THE GREAT NAVY SUPPLY SYSTEM of World War II was the product of an evolution that began with the American Revolution. Ships of the Continental Navy included in their complements men whose job it was to see that the ships were properly provisioned and supplied with consumable stores, and who paid the officers and men from money advanced to the Captain of the ship. Called "pursers," they had military rank and were subject to military discipline. When the Navy dwindled into nothingness after the Revolution, the position of purser died along with it.
The Bureau of Supplies and Accounts
For over a decade, the new nation had no Navy. Then, to resist the depredations of the Barbary Pirates, Congress in an Act signed on 27 March 1794, authorized the construction and manning of the six frigates already mentioned in this work. Each of the new ships was to carry a purser who was to be a warrant officer appointed by the President. These pursers, like their predecessors of the Continental Navy, were given military rank, although persons on shore handling supplies and pay of the Navy, were civilians.
Pursers at that time were often men who had served as "supercargoes" on merchant ships. The supercargo represented the owners and handled the vessel's business operations during the voyage away from home. Before sailing he procured the ship chandlery, provisions, and other stores needed by the ship, and was consulted as to the stowage of the cargo so as to insure the accessibility of the various items at the unloading ports. The supercargo saw to the delivery of the cargo to the agents of the owners, or he himself sold the cargo for the owners if there were no agents. The securing of a profitable return cargo was also his responsibility. This required knowledge of the business world in foreign ports. The supercargo was, in short, a seagoing merchant and banker. Much of the experience that these men acquired in that capacity was of value to them when they joined the Navy as pursers.
An Act of Congress signed on 23 February 1795,1 made provision for a Purveyor of Public Supplies under the Secretary of the Treasury. He was charged with the procurement of ". . . generally all articles of supply requisite for the service of the United States." One of his early jobs was to procure the supplies, stores, and equipment needed to outfit the ships which were being built to fight the Barbary Pirates. The law which established the Navy Department in April 1798,2 made the Secretary of the Navy responsible for obtaining naval stores and equipment, but the services of the Purveyor were continued for doing the actual work connected with procurement. The position of Accountant of the Navy was established by Congress in July 1798. He was charged with keeping the accounts of all money advanced and stores issued or distributed within the Navy. Together, the Purveyor of Public Supplies and the Accountant of the Navy constituted the mechanism that eventually developed into the Supply Corps and the Bureau of Supplies and Accounts of the Navy Department.
Procurement of stores for the Navy through the Purveyor of Public Supplies was, however, cumbersome and inefficient as the Secretary of the Navy had no direct authority over the Purveyor. This procurement method caused much dissatisfaction, particularly when the War of 19812 put a heavy load on the system. Between 1811 and 1815 naval expenditures rose from $1,900,000, to $8,660,000 annually. One of the reasons for creating the Board of Navy Commissioners in 1815 was the need for improving the Navy Department' purchasing methods and fiscal management. The Navy Commissioner system to assist the Secretary in the administration of the Navy Department was a step in that direction, but proved unsatisfactory eventually for the reasons given earlier in this work. The Navy Commissioners were replaced by the Bureau system in 1842.
One of the five bureaus created by the Act of 31 August 1842 was the Bureau of Provisions and Clothing. The Act did not describe the duties of the bureaus but left it to the Secretary of the Navy to "assign and distribute among the said bureaus such of the duties of the Navy Department as he shall judge to be expedient and proper."
The assignment of duties to the Bureaus was made by Secretary of the Navy A.P. Upshur in a "Regulation" dated 26 November 1842. It is a gem for brevity. The Bureau of Provisions and Clothing was "charged with the following subjects": "all provisions of every sort, whether solid or liquid; all clothing of every sort; all labour employed thereon; all contracts and accounts relating thereto." The last phrase "all labour . . . contracts and accounts relating thereto" or a similar phrase appears at the
end of the duty assignment of each of the five bureaus. It may be assumed from this that originally the Bureau of Provisions and Clothing had no responsibility for keeping the appropriation, cost, and property accounts of the naval establishment as a whole, but only for its own expenditures. Eventually, however, disbursement of funds and cost accounting for the entire naval establishment became one of its most important functions.
There was no requirement in the organic Act as to the qualifications which the Chief of the Bureau of Provisions and Clothing was expected to have, not the profession from which he was to be drawn, as was the case for the other four bureaus. He was actually appointed from civilian life until an Act of Congress passed in 1862 gave him the title of "Paymaster General of the Navy" and required that he be appointed from the "list of Paymasters of the Navy of not less than ten years standing." One of the early Chiefs of the Bureau was Gideon Welles who served from 1844 to 1849 and became President Lincoln's Secretary of the Navy at the outbreak of the Civil War, holding that office from 1861 to 1869.
The Secretary of the Navy delegated to the Chief of the Bureau much of the responsibility for selecting the pursers for naval ships, although the appointments were often influenced by political considerations. An early qualification for appointment was well as for the promotion of pursers required that they be able to speak French and Spanish with sufficient fluency to transact business in foreign ports. Certification by the Fourth Auditor of the Treasury Department, who audited Navy accounts, that their accounts had been kept to the satisfaction of that Department was another requirement for the promotion of pursers.
An Act of Congress passed in June 1860 provided that "pursers in the Navy of the United States shall hereafter be styled Paymasters" presumably because the latter name described more nearly than the word "purser" on of the important functions of these officers. The duties of civilian Navy agents and naval storekeepers ashore were gradually assumed by Paymasters and by 1865 all of these positions had been taken over by officers of the Pay Corps reporting to the Bureau of Provisions and Clothing. An act of 3 March 1871 officially established the Pay Corps of the Navy, although the term "Corps of Paymasters" had been used unofficially before that time.3 Its officers were known as Paymasters until the name of the Corps was changed to Supply Corps in 1939,4 after that its officers were called Supply Officers.
After the adoption of the Bureau system each bureau gradually established
at the principal navy yards its own operating department of shops including storehouses carrying the stores needed for doing the work under its cognizance. This led to considerable duplication of shop facilities and stores. Comprehensive reform in the organization and management of navy yards to correct this situation was not fully brought about for many years, but in 1887 all stores and supplies in common use by more than one department were transferred to a general storekeeper who was an officer of the Pay Corps, reporting to the Bureau of Provisions and Clothing. That Bureau was gradually assigned greater responsibilities for the purchase, custody, and handling of stores and supplies of all kinds. Its responsibilities for accounting also broadened with the result that the name of the Bureau was changed to the Bureau of Supplies and Accounts by Act of Congress of 19 July 1892, as being more nearly descriptive of its principal functions that the title, Bureau of Provisions and Clothing.
With the growing complexity of ships, the need for improving the supply system afloat also became important. In order to highlight this need, the Secretary of the Navy in 1909 directed that at the next overhaul visit of a ship to a navy yard the stores and portable equipment, except items actually in use, were to be taken ashore and spread out for inspection, as it was suspected that many of the items carried were excessive either as to kind or quantity. The head of each department was required to estimate the probable consumption of the various items during the next six months. This was to constitute the allowance of the respective items for a six months' period and only such items in kind and quantity were to be returned to the storerooms of the ships. An experienced officer of the Pay Corps stated that several ships, including his own, after going through this process, left behind about 755 of the stores that had been landed for survey and inspection.
Largely as a result of this study General Order No. 78 was issued the following year establishing the general storkeeping system afloat in the following terms:
"On and after October 1, 1910, the Pay Officer, hereinafter referred to as the ship's general storekeeper, shall have charge of the accounts and the custody of all supplies and equipage not actually in use, except coal, ammunition, Marine Corps, and medical stores. His responsibility for the articles of equipage 'in use,' as distinguished from those 'in store' . . . shall be limited to keeping the accounts and records thereof."
By the time of the outbreak of World War II, the functions of the Bureau of Supplies and Accounts a an administrative unit of the Navy Department had become well established and standardized both afloat and ashore. The Bureau;s duties were set forth in an organizational manual called the "Control Record."
A good approach to the history of the administration of the Bureau of Supplies and Accounts in World War II, is to set down first its principal duties at the beginning of the war, accompanied by an organization chart of that time, followed by a statement of its principal duties at the end of the war, and an organization chart of that date. Figures 25 and 26 show the organization of the Bureau on such dates, i.e., 1 October 1941 and 1 October 1945. The corresponding functions of the Bureau are stated in its organization manuals for these dates.
Summary of Duties in World War II
Briefly, the pre-0war functions included purchasing, storage, issue, and shipping of supplies (with certain exceptions) for the Navy. The Bureau controlled certain special "Funds"; it administered supply activities, and storehouses; it administered transportation of Navy property and of household effects of naval personnel; it procured and loaded cargoes, and when necessary, chartered ships to carry them The Bureau administered the disposal of unneeded material. It administered the disbursement of payments for personnel and services; and it kept the money and property accounts of the Naval Establishment. It originated the detailing to duty of Supply Corps officers.
During the four years embracing World War II, the Bureau's organization evolved into that shown on Figure 26. Except for purchasing, its functions ere basically unchanged. They had, however, grown enormously in size and complexity. Planning the procedures and formulating the policies to be followed in the performance of its many duties was now a major function of the Bureau. New accounting and disbursing policies and procedures, and new inventory system (all developed by BuSandA) were adopted. The Bureau supervised or participated in the development of special materials, allowance lists, and methods of preserving and packaging Navy materials. It supervised vastly expanded storage and transportation programs. And it exercised an increased responsibility for administration of Supply Corps personnel.
The most significant wartime change in the Bureau's functions, was the elimination of procurement as a sole BuSandA responsibility and the expansion of the Bureau's accounting activities.5 Chapter XX in this work is devoted to "Material Procurement" in all its aspects: the mobilization
Fig. 25--Organization of Bureau of Supplies and Accounts (1 Oct 1941)
Fig. 26--Organization of Bureau of Supplies and Accounts (1 Oct 1945)
of industry; the special machinery set up in the Office of the Secretary of the Navy to coordinate material procurement within the Navy Department, and to correlate procurement with the emergency war agencies, the inspection and cost accounting for material; and the changes in purchasing procedures that were found necessary to go from a peacetime to a wartime system of procurement. These changes and the policies and traditional practices underlying the procurement functions of BuSandA must nevertheless be reviewed here, even though some repetition of the broader coverage in Chapter XX on "Industrial Mobilization and Material Procurement" will result.
Prior to World War II, all of the Navy's material requirements, both for the fleet and shore establishment (with the exception of medical supplies, ship construction, some ordnance material, and a few other special articles) were filled through BuSandA. The principles of competitive buying applied to all such procurement. The statutes governing procurement stipulated in fact that the Navy Department must advertise its requirements call for bids, and award contracts to the lowest bidder offering material in conformity with the specifications forming part of the advertisement. The successful bidder had to post a bond or make a deposit to guarantee performance of the contract. In case of default, he was held responsible for any increased cost to the government resulting from the reallocation of the contract.6
As a general proposition, it may be stated that all procurement begins with a requisition from any one of many sources in the Naval Establishment. The requisisiton includes a description of the article desired. The description may be drawings, specifications, models, stock numbers, verbal descriptions, or a combination of any of these. The requisition shows also the appropriation chargeable, date of delivery desired, and other requirements. On receipt of a requisition by BuSandA it had become standard practice to check with the Stock Division to determine whether the article was available from standard stock, procurable under an annual contract, procurable from another government department, or whether it should be purchased by BuSandA.7
The majority of requisitions reaching the Bureau (most requisitions never reached BuSandA as they were filled from stocks on hand in supply
depots and storehouses) had to be filled by purchase, and were therefore sent to the Purchase division. In this division a "schedule" was prepared, giving the specifications for the article and the terms of purchase. The schedule was then sent out to a large mailing list. At the same time, notice of the transaction was advertised publicly. On a date specified in the schedule and the advertisements, the bids received in the Bureau were opened. Usually the contract was awarded to the lowest bidder, under some circumstances, however, bids were referred to the appropriate technical bureau for recommendation. If the technical bureau considered that the low bid did not meet the requirements of the specifications, it could recommend acceptance of a higher bid. The successful bidder was so informed by a notice of award which identified the article by schedule and lot number or numbers. The formal contract was later sent to the contractor for execution.
