Mr. MUMMA. If he died of pneumonia or something like that, it would be paid out of the fund? Mr. DALEY. Yes, sir; if not traceable to service. Mr. MUMMA. It seemed funny to me at that time that ordinary deaths wouldn't be paid out of the fund, but the statement was made that they had never been. I just wondered where they get the dividends, if they paid all those claims. Mr. DALEY. There were some situations under the prior laws whereby individuals who died or became permanently totally disabled within a certain period were covered by automatic insurance, so-called. Those would not be paid from the Government insurance funds. Those would be paid by the Government as a matter of benefit. Mr. MUMMA. Those premiums would be quite high in comparison to the money drawn? Mr. DALEY. No, those automatic cases, there would be no premiums levied against the individuals. Mr. MUMMA. This bill provides for Mr. DALEY. I wonder, Mr. Mumma, if you might not be considering the Servicemen's Indemnity Act, whereby the amount of indemnity is paid in the event of death, of persons in service. That was under Public Law 23, 82d Congress. Mr. MUMMA. I really don't know. I just took that statement. I think they were discussing the probability of letting some insurance company handle different insurance programs of the Government. You say six-tenths of 1 percent of the mortgages have been foreclosed or are in trouble. I thought I remembered along that line that it was very low, but that the actual amount was some 40,000. Would that be correct? Mr. STONE. 28,000, sir, approximately. Mr. MUMMA. It is a good record, anyhow. Thank you. Mr. BROWN. Mr. McVey? Mr. McVEY. No questions. Mr. BROWN. Mr. Hiestand? Mr. HIESTAND. No questions. Mr. BASS. No questions. Mr. BROWN. Gentlemen, we are very glad to have your testimony. Mr. DALEY. Thank you, Mr. Chairman. Mr. BROWN. The clerk will call the next witness. The CLERK. John H. Arrington, Family Housing Division, Office of the Assistant Secretary of Defense for Properties and Installations. Mr. BROWN. Come around, Mr. Arrington. STATEMENT OF JOHN H. ARRINGTON, CHIEF, FAMILY HOUSING DIVISION, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE FOR PROPERTIES AND INSTALLATIONS; ACCOMPANIED BY ANDREW MAYER, OFFICE OF GENERAL COUNSEL Mr. ARRINGTON. Mr. Chairman, I have with me Mr. Andrew Mayer of our office of General Counsel. I have a prepared statement, which I would like to read, if that is agreeable to the committee. I appreciate the opportunity to appear before you today on behalf of the Department of Defense, in order to furnish current information on our military housing programs, and to offer our views with regard to proposed legislation now pending before this committee. First of all, I'd like to say a few words about the basic reason why we need family housing-the necessity to retain essential people in uniform on a voluntary basis. The personnel problem of the Armed Forces are becoming increasingly critical, because of the failure of trained career people to reenlist. Aside from the cost of training replacements, it is absolutely impossible to operate complex modern military equipment with inexperienced personnel. Consequently, a low reenlistment level jeopardizes the basic effectiveness of the national defense effort. In this connection I should like to quote a relevant portion of the statement given yesterday by Secretary Wilson before a subcommittee of the Senate Committee on Appropriations: The personnel program of the Department of Defense does not involve either large increases or decreases, since we have now reached a substantially stable level of strength. Our problem today is to achieve stability of skilled personnel within these numbers. We must increase the ratio of career personnel to total personnel. We must further reduce the personnel turnover rate and provide the necessary incentives for larger numbers of highly qualified officers and enlisted men to accept military service as a career. When we attain a "hard core" of career personnel, in sufficient numbers to constitute a reasonable percentage of the total, we will have stability in its full and true sense. There are now pending before the Congress several important personnel measures designed to do just that, and I hope that you will give them your full support. I recommend to your particular consideration the provision for adequate medical care for dependents, the measures which we are recommending for the improvement of housing for military personnel, the important adjustments necessary in our survivor benefit legislation, and the augmentation of the Regular officer structure of the services. *** For specific comments on the importance of the problem with which we are trying to deal, some brief excerpts from a statement made by Secretary of the Navy Thomas last year are of interest: Fifty-eight percent of the men in the Navy today have enlistment contracts which expire in the next 2 years. This means that the Navy will lose about 350,000 men during the next 2 fiscal years. These personnel can be divided roughly into two groups: The so-called career people, who are on their second or subsequent enlistment; and the noncareer people, serving on their first enlistment. Among our career