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National Security Essays

To encourage the circulation of innovative ideas, theNational Defense University publishes occasional essayswritten by its research fellows. These essays address, oftenin spirited, personal, and controversial ways, continuingissues of national security, and frequently suggest alterna-tives to current policy or practice. Sometimes they inter-pret recent events from unusual perspectives. Always, theychallenge the status quo.

Resource Managementin Peace and War

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Resource Management

in Peace and War

Louis C. Seelig

1990

National Defense University PressWashington, DC

I

NATIONAL DEFENSE UNIVERSITY PRESS PUBLICATIONS

To increase general knowledge and inform discussion. NDU Press pub-lishes books on subjects relating to US national security.

Each year, in this effort, the National Defense University, through theInstitute for National Strategic Studies, hosts about two dozen SeniorFellows who engage in original research on national security issues.NDU Press publishes the best of this research.

In addition, the Press publishes other especially timely or distinguishedwriting on national security, as well as new editions of out-of-printdefense classics, and books based on University-sponsored conferencesconcerning national security affairs.

Opinions, conclusions, and recommendations expressed orimplied within are solely those of the author, and do not necessar-ily represent the views of the National Defense University. theDepartment of Defense, or any other US Government agency.This book is cleared for public release. distribution unlimited.

Portions of this book may be quoted or reprinted without permission,provided that a standard source credit line is included. NDU Presswould appreciate a courtesy copy of reprints or reviews.

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First printing April 1990

vi

CONTENTS

Illustrations ........................................ xiForew ord ......................................... xiiiPreface ........................................... xvIntroduction ...................................... xvii

1. CHANGING TIMES ........................ 3The Spoils of W ar ........................... 4"Nothing Is Too Good for Our Boys" .. ......... 5The Economics of the Bomb .................. 6The Purse Strings Tighten .................... 8The New Law .............................. 10

Ii. CONGRESSIONAL AND MEDIA INFLUENCE 13The Search for M eans ........................ 13The New Budget Process ..................... 15Legislated Power ............................ 16Front Page News ............................ 17

Ill. DEVELOPMENT OF ARMY COMPTROLLERSHIP.......................................... 19

Businessmen in Uniform ..................... 20A Comptroller for the Army .................. 21A New Perspective for Resource Management .... 26

IV. GLOBAL ECONOMIC INTERDEPENDENCE ... 29The Shift in Production ...................... 31Financing Partnerships ....................... 33The Threat of Limited War ................... 38The Spectrum of Conflict ..................... 38

ix

V. STRATEGY ............................... 43Deterrence ................................. 43Coalition W arfare ........................... 45Joint Operations ............................ 49W hat the Future Holds ....................... 51

VI. THE ART OF RESOURCE MANAGEMENT .... 55The Controller in Private Industry .............. 56The Bottom Line ............................ 58Resource Management and War ................ 59Controlling ................................. 61Planning ................................... 61

VII. THE WARTIME RESOURCE MANAGER ...... 65Making the Organization Work ................ 66The Honest Broker .......................... 68The A's of Resource Management .............. 70A Wartime Resource Management Model ........ 74Toward a Doctrine for Resource Management .... 80

N otes ............................................ 83Index ............................................ 9 1The A uthor ........................................ 99

]'

Illustrations

Department of the Army Circular No. 2, 2 January 1948 .. 24

Table4:1 Net Import Reliance on Selected Nonfuel Minerals ... 30

Figures4:1 Cooperation Between World Automakers ........ 34-354:2 The Spectrum of Conflict ....................... 394:3 Probability Versus Intensity of Conflict ............ 417:1 The Four A's of Resource Management ............ 727:2 The Modified Four A's of Resource Management .... 737:3 Resource Management Model .................... 75

xi

FOREWORD

The rapid political changes brought on by the unexpectedlysudden thaw of the Cold War are creating significantchanges within the nation's military structure and prac-tices. With the general tightening of budgets, reduction offorces, and curtailing of programs, resource managemr-tis taking on a steadily more important role.

In this essay, the author contends that the changingnature of warfare, the increased expectation of account-ability and cost-effectiveness throughout national defense,and the growth of comptrollership as a discipline nowrequire a different approach to wartime resource manage-ment. He challenges present United States Army doctrinein this area and offers both a wartime res',Vrce manage-ment model and five theses toward a revised doctrine.

Not every reader will accept the author's arguments.but few would deny that they provoke thought and suggestreasonable alternatives to historical practice.

J.A. BALDWINVice Admiral, US NavyPresident. NDU

xiii

PREFACE

The United States Army lacks a clearly defined doctrinefor wartime resource management. US Army resourcemanagers are left to their own devices to identify theirwartime responsibilities and develop plans to meet them.Many Army resource managers-as well as their com-manders-assume they have no wartime responsibilities.They focus on peacetime Program Decision IncrementPackages (PDIPs), Program Analysis Resource Reviews(PARRs), and Program Objective Memorandum (POMs),giving little thought to the vital wartime role that resourcemanagers can perform.

My purpose is to broaden this focus by demonstratingthe need for resource management in wartime, developinga set of functions for resource managers, and offering a setof principles from which to derive a doctrine for wartimeresource management. I hope these proposals will promptother US Army resource managers to enter this essentialdebate and develop a consistent, Army-wide doctrine forwartime resource management. I solicit the participation ofother US Army resource managers because this doctrineshould not be the product of one individual. Certainly, allresource managers can contribute t- this doctrine fromtheir own experience.

To help resource managers contribute more effec-tively to the development of doctrine, I have sketched thepertinent history of Army Resource Management as well

xV

xvi PREFACE

as the major conditions that drive the requirement for aresource management doctrine.

I have identified two such conditions. First, there is agreater demand on our commanders for accountability andcost-effectiveness programs in wartime. Second, the natureof warfare is changing. The economic and strategic forcesleading to the next major war-or, more likely, the .,extseries of minor conflicts-will require commanders todevelop and evaluate plans where the effective and innova-tive use of resources can influence decisions as much asthe dictates of the operational situation.

I devote much of the first five chapters to ensuringthat a common point of departure and set of assumptionswill be used in the deliberations leading to the new doc-trine. Without this common base. the Army might finditself guilty of retaining an outmoded resource manage-ment system that served well enough in past wars, but thatwill not meet the needs of future conflicts.

LOUIS C. SEELIG

I

INTRODUCTION

The Department of Defense is in the process of makinghard decisions to trim its budget in response to events inEastern Europe, the Soviet Union, and, indeed, around theworld. The most recent Department of Defense projectioncalls for a real decline of 2 percent in the budget for eachfiscal year from 1992 to 1995. Exact reductions are, ofcourse, subject to congressional debate and authorization.But most observers agree that defense budget cuts, of onedegree or another, are the foreseeable trend.

In view of these impending reductions, this essay,which calls for a new, vigorous, resource managementdoctrine for the Army, is especially timely. To improvethe established order, to help us make the right choices-and to help ensure that resources are used most efficientlyonce the choices are made-the time for strong resourcemanagement has clearly arrived. As the author demon-strates-quite independently of current events-severalhistorical trends have culminated in a modern defenseenvironment that is not only suitable for, but requires. pro-fessional resource manager-ent. Were the defense budget,for whatever reason, to r erse current trends and increase,the need for resource management would not - diminished.

The present challenge to Army resource managers.then, is to become active participants in the decisionmak-ing process; they mu,. use their multidisciplinary skills tohelp create new oppcrtunities which are based on sound

xvii

Xviii

operational and fiscal analyses. They must become ad-visors who can improve the operational effectiveness oftheir organizations by providing systematic, objective scru-tiny. Finally, resource managers must retain a broad per-spective of the entire operation, while still be willing to go"down in the trenches" where the action is. They must, inshort, be helpfully involved in all stages of planning andexecution of the mission. This concept is integral to mynew "Resource Management 2000" program that Iam developing to provide the Army a vision and action planto take Army resource management into the next century.

Resource Management in Peace and War is a schol-arly study, independently conducted, that places resourcemanagement in a historical and intellectual context. Whilethis is a personal essay with some healthy intellectual con-troversy and not an official position of the Department ofthe Army, it does present timely, thought-provoking, andconvincing arguments for further definition of the resourcemanagement profession. For the professional resourcemanager, this essay contains excellent insights into the devel-opment of our discipline and identifies areas of future con-cern for all resource managers as they develop their skills.

As Comptroller of the Army, I am pleased to note thatthe field of resource management, through publication of thisessay, is beginning to receive more attention in respectedacademic circles such as our senior service schools. We maybe on the brink of a widespread recognition of the need forimproved resource management, and this essay will bothinspire the professional and introduce the newcomer to thegrowing field of military resource management.

JAMES F. MCCALLLieutenant General, US ArmyComptroller of the Army

I. CHANGING TIMES

In wars of the twentieth century, US defense planners havehad the luxury of assuming that defense dollars werenearly unlimited. Because they could have virtually any-thing they demanded with no consideration of cost, mili-tary leaders could effectively determine the size of thebudget. ' Enjoying the benefits of maximum national indus-trial output long before the government b -ne unwillingto pay for it, military leaders often dismis.,:d the need forresource managers who might crimp their war-planningfreedoms by sternly cautioning financial economy, asthrifty parents might advise their children that they couldbuy a wagon or a bicycle but not both. Military plannerscan no longer assume that defense dollars will be unlimitedin time of war.

Naturally, military strategies clearly have an impor-tant impact on resource requirements, and the scale of stra-tegic requirements largely dictates the degree of resourcesrequired. However, the reverse is also true: the availabilityof resources can have a significant impact on the ability ofmilitary forces to carry out strategies. This fact, perhapsmore than any other, dictates the need for strong resourcemanagement.2

In view of this paradox, it is important to constructthe role of the resource manager in such a way that he canmaximize his contribution to the planning and conduct ofwar. A resource manager must be prepared to perform the

3

4 CHANGING TIMES

functions of resource management to assess the alterna-tives provided to the commander and determine if they areeconomically feasible, cost-effective, and supportable.

THE SPOILS OF WAR

In the past, successful warfare brought significantmaterial rewards. Most obvious were the spoils of war, thestored wealth of the vanquished: the gold, jewels, andartifacts, and the territories, indemnities, and tributes thatthe victor could exact. Equally important was humanlabor--control over people as slaves or levies for the vic-tor's army. There was also the enemy's productive capac-ity-agricultural lands and mines. The victor, with controlover new wealth, people, and land, could, with this netgain in strength and resources, move on to further con-quests. War in the past was useful, satisfying, and profita-ble for those who won. There was little regard for thedamage and destruction done to the enemy or the coun-tryside, or the cost of this success.

During World War 1, however, a watershed formed toseparate drastically and irreversibly the stream of historicalwarfare from the stream of modern warfare. Before WorldWar 1, men, aided by horses and small cannon, foughtwars. Victory came by wounding and killing people andby destroying formations of soldiers, mounted and on foot.But the Great War brought with it great machines and theneed to destroy great machines to earn victory. Because ittakes more explosive power to destroy a machine than tostop a man or a horse, the cost to wage war rose dramat-ically. 3 The cost to wage war now far outweighed theobvious return.

World War I was viewed as the "war to end allwars." As a result, after the war we reduced the Americanmilitary establishment to a negligible power with few

I

CHANGING TIMES 5

resources. Our Army in the interwar period was no largerthan Portugal's, its strength sinking to a low of 130,000 in1923. 4 The United States did not apply enough money todefense between the wars to worry about resource manage-ment. Consequently, not until World War !1 did we giveany serious recognition to the notion of accountability andcontrolling costs, and the need for a resource managementfunction. But the crisis of World War II and the absence ofa resource management structure prevented any meaning-ful attempts to control the costs of war.

'NOTHING IS TOO GOOD FOR OUR BOYS'During World War II, when a substantial sum was

required for the war, the Army was, for all practical pur-poses, given an open line of credit. Most Americans,along with their elected representatives, genuinely believedthat "nothing was too good for our boys." Consequently,budget preparation within the Army never served as animportant management technique. We based budget esti-mates on planning documents fixing the Army's size andorganization. The budget was developed to meet the planrather than the plan developed to meet the budget. Budgetpreparation was a mechanical process consisting mainly oftranslating decisions into cost estimates. Clearly, the intentof budget preparation was to obtain the House Appropria-tions Committee approval of the estimates, and not thedecisions behind them.

In preparing its wartime budgets, the Army, as wellas the other services, was always careful to emphasize the"committee's attitude." There was no appropriation esti-mate specifically identified for procurement, storage anddistribution of supplies, transportation, training, admin-istrative services, or management expenses. Instead, theArmy's eight autonomous bureaus which dealt separatelywith the Congress developed the estimates. There were

6 CHANGING TIMES

25 major "projects" or appropriation classifications, eachwith its own individual budget. These appropriationsaccounted for 80 percent of the funds spent by the Army.As a result of the decentralized funding scheme, neitherthe Secretary of the Army nor the General Staff had anyeffective control over these funds.5 For example, the esti-mate for ordnance service and supplies was included in theordnance appropriation, which was controlled by the Ord-nance Bureau. These estimates could not be used system-atically to review the adequacy of the Army-wide supplyand service operations since they were not integrated withthose of the other bureaus.

In 1944, General Brehon Somervell, Commander ofthe Army Service Forces, attempted to make extensive useof budget preparation as a tool of management informationand direction. On one occasion, he asked his own budgetoffice to explore the possibility of developing a budgetestimate which could be used for both internal manage-ment and appropriation purposes. They informed him thatthe budget officer of the War Department had previouslyinquired about the possibilities of a centralized budget andreceived a report of general hostility to the idea on the partof the House Appropriations Committee. Being busy withthe logistical requirements of the war effort, GeneralSomervell dropped the idea. 6 Even though this incident isnot detailed, it shows that General Somervell never hadcontrol over the resources he needed to support the Army.But with resources as plentiful as they were, he couldafford to turn his attentions to other matters.

THE ECONOMICS OF THE BOMB

During the late 1940s and the 1950s, many influentialpeople, fascinated with the power of new weapons, con-cluded that the hydrogen bomb was the only weaponneeded to protect our national security. Strategic weapons

CHANGING TIMES 7

allowed us to prepare for and deter war. In this situation,the resource manager had no wartime role since the enemywould be destroyed in short order at the cost of a handfulof hydrogen bombs. Furthermore, defense planners con-tinued to believe that an open line of credit would be avail-able to support any war and that budgeting was onlynecessary "after the fact" to account for expenditures-but not before the fact during the planning process.7

As the Cold War intensified, Congress not onlydeferred to presidential judgments on defense appropria-tions, but also cooperated with the Executive Branch onvirtually every major defense issue until the mid-1960s.Congress deferred to the Executive Branch for several rea-sons: their lack of information precluded an educated judg-ment on the President's requests, the nation's perception ofthe communist threat appeared compelling, defense issuesseemed so intricate that they defied objective evaluation,and the need for solidarity almost mandated support for thePresident. In many cases, Congress gave the Presidenttotal approval in advance of resolutions, thereby authoriz-ing him to act unilaterally. Such was the case in Formosa(1955), Cuba (1962), and the Gulf of Tonkin (1964).KCongress continued to extend an "open line of credit" tothe defense establishment well into the Vietnam era. Wit-ness Secretary of Defense McNamara's I March 1965memorandum: "Under no circumstances is lack of moneyto stand in the way of aid to that nation. "' This is par-ticularly ironic considering his subsequent obsession withcost-effectiveness, systems analysis, and econometrics.

