STATEMENT OF MAJ. GEN. ROBERT S. MOORE, OFFICE OF THE SECRETARY OF DEFENSE

CLAIMS

Mr. Chairman and members of the committee, the appropriation "Claims, Department of Defense" provides funds for the payment as authorized by law of all noncontractual claims against the Department of Defense and represents the consolidated requirements of the Office of the Secretary of Defense and the Departments of the Army, Navy, and Air Force.

The nature of the purposes for which these funds are provided makes it difficult to predict with any degree of accuracy and very far in advance the amounts which will actually be required. There are, however, certain general factors that, from past experience, we can use as broad guidelines to arrive at an approximation of these amounts. For example, we know that the number of troop movements, maneuvers, and training activities unfortunately results in an increase in the number of accidents involving injury or damage to persons and private property. For fiscal year 1955 the Department of Defense requested and the Congress appropriated $7.68 million for such claims. Subsequent to the submission of the original estimates, a Comptroller General's decision concerning the repayment of erroneous collections and new legislation relating to the payment of foreign claims have tended to increase the requirements above the original estimates. Also, experience has shown that there has been a general increase in the amounts of the judgments rendered by the courts in cases which are litigated, as well as increases in amounts claimed in other cases, where damages to property are involved, and labor and material comprise a substantial element of the claims. In addition, the time-delay factor between accidents and the filings of claims, and between the institution of an action and the settlement of the suit have resulted in backlogs in many categories. As a result of all these factors, it is now estimated that an additional $4.32 million will be required for payments under this appropriation for the current year.

I would like to mention a few of the specific factors which have led us to the conclusion that additional funds will be required for this fiscal year.

Approximately $2,067,500, or almost 48 percent of the estimated additional requirements, are for the general category of personnel claims. An analysis of current obligations and expenditures indicate that the requiremenes for claims for damage to, loss, destruction, or abandonment of personal property incident to service of military and civilian personnel of the Department of Defense, especially veterans of the Korean conflict, are running higher than had been originally estimated. An additional $457,500 will be needed for this type of claim. It is estimated that an additional $734,500 will be required for repayments of erroneous collections. These repayments are attributable to a decision of the Acting Comptroller General, dated April 23, 1954, which provided that personnel who reenlisted prior to October 26, 1951, and who failed to complete terms of enlistment are not required to refund any portion of the reenlistment bonus paid incident to such reenlistment. A large number of collections had been made, and in compliance with this decision refunds will be made to the individuals. The balance of additional requirements in the amount of $875,500 for this general category is for claims resulting from the correction of military or naval records. These corrections are ordered by a civilian board in each military department where it is determined that such military or naval records should be changed to correct an error or remove an injustice. The Department of the Army has a large number of terminal leave claim cases which are expected to be settled this year. The number of cases of this type is now estimated to be fewer than was originally estimated, but payments are averaging much higher than those of past years for this category. Obligations through January 31, 1955, for 277 cases amount to $1,148,931 and have already exceeded the amount provided for this item in the original estimates.

Tort claims account for almost 52 percent of the estimated additional requirements for the current year. It is estimated that approximately $2,230,500 more will be required during the current year for all types of tort claims. Federal Tort Act claims, foreign claims, and litigated claims against the military departments which are compromised, arbitrated, or settled by the Attorney General and approved by the court account principally for the additional requirements in this general category. Claims under the Federal Tort Claims Act will require $149,000 more than was previously estimated. Due to increasing cost of labor and parts and larger amounts allowed for personal injuries, the average claim received and paid is now exceeding the average of claims based on similar incidents of previous years. An additional amount of $1,542,000 is estimated for

foreign claims, which includes claims pursuant to both the Foreign Claims Act of 1942 and Public Law 734, 83d Congress. The claims appropriation was approved before the enactment of Public Law 734, and, therefore, no provision has been made for the payment of claims pursuant to this act. Under terms of international treaties and agreements to which the United States is a party and as implemented by Public Law 734, there has been established a reciprocal and, it is believed, a more effective remedy for the settlement of certain claims as a result of line-of-duty acts or omissions of personnel of the Department of Defense in foreign countries. Public Law 734 authorizes the reimbursement to foreign governments for the agreed pro rata share of such sums as may be expended by foreign governments for the payment of claims settled pursuant to the terms of such international agreements. Non-line-of-duty claims have also been increasing as a result of operations in additional foreign areas, and it is anticipated that approximately $332,000 will be required for the payment of claims pursuant to the Foreign Claims Act of 1942 over the amount originally estimated.

An additional amount of approximately $500,000 will be required for compromise settlements to be completed by the Attorney General in collaboration with the military departments. Amounts awarded in personal injury cases are most difficult to estimate. Almost all such settlements involve cases in excess of $1,000, and in many instances represent very large amounts. For example, during the first half of this year compromise settlements in the amount of $375,000 were paid for one incident, whereas judgment in the lower court against the Government was entered in the amount of $415,000. While some settlements are for very large sums, they are considerably less than the amounts which otherwise we would be required to pay if the case were to go to a judgment. It is estimated that about $39,500 will be required this year for all other types of tort claims, including noncombat activity claims under authority of the Military Claims Act of 1943, National Guard activity claims for which payment is authorized in the appropriation language and Guam claims payable under the Guam Claims Act.

The number of admiralty claims currently being presented has been increasing, especially in the Department of the Army. The Maritime Claims Act of 1951 authorized the Departments of the Army and Air Force to settle administratively claims of this type in a similar manner as the Department of the Navy has been doing for some time. An additional $30,000 is estimated to be required this year for this purpose.