This procedure was followed for proprietary articles as well as for articles for which genuine competition could be obtained, except that with the former type, the request for a bid was sent only to the manufacturers of the proprietary article. Little or no negotiation took place.8
Under this peacetime system the determination of the contractor, the legal provisions of the contract, the financing, the credit, and the insurance all followed a standardized pattern. nearly all contracts were on a "fixed-price" basis ("Cost-plus" contracts had been prohibited after World War I). Legal problems which arose were referred, by correspondence, to the Judge Advocate General of the Navy, or else decided in the office of the Special Assistant to the officer-in-charge of the Purchase Division.9
Negotiated Contracts. The transition, from the old traditional bid-and-award system to the methods ultimately adopted for practically all Navy procurement during World War II, began in 1940. On 28 June of that year, Congress, at the request of Secretary of the Navy, Charles Edison, enacted Public Law 671, "An Act to expedite national defense, and for other purposes." This act modified the advertising-competitive bid requirements in making national defense purchases, and authorized the making of contracts for certain articles by negotiation as follows:
That whenever deemed by the President of the United States to be in the best interests of national defense during the national emergency . . . the Secretary of the Navy is hereby authorized to negotiate contracts for the acquisition, construction, repair, or alteration of complete naval vessels or aircraft, or any portion thereof, including plans, spare parts, and equipment therefor, that have been or may be authorized, and also for machine tools and other similar equipment, with or without advertising or competitive bidding upon determination that the price is fair and reasonable, and deliveries of
material under all orders placed pursuant to the authority of this section and all other naval contracts or orders and all Army contracts and orders shall, in the discretion of the President, take priority over all deliveries for private account or for export.
It will be noted that the act broadened and supplemented the conventional methods of procurement, but did not displace them.10
Contract-letting time was shortened considerably, but the once clear-cut purchasing relationship between BuSandA and the technical bureaus was broken down. The day after Public Law 671 was passed, the President delegated authority for administration of the law to the Secretary of the Navy. The Secretary in turn issued a directive placing all forms of procurement involving ships, their construction or repair, the purchase of aircraft or parts of aircraft, and the purchase [of] machine tools in line for procurement through negotiated contracts. The technical bureaus were required to certify the fairness and reasonableness of the arrangements made and the prices agreed upon.11 This led to confusion over who had the power to determine the contractor and the price. The technical bureaus were under great pressure to let contracts with all possible speed to meet their production programs. In doing so, the bureaus adopted the practice In many cases, of negotiating contracts and sending the finished product to BuSandA for paper processing. This resulted in some contracts being negotiated by persons with technical knowledge, but little contract-making experience.12 In turn, the technical bureaus felt that BuSandA might have contract-making experience, but lacked the specialized technical competence to negotiate contracts.13
The final departure from peacetime procurement procedures was brought about through the War Production Board's Directive Number 2, issued on 3 March 1942. Where before a choice of negotiation or competitive bidding was authorized, negotiation was now required for all Navy purchasing as follows:
Except as hereinafter provided, all such Departments and Agencies shall place all supply contracts relating to war procurement by negotiation; provided, that where consistent with the required speed of war procurement, notification of the proposed procurement shall be given to qualified possible contractors and quotations secured from them. The procedure provided by Section 3709 of the Revised Statutes (41 U.S.C., Section 5) shall be used only upon the specific authorization of the Director of Purchase of the War Production Board, or of such person or persons as he may designated.14
The directive further set forth a definite wartime basis for the awarding of contracts: first, that delivery must be within the time required by the war program; secondly, the widest use of facilities be made by conserving the more difficult war production contracts for concerns best able, by reason of engineering, managerial, and physical reasons, to handle them; and finally, the least amount of additional machinery and equipment be required for the performance of the contract.15
BuSandA was normally not in position to negotiate contracts for large and complex end-products such as ships, guns, etc., because of lack of technical personnel qualified to enter into the negotiations. The Bureau, nevertheless, had traditional responsibilities for all Navy purchasing. To clarify the responsibilities and authority respectively of the negotiating bureau and of BuSandA, the Secretary of the Navy issued a directive under date of 13 December 1942 on the subject of procurement procedures and the coordination of procurement legal services.16 The directive authorized the chief of the bureau having technical cognizance of the material or services needed, to exercise his discretion in the extent to which he used the services of BuSandA in negotiating, preparing, and executing contracts, and the extent to which he took these steps in his own bureau. The chief of each bureau was directed to make a survey on or before 1 March 1943 of the purchases and arrangements originating in his bureau and to state which contracts would be negotiated, prepared, and executed in his own bureau, and which on request, would be prepared by BuSandA. These lists were to be filed with the Vice Chief of Naval Operations and were subject to revision from time to time. The chiefs of the technical bureaus were authorized to delegate the actual negotiation of contracts to their subordinates.
The personnel in BuSandA dealing with negotiated contracts were, by the directive, transferred to the Office of Procurement and Material (one of the Executive Offices of the Secretary reporting to the Under Secretary( and made available to the various bureaus to assist them in the negotiation of contracts. A single legal division was set up in each bureau to assist in this work. Lawyers were assigned by name to the different bureaus as counsel. The Procurement Legal Division, which had been established in the Officer of the Under Secretary, was directed to coordinate and generally supervise the legal work of the bureaus. The Procurement Legal Division was also directed to make a comprehensive and detailed study of the contracting procedures of the respective bureaus. The bureaus were absolved from the former requirement of sending negotiated contracts to the Judge Advocate General for review and approval.
The reaction of the technical bureaus to this directive was favorable, but BuSandA was not enthusiastic about the prescribed procedure.17 The Bureau took the position that the technical bureaus should be required to confine their contracting activities to those items for which complete manufacturing specifications could not be provided, but that all other things should be procured b y BuSandA as formerly. It should be noted that this had not previously been the precise dividing line between organization, the Bureau of Construction and Repair, had for many years prepared the contracts for ships. Such contracts were based on very complete plans and specifications, thus permitting competitive bidding. A limit, however, to the competitive-bid method of contracting was reached when ships became so large, complicated, and expensive, and took so long to build that no commercial shipyard could take the risk of bidding a fixed price for their construction. The Chief of BuSandA expressed the opinion, also, that if the technical bureaus undertook to procure everything over which they had technical cognizance, confusion and duplication would result.
This change in the Navy's procurement procedure actually became necessary because of the sudden, urgent, and overwhelming demands of wartime. It is all the more interesting in that BuSandA had visualized its wartime role as simply n expansion of its traditional peacetime function. It conceived of its primary task as one of procurement coordination ". . . including not only the final function of purchase, but, especially the coordination and consolidation of requirements, and the recommendation of allocations of plant capacity." Insufficient action was taken, however, to implement this assumption. The entire naval service, along with the nation at large, was far too sanguine about the industrial capacity of the United States. There was anticipation that certain "problem items" would be in short supply but there was no conception of the fact that a war would overload the entire industrial potential of the nation of a point where military needs could simply not be met without enormous industrial expansion and concurrent limitations on civilian supply. As late as April of 1941, BuSandA believed that ". . . expansion in the Navy would required only increased orders from its normal sources of supply."18
As sanguine as this belief was, it can, at least, be explained by pointing out that this attitude was both widespread and well-entrenched. Far less understandable was BuSandA's obvious indifference to inter-service attempts to plan for wartime procurement. Even in the face of positive evidence that stepped-up procurement would bring conflicts of interest
Rear Admiral Raymond Spear (SC)
Chief of Bureau of Supplies and Accounts, 1939-1942.
with the Army, if not also with the civilian economy, BuSandA preferred to remain aloof. The Bureau's attitude was expressed in this paragraph, which appeared in the Bureau's contributory plan to the Navy's basic war plan "RAINBOW 3":19
The rapidity with which the Army is being expanded . . . has necessitated the entrance of Army procurement agencies into sources of Navy Supply, and the establishment of a system of "allocating" industrial capacities. The Navy has participated in this system only to the extent necessary to protect its normal sources of supply.
The idea of arbitrarily allocating industrial capacities was basically unsound and in a large measure responsible for the inadequacy of pre-war
logistics planning. Nevertheless, it was an attempt to plan, and the fact that BuSandA declined to participate was due not to perception of the faults in the system, but to a narrow attitude created by unwillingness to surrender any of its traditional authority or functions to any other agency, either intra- or inter-service. The Bureau maintained a "let us handle this by ourselves" attitude despite constantly increasing indications that wartime procurement would require far more personnel and a higher level of planning and coordination than BuSandA was prepared or qualified to provide.
Procurement Responsibilities. With the establishment of the Office of Procurement and Material on 31 January 1942, the overall coordination of the Navy Department's material procurement activities became the responsibility of that office. BuSandA had the responsibility for procurement and purchase of provisions (including those for the Coast Guard and the Marine Corps), clothing, fuel and lubricants (including those for the Coast Guard and Marine Corps, for Lend-Lease, and lubricants for the Army, as well as fuel in certain areas), and general stores (such as rope, paint, electrical fixtures, hand tools, cement, lumber and other materials for maintenance and repair). The Bureau also served as a purchasing agency for materials and equipment under the cognizance of other bureaus. where such materials and equipment were common to two or more bureaus (i.e. "standard stock"), and where finished specifications were in existence.
Two responsibilities, direct and indirect, in the broad field of procurement, remained with BuSandA. The direct purchasing responsibilities were for clothing, provisions (subsistence stores), fuel and lubricants, general stores and those aviation materials not purchased by the Bureau of Aeronautics. Its indirect responsibility lay in its service as a purchasing and contract-making agent for the technical bureaus, which now had the authority as they saw fit to procure in their own fields, or to use BuSandA procurement and purchasing facilities in Washington or in the field.20
The Bureau's direct purchasing responsibilities as listed above (except that for aviation material) were handled by the various divisions shown under the "Requirements Group" in Figure 26. The indirect responsibility of purchasing for the other bureaus came under the "Supply Services Group." Before proceeding further, a brief explanation of the two organization charts is necessary.
Figure 25 shows the Bureau organization of 1 October 1941; it is misleading however, in that of the four "groups" shown, only the Accounting
Group actually functioned as a unit. An officer and a civilian supervisor coordinated the work of the five divisions shown under the group heading. The other nineteen divisions reported directly to the Assistant Chief of the Bureau and through him to the Chief. This was a highly undesirable system in that it required the Assistant Chief to attend to myriad minor details which should have been handled by subordinates. In their survey of BuSandA administration, the firm of Booz, Fry, Allen and Hamilton recommended that ". . . competent officers and civilian assistant should be delegated to head up and coordinate the activities of the Supply and Fiscal Groups. In this way only major matters of policy and procedure need filter through to the Chief of Bureau and Assistant Chief of Bureau for decision."21 By the end of the war, the various divisions had been grouped under heads; these groups had been further paired according to general function under a Director of Supply and a Fiscal Director. In reading Figure 25, therefore, it must be remembered that there was no head of either the Supply Group or the Fiscal Group. in Figure 26, each group had a head; the "ungrouped" divisions reported directly to the Assistant Chief, the Inspection Group to the Chief. To describe the various divisions in detail is beyond the scope of this chapter; instead, only overall responsibilities and relationships will be discussed.
Revolving Funds. In the summaries of the Bureau's functions, statements are made that BuSandA administers various special "Funds." These funds were of a type called "revolving funds." The revolving fund was an important concept in BuSandA administration, and had been so for years. A revolving fund was set up by Congressional legislation; an appropriation was made to start the fund and an upper limit was set on it. The money from the appropriation is used to purchase certain items to be held in stock; as these items are released from stock they are paid for by t;he using agency from its own appropriations. This payment goes back to the revolving fund and is used to maintain inventory levels. In this manner, as long as there is cash in a revolving fund, material can be ordered in advance of specific appropriations. Thus, excessive peaks and valleys of procurement are avoided. Additional appropriations are requested to replenish the fund when it is depleted through stock obsolescence, rising costs, or increased inventory requirements.