Thus, until the mid-1960s, appropriations providedyears of plenty for the Army. A nearly inexhaustible sup-ply of funds and resources flowed to the field. Financialcontrol, financial management, and comptrollershipbecame almost irrelevant concepts, everywhere, the Army

8 CHANGING TIMES

sought to develop programs, expand inventories, andenlarge its structure. There were few rewards for fiscalcontrol.

THE PURSE STRINGS TIGHTEN

By the late 1960s, however, public support for theVietnam War began to dissolve. Reflecting the divisionamong the citizenry, Congress began using its chief powerbeyond lawmaking-the power of the purse strings-tocontrol the operation of the war. Money bill after moneybill carried substantive amendments limiting the Presi-dent's role in conducting military operations in the field.' 0

This change in attitude was evident when Senator StuartSymington pressed the Director of the Army Budget for"the total cost per month for the Vietnamese opera-tions"-figures which were not available. His concernwas a simple one: "The people do not have any idea as towhat the basic facts are incident to the cost of Vietnam." I"

As a result of this type of reception, the Departmentof Defense eliminated 32 percent of the total fiscal year1967 supplemental request from the Army. Thus only 68percent of the Army's requirements were forwarded toCongress. Whether these cuts made by the Department ofDefense before submission to Congress were genuineattempts to provide only those funds which Department ofDefense statistics indicated were necessary, or were cutsimposed to bring the total supplemental request within lev-els which might be acceptable in Congress, is a questiondifficult to answer. ' 2

After the height of the Vietnam period, the Depart-ment of Defense's open line of credit came due. TheDepartment of Defense experienced significant decreasesin defense spending in eight out of ten years. As a share ofthe total gross national product, defense spending declined

CHANGING TIMES 9

from 9.3 percent in fiscal year 1968, the peak spendingyear in Vietnam, to 5.0 percent in fiscal years 1978 and1979. As a share of the federal budget, defense declinedfrom 43.2 percent to 22.9 percent over the same period. "-

While some of the decline was due to the post-Vietnamdraw down, the decreases in funding levels neverthelessbrought to an absolute standstill any modernization effortand produced claims of a "hollow Army." Failure to be"penny wise" in Vietnam cost the services dearly in sub-sequent years.

The post-Vietnam era also saw the birth of a newArmy leadership ethic: "Let the commanders command."This ethic sought to diminish the power of control agenciessuch as auditors and accountants. Fiscal control and comp-trollers flew in the face of the freedom to command. Con-currently, there was a great movement to increase the"tooth to tail" ratio. Many leaders, both in Congress andin the Army, believed that the Army was top heavy withadministrators and, therefore, could not perform its pri-mary role of fighting effectively. You just can't kill theenemy with computer paper.

A further reduction in the number of support units andpersonnel occurred in the early 1980s with the formationof the light infantry division. The Army needed a rapidlydeployable division that was easily air transportable. Fur-thermore, the Army decided that these divisions would beadded to the existing Army divisions, but no additionalmilitary spaces would be requested from Congress toprovide the required manning levels. Consequently, theyhad to obtain personnel and billets from within the currentforce structure. As a result, many of the spaces previouslyallocated to support functions they now assigned to combatarms functions, further diminishing the Army's capabilityto manage its resources.

10 CHANGING TIMES

THE NEW LAWThe current movement to eliminate the notion of the

open line of credit in defense planning and put some teethinto resource management culminated in 1986 with thePresident's Blue Ribbon Commission on DefenseManagement, chaired by David Packard. The commissionfound no rational system where the Executive Branch andthe Congress reach agreement on national military strat-egy, the forces to carry it out, and the funding that shouldbe provided. The commission cited this condition as par-ticularly important in light of the overall economy andcompeting claims on national resources. According to thecommission, the absence of such a system contributes tothe instability and uncertainty of our defense program,causes imbalances in our military forces and capabilities,and ultimately increases the costs of procuring militaryequipment. 1

4

The Packard Commission recommended that the Sec-retary of Defense instruct the Chairman of the Joint Chiefsof Staff to prepare a fiscally constrained military strategythat best achieves the national security objectives. 5 Thisrecommendation marks a complete departure from the defacto open line of credit historically extended by Congress.The recommendation was, in fact, followed in the con-struction of the Goldwater-Nichols Department of DefenseReorganization Act of 1986. The Chairman of the JointChiefs of Staff will prepare "fiscally constrained strategicplans as a new statutory duty."16

Whether one feels that Congress placed the nationaldefense unwisely in the hands of auditors or that the nationfinally has a sound basis for defense planning, the fact isthat resource management is now the law. Congress' useof its absolute fiscal power, along with the DOD Reorgani-zation Act, will affect profoundly the way the Army

CHANGING TIMES I I

manages its resources in the future. We now must be readyand able to provide commanders with alternatives toaccomplish the missions assigned under a resource-con-strained planning process. These stringencies create newdemands on the resource manager, demands that requirethe resource manager to take an active role in the planningprocess.

Clausewitz asserted that we should never regard waras an autonomous act but always as an instrument of pol-icy. If we wage war with no political goal. its sole objec-tive will become the complete destruction of the enemy.regardless of the cost. ' 7 But in the future, nations may findthemselves unable to afford to pursue such an apoliticalobjective. Instead, future wars must be tied to a policywhich will include at least some pragmatic considerationof the cost, lest a nation-even the United States-finditself waging a war not that it can't win but that it can'tpay for.

H. CONGRESSIONAL ANDMEDIA INFLUENCE

The art of war is of vital importance to the state. It isa matter of life and death, a road either to safety orto ruin. Hence it is a subject of inquiry which can onno account be neglected.

-Sun Tzu Wu, The Art of War

The United States Constitution gives Congress the exclu-sive power to raise revenue, to raise and support armies,and to provide and maintain a navy.'1 Yet until the Con-gressional Budget and Impoundment Control Act of 1974,Congress did not have the means to evaluate the defenseneeds of the country or to challenge the administration'sbudget request to meet this critical requirement.

THE SEARCH FOR MEANSAt the beginning of the Vietnam War, Congress

regarded the Vietnam requirements in much the same lightas those for World War II and the Korean War. But as thewar developed into one of attrition and the antiwar move-ment generated intense popular opposition to the continuedwar effort in Southeast Asia, feelings of frustration

13

14 CONGRESSIONAL AND MEDIA INFLUENCE

weighed on the minds of congressmen. Although theywanted to provide our military with the necessities, theyalso wanted to satisfy a domestic agenda at a time when itwas becoming more and more apparent that defense costsconstituted a major factor in determining national taxes.The time came when the programs of the "Great Society"finally came about-a time when the role of governmentwas greatly expanding. These times brought to the fore-front the dilemma of defense versus social programs. theclassic conflict of guns versus butter. While the connectionbetween security, domestic issues, and economics becameincreasingly apparent to Congress, sharp differences ofopinion on organization, strategy, and troop deploymentdeveloped in efforts to balance the country's requirements.Faced with these competing demands, Congress had greatdifficulty making hard budget choices because of constitu-ent pressures and a number of institutional factors.

One of the institutional factors interfering with Con-gress' participation in military matters was the fractionaliz-ation of its power and influence. That is, the committeesystem which dominated Congress also convenientlyallowed members of the legislature to insulate themselvesfrom constituent pressure. Therefore, legislation adoptedby Congress was not the result of discussion by the fullbody but, rather, the consequence of discrete and tediouscommittee work. The primary influence came from com-mittee chairmen, who could be influenced by special inter-est groups. An indication of the fractionalization of powerin Congress over defense matters is the number of commit-tees that exert budgetary or oversight authority in thedefense acquisition process. A report prepared by theLogistics Management Institute for the President's BlueRibbon Commission on Defense Management identified55 subcommittees with jurisdiction over matters specifi-cally affecting defense acquisition.

CONGRESSIONAL AND MEDIA INFLUENCE 15

Consequently, when Congress received the Presi-dent's budget-the budget containing his annual spendingand revenue proposals-it would act piecemeal on thebudget request. No means existed for the Congress toestablish its own total spending and revenue levels orbroad spending priorities to serve as guidelines for bothhouses to follow.20 As a result of this operational struc-ture, there was no focal point in Congress to bring dispa-rate views together. Congress was unable to determinecoherent national priorities, except implicitly, when thebudget was enacted. 2' Even then, its expertise onbudgetary matters placed it at a disadvantage in dealing

El with the Executive Branch.

THE NEW BUDGET PROCESSTo arm itself with relevant facts and analyses. Con-

gress established a congressional budget process withenactment of the Congressional Budget and ImpoundmentControl Act of 1974, a response to the increasing realiza-tion among members of Congress that they had no meansto develop an overall budget plan.22 Congress also createdthe Office of Technology Assessment, and strengthenedthe Congressional Research Service and the GeneralAccounting Office. Now Congress can directly inquire intopolitical wartime options and make intelligent decisions onresource allocation.

The Act also created the Senate and House BudgetCommittees, which now have responsibility for draftingthe annual budget of Congress for consideration by theentire legislature. In addition, it created the CongressionalBudget Office to support Congress in the process by sup-plying economic and program analysis and cost informa-tion on existing and proposed legislation. TheCongressional Budget Office's independent, nonpartisanprofessionals provide Congress with the expertise longheld by only the Executive Branch.

F


As Congress reached out for new roles and a greatershare of power, it began concurrently to acquire the infor-mation and means to underwrite its new activities. FromJune 1974 to March 1984, the Congressional staff grewfrom 36,40323 to 41,945,24 a 15 percent increase. In short,through its legislative power, Congress began to changethe structure and extent of the information flow coming toit from the Executive Branch.

The implications of the new budgetary process for theDefense Department were and still are significant. In spiteof its new capabilities, Congress will probably say, "If wemust fight, then we'll spend whatever is necessary towin.'" But Congress is now in a position to say also, "Ifyou, Mr. President, must commit forces to that place, weare in a position to evaluate what is necessary to supportyour commitments." No longer must Congress defer toExecutive judgment.

Connected with this new confidence, of course, is adesire to restrict commitments. No one can predict whetherCongress will be inclined to approve or disapprove specificuses of force. The trend, however, is clear: Congressintends to become more involved in the requirementsdetermination process of the Defense Department andinsist on accountability and cost-consciousness on the partof the country's military establishment, from the Com-mander in Chief to the Army commander-and his comp-troller-in the field.

LEGISLATED POWERAnother indication of the changing role of Congress

in national security matters is the War Powers Resolution.passed in 1973 over President Nixon's veto. The contro-versial resolution restricts the President's ability to wageprolonged undeclared war. Members of Congress viewedthe Resolution as an exercise of the Constitutional -war

A

CONGRESSIONAL AND MEDIA INFLUENCE 17

powers" of Congress and "necessary and proper powers"to ensure that the collective judgment of both the Congressand the President will apply to the introduction of USarmed forces into hostilities, or into situations whereimminent involvement in hostilities is clearly indicated. 25

Many people may find the fiscal power of Congressexcessive; however, congressional involvement may resultin more carefully measured decisions on the use of force.Congress will, for the first time, be playing a full role inthe decision process. War is not a mere act of policy but atrue political instrument, a "continuation of politicalactivity by other means." 26 The political object is thegoal, war is the means of reaching it, and means can neverbe considered in isolation from their purpose. While Con-gress has always been concerned with the overt politicalconsiderations of every American war, Congress is nowbeginning to examine the fiscal constraints-and demand-ing that the country's armed forces do so as well.

FRONT PAGE NEWSAs with Congress, the media are different today than

they were during World War l-the era of Ernie Pyle, thewar correspondent who was killed in the Pacific just beforethe end of World War 11. Ernie Pyle wrote about thegrunt's-eye view of the war. He rarely covered the big pic-ture. He made his name writing about the relatively sim-ple, focused existence of men in combat, not about thecomplexities of the military budget, or quality control indefense plants, or whether women should be in combat, orthe mysteries of nuclear war. 27

Today the trend of media reports has shifted from thegrunt's-eye view to the bird's-eye view. Since the early1980s, the media have taken up the mantle of challengingdefense requirements in light of the significant governmentdeficit, unfavorable balance of payments, and the overall


impact large defense expenditures have on the economy.The impact of this shift is significant. Reports of theDIVAD gun "locking on" to a range latrine, and ready tofire, along with its other faults, helped cause the demise ofthat system. Reports questioning the performance of theBradley Fighting Vehicle placed future funding for it injeopardy. Charges by the media of cost overruns, alongwith poor management, $75 hammers, and spare parts hor-ror stories uncovered by the Defense Department itself,invited increasing scrutiny of the Defense Departmentbudget.

Times have changed for the Army's commanders withthe increased interest and capability of the media, par-ticularly with the advent of the Freedom of InformationAct. The media can now obtain information not availablebefore the passage of the act. Commanders must, there-fore, be more aware of costs and accountability-evenduring war-or they may find themselves on the front pageof the Washington Post or the New York Times.

I1. DEVELOPMENT OF ARMYCOMPTROLLERSHIP

Military history abounds with the dramatic fare of battlesand campaigns, but definitive analysis of administration ofthe Army is a relatively neglected field.28 In many cases,this field is not well understood even when it is reported.Much of the perception of resource managers in particularcomes from the fact that the contribution of resource man-agement in war is not known and seldom reported. Conse-quently, our military schools do not teach resourcemanagement in war as part of the curriculum. Thus mili-tary planners largely overlook resource management in thecourse of developing and conducting war strategy. Thisoversight may result in commanders developing overlyambitious strategies that can't be supported by the limitedresources available, and possibly dooming the strategies tofailure.

One explanation for this lack of administrative historyand the absence of resource management in planning isthat many join the military because they are interested incombat and combat related duties, not business manage-ment, public information, or government relations. Theydon't sign up for desk duty to prepare budgets or lobbyCongress. As a result, most military officers aren't trainedfor these activities. Many officers only become resourcemanagers to prepare themselves for a job after they retire.The perception among the combat types is that resource

19

20 DEVELOPMENT OF ARMY COMPTROLLERSHIP

managers are civilians in green suits who should disappearwhen the war starts. The resource management functionjust does not have any "macho" appeal.

Despite the lack of enthusiasm for military resourcemanagement careers, it is an undeniable fact that financesare critical for carrying on war as well as for determiningstrategy. Over 300 years ago, Jean Baptiste Colbert, thecontroller general for France, said, "Finance is the vitalnerve of war. "29 According to Publius Cornelius Tacitus,a Roman historian and orator, money provides the "sinewsof war."3 And looking even further back, to the oldestknown treatise on war, Sun Tzu wrote, "Raising a host ofa hundred thousand men and marching them great dis-tances entails heavy loss on the people and a drain on theresources of the state. The daily expenditure will amountto a thousand ounces of silver. There will be commotion athome and abroad .... ,3 The cost of war is so fundamen-tal and so important that it must be a primary considerationin planning and conducting war.

