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The Secretary of Defense

Implementation of the kecommendations of the
President's Comission on Defense Management (U)

The implementation memo you sent to the President on March 3 has been revised to foliow more closely the format and detail of the Commission report and has been put into NSDD format (Tab A). Attached at Tab B is a proposed public announcement which we plan to release after your review. Appropriate draft letters to both Houses of Congress are at Tab C. (S)

The NSDD is intended to strengthen your hand vis-a-vis the legislation now in both Bouses and maintain your control of the implementation process. We have tried to be sensitive to the President's desire to implement the Commission's recommendations without infringing on your authority or prerogatives. (C) The events of the past week have demonstrated that the Hill bas been most favorable toward the Commission's report. The report thus gives the President considerable leverage in dealing with the more radical proposals for reform that now abound in both Bouses. Because of our need to sustain momentum on this and your peading trip to Europe, I hope we can bave your comments this week before you leave. (C)

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Declassified/Released on

9-8-87 under provisions of E0. 12356 (FP7. by N. Monan, National Security Council

83-304 O- 88 - 2

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SUBJECT: Weapons Systems Costs and Projections

As you will recall from earlier correspondence on the subject, Dr. Amlie and I have continuing concerns about the integrity of our reports to Congress on weapons systems costs and projections.

The current confusion over the so-called "outyears" of the Five Year Defense Program (FYDP) has heightened our concerns.

On several occasions in the past couple of nonths, I have raised the issue of the failure to reconcile the supporting detail of the FYDP "outyears" · FY 90, 91, and 92 · to the President's "top line" figures for those same years. As I understand it, the purpose of the PPBS is to produce a FYDP that reconciles the detailed projections and the "unconstrained" requirements with the "constrained" budget toplines of the President's program. Some people estimate that DOD expends over a million nanhours per year to produce a FYDP. I have been told that the essential reconciliation was not done when the FYDP was prepared for this year. I would like to pursue this question, especially as it say affect our reports to Congress.

This brings ne to the accompanying SECRET chart. We want to find out whether the figures we are using Tor "outyear" reporting are reconciled to the "88 PB plus 38 GROWTH" line ("the President's" figures) or the higher 88 PB projection. I presune that the highest projection depicted on the chart reflects the sum of the detailed projections contained in the Comptroller FYDP conputer tape. I also presume that the "88 PB plus 38 GROWTH"' is the "constrained" projection.

As noted above, the chart in question is "SECRET which greatly inhibits our discussion of this inportant natter. I would greatly appreciate your declassifying this chart so we can discuss it freely and over the telephone, both with our colleagues in the Pentagon and with interested parties in Congress. Senator Weicker and the DOD Inspector Generali have already declassified the ais. Batch figures for all of the Department of Defense. Therefore, I don't see why ours can't be declassified as well. In case you have

not seen the correspondence, Senator Weicker's figures indicated that the excess of the unconstrained projections over "the Presi. dent's budget" for the three "outyears" was $8 2.9B. The IG adjusted this figure downward to $77.2B to reflect off-setting receipts. Our niskatch for the three years is roughly proportional to the DOD excess and represents an increase of 7.3% of our total budget for the three years in question. More significantly, perhaps, it represents an excess of 20.5$ above the lowest of the three projections on the attached chart, the "87 PB plus 0% GROWTH"' line. As noted on the chart, this lowest projection is itself substantially above the House Budget Connittee mark for 1988.

Because of the significance of this issue, I would greatly appreciate your personal attention to this natter and your support for getting the accompanying chart and its updates declassified so we can deal with the questions nore easily. In this connection, I noted especially president Reagan's call for openness on the part of the Soviet Union in revealing their budget figures. In a speech on August 29, 1987, the President said:

"The Soviets can also open their defense establishment to world scrutiny. They can publish a valid and comprehensive defense budget and reveal the size and composition of their arned forces. They can let their parliament, The Supreme Soviet, debate najor new military programs."

We can set a good example, as well as doing ourselves a favor, by taking our heads out of the sand and dealing forthrightly with the very troubling projections depicted in the attachment. If we don't do it now, I'm afraid the natter night not be dealt with until the new Administration takes office in 1989. As I understand the new procedures, we are not scheduled to do an FYDP next year which will result in the Congress and the taxpayers being kept in the dark. Given this situation, it is all the nore inportant that our current projections hang together at least as well as they have in the past. As the Chief of Staff and the Secretary wrote in their July 29, 1987 nemorandum, "Keeping Congress Inforned", nany in the Congress believe that "the Air Force just isn't being honest in explaining the perfornance of their programs." They went on to write:

"Our policy will continue to be to provide candid, tirely assessinents of problem areas or potential problem areas that could reasonably be of interest to the Congress. We'll just have to do it better."

Declassifying the attached document will be a good start in this direction. If you cannot do this right away, then I rust raise the sane questions that I raised about the March 12, 1986 nemorandum



Bras ques

from John M. Poindexter to the Secretary of Defense which i requested be declassified in ay 20 August 1987 nenor andun to you, Subject: Questions on SF 189. In this connection, I have not yet received an answer to this declassification request. I would appreciate a follow-up inquiry and an early answer.


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Management Systens Deputy

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Mr. SIKORSKI. At this point I would like to turn to Mr. Louis Brase and ask you to make your statement, and then we will get to questions for both of you.

STATEMENT OF LOUIS BRASE, PRINTING MANAGER Mr. BRASE. Mr. Chairman, my name is Louis C. Brase. I am a GS-12 printing manager at Goodfellow Air Force Base.

Mr. SIKORSKI. Mr. Brase, can you pull that microphone in?

Thank you.

Mr. BRASE. I am a GS-12 printing manager at Goodfellow Air Force Base, San Angelo, Texas. I have been a civilian employee of the Department of Air Force for 33 years.

I very much appreciate the invitation to appear here today to provide the Congress with the information on my experiences with the Standard Form SF 189 and 4193.

As you may know, I am one of the plaintiffs in the case brought by the American Federation of Government Employees that challenges the legality and constitutionality of these secrecy agreements. I am accompanied by my counsel in that matter, Mr. Joseph B. Kennedy, General Counsel for the Government Accountability Project.

At this time I would like to introduce a statement by Mr. Kennedy into the record. Mr. SIKORSKI. It will be inserted in the record without objection.

[The prepared statements of Joseph B. Kennedy and Louis C. Brase follow:)

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