Naval Stock Fund. The Naval Stock Fund, for example, was established as the Naval Supply Fund on 3 March 1898. Its initial limitation was set at $200,000. By 1 March 1921, when the name was changed to the Naval Supply Account Fund, the limitation had been raised to $250,000,000. On
30 June 1939, more than $560 million had been appropriated for the fund, but at that time it amounted (in cash and inventory) only to $70,283,656. By 30 June 1944, the amount appropriated had risen to over $1,922,000,000 and the value of the fund to better than $1,578,000,000, cash and inventory.22
The Naval Stock Fund was the source of money to purchase those many items of material called "standard stock." This designation is applied to these items because they are commonly used throughout the Navy (by at least two bureaus), because their specifications are relatively stable, and because they are not subject to excessive obsolescence.23
Administration of the Naval Stock Fund during World War II, was handled initially by the stock Division, but the Fund grew to such a size that establishment of a separate division became necessary. This new division was called the Administrative Office, Naval Stock Fund, and operated under the Director of Supply.24
Keeping material in the Naval Stock Fund was the job of both the general Stock Division and the Purchase Division. Prior to the war, difficulty in obtaining adequate funds slowed the Navy's early attempts to build stocks. Critics considered naval expenditures extravagant and looked upon growing stocks as already larger than any future use could warrant. Stocks as low as six weeks supply were being advocated by some.
As war approached, increased funds became available to the Naval Stock Fund. The Bureau's objective was to obtain and maintain 12 months stock in all yards and depots. It was almost impossible to define this goal, let alone attain it. In peacetime, the needs of each type of ship were known within narrow limits, and accurate tables of usage data were compiled.But in wartime, these conditions ceased to exist. Ships and planes of new types were being built, and there was no accurate idea of their stock needs or usage factors. Even for ships and planes of a familiar type, the vastly different operating conditions added many new factors to supply requirements. It soon became obvious that past issues were no reliable guide to future needs--stock equal to past issues for a year might now last only 30 days. In addition, an increasingly long time was needed for delivery.
To meet the need for supplies, the Bureau authorized augmented stocks by blanket directives. Such increases, while meeting an emergency situation, caused stock unbalances when the Fleet moved farther from some supply points and increased requisitions on others.
In March 19842, stocks on hand were approximately five months issues at current rates. The Bureau then made a significant policy change. Stock limitations, heretofore based on past issue, were set at a year's future needs, to be determined by the judgement of personnel concerned. This system was followed except for certain critical materials handled in accordance with the Controlled Materials Plan of the War Production Board.
The end of 1943 found a general average of about seven months stock on hand. Of course, although the goal of twelve months stock--or more--had been reached in some classes, other classes and individual items were in short supply. In 1944, excesses began to be a problem as overprocurement and changes in usage began to have their effect. It was obviously desirable to exercise greater central control over the build-up of stock and to eliminate surpluses by transfer to the other services or by sale. The use of electric accounting machines for stock control was initiated. This aided in meeting the lack of trained stock control personnel, but more importantly it permitted the preparation of stock status reports at more frequent intervals and with greater currency and accuracy. The Bureau was thus provided with information necessary for improved stock control. The knowledge of the existence of surplus stocks made feasible the initiation well before the end of the war of an active program for excess matériel redistribution and disposal, and did much to lessen the difficulties of administering this problem in the post-war period.
THe end of 1943 found a general average of about seven months stock on hand. Of course, in some classes the 12 months goal had been reached but there were also many cases of near exhaustion. In 1944, excesses became a problem as a number of items reached their top limits. It was evident that some stocks would continue to build far above their top limit if not drastically controlled. Supply officers, formerly encouraged to boost requirements, had to learn to level off as the picture changed. The inevitable tendency was to continue building stocks as long as the war lasted. This problem was met by the installation of the machine method of stock control which permitted current reports on inventory at any activity or of any class. With this stock inventory method it was possible to curtail the amount of stock carried by the Navy. Compete inventory figures s of recent date were now available and more frequent replenishment could be undertaken. The Bureau also proceeded to eliminate surplus materials as they appeared, thus lessening the need for wholesale disposition of materials after the war.
The function of inventory control had begun in the Stock Division in 1942; by mid-1944, mechanized accounting procedures had been adopted,
and at year's end, an Inventory Control Office was established under the Director of Supply where it remained for the duration of the war.
A major difficulty in the path of successful inventory control was the lack of standardization of nomenclature which had resulted from the decentralization of procurement. Virtually the same problem had existed before World War I, when articles used by the Navy were brought and carried in stock under various names that different bureaus had seen fit to bestow upon them. As a result, Navy storehouses were filled with an unnecessarily large range of kinds and sizes of many items. In one yard, for example, in separate bins the same type of lamps were held as "lamps," "fixtures," and "lights."25
In 1914, Rear Admiral Thomas H. Hicks, (SC), USN, then a captain serving as Supply Officer of Norfolk Navy Yard, recognized that the system was so inefficient and confusing that a Navy Standard Stock Catalog was necessary and undertook to prepare one. His three principal objectives were: standard nomenclature; elimination of all items not essential to a standard and adequate stock; and systematic arrangement of those items.
Navy Standard Stock Catalog
The catalog was not presented to the service as a complete volume, but rather piecemeal, class by class. By World War IO, the Navy had a catalog of supplies for general use, excepting ordnance material. It proved its usefulness so well during the war that the Secretary of the Navy, in 1920, authorized Admiral Hicks to employ a small force to expand the catalog and prepare changes and revisions as necessary. Therefore, the Navy Catalog Office was established at the Naval Supply Depot, Brooklyn, and published a complete revision of the work each year until it was merged into the Federal Standard Stock Catalog.
The success of the Navy Catalog caught the attention of other government activities. Thus, in 1929, Admiral Hicks was named Chairman of the Federal Standard Stock Board, and his entire staff, together with a similar staff from the office of the Quartermaster General of the Army. was detailed to compile a Federal Standard Stock Catalog, based primarily on the Navy's catalog. This huge task, completed in 1931, involved cataloging the items used by all departments of the government and also the actual production and distribution of the catalog. The first Federal Standard Stock Catalog consisted of more information than the strictly Navy work as it classified approximately 155,000 items stored or issued by the various department of the government.
After the Federal Standard Stock Catalog had been in use for several years, it became apparent that a purely Navy catalog was more satisfactory. Therefore, Admiral Hicks undertook to issue a Navy Supplement, or N-Supplement, to the Federal Standard Stock Catalog. This became the Standard Stock Catalog, and the Classification Index of Naval Stores and Materials became the index thereto, listing in a single alphabetical arrangement articles of supply regularly procured, stored, and issued by the Navy Department. The N-Supplement was also issued a class at a time, commencing in 1935. In January of 1942, all classes of the N-Supplement were reprinted at one time, listing about 70,000 items.26
In 1933, the personnel of the Catalog Office had been transferred to the Procurement Division of the Treasury Department. This lack of control had the unfortunate result of limiting work on the catalog to simply inserting or deleting items requested by the technical bureaus via BuSandA. When the emergency came there were neither personnel nor machinery to inform the Bureau of what should or should not be standard stock.27 In the meantime, war conditions had made the Navy Supplement inadequate by completely changing the old concept of what items are standard. Also, by completely changing the old concept of what items are standard. Also, return to "bureau cognizance" had again resulted in duplication of many items. Studies conducted by the War Production Board in 1943 and 1944 had revealed common failures to utilize existing inventories.28
In July 1944, the Secretary of the Navy placed one officer in overall charge of inventory control and established the Inventory Coordinating Group under BuSandA with the mission of inventorying and cataloging all Navy-owned material. After several months it became increasingly clear that inventory control, to be effective, should be closely correlated with the work of the Stock Division. Accordingly, on 27 December 1944, a SecNav directive reassigned this duty within the Bureau to the Inventory Control Office, and established the Navy Catalog Office to absorb the catalog functions of the Inventory Group.
The Catalog Office immediately set out to publish a new edition or practically an entirely new catalog of standard stock. Meanwhile, fourteen field units were established at various major supply distributing points in the Continental United States. These units identified and reported all local stock items encountered in the field. The items were then screened, analyzed, and combined with standard stock items, each class being supplied with appropriate standard stock numbers.
The first class of the revised catalog rolled off the press in February 1945, and the last was printed in November of that year. This improved
catalog contained several innovations: for the first time prices were not printed in the catalog but were given in a separate pamphlet which allowed easier revision; and illustrations were widely used to aid in the identification of many items.
As mentioned above, the Purchase Division also had a responsibility for keeping material in the Naval Stock Fund. Additionally, this Division performed or coordinated purchases for other purposes. hen the technical bureaus desired to use BuSandA as their purchasing agent, the bulk of the job fell on the Purchase Division. During the first two critical war years, procurement actions in the Division mounted from 2600 a month to 3700 a month. During this time about 65,000 awards were made to 14,000 contractors, obligating the Navy for material to the sum of over $12 billion. On occasions, over a hundred contracts were completed in a single day--contracts which would have required weeks and possibly months for consummation under normal peacetime procedure.
Wartime procurement was also marked by a large measure of decentralization of Bureau purchasing to its field activities. In effect, this amounted to a secondary centralization in certain geographic areas. Large volumes of requisitions were sent out to Navy Purchasing Offices and other activities in the field; field procedures were developed and standardized; and a strong, direct liaison was established between the Bureau and the field. A section of the Purchase Division maintained this contact between BuSandA and the purchasing activities in the field. This section assisted the field activities by advising them on matters relating to the award or modification of contracts, and it coordinated the handling of inquiries from the technical bureaus or from contractors and relating to field contracts.29
Decentralization of Purchasing
Field purchasing as developed and operated in the Navy Purchasing Office in Chicago, for example, marked important innovations in Navy purchasing policy and practice. That office was assigned three specific duties. it was the procurement agency for a sizable part of the needs of the Advanced Base Section of the Bureau of Yards and Docks; it was assigned the procurement of the main volume of standard stock items under BuSandA cognizance; and it was the only activity in the Ninth Naval District authorized to make individual purchases in excess of $500. The Naval Purchasing Offices were excellent examples of the Bureau's policy of retaining the benefits of centralized purchasing and yet relieving the congestion of procurements within the Bureau.
In such procurement fields as lumber, clothing, textiles, and such, where joint operations were indicated in the public interest, the Purchase Division joined with Army agencies in establishing coordinated purchasing operations.
In the last year of the ear, the vast bulk of BuSandA's procurement mission was completed and the large undertaking of "buying in reverse"--contract termination--was fully launched. Here again the Purchase Division played a major role; well in advance of the close of hostilities a Contract Terminations Section was set up in the Division. To indoctrinate the personnel of this section, the training facilities of the Army Industrial College were used.30 Field policies in contract termination were coordinated by the Field Purchase Branch of the Division. All told, by 1 September 1945, the Purchase Division had issued nearly 17,000 contract terminations.
To procure, catalog, and inventory material was only part of the process of supplying the Fleet. A major problem facing BuSandA was where and how to store this material while it awaited issue. During World War I, storage problems were handled by an aide in the office of Assistant to the Paymaster General. This function was later handled by the Storage Section of the Stock Division. Storage facilities in the 1930's were limited and funds for expansion were very difficult to obtain. But the emergency in 1939 stimulated an expansion of storage facilities which continued throughout the war. Construction of storage space at supply depots proceeded under a mass-building program. Instead of constructing each storehouse as an individual project, the Bureau developed standard plans, readily adaptable for any location. Four great inland depots were commissioned, far from other Navy activities, but strategically located on main railroad lines.31
The importance of storage and associated problems was recognized by a reorganization of Bureau handling of storage matters. A separate Storage Division was formed to consolidate and carry out storage functions previously performed by the Stock and Planning Divisions.
The Navy also used an amount of commercial warehouse space. To avoid duplication and competition with the Army, an agreement was made with the War Department which permitted the Navy to use the Army
Public Warehouse Plan. It was no longer necessary for a naval activity to find, inspect, and contract for space: it could now procure space in any part of the United States by contracting the Storage Division which would obtain a warehouse assignment number and location from the Quartermaster General of the Army.