BUSINESSMEN IN UNIFORMIt is interesting-perhaps vital-to note that the need

for resource management expertise often was fulfilled dur-ing wartime by the lateral entry of financial specialistsfrom the business world to the military; these resourcemanagers, though, seldom became an influential part ofthe strategic planning structure. In both world wars, orexample, the United States called large numbers of civil-ians into the services directly from industry and commis-sioned them as officers. 32 The military departmentsnoticed as early as World War I how the recruitment ofbusinessmen imbued the departments with a different out-look-an outlook that should be provided by the resourcemanager. According to Alan Milward, "for good or ill,the tendency of businessmen was to look to the future."33

DEVELOPMENT OF ARMY COMPTROLLERSHIP 21

The creation of the Control Division within the ArmyService Forces during World War II, a major administra-tive reform, is a case in point. The Army drew the staff forthe Control Division, for the most part, from civilian man-agement experts rather than military officers, because theofficers had little experience with resource management. 34

A reorganization within the Army Service Forces dur-ing World War II further illustrates how the recruitment ofcivilian experts filled the resource management void. Dur-ing the war, the Army Service Forces set up a Fiscal Divi-sion as part of its staff organization. This divisioncombined certain budgetary and other fiscal duties andoften duplicated work of the Office of the Chief ofFinance. For a time, Army Service Forces had, in effect,two staff offices concerned with fiscal matters. Then thetwo amalgamated, and the Chief of Finance became dep-uty fiscal director. 3- The new Fiscal Director, Arthur H.Carter, a senior partner in the accounting firm of Haskinsand Sells, was a private citizen appointed as a major gen-eral during the war. Had the Chief of Finance at that time,General Howard Loughry. been more aggressive, the rolesmight have been reversed, and an active duty generalofficer could have been appointed as Fiscal Director. ButGeneral Loughry did little to anticipate American involve-ment in the European war. Rather than gearing his officefor wartime planning, which obviously would haverequired a larger staff, he actually allowed the loss of oneposition between 1940 and 1941.36 As a result of Loug-hry's lack of foresight in wartime planning, a private cit-izen, commissioned a major general, was hired to replacehim as Fiscal Director of the Army Service Forces.

A COMPTROLLER FOR THE ARMY

After World War II, a congressional committeereviewing the Army's performance during the war reported

.I ...--_


that there had been "unconscionable wastes of money"through two shortcomings. First, the best modem businessmethods and practices were neglected by the War Depart-ment in favor of their own bureaucratic institutions and tra-ditional ways of doing business. Second, there was nocompetent analysis and reporting machinery to furnish theSecretary of War information on which corrective actioncould be based. 37

As a result of the congressional report, the Secretaryof War appointed Edwin C. Pauley, on 3 September 1947,as his special assistant to study the "business practices" ofthe Army. Mr. Pauley's report, submitted in late 1947,concluded that the principal deficiency was a lack ofknowledge about the real cost of the various activitiesundertaken throughout the department. The accounting thatexisted was usually unique within each organization, withthe result that no common denominator existed on whichoverall cost analyses could be prepared. No one from theSecretary of War on down knew the real costs of opera-tions for which they were responsible. 38

At about the same time that Mr. Pauley submitted hisreport to the Secretary of War, the Haislip Board, a boardof high-ranking officers, submitted a report to the Chief ofStaff. This board, set up in early 1947, reviewed all pol-icies and programs of the postwar Army to determine whatpolicies and programs should govern the Army in thefuture. It was also critical of the conduct of the war. In theboard's opinion, "neither the organization, the procedures,nor the general attitude of the Army is conducive to max-imum economy." 3" Included in the recommendations ofthe board was the establishment of a management-engineerfunction to keep the organization and methods of the Armyunder continuing survey to ensure constant attention toefficiency and economy/"1 The Army, whether it knew it


or not, had just been introduced to the notion that it neededa comptroller. 4'

As a result of these studies, both Secretary KennethRoyall and the Chief of Staff, General Eisenhower, agreedthat there should be an official at the highest level in theArmy both to specialize in improving the accounting andreporting methods and to study the organization and proce-dures of the department. They agreed that the mostdescriptive title for such an individual, to parallel businessand industrial practice, would be Army Comptroller.4 2 Aprecedent for both the title and most of the functionsalready existed in the Office of the Air Comptroller, whichthe Air Force recommended to the Army as a device whichhad improved the efficiency and economy of Air Forceoperations.

Secretary Royall favored appointment of a civilian asComptroller, who would work directly under the Secre-tary, while General Eisenhower preferred that the Comp-troller be part of his military staff. General Eisenhower'sview prevailed. A Comptroller for the Army was formallycreated by Department of the Army Circular No. 2. dated2 January 1948, which provided for a military comptrollerwith a civilian deputy within the Office of the DeputyChief of Staff (see page 24).

The establishment of the Comptroller position mostclearly responded to three major points that had emergedfrom the early investigations and the resultant criticisms ofthe Army's financial management:

i. The Army had entirely too many fiscal masters.

2. The Army divided fiscal authority from commandauthority.

3. The organization, procedures. and general attitudeof the Army was not conducive to maximum economy.


Cir 2

CIRCULAR DEPARTMENT OF THE ARMYNo. 2 } WASHINGTON 25. D.C.. January 1948

Effective until 2 July 1949 unless sooner rescinded or superseded

ARMY COMPTROLLERI. In order to improve the use of modern management techniques in the business

administration of the Army, and to utilize accounting more effectively as a tool through-out the Army in the control of operations and costs, the Office of the Army Comptrolleris hereby established as a part of the Office of the Deputy Chief of Staff. United StatesArmy.

2. The personel and functions of the Budget Division and the Manpower Board, Spe-cial Staff, United States Army. and of the Central Statistical Office and the ManagementOffice of the Chief of Staff. are transferred to the Office of the Army Comptroller.

3. The Army Comptroller shall serve, either personally or through designated repre-sentatives, as he may elect, as the Budget Officer (Sec. 214, Budget and Accounting Actof 1921) Fiscal Director. and Management Engineer for the Department of the Army. Assuch he formulates, coordinates, and supervises those matters pertaining to budget, tica.statistical, and management engineering activities of the Department of the Army. h-isduties include:

a. Development of a plan for the business management of the Department of the Armyand the presentation of periodic reports thereon to the Chief of Staff.

b. (I) Preparation of plans and procedures for. and exercise of general supervision andcontrol over, all budgetary matters of the Department of the Army, under pol-icies established by the Chief of Staff.

(2) Preparation of military and civil budget estimates of the Department of the Army(Sec. 214, Budget and Accounting Act of 1921).

c. Development of systems and procedures for utilization throughout the Army ofaccounting and auditing for purposes of control of operaons and costs.

d. Formulation, coordination, and general supervision of basic fiscal policy for theDepartment of the Army.

e. Establishment and supervision of Department of the Army fiscal policy with respectto international monetary matters and the use of foreign exchange by the Army overseas.

f. Continuing survey and development of a Department of the Army cost analysis.reporting, and control system.

g. Continuing survey of the effective utilization of manpower in its relationship toappropriations and to economy.

h. Continuing survey of the Department of the Army's organization. methods, and pro-cedures in the interest of efficiency and economy.

i. Coordination of the collection, analysis, and presentation of statistical data. includingprogress reports.

4. All changes are effective this date.5. Circular 138, War Department. 1946. is amended accordingly.lAG 020 (2 Jan 48)]

BY ORDER OF THE SECRETARY OF THE ARMY:

OFFICIAL: DWIGHT D. EISENHOWEREDWARD F. WITSELL Chief of Staff, United States ArmYMajor GeneralThe Adjutant General

Department of the Army Circular No. 2, 2 January 1948


But suspicion persisted in some influential quartersthat control and accountability put "dollars before nationalsecurity," or would result in going to war with "cut-rate,cut-quality, cheapest-to-buy weapons." Manycommanders insisted, "Nothing but the best will do forour troops." Implicit in this challenge was the deeplyrooted feeling that national defense was far too important amatter to be inhibited by cost.

To help shore up the position of Comptroller in viewof these objections, the position of Comptroller of theArmy was mandated in law. The functions andresponsibilities of the Army Comptroller obtained theirstatutory authority upon the passage of the NationalSecurity Act Amendments (Public Law 216, 81stCongress) of 10 August 1949. Those amendments resultedwhen the Commission on Organization of the ExecutiveBranch of the Government, generally known as the HooverCommission, reconfirmed the need for a formalizedresource management structure in the Department of theArmy. Former President Herbert Hoover set up a specialtask force composed of eminent accountants with widegovernment experience to examine the budgeting andaccounting in every part of the Executive Branch. Inaddition, he directed a specific investigation of thebudgeting and accounting issues in the defenseestablishment. Much like Mr. Pauley, Mr. Hoover wascritical of the "startling state of affairs" of the militarybudget system which, he claimed, "do not permit readycomparisons, they impede administration, and interferewith the efficiency of the Military Establishment." Thistask force affirmed the critical need for a resource managerwithin the structure of the Department of the Army andcreated the 1949 amendments which mandated aComptroller of the Army. 43


A NEW PERSPECTIVE FORRESOURCE MANAGEMENT

The lateral transfer of civilian experts provided theArmy's financial management capability during the worldwars. The absence of such lateral entry during the KoreanWar, and even of any Army Reserve and Army NationalGuard call-up of experts during the Vietnam War, createdunprecedented difficulties in management of the services,requiring many military personnel to handle respon-sibilities for which they were little prepared. This lack ofexperience in resource management goes far to account forthe Vietnam era problems and scandals which racked theArmy. It may also explain the rationale for the Army'smajor post-Vietnam reform to its resource managementfunction-the establishment of a comptroller specialty inthe new Officer Personnel Management System. 44

Currently, the need for a more comprehensiveresource management perspective is evidenced by therecent enactment of the Goldwater-Nichols Department ofDefense Reorganization Act of 1986. This Act has elimi-nated the Office of the Comptroller of the Army as a sepa-rate staff office under the Chief of Staff and made thefunction of comptroller and financial management the soleresponsibility of the Office of the Secretary of the Army. 45

This organizational change is not what is most important,since the Comptroller of the Army has reported directly tothe Assistant Secretary of the Army for Financial Manage-ment since 1949. What is important is the logic behind thechange. Congress noted that the service secretaries apply adifferent set of experiences and viewpoints on programmanagement to reach an optimum decision. They believethe political, budgeting, and academic points of view andskills can help provide better overall decisions than if onlymilitary skills and views are present. 46


This recognized requirement for a greater knowledgeand a broader perspective is derived from the need to applythe unique skills of resource management to achieve theobjectives of the commander. Our fundamental thinking

must start with the basic premise that resources are alwayslimited. In terms of general principles, fiscal capabilitieslimit the combat forces which can be created. At the sametime, logistic capabilities limit the forces which can beemployed in combat operations. In sum, fiscal factorsdetermine the limits of strategy. The resource managermust have a thorough knowledge of the management con-trol structure and process, the warfighting doctrine, andthe capabilities of the organization as a warfighting instru-ment. Most important, the resource manager must masterthe art and science of war. This single factor differentiatesan officer from a civilian with a similar skill.

4

4

i

IV. GLOBAL ECONOMICINTERDEPENDENCE

The events of the last three decades have forced a reap-praisal of those concepts of war commonly held by themajority of our people. Thirty years ago, most Americansgenerally considered war as a specialized form of brutal,

4formal contest in which nations engaged only after failing, to solve differences by negotiation. We considered, per-

haps naively, that the usual state of man was peace.

Now we see international relationships somewhat dif-ferently. The usual state of man-and of nations-involvescompetition, and in an expanding world, internationalcompetition involves a struggle for existence and hence aconflict of interests. Many of the sources of these conflictsare economic: the desire to attain or maintain a high stand-ard of living, the problem of supporting an excessive pop-ulation, the need to control sources of raw materials, thedevelopment of trade routes to obtain raw materials anddistribute finished goods, and the desire to dominate thefocal points of world trade routes. (See Table 4:1 on page30 for US dependence on foreign sources for minerals.)

The competition for an economic advantage mayintensify to a point of economic warfare and then combinewith social and ideological competition to produce violentconflict. In this event, the enemy's armed forces and hiseconomy both become targets for destruction or control. 47

29

30 GLOBAL ECONOMIC INTERDEPENDENCE

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GLOBAL ECONOMIC INTERDEPENDENCE 31

THE SHIfr IN PRODUCTIONThe potential for economic warfare is more compli-

cated than the simple struggle to protect the sources of rawmaterials. Today, and increasingly in the future, theUnited States needs to strengthen its production chain anddefine its national security objectives in terms of economicproductivity. We are finding that, in less than a decade.the United States, the world's largest creditor nation, hasbecome its leading debtor. Foreign competition hashumbled some of America's mightiest companies. Hun-dreds of thousands of manufacturing jobs in the -smokestack" industries have disappeared, and middle-class liv-ing standards have declined in many communities.

In the future, much of the material goods that contrib-ute to our quality of life will be obtained from foreignsources. From the defense perspective, Pentagon strate-gists recently discovered that if war broke out. Sovietbombers could gravely wound the United States simply byattacking a small German plant 30 miles west of theCzechoslovakian border. The plant makes all of the high-purity silicon the United States buys for chips used inthousands of missile guidance systems. Destruction of theplant would stall US missile production for months. crip-pling the West's capacity to resupply its forces with mis-siles. Ball bearings in US submarines, aircraft, and tankscome increasingly from Europe and Asia. Some Navyships ride at anchor on Spanish chains. Military officialsconcede that the US arsenal is riddled with foreign-madeparts that might not be available during a global crisis. Inwartime, this weakness could emerge as the soft under-belly of the recent defense buildup. The days of "Made inthe USA" are slowly slipping away. 4x

One of the major forces causing this shift is that all ofthe countries on the world's economic scene are growing


increasingly interdependent. Whether we endorse this newdirection or not, we are obliged to respond to it. TheUnited States is in the midst of a powerful twofold changeas part of this new era. First, we are shifting from being anisolated and virtually self-sufficient nation to becomingpart of an interdependent, global economy. To illustrate,between 1981 and 1984, imports captured 42 pcrcent ofthe growth in domestic American spending. Even such ahistorically strong exporting industry as agriculture losthalf its foreign markets between 1981 and 1984. Importsof computers and office equipment soared 50 percent in1984. Electrical machinery imports were up 38 percent.Overall, 20 cents out of every dollar spent by Americanswent into imports in 1984. 49 Second, we are giving up ourformer role as the world's dominant economic force andbecoming a member of a growing handful of economicallystrong countries.

As the nations of the world move toward a globaleconomy, it is no longer clear who is going to make what.We are witnessing a global redistribution of labor and ofproduction: Spain and Brazil are replacing Japan and Swe-den as shipbuilders; the United States is yielding to ThirdWorld countries on apparel, steel, and automobiles.

