I am not looking for any big commitment from you except to indicate that that is a very basic problem that has to be fixed and fixed soon.

Mr. DUNCAN. I will pledge also that I am interested in any ideas and in unconventional thinking on that issue. We may have to come up with some creative ideas to solve that one. It is not immediately apparent how we can do that.

I did not mean to minimize the financial incentives at all, as I said before. That is important. But there have to be some other ways to bring those folks in.

We will make it an early priority, I assure you.

Senator GLENN. It might not hurt to go to the AMA or some of the doctors' organizations and ask what would be required to get your folks interested. Why not throw the ball into their court to see if they have any ideas. Maybe they don't. If they don't, then we will have to come up with the innovations.

But something has to be done. There is no doubt about that.
I have one other question.

A recent management study of OSD, completed by one of their study teams, made a recommendation that the three positions-the Assistant Secretary of Defense for Force Management and Personnel, the Assistant Secretary of Defense for Reserve Affairs, and the Assistant Secretary of Defense for Health Affairs-be organized under an Under Secretary of Defense for Personnel Resources.

Are you aware of the study and do you have any view on it at this point?

Mr. DUNCAN. I am aware of the study, Senator. I have not read the study, but I am aware of it, and I am aware of that particular recommendation. I am reluctant to reach a definite conclusion until I have had a chance to read it. But I would, I guess, make one observation.

There is a lot more that I see that goes into the Office of Reserve Affairs than just personnel resources. I mean, we are talking readiness, we are talking materiel, facilities, equipment, and lots of things other than pure manpower and personnel issues.

Second, a very important part of my job is exercising direct access to Secretary Weinberger, to give him my best judgment, which he can reject or take, but at least my best judgment on issues. To the extent that that particular proposal would somehow decrease that, I would be skeptical. But, having said that, I think I would like to see the study before I comment any further.

Senator GLENN. That is a good reply. I do not disagree with you at all. I am leery of such things as putting in another level of control somehow between the function and who makes the decisions. We have had too much of that through the years already.

So I am very sympathetic to your comment on that.

I have no other questions.

I have had no indications from anyone on this committee that there is any problem at all with your appointment. In fact, it is quite the opposite. People have spoken well, as Senator Warner did, about your qualifications and your background for this position.

Being in Washington all the time is going to give you some different winter sports activities than being in Evergreen, CO, I can guarantee you that. [General laughter.]

But if you and your family are willing to make that transition, then our blessings on you.

We will be reporting this out probably today. I don't know for sure, but I think we have several other nominations that have been held that we are going to vote on off the floor after the next vote. I don't know whether in this particular situation your nomination has to wait 3 days or not.

[Pause.]

I guess there is a requirement, a Senate requirement, that it lay before the Senate at least for 1 day. So it probably will not be voted out today, but probably early next week sometime.

I know of no objection and I think you can assume that you probably will be confirmed by acclamation.

So, we appreciate your comments today. We look forward to working with you in the future.

Mr. DUNCAN. Thank you very much.

Senator GLENN. The hearings are adjourned.

[Whereupon, at 10:45 a.m., the committee adjourned, to reconvene upon the call of the Chair.]

[The nomination of Stephen M. Duncan was reported to the Senate by Senator Sam Nunn on October 20, 1987, with the recommendation that the nomination be confirmed. The nomination was confirmed by the Senate on October 23, 1987.]

NOMINATION OF FRANK C. CARLUCCI TO BE

SECRETARY OF DEFENSE

THURSDAY, NOVEMBER 12, 1987

U.S. SENATE,

COMMITTEE ON ARMED SERVICES,

Washington, DC.

The committee met, pursuant to notice, at 2:05 p.m., in room SD106, Dirksen Senate Office Building, Senator Sam Nunn (chairman) presiding.

Present: Senators Nunn, Exon, Levin, Kennedy, Bingaman, Dixon, Glenn, Wirth, Shelby, Warner, Thurmond, Humphrey, Cohen, Quayle, Gramm, Symms, and McCain.

