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partment of the Air Force is reviewing major nonprofits engaged in Air Force contract work on a continuing basis. These reviews are an attempt to respond to varying expressions of congressional concern about the role of nonprofit organizations in Government contract work. It is expected that the findings and actions resulting from these studies will take account of this committee's recommendations and comply with them in essence.

[H. Rept. No. 1425, 88th Cong., 2d sess.)

PROCUREMENT OF EQUIPMENT FOR MARINE CORPS

TACTICAL AIRFIELDS

Nineteenth Report by the Committee on Government Operations

(Submitted to the Speaker May 25, 1964) This report gives an account of development and production of equipment for the short airfield for tactical support (SATS) system, an expeditionary airfield complex designed for the use of Marine Corps assault divisions. It is, in essence, an extension of the carrier flight deck concept to shore operations. Under this system, airstrips can be laid down by military personnel using prefabricated aluminum mats, which are hooked together so as to form a continuous strip. Launching and arresting gear enable the attack aircraft to take off and land on these short strips, placed on beachheads, offshore islands, or other locations close to the area of ground combat action. The matting and other equipment are removable and therefore can have repeated use.

Although the concept and equipment requirements seem fairly simple, there have been in fact some rather difficult development and production problems, an elaborate array of proposed components for full system operations, and substantial money outlays in the SATS program.

The staff of the Military Operations Subcommittee was directed to study the SATS program because of allegations made by one of the development contractors that there were various deficiencies in the procurement of certain categories of equipment. With the help of 2 defense audit specialists from the General Accounting Office, the staff examined 44 contracts covering the development and production of landing mats, earth anchors, catapults, and arresting gear, which are among the major items of SATS equipment. Documentary research was supplemented by staff interviews with responsible policy and procurement authorities, including personnel of the Marine Corps as the user, the Bureau of Naval Weapons and the Naval Air Engineering Center) as the procuring agency, and the Air Force Logistics Command as owner of key production presses. A preliminary staff report was prepared for the use of the subcommittee and made available to the interested Government agencies as a basis for public hearings, which were held on March 10 and 11, 1964.

Information developed in the hearings and additional data requested by the subcommittee were considered in preparing the final report. This report is not confined to a consideration of specific complaints. In view of the military importance of the SATS program, the substantial costs, the lack of readily accessible public information on the program, and its intrinsic interest for policymakers in the Congress and the executive branch, the report sets forth in broad scope the evolution of the SATS concept, the major program developments, and some of the procurement problems which have been encountered. It also makes a special analysis of transportation costs to show that a proper consideration of this factor in certain production contracts could have yielded substantial savings to the Government.

RESULTS.-The report contained seven recommendations. Comments were received from the Assistant Secretary of Navy (Installations and Logistics), the Commandant of the Marine Corps and, in instances where the recommendation could have possible bearing on Government-wide procurement policy, comments also were solicited from the Administrator of the General Services Administration. The seven recommendations and the pertinent comments thereon are printed below.

RECOMMENDATIONS

REEVALUATION OF THE SATS PROGRAM (Recommendation No. 1):

The SATS program has been the subject of relatively extensive research and development, with procurements of production quantities of items overlapping the development phases. The substantial money outlays to date, the large number of component items designated for ultimate full field operation, the extended period for future development, and the difficulty of determining whether various component development and production programs are in proper phasing, dictate a reappraisal of the SATS program.

We recommend that the SATS program be reevaluated (a) to achieve, if possible, greater austerity without sacrificing military capabilities; (b) to determine whether an extended period of SATS development is justified in the light of other tactical aircraft developments such as VTOL; (c) to weed out less promising R. & D. contract efforts; and (d) to integrate the various development and production programs into a coherent properly time-phased effort.

DEPARTMENT OF THE NAVY COMMENTS (a) The SATS program is a high priority research and development program, involving parallel efforts on many components, designed to bring into being a major limited war system in the minimum of time. Since the committee hearings on March 10–11, 1964, all final components of the SATS system have been selected and prosecution of competing research and development components has been terminated. All components of the SATS system are under contract or will be shortly.

(b) SATS is a major achievement and upon receipt of full allowances of equipment in the near future will be a reality. VTOL is not a reality today and must await engine development and a satisfactory

а

means of obtaining stability and control. When VTOL is a reality, in possibly 10 years, the VTOL aircraft must inevitably be a heavier, more complex, and costly machine than a conventional aircraft to accomplish the same mission. SATS greatly extends the usefulness of high performance conventional aircraft and gives the free world mobility and rapid dispersion in the employment of these weapons. While an extended period of SATS development is not anticipated, the edge that SATS gives us will be maintained by further development in the next few years.

(c) All research and development contracts not involving final components selected for SATS have been or are being terminated.

(d) Since selection of all final components of the SATS system has been made, phasing of research and development and production contracts is no longer a problem. An orderly program of phased production deliveries of the final components is in being and will be followed. This plan takes into account lead times, training requirements, costs, and destinations.

MARINE CORPS COMMENTS

(a) Although the SATS program is proceeding very satisfactorily, the Marine Corps concurs in any reevaluation which offers the oppertunity for improvement in the SATS program and stands ready to provide any assistance necessary toward this end.

