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along without the draft. This might be one aspect of the problem that would be helpful. That is a part of a study that we are just now getting started and it should take a year to complete it.

Mr. JOHANSEN. It is my understanding that some of the large Defense activities, specifically, Dover Air Force Base, made their own manpower surveys prior to this Defense Department report, or proposal, and came up with recommendations for sizable shifts of military personnel spaces to civilian spaces. Is that information you will avail yourself of in continuing reviews of this matter?

Mr. PAUL. Yes; and we will get more information of that kind. I might add, though, there is still a wide disagreement among the military departments as to where the cost savings lie, whether it be military or civilian. From a cost point of view, it is very hard to compare the cost of a military man versus the cost of a civilian. The military pay and allowance system is very complicated. We have problems of overhead. If there are large changes of categories of personnel, it is an exceptionally complicated problem.

Mr. HENDERSON. Do you have a figure, Mr. Secretary?

Mr. PAUL. A cost figure?

Mr. HENDERSON. Yes. We wonder if we could get one. have a figure of the cost of a military man?

Do you

Mr. PAUL. We would give you examples of comparable costs, I believe.

Mr. HENDERSON. I wonder how much in depth you have studied this. I was tempted earlier this morning to say, "Let's take the military slots and divide them by the payroll." We need this figure. We do not have it. We would like to have a comparative figure with the in-house, because very frankly, before we get through with the hearings, we expect to have some kind of a figure as to the cost of contracting out personnel.

In the technical field, we arrived at a figure of about 16,000. We believe when you compare that with an in-house employee, or a military man, you are going to have some eyes opened on costs.

Mr. PAUL. I cannot speak to contractor cost. We will give you what cost figures we can pull together on the military versus civilian. (The information follows:)

COMPARATIVE COSTS OF MILITARY AND DIRECT-HIRE CIVILIAN PERSONNEL

Repeated efforts over the years to develop a standard table of comparative costs as between military and direct-hire civilian personnel for general usage have not proved practical because such costs, which are averages, tend to be misleading when applied to specific cases. For example, since wage board pay rates vary by locality comparisons with military pay rates using average salary costs could result, in fact, in one type of personnel being more economical in one locality and more costly in another locality. A graphic example of this was a study made recently on the cost of civilians and military in the base and transient aircraft maintenance function at two different installations. At one base the average annual civilian cost was $612 more than the average annual military cost. The figures at the other base indicated that the civilian cost was $404 less than the military cost. Consequently, the use of a standard comparative cost table in these situations would have proved to be of little value to the management staffing decision.

As illustrated in the preceding example, the Department of Defense does cost in-house personnel in specific situations. Even in these situations, however, cost comparisons of themselves do not necessarily prove to be the overriding consideration. For example, use of an enlisted man on station for rotation or awaiting discharge would be more economical than hiring a lower paid civilian driver. The availability and quality of civilian skills on the local labor market has also, on occasion, been a limiting factor.

For the most part, however, the Department of Defense has been guided by statements of staffing policy which have been amplified from time to time for specific functional activities. The general rule has been that civilian personnel will be used in positions which do not require military incumbents for reasons of law, training, security, discipline, rotation, or combat readiness, which do not require a military background for successful performance of the duties involved, and which do not entail unusual hours not normally associated or compatible with civilian employment. This general statement of policy has been refined for specific areas such as real property, maintenance, construction, and repair, and sales commissaries and exchange stores to further limit military staffing. The objective of these criteria, of course, has been, and continues to be, to maximize operational readiness within total manpower resources. Attached is a copy of an Army regulation which prescribes a system of uniform rates for costing Army military personnel. Comparable material has been developed by other services.

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Purpose and Applicability..

Procedures for costing military personnel..
Military compensation factors..
Tables of compensation..

1. Purpose and applicability. a. This regulation prescribes a system of uniform rates in the Department of the Army for costing military personnel services. The rates established herein will be used in costing Department of Army military personnel services in ascertaining the cost of items and functions, and determining the amount of reimbursement for military personnel services when required by law, Department of Defense directives, or other Department of Army regulations. See paragraph 2e.

b. This regulation governs the pricing of military personal services in arriving at the cost of work performed by military personnel in all Army activities (industrial and nonindustrial) and prescribes the rates to be used where the inclusion of military pay is authorized. This regulation does

not

(1) Require the cost of work performed by military personnel to be developed.

