Chairman BRIDGES. Mr. Lee, will you please describe, briefly, the situation at the Bureau, and any comment you care to make about your program and the justifications of your request?

Mr. LEE. Yes, Mr. Chairman. Our 1955 request is for 10 percent less positions than in 1954 and 14.4 percent less positions than in 1953. This represents a net reduction. The actual reduction is more, since we have made provision for an increase of about $2,400,000 to handle the operation of new facilities, and 64 additional traffic controllers to handle the increased workload in our airway trafficcontrol centers.

TYPES OF SAVINGS ACCOMPLISHED

The savings that have been made have been accomplished through four general types of reductions. First is through the improved management and procedures that we have installed. In Federal airways we have revised our training programs. We have combined some of our overseas and foreign airways communications stations. We have combined certain interstate airways communications stations and towers. And we have had a reduction in training programs, which we feel is warranted, and a reduction in our supervision.

In the field of aviation safety, we have made certain cutbacks, due to principles of administration, whereby we have placed more responsibility in the individual agent in the field and have reduced the layers of supervision over the agents.

Those are the savings being realized through improved management and procedures.

The second category of savings is being accomplished through reductions in services.

I might add that by improved management we have cut out 60 automobiles for fiscal 1955; so we have less passenger automobiles than we had in the past.

REDUCTIONS IN SERVICES

Returning to the reduction in services, we have cut out certain activities, such as the education staff, and planned to discontinue the operation of 41 interstate airways communications stations, 78 low-medium frequency range and 575 standby engine generators. Those come under the classification of reduced service.

CAPITAL IMPROVEMENT AND DEVELOPMENT PROGRAMS

In a third category, we have cut our capital-improvement programs down to the absolute minimum, retaining only those items necessary to meet the absolute minimum damands of the growing air traffic of this country.

Fourth, we have cut our development programs to the bone also. These reductions have been made in the face of a continuing increase in the growth of aviation in this country. In 1953, scheduled air-carrier operations grew twice as fast as they did in 1952. They were up 17 percent, to 32 million passengers, in 1953. That is the equivalent of 1 out of every 5 of the United States population.

We forecast an increase from 19.1 billion passenger-miles in this fiscal year to 20.4 billion passenger-miles in fiscal year 1955, or an increase of 6.8 percent. We forecast a parallel increase in the military operations leading to the 137-group Air Force; and finally, we have had a substantial increase in business and industrial flying, which has more than offset a slight decrease in instructional and pleasure flying. That finishes my preliminary statement, Mr. Chairman.

Chairman BRIDGES. We will make your general statement part of the record.

SAFETY PROGRAM

The Committee may have many questions. There is a reduction of $668,000 in your safety program. First, will this reduction affect your safety activities?

Mr. LEE. Mr. Chairman, we hope that they will not suffer. We have budgeted approximately $1 million less than the 1954 appropriation for our safety program, a reduction of 9.5 percent in the appropriation level. This means the services of some 176 people we shall attempt to absorb within our existing staff. We are revising certain of our procedures, and we sincerely hope that we will be able to keep the same level of safety that we have had in the past.

Chairman BRIDGES. Various members of the committee have called to the attention of the committee, its staff, and the chairman, that a survey, or a number of surveys have been made, by the Department. Copies of some of these surveys, have been delivered to the Appropriations Committee. When money is appropriated we try to follow through and see that the general objectives and purposes for which the money is appropriated are met. We are interested in surveys which result in greater efficiency. Yet, surveys that will change fundamentals should be given careful consideration by Congress.

MANAGEMENT SURVEY

Is there a management survey for the Civil Aeronautics Commission being developed presently?

Mr. LEE. Yes, Mr. Chairman.

Chairman BRIDGES. Who is doing it?

Mr. LEE. The firm of Cresap, McCormick & Paget, of Chicago. Chairman BRIDGES. Did you select the firm?

Mr. LEE. They were picked by the Department of Commerce, Mr. Chairman.

Senator MCCARRAN. By whom, please?

Mr. LEE. The Department of Commerce.

Senator MCCARRAN. What does that mean, "by the Department of Commerce"? Who in the Department of Commerce selected them?