(6) It is considered appropriate that any reevaluation include all new tactical aircraft developments. The VTOL development is one which the Marine Corps monitors closely. At this time it is not anticipated that a combat VTOL aircraft will be in the hands of the operating forces within at least the next 5 years. The SATS satisfies an existing requirement, i.e., to provide expeditionary facilities for Fleet Varine Force aviation units in support of the Marine ground forces in any combat area where approximately 2,000 feet of relatively level land can be obtained. It is expected that the SATS concept will require revision and updating to meet the special requirement for VTOL as its development progresses satisfactorily toward becoming an operational reality.

(c) and (d) It is agreed that every effort should be made to weed out less promising R. & D. contract efforts and that maximum coordipation of development and production programs should be effected. The major portion of the SATS R. & D. effort has been completed or is in the final stages of completion. The remaining modest R. & D. effort is confined to equipment modification and product improvement.

MANAGEMENT IMPROVEMENT NEEDED (Recommendation No. 2):

User-buyer relationships and internal management of the SATS program need improvement. We found disconcerting differences of opinion and judgment as between the Marine Corps (user) and the Naval Air Engineering Center in Philadelphia (designer), with the Bureau of Naval Weapons in Washington, D.C. (cognizant bureau), siding now with one, now with the other. As one flagrant example, the Center spent $2.6 million for expensive tooling and the buildup of a production resource which has little prospect of future use, since the Marine Corps did not want, and will not use, even for training purposes, the type of landing mat available from that source. Where differences of opinion and judgment result in lines of research and development of procurement not desired by the using service, there ought to be a systematic means of resolving these differences by appropriate higher authority. The testimony also indicated that substantial sums of money could have been saved by better coordination and a fuller and more timely exchange of information between buyer and user and between the technical and contracting units of the buyer organization.

We recommend that (a) the Marine Corps, as the user of SATS, be fully consulted in connection with research and development and production programs; (6) in cases where Marine Corps disapproval is found, the matters be resolved at the level of the Secretary of the Navy and the Commandant of the Marine Corps; (c) the Bureau of Naval Weapons redefine its supervisory relationships with the Naval Air Engineering Center, to insure more integrated technical decisions; and (d) the technical and contracting elements of the Center be more closely coordinated and be directed to exchange full and timely information between themselves and with the Marine Corps to insure more economies in procurement.

DEPARTMENT OF THE NAVY COMMENTS

(a) It was always intended that the Marine Corps be fully consulted on all matters concerning them as the user. Since early March 1964, the means of doing this has been formalized and the rapport between the Marine Corps and the Bureau of Naval Weapons complex has improved to a highly satisfactory state.

(6) Differences of opinion continue to exist and always will, but these differences have been systematically resolved. Resolution of differences by the Commandant of the Marine Corps and the Secretary of the Navy is always available should it be required.

(c) The Naval Air Engineering Laboratory (Ship Installations) (SAEL(SI)) is under the management control of the Bureau of Naval Weapons and this relationship has been reiterated to the NAEL(SI) personnel. A major program such as SATS demands strong management and technical personalities in order to assure success. There will be disagreement. However, the means of resolving these differences has been made clear.

(d) A very close working relationship between the Bureau of Naval Weapons, NAEL(SI), and contracting elements of the Naval Air Engineering Center now exists for the purpose of a full exchange of information.

MARINE CORPS COMMENTS (a) The Marine Corps is satisfied that appropriate consideration is being given to the interests of the user in all SATS research and development and production programs.

(6) It is not anticipated that resolution of SATS decisions at Secretary of the Navy level will be required. However, should it become necessary, the required procedures for the accomplishment of such action are presently in existence and will be utilized.

In addition, the committee has been advised that in August 1964 a Triservice Airfield Matting Committee was formed. The Committee consists of representatives from the Army, Navy and the Air Force and is aimed at exploring the possibility of reaching an agreement on a mat or family of matting which satisfy the requirements of all three services. The services then would be in a position to meet their requirements at less cost. A number of meetings of the Committee have been held and it is their intent to field test those mats which pass development tests and thereafter to submit recommendations to higher authority for adoption of a true multiservice, common, interchangeable family of airfield landing mats.

TRANSPORTATION COSTS SHOULD BE CONSIDERED IN MAKING AWARDS (Recommendation No. 3):

To meet Marine Corps requirements, the Naval Air Engineering Center recently in 1963) awarded a $7.8 million contract for 14 million pounds of aluminum matting and pallets in the SATS program to Washington Aluminum Co., the successful low bidder. The sought-for savings through award of the contract to Washington Aluminum as the lowest bidder were somewhat illusory, however, in that the Navy procuring agency did not consider the transportation costs for delivery of finished mats from fabricator to point of use or storage. If the transportation factor had been incorporated in the bid invitation and evaluation, another bidder would have been selected as low, and we estimate that the Government could have realized a minimum savings of about $104,000.

Alternatively, if the transportation factor had been analyzed more closely in relation to the three intended destinations of the aluminum matting, and transportation costs minimized by making split awards instead of a single contract, we estimate that minimum savings to the Government could have been increased to about $248,000.

We recommend that (a) in future SATS competitive procurements, which involve significant transportation costs and f.o.b. origin quotations, a determined effort be made by the using and purchasing activities to establish firm or proposed destinations prior to issuance of bid invitations (this would enable contract personnel to incorporate estimated transportation costs to the Government in the bid evaluation and to select the contractor(s) whose price, together with estimated transportation costs, would result in the lowest delivered cost to the Government); (6) in all instances where transportation costs will be significant, the contracting agency notify the Defense Traffic Management Service of the quantities and destinations involved as soon as possible after award of the contract(s) so that appropriate action can be taken to negotiate with transportation companies.

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