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Corps. To protect such officers from future reprisals by not requiring the questionnaire to be signed, or employ the services of group efficiency experts to make recommendations to the Senate Armed Services Committee on the question.

Many times the committees and the Congress have recommended that we have a Supply Department in the Department of Defense. Recently, the Appropriations Committee of the House recommended more specialization, recommended less rotation. I will admit that it is quite a complicated affair, running the finances, the supply and the procurement of the services, and I feel that those people who know what they are talking about, who know all the laws going on, should be the people permitted to run that department.

Thank you very kindly, sir.

Chairman RUSSELL. You, of course, General Hill, are aware of the fact that under the law we passed here about 2 years ago the Secretary of Defense has the authority to have a single procurement agency now, if he wants to, in the Department of Defense.

General HILL. Well, certain things do have central procurement, sir.

In some cases they are satisfactory; in other cases they wait too long, because the people doing the procurement make the decisions but do not have the responsibility of furnishing the supplies of other people. Chairman RUSSELL. You were quartermaster general of the Marine Corps when it was larger than it has ever been in history, I suppose. General HILL. Yes, sir.

Chairman RUSSELL. The number of men who were discharging supply duty must have been very considerable.

General HILL. Yes, sir.

Chairman RUSSELL. But the number of SDO officers at that time must have been a very small percentage of the total officers under your command doing supply duty, were they not?

General HILL. It was very small, sir. At one time I believe they had 104 officers in the Supply Department in Washington.

I had worked late that night. I got in the next morning early and my plans and policy officer came in and said:

"You should have stayed until 12 o'clock last night. You lost 67 of your officers to go to the Pacific," and it is relief on the job. In other words, they had to go out there and relieve those people, before those people could come back, have leave and come report to duty in the Supply Department. It was kind of rough, yes, sir.

Chairman RUSSELL. But you did have a lot of line officers who were doing supply duty, did you not?

General HILL. Yes, sir.

Chairman RUSSELL. Did not most of them perform satisfactorily? General HILL. They did, and we had a preponderance of Reserve officers who were performing supply duty who had a business education, and it was very simple for them to catch on and go ahead with the work. There were not any seniors. They were, say, lieutenant colonels, majors, and captains. But they still had positions of responsibility, great responsibility.

Chairman RUSSELL. You are not impressed, then, with the argument that this would open up a wider field for these SDO officers, I assume, because there are a very limited number of billets in the higher ranks in the SDO now, whereas, if this bill were passed, all

your SDO officers could compete for a much larger number of vacancies?

General HILL. They could compete, sir, but I feel that due to their background, these senior officers had 20 years' supply duty experi


Now, a great many of them, in my mind, are equivalent or above the average line officer and some of them are superior to line officers. Now, they would get by all right.

Chairman RUSSELL. We have just had testimony here from the Commandant of the Marine Corps that some of these suppy officers, if they were not in this category, would undoubtedly get to higher grades, performing greater responsibilities in the Marine Corps.

General HILL. When they went into the Supply Department sir, they were cautioned that the highest you can get is quartermaster general. You forgo the chance of ever being Commandant.

Chairman RUSSELL. There cannot be but one Quartermaster Gen


General HILL. There can only be one Quartermaster General. Chairman RUSSELL. But they have a great many majors and brigadier generals.

General HILL. One Quartermaster General every 4 years. But those brigadiers are permitted to stay 35 and 5—that is, 5 years' commission and 35 years' service-and about that time they are ready to retire, and I believe very few of them who are outstanding in supply would be selected to command a station like Camp LeJeune, Camp Pendleton, or Parris Island, or something like that, sir.

Chairman RUSSELL. I was interested in your observation that it would be preferable to transfer this to the Navy Bureau of Supplies and Accounts than to pass this bill. What would be your views on a bill that did not disturb the present status of these officers but prevented the assignment of any more officers to SDO?

General HILL. I feel you would be in the same position you were when we went to war or when we were mobilized in 1942.

We had 1 major general, 1 brigadier general, 9 colonels, and 11 lieutenant colonels. Everyone else was on a 4-year-detail. In fact, some of them, against their own wishes, were on their second 4-year detail, because they changed the rules about 1933 and said instead of one 4-year detail, if you had shown any efficiency whatsoever, you had to be assigned the second 4-year detail.

Chairman RUSSELL. Senator Saltonstall?

Senator SALTONSTALL. No questions.

Chairman RUSSELL. Senator Stennis?