Mr. WORTHY. If I might answer that, Senator, that was a joint decision made between the Under Secretary's office and the Office of the Assistant Secretary for Administration.

Senator MCCARRAN. Who is the Assistant Secretary for Administration?

Mr. WORTHY. I am the Assistant Secretary for Administration.
Senator MCCARRAN. And who are the others?

Mr. WORTHY. The Under Secretary for Transportation-
Senator MCCARRAN. On what basis was this group selected?

Mr. WORTHY. On the basis, Senator, of having some extensive knowledge drawn from my own business experience of many management engineering firms in the country, a knowledge of some of the kinds of things that these different firms have done and the areas in which they are likely to have special competence.

Senator MCCARRAN. Has this firm ever made a survey of this kind before, to your knowledge?

Mr. WORTHY. I am quite sure they have never made a

Senator MCCARRAN. I didn't ask you for the "quite sure." I said, did they ever, to your knowledge?

Mr. WORTHY. I understand

Senator MCCARRAN. I didn't ask for that either. I asked for your knowledge.

Mr. WORTHY. To my knowledge, they have made a number of surveys of Government organizations. They have made surveys of transportation companies, including a study they are now making for the New York Central Railroad.

Senator MCCARRAN. What are they required to do in making this study?

Mr. WORTHY. We wish them to make a careful examination of the organizational structure and the procedures of the Civil Aeronautics Administration.

Senator MCCARRAN. All right. Let's go back of that. Did they ever, to your knowledge, make such a study before?

Mr. WORTHY. Not of the Civil Aeronautics Administration.

Senator MCCARRAN. All right.

Chairman BRIDGES. Has this study been completed?

Mr. LEE. No, Mr. Chairman. The final recommendations have not been received as yet. The major factfinding phase of the study has been completed, and an interim report has been rendered.

CHANGES IN ORGANIZATION

Chairman BRIDGES. Are there, as far as you know, any major changes contemplated in the organization of the Civil Aeronautics Administration as a result of this survey?

Mr. LEE. The final recommendations have not been received as yet. There have been certain considerations of changes of major proportions with regard to the CAA and its functions.

Chairman BRIDGES. Mr. Lee, when the fiscal year 1953 hearings were in progress, you were engaged in the process of making certain changes to improve the effectiveness of the CAA. What progress have you made, during the year?

Mr. LEE. We have completed the consolidation of our regional activities, which was a major change, involving the moving of a large number of our personnel and a very substantial reduction in our headquarters personnel. The annual savings from consolidating regional offices that have been realized are approximately $1,700,000.

AIRCRAFT OPERATIONS IN ALASKA AND PACIFIC AREAS

Chairman BRIDGES. Why is it necessary to spend over a quarter of a million dollars for operating of aircraft in Alaska and the Pacific areas?

Mr. LEE. Mr. Chairman, in both Alaska and the Pacific areas, we have a requirement for logistic support of our facilities at outlying locations; in the Pacific, at Wake, Canton, and Guam, and in Alaska at numerous locations off the beaten path, off the routes regularly served by the scheduled air carriers.

FURTHER DISCUSSION OF MANAGEMENT SURVEY

Senator MCCARRAN. Mr. Chairman, I would like to go back to that former question. I agree with you, Mr. Chairman, that this management survey is, as far as I can see, a complete waste of funds. Mr. Murray, I should like to know who this firm is that is making this survey; whether they were personally known to you, whether bids were asked. I should like to know where you got the money for the survey and why this matter was not justified to the committee in advance. Further, I should like to know the cost of the survey. In addition, Mr. Chairman, I request that copies of all correspondence leading up to the selection of this firm be made a part of our hearing record, together with a copy of the contract; also a copy of all other bids received.

Mr. Murray, I would like to have your comment.

Mr. MURRAY. You want my comment about what part of that, Senator?

Senator MCCARRAN. The whole proposition. Is there any part of it you don't understand?

Mr. MURRAY. No. I understand it.

Senator MCCARRAN. I thought you did.

I am asking you, Mr. Murray. You are the head of this Depart

ment.

Mr. MURRAY. Senator, I do not handle the administrative part of the Department. I do not know the activity that led to the questions which you have asked.