• Option 3C-formulate monetary incentives or lessen the monetary disadvantages for political appointees.

The three specific actions considered under this option are separately evaluated as follows:

a) increase the salaries of senior civilian officials in OSD

Although this study has not attempted to conduct a detailed analysis of the salary levels of senior OSD officials, a number of studies have found the salaries of such officials to be substantially below that of private sector business leaders having similar authority and responsibility. Likewise, there is a substantial body of evidence that the relatively low salary levels of OSD officials is a substantial impediment to both recruiting and retaining individuals who are well qualified for these positions.

This possible action is made more complex because of the present salary structure in effect for the entire Executive Branch. If OSD officials' salaries are to be raised, it is quite likely that there will be strong pressure to increase the salaries of other officials in the Department of Defense and in other Executive Branch agencies. b) alter conflict of interest statutes

The Senate Committee on Armed Services' interpretation of conflict of interest rules requires a nominee to divest himself within 90 days after appointment of any interest in any business, stocks, securities, or other asset which could result in a potential conflict of interest. In the past, rarely have potential appointees held substantial investments that would pose potential conflicts of interest. It perhaps can be argued that the Committee's interpretation of the rules has served as a barricade for highly qualified persons with substantial defense-related investments from even considering appointive positions in DoD. Whether this is true is open to speculation.

Some observers have indicated, however, that the interpretations applied by the Senate Committee on Armed Services to conflict of interest statutes and regulations go beyond that needed to protect public interest and, in fact, work against the public interest by preventing highly qualified personnel from accepting senior positions in OSD because of financial ramifications.

Those who offer this option argue that the public is adequately protected from conflicts of interest by merely requiring a public disclosure by potential appointees of all business or financial interests or by such disclosure accompanied by a disqualification of the official in matters directly affected by that business or financial interest.

The opposing view notes that the additional requirements imposed by the Senate Armed Services Committee's interpretation of conflict of interest rules were the result of less stringent requirements clearly not serving the public in the past and efforts to ensure public confidence in DoD officials by attempting to remove all potential for conflicts of interest.

c) alter Federal tax laws with respect to forced sale of assets

Rather than alter the requirement that a potential appointee divest himself of business and financial assets which are potential

sources of conflict of interest, this possible action would attempt to reduce the impact such requirements have upon potential appoint

ees.

This action would seem to be a small step which could be of some value. It would not alter conflict of interest practice and should not reduce public confidence in OSD officials. However, it would reduce the immediate financial impact upon an individual who accepts an appointment and is required to divest assets by permitting the gain from that divestiture to be rolled over into other non-conflicting assets, thereby postponing the payment of Federal capital gains tax. In this way, the U.S. Treasury would not be deprived of the revenue; the receipt of the revenue would only be postponed.

An alternative approach would be the use of "blind trusts", rather than divestiture. Blind trusts, however, would not seem to be a practical alternative for two reasons. First, while the assets would be placed in a blind trust, the appointee would still be aware that he owned certain investments until such time as he were informed that some taxable transaction had occurred involving the corpus of the trust. Second, if the trustee were to divest the trust of the ownership of the potentially conflicting investments, there would no longer be a need for the blind trust, but the tax consequences to the appointee would be the same as if the divestiture had occurred without the blind trust.

• Option 3D-place a limit, at a reduced level, on the number of political appointees.

Reducing the number of political appointees would somewhat alleviate the underlying problem, but it might also make the Department of Defense even more the province of professional civil servants whose predilections and biases might tend toward caution and routine, rather than toward innovation and reform. Their outlook and approaches to problems might also run sharply contrary to the direction of given administrations, who would have an even harder time controlling the Department with fewer political appointees. • Option 3E-give greater attention to the development and retention of a strong group of senior civil servants.

Detailed consideration of this option is beyond the scope of this study.

• Option 3F-create a permanent (career position) under secretary to provide for greater continuity.

This option is evaluated under Option 2G.

4. OPTIONS FOR RESOLVING THE PROBLEM OF OSD MICRO-MANAGE

MENT

• Option 4A -reduce the size of the OSD staff.

While OSD may be engaging in activities that might be better left to the Military Departments, it is not clear that reductions in the size of OSD could be justified. There are many responsibilities which OSD is not adequately performing at present. Improved performance in these areas may be necessary before judgments can be made on whether there is excessive staffing in OSD.

There is a second dimension to the issue of the size of the OSD staff. Chapter 4 dealing with the Organization of the Joint Chiefs of Staff discusses the tendency of Secretaries of Defense to rely on the OSD staff for advice and analyses that he cannot obtain from the JCS system. If the institutional deficiencies of the JCS system were corrected, it might be possible to reduce the size of the OSD staff. The Chairman's Special Study Group concludes that reductions would be possible:

...as the OJCS gains in effectiveness, the Service Staffs and OSD can and should be reduced. (page 73)

In addition to interactions with the Military Departments and OJCS, the size of the OSD staff is also influenced by outside demands. Former Secretary of Defense James R. Schlesinger discussed this fact in testimony before the Senate Committee on Armed Services:

It must firmly be borne in mind, however, that many of the problems of the OSD come from outside. The growth of the staff reflects the enormous increase in the interest and power of outside entities. There must be continued responses to members of Congress, to congressional staffs, to the General Accounting Office -all of which have expanded exponentially as well as to the Arms Control and Disarmament Agency and to such older institutions with expanded powers like the Department of State and the Office of Management and Budget. If one is concerned about the size of the OSD staff, the initial place to start is probably outside. (Part 5, page 189)

This study has several general themes that might have a potential effect on the required size of the OSD staff: (1) reorient OSD's attention to mission integration, strategic planning, and other broad responsibilities; (2) eliminate OSD micro-management of the Services; (3) improve the effectiveness of OJCS and reduce OSD and Service staffs that are overinvolved in joint military advisory matters; and (4) lessen outside demands on OSD. When combined, these themes suggest that a reduction of the size of the OSD staff would be both possible and desirable. Unfortunately, any reductions proposed would probably have to be somewhat arbitrary. Moreover, the justification for such reductions would be dependent upon the implementation of all of the above themes.