Over the next decade, we will see a number of"new" Japans. The twenty fastest-growing economies forthe period 1970-77 were all Third World countries.Botswana was up an annual average of 15.8 percent; SouthKorea was up nearly 10 percent; Singapore was up 8.6percent; and the Dominican Republic was up 8 percent.These Third World countries are growing with purpose anddesign: South Korea, Taiwan, Brazil, and Singapore in-vested between 25 and 35 percent of their gross nationalproducts into their economies, nearly twice the rate of theUnited States. During the past decade, the Third World


has begun to take up many of the developed world's indus-trial tasks."

Economic changes which shifted the manufacturing ofcomponents from the United States to foreign sources mayhave some favorable security effects by linking countriesmore closely with each other and with the global com-munity. Nevertheless, these economic changes also chal-lenge the existing order, the existing stability so importantfor strategic security. Figure 4:1 is an example of the inter-relationships of the firms that have adapted to thiseconomic change. The United States must now be con-cerned not only with the continued supply of raw materialsbut also with the supply of component parts produced fromforeign sources, and must adjust its security arrangementsaccordingly.

FINANCING PARTNERSHIPS

In addition to the shift in the actual manufacturingproduction, we are finding many US firms developingfinancial relationships with overseas firms. These financ-ing arrangements will also subject the United States toincreasing vulnerability.

As this interdependence develops, global partnershipsbecome an important new strategic option that touchesevery sector of the world economy. To remain competi-tive, companies are looking for the least expensive sub-contractor or supplier. Many have found that "offshore"contractors can provide a quality product at considerablyless cost. Some of the movement toward foreign part-nerships, interestingly, is driven by the Competition inContracting Act. This may mean going to a foreign sourceto obtain the lowest-cost component since there are no pro-hibitions against obtaining supplies or services from for-eign sources for defense contractors.


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In the future, few companies will achieve interna-tional leadership and few nations will prosper in the worldeconomy without some set of global strategic partnershipsin their portfolios. Examples of these already exist:

* AMC's link with Renault seven years ago gavethe US automaker an infusion of capital andexperience with front-wheel- drive cars, andopened up the United States market to theFrench company. Since then, Ford. GM, andChrysler have consummated production dealswith Mazda, Toyota, Suzuki, lsuzu, andMitsubishi, and with emerging South Koreanautomakers.

American high-tech companies formed twocoalitions, the Microelectronics and ComputerCooperative and the Semiconductor ResearchCooperative, to buffer the competitive shocksof similar groups from Japan, the "new"Japans, and Western Europe.

0 Recently, the Pentagon disclosed its agreementto exchange proprietary radar technology forJapanese expertise in missile guidancesystems.5 1

* In another case, an American company is cur-rently exploring the possibility of developing ajoint fishing venture with the Pacific islandgovernment of Kiribati. Americans would sup-ply the vessels and other equipment but the twocountries would share the profits.52

As global strategic partnerships proliferate, strategicissues will become even more complicated, and the bound-aries between companies will become blurred. If singlecompanies no longer set strategy, and if groups of


companies negotiate common interests with foreigngovernments, the international political arena is bound tochange.

Global strategic partnerships may challenge our tradi-tional concept of national sovereignty. Notions abouteconomic competitiveness may be rendered obsolete. Nocountry can afford to be excluded from joining in strategicpartnerships, just as no company can avoid the shiftingpatterns of global supply and demand, Indeed, the nation-states that prosper in the years ahead will be those that nur-ture a series of global strategic partnerships that stress thevalues of parity and mutual benefit.

The increased emphasis on "offset" financing is agood example of partnerships that stress parity and mutualbenefit. This is a throwback to the barter system of yearsago, as the United States attempts to help satisfy the ThirdWorld's debts and produce a more favorable US balance ofpayments.

Mexico, for example, began a large developmentsurge during the early 1970s as a result of finding large oilreserves at the same time oil prices were being driven upby OPEC. As the price for oil eroded in the early 1980s,Mexico was unable to service the debt, incurred during theoil shortage, that was used to develop the country. Whenno further debt financing was available, the initiatives hadto stop as a result of the capital drying up. This led to theirinability to pay even the interest on the loans they obtainedfrom US banks. The US banks were concerned that such alarge unpaid debt could cause them to go bankrupt. Alter-natively, Mexico offered a large, cheap, and unused manu-facturing capacity that was attractive to US industry.Many US firms negotiated with the firms in Mexico totake control over the manufacturing operations with theunderstanding that the US firm would pay off Mexico's


debt to the United States. The result is that everyone won.The banks got their money, Mexico had the debt paid, andthe US firm has control over an operation with a muchlower operating cost than it would have in the UnitedStates.

THE THREAT OF LIMITED WAR

Intraregional conflict in the Third World has thepotential for disrupting this existing economic order asdeveloping nations become major suppliers of criticalmaterials to the United States. 3 Stationing of troops by theSoviet Union and their Cuban surrogates will furtherincrease the likelihood of such conflicts and may providethe Soviet Union opportunities to expand its influence atthe expense of the Free World. This poses a threat to thewelfare of the United States, particularly when theseregions may be major producers of components of ourweapon systems or providers of many of our consumergoods.

Economic factors could also threaten the flow ofresources and components. The rising price of oil in the1970s emphasized the importance of territorial and borderdisputes that had been, until then, mostly insignificant. Inthe 1970s, as oil prices rose, a number of disputes came tothe fore over offshore drilling rights. Should oil prices riseagain in the 1990s. as many expect, problems could re-emerge, since many of the unresolved boundaries aroundChina, Japan, Korea, Taiwan, the Philippines, and Viet-nam are in prospective oil-producing areas. 54

THE SPECTRUM OF CONFLICTWhile the complexities of competition cannot always

be precisely defined or delimited, figure 4:2 on page 39shows a "spectrum of conflict" which illustrates the rangeof potential conflicts that may occur. From the perspective


Strategic NBC WarHigh

Theater NBC War

E-4 Conventional War

\ Civil War

Protracted Guerrilla War

_errrismGuerrilla WarLow Terrorism Sabotage

Low Medium High

INTENSITYS :r Paul F. Gorman. -Military Intrumcnts of Containment.- in Ter .L Deitkl and

John Le% i., (addi,. cd%.. (onituimflnt: (onr p and PI'inv Washington. [x':National DMlensc UnivcrsnIt Press. 19N6). p 225.

Figure 4:2-The Spectrum of Conflict

of the United States, there are several levels of conflict.High intensity conflict describes the relatively uncon-strained use of available military forces and weapons,including nuclear, chemical, biological, or other weaponscapable of affecting large numbers of people or broadexpanses of territory. Mid-intensity conflict implies limita-tions on the use of weapons of mass destruction, butassumes employment of conventional military forces andweapons in a given region with extensive destruction andheavy casualties among participants. Low intensity con-flict, in contrast, refers to situations in which the perpetra-tors of violence resort to coercive crime, sabotage.


subversion, terrorism, or guerrilla warfare, and the UnitedStates limits its military response either to direct action byits special operations forces, to advising or supporting athreatened ally, or to positioning US forces to deter escala-tion of the conflict by third nations. 55 Historically, US warplanners have concentrated their planning on the high sideof the curve. However, the global economic links whichthe United States must now concern itself with can onlyincrease the possibility of a limited conflict to protect alimited interest. Thus more planning is required at thelower end of the spectrum. The low end of the spectrum isalso where the resource manager in the theater of opera-tions could provide the greatest contribution in the plan-ning and the conduct of the war.

To illustrate the war planner's concept of the mostlikely war, figure 4:3 on page 41 plots conflict probabilityversus intensity. This relationship dictates the type andsize of force that will be required. The type and size of thecombat force will also define the size of the support ele-ment that will deploy with the combat force. Based on thetypes of war and their probabilities, the military shouldconstruct functions and doctrinal employment of resourcemanagement.

Perhaps the best conclusion is that resource manage-ment requires a degree of flexibility geared to the intensityof the conflict. "Limited" wars will require increasedresource management actions, although these actions maybe severely constrained. Resource management also willbe constrained during the ambiguous early warning periodpreceding a limited crisis. Development of limitedresource management programs which avoid excessive orpremature control or over-expansion, while still providingthe needed levels of resources, may be the greatest chal-lenge facing the resource management planner.


1.0

g-4

Low Medium High

INTENSITYSource: Paul F. Gorman. "Military Instruments of Containment." in Terry L. Deibel and

John Lewis Gaddis. eds.. Containment: Concept and Policy (Washington. DC:National Defense University Press. 1986), p. 226.

Figure 4:3-Probability versus Intensity of Conflict

The growth of the Third World, the shift of industrial-ization patterns, and the creation of financing partnershipshave significant implications for the strategic issues anddefense preparedness of the United States. These factorshave increased the strategic vulnerability of the UnitedStates. We can no longer limit our attention to only eventsthat occur in Japan and Western Europe; we must be con-cerned with events that occur throughout the entire world.

An examination of the spectrum of conflict in light ofthe economic events of the last 20 years makes it in-creasingly evident that the United States must be preparedto use military force effectively throughout the

K


entire spectrum. In all likelihood, the United States willfight a number of small wars for limited objectives in thefuture, rather than a major war involving full mobilization.The resource management planner will have to balance thecost of these defense responsibilities with the cost ofequipment necessary to deter war with our principal adver-sary. All of this comes upon us as major warfightingresources are more difficult to obtain; therefore, the mod-ern resource manager must be more aggressive in statinghis case, for that person can affect the readiness of theArmy much more so than predecessors could.

I

4

I£ _

V. STRATEGY

As we begin the last decade of the twentieth century, thebasic goals of our national security policy remain essen-tially unchanged since the late 1940s:

I. To preserve the independence, free institu-tions, and territorial integrity of the UnitedStates.

2. To preserve US and allied vital interestsabroad.

3. To shape an international order in which ourfreedoms and democratic institutions can sur-vive and prosper-an international order inwhich states coexist without the use of forceand in which citizens are free to choose theirown governments.',

DETERRENCE

Our national strategy since World War 11 to achievethese goals was containment-to contain Soviet expansioninto areas vital to our interests. The basic defense strategyused to implement the containment concept was deter-rence. Deterrence means that we seek to protect our vitalinterests by being strong, not to enable us to resort toaggression or war, but to prevent war by our very strength.We seek to prevent war by persuading potential adver-saries that the costs of attacking us will exceed any gainthey could hope to achieve. This is the core of our defense

43

44 STRATEGY

strategy today, as it has been for most of the postwarperiod.57

The focus of the post-World War 11 military conceptof deterrence has largely centered on the Soviet Union.But in view of today's interdependent economic structure,the notion of deterrence has come to include maintaining asecure environment within which not only the UnitedStates but also its allies and friends can pursue legitimateinterests. In the future, the United States may find itselfincreasingly vulnerable in a military conflict not directlyinvolving the Soviet Union, because our vital interests areexpanding and becoming increasingly resource dependentin areas not necessarily challenged by the Soviets as dem-onstrated by the Naval force deployed to the Persian Gulfin recent years.

The scope of deterrence, therefore, includes othercountries that may threaten the vital interests of the UnitedStates. These vital interests include resources located inareas that may become inaccessible due to a regional con-flict where, conceivably, neither the United States nor theSoviet Union would be directly involved. The UnitedStates may need to ensure continued access to suchresources. Logically, we need more time to examineinfrastructure, logistics, transit rights, and availability ofsupplies in those regions where the potential for conflictseems most likely.58 Resource managers are valuableassets to planners when operations in such regions areunder consideration, even with the apparent lessening ofthe Soviet threat.

To fulfill this strategy of deterrence, the Army ischarged with the possibility of conducting land warfareagainst any enemy anywhere in the world. The array ofpotential operations can require any size unit, from a bat-talion to a mature theater army. Because of this wide range

*1

STRATEGY 45

of possible wars, there are few situations in which theUnited States would have substantial forward-deployedforces at the outbreak of war since the number of countrieswhere the United States has staging areas has decreased asa result of agreements. This increases the probability thatwars will be fought in countries where we do not haveexisting support bases. There may or may not be friendlypopulations, and there may or may not be facilities such asdeveloped ports, highway networks, airfields, and rail-roads. Army forces must plan to conduct operations insuch environments.59

Political trends in the United States, budgetary con-straints, changes in priorities, and the effects of technologyhave resulted in a shrinking of both US military deploy-ments and the basing structure supporting them from theAtlantic Basin to the Pacific arena. The most drastic dete-rioration of the overseas base structure has occurred in thewestern Pacific and around the Mediterranean Sea. TheMediterranean served as the pivotal area for the postwarUS strategy of containment; for two postwar decades, itwas an uncontested "American lake," patrolled by theSixth Fleet. Today, uncertain political trends in Spain,Italy, Greece, and Turkey point to an even more somberfuture in this critical region. 60

If there is one strategic lesson that stands out from allthe others in the post-World War II period, it is that theUnited States no longer can go it alone. Fortunately, thenation has developed an elaborate structure of securityalliances designed to achieve a level of deterrence anddefense that would otherwise be unattainable.

COALITION WARFARE

One of the most important developments for the USArmy in the twentieth century has been its participation in

46 STRATEGY

coalition warfare and programs of mutual assistance.The nations of the world now belong to a global com-munity which in all respects-political, economic,social, cultural, and technological-is increasinglyinterdependent.

After the early alliance with France in the Revolution-ary War, the United States had no further experience withcoalition efforts until the China Relief Expedition in 1900.Much more significant was World War I, when the UnitedStates, as an "associate" of the Allied Powers, geared itsmilitary production through 1918 to a division of laborwith England and France. In World War 11, the alliance ofthe United States and Britain, although never formalizedby treaty, probably was the closest international militarycollaboration in history. Later, support of United Nationsforces in Korea brought new complications and new expe-riences in coalition warfare, which provide the most valu-able lessons of the Korean War. 6

1

So diverse are the connecting points of the complexnetwork within which nations exist today, that it is notpossible for any single nation to be completely independ-ent. Even with its immense strength, the United States isno exception. Where once geography permitted considera-tion of a policy of "splendid isolation," the results of thetwo world wars and ensuing changes have dictated thatnational interests will be served best in the future throughvoluntary association with other states having sharedvalues or common objectives. As a result, for at least thepast 40 years, our national security policy has beenfounded on the premise of collective defense.

This policy of collective defense is expressed in aseries of multilateral and bilateral treaties, executiveagreements, congressional resolutions, policy declarations,and communiques. These political commitments are

STRATEGY 47

fundamental to developing our military strategy. Conse-quently, it is clear that any future military action involvingthe United States will likely occur in the context of "coali-tion warfare," that is, joint action with other nations toachieve a common purpose.

Coalitions are exemplified by Army forces in theNorth Atlantic Treaty Organization (NATO) area whichwould operate under one of NATO's major commands.Those in the Republic of Korea would fight as part of theUS-ROK Combined Forces Command. In these theaters,doctrine, procedures, and principles have been developedand practiced to minimize the problems of interalliedcoordination.