By CNO directive of 21 May 1945, BuSandA was made responsible for the warehousing of supplies and property of the Navy Department. In addition, the Bureau was directed to establish and administer a centralized storage operating organization. All of these functions were delegated to the Storage Division for execution.33
Procurement of fuel was an important Bureau function. In the performance of this function, the Fuel Division became the largest petroleum procurement agency in the world.
During World War I, bituminous coal was the major fuel used by the Navy. The Navy's largest consumption of that fuel amounted to 0.6 percent of the current production. Anthracite coal, used in both wars primarily to heat shore quarters, was never required in significant quantities.
The Navy's peak demand for petroleum products in World War I was 10,905,000 barrels in fiscal 1919, approximately 3.3 percent of U.S. production. Procurement by the Navy in fiscal 1945 for its own, Lend-Lease, and other purposes, represented 462,000,000 barrels of petroleum products, about 28.4 percent of 1944 crude petroleum runs in the United States.34 In addition to fuel oils, including diesel, the Fuel Division procured solid fuels, aviation gasoline, motor gasoline, blending agents, lube oils, and grease.
The terrific demand for petroleum within the United States necessitated the rationing of petroleum products and the tapping of petroleum sources outside the country. The principal outside sources of refined products were the British and Netherlands West Indies.
In addition to the heavy increase in demand for petroleum products, there was a large shift in the nature of that demand. In peacetime, residual fuels are definitely a by-product with 50-55 percent of crude oil being converted to gasoline cuts. Wartime demand for residual fuels resulted in gasoline cuts declining to approximately 40 percent.35 Also, the flow of finished
products was considerably changed. Prior to the war, the basic movement was to the East Coast. Since the Navy's demands were predominantly in the Pacific, close coordination and organization of transportation was necessary to provide the products where needed.
The Fuel Division made every effort to increase the volume of oil available for military use. The production of refiners was balanced insofar as possible. Cutbacks in production were avoided by accepting excess stocks of residual fuels at Navy storage facilities. Refining areas in the mid-continent, not normally a source of supply, were utilized for critical products. In the latter stages of the war, an agreement was worked out with the western railroads that consumed oi; the Navy supplied oil from inland refiners to the railroads who released an equivalent quantity allocated for their use on the West Coast. A program was established to supply West Texas crude oil to California refineries which had excess refining capacity. An additional source of crude oil for California refineries was the Naval Petroleum Reserves. The drilling program authorized by Congress was successfully completed up to 1,800,000 barrels of Navy oil per month. And, on one occasion, 107,000 barrels of heavy fuel oil were purchased from the stocks of a power company in Los Angeles.36
The Fuel Division assisted in coordinating petroleum procurement on a global basis so that shipments to forward areas were from production areas most advantageously located. This was particularly successful in the series of reciprocal agreements with the British under which we received fuel from refineries in Sterling areas and supplied the British with fuel in American production areas.37 In order to utilize tankers most advantageously, shipping schedules were carefully planned in cooperation with cognizant agencies, as well as British representatives.
Navy Petroleum Pools were established to provide maximum flexibility for refining programs. These Pools contained a large part of commercial oil storage on the seaboards plus all Navy-owned storage. Pools were established at New York, Norfolk, and the West Coast (San Pedro, San Diego, San Francisco, and Seattle operated as one pool), plus a Houston Branch of the New York Pool. Peak storage capacity of the pools totalled over 49,000,000 barrels, and they proved of great value in leveling off fluctuation in supply and adjusting to shipping schedules.38
Also, fuel depots were constructed or enlarged at many naval activities. And gasoline storage was provided at over 160 aviation activities in the United States and many ore overseas. Millions of barrels of storage capacity
were provided in combat areas, primarily floating storage in the form of obsolete tankers or barges.
After V-J Day on 15 August 1945, immediate steps were taken to cut back the huge program of fuel procurement, storage, and shipment. Termination was simplified by the fact that most contracts were set up on a standby basis which permitted the Navy to order as required or to refrain from doing so. Shipments were arranged to preclude the accumulation of over-large inventories, and stocks were used in the course of regular operations.
Food is one of the largest factors affecting the morale of Navy men. Although it is practically a Navy tradition to "gripe" about the "chow," ood on Navy ships and stations is justly famous for being ample, nourishing, and appetizing. To provide the sailor with three good meals every day was the function of the Subsistence Division of BuSandA. It was admirably fulfilled despite difficulties of procurement, transportation, and radically changing needs of the expanded fleet.
Subsistence items are divided into two basic categories; perishable and non-perishable. The latter term covers those items that are canned, dehydrated, dried, or otherwise processed for ordinary storage. Sixty-eight items were canned in this category prior to the war, and procured by the Bureau periodically through competitive bidding. In wartime, rapidly increasing demands of the armed forces and Lend-Lease for food made cooperation of the government agencies a necessity. An agreement was reached which vested most non-perishable food procurement for the Armed Services in the Quartermaster-General of the Army. Requirements for the several services were consolidated and sent to the field buying offices. Field negotiating officers then contracted with suppliers and allocated various lots to meet the needs of claimant services. The list of non-perishable subsistence supplies soon grew to 122 items with the addition of new items required. Eighty-six of these were purchased under the Joint Army-Navy procurement program, 33 by the Navy, and 3 by the War Food Administration.39
Existing facilities were greatly enlarged during the war to provide additional storage space for provisions. Naval Supply Depots, Bayonne, N.J. and San Pedro, Calif., were established in 1942. Two inland feeder depots at Mechanicsburg, Pa. and Clearfield Utah, were established in August 1942 and April 1943. Stocks of dry provisions for issue to ships and stations were maintained in the United States at 9 supply depots, 3 navy
Rear Admiral William B. Young (SC)
Chief of Bureau of Supplies and Accounts, June 1942-March 1945
yards, and the 2 inland feeder depots. Also, 12 large training and air stations received direct shipments from contractors in carload lots.40
From the end of World War I until March 1942, the Navy purchased perishable provisions through periodical contracts, negotiated by purchasing officers in the field. Against thee contracts, ships and stations placed their orders directly with the contractors During this period, market conditions were such that this method proved very satisfactory. The Army, which had practically the same system as the Navy, found such methods inadequate
in 1940. Therefore, the Quartermaster Market Center plan was evolved in May 1941. Under this plan, market centers were set up at desirable locations to handle the purchase of perishables. The Navy held to peacetime procedures until 1942, when it began experiencing great difficulty in competition for supplies and to effect the most efficient use of provisions available, a joint procurement program was instituted. For this reason, a number of Navy Market Offices were established and attached to Quartermaster Market Centers.41
The difficulty of obtaining regular procurement of some perishables such as butter and eggs emphasized the desirability of storage stocks of these items during periods of peak production. Beginning in 1942, stocks of such items were built up by joint Army-Navy storage. The reserves stocks thus obtained jointly by the Army and the navy were stored under the direction of the Quartermaster-General. They would be transferred to the Navy when requisitioned immediately prior to use.
During the war, the War Production Board, later the Secretary of Agriculture and the War Food Administration, allocated the country's food supplies among claimant groups. A procedure was adopted to balance the total supply against the needs of the armed forces, Lend-Lease, and the civilian population. The steps taken to carry out this policy included civilian rationing; orders requiring that certain amounts or percentages of production be set aside for governmental purchase; and orders limiting the amount of food items that could go into civilian consumption. In 1942, a Food Requirements Section of the Subsistence Division was established to handle the Navy's claims for food allocation.42
The institution of civilian food rationing also raised a number of problems for the Navy. Initially, all armed forces were completely exempt from rationing. However, by 1942, this had proved unsatisfactory as it was difficult for suppliers to properly account for rationed goods, and the number of rationed items had increased greatly. The OPA, therefore, set up a ration-banking system. Naval activities which purchased food were authorized to open unlimited ration-bank accounts against which authorized officers could draw checks for rationed food purchased. This enabled suppliers to account for all their sales. Special arrangements were made for ship's services, contract messes, officers' messes, etc. Commissary stores bought from commercial suppliers and sold rationed food in the same manner as civilian retail stores
Actual war conditions raised new problems in subsistence which were solved by research and development of suitable foods under the cognizance
of the Subsistence Division. Abandon-ship and aircraft rations were revised and greatly improved. A battle-ration was developed for use when it was necessary for men to remain at battle stations. Ration lists were prepared for special expeditions sent to remote sections of the world. Dry and powdered provisions were highly developed and utilized. The Navy Cook Book was revised because of many new items in use and the advances in knowledge of food preparation.43
In May 1943, the Secretary of the Navy appointed a Special Committee of leaders in the food industry to make a study of the Navy's food administration. The Committee inspected subsistence facilities at ships and stations representing approximately 25 percent of the Navy's personnel within the continental limits of the United States. The Committee reported that "the food administration of the Navy deserves credit for its accomplishments and performance in handling the intricate problem of providing adequately for its constantly expanding personnel."44
Clothing the growing Navy was another great task faced by BuSandA. Under the Clothing Division of the Bureau came the Clothing and Small Stores Fund which financed the maintenance of stocks for issue to the enlisted men of the Navy. Issues from this fund except for the original outfit furnished on first enlistment, were paid for by the men and credited to the fund. The fund, therefore, is revolving and self-sustaining.45
In the early stages of the war, the issue rate used in computing requirements of clothing consisted of an average for previous years which was adjusted to compensate for unusual conditions. Using this issue rate, replenishment programs were compiled providing for outfits for first enlistments, for issues to average personnel during the year, and for maintenance of 24 months' supply at various points. The Clothing Division continuously studied changing conditions in order to revise rates of issue as warranted. in March 1943, upon request from the office of Procurement and Material, to keep military procurement at a low level in order to provide for civilian stocks of clothing, the stocks maintained as a reservoir were reduced from a 24 months level to an 18 months basis.46 In 1944, inventories were generally reduced to a 12 months level. Early in July 1945, all clothing contracts were reviewed and classified for action to be
taken at the end of the war. Immediately upon the surrender of Japan, termination and partial termination wires were sent to contractors canceling about $38,000,000 in clothing contracts.47
Research and development in the field of special clothing (primarily items of winter, rain, and submarine clothing) came under the cognizance of the Clothing and Small Stores Division; in the course of the war, nearly fifty special clothing items were added to the Navy's list. Renovation of this special clothing posed a problem; it was solved by the establishment of special facilities in forward areas and the utilization of prison labor in the United States.48
To meet the vastly increased demand for enlisted men's blue uniforms, the Naval Clothing Depot continued the practice of furnishing the cut material to private manufacturers for fabrication. Officers' uniforms were manufactured, distributed, and retailed under Navy supervision through the Naval Uniform Plan.49
The Clothing and Small Stores Division was also highly instrumental in the establishment of a somewhat similar system for the production and sale of uniforms to the Women's Reserve (WAVES).50
The Navy provides quarters, food, and clothing for enlisted personnel, or a money allowance in lieu thereof. Officers were furnished quarters, or a compensating money allowance when government quarters were not available but paid for food and clothing out of their own pockets. Many personal items, not furnished by the Government, such as toiletries, tobacco products, soap, candy, writing materials, and various knickknacks were until comparatively recent times supplied by "bumboat" men who carried on a thriving business with ships of the Fleet. Practically every ship had a regular bumboat man who received a virtual monopoly on that ship. Some bumboat men followed ships from port to port, and occasionally were even carried on board naval vessels. These salesmen were sometimes dishonest and often charged exorbitant prices. In addition, their presence on board ships was frequently a nuisance, especially since many served as a source for illegal and contraband articles.
The first attempts to avoid dependence on bumboat men led to unofficial ships' stores or canteens financed by crew members. Canteens were
not satisfactory because they operated very informally with little responsibility or accountability.