• Option 4B -draw the micro-management problem to the attention of the Secretary of Defense and seek more clearcut guidance on OSD staff responsibilities.

The most promising solution to the OSD micro-management problem appears to be corrective action by the Secretary and Deputy Secretary of Defense. If the Secretary and Deputy Secretary fail to object to the work agenda of OSD, they implicitly give their approval to it.

• Option 4C -reorient OSD's attention away from functional micro-management and toward mission integration.

If one were convinced that limited mission integration is a serious problem, there are no apparent disadvantages to this option.

• Option 4D -create a permanent (career position) under secretary to police OSD micro-management.

This option is evaluated under Option 2G.

• Option 4E -lessen congressional interest in program details. This option is evaluated in Chapter 9 dealing with the Congress. • Option 4F-hold Service Secretaries more accountable for conformance to guidance from the Secretary of Defense.

This option would not be desirable if it inhibited the ability of a Service Secretary to effectively and completely present the point of view of his Service prior to decisions being made by the Secretary, Deputy Secretary of Defense, or senior DoĎ decision-making bodies. If this could be avoided, ensuring Military Department conformance with the final decisions of higher civilian authority would be extremely beneficial. Evaluation of such efforts is also included in the chapter of this study dealing with the Military Departments. 5. OPTIONS FOR RESOLVING THE PROBLEM OF UNILATERALISM

Option 5A -create a position in OJCS for a 3-star military officer responsible for coalition matters.

The problem with this option is that coalition affairs ultimately are handled at a level much higher than that of a 3-star billet on the JCS. Such a position would increase the involvement of the JCS in more routine matters of coordination among allies, but it would only marginally increase their influence in larger national policies on NATO and other alliances. Given the right combination of personalities and circumstances, a 3-star officer might be able to sensitize the Nation's top military to coalition issues such as the "two-way street" or he might not. But it is certain that he would have only minimal impact on the much larger political issues that affect the NATO Alliance, such as burdensharing and nuclear strategy. If such a position were to be created largely for symbolic reasons and for improving inter-military coordination within the North Atlantic Alliance on relatively routine matters, it might serve its purpose. If it were expected to accomplish more than that, the results would likely be disappointing.

• Option 5B-make the Deputy Under Secretary of Defense (Policy) responsible for coalition matters.

By assigning formal responsibility for coalition matters to one official, they might consistently receive attention of higher quality. However, the Under Secretary (Policy) currently has general responsibility for coalition matters. It is unclear how delegating this responsibility to his immediate subordinate would substantially improve the situation.

• Option 5C-strengthen the position of the Deputy Under Secretary of Defense (International Programs and Technology). This option does not appear to offer substantial prospects for solving the unilateralism problem. This official has neither the position in the hierarchical structure nor the breadth of responsibility to have the necessary degree of influence. Moreover, his respon

sibilities are limited to armament cooperation whereas the range of coalition matters is much broader.

• Option 5D -create mission-oriented assistant or under secretaries who would be assigned responsibilities for coalition matters in their mission areas.

The functional organization of OSD is one of the major causes of unilateralism. Because there is limited mission integration in OSD, functional areas are not sufficiently attuned to the needs of the coalition strategies. Mission-oriented assistant or under secretaries with functional cells or subunits would be able to provide coordination across functional areas and, thereby, substantially enhance the prospects for comprehensive and effective coalition approaches. Furthermore, these offices could ensure that the inputs of unified commands on coalition issues were adequately considered.

6. OPTIONS FOR IMPROVING THE REVIEW OF CONTINGENCY PLANS. • Option 6A -create an OSD office, staffed by a combination of civilian officials and military officers, to review contingency plans.

The Steadman Report offers support for this option:

...there is a need for at least an annual review by the Secretary and selected key assistants of the principal military plans to assure that their political assumptions are consistent with national security policy. Such briefings also would broaden the understanding of key policymakers of military capabilities and options in the event of crisis or conflict. (page 43)

The critical words in this quote are "and selected key assistants." It is not possible for the Secretary and Deputy Secretary of Defense to conduct comprehensive reviews without staff assistance.

If mission-oriented assistant or under secretaries were established, the review of contingency plans (and a review of readiness standards) affecting their areas would be a normal course of business in relating ends to means. This would simply be a part of the iterative strategy-policy-resources decision process that would go on to make goals coherent with capabilities.

In the absence of mission-oriented assistant or under secretaries, the Office of the Under Secretary of Defense (Policy) might be a natural place for basing a small team to review contingency plans. In either case, such a team would probably focus not on the military value and quality of the plans, but solely on their possible political impact and their conformance with established national policies.

If the team were staffed by military officers alone, the impression would be created that a tiny group from OJCS was simply transferred on paper to an OSD office, but that no effective civilian control was taking place. That impression could only be alleviated if the assistant or under secretaries themselves played a significant part in the review (an additional time-consuming burden for them) or if a small number of civilian officials beneath them were involved. The tightest security arrangements and the most careful selection of the civilians would be required in order to assure that