Senator STENNIS. I think it is covered fully. Thank you.

Chairman RUSSELL. Senator Smith?

Senator SMITH. No questions, Mr. Chairman.

Chairman RUSSELL. Senator Case?

Senator CASE. No questions.

Chairman RUSSELL. General, we are very glad to get your observations growing out of your long years of experience.

General HILL. Thank you very kindly, sir.

(Subsequently, in executive session, the committee voted to report H.R. 4328 without amendment, as covered by S. Rept. 577.)

H.R. 6668

Chairman RUSSELL. We will take up next H.R. 6668. The committee members will recall that this act permits members of the uniformed services to elect to receive a reduced amount of retirement pay in exchange for a right to their survivors to receive certain payments upon death of the members.

The plan is intended to be a self-sustaining one, except for administrative expenses, which, of course, would be borne by the Government. This bill proposes several modifications to the restrictions on entering and withdrawing from the program.

The departmental witness is Rear Adm. B. A. Clarey, Office of the Assistant Secretary of Defense.

We will also hear Mr. Robert Myers, Chief Actuary of the Social Security Administration, and a member of the Board of Actuaries that supervises the Contingency Option Act. He is here if his testimony is needed.

If you wish, Mr. Myers, you may sit there with Admiral Clarey. Admiral Clarey, you may proceed.

(The bill referred to is as follows:)

[H.R. 6668, 87th Cong., 1st sess.]

AN ACT To amend title 10, United States Code, with respect to annuities based on retired or retainer pay, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That chapter 73 of title 10, United States Code, entitled "Annuities Based on Retired or Retainer Pay" may be cited as the "Retired Serviceman's Family Protection Act".

SEC. 2. Section 1431 of title 10, United States Code, is amended to read as follows:

"S 1431. Election of annuity: members of armed forces

"(a) This section applies to all members of the armed forces except—

"(1) members whose names are on a retired list other than a list maintained under section 1376 (a) of this title;

"(2) cadets at the United States Military Academy, the United States Air Force Academy, or the Coast Guard Academy; and

"(3) midshipmen.

"(b) To provide an annuity under section 1434 of this title, a person covered by subsection (a) may elect to receive a reduced amount of the retired or retainer pay to which he may become entitled as a result of service in his armed force. Except as otherwise provided in this section, unless it is made before he completes 18 years of service for which he is entitled to credit in the computation of his basic pay, the election must be made at least three years before he is retired or granted retired or retainer pay. However, if, because of military operations, a member is assigned to an isolated station or is missing, interned in a neutral country, captured by a hostile force, or beleaguered or besieged, and for that reason is unable to make an election before completing 18 years of that service, he may make the election, to become effective immediately, within one year after he ceases to be assigned to that station or returns to the jurisdiction of his armed force, as the case may be. A member to whom retired pay or retainer pay is granted retroactively, and who is otherwise eligible to make an election, may make the election within 90 days after receiving notice that such pay has been granted to him.

"(c) An election may be changed or revoked by the elector before he retires or becomes entitled to retired or retainer pay. However, unless made on the basis of restored mental competency under section 1433 of this title, the change or revocation is not effective if the member is retired or becomes entitled to retired or retainer pay within three years after making the change or revocation. "(d) If an election made under this section is found to be void for any reason

except fraud or willful intent of the member making the election, he may make a corrected election at any time within 90 days after he is notified in writing that the election is void. A corrected election made under this subsection is effective as of the date of the voided election it replaces."

SEC. 3. Section 1434 of title 10, United States Code is amended

(1) by amending subsection (b) to read as follows:

"(b) A person may elect to provide both the annuity provided in clause (1) of subsection (a) and that provided in clause (2) of subsection (a), but he may elect only 25 or 121⁄2 percent of his reduced retired or retainer pay for each annuity. The reduction in his retired or retainer pay on account of each annuity, and the amount of each annuity, shall be determined in the same manner that it would be determined if the other annuity had not been elected."; and (2) by adding the following new subsection at the end thereof: "(d) Under regulations prescribed under section 1444 (a) of this title, a person may, before or after becoming entitled to retired or retainer pay, provide for allocating, during the period of the surviving spouse's eligibility, a part of the annuity under subsection (a) (3) for payment to those of his surviving children who are not children of that spouse."