Official recognition of the problem promised relief as the Naval Appropriation Act of 1909 authorized the use of appropriated funds for the establishment and operation of ships' stores. Subsequent General Orders placed ships' stores under the cognizance of BuSandA and provided procedures and instructions for their operation. These directives authorized commanding officers of ships, having a pay officer attached, to maintain a ship's store. In 1929 ships' stores became mandatory on vessels which had a supply officer as head of a department.51
However, ships' stores, limited by laws and regulations, did not adequately provide all the services desired. As a result, ships' service stores and services (such as barber ships, tailor shops, and cobbler shops) not available through ships' stores. Ships' service stores ashore were under the cognizance of the Bureau of Navigation (later BuPers); those afloat were under the cognizance of the individual commanding officer, subject to regulations of the fleet commanders. Ships' service stores were managed by line officers and financed with nonappropriated funds.52
Thus, at the beginning of World War II, there were three different types of resale stores within the Navy: ships' stores (BuSandA), ships' service department (BuPers), and ships' service stores (C.O.'s afloat). It was obvious that the supply and administrative problems of thee nearly parallel activities could be simplified by combining their functions. Accordingly, in 1943, trial mergers of ships' stores and ships' service were effected on 100 ships to determine if a single activity could properly provide the desired services. Another important objective was to release line officers from ship's service duties. The trial mergers proved successful and in July 1944 the Ships' Store Division was established in BuSandA to bring about a fleet-wide merger of all ships' stores and to administer these activities. Navy Regulations were changed so that, effective 1 December 1944, about 1600 ships' service stores and ships' stores afloat were merged.53
In May 1945, the Secretary of the navy appointed a special committee to study Navy resale activities. The committee recommended the establishment of a strong central organization of resale activities under BuSandA cognizance; the recommendations were approved by SecNav.54 A Subsequent committee developed plans for centralized control and operation,
which were approved by SecNav on 8 February 1946. Consolidation of ships' stores and ships' services under BuSandA began in August 1946 and was completed by March 1947. 55
The material and supplies purchased or otherwise obtained by the various divisions of the Requirements and Supply Services Groups were of no use sitting still at their points of origin; they were obtained for the Fleet and to the Fleet they had to be shipped. Here the Transportation Division of BuSandA--the freight office of the Navy--came in.
The Bureau established and the Division adhered to three basic policies in freight transportation matters: to see that material ready to move gets to the point where it is needed when it is needed; to secure the best transportation available at the lowest cost; and to spread the great burden of Navy tonnage over all carriers in order to avoid overloading any of them.
The overall transportation situation in World War II was marked by exemplary cooperation and harmony among the Armed Forces and the various other agencies concerned with the shipment of material. Within the Navy, control of transportation was centralized very shortly after the Pearl Harbor attack.56 The Transportation Division assumed firm control of requests for all special transportation services in order to prevent confusion and conflict of interests among various commands. In contrast, many peacetime controls were relaxed to grant greater authority to officers in the field in selecting shipping methods. The Transportation Division also placed experienced transportation personnel in newly-created shipment sections of the other bureaus, to screen and coordinate their requests for special transportation services. These officers were vested with authority to process and approve shipment orders and to promulgate on BuSandA authority any necessary shipping instructions. Supervision of these officers was exercised by an administrative assistant in the Transportation Division.57
With its Officer-in-Charge as a member of the Transportation Control Committee, the Transportation Division had a voice in the determination of policy and the guidance of administrative offices in the release of traffic for overseas shipment to ports of embarkation.58 Traffic control was achieved by means of (1) issuance of ODT permits authorizing and scheduling
movement of carload Navy traffic to tidewater stock and transshipment facilities; (2) distribution of Navy overseas traffic among various ports and transshipping facilities in accordance with current conditions (port capacity, ship availability, etc); (3) membership and participation in standing transportation committees;59 (4) issuance of air cargo priorities and operation of overseas air cargo terminals; (5) receipt of information and issuance of instructions concerning return to overseas Navy cargo; and (6) protection of the Government's interests in the matter of transportation charges paid by the Navy.
The Transportation Division was instrumental in the development of Atlantic ports as transshipment points for the logistic support of the Pacific Ocean areas. As the war progressed, facilities on the West Coast became overtaxed; to maintain the vital flow of material to the Pacific, cargo was loaded in such ports as Davisville, Rhode Island; Bayonne, New Jersey; Norfolk, Virginia; Gulfport, Mississippi; and New Orleans, Louisiana.
Traffic within the United States was expedited by the use of blanket route orders and blanket ODT permits. A blanket route order authorized an individual shipping activity to make repeated shipments to a particular destination via a specific route without requesting individual authority from the Transportation Division each time a shipment was ready to move. Under some of the blanket ODT permits, the Navy was allowed to handle all freight shipments to and through Navy-owned or operated facilities without securing individual releases in each case.60
When the Naval Air Transport Service was established in December of 1941, need arose for control and coordination of air-shipped freight. The Transportation Division then added to its functions that of acting as a Freight Traffic Department for NATS.61 Priority systems were established and the maximum flexibility in the use of naval air transportation was achieved.
The Transportation Division's cooperation with the Army is very well illustrated by the Army-Navy Consolidating Service. Freight shipments of less-than-carload size (particularly those moving transcontinentally) were consolidated with similar Army shipments at four principal stations--New York, Philadelphia, Chicago, and St. Louis. The results were increased utilization of available transportation; the saving of large sums of money to the Government, and a substantial speeding up of less-than-carload shipments.62
Return of naval material from overseas became a concern of the Transportation Division as the war drew to a close. Once again the Division performed with skill and efficiency, handling not only that material under BuSandA cognizance, but coordinating the shipment of material for other bureaus.63
The duties and functions of BuSandA thus far described have been those of supply; the Bureau's fiscal and accounting functions will now b e considered. In this area, the line between administration and operations was very fine; the functions of the various divisions under the Fiscal Director were complex and highly technical. In order, therefore, to remain within the scope of this work, these divisions can be overed in a general manner only.
That function of BuSandA which might be termed its "most popular" one is disbursing. The Bureau is responsible, directly or indirectly, for the payment of all salaries and wages due naval and civilian personnel employed by the Navy, and all payments for material procured by the entire naval establishment. The actual payments are made by disbursing officers on board ship, at naval shore activities, and in the Bureau itself. Regardless of where the disbursement is made, each disbursing officer is responsible to BuSandA for determining that all payments he makes are entirely legal. Should the Bureau of the General Accounting Office consider that a payment does not meet the validity requirements the disbursing officer must furnish satisfactory technical evidence to substantiate the validity of the payment if he is unable to do this, he must recover the amount to which exception has been taken. The disbursing officer is personally responsible to the government, and in the event that he cannot recover the invalid payment, he can be relieved only by act of Congress or by payment from his personal funds.64 This individual personal responsibility remained unrelaxed through the war despite changes made in disbursing procedures.
THese changes came about because of the many additional duties imposed on the Bureau in World War II. Such things as transfers of funds to vessels of foreign nations; conversion of foreign and occupied currency to United States funds; issuance of ration point checks in the purchase of rationed foods, and the maintenance of a ration point bank account; and payment of reverse Lend-Lease bills and other foreign bills were among the additions to BuSandA's responsibilities.
These functions were handled in the Disbursing Division. The increase in work volume is indicated by comparing statistics: in fiscal 1940, $400,050,743 was disbursed in payment of 120,758 vouchers; in fiscal 1945, $12,720,964,498 was paid to satisfy 1,439,201 vouchers.65
To keep pace with this vastly increased burden, the Disbursing Division mechanized its operations as much as possible, installing electrically operated bookkeeping machines, punch card tabulating machines, electric typewriters, microfilmers, and a check-signing machine. This last device, for example, reduced check-signing time by over eighty percent.
Use of mechanical aids helped to make possible revisions in disbursing procedures. The Booz Report had recommended changes not long before hostilities began;66 these recommendations were adopted gradually as the Disbursing Division expanded and met it growing duties. Highly significant was the centralization of payments and decentralization of obligation and expenditure accounting.67 Payments to vendors for material and equipment which formerly had been made by approximately 900 disbursing officers scattered throughout the country were centralized in 14 Central Navy Disbursing Offices strategically located within the continental limits.
The system of centralized accounting had been established over the years primarily as an outgrowth of BuSandA's responsibility for overall Navy appropriation and obligation accounting. But the responsibility of disbursing officers for the disbursement of public funds and the responsibility of the various bureaus to keep within budgetary limitations resulted in a duplication of accounting records. The lack of coordination and uniform accounting control caused wide differences in these duplicate records. In 1944, the balance sheet as of the end of any month was not available for approximately three and one-half months. It was, therefore, not possible to know currently whether expenditures were being kept within the limitation imposed by law. The Secretary of the nay directed that appropriation obligation and liquidation accounting be decentralized from BuSandA to the various Navy Disbursing offices. Thus, basic obligation accounting data was processed at the point of origin. Monthly summaries were then forwarded to the Bureau for posting to overall central ledgers. On 1 July 1945 this plan was made fully effective in every Central Navy Disbursing Office.
Measures of this type were responsible for the fact that the average time for payment was reduced by two-thirds despite the increased complexity and volume of the Division's work.68
While payment of bills, conversion of foreign currency, and advancement of funds to contractors were major disbursement functions, the one most widely known and of most interest to naval personnel was that of meeting the payroll. In World War II this became far more than merely presenting cash or a check to the person who had earned the money; it involved making bank deposits for naval personnel, sending checks to their families, issuing War Bonds, and keeping the master pay accounts. At the outset of hostilities, these latter functions were the province of the Allotments Division of BuSandA.
This Division grew very rapidly; to provide it with adequate quarters and working facilities, space was leased in a vacant department store in Cleveland, Ohio, and by November of 1942, the transfer to that location of those activities which handled the money affairs of personnel, had begun. Thus, there was established the Bureau of Supplies and Accounts Field Branch, Cleveland, Ohio.
The Field Branch has been called the Navy's bank, for its members assumed virtually all the burdens of financial affairs which would otherwise have plagued the men and women of the Navy. These included the items mentioned above--allotments, bonds, and family allowances. Despite the tremendous volume of work entailed in the performance of these services, the Field Branch operated at astonishing speed and with a remarkable degree of accuracy, thanks to the employment of modern machine methods of office work.
A historic change in the accounting and finance methods of the Navy was signalized by the introduction of a new payroll system on 1 July 1944. A thorough overhauling of the framework of pay procedures had been inevitable. Gauged for the needs of a peacetime Navy of some 200,000 officers and men, the old method lost its effectiveness under the pressure of global war.
Moving ahead on the premise that immediate action was necessary if a breakdown in the pay system were to be averted, the Bureau undertook an intensive study of pay procedures. Experts in industrial payroll problems were recruited, and officers and civilians within the Navy who were familiar with naval administration and qualified by the knowledge of the problems, were assigned to these studies. Research into methods of improving the pay procedure lasted nearly a year, and the new plan, simple and almost to the point of being foolproof, was approved and adopted on 3 September 1943.
The new payroll and accounting system was designed to eliminate the major infirmities of its predecessor, namely, multiplicity of forms, waste of labor, uncertain and sporadic payment of naval personnel in travel status, surplus of clerical routines, high percentage of records lost or
destroyed, erratic method for registering allotments, and inability to reconstruct pay accounts in cases of lost records.
Under the new procedures, each individual's pay record was kept on a separate card on which all entries were made in finished form. The pay record always accompanies a man upon his transfer. He is able to present it to his new disbursing officer, or to any service disbursing officer while in transit to his next duty station. If a ship or activity is without a disbursing officer, pay records are kept in the custody of the commanding officer who, on pay day, presents the pay records to any disbursing officer.
The movement of several activities to the Field Branch in Cleveland created a geographical handicap to effective coordination within the Finance Group of the Bureau. Consequently, the Field Branch Liaison Division was established on 4 January 1943. Its mission was to represent the Field Branch in Washington, to issue instructions to disbursing officers with regard to paying the allowances of naval personnel, and to develop procedures to be following in making and properly substantiating the payment of such pay and allowances.69
Within the Finance Group came three more divisions. Officers' Accounts, Personnel Travel, and War Bonds. The first of these simply maintained the pay accounts of all officers on duty in the Navy Department. The Personnel Travel Division handled all facets of passenger transportation for naval personnel and civilian employees of the Navy. Originally, these functions--which included among other things, maintenance of passenger tariffs, preparation of instruction for the Department and the field governing the preparation and submission of travel vouchers, and administration of the issuance of transportation and subsistence of directly recruited Navy civilian personnel--were discharged within the Disbursing Division, but the increased work load justified the establishment of a separate division in 1944.