(2) Govern the treatment of such data in any systems except as provided in paragraph

2.

(3) Govern the use to be made of such data. c. The value at which military personnel services will be considered for cost purposes, statistically and otherwise will be based on standard rates which include pay and all allowances where applicable, and Government contributions for FICA. Standard rates for each rank or pay grade are contained in tables I and II. These tables are not to be used for pay purposes.

2. Procedures for costing military personnel. a. Standard work period. The standard work period for computing military personnel service costs is established at 40 hours within a calendar

Paragraph

1

2

8

4

week, and the workyear as 52 weeks, 260 days, or 2,080 hours. The rates prescribed herein will be applied to time worked in excess of the standard work period (40 hours weekly) for the purpose of costing all functions performed, and for the purpose of arriving at labor charges applicable to functions being billed to the benefiting activities. Although the regular hourly rate will be charged for time in excess of 40 hours worked per week, such hours will be recorded separately and accounted for as overtime hours.

b. Distribution of costs.

(1) The cost of military personnel in a pay status and assigned to activities covered by this regulation will be recorded on the basis of distributing to appropriate overhead accounts, or to production effort, the full amount of a standard workweek (40 hours), regardless of time spent on miscellaneous duties, leave, illness, details to boards and committees, travel status, and on-the-job training.

(2) The accounting techniques and proce

dures employed in distributing costs of civilian services will be utilized in accounting for costs of military personnel services to the extent that may be required. Memorandum accounts will be established at installation level to control the total available man-hours and total dollars to be distributed, based on standard workweeks of 40 hours per assigned member and total distributable dollars based on hours multiplied by applicable costing rate per member.

•This regulation supersedes AR 35-247, 3 July 1958 including C 1, 29 November 1960.

AR 35-247

(3) The value of time not distributed directly

to the functions being costed will be regarded as indirect labor or overhead to the activity to which assigned regardless of the nature of the duties or leave time included in the overhead cost. However, time devoted to military duties (KP, drill, etc.) not directly or indirectly related to the productive effort of the military member will not be included as distributable overhead to a job when reimbursement for the military labor is required.

(4) Where military members are assigned on an occasional or intermittent basis to functions being costed, such time being less than three 8-hour days of any 1 week, only the directly distributed time will be costed to the function being performed with such time being added to the total in the control account. Where members are assigned for 3 or more days in any one week to functions being costed, the members will be included in the control total on a 40-hour basis. Overtime hours will be controlled separately on a weekly basis in order that the total of such hours may be ascertained readily for analysis or reporting purposes.

c. Identification of costs. In accounting for costs of operating functions, manufactured products or services (transportation, overhaul and repair, printing, etc.), the costs of military personnel services will be identified separately and not intermingled with elements of costs financed from appropriated funds or other funds under control of the operating activity.

d. Duplicate costs. It is recognized that the inclusion of cost of subsistence and quarters allowance uniformly in the standard basic rate will result in duplication of costs where activities furnish subsistence-in-kind or maintain public quarters under its operating funds. In such cases, the cost of subsistence furnished and the maintenance of public quarters will be treated as nonoperating costs in cost reports of the respective activities, and eliminated from amounts billed to other activities for reimbursement for work or services.

e. Reimbursement for military personnel serv

ices. Reimbursement will not be effected for costs of Army military personnel involved in services furnished to any U.S. governmental agency, or component thereof, except that Army may receive reimbursement in accordance with special arrangements when military personnel are detailed to other U.S. governmental agencies. Where services are authorized and performed by the Army for a State, municipality, or any organization outside the U.S. Government, reimbursement for costs of Army military personnel involved will be effected at the rates prescribed herein. Amounts collected as reimbursement for such costs in connection with services furnished to non-federal agencies will be deposited to miscellaneous receipts account 212490, Fees and Other Charges for Miscellaneous Services.

3. Military compensation factors. The rate tables prescribed herein are based on current rates as prescribed by law. See Title 37, United States Code, Chapters, 3, 5, and 7. The rates are established as weighted averages of pay and allowances (computed without deduction for allowances paid in kind), to which military personnel have an inherent right considering the basis of rank, grade, length of service, occupation, and location, and include Government contributions for FICA. Compensation of military personnel is considered as consisting of three factors-basic rate, increments, and accretions. Although values for medical, dental, educational, welfare, and retirement allowances might be construed as a part of gross military earnings, these costs will not be considered as costs of military personal services and are not included in the rate structure.

a. Basic rate combines the following factors: (1) Basic pay. Includes increases for cumulative years of service (Sec 203, Title 37, U.S. Code).