Elsewhere, agreements on doctrine, principles, andoperating techniques are only partially developed or do notexist at all. In such theaters, US and allied forces will haveto work out procedures for combined operations under thepressure of imminent conflict, or even while operations areunderway.

Most people look at the coalition strategy as the bestof all possible worlds in the sense that it amplifies thepower of each participant. This is, of course, the reasonfor negotiating such arrangements. However, from the per-spective of the resource manager, coalitions also posechallenges.

The very nature of a multilateral strategy demandsthat the participants sacrifice some of their freedom ofaction. For instance, there is a problem of allocation ofresources. Unless all partners of the coalition can performtheir parts, their utility is diminished. Therefore, we mustallocate resources in a manner to maintain an equilibrium.We may have to draw resources from the United States tosupport an ally who is in need, to the detriment of the

48 STRATEGY

US forces. Though this use of resources may maintainequilibrium, it may result in a resource managementconflict.

During World War II, the allocation probleminvolved our allies. Generally, the Anglo-American supplypartnership functioned smoothly, but there was some dis-sension. Actually, only the Americans had any real stockof supplies to distribute. The British contended that alloca-tion from American production should be made to the Brit-ish in one block for their empire. The commanding generalof the Army Service Forces tried to keep British require-ments within reasonable limits and minimize emergencydemands outside the Army supply program. He instituted arigid review of British requirements to prevent use of lend-lease supplies for postwar economic recovery, for nones-sential civilian purposes, and for accumulating excessivereserves. For example, when the Middle East ceased to bean active theater, the use of British surplus there for civil-ian purposes became a serious issue. On one occasion, theAmericans learned of large supplies of rubber tires storedin Egypt, and forced the British to restate their entirerequirements. 62

As the preceding problem suggests, participation inmultilateral defense arrangements frequently requires adegree of compromise which, in turn, complicates the mil-itary equation. In Vietnam, there were instances whereallies did not want the United States to support any of thecost of their forces (Australia and New Zealand).However, they realized that there were many areas of sup-port which the United States could handle moreeconomically due to the extensive US administrative andlogistical system. In order to offset an adverse balance ofpayments deficit in Australia, the United States agreed toaccept sugar and other commodities as part of the

STRATEGY 49

reimbursement. 63 This compromise placed an additionalburden on the resource manager to account for the barterarrangement. Accounts had to be established and receipt ofthe deliveries confirmed before supplies from the UnitedStates could be released.

In summary, coalition warfare is well worth our greatemphasis. But it carries with it some burdens which theresource manager must be aware of and constantly includein the planning process.

JOINT OPERATIONS

The doctrine for employing US fighting forces andconducting the war is just as important for designing theresource management function as the coalition warfarerequirements. The doctrine today is called the airland bat-tle. The airland battle doctrine developed by the Army ispredicated on routine cooperation of Army units with theother services. In most cases, Army forces will also coop-erate with US civilian agencies under the direction of theambassador of the country. These extremely importantarrangements will provide unique problems for theresource manager.

Joint forces operate within two distinct chains of com-mand--one for operations, another for administrative andlogistical matters. For operations, orders to commanders ofunified and specified commands are issued through theJoint Chiefs of Staff. The Joint Chiefs prepare plans andprovide strategic direction for the armed forces, includingoperations by commanders of the fighting commands.

The administrative and logistical chain of commandencompasses those functions of the military services notincluded in strategic direction, such as resource manage-ment. The military departments are responsible for admin-istrative and logistical support of their forces wherever

50 STRATEGY

employed. Forces assigned to the fighting commands dealdirectly with their respective departments and services onmatters which are the responsibility of the departments. 64

Since resource management is an administrative func-tion, the chain of command is through the military depart-ment. This arrangement poses some unique problems forthe resource manager in providing support to the com-manders "on the ground," whose operational chain ofcommand is through the Joint Chiefs of Staff, whereas theadministrative chain of command is through the Army. Forexample, there will be many instances where members ofthe other services are collocated with the Army without alogistical support base. They will require logistical andadministrative support from the Army. The resource man-ager must ensure the structure is established and arrange-ments made for the resources to provide the supportrequired. This has not been the case in the past.

In the early stages of the 1965 buildup in Vietnam,complications and administrative problems arose becauseof the multitude of funding channels in Vietnam. The dif-ferent military services were responsible for providingvarious types of supplies and services, but generally wereresponsible to finance only the support of their own forces.This led to many peculiar and inefficient situations. Forexample, up-country military advisers were required toobtain their day-to-day logistical support from Saigon,located 200 miles away, even though the same support wasavailable from much closer locations. Such support wouldhave been financed by funds of another service. But noprocedures existed to do this, and in fact, providing suchsupport at no cost would have been technically illegal. 65

Another experience occurred in Grenada. The XVIIIAirborne Corps Finance and Accounting Officer reportedthat an Army helicopter carrying wounded Marines to a

STRATEGY 51

Navy hospital ship was not allowed to refuel aboard theship because the payment procedures were not establishedto permit the pilot to sign for the fuel. These brief illustra-tions serve to remind us of the importance of the role ofresource managers in the planning process.

WHAT THE FUTURE HOLDS

The strategy of the United States to prevent an inter-ruption of strategic supplies is deterrence. However, theloss of many of our forward staging areas reduces ourcapability to react to a crisis, which diminishes our deter-rent capability. The loss of the forward staging areas alsodiminishes our capability to support our forces oncedeployed. To overcome this problem, the United Stateshas adopted a policy of joint and combined operations.These policies dictate reliance on both the Air Force andNavy for tactical support, but not for logistical and finan-cial support. It is up to the services to develop the structureand procedures to handle the logistical and administrativerelationships. In addition, we must rely more heavily onour allies for tactical and logistical mutual support.

In order to provide combat service support for our-selves and our allies, the United States has two sources.First, we can bring it with us. Second. we can obtain it inthe area of operations. However, in the course of develop-ing the light infantry divisions to act as a reaction force,the United States elected to put most of the combat servicesupport forces in the reserve components. Today, theArmy National Guard and the Army Reserve provide two-thirds of the intra-theater logistics support capability forthe armed forces. These are very capable forces, but due toour limited air and sea lift capability, they cannot arrive inthe theater early enough to influence the battle effectively.Therefore, the United States must initially rely more on the

52 STRATEGY

capabilities that exist in the theater of operations for logis-tical support.

This is where the resource manager can contribute hisexpertise. There must be someone on the ground asidefrom the logistician who can seek out the logistical supportrequired by the commander. The logistician will have asmuch as he can handle in simply setting up the supply sys-tem coming from the United States, without having toworry about determining the capabilities of the local econ-omy for logistical support and the support relationshipswith our allies. The logistician will have to arrange forone-half of the nondivisional logistics capability of eachforward-deployed corps until support units from the ArmyGuard and Army Reserve arrive. But even after they doarrive, they will have great difficulty providing the balanceof the required support. In the words of Louis J. Conti,Chairman of the Reserve Forces Policy Board:

The Army Guard and Reserve have only 69 percentand 43 percent respectively of wartime equipmentinventory in dollar value, with huge shortfalls intrucks, armored personnel carriers, and artillerypieces. Many units, if mobilized, would deploy withinadequate or incompatible equipment-includingsome committed to support the Rapid DeploymentForce. 66

The resource manager must also be available toprovide advice to the commander on the economicramifications of fighting the war. With the increasinginterdependence of the world economy, destruction of acountry's economic assets while conducting a campaign isno longer an option. Instead, we must consider theeconomic implications of our military actions: we cannotdestroy the very interests that we were sent to protect.

Planners also need to consider the probability that thenext war may not be a full-scale conventional or nuclear

STRATEGY 53

war. Rather, there is an increased probability of small warsfought with limited objectives. Because such wars will notinvolve the total mobilization of the economy, there willbe a demand for more prudent use of resources. As ourplanners consider the strategies necessary to achieve lim-ited objectives, the objectives may very well have to bealtered if the cost to meet them is too high.

It is now time to turn our attention to defining themission and functions of the wartime resource manager.To do this, we will first look at the current state of control-lership in private industry as a model for what the currentconcept of Army resource management should encompass.

VI. THE ART OF RESOURCEMANAGEMENT

We recognized the need for a wartime comptroller duringthe Vietnam War. It became sharply evident as the warprogressed that the luxury of an open line of credit was notto be the case, partially as a result of Congress armingitself more formidably to defend its constitutional role.Many specialists involved in resource managementbelieved that they would handle the Vietnam War much asthey had operated during the Korean conflict. Since thoseinvolved in accounting controls or budgeting anticipatedthat the funds for the war would be unlimited, there was aninadequate organization base for resource management inthe early days of the buildup. 67

Because the concepts of wartime accountability andcost-effectiveness, as well as the functions of a wartimecomptroller or resource manager, were relatively new,there wasn't much historical precedent to guide perform-ance in Vietnam when the rules changed. Nor was theremuch to learn from Vietnam since the structure put inplace during the war was a patchwork arrangementinstituted under pressure and not completely effective.While the Vietnam experience provided some valuablelessons, it did not establish an appropriate baseline fromwhich to develop a doctrine for wartime resource manage-ment. As a result, the Army did not acquire the experience

55

56 THE ART OF RESOURCE MANAGEMENT

to help it ask the right questions to define the resourcemanagement doctrine problem.

The lack of historical documentation notwithstanding,the requirement for resource management in wartime isgrowing in importance. Moreover, the conduct of the nextwar will be markedly different. The nature of modem war-fare, with its demand for advanced weaponry, sophisti-cated communications, and complex logistical systems,will require a high degree of technical and administrativeskill and expertise in resource allocation. 68

In the absence of a complete and documented histor-ical perspective of the wartime role of the Army resourcemanager, the role and functions of a controller in privateindustry will help define the current state of the art. This isa reasonable point of departure since the legislated require-ment for a comptroller in the Army used as its basis theprivate industry model.

THE CONTROLLER IN PRIVATE INDUSTRYThe term resource management developed gradually

in the Army in the late 1970s and early 1980s. Originatingfrom the comptroller function, the term gained favor afterinclusion of the manpower control function in the ArmyComptroller's office. Resource management helped dis-tinguish the new element of manpower control from theprevious and more limited notion of a comptroller's office.Regardless of the name, the intent was clearly to use theprivate industry "controller" as the model for the Armyresource manager when the function was established afterWorld War 1f.

Private industry's increasing use of a controller afterWorld War I and its parallel application to the Departmentof Defense became more apparent with the introduction ofSecretary of Defense McNamara's program budgets.

* THE ART OF RESOURCE MANAGEMENT 57

Historically, these program budgets were managementcontrol techniques pioneered earlier by DuPont and Gen-eral Motors after World War I. After World War II, anumber of large industrial corporations followed theirexample, including Ford Motor Company, which hiredMr. McNamara and others to revitalize that company'santiquated management procedures.69

To better understand the relationship between the pri-vate industry use of a controller and the application of thisconcept to the Army, let us make a comparison of the twoorganizations and how they operate.

A private sector business is tightly structured and con-tained in a fairly finite universe. The chief executiveofficer at the head is accountable to a board of directorsand, ultimately, to all of the company's shareholders. Inthe interests of seeing regular payout of dividends, theshareholders closely monitor the enterprise's activities toensure the protection of their investments. A great deal ofattention is focused on the president or chief executiveofficer, and results are expected of him within a definedsphere. The corporate controllers are the people the com-pany presidents rely on the most to control the activitiesand provide advice on alternative measures. 70

In the private sector, the primary objective is to real-ize a profit-the higher it is, the more successful the com-pany. Business enterprises operate on the basis ofproducing specific goods or services, marketable items thatmanagement believes can be sold at a profit. Many opera-tions consist of complex, intertwined corporations withdiverse product lines and services. Therefore, the means ofmaximizing profits become more complicated. The realmof determining how to increase profits is fertile ground forprivate-sector controllers to exercise their skills. Private-sector measurement, planning, and control systems are


aimed at maximizing profit. It is impossible, however, fora government to measure its performance in terms ofprofits because the notion of profits does not exist.

There is little question that controllers are key playersin private-sector organizations. They play a pivotal role inmarshalling the available resources for optimum results,and it is most unusual if their scope does not extendbeyond basic control. Most private-sector controllers inter-act closely with the various engineering, product develop-ment, marketing, and manufacturing arms of an enterpriseto develop strategies and product mixes. Certainly, there ismuch to challenge them.

Because the organizational relationships of the Armyare similar to those of a private company, a corollary canbe drawn between the two. In the Army, the board ofdirectors could be considered the Secretary of the Army,the Under Secretary of the Army, and the Chief of Staff ofthe Army. The other element, the chief executive officer,normally a member of the board, is the Vice Chief of Staffof the Any.71 A key member of the staff is the AssistantSecretary of the Army for Financial Management. He, ashis private-sector counterpart, has sole responsibility forfinancial management. 72

THE BOTTOM LINE

A corollary could also be drawn between productlines. Congressmen, as the stockholders, invest theirmoney and expect Army management to support thatinvestment by producing "ready units." So we can defineour product as "ready units." The modifier ready is cru-cial since the units must be ready to defend the country. Ifthey are not ready, they won't sell to the customer-theCommanders in Chief of the unified commands-and theUnited States would not achieve the final objective of

THE ART OF RESOURCE MANAGEMENT 59

winning the war. You could carry this corollary on todescribe the production facilities and suppliers. But theparallel between private industry and the Army eventuallybreaks down because private industry has a "bottom line"and the Department of the Army does not. 73 This distinc-tion, in fact, makes the role of the resource manager in theDepartment of the Army even more challenging than hisprivate-industry counterparts.

El Even without the objective of a bottom line, it is rela-tively simple for the Army to determine how much hasbeen spent, which is perhaps the reason it spends so read-ily. It is much more difficult to determine the resultsachieved from the expenditures made because Army objec-tives are often complex and broad, and we must considerfactors such as regional and cultural matters as well aspolitical and legal ramifications. The private-sector con-cept of effectiveness, expressed in terms of maximizingprofits, is not transferable. Effectiveness in the Army,therefore, must be measured in a different manner.7 4

RESOURCE MANAGEMENT AND WAROne of the obstacles to the development of the comp-

trollership (,:ontrollership) function in the Army is the feel-ing on the part of some commanders that the Army isdifferent and does not lend itself to modern controlmethods. Basically. the problems do not vary muchbetween private industry and the military. There arealways the problems of determining policies, of planningfor future action, of organizing, of controlling costs, ofsupervising inventory, and of planning production. Man-agement employs workers in competition with other firms-they must train and supervise them and check their per-formance; they must purchase materials in proper quan-tities at proper times, and closely control investment ininventories; select, maintain and replace suitable equip-ment; arrange funding and keep it in proper balance. and

IIi

~1

i


finally, they must properly coordinate all factors. Theseare not peculiar to any business; they are common issuesthat form the basis of the management task facing theArmy in peace or in war. But there are some differencesthat we must consider when introducing the private-sectorversion of controllership to the Army:

I. Legislation establishes the basic rules for comp-trollership in the Army, not "generally acceptedaccounting practices" or the rules of an associationas exists in private industry. Legislation is law, andfailure to follow the law could result in personalliability.