The Navy's War Savings Bond program, dating from 1941, proved so successful that it was eventually adopted by all governmental agencies. In addition, the Navy led all other federal agencies in participation in the War Bond program--by October 1944, over 93 percent of the Navy's civilian employees had been enrolled as regular purchasers. The promotion and administration of this program were technically outside BuSandA in the Office of Coordinator of Savings Bonds, directly subordinate to the Under Secretary of the Navy. In August 1945, however, a reorganization was effected which placed administrative responsibility within the Bureau and led to the establishment of the War Bonds Division, while the Coordinator's Office retained responsibility for sales promotion.70 As
Rear Admiral William J. Carter (later Vice Admiral) (SC)
Chief of Bureau of Supplies and Accounts, March 1945-Oct. 1946.
mentioned previously, the issuance of bonds to military personnel was a function of the Allotments Division which was incorporated into the Field Branch.
Navy Regulations charged BuSandA with keeping the Navy's accounts, both property and financial.71 Within the Bureau, these functions were
assigned to the Accounting Group. This group had the responsibility of establishing and maintaining the largest centralized accounting system in the world, containing complete sets of subsidiary accounts and records supporting detailed analysis of expenditures and revenues. This system controlled the financial structure for the entire Navy Department, involving 1,500 field shore establishments, employing approximately 600,000 civilian personnel. All of the fiscal transactions relating to this group are received, coordinated, administratively reviewed, summarized, and posted to the related accounts and centralized system from which are prepared all the official and essential financial statements of the Navy Department. All of the accounting procedures and reports are required to conform to accepted governmental and commercial practices, and meet the regulatory requirements of the Bureau of the Budget, General Accounting office, and Treasury Department.
The Accounting Group was required to:
- Keep abreast of the hanging accounting requirements deemed necessary to meet the administrative operating needs and the requests of Congress;
- Initiate and develop appropriate accounting procedures affecting all naval activities, ashore and afloat, such as accounting procedures for (a) material redistribution, (b) housing projects, (c) Lend-Lease and Reciprocal Aid, (d) civilian payrolls with particular reference to the leave requirements and rights under the compensation laws, and (3) appropriation requirements that are contained in current appropriation acts;
- Contact and report on the activities of commercial organizations cooperating with the Navy Department;
- Make arrangements for the establishment of foreign finance and exchange facilities;
- Coordinate accounting procedures of the Navy Department with those of the War, State, Treasury Departments, and the General Accounting Office, and other agencies cooperating with the war effort;
- Develop and promulgate accounting procedures developed by specific reports;
- Develop technical features of reports deemed essential for the presentation of naval financial statements;
- Develop and present proposed legislation to meet the changing accounting requirements of the Navy Department;
- Develop training material in cooperation with educational institutions training Supply Corps Officers; and
- Determine the legal requirements for the developed accounting procedure.72
The efficient performance of these duties was obstructed primarily by two factors: a serious shortage of qualified personnel and an outdated accounting system incapable of effective expansion. The personnel shortage was due to the vast increase in the group's work load, the induction of key and trained employees into the armed forces without consideration for their need and qualifications in the group, and the generally low civil service classifications assigned to most of the Accounting Group's positions. The problem was met by a stepped-up personnel procurement program which included direct recruiting from high schools and business colleges, and the up-grading of many of the positions. In addition, the Bureau was finally able to expedite the commissioning of officers whose civilian experience qualified them for billets in the Accounting Group.73
As the personnel efficiencies of the Accounting Group were eliminated, those charged with the Navy's accounting function quickly ascertained that the very accounting system itself was badly in need of simplification. To meet the tremendously complicated task brought about by the war, the Assistant Chief of the Bureau, late in 1942, appointed a study committee to consider modernizing the Navy's accounting system. The classification of titles and accounts in use at war's outbreak, for example, was used by the Navy before 1910. It combined a single capital letter with a single number; for mechanical purposes it was essentially a block classification system.
The Under Secretary of the Navy took note of the appointment of this accounting study group, and directed that the committee's report be submitted for his approval. Without going into detail of the aforementioned study, it is pertinent here to outline the conclusions of the Committee on Accounting Changes; these conclusions were referred to the Under Secretary on 5 April 1943 under the tile of "Report on Suggested Changes in Accounting Organization and Procedures."74
In arriving at their recommendations, the committee gave particular consideration to the following aspects of the accounting situation:
- "General effectiveness of plan of organization including extent of decentralization as means of keeping current with present volume of work.
- Coordination of related records being maintained at various activities and elimination of any duplication and unnecessary work.
- Effectiveness of accounting control from viewpoint of independent record of operating results, as well as fidelity control over cash and property.
- Whether structure and form of reports satisfactorily meets the needs of the Navy management; and the extent, of any, to which present reports may not be justified."75
The actual recommendations go into great technical detail with respect to the operations of the Accounting Group. It was recommended that certain detailed records be decentralized from BuSandA to the technical bureaus as basic subsidiary records in support of the general control records to be maintained in the Accounting Group. At the same time, the functional responsibility of the Bureau should be extended to all accounting activities located in the technical bureaus.
The committee recommended the establishment of an office of the Controller of the Navy ". . . in which should be centralized the responsibility and authority for all accounting activities in the Navy. The Controller's functional responsibility and authority should extend to all field bureaus. he should exercise administrative authority over the accounting activities of the Bureau of Supplies and Accounts and report directly to the Chief and Assistant Chief of the Bureau."76
Other recommendations called for segregation of the Accounting Group's work between audit-review of accounting documents received from the field and the processing of these documents through the general accounting system; vesting of responsibility for timekeeping in industrial activities in the accounting departments rather than the industrial departments; and the establishment of a permanent staff of "systems and procedures men: in the Controller's office for the purpose of continuous study and revision of the Navy's accounting system.
The "heart" of the report was the recommendation that the financial information requirements of the various bureaus and offices be carefully reviewed as the basis for developing a group classification plan which would permit the use of tabulating equipment. "The adoption of such as system would greatly facilitate the performance of the accounting work through the use of summary cards, and by permitting the tabulation of the major classification expenditure totals in advance of the minor or detailed totals."77
Despite the broad nature of the "Grady Report," it was necessary to provide a staff which would implement the recommendations, especially those dealing with the need for a new classification of accounts. The problem was worked on for nearly a year before it was presented to the Under Secretary, whose approval was readily obtained. Once the basic authority for installing the new system was secured, this same staff was augmented and spent nearly another year putting the plan into final form, arranging to instructions to the field, and rewriting the BuSandA Manual and Memoranda. The plan was finally put into operation on 1 July 1945.
As mentioned above, the old accounting system (called the "Titles and Accounts" system) had been in use since the turn of the century. It was highly unsuitable for adaptation to an expanded navy; under it, expenditures were grouped often without regard to logic. When statistical breakdowns of appropriations and expenditures were required, they were very hard to make. While the new "classification of Expenditure Accounts" system closely paralleled the old system, it nevertheless corrected the deficiencies of the "Titles and Accounts" method.
The basis of the new accounting system is outlined in the following excerpt from the May 1945 edition of the Navy Accounting Handbook (NAVSANDA Publication No. 45):
"Expenditures reported in the fiscal year 1946 and thereafter will be codified through the use of five-digit numeric codes. These codes are constructed so as to permit the correlation of expenditures into classifications which may be related back to primary project estimates on which appropriations are justified before the Bureau of the Budget and the Appropriation Committees of the Congress. While there will be exceptions to this desired end result, on the whole, the new accounts connote progress which will be apparent in the post-war years. The Navy Department through the presentation of simplified statements of how appropriations are expended, will be in a position to specifically justify the need of funds for definite purposes in future years when the estimates of appropriation requirements will be more closely screened than is possible under war conditions."
With the adoption of the new system, the Accounting Group believed that the Navy was better able to defend its appropriation requests and to furnish completely accurate information rather than estimates to the Congress, the President, the Treasury Department, and other government agencies. The new plan was ". . . far more satisfactory than any previous system adopted for the recording of fiscal and administrative information."78
The seven divisions with which the Accounting Group emerged from the war are shown in Figure 26. They will not be discussed individually since
they shared the basic function of accounting for the Navy's money and property and their titles are descriptive of their separate technical roles.
Three "ungrouped" divisions reported to the Fiscal Director: the Budget Division, Cost Inspection Service, and International Aid Division. The first and last of these may be described very briefly; somewhat more attention will be given to the Cost Inspection Service.
Although the Budget Division evolved through several organizational changes, its function and those of its antecedents remained essentially the same throughout the war. These were the preparation of budget estimates for appropriations and funds controlled by BuSandA, and assistance in hearings thereon; preparation of requests for apportionment of appropriations; allocation of amounts as approved to the various budget programs; and the application of necessary administrative controls to remain within the available funds.79
In 1939, the functions described above were handled within the Field Services and Appropriations Estimating Divisions, the latter's name being changed to Budget Division in 1941.80 The Field Services and Budget Divisions were then under the same office-in-charge and operated in close cooperation. Cooperation became consolidation on 18 June 1942, when the two divisions were combined into the Maintenance Division.81 On 13 July 1944, the name of the Maintenance division was changed to the Budget Division, an appellation much more descriptive of the division's cognizance.82
The International Aid Division was a direct product of World War II. The nations with which the United States allied itself after Pearl Harbor had been fighting since September 1939. Various legal restrictions prohibited the United States form extending the amount of help which the future allies requested. On 11 March 1941, the Congress passed legislation designed to provide large scale material aid to the friendly powers. This law came to be known popularly as the "Lend-Lease:" it initiated a service in which BuSandA was to play a very prominent part.83
Originally, foreign governments' requisitions were routed through the Lend-Lease Administration (later the Foreign Economic Administration), and financed from funds appropriated to that agency by Congress. The requisitions were then routed through the various procuring agencies, such as the Navy Department, and to the cognizant Bureau, and funds were allocated to these bureaus accordingly.84
With the passage of Public Law 441, 7 February 1942, funds were instead appropriated directly to the Navy under regular Navy appropriations for Defense Aid.85 Foreign requisitions were forwarded directly to the Navy, and were filled in considerably less time. In effect, the foreign nation became another claimant naval activity, and was treated much like a United States naval activity in the fulfillment of requisitions.
The International Aid Division was responsible for the Bureau's part in the Navy Lend-Lease program and, in certain respects such as accounting, movement of Lend-Lease materials, and administration of the Reciprocal Aid Program, was largely or wholly charged with the entire United States Navy responsibility in this field.
A major step in achieving greater efficiency in the Bureaus dealings in Lend-Lease was the establishment of the International Aid Division itself.86 Previously, the Bureau's Lend-Lease responsibilities had been distributed among three divisions: Defense Aid Section, Budget Division, handled administrative matters; accounting and reporting were the responsibilities of the Lend-Lease Accounting Division; and transportation was dealt with by the Defense Aid Material Movement Section of the Transportation Division. The first two activities were combined to form the International Aid Division on 14 July 1944, and the Material Movement Section was incorporated into the Division on 9 November of that year.
Last of the three divisions directly under the Fiscal Director was the Cost Inspection Service. As stated earlier in this chapter, pre-war procurement was done almost exclusively on a fixed-price basis. The uncertainty of the war years made this system obviously impossible; consequently, price-adjustment or cost-plus features were written into virtually all wartime contracts. This fact magnified the importance of keeping costs under surveillance to insure that they were fair to both the government and the contractor.87
Cost inspection of Navy contracts was established pursuant to an order issued by the Secretary of the Navy on 22 March 1917.88 The order created a Compensation Board for the purpose of determining the cost of ships being built, or about to be built on a cost-plus basis. BuSandA assisted
the Compensation Board in the determination of costs under shipbuilding contracts, and the Bureau itself performed the cost inspection on manufacturing cost-plus contracts and ship repair contracts.