personnel, only 58 percent are signing up for additional service. This 58 percent today compares with 90 percent only 1 year ago. For the noncareer people, less than 6 percent are signing up. * * * Not all of these losses are the apprentices and the unskilled. Many are highly trained technicians, specialists in electronics repair, aviation mechanics, submarines, and atomic weapons, as well as the many other technical trades of the Navy. Many are our key people-our supervisors, our petty officers. These are the types that industry attracts in particular. Unless we can reverse this trend, make a career of military service attractive and thereby keep our hard core of trained people, the Navy will inevitably become a second-rate organization. *** Considering the cost in men and in money and in military effectiveness, it is apparent that nonreenlistment is a major defense problem. It affects not only the Navy, but the Army and Air Force as well, and one of the 2 or 3 principle reasons for it is lack of adequate family housing. Might I say there are representatives of the military departments here this morning, particularly General Brown of the Air Force, who can present further information on the importance of the housing program if the committee desires. Mr. RAINS. Which General Brown? Mr. ARRINGTON. Gen. Pratt Brown, Assistant Chief of Staff for Logistics. Mr. RAINS. We are very glad to have you, General Brown. Mr. ARRINGTON. The Defense Department's family housing shortage involves some sizable figures. First of all, combined Army-Navy-Air Force strength levels planned for June 30 of this year amount to about 2,850,000 officers and men. Considering only married personnel of the officer and upper enlisted grades, we have a worldwide requirement for 650,000 units. After subtracting 220,000 units of Government-controlled assets existing or under contract, and 156,000 units of adequate housing available in nearby civilian communities, it is found that the net deficit of family housing is 274,000 units. It will be noted that the above figures do not take into consideration the requirements of enlisted personnel of the lower pay grades. A recommendation that consideration be given to provision of housing for this category of personnel was contained in report No. 3 of the Subcommittee on Housing of the House Banking and Currency Committee; and subsequently this matter has been given particular attention by the Office of the Secretary of Defense and by the Military Departments. The Department of Defense does not favor an across-the-board program to meet the family housing requirements of the lower pay grades at this time. It is believed that first attention should be given to meeting the needs of career-motivated personnel of the officer and upper enlisted grades. Moreover, if family housing is provided for the lower pay grade group, a natural concomitant would be to provide for transportation of dependents and household goods,, in the United States and overseas. The costs of the additional transportation and support facilities (above and beyond the cost of the housing) could exceed any reasonable forecast of funds to be made available, without any direct impact on the morale or well-being of the career personnel whose retention is of primary importance. Furthermore, troop housing (barracks) now in being or programmed for construction might become surplus due to nonoccupancy by the personnel for whom it is intended. Accordingly, it is planned that provision of housing for lower pay grade enlisted personnel will initially be limited to isolated installations and to special circumstances involving military necessity. After the needs of the officer and upper enlisted groups have been substantially satisfied, consideration will be given to further construction to meet the balance of the enlisted requirements especially for personnel of pay grade E-4 (corporals or equal) who have demonstrated their career intent or their value to the services by attainment of that grade. This gradual approach to the provision of housing for the lower pay-grade enlisted personnel is also motivated by the desire of the Department of Defense to maintain safety factors as a precaution against overbuilding. In other words, after projects currently planned to meet the needs of officers and the upper enlisted groups have been built, it will be possible to assess more precisely how much additional construction can be scheduled to meet the balance of the military requirement without harmful impact on the local communities. Returning again to the overall problem: It can be seen that the military family housing requirement is a sizable one with a serious effect on the national defense. To meet this substantial and urgent requirement, we in the Department of Defense believe that in the United States, its Territories and possessions, the best and cheapest method involves construction of public quarters through use of funds directly appropriated for that purpose. However, despite the advantages of the appropriated fund method, it has one inherent limitation-budgetary considerations will not permit expenditure in 1 or 2 fiscal years of the sums needed to meet the total need. Accordingly, the Department of Defense supported legislation