2. Resource accountability in military operations tendsto blur comptrollership in the Army. Unlike privatesector counterparts, Army commanders view allassets as available for immediate disposal. Theymay not be interested in the supply status of anothercommand or theater, which could reduce the overalleffectiveness of the Army.

3. Balancing the political process with the require-ments of accountability and cost-effectiveness isdifficult. The private company is only concernedwith the results of its own operation and doesn'thave to worry about the constituent pressuresapplied to politicians.

4. Centralization and decentralization pressures con-stantly ebb and flow in government structures andoperations, making it difficult to apply consistentpolicies. 75

5. The Army must contend with "colors of money,"much like international currency, but here there isno central bank which will allow an exchange.Appropriations are restricted to specific purposesfor which they were approved by Congress.

6. Military money has a termination clause whichexpires at the end of the fiscal year.


CONTROLLINGIn the evolution of the controllership function, it is

understandable that diversity between companies shouldappear. In most organizations, the certificate of incorpora-tion, or bylaws, or resolutions by the board of directors setforth only the general financial duties to be performed; theadditional duties assigned to the controller have no generalbylaws or accepted precedents. They are influenced bysuch forces as the size and complexity of the company,industry practice, government regulations, the personalityand ability of the controller, and the prevailing opinion ofthe chief executive and his associates about just whatshould constitute the job. 76 Perhaps this novel descriptioncaptures the essentials of what a comptroller should do:

The Controller is not the commander of the ship-that is the task of the chief executive-but he may belikened to the navigator, the one who keeps thecharts. He must keep the commander informed as tohow far he has come, where he is, what speed he ismaking, resistance encountered, variations from thecourse, dangerous reefs which lie ahead, and wherethe charts indicate he should go next in order toreach the port in safety. 77

The one constant responsibility of a comptroller,encompassing all of the individual functions, is to providecontrol-to assure that an appropriate and effective controlsystem is in place. This one responsibility, more than anyother, is the foundation for the function of comptroller andapplies equally to both the private and public sectors.

PLANNING

The current thinking is that the basic control authorityof a controller is simply not adequate. Richard L. Fleming,President of Fleming Associates, says:


The emerging Controller is not a green-eyeshadeexecutive who focuses simply on historic financialdata. The new controller is an active participant ordirector of corporate growth, using his or her finan-cial management skills to create new opportunitieson a sound basis. 78

The controller is the individual who acts as an "hon-

est broker" to provide opportunities for new growth. AlanG. Ross, Canada's Assistant Deputy Minister, Finance andAdministration, maintains that the controller must be theindividual who "will challenge or test ideas without vestedprogram interests but to strengthen the case and, therefore,

ultimately to strengthen the program." 79 A controlleractively involved in business decisions has access to allsensitive information and deliberations in progress. Such acontroller has an opportunity to put a stop to ill-conceived,ill-advised, or illegal decisions and actions before they aretaken. A controller not actively involved is not privy tosuch information and can only provide after-the-fact orreactive control.

To fully realize the potential his function holds, the

controller must immerse himself in the corporate planningprocess. Philip B. Johnson, Controller, Tennessee Opera-tions, of the Aluminum Company of America, explains:

Probably no activity is as important or time-consum-ing as that of planning the future course of a busi-ness enterprise. The larger the firm, the morecomplex the business; and the greater the number ofdifferent businesses in which the firm is engaged,the more difficult is the process of coordinating andaccomplishing the activity. Yet the penalty for notplanning is to go the way of the "buggy whip"companies. The Controller is uniquely qualified toprovide the necessary coordination and "tyingtogether" of the various divisional plans,

.. ... .....


quantifying the accumulated impact on the firm as awhole and identifying the conflicts that oftenoccur.80

Planning is not always easy and exciting for manypeople. Preparing reports, analyzing data, auditing, score-keeping, and doing systems work may seem interestingonly to accountants. Activities which are more interesting,therefore, get top priority in people's work schedules inboth time and commitment of energy and attention. Plan-ning deals with the future, and the future is fraught withuncertainty. Dealing with uncertainty is more difficult thanrecording historical events. Planning makes you think!Assumptions must be made, data analyzed, and commit-ments made to achieve certain objectives. It is far easier todeal with activities for which a system has already beendeveloped. It is not sufficient for the comptroller to bemerely a scorekeeper. The comptroller must be sensitive towhat may happen as well as to what has alreadyhappened.

8 '

Based on the current literature about controllership inthe private sector, the controller today must assume moreresponsibility and adopt a more creative approach. Con-trollers must expand their interest beyond the traditionalareas. They should delve into all phases of the company'soperation: the habits of the customers, the financial prob-lems of the community, demography of the business loca-tion, the entire merchandising operation as it relates toprofits. They should see trends long before others andreport these trends to management for their considerationand corrective action. It is necessary now to translate theseideas about corporate controllership into a concept that isuseful for the Army.

VII. THE WARTIME RESOURCEMANAGER

The Army builds the financial and logistic planning andmanpower control processes around the development ofoperational war plans. Such plans are based upon therequirements of the tactical situation to ensure deliveryof the necessary troops and equipment at the time and

place required. The organizational structure prepares aseparate staff element in each aspect of an operationalplan-personnel, intelligence, concept of the operations,and logistics. Only then can financial planners developplans to ensure that the Army obtains the resources insufficient quantity, time, and "color" to carry out theoperational plan. And only when the resource manageris involved in all these functions within the operationalstructure can we deem the planning process complete.

The linkages between the organizational structure andthe resource management process, between the varioustypes of financial and operational plans, and betweenapproved resources and program results, confront the

Army resource manager with a number of importantwartime responsibilities. To meet these responsibilities,

the resource manager must ensure that an appropriate andeffective control system is in place to execute theoperational plan.

65

66 THE WARTIME RESOURCE MANA -tER

MAKING THE ORGANIZATION WORK

A large, complex organization such as the Armyneeds a rigorous management control system to ensure thateach staff element performs its tasks-that is, a controlsystem to make the organizational structure accountablefor the processes it performs. Specifically, the G4 isresponsible for logistics as part of the organizational struc-ture. The G4 now needs some means to determine if theprocess of developing the requirements for and deliveringsupplies to the troops is working. This cross-checkrequires that the control system link the organizationalunits into a clearly identifiable chain of accountability,ensuring that those who are delegated authority andresponsibility can be held accountable for their actions tothose who have conferred these powers upon them in thefirst place. Consequently, comptrollers, in concert withother members of the staff, can play a key role in thedesign of the organizational structure, since the organiza-tion cannot function efficiently without the structure itselfbeing well designed. 2

Generally, the structure within the military is wellestablished. Its organizational chain of command isdefined, the communications networks are spelled out, andcoordinating points are carefully planned. But sometimesindividual responsibilities-or processes-are not clear,for example, local procurement policy. In World War Ifthe Army did not assign the local procurement policy toany organizational entity so it did not work well. With themove to joint and combined warfare, involving severalmilitary departments and many allies, the structurebecomes even more vague. Even armies of the NATOalliance will not be fighting with the same doctrine, tac-tics, organization, and weapon systems. Therefore, a care-fully studied "systems approach" to responsibilities and

THE WARTIME RESOURCE MANAGER 67

organizations is a paramount requirement. Each staff ele-ment is responsible for designing its individual organiza-tion, but there must be an individual responsible forensuring that all organizations and responsibilities are inte-grated and that controls are in place to ensure an integratedoperation.

Today in Korea the Army's resource managers facejust such a challenge: a collage of command and controlorganizations which have been in place for over 30 years.During the Korean War, the allied forces used trial anderror with limited success to improve the command struc-ture. Korean Brigadier General Taek- Hyung Rhee claims,"Had the US been more willing to use the South's poten-tial to mobilize forces and provide arms for these forces touse, as she had with UN units. ... there would be now, atleast, no direct threat from the North to Seoul."" 3 Brig-adier Rhee, in talking about the next war, goes on to say,"Certainly there will be no time to reorganize, to stream-line command structures, or to insure responsiveness ofcommand. A heavy North Korean attack could conceiv-ably reach Seoul while commanders try to sort out respon-sibilities and reorganize as necessary."

The preceding example clearly shows a pressing needfor process-structure alignment. Such an alignment by thewartime resource manager ensures that the organization isproperly constructed and that specific responsibilities areassigned to specific organizations. After he establishes thestructure the resource manager turns his attention to theprocesses that exist within the structure: the establishedprocesses provide the controls necessary for the com-mander to ensure the desired result is achieved or, if not,to determine what corrective actions can be taken. Theresource manager develops a system of controls to providethe commander the information needed to make decisionswithin the established processes.

68 THE WARTIME RESOURCE MANAGER

THE HONEST BROKERAt this critical juncture, the resource manager can

now become an honest broker. Because comptrollers haveno program responsibility, they can remain aloof from thepartisan arguments often offered by other staff elementsand, instead, offer the commander an objective evaluation.It is in this realm that the Army resource manager movesbeyond his conventional "bean-counting" mindset andadopts a perspective much closer to that of the controller inthe private sector discussed in chapter VI.

The resource manager's most artful role will be thatof an objective adviser who can enhance the operationaleffectiveness of his organization by providing systematicand objective scrutiny. In a previous reference (p. 62) tohis article, "A Prognosis for the New CFO," I quotedRichard Fleming's statement that resource managers can-not be green-eyeshade executives who focus simply on his-torical financial data.84 This point bears repeating here.Indeed, resource managers must retain a broad perspectiveof the entire operation while being willing to go down inthe trenches where the action is. The resource manager isalways an active participant, using his financial manage-ment skills and personal involvement to create newopportunities.

In fulfilling the role of adviser, and as a member ofthe primary staff, the resource manager can be an activeparticipant in policy development, rendering opinions onpolicy, procedures, and issues generated from all activitieswithin the command-yes, even to the extent of evaluatingwar plans. Another important role will be to questionwhether specific proposals are consistent with policy andto determine the total effect proposals will have on thecommand's resources. The resource manager's final rec-ommendations should become an essential element of all


decisions taken by commanders, since the resource man-ager obtains the resources required to support the proposal.

For example, the G4 in a campaign is responsible forobtaining replacement tanks for those that have beendamaged or destroyed. The G1, the personnel officer, onthe other hand, is responsible for obtaining replacementcrews. Each of these staff elements tends to operate inde-pendently to accomplish its mission. In situations like this,the resource manager can provide a system of controlswhich ensures that both the tanks and the crews arrive con-currently in time to fight the next battle and accomplish theoperational mission.

While the foregoing example suggests a necessaryfunction of resource managers in a conventional, highintensity war, they can also perform vital tasks at the otherend of the spectrum of conflict discussed in chapter IV. InGrenada, for example, the XVIII Airborne Corps Comp-troller developed the option of locally contracting mealsfor the troops rather than shipping the food--and the sol-diers required to prepare it-from the United States. Thisalternative not only saved valuable resources, but wasmore responsive to the commander's needs.

The advisory role of the resource manager, however,has two seemingly contradictory responsibilities. On onehand, the resource manager is responsible for providingassistance in the decisionmaking process. On the otherhand, resource managers also are responsible for the integ-rity of the control system. In order to discharge the secondresponsibility of checks and balances, they are expected toretain a sense of objectivity and independence from theother staff elements. Emphasis on one makes effective per-formance of the other more difficult. It is analogous to theresource manager assisting the G4 in correcting a supplyshortfall while at the same time being critical of the G4 for


failure to maintain control of the stock in question. Strongresource managers can, however, overcome this apparentdilemma and remain actively involved while retainingobjectivity. The key lies in the development of certain per-sonal qualities and interpersonal communication and otherskills.8 5 Due to the potential contribution resource man-agers may provide, it is important that they be allowed toperform both functions.

Thus far I have shown the essential contribution thatthe resource manager can provide within the structural andprocedural framework of planning for and planning duringwar. But how will the resource manager actually assist thecommander as he develops the plan and help him obtainthe resources needed to support it?

THE 'A's' OF RESOURCE MANAGEMENTA starting point for answering this question has

already been provided by Lieutenant General Max W.Noah, former Comptroller of the Army. On 15 August1985 he announced a new operational and organizationalconcept to all Army resource managers. General Noahstated, "The change is evolutionary and very necessary tothe future success of the Army." The concept envisioned amore active role for the resource manager-the same kindnow advocated in the private sector-with emphasis onproviding improved services to leaders and commanders atall echelons in programming, budgeting, and execution ofthe resource program, improved productivity programs,and a standardized functional approach to installation man-agement. In offering his proposals, General Noah alsostarted the search to define the role and functions of aresource manager, a definition which has been absent, in apurely doctrinal sense, from the literature of the Army.

As part of this concept, General Noah identified theresource management process. He indicated it was aneconomic process involving:


1. Analysis of planned priorities.2. Allocation of resources according to the pri-

orities, generally considered dollars andmanpower.

3. Accounting for resources with two systems,one that provides decision support and trackingcapability for the program-budget function,and another that performs accounting for fiscalcompliance required by statutes.

4. Audit of the results of the process.

In this announcement, General Noah challenged resourcemanagers to vigorously pursue these parts of the process,the "Four A's" of resource management (see figure7:1).86

Late in December 1986, Brigadier General Richard J.Mallion, Director of Operations and Support in the Officeof the Comptroller of the Army, continued the dialogueand development of the functions for resource managers.Like General Noah, General Mallion also offered "FourA's" of resource management; however, General Mallioncombined the auditing process with the analysis processand added an acquisition function (see figure 7:2).87

General Mallion now defined these A's of resourcemanagement as:

I. Acquisition The process of obtaining theresources to support the soldiers at the lowestechelons.

2. Allocation The process of communicating theresource decisions to the commands reportingto Headquarters, Department of the Army.

3. Accounting The process of capturing manage-ment information to support the resource anal-ysis that must be performed.


4Q;€a

tt

E

c 4

__ -

C C° i!

E

0

.. 4

om

Sp -

o 4

41 2 S4 N .~z

o ;0%


Source: Richard J. Mallion, "A Resource Management Vision." Resource ManagementJournal. December 1986. p. 20.

Figure 7:2-The Modified Four A's of Resource Management

4. Analysis The process of defining the innermeanings of data and presenting it all in someformat which the decisionmakers understand.

The functions proposed by General Noah and modi-fied by General Mallion provide a solid foundation fordeveloping the wartime functions of the Army resourcemanager, but the final, essential element-the keystone ofthe process-is missing. The foregoing functional list.therefore, requires the addition of a fifth "A" to capturethe advisory role which the resource manager must


perform if he is to meet the new fiscal responsibilitiesfacing the Army.

