I say it is a charade. You never talk about the number of contract employees that we are hiring to replace these people. The image out there to the man in the street is that we are saving a lot of money because we have dismissed and terminated thousands of Government employees. For that reason, Mr. Secretary, I would ask that you submit to the committee a statement at the end of fiscal year 1983, 1984, and 1985 of the number of Federal employees on the Defense Department's employee list at the close of those fiscal years.

I would also ask that you submit for our attention the number of contract employees on board at the same time.

Any questions or problems about that request?

Mr. FARBROTHER. There are some difficulties with the contractor statistics, but I will work those out with Dr. West.

Mr. NICHOLS. What difficulty do you have with those contractor specifics?

Mr. FARBROTHER. We have not asked contractors historically to tell us

Mr. NICHOLS. I think that ought to be made known. I think the public ought to know that when we terminate a Federal employee who has been on the job 15 years, we have got to hire a man in his place to do the work.

Mr. FARBROTHER. Oh, clearly.

Mr. NICHOLS. I would just like those figures. I think they would be interesting figures to look at.

Mr. FARBROTHER. We have made, in our annual report for the past several years on contracting, we have made estimates of those figures. It would cost us money to have the contractor add another report to his requirement that he would have to tell us how many employees that he had at the end of the year. That's why we don't ask him. We can make reasonable estimates of that.

Mr. NICHOLS. I am cognizant of saving money, and I don't want to ask you to go to any great additional expense, but I want you to give us, if you will, your best calculated judgment of the number of private sector contract employees on the list of these years. Mr. FARBROTHER. I certainly will attempt that.

[The following information was received for the record:]

The above data has been extracted from annual DoD Commercial Activities Inventory Reports. In-house workyears are the number of civilian and military work years used to perform commercial activities. DoD does not collect data on the number of contractor employees. The contract workyears reported above are estimated based on the number of workyears that would be required to perform the commercial activities in-house. The data shows an increase in contract workyears and a decrease in total workyears. There are three major reasons for the changes. First, the Services have significantly improved the accuracy of the information in the database since FY 1983. Second, the Navy removed core logistics activities from their FY1985 Inventory. Third, normal annual conversions resulting from A-76 studies are approximately 5,000 workyears.

Mr. NICHOLS. Any other questions? Mr. McCloskey?

Mr. MCCLOSKEY. Mr. Chairman, I will be very brief because I am very interested in getting to hear from Mr. Watkins who is also very concerned about this. A few general follow-up questions, General or anyone. Is there any formal study whatsoever of economic impact on an area, community impact given the investments communities make, schools and otherwise in Defense installations over years?

General REGISTER. Not to my knowledge, sir.

Mr. MCCLOSKEY. I think it is a very important factor if people would visit southern Indiana what a facility like Crane means to an area. I think it would be very important since we are dealing with human beings.

Secondarily, I guess Crane right now the Army side is the only public sector munitions operation like this. Is there anything, General, in your opinion, and just an opinion perhaps, as to the value of keeping that for a cost efficiency, administrative control and

study purposes given all the private contractors that are doing this and also given Crane's admittedly outstanding record?

General REGISTER. Sir, could you please repeat your question?

Mr. MCCLOSKEY. What I mean is would it be valuable at all to consider Crane's staying within Army auspices as a control unit to use in comparisons with all the contractors who quite frankly, after they get the initial contract, very often aren't subject to all that much competition.

General REGISTER. I do not personally feel it is appropriate on the basis that you have stated, to keep an in-house base to use as a comparison against contractor performance. I think each activity has to be judged on its own merits consistent with its mission. I think it is important that the Army retain in-house, in some form, the technology and the capabilities to perform the mission. Of course, we are looking to still retain that under Government control regardless of whether it is contracted or whether the in-house bid.

Mr. MCCLOSKEY. Just one final question, General. On January 22 you received a letter from Army Materiel Commander Thompson indicating how core logistics should be defined. Crane and McAlester were listed. Do you agree with General Thompson's definition? General REGISTER. Can I provide that for the record, sir?

Mr. MCCLOSKEY. Yes; if you are not familiar with the letter, it is to you, General, and I believe it is somewhat different than your opinion as to core logistics definition. I would be glad to give you a copy, and if you would supply that for the record, I would appreciate it.

General REGISTER. Yes, sir, I would be happy to.

Mr. MCCLOSKEY. Thank you.

[The following information was received for the record:]

CURRENT STATUS

General Thompson's letter of 22 January 1985 was part of an internal Army dialog that took place over a year ago, regarding the definition of core logistics. Those discussions, however, have been overtaken by events, since core logistics is now defined for all the Services in Public Law 99-145.

Mr. NICHOLS. Thank you very much, gentlemen. Before you leave I would ask if you might keep your places at the table. Hon. Wes Watkins of the State of Oklahoma, a very important member of the Appropriations Committee, has a prepared statement, and I would like for you to have the benefit of his remarks, if you will. Mr. Watkins, we are delighted to have you, sir.

STATEMENT OF HON. WES WATKINS, A REPRESENTATIVE FROM

OKLAHOMA

Mr. WATKINS. Thank you, Mr. Chairman. I want to personally express my thanks for your interest and the committee members' interest in contracting issues. I know I have worked with Frank here quite closely concerning the Crane Army ammunition activity.