The settlement of war contracts and ship construction contracts cancelled due to the Naval Limitation Conference kept the Bureau and the Compensation Board occupied until 1925.89 Cost inspection activities were greatly curtailed during the next ten years due to the use of fixed-price contracts. The expansion program which got underway in the early 1930's, however, gradually increased the work of the Bureau and the Compensation Board. The acceleration of the naval building program in 1939 resulted in a corresponding increase in cost inspection needs. Meanwhile, passage of the Vinson Act in March 1934 (and its amendments in 1936), containing provisions for the limitation of profits, complicated and enlarged the scope of cost inspection.90
The continuing dual responsibility for cost inspection work between the Compensation Board and the Cost Inspection Service resulted in a conflict of authority, duplication of effort, and dissatisfaction among contractors. The Booz Report recommended the consolidation of Navy cost inspection services in the Bureau.91 No action was taken by the Navy Department until 9 February 1942, at which time the cognizance and responsibility previously shared with the Compensation Board were assigned to BuSandA.92
The Cost Inspection office in Washington was a small policy making group employing about 2% of the total personnel of the Cost Inspection Service Operational control of the Service was exercised through Supervisory Cost Inspector's offices, located in each naval district. A majority of the personnel were in the field organization, dispersed at manufacturing plants and shipyards throughout the country. Most of the experienced certified public accountants who could meet on equal terms the accounting representatives of contractors.
The value of cost inspection is readily apparent when it is considered that during fiscal years 1943 and 1944, disallowances from costs claimed by contractors on all types of contracts under which cost determination was the basis for payments aggregated approximately $140,000,000. During this time, the cost of operating the Cost Inspection Service, including the entire field organization, amounted to $24,000,000.93
Navy procurement officers often sought the assistance of the Cost Inspection Service in verifying cost-breakdowns submitted by contractors for use in negotiating fixed price contracts. In many instances, the appearance of a Navy Cost Inspector at the contractor's office to check cost figures resulted in almost immediate downward revisions in the prices proposed.
In the final years of the war, the Service became increasingly concerned with claims arising from contract terminations, a function which dominated cost inspection activities at the conclusion of the war. The Service was guided in this respect by a Joint Termination Regulation issued 1 November 1944 by the War and Navy Departments, which established uniform policies and procedures for the termination of war contracts executed by either department.94
Notwithstanding inevitable differences of opinion, the Cost Inspection Service found its relationship with contractors quite satisfactory; contractors were not required to make costly changed in their accounting systems if their books provided the information necessary to make a proper determination of cost. In cases involving disallowances, the reasons were always fully explained to the contractors, and in most instances agreement to the disallowances was obtained. Futhermore, contracts were usually paid more promptly through the use of special Disbursing Officers attached to the offices of Supervisory Cost Inspectors.95
The remainder of BuSandA's functions were distributed among seven divisions: Aviation Supply Liaison, Planning, Special Assistants, Professional Assistants, Public Information, Chief Clerk, and Officer Personnel. These divisions reported directly to the Assistant Chief of the Bureau, and for that reason, are considered together at this point.
Aviation supply was in a continual state of flux during World War II. The rapid growth of naval aviation, requirements for multitudinous items unused outside of aviation, and the swiftness of technological developments which frequently rendered obsolete much aviation material on hand, complicated the problem. As a result, cognizance of material, supply methods and procedures were under constant study throughout the war. The Aviation Supply Liaison Division was the BuSandA unit concerned with aviation supply at the close of hostilities. This division's function was to coordinate the efforts of BuSandA, the Bureau of Aeronautics, and
the Aviation Supply Office "on matters pertaining to supplies of aviation material."96
Predecessor to the Aviation Supply Liaison Division was the Aviation Supply Division. This unit acted as a liaison between BuSandA and the Bureau of Aeronautics, as a cataloging agency for aeronautical material, and as a procurement recording and expediting agency .In November of 1944, the Aviation Supply Division was transferred to the Bureau of Aeronautics, where it became that bureau's supply division. It assumed responsibility for inventory control, disposal of surplus war property, coordination within the Bureau of Aeronautics of all supply problems, and continued liaison with BuSandA and the Aviation Supply Office.
Actual procurement and stock accounting of aviation material was handled by the Aviation Supply Office (ASO) in Philadelphia. This unit, an outgrowth of the Naval Aircraft Factory's Supply Department, was headed by an officer of the Supply Corps with the title "Aviation Supply Officer." Throughout the 1930's, the Supply Department of the naval Aircraft Factory had been progressively given authority over the distribution of aeronautical stores. The ultimate result was the centralization of procurement of all aviation stores, spares, and replenishment parts in the ASO.97 The ASO exercised stock control over aeronautical stores, arranging transfers from one naval aviation activity to another a necessary; it standardized aviation stock items as far as possible; and it cooperated with the Army Air Forces to reduce competition between the services for the same industrial output, and to provide for inter-service transfer of material when feasible. At its peak, the ASO originated procurements of aviation supplies at the rate of $1,500,000 per day.
The Aviation Supply Office provided an excellent example of inter-bureau cooperation. Line officers form the Bureau of Aeronautics and Supply Corps officers from BuSandA worked in the ASO of billets which made no reference to their "sleeve marks." The Aviation Supply Officer himself was empowered to speak with the full authority of either bureau chief.
The division shown in Figure 26 as the Planning Division is the final amalgamation of various units which performed different planning functions for BuSandA throughout the war. Many organizational changes were made during these years; they can be traced by comparing the various
Control Records for the war years. This chapter will include only an overall description of the Bureau's planning activities and will not attempt a breakdown by specific division or section.
The planning functions of BuSandA cut across the functions of virtually all the divisions of the Bureau. The Bureau's planning officers and staffs corresponded roughly to the general manager's office in an industrial organization, comprising a central office for the initiating of plans which affected the work of the rest of the Bureau, and the officers of the Supply Corps as well.98
Planning in BuSandA may be divided roughly into administrative planning and logistics planning. They will not be considered independently, however, as each had its effects on the other. Among the tasks of the Bureau's planners were such items as:
"The general planning for bureau functions and liaison with other bureaus and offices of the Department and other agencies.
Planning for the outfitting of ships.
Control of printing and publications.
Supervision of bureau public relations, history and liaison with Congress.
Supervision fo the bureau's interests in military government of occupied areas.
Supervision of managerial surveys."99
Added to these considerations were such others as the supply of advanced bases, the assembly of commissioning outfits, establishment and expansion of storage facilities, and organization fo activities under BuSandA cognizance. The ultimate results of much work initiated in the planning divisions has already been covered in this chapter. The location and establishment of the inland supply depots,100 the amalgamation of Ship's Stores and Ship's Service Stores,101 and the establishment of the Aviation Supply Office102 are examples. At various times during the war, BuSandA's Management Engineer operated within a planning division;103 the Public Information Division was an outgrowth of a section which operated under a planning division.104
BuSandA's planners worked closely with those of the other bureaus and the office of the Chief of Naval Operations in meeting the problems
of expanding the Navy and keeping it supplied throughout the globe. The Bureau's planning divisions recommended storeroom, commissary, and loading arrangements during the design and construction of ships;105 they participated in establishing initial allowances, and collected usage data to be considered in drawing up final allowance lists; and they prepared booklets of instructions to guide inexperienced supply officers in the performance of their duties.106
The Bureau's planners also played a large part in the development of advanced base supply. Here again the Navy had virtually no previous experience on which to draw, but intelligent estimating by the various bureau and office planners resulted in sound basic allowances which were easily modified when usage data became available.107 The idea of listing and assembling all the items required to perform any specific task at an advanced base was adopted and called an "advanced base functional component." All the components needed to establish any given kind of advanced base--repair, supply, air, for example--were collectively called "advanced base units." BuSandA coordinated the items of supply required for advanced base components, and published and amended the "Catalog of Advanced Base Functional Components" (promulgated by the Vice Chief of Naval Operations).
With the compilation of firm issue and usage data, the Bureau's planners extended the theory of "block shipments (of which the advanced base functional component is an excellent example) to use in fleet replenishments: the system proved an important time-saver.
Use of tabulating machinery to keep stock and issue data up to date, training of personnel in advanced base supply work, origin of the Naval Supply Center concept (where at one office, ship supply officers could requisition items under any bureau's cognizance), and long-term planning for future logistics problems were additional accomplishments of the Bureau's planners.108
Also reporting to the Assistant Chief of the Bureau were the Special Assistant's Division and the Professional Assistant's division. With the growth of the Navy and the large increase in laws and regulations affecting BuSandA, the need for qualified advisors on such matters had become obvious. The Special Assistant was appointed shortly before the war began. His responsibility was to assist the Chief of the Bureau on accounting and fiscal matters. Included in this function, the Special Assistant developed
policies and procedures relating to the operation of the Bureau, and studied special problems assigned by the Chief of the Bureau.109
The Professional Assistant's Division was established after hostilities had begun. His functions were to provide advice on legislative and legal matters (except legal matters relating to procurement);110 supply reports, recommendations and information on proposed legislation; review requests for opinions of the Judge Advocate General and decisions of the Comptroller General and instructions relating thereto; and to advise naval personnel on income tax matters.
The Public Information Division's functions are accurately indicated by the division's title. Its responsibilities included supervision on the preparation and release of information and publications on the activities of the Supply Corps; acting as liaison on training films and as voting office for the Bureau; attending to congressional inquiries; and acting as the historical office of BuSandA and the Supply Corps.11
Certain "housekeeping" and service functions are a necessary and important part of any organization. In BuSandA these functions were performed by the Chief Clerk's Division, called the Civilian Assistant's division until July 1942.
The Chief Clerk was responsible for the procurement of civilian personnel, all operating functions relating to civilian and enlisted personnel on duty in the Bureau, mail and messenger service, an office equipment and supplies.
Personnel was the greatest problem faced by the Chief Clerk's Division in World War II. Total Bureau civilian personnel in Washington expanded from 600 in 1939, to over 4,000 in 1944.112 In addition to recruiting thousands of employees, the Division provided classification surveys, in=-service training, incentive programs, employee counseling, and recreational programs in order to make the best possible use of the Bureau's employees. These services did much to reduce civilian personnel turnover, and also, to increase the efficiency of employees through maintaining morale. It is noteworthy that despite the greatly increased demands made on this division, its own personnel remained stable in number and composition throughout the war.
Last of the units reporting directly to the Assistant Chief of the Bureau was the Officer Personnel Division. In December 1941, there were on active duty 638 officers of the regular Supply Corps and 1,425 officers, S.C., U.S.N.R.113 and 13,892 officers, S.C., U.S.N.R. on 30 June 1945.114 These statistics reveal that officers on active duty multiplied about eightfold, and that the bulk of the increase was provided by Reserves. The Officer Personnel Division considered its fundamental problem to be "the procurement of Reserve officers in adequate numbers to meet the demands of an expanding Supply Corps. The training given Reserve officers, once recruited, is also of paramount importance."115
Pre-war procurement and training of Reserves was very haphazard. Each Naval District Commandant was charged with enrolling officers in the Naval Reserve, within quotas assigned by the Bureau of Navigation. Applications for Supply Corps appointments were forwarded by the Commandants and examined in BuSandA. BuSandA's recommendations on each individual were generally followed by BuNav. Lack of coordination, however, among BuSandA, BuNav, and the districts often prevented effective utilization of accepted candidates. Many officers were appointed in the Reserve without regard for actual mobilization requirements.
Reserve Officers of the Supply Corps were divided into two basic categories: General Service ("G") and Special Service ("S"). "G" officers were those qualified to perform general supply functions afloat or ashore. "S" officers were appointed for assignment to specific and specialized billets for which the applicant was professionally qualified by virtue of his background and training. Men of this classification were given only a brief indoctrination to show them the "Navy way" and were then put to work. They were part of the shore-based Navy, and their work was similar to that which they had done as civilians. The age of 30 was an arbitrary dividing line between the "S and "G" classification. It was considered that a man had not usually learned enough about his profession to be rated an expert, under 30 years of age, and that such men were also better physically qualified for sea duty than were older men.116
Shortly after the outbreak of the war, the offices of the District Commandants were completely bogged down with the procurement of Reserve Officers. It was necessary for the Bureau of Naval Personnel to set up
Offices of Naval Officer Procurement in order to provide the large number of officers needed for the prosecution of the war. The Supply Corps had little difficulty in obtaining enough officers until 1944. Then, the decisions to draft no more men over 28 removed the implicit threat of Selective Service to persuade qualified civilians to apply for commissions. As a result, the pool from which the Corps might have drawn additional "S" officers, simply dried up. Procurement of General Service officers proceeded satisfactorily throughout the war.