Staff present: Arnold L. Punaro, staff director; Carl M. Smith, staff director for the minority; Romie L. Brownlee, deputy staff director for the minority; Jeffrey H. Smith, general counsel; Patrick A. Turner, minority council; Gerald K. Bankus, Robert E. Bayer, Robert G. Bell, Judith A. Freedman, John J. Hamre, Ronald P. Kelly, James R. Locher III, David S. Lyles, Norman G. Mosher, and Frederick F.Y. Pang, professional staff members; Colleen M. Getz, research assistant; and Pamela G. Powell, staff assistant.

Also present: Jeffrey B. Subko, assistant to Senator Exon; Gregory J. Weaver, assistant to Senator Levin; William J. Lynn, assistant to Senator Kennedy; Edward M. McGaffigan, Jr., assistant to Senator Bingaman; Charles C. Smith, assistant to Senator Dixon; Milton D. Beach and Donald A. Mitchell, assistants to Senator Glenn; Leon Fuerth, assistant to Senator Gore; Terrence Lynch, assistant to Senator Shelby; William J. Wight, assistant to Senator Warner; Robert P. Savitt, assistant to Senator Cohen; Henry D. Sokolski, assistant to Senator Quayle; Mark J. Albrecht, assistant to Senator Wilson; Alan Ptak, assistant to Senator Gramm; Samuel J. Routson, assistant to Senator Symms; and Patrick A. Putignano, assistant to Senator McCain.

OPENING STATEMENT BY SENATOR SAM NUNN, CHAIRMAN Chairman NUNN. The committee will come to order. Our committee meets this afternoon to consider the nomination of Mr. Frank C. Carlucci III to serve as Secretary of Defense.

This is the seventh time Mr. Carlucci has been nominated to a position requiring Senate confirmation. This is a testament to his outstanding abilities and his distinguished career of Government service.

Mr. Carlucci is serving now as the Assistant to the President for National Security Affairs. But he is appearing today as the nominee to be the Secretary of Defense. We welcome you, Mr. Carlucci. On behalf of the committee I extend a welcome also to your wife, Marcia. We are delighted to have you here today.

I hope that the committee will report your nomination expeditiously, if we do not run into a problem today or tomorrow. And I hope the Senate can act on it tomorrow or early next week.

Í fully expect you to be confirmed. And that is the good news. The bad news is that the challenges facing you as the next civilian leader of the Department of Defense are going to be staggering. Let me point out a few of those hotspots, as I view them.

Foremost among these is the need to bring the defense budget into sync with fiscal reality. We must get more military capability from less spending. And we are going to have to do it in a period of unprecedented fiscal restraint.

The current 5-year defense plan of 3 percent real growth per year is based on what most recognize, in the Congress at least, as an unattainable level.

Our staff's calculations indicate that this 5-year plan of the Defense Department is $300 billion higher than the level that would be available at a zero real growth rate in defense. And in the past 2 years we have not even been able to achieve a zero real growth rate.

We do not know what the final number will be this year. I know that you have been very involved in that and we hope it will be as high as possible. But I do not visualize that we are going to see a substantial difference in what we are dealing with in the commit

tee.

It will take some tough decisions to get more defense from fewer dollars. It is also going to take some innovative ideas, like the early retirement of aging and marginal systems.

The aircraft carriers, Midway and Coral Sea, and other older systems, may have to be candidates for such early retirement. A major effort is needed to reduce the number of production lines for weapons systems. And I know we have talked about that on several occasions.

We cannot afford to spread scarce defense dollars over an excessive number of lines, buying fewer quantities of these systems at markedly higher prices. We need to look at the number of big, new starts that have substantial downstream costs.

We need to take a hard look at the size of the force structure itself, at the defense installation structure, including, of course, sensitive bases in this country, and even some abroad.

And we in the Congress, I think, are going to have to take a much harder look than we have ever before, including this year, at congressional add-ons to the defense budget. Some of those add-ons are to increase production efficiency, and I think are entirely justified. Others are of a more questionable nature. And we are going to have to look at those ourselves.

We must bring the defense budget into sync with reality, or we may go into the 1990s with a hollow military, and a hemorrhage of quality, of talent in our personnel. And that talent is very high today, and I hope we can maintain it.