In summary, the estimate of $12 million for the fiscal year 1955 is the best available projection that can be made at this time of the amount which will be required for the payment of all noncontractual claims against the Department of Defense.

Explanation of supplemental estimates, fiscal year 1955-Claims, Department of

Defense

Amounts available for obligation

RETIRED PAY

The appropriation "Retired pay, Department of Defense" provides funds for retired pay, as authorized and at rates prescribed by law, for military personnel on the retired rolls of the Army, Navy, Marine Corps, and Air Force and provides for payments to survivors of such military personnel pursuant to the Uniformed Services Contingency Option Act of 1953. These estimates represent a consolidation of the requirements of the military services and include commissioned officers, warrant officers, enlisted personnel, female nurses, and members of the women's specialist corps, Philippine Scouts, and authorized personnel of the reserve components, including retainer pay of the inactive fleet Reserve.

For the fiscal year 1955 the Department of Defense requested and the Congress appropriated $404.5 million for these purposes. The original estimate provided for a year-end strength of 176,988 annuitants or an average of approximately 172,314 for the year. A review has been made of the number of annuitants added to the rolls during the first 7 months of the current year, and based on this analysis and a projection for the balance of the year, it appeared that there would be a total of approximately 179,477 military personnel on the retired lists and inactive fleet Reserve and approximately 496 annuitants entitled to benefits under the Uniformed Services Contingency Option Act of 1953, or a total of 179,973 as of 30 June 1955. This is 2,489 more than has been programed within the appropriation of $404.5 million which is presently available, and an increase of 2,985 over the number estimated at the time the appropriation was considered by Congress. As a result, when these estimates were prepared it appeared that an additional $10.5 million would be required for the current fiscal year.

From July 1 through January 31 of this fiscal year, the number of annuitants increased from 167,891 to 175,043-an average increase of slightly over 1,000 annuitants per month. We projected our estimates for the balance of this fiscal year on the basis of an average increase to the rolls of approximately 900 per month with an estimated year-end strength of 179,973.

The estimated increases are principally in the nondisability category as a result of revised planning for separation from active service of personnel eligible for retirement. In addition, current obligational data indicate that the annual rate of retirement compensation in many categories is now higher than the rate used in preparing the original budget estimates.

Actual obligations for the first 7 months of this fiscal year are $236.4 million. By projecting the current obligational rate for the balance of the fiscal year and then estimating requirements for the anticipated increase in the number of annuitants who will be added to the rolls during the remaining months of this year, it appeared that obligations for the last 5 months would be approximately $178.6 million, or a total requirement of $415 million for retired pay this year. All of the funds provided in this appropriation go to payments of amounts authorized by law to retired military personnel or their survivors in accordance with the several statutes governing such matters. Consideration has been given in these revised estimates to reductions in retired pay of those members electing benefits for their survivors pursuant to the Uniformed Services Contingency Option Act of 1953. Deductions during fiscal year 1955, from which the payments to survivors are to be made, are estimated to be approximately $4.2 million. No portion of the funds provided under this appropriation is for expenses of administration.

The House, in considering this item in the second supplemental appropriation bill, recommended a supplemental appropriation of $8 million in lieu of the $10.5 million requested, a reduction of $2.5 million from the estimate. A review of the obligational rate for the month of January, which was not available when we appeared before the House, reflects a further increase of $0.2 million over the December rate, continuing the trend noted last fall which prompted a review of the Departments' needs for appropriations for retired pay this year. However, since the factors on which these estimates are based are subject to considerable variation, principally caused by changes in the planning factors affecting the size and composition of the active forces, it is difficult to determine this far in advance the precise amounts which will be required for retired pay. Rather than ask the Senate at this time to amend the amounts approved by the House, the Department proposes to watch this item very closely over the next 2 or 3 months and at such time as it can be determined definitely there is need for the additional amount requested, we will again make known this requirement.

Chairman HAYDEN. The audited claims, you have very little choice about that.

General MOORE. They are claims that have been determined by the General Accounting Office to be payable and have been certified by that Office. They are included as has been the practice in the past.

UNIFORM ALLOWANCE

Chairman HAYDEN. How about this uniform allowance?

General MOORE. The House amended the uniform allowance provision based on testimony given by representatives of the Department of Defense that we could not use the authority to pay at this time and have submitted an amendment to the legislative committees to make it possible for us to work out an equitable method of payment of the uniform allowances.

As soon as that amendment is acted upon by the Congress, then we will need the language which the House deleted.

I might say in passing that the House left in the bill language for the civil functions. Among the civil functions items is an item for the Panama Canal. That agency is ready and can work out under existing law an equitable solution.

Certainly that language should be left in to permit the Panama Canal to proceed.

Chairman HAYDEN. Are there any further questions?

SUITS UNDER TORT CLAIMS ACT

Senator KILGORE. I wanted to ask the general a question, Mr. Chair

man.

Now, I notice in your prepared statement here you go into the question of these suits under the Tort Claims Act for accidents, injuries, and things of that kind?

General MOORE. Yes.

Senator KILGORE. I want to call to your attention and to the attention of the commitee another factor. Those only apply where those vehicles were on official business; is that right?

General MOORE. I think that it applies while the operator was operating within the scope of his employment.

However, I think upon occasion-and I am not the best witness on the legal aspects of this-that where a person went without authority with a vehicle, we have found one way or another that the Government was at fault.