A WARTIME RESOURCE MANAGEMENTMODEL

Combining the four A's of resource managementdeveloped by Generals Noah and Mallion with the fifth Aof advice produces a resource management model that canguide the resource manager in performing his expandedwartime role (see figure 7:3). The model will adopt theconcept of structure and process as applied to the organiza-tion earlier in this chapter. The structure will contain spe-cific functions of the resource manager, whereas theprocess will be the connection of the functions with eachother, as discussed next:

Acquire

One of the most serious problems within the Army isthe complete independence of the planning function inrelation to the budgeting function. There is one primaryreason for this situation: separation of these functions wasfeasible when the Army was small or assumed an open lineof credit during wartime. However, as was discussed inchapters I and II, this condition no longer exists. We canno longer expect an uncontested open line of credit in ourfuture wars. It is necessary to constrain fiscally our warplans; the simple fact is that it is now mandated in theGoldwater-Nichols Department of Defense ReorganizationAct of 1986, as discussed in chapter 1. Therefore, in theconstruction of this resource management model, the func-tion of planning has been included in the resource acquisi-tion process.

After completing the plans one of the most importantfunctions of the resource manager is to acquire theresources to support the plan. This is the first step in the

I

w


RESOURCE MANAGEMENT MODELAdvise

, l l1

Analyze(Audit)

Acquire Allocate Account

Pay Autormt.

f~-7IIPay

Figure 7 ,3 -Resource Management Model


resource management process. The resource manager isresponsible for coordinating the general management proc-ess, integrating the program and the budget, and defendingthe stated requirements contained in the program or thebudget. General Mallion emphasizes the importance of theacquisition responsibility this way: "It becomes clear thatif it's unsuccessful, it makes all the rest of this tresourcemanagement] useless.' '8

During war, the resource acquisition process takes ona different complexion. The conduct of our future warswill be quite different than that of wars in the past, as dis-cussed in chapters IV and V. We will be involved in jointand combined operations which will require that theArmy's personnel and logistics systems tie in with those ofthe other services and other countries. At this time we donot know the source of the resources required for all of theforces involved to support the next war. Therefore, aresource manager, as a permanent member of the com-mander's staff, sorts out the alternatives. This critical rolecannot be left to someone who is uninformed about theintricacies of resource acquisition. The problem is not sim-ply the development of a budget and obtaining an appro-priation from Congress. It may involve a cost-sharingprocess with our allies. These international arrangementsrequire a sophisticated understanding of the conduct of thewar and the cost incurred.

AllocateFollowing the acquisition of the resources, we allo-

cate them to obtain the maximum effect in accomplishingthe mission set by the commander-whether the choice isbetween two divisions with different missions in the sametheater during a conventional war or between a low inten-sity war in one area and a theater where only deterrence isthe mission. The artful aspect of the allocation process is


to provide one commander with all that he may need toachieve victory but, at the same time, not to hamstringother commanders to such an extent that they cannot per-form their missions.

With the advent of coalition warfare, the allocationprocess becomes even more difficult than just allocatingresources among competing US requirements. Resourceswill have to be allocated to allies who are participating inthe conflict as partners with the United States. Some alliesmay take the opportunity to improve their country'seconomic well-being rather than devote all of the resourcesreceived from the United States to the war effort. Thecommander must be conscious of this possibility andestablish the controls necessary to preclude such a diver-sion of assets.

A subset of the allocation process is the paymentprocess. Given the limited air and sea lift capabilitiesavailable in the United States for supplying our forces inmany overseas areas, we will have to resort to consider-able local procurement. If the payment process does notwork well-to the satisfaction of the supplier-the sourceof supplies will dry up quickly. It is important to note thiscritical function as part of the resource allocation process.The resource manager is the individual responsible forpaying the bills.

AccountAfter we have allocated the resources we must verify

the transactions-the function of accounting, and one thatis receiving greater and greater attention. Congress, tofulfill the role mandated by the US Constitution to raiseand support the Army, is demanding more and moreaccountability from our commanders-even during war-time. All indications are that Congress intends to continueto fulfill this responsibility. During the Grenada operation,

.. .. .....


Congress insisted on a complete accounting of costs beforethey provided the resources. Eventually, the Army wassuccessful in obtaining the additional funds for the mis-sion, but only after a full accounting was made. Had thesefunds not been made available, the transfer of Armyresources to the Grenada operation would have seriouslyaffected the readiness of the Army in many other regionsof the world.

The traditional role of accounting includes a varietyof tasks such as implementing the departmental accountingpolicy, carrying out accounting functions to comply withlegislation, meeting the requirements of commanders, andmaking periodic summary statements. This traditional rolealso includes responsibility for the protection of publicproperty through the implementation of an effective systemof internal controls. However, this is not enough to justifyand successfully implement a wartime comptroller con-cept. This aspect of accounting is, for the most part, exter-nally oriented. An expanded role is envisioned to provideresponsive internal controls for the commander.

This expanded role for accounting will provide moretimely and responsive information and feedback, enablingcommanders and staffs to reach more timely and accuratedecisions. In decisionmaking, accounting can help thecommander identify trends and enable the staff to makeprojections. Commanders need an interpretation of theresults of past decisions, and they most assuredly need ananalysis, in financial terms, of potential results of probablecourses of action. This aim implies that the financial infor-mation system must be an integral part of all of the sys-tems supporting the command-the logistics system, thepersonnel system, and the planning system, To participatewith the rest of the staff in planning future missions, theresource manager must direct his activity toward whatshould be rather than what has been. 89


One of the most important tools of the trade ofaccounting is automation; therefore, we identify it as animportant subset of the accounting function. Sinceresource managers are responsible for providing informa-tion to the decisionmakers to facilitate the decision pro-cess, they are involved in designing managementinformation systems. The resource manager ensures that asystem of controls is established that will prevent aduplication of effort, and that the various systems in use inthe Army are compatible.

AnalyzeThe hub of the resource management process is anal-

ysis. It is this function that the resource manager can bestperform. With special training in analytical techniques, theresource manager can evaluate the many options providedto a commander and provide him an objective opinion.The resource manager will draw from the data providedfrom the accounting systems, interpret the data, andprovide advice to the commander. In fulfilling this role,the resource manager must pay particular attention to thefinancial implications of various proposals put forth, andstrive to produce an objective, internal study of the meritsof various proposals.

Analysis also includes auditing, but not just internalaudits. Instead, the resource manager should focus onmanagement audits and operational audits. Managementaudits examine and appraise organizational goals and ana-lyze the adequacy or inadequacy of the decisions andactions taken to achieve them. Operational audits focus onthe organization rather than the management. Operationalaudits are an organized search for efficiency-related prob-lems. 90 Properly performed, such audits provide anotheropportunity for the resource manager to provide soundadvice and recommendations to the commander.


AdviseIn performing each of the functions which comprise

this model, the Army resource manager has an implicitresponsibility to advise his commander and to take anactive role with the other staff principals in shaping thedecisions which will affect the course of any future con-flict. From this implicit responsibility derives the explicitfunction, the keystone of the model, which the resourcemanager must perform. Only by providing informed, accu-rate, timely advice and recommendations can the resourcemanager ensure that the Army will be able to perform itsmission effectively within the fiscal constraints it will facein the future.

TOWARD A DOCTRINE FOR RESOURCEMANAGEMENT

The preceding functional model was developed basedon the forces that necessitate an expanded role for the war-time Army resourze manager. These forces, outlined in theearlier chapters, can be summarized in the followingpropositions:

I. The cost of undertaking a military action is nowas important as the reason or objective for under-taking such action.

2. In the foreseeable future, limited wars are morelikely than conventional wars. Limited warsentail limited objectives and a correspondinglylimited application of military force. Thus, wemust manage resources all the more carefully.

3. The increased likelihood of joint and multina-tional military operations, particularly in regionswhere no US forces are deployed forward, willnecessitate meeting Army requirements fromoutside traditional Army sources.

4. As always, commanders are ultimately respon-sible for the success of any military action, but


now they are also accountable for the resourcesthey employ.

A single concern dominates each of these propositions,a concern which, not unexpectedly, is one of the principlesof war: economy of force, or, in this case, economy ofresources. With this in mind, I venture the following in aninitial attempt to develop a doctrine for wartime resourcemanagement:

1. Fiscal constraints must be an essential element inthe development of war plans. Common sensewarrants it; the Goldwater-Nichols Act mandatesit.

2. The cost of undertaking a military action isquantifiable. We are obligated to develop themost effective yet least costly course of action.And-a corollary-as its cost is reduced, thelegitimate employment of military force becomesa more feasible alternative for pursuing limitedobjectives in the national interest.

3. On the battlefield, innovative resource manage-ment must become a combat multiplier. Theresource manager can conserve force costs byefforts to balance operational plans with resourceplans and sustain the force by developing newways and means to obtain and provide resources.

4. The resource manager must assist the com-mander and the command in their efforts tomaintain accountability and protection for theassets and resources employed. This will enablemore accurate determination of requirementsduring the conflict as well as afterward when thebill comes due.

5. To accomplish the foregoing, resource managersneed to advance beyond their traditional roles


and become active, aggressive, innovative mem-bers of their commanders' staffs, willing-andcompetent-to advise their commanders on allaspects of resource management.

The doctrine proposed above is only a "first cut," but acarefully considered one. The last element, in particular, mayseem provocative; perhaps it's not even an element of doc-trine but rather a consequence of the doctrine. I leave it thereas the central issue in the debate which I hope will follow.The need for this debate seems clear.

At the end of Chapter 1, 1 suggested that someday wemight find ourselves fighting a war we can't pay for. Butperhaps the problem is something more along these lines:someday we might find ourselves facing a war that we aren'twilling to pay for. Congress, not the military, makes thatdecision. But we can influence such decisions by innovativewartime resource management, by carefully balancing thesize-and, therefore, the cost--of the force employed withthe objective at hand. Remember, the problem with Grenadawas not the objective set by the administration but the clamorafterward that too large a force and too many resources weredevoted to the operation. In this respect, then, the resourcemanager can perform a vital service by trying to prevent suchimbalances. Otherwise, the country might, someday, have alegitimate national interest to protect, but our inability to jus-tify it financially will preclude us from taking action, orworse, prohibit us from completing a task once begun.

NOTES

1. James R. Schlesinger, The Political Economy of NationalSecurity (New York: Frederick A. Praeger, 1982), p. 113.

2. Leon S. Reed, Brian Dickson, and Francis P. Hodge,Resource Management: An Historical Perspective (Arlington:Analytic Sciences Corporation, 1984), pp. 3-14.

3. Martin van Creveld, Supplying War: Logistics from Wallen-stein to Patton (Cambridge: Cambridge University Press, 1977),pp. 232-35.

4. US Department of Commerce, Bureau of the Census, Statisti-cal Abstract of the United States 1942 (Washington: GovernmentPrinting Office, 1943), p. 176.

5. James E. Hewes, Jr., From Root to McNamara: Army Orga-nization and Administration, 1900-1963 (Washington: Govern-ment Printing Office, 1975), p. 273.

6. John D. Millett, The Organization and Role of the Army Sen'-ice Forces (Washington: Government Printing Office, 1954),p. 383.

7. Leonard B. Taylor, Financial Management of the VietnamConflict (Washington: Government Printing Office, 1974), p. 4.

8. Amos A. Jordan and William J. Taylor, American NationalSecurity: Policy and Process (Baltimore: Johns Hopkins Univer-sity Press, 1981), p. I11.

9. Taylor, Financial Management of the Vietnam Conflict,p. 18.

10. Jordan and Taylor, American National Security. p. 116.

83

84 NOTES

I1. Taylor, Financial Management of the Vietnam Conflict,

p. 24.

12. Ibid., p. 28.

13. Stephen J. Cimbala, ed., National Security Strategy;Choices and Limits (New York: Praeger Special Studies, 1984),p. 52.

14. The President's Blue Ribbon Commission on Defense Man-agement (The Packard Commission), Final Report to the Presi-dent, p. 5.

15. Ibid., p. 1I.

16. US Congress, Conference Report, Goldwater-NicholsDepartment of a Defense Reorganization Act of 1086, Rept.

99-824, 99th Congress, 2d Session, 1986, p. 108.

17. Carl von Clausewitz, On War, translated by MichaelHoward and Peter Paret (Princeton: Princeton University Press,1976), p. 605.

18. US Constitution, Article 1, Section 8.

19. Logistics Management Institute, "Congressional Commit-tees and Subcommittees Invoived in the Defense Acquisition

Process," Bethesda, MD, 25 November 1985.

20. US Congress, Senate, Gramm-Rudman-Hollings and the

Congressional Budget Process, SI Prt. 99-119, 99th Congress,Ist Session, 1986, p. 1.

21. Jordan and Taylor, American National Security. p. 112.

22. Ibid., p. 119.

23. The World Almanac & Book of Facts 1975 (New York:Newspaper Enterprise Association, 1974), p. 96.

24. The World Almanac & Book of Facts 1985 (New York:Newspaper Enterprise Association, 1985), p. 155.

25. Robert D. Clark, Andrew M. Egeland, Jr., and David B.Sanford, The War Powers Resolution (Washington: National

Defense University Press, 1985), p. 5.

26. Clausewitz, On War, p. 605.

NOTES 85

27. Richard Halloran, "Soldiers and Scribblers: A Common

Mission," Parameters, Spring 1987, p. 27.

28. Hewes, From Root to McNamara, p. v.

29. Peter Paret, ed., Makers of Modern Strategy (Princeton:Princeton University Press. 1986), p. 217.

30. Walter Rundell, Military Money: A Fiscal History of the

U.S. Army Overseas in World War I1 (College Station: TexasA & M Press, 1980), p. 3.

31. Sun Tzu Wu, The Art of War, trans. by Lionel Giles(Harrisburg, PA: Military Service Publishing Co., 1953), p. 96.

32. William L. Hauser, "Careerism vs. Professionalism in the

Military," Armed Forces and Society 10 (Spring 1984): 450.

33. Alan S. Milward, War Economy & Society 1939-1945 (LosAngeles: University of California Press, 1979), p. 105.

34. Hewes, From Root to McNamara, p. 94.

35. Millett, The Organization and Role of the Army ServiceForces, p. 350.

36. Rundell, Military Money, p. 4.

37. Harry M. De Witt, Jr., Comptrollership in the Armed Forces

(Washington: Institute of Engineering, 1952), p. 21.


39. Ibid., p. 180.

40. De Witt, Comptrollership in the Armed Forces, p. 21.

41. Spelling of comptroller developed originally as an error intranslation from the original Latin word. The more correct spell-

ing, controller, is now commonly used in industry. The termcomptroller is perpetuated merely by custom and tradition.


43. US Congress, Senate, Progress on Hoover Commission Rec-

ommendations, S. Rept. 1158, 81st Congress, Ist Session,

1949, p. 167.

86 NOTES

44. Hauser, "Careerism vs. Professionalism," p. 451.

45. US Congress, Conference Report, Goldwater-NicholsDepartment of Defense Reorganization Act of 1986, p. 97.

46. US Congress, Senate, Committee on Armed Services,Defense Organizatior: The Need for Change, S. Prt. 99-86, 99thCongress, 1st Session, 1985, p. 429.

47. Henry E. Fccles, Logistics in the National Defense (West-port: Greenwood Press, 1959), p. 30.

48. Tim Carrington, "Military's Dependence on Foreign Sup-pliers Causes Rising Concern," Wall Street Journal, 24 Mar1988, p. 1.