last year to provide an additional 100,000 family housing units under an amended title VIII of the National Housing Act. This legislation provided a sound means to do the job quickly, utilizing private capital to be repaid out of quarters allowances over a 25-year period. Public Law 345 was approved on August 11, 1955. As of April 30, 1956, a total of 158 projects, comprising 64,947 units, have been approved by the Secretary of Defense for development under the new title VIII program in the United States, Hawaii, and Guam. A list of these projects is attached for information of the committee. At present only one contract has been awarded in this program, for a 944-unit project at Abilene Air Force Base, which is now under construction. Bids have been taken on two other projects: 211 units at Fort Carson, Colo., and 500 units at Eglin Air Force Base, Fla. Seven additional Army projects and one Air Force project are scheduled for advertising during the month of May. A progress report on the title VIII program would not be complete at this time without a statement on the difficulty at Fort Carson. Although bids have been opened, it has not been possible to award a contract because the low bid exceeded the FHA estimate of replace ment cost. In this case, the FHA estimate was $2,340,574. The architectengineer, who was employed by the Army to design the project, estimated the cost at $2,606,979 $266,405 more than the FHA figure. The Army district engineer at Omaha estimated the cost at $2,687,464 $346,890 above the FHA estimate and $80,485 above the architect-engineer's figure. Prior to advertising, at a conference between FHA and the Army, it was pointed out that the low FHA estimate of cost might preclude awarding a contract; and although both the FHA and the Army engineers' estimates were reviewed, an agreement could not be reached as to a revision. Of the nine bids received, the lowest was $2,688,200, and the next lowest was $2,846,332, and the highest was $3,100,000. 77608-56- -12 Because the low bid exceeded the FHA estimate of replacement cost by $347,626 (it was only $736 above the Army engineer's estimate), the Army requested that FHA review its cost estimate. As a result of this review, on May 3, the FHA estimate of replacement cost was raised to $2,605,500-an increase of $264,926. However, since this new figure is $82,700 less than the low bid, a contract still cannot be awarded. It is believed that the problem at Fort Carson arises largely from the fact that title VIII contracts are essentially military construction documents, and bidders will normally figure higher allowances for overhead and contingencies than the FHA field offices are accustomed to allowing. This same problem arose in connection with the Abilene project and was successfully resolved. The Department of Defense plans to explore this subject further with the Federal Housing Administration, in an effort to find a means to eliminate this present impediment to successful development of the title VIII program. Having laid emphasis on the importance of the urgency of the military family housing program, I should like also to emphasize to the committee that the greatest care is being taken to avoid overbuilding. For the title VIII program a comprehensive review system has been established in close cooperation with local and national Federal Housing Administration offices to avoid duplication of existing satisfactory assets, and to prevent harmful economic impact on local communities which have made available private rental housing. For example, an installation commander desiring a title VIII project must prepare a backup data sheet, based on an actual survey, showing existing and future strength levels, gross requirements, Government assets, including Wherry, adequate community support, and net deficits. The proposed project is then discussed with the Director of the Federal Housing Administration field office, who is requested to concur in the need for the desired number of units. If the Director concurs he will so indicate above his signature on the application form; if he does not, the question will have to be resolved between the FHA Commissioner and the Assistant Secretary of Defense (P. & I.) The Department of Defense may approve a larger number of units than the FHA will agree to, but has not yet done so. Such is the concern for careful administration that the Office of the Secretary of Defense has in some cases reduced proposed projects below the level in which FHA has concurred. A number of cases of this type have involved stations where there was an existing Wherry projact, and an extra margin of safety was desired to protect the occupancy of that Wherry project. Total programing, including all existing adequate Government and private assets as well as planned construction, cannot exceed a maximum of 90 percent of total requirements. A safety factor of at least 10 percent is maintained to provide against unforeseen strength fluctuations and families which may not desire to move into the area. A larger safety factor is used where programing is based on future strength increases, and for installations which enjoy the use of a sizable amount of private housing. Except at isolated stations, no provision |