SEC. 4. Section 1436 of title 10, United States Code, is amended

(1) by adding the following at the end of the catchline: "; withdrawal for severe financial hardship";

(2) by inserting the designation "(a)" before the words "The reduction" at the beginning; and

(3) by adding the following new subsection at the end thereof:

"(b) Under regulations prescribed under section 1444 (a) of this title, the Secretary concerned may, whenever he considers it necessary because of the member's severe financial hardship, allow him to withdraw from participation in an annuity program under this chapter, when requiring the member to continue to participate in the program would violate equity and good conscience. The absence of an eligible beneficiary shall not of itself be a basis for such action. However, no deductions from his retired or retainer pay may be refunded to him under this subsection."

SEC. 5. Section 1444 (b) of title 10, United States Code, is amended by adding the following new sentences at the end thereof: "In addition to a report on the administration of this chapter, the report shall also contain a detailed account, including an actuarial analysis of those cases in which relief is granted under sections 1436 (b) and 1552 of this title, or any other statutory or administrative procedure. This subsection does not apply to actions taken under section 1445 of this title."

SEC. 6. Chapter 73 of title 10, United States Code, is amended

(1) by adding the following new sections at the end thereof:

" 1445. Correction of administrative deficiencies

"Whenever he considers it necessary, the Secretary concerned may, under regulations prescribed under section 1444 (a) of this title, correct any election, or any change or revocation of an election, under this chapter when he considers it necessary to correct an administrative error. Except when procured by fraud, a correction under this section is final and conclusive on all officers of the United States.

"S 1446. Restriction on participation

"(a) Notwithstanding section 1441 of this title, if a person

"(1) has made an election under this chapter:

"(2) is retired for physical disability before he completes 18 years of service for which he is entitled to credit in the computation of his basic pay: and thereafter dies, his beneficiaries are not entitled to the annuities provided under this chapter until they give proof to the department concerned that they are not eligible for benefits under chapter 11 or 13 of title 38. If the beneficiaries are not eligible for benefits under chapter 11 or 13 of title 38, the annuity shall begin on the first day of the month in which the death occurs.

"(b) Whenever the beneficiaries on whose behalf the election was made are restricted, under subsection (a), from participating in the annuities provided under this chapter, the amount withheld from the elector's retired or retainer pay as a result of an election under this chapter shall be refunded to the bene

ficiaries, less the value of any annuities to be paid under this chapter, and in either case without interest."; and

(2) by striking out the following item in the analysis:

"1436. Computation of reduction in retired pay."

and inserting the following item in place thereof:

"1436. Computation of reduction in retired pay; withdrawal for severe financial hardship."; and

(3) by adding the following new items at the end of the analysis:

"1445. Correction of administrative deficiencies.

"1446. Restriction on participation."

SEC. 7. Any person who, before the date of enactment of this Act, has filed' a change or revocation, subject to section 1431 (c) of title 10, United States: Code, of an election made under section 1431 (b) of that title, which change or revocation would be ineffective if he were to retire upon the date of enactment of this Act, shall have that change or revocation become effective on that date, or three years after the date upon which it was filed, whichever is later. SEC. 8. Any person who

(1) made an election before the date of this Act which would be effective if he retired on the day before such date; and

(2) hereafter retires for physical disability before completing 18 years of service for which he is entitled to credit in the computation of his basic pay

shall be considered as having applicable to him all of the provisions of chapter 73 of title 10, United States Code, existing on the date preceding the date of enactment of this Act, except that any revocation or change of an election is not effective until three years after the date of filing such revocation or change, or the date of enactment of this Act, whichever is later. Passed by the House of Representatives May 15, 1961. Attest:


Admiral CLAREY. Mr. Chairman and members of this committee, I am Rear Adm. Bernard A. Clarey, USN, Director for Military Personnel in the Office of the Assistant Secretary of Defense (Manpower). I welcome the opportunity to present the views of the Department of Defense on H.R. 6668, a bill to modify certain provisions of the Contingency Option Act of 1953.

As you know, the Contingency Option Act allows a member of the uniformed services to elect to have his retired pay reduced during his lifetime so that his widow and children might continue to receive a portion of that pay after his death. The program is designed to be paid for by the participating member with no direct contribution by the Government.

H.R. 6668, the bill for your consideration this morning, is based on 7 years of experience with the operation of the Contingency Option Act. During this period it has become apparent that the act requires certain modifications in order to increase participation through more flexible elections, improve financial stability by eliminating those groups which have proved to be an excessively bad financial risk, and to simplify administration.

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