49. Lester C. Thurow, The Zero-Sum Solution, 1985 (NewYork: Simon & Schuster, 1985), p. 333.

50. John Naisbitt, Megatrends (New York: Warner Books,1984), pp. 53-60.

51. Howard V. Perlmutter and David A. Heenan, "Cooperate toCompete Globally," Harvard Business Review, March-April1986, p. 136.

52. Robert C. Kiste, "Economic Security Issues in the South4 Pacific," in Economics & Pacific Security (Washington:

National Defense University Press, 1987), p. 181.

53. US Department of Defense, United States Military PostureFY 1988 (Washington: Government Printing Office, 1987),

4 p. 13 .

54. Stuart Harris, "The Implications of Changing EconomicStructures for Pacific Basin Security," in Economics & PacificSecurity, p. 19.55. Paul F. Gorman, "Military Instruments of Containment," inTerry L. Deibel and John Lewis Gaddis, eds., Containment:Concept and Policy, Vol. I (Washington: National Defense Uni-versity Press, 1986), p. 223.

56. US Department of Defense, Annual Report of the Secretaryof Defense to the Congress, for the Fiscal Year 1987 (Wash-ington: Government Printing Office, 1986), p. 27.

NOTES 87

57. Ibid., p. 8.

58. Harlan Ullman, "Managing the Potential for Conflict," inJohn J. McIntyre, ed., The Future of Conflict (Washington:National Defense University Press, 1979), p. 154.

59. US Department of the Army, Field Manual 63-4, CombatService Support Operations-Theater Army Area Command,September 1984, p. 9-1.

60. Cimbala, National Security Strategy, p. 108.

61. US Department of the Army, Office of the Chief of MilitaryHistory, The Sinews of War: Army Logistics 1775-1953 (Wash-ington: Government Printing Office, 1970), p. 678.

62. Millett, The Organization and Role of the Army ServiceForces, p. 51.63. Taylor, Financial Management of the Vietnam Conflict, p.84.

64. US Department of the Army, Field Manual 100-5, Opera-tions, May 1986, p. 163.

65. Taylor, Financial Management of the Vietnam Conflict,p. 65.

66. W. D. McGlasson, "Combat Readiness Suffers," in BennieJ. Wilson 1II, ed., The Guard and Reserve in the Total Force(Washington: National Defense University Press, 1986), p. 150.

67. Taylor, Financial Management of the Vietnam Conflict,p. v.

68. Sam C. Sarkesian, "Leadership and ManagementRevisited," The Bureaucrat, Spring 1985, p. 4.


70. George McIntyre, "The Challenge of Comptrollership inGovernment," CA Magazine, January 1985, p. 75.71. Glenn E. Hammond, "Managing the Army as a Business,"Resource Management Journal 7 (October 1986): 6.

72. US Congress, Conference Report, Goldwater-NicholsDepartment of Defense Reorganization Act of 1986, p. 148.

88 NOTES

73. Hammond, "Managing the Army as a Business," p. 6.

74. Jacques C. Leger, "The Departmental Comptroller,"Optimum 14: 48.

75. G. McIntyre, "The Challenges of Comptrollership in Gov-ernment," p. 76.

76. James D. Willson and John B. Campbell, Controllership:The Work of the Managerial Accountant (New York: John Wiley& Sons, 1981), p. 12.

77. J. B. Heckert and J. D. Willson, Controllership-The Workof the Accounting Executive (New York: Ronald Press, 1952),p. 4.78. Richard L. Fleming, "A Prognosis for the New CFO," TheMagazine for Financial Executives, September 1986, p. 31.

79. Alan G. Ross, "Where is Comptrollership in Government?"CA Magazine, September 1984, p. 90.

80. Philip B. Johnston, "Controllership in a Changing World,"Survey of Business 17 (Fall 1981): 15.

81. G. McIntyre, "The Challenges of Comptrollership in Gov-ernment," p. 78.

82. Ross, "Where is Comptrollership in Government?" p. 89.

83. Taek-Hyung Rhee, US-ROK Combined Operations (Wash-ington: National Defense University Press, 1986), p. 12.

84. Fleming, "A Prognosis for the New CFO," p. 31.

85. Vijav Sathe, Controller Involvement in Management(Englewood Cliffs, NJ: Prentice-Hall, Inc., 1982), p. xvii.

86. Max W. Noah, "COA's Organizational and OperationalConcept," Resource Management Journal, Summer 1985, p. 2.

87. Richard J. Mallion, "A Resource Management Vision,"Resource Management Journal, December 1986, p. 19

88. Ibid., pp. 19-21.

89. R. Vander Weele, "An MBO Perspective on Controller-sh4'," Management Accounting, August 1976, p. 14.

A

NOTES 8990. John P. Fertakis and Bruce R. Budge, "'Management Serv-ices by the Controller's Department," Managerial Planning,May-June 1974, p. 33.

IndexAccounting, of allocated Asia. See individual coun-resources during war- triestime, 71, 77-79 Automobiles, global part-Airland battle doctrine, 49 nerships in manufactureAllocation, of resources dur- of, 33, 34-35, 36

ing wartime, 71, 76-77Analysis, and audits of "Bottom line," privateresource management industry and militaryprocessing during war- in es n resourcetime, 79 differences in resource

Appropriation. See Budget; maragement's, 58-69Economics Brazil, 32

Army, US Budgetcivilian experts drafted to congressional fractionaliz-

fill resource manage- ation on defense mattersment void in, 20-21 and President's, 14-15comptrollership establish- current congressional proc-ment by, 21-25 ess and input into thefactors to balance in man- President's, 15-16aging resources for, development during World59-60 War 11, 5-6, 48foreign-made parts used increased media and inter-by, 31, 33 nal scrutiny of theinterwar period's strength, DOD, 17-18of, 4-5 military leaders' pastresource management in impact on the defense,Vietnam and Grenada, 3.4-850-51

public support for Vietnamresource management par- involvement and, 8-9allel between private See also Economicsindustry and, 56-59Army National Guard, corn- Carter, Arthur H., 21bat support capability China, unresolved bound-of, 51-53

aries around, 38Army Reserve, combat sup- China Relief Expeditionport capability of, 51-53 (1900), 46

91

92 INDEX

Clausewitz, Carl von, I I Congressional Budget Office,Colbert, Jean Baptiste, 20 formation, purpose, and

Cold War, defense appropri- strengthening of, 15ations during. 7-8 Congressional Research Serv-

Competition in Contracting ice, 15Act. 33 Containment, concept as basic

Comptroller US defense strategy,as a broker and advisor to 43-45

the commander. 68-70 Conti, Louis J., 52organizational structure Controller. See Comptioller

design input by, 66-67 Cooperation, internationalresponsibilities of, 61-63 national security policyUS Army's establishment founded on premise of,

of, 21-25 46-49Congress, US See also Interdependence

accounting for allocated Cuba, 7resources by, 77

cooperation with Execu- Debt, external, Mexican-tiverancon military United States manufac-tive Branch o turing firms' barteringcosts by, 7-8 oeain o amn

current budget process of, operations for payment15-16 of, 37-38

hostility toward a cen- Department of Defense, US

tralized military budget (DOD)

in, 6 implications of new

interdependence between budgetary process on, 16

security, domestic increased media and inter-

issues, and economics nal scrutiny of appropria-

realization by, 13-15 tions for, 17-18

post-Vietnam era resource Vietnam-era spending cuts

management perspective by, 8-9

of, 26-27 See also Army, US; United

power fractionalization States Department of

concerning defense mat- Defense Reorganization

ters in, 14-15 Act (1986), future ArmyCongressional Budget and resource management

Impoundment Control and, 10-11, 26-27, 74,Act (1974), 13, 15 81-82

INDEX 93

Deterrence General Accounting Office

resource management pol- (GAO), 15

icy and future of, 51-53 General Motors, 57

US strategy of, 43-45 Goldwater-Nichols Depart-

Dupont de Nemours & Com- ment of Defense Reor-pany, E.I., 57 ganization Act of 1986.

See Department ofEconomics Defense Reorganization

global interdependence of, Act31-42 Greece, influence on US pol-

hydrogen bomb develop- icy of political trends in.ment and, 6-8 47

of modern warfare, 4, Grenada, resource manage-5-11, 45, 48-53, 80-82 ment during US opera-

resource management tion in, 50-51, 69,

advice on war fighting, 77-78, 8252-53

See also Budget Haislip Board, 22Eisenhower, Dwight D., History

Army comptroller views lack of administrative, 19of, 23, 24 of material rewards to the

Europe. See individual coun- successful military, 4-5tries of twentieth century war-

Fleming, Richard L., 61-62, time budgets, 3, 4,

68 5-11, 45, 48-49, 55,

Ford Motor Company, 67 56-57

Formosa, unilateral defense Hoover, Herbert, 25

spending and the caseof, 7 Industrialized countries

Four A's" giving over to Third World

modified version of, 73-74 countries industrial tasksof resource management, formerly done in, 32-33

70-73 See also individual coun-

France, Revolutionary War tries

alliance with, 46 Interdependence

Freedom of Information Act, between military strategy

resource management and resource manage-

impact of, 18 ment, 3-4, 47-53, 80-82

94 INDEXof global automobile man- "A's" of wartime, 70-74ufacture, 33, 34-35 effectiveness measurementglobal economic, 29-42 differences between pri-Italy, influence on US policy vate sector and military,

of political trends in, 45 58-59Japan functions of, 3-4shipbuilding trends in, 32 interdependence of success-

unresolved boundaries ful military strategy and,around, 38 3-4, 47-53, 80-82Jo un, 3i Black of enthusiasm in theJohnson, Philip B., 62-63

Joint operations, resource miltar fmanagement function problems during Vietnamin, 49-51 and Grenada conflicts,50-31

Korea techniques and skillsresource management and required in, 55-63organizational structure Manager, resourcein, 67 functions of a, 3-4unresolved boundaries fundamental skills neededaround, 38 by US Army, 27

job description and specialLatin America. See individ- factors for US Army,ual countries 59-60Legislation. See individual wartime duties and respon-statutes sibilities of, 65-82Linkage. See Interdepend- Media, trends in defense-ence; Partnerships related reports by, 17-18Loughry, Howard, General, Mediterranean Sea, US21 deployment in. 45

Mexico, debt servicing by,McNamara, Robert, defense 37-38budgeting and, 7, 56-57 Milward. Alan, 20Mallion, Richard J., resource Modelmanagement concept of, private sector's resource71-74, 76 management as modelManagement, resource for future Army, 53additional inputs into wartime resource manage-Army, 26-27 ment, 74-81

INDEX 95National Security Act, 1949 Planning

amendments to, 25-26 a doctrine for wartimeNew York Times, 18 resource management,Noah, Max W., rerource 80-82

management concept of, resource manager's par-70-74 ticipation in 61-63, 76Nuclear weapons, economics Seeiatio ing61-63,of, 6-8 See also Management,

resource; Policy; Strat-Office of Technology egy

Assessment (OTA)--US PolicyCongress, 15 containment as US

Officer Personnel Manage- defense, 43-45ment System, 26 current and future US"Offset" financing, 37-38 national security, 43-53

Oil future US resource man-prices and Mexican debt, agement, 51-5337-38 suggestions to develop

prices influencing offshore effective, efficient war-territorial disputes, 38 time resource manage-ment. 80-82

P a c k a r d , D a v id , 1 0 S e e a s S r eSee also StrategyPackard Commission, find- President's Blue Ribbonings and recommenda- Commission on Defensetions of, 10, 14MaaentSePck

Partnerships ard Commission.strategic issues and global Private sector

strategic, 36See also Interdependence controller's job description

Pauley, Edwin C., 22, 25 in. 56-59Personnel modeling military resource

resource management and management on, 53-58post-Vietnam reduction Public opinionin, 9 on military appropriations,

US Army interwar level 5, 8-9of, 4-5 on the war in Southeast

Philippines, the unresolved Asia, 13-14boundaries around, 38 Pyle, Ernie, 17

96 INDEX

Resources Tacitus, Publius Cornelius,acquisition during wartime 20

of, 3-4, 71, 74-76 Tack-Hyung Rhee, 67deployment trends of US Taiwan, unresolved bound-

military, 44-51 aries around, 38obtainability of major war Third World

fighting, 42 economic growth in someRoss, Alan G., 62 countries of, 32-33Royall, Kenneth. Secretary See also individual coun-

of War, 23 tries

Somervell, Brehon, General, Tonkin. Gulf of. unilateral

budget preparation by, 6 defense spending in the

Spain case of, 7

influence on US policy of Training, lack of militarypolitical trends in, 45 resource management.

shipbuilding increase by. 32 19-20"Spectrum of conflict," Turkey. influence on US pol-

resource management icy of political trends in.and, 38-42 47

Strategyinterdependence of United States (US)

resource management debt payment in barterand military, 3-4, arrangement between47-53, 80-82 Mexico and. 37-38

resource management con- increased resource man-tributions through agement planning foradvice toward warfare, "limited" wars by,79-81 40-42

US national security, recruitment of business-43-53 men into Army during

See also Policy World Wars, 20-21Sun Tzu Wu, 20 reliance on foreign sourcesSweden, shipbuilding trends of minerals by, 29, 30

in, 32 shift from self-sufficientSymington, Stuart, Senator, nation by. 32

Vietnam war cost con- See also individual depart-cerns of, 8 ments and agencies

INDEX 97

Vietnam returns outweighed by

resource management costs of modern. 4-5

problems during war in,

26. 50 War Powers Resolution

unresolved boundaries (1973). passage and

around, 38 intention of. 16-17

Washington Post, 18Warfare World War I

coalition strategy to pre- international cooperation

vent and conduct, 45- during. 46

economic interdependence modern warfare's begin-

and limited. 38 ning during, 4-5

probability versus intensity World War iiof, 40-41

resource allocation during congressional reaction to

coalition, 76-77 War Department spend-

resource management during during. 21-25ing, 65-82 international cooperation

resource management for during. 46

varying degrees of. US defense strategy since,

38-42 43-51

THE AUTHOR

I ouis C. Seelig, Colonel, US Army, Finance Corps, wrote thisessay while assigned as a Senior Fellow at the National DefenseUniversity. Since serving as an infantry officer in Vietnam,Colonel Seelig has worked continuously in Army resource man-agement positions. He has been assigned to field commands inthe United States, Europe, and Asia, and to the Army Staff. Hehas published several articles and authored or contributed to sev-eral studies on resource management topics. A 1987 graduate ofthe Industria! College of the Armed Forces, Colonel Seelig isnow assigned as Comptroller of the Strategic Defense InitiativeOrganization.

Resource Managementin Peace and War

Text type and display composed in Times RomanBook design by Donald Schmoldt

Cover mechanical prepared by Juan Medrano

Editorial Readers:Lieutenant Colonel Ben Hackman, United States Military Academy

Captain Walter R. Thomas, US Navy (Ret.)Major Larry James, United States Air Force Academy

NDU Press Editors: Donald Schmoldt and Tom GillEditorial Clerk: Myma K. Morgan