Mr. Chairman, this is not a new situation confronting me. It seems like it was just yesterday we went through this contracting out review process at the McAlester Army Ammunition Plant. I understand it has been 4 to 5 years, but I can still remember the

emotionalism and the attitude and morale problems that came about with McAlester Federal employees at that time, and Mr. Chairman, that have also come about in the last month or month and a half now since they have announced this particular contracting out study for McAlester Army Ammunition Plant.

Mr. Chairman, I would just like to describe for you, the committee members, and the audience the area of McAlester, Pittsburgh County, OK. I might mention it is the home area of our former speaker, Carl Albert. This area of Pittsburgh County normally has had double digit unemployment, 15, 16, 18 percent year aroundchronic-for all my life. Per capita income exists in the county at probably less than $5,000 per year. The people in that area are very patriotic. They are people who are willing to work at the McAlester AAP on even a part-time basis.

In times of mobilization they have come from their farms and from their ranches to help in this particular facility. Mr. Chairman, 2 weeks ago I had the new chairman of the Appropriations Subcommittee on Defense, Bill Chappell, down in McAlester Army Ammunition Plant for a briefing specifically about this contracting

out.

One of the things that greatly surprised him was that there are a number of individuals-when I say a number, several hundredthat in their contract with the Government are on what they call a permanent part-time status. They are willing to work just even part time during the year. They like for the Government to have as much as 6 months work for them, but this provides a very unusual flexibility to our Government. They can take advantage of, if you please, a dedicated, experienced work force that is trying to continue to live on a farm, raise some cattle and wanting to have that opportunity for a job at the McAlester AAP at least 6 months out of the year.

Their families are sacrificing because of this type of a setup, but they prefer that instead of having to try to go to the big cities to find other kinds of jobs. This is basically the only Federal jobs in my area in the State of Oklahoma, so most of them would have to leave if the McAlester AAP were contracted out and they are going to stay with the Federal Government. They have no other alternative. They can take other part-time jobs.

I was a contractor before coming to Congress. I'm sorry John has left, but I conferred with him a while ago. I used to have to compete against what they call the prevailing wage. I would lose some employees that would go work maybe to build a government school building for 6 months, but usually they would come back and ask for a job. But this prevailing wage doesn't compare with the Federal Civil Service employee who has been there for a number of years and has worked and gained that seniority, those steps, and their particular grade as a Government employee. So there is a difference. There is a tremendous uneasiness there by people knowing they have worked a number of years, and they are going to possibly lose their jobs as you indicated. And rightly so; I think their uneasiness is very much justified.

Mr. Chairman, I have a written statement, but I want to highlight what I would like to say and make the entire statement a part of the record.

No. 1, in my 10 years in Congress, I have to tell you I have never run into such an arrogant attitude about anything I have dealt with in Congress as implementing contracting out. The attitude of "it doesn't matter what you think, Congressman. We are going to do it." Wham! In fact, through the last contracting out study at McAlester, we discussed having lead time for congressional notifications if any of this would ever take place again. I was informed by people on the base in McAlester, OK, before I was informed by the brass here in Washington, DC, about this current contracting out study at McAlester. That is embarrassing. I cannot believe this is the kind of way we are trying to run the military here in the great United States.

Without question, the Army's purpose to free up these personnel slots so they can put other people in those slots somewhere along the way. I think some of the facts that Dr. West has provided you will prove basically that we haven't saved a whole lot out of this whole thing, but they are bound and determined to find some more slots that they can vacate, and I think they are hell bent on leather in trying to do it. That is my conclusion just from certain things that I have glimmered from memos, notes and things that I have obtained.

Let me tell you why I oppose contracting out the McAlester AAP. I not only oppose it-this contracting out study-I think it should be stopped. As I mentioned, in McAlester, OK, our in-house work force saved $7.2 million over what the contractors' low bid for work targeted during McAlester's last contracting out review. Let me tell you about the morale of that person who works part time at McAlester. They are patriotic, and think they are doing something good for our country. Maybe this attitude doesn't exist throughout the Federal Government, but in a rural area-hill country-working at that ammo plant job is a patriotic situation. They think they are being harassed now, and I think they are being harassed for doing a good job. I deeply, deeply resent that particular attitude.

I oppose the contracting out of Crane Army ammunition activity and the contracting out of the McAlester ammunition plant. A lot of the early contracted out AAP's were one purpose or maybe dual purpose, but at McAlester AAP there is over 40,000 acres. They not only store bombs there, make bombs there, and distribute bombs across the waters everywhere, but they also explode a lot of the old bombs there. They bring them in. They detonate them there, and they do a lot of different things that at some AAP's they do not do. Let me give you 14 reasons why McAlester and Crane should not be contracted out. One, I truly believe that certain defense functions must be retained in-house for the Nation's readiness, and I have not seen that highlighted in most of the testimony or most of the information that I have seen come across my desk.

No. 2, activities performed at McAlester and Crane AAP's are essential to mobilization requirements and the readiness of our Nation, without question.

No. 3, the Pentagon, and specifically the Army, has ignored all congressional guidance, public law and the recommendations of its own experts in its handling of contracting out matters, and I have