalleled, intimate working knowledge of Army organization and management and its problems both as a planner and as an operator.2

The Deputy Secretary of Defense, Roswell L. Gilpatric,

(1) For a historical account of the role of the Bureau of the Budget in promoting functionalism within the federal government paralleling Hoelscher's career, see Schick, "The Road to PPB: The Stages of Budget Reform," pp. 243-58, passim, especially 249-53. (2) Biographic data on Mr. Hoelsher. OCMH files.

gave Mr. Hoelscher some broad, informal instructions. He suggested the study should first determine what major changes had taken place in the defense environment since the Army's last reorganization in 1955 and, second, outline what basic considerations or standards the Army should meet in the light of these changes. The study should then recommend changes required in the functions, organization, and procedures of the Department of the Army to meet these basic considerations.

The committee, Mr. Gilpatric went on, should assume no further major changes in the National Security Act of 1947 or in the Army's current assigned missions and functions to train and support forces assigned to the unified and specified commands. The Army's Chief of Staff would continue to be a member of the Joint Chiefs of Staff, and the assistant secretaries of defense would remain advisers supposedly without operating responsibilities.3

Mr. Horwitz and his staff wanted other areas investigated. A perennial question was whether the General Staff should be involved in operations, how responsive it was to demands from higher echelons, and what should be its relations to other Army elements. Was CONARC necessary as a kind of "second Department of the Army?" Should the technical services be subordinated to a "Service Command" or replaced by a "Research and Development" or "Materiel Command?" Should the Army continue to perform such "non-military" tasks as managing the Panama Canal or the civil functions of the Corps of Engineers? *

On the basis of these instructions, assumptions, and questions Mr. Hoelscher drew up an outline showing how he proposed to conduct the study. He recommended that there be a project director with full executive authority to conduct the study and make its final proposals, assisted by a Project Advisory Committee and supported by a working staff divided into task forces assigned to investigate particular areas, organizations, or functions. General Decker approved this plan on 17 February and, as already noted, appointed Mr. Hoelscher as Project Director.

'Department of the Army, Study of the Functions, Organization, and Procedures of the Department of the Army, OSD Project 80, Oct 61, pt. I, Overall Report, pp. 8-9. Hereafter cited as Hoelscher Committee Report.

'Blumenson, Project 80 History, pp. 5-9.