(2) Basic allowances. Includes subsistence and quarters (Sec. 402 and 403, Title 37, U.S. Code).

(3) Other allowances. Includes personal money allowances for officers, and clothing allowances of enlisted personnel (Sec. 414 and 418, Title 37, U.S. Code). Allowance values are included at cash allowance rates on the assumption that they are the equiv alent of values in kind. Allowances for family benefits are not included.

b. Increments cover the following types of compensation:

(1) Incentive pay for hazardous duty (Sec. 301, Title 37, US. Code).

(a) Flight crew duty.

(b) Submarine duty.

(c) Noncrew flight duty.

(d) Parachute jump duty.

(e) Leprosy duty.

(f) Explosion demolition duty.

(9) Duty as low-pressure chamber inside observer.

(h) Duty as human acceleration or deceleration experimental subject.

(i) Thermal stress duty.

(j) Other similar duty established by proper authority.

(2) Special pay (Secs. 302, 303, 304, 305, and 507 of Title 37, U.S. Code).

(a) Physicians.

(b) Dentists.

(c) Veterinarians.

(d) Diving duty.

(e) Sea or foreign duty for enlisted personnel at certain locations.

(f) Proficiency pay for enlisted personnel. An incremental rate will be added to the basic rate when, because of the nature of the assignment, all or most of the military personnel performing on the assignment are entitled to receive the particular increment. Whenever only one, or a relative few, because of their particular individual circumstance, receive an increment despite the fact that performance on an assignment does not

AR 35-247

AR 35-247

of itself entitle them to such increment, the increment will not be included in the rate.

For example:

A-A budget and fiscal officer who receives hazardous duty pay in addition to his basic pay would be included in the cost of the budget and fiscal function at the basic rate only.

B-Both basic rate and physicians' special pay for a rated doctor would be used to cost the medical function.

c. Accretions are special one-time or lump sum payments and are not included in the average pay rates. Accretions include the following:

(1) Special reenlistment bonuses.
(2) Mustering out or terminal leave.
(3) Death gratuities.

(4) Retroactive awards or special pay raises
which are applicable to previous cost
periods.

(5) Suggestion awards for savings ideas.
(6) Separation and severance pay for physi-
cal disability.

(7) Readjustment pay.

4. Tables of compensation. There are prescribed herein two tables of compensation

a. Table 1-Army Basic Standard Military Compensation Rates. This table establishes weighted average rates for factors covered in paragraph 3a. The table provides hourly, daily, weekly monthly, and annual rates.

b. Table II-Incremental Standard Military Compensation Rates. This table provides hourly standard rates for factors covered in paragraph 36.

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*The rates shown cover basic pay including allowances (cash and in kind). For special and incentive pay refer to table II.

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The applicable Incremental rate will be added to the average hourly rate of baste pay and allowances (table 1). Diving duty and cost of living allowances are not included in table II but will be calculated for addition to the basle standard rates at actual rate of payment.

Covers duty as crew member in serial flight (Sec. 301, Title 37, U.S. Code).

Applicable to performance of hazardous duty including nouerew flight duty, parachute jump duty, leprosy duty, explosion demolition duty, thermal stress duty, and other duty established by proper authority.

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To be distributed in accordance with DA Form 12-9 requirements for DA Regulations, Financial Administration:

Active Army: C. NG:D. USAR: None.

Mr. HENDERSON. As soon as you can transmit that to the committee, we would like to have the best information you can give us on the cost of the military man and the cost of the civilian man.

Mr. PAUL. Yes, sir.

Mr. JOHANSEN. In your statement, Mr. Secretary, I read this

sentence:

The decisions on base closings announced through April 24, 1964, when fully implemented, are estimated to result in a cumulative reduction of 48,835 military and 32,764 cilivians.

My question is, and I am not meaning to be cute about it, how long is "when"?

Mr. MORRIS. In the case of each reduction, or closure, a careful study is made in advance of the length of time over which the closeout should

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