Before the war, there was a notable lack of proper training for officers of the Supply Corps Naval Reserve of all classifications. Officers appointed as probationaries were required to take the Supply Corps Correspondence Course; other officers were merely encouraged to do so. This course was the only training afforded officers of the Reserve by BuSandA. There was no method of sustaining the interest of Reserve Officers after they had completed the Correspondence Course.117
At the time the national emergency was declared in September 1939, formal training for Supply Corps Reserve officers was virtually nonexistent. Regular Nay Supply Corps officers attended the Navy Finance and Supply School, located at the Philadelphia Navy Yard, but this was the only Supply Corps school and it had only an average annual output of approximately 35 officers. When sizeable numbers of Reserves were ordered to active duty, BuSandA et up three schools in washington, D.C., to provide basic Supply Corps training. At the same time the course at Philadelphia was condensed and the number of graduates increased by 300 percent. In June of 1941, Supply Corps training was localized at Harvard University. By overlapping, a class of approximately 400 entered there every two or three months.
Specialists were indocrinated by a one or two months course given first at Harvard and later at the Babson Institute, in Boston, massachusetts. The need for further specialized training (i.e. Aviation Supply, Marine Transportation) led to the establishment of a number of auxiliary schools, at various locations, in 1943 and 1944. WAVE officers were trained at Radcliffe College, in Boston; about 850 received instruction at that unit.
In an effort to determine the most desirable educational backgrounds for prospective Supply Corps officers, the Officer Personnel Division analyzed eleven classes at the Navy Supply Corps School, harvard University. This analysis showed that business administration was the most useful educational background for Supply Corps candidates, with economics
next. The scholastic requirements of the school formerly attended by the candidate was highly significant; men from schools with high academic standards did well at the Supply Corps School irrespective of their college major.118
One unit of BuSandA reported directly to the Chief of the Bureau; this was the Inspection Group. Headed by the General Inspector of the Supply Corps, this group kept a constant check on the administration and operations of all activities under the Bureau's cognizance to insure conformity with Bureau policy and to insure efficient management. Periodic fiscal examination of the accounts of disbursing officers was one of the important functions of the General Inspector. The Inspection Group provided the benefit of objective advice from experienced officers of the Supply Corps to activities afloat in the field.119
General Inspector of the Supply Corps
Summing UpThe organization of the Bureau of Supplies and Accounts was adapted as necessary during the war to meet the hanging problems of supplying the Navy. But wartime experience was not fully reflected by the organization which emerged form the war. Immediately after the war, however, the Bureau of Supplies and Accounts undertook to record the lessons of the war and to apply those lessons in terms of organization. The primary result of this review was the establishment of an integrated Navy Supply System and the adaptation of the organization of the Bureau to the administration of the system.
Table of Contents
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Footnotes[Note: The links below are to the Guide to United States Naval Administrative Histories of World War II. The BuSandA histories therein have not been transcribed yet. If and when they are, the Guide entries will be linked to these transcribed volumes. In the meantime, these links seem better than nothing. --HyperWar]
1. 1 Stat. 419.
2. 1 Stat. 553.
3. 16 Stat. 536.
4. 41 Stat. 147.
5. Under the procurement method adopted, the technical bureaus negotiated a far greater money value of contracts than did BuSandA; nevertheless, the determination of allowable costs on all contracts was BuSandA's responsibility. During World War I, the Compensation Board had been created and, working independently of BuSandA, determined allowable costs under cost-plus and similar types of contracts. The Board was abolished in 1942 and its duties were transferred to BuSandA.
6. For laws covering naval procurement, see Revised Statutes, Sections 3700-3719. Hereafter cited as R.S. (section).
7. United States Naval Administration in World War II, Bureau of Supplies and Accounts, Volume XIV, p. 3. Certain federal regulations required that government agencies buy fro special groups, such as the Federal Prison Industries, Inc. (Reference hereafter cited as S&A with Vol. No.)
8. S&A, XIV, p. 4.
9. S&A, XIII, p. 31.
10. S&A, XIV, p. 13.
11. S&A, XIII, p. 39.
12. S&A, XIV, p. 15
13. S&A, XIII, p. 67ff "Exhibit B," reproduced in the referenced pages, contains correspondence between the Under Secretary of the Navy and the Bureau Chiefs on the subject of material procurement.
14. S&A, XIII, p. 55. The section of the Revised Statutes referred to, prescribes the use of bid-and-award procurement.
15. S&A, XIV, p. 41.
16. S&A, XIII, p. 67ff. "Exhibit 13," p. 9, within the referenced pages.
17. S&A, XIII, p. 67ff, "Exhibit B," p. 17.
18. S&A, XIII, p. 10-11.
19. S&A, XIII, p. 11.
20. S&A, XIV, p. 47-48.
21. It was considered desirable for the divisions in the Administrative Group to report directly to the Assistant Chief of the Bureau; therefor no change was recommended in this area.
22. S&A, VI, Part 2, p. 74-75. The figures on the amounts appropriated are cumulative since 1893, are gross, and show no cancellations.
23. S&A, XIII, p. 146. In 1945 there were over 100,000 different items classified as "standard stock."
24. S&A, VI, Part 2, p. 74. This division was established on 22 December 1944.
25. S&A, VI, Part I, "Navy Catalog office," p. 2.
26. S&A, VI, Part I, p. 10.
27. S&A, VI, Part I, p. 13.
28. Ibid., p. 42.
29. S&A, XIV, p. 296.
30. S&A, XIV, p. 373.
31. S&A, XVII, p. 25. These depots are located at Clearfield, Utah; Mechanicsburg, Pennsylvania; Scotia, New York; and Spokane, Washington. A fifth depot at Barstow, California, was established but it was turned over to the Marine Corps immediately upon its completion.
32. Bureau of Supplies and Accounts, NAVSANDA Publication No. 37 May 1045 "Handbook of Operating Procedures for the Use of Commercial Storage Space by Naval Activities," p. 1. (Bound as "Exhibit J" to S&A, XVII.)
33. S&A, XVII, p. 95.
34. S&A, V, p. 25.
35. Ibid., p. 27.
36. S&A, V, pp. 71-72.
37. Ibid., p. 76
38. S&A, V, p. 65.
39. S&A, XV, p. 14.
40. S&A, XV, p. 16.
41. Ibid., p. 25 ff.
42. S&A, XV, p. 45-46.
43. S&A, XV, p. 49 ff.
44. Report of Special Committee Appointed by the Secretary of the Navy to Make a Study of the Navy's Food Administration (11 May 1943), p. 2 (BuSandA Library).
45. S&A, III, p. 13.
46. S&A, III, p. 26.
47. Ibid., p. 296.
48. S&A, III, pp. 301-302.
49. Ibid., p. 105.
50. Ibid., p. 165.
51. S&A, XVI, p. 1.
52. Ibid., Exhibit B, p. 1.
53. S&A, XVI, Exhibit B, p. 4.
54. S&A, XVI, Exhibit B, p. 12.
55. Review and Evaluation of the Navy Exchange System, prepared by the Office of the Assistant Secretary of the Navy, 29 November 1950, p. 1 (BuSandA Library).
56. S&A, XIX, p. 8ff.
57. Ibid., p. 13.
58. S&A, XIX, p. 15. The other agencies represented on the Committee were the War Department, the Office of Defense Transportation, the War Shipping Administration, and the British Ministry of War Transport.
59. In addition to the Transportation Control Committee, the Transportation Division represented the Navy on the ODT Coordinating Committee, the Port Utilization Committee, the Army-Navy Explosives Safety Board, and the Traffic Requirements and Priorities Control Committee.
60. S&A, XIX, p. 14ff.
61. Ibid., p. 23.
62. Ibid., p. 38.
63. S&A, XIX, p. 63ff.
64. S&A, I, "Disbursing Division," p. 57.
65. S&A, I, "Disbursing Division," p. 56c.
66. Booz Report, p. 65 ff.
67. S&A, I, "Disbursing Division," p. 58ff.
68. S&A, I, "Disbursing Division," p. 91.
69. S&A, I, "Field Branch Liaison," p. 1.
70. Information from Head, Savings Bond Branch, BuSandA, November 1955.
71. United States Navy Regulations, 1920, Articles 11861-1863, applied during World War II; in the current edition (1948), Articles 0450 and 0453 apply.
72. S&A, I, "Accounting Group," pp. 23-34.
73. S&A, I, "Accounting Group," pp. 7-9.
74. S&A, I, "Accounting Group," p. 58. This report became known familiarly as the "Grady Report," after Mr. Paul Grady, a former partner in a prominent firm of certified public accountants, who resigned his post to perform this work for the Navy. The staff for the committee came from the Cost Inspection Service of the Bureau.
75. S&A, I, "Accounting Group," p. 60.
76. S&A, I, "Accounting Group," p. 61. This proposal was not adopted during the period with which this study is concerned.
77. Ibid., "Accounting Group," p. 66.
78. S&A, I, "Accounting Group," p. 169.
79. Bureau of Supplies and Accounts Control Records, 1941-1945.
80. S & A, VII & VIII, p. 26.
81. Ibid., p. 28.
82. Ibid., p. 88.
83. S & A, VII & VIII, p. 60.
84. Ibid., p. 62.
85. "Defense Aid" and "Lend-Lease" were, in effect, identical. "Defense Aid," however, was used to designate aid furnished form Navy appropriations, and "Lend-Lease" to designate aid furnished from funds under the cognizance of the Lend-Lease Administration.
86. S & A, VII & VIII, p. 127.
87. Cost inspection in connection with material inspection is discussed briefly in the chapter on "Material Procurement," p. 127 [sic p. 874].
88. S & A, IV, p. 3.
89. Ibid., p. 11.
90. Ibid., p. 4.
91. Booz Report, pp. 84-87, 124-125.
92. Ibid., p. 16.
93. Undated letter from Chief BuSandA to Director of the Bureau of the Budget. Subject: Brief History of the Bureau of Supplies and Accounts (Cost Inspection Service) (BuSandA file no. EN9-S (CI-IWL); letter attached to flyleaf of S & A, IV).
94. S & A, IV, p. 124.
95. Brief History of the Bureau of Supplies and Accounts (Cost Inspection Service).
96. Control Record, 1945, p. 2.00.
97. Background on the actual establishment of the Aviation Supply Office, as well as aviation supply in general, is found in S & A, II. The Booz Report discusses aviation stock control and its associated problems in Chapter III.
98. S & A, XII, Introduction.
100. Ibid., p. 21.
101. S & A, XII, p. 6.
102. Ibid., p. 16.
103. Ibid., p. 52.
104. Ibid., "Administrative Services," p. 28.
105. Ibid., "Ship's Section," p. 1.
106. Ibid., "Ship's Section," pp. 8-9 Copies of these pamphlets are bound in S & A, XII.
107. Ibid., "Advanced Bases," p. 9.
108. S & A, XII, "Advanced Bases," p. 46 ff.
109. Control Records, 1941-1945.
110. Legal advice and service relating to the procurement of supplies and service was provided to BuSandA by the Office of Legal Procurement, later called the Office of Counsel, an activity which reported to the Under Secretary.
111. Control Records, 1941-1945.
112. S & A, X, "Chief Clerk's Division," p. 10.
113. S & A, X, "Officer Personnel" letter of Chief of Bureau of S & A, OS/P16-4(OP) of 19 August 1943.
114. SecNav Annual Report for 1945, page A-19.
115. S & A, X, "Officer Personnel," p. 2.
116. S & A, X, "Officer Personnel," p. 32.
117. Officers of the Organized Reserve were required to attend drills, but such officers were but a small minority of the Supply Corps Reserve.
118. S & A, X, "Officer Personnel," Exhibit 6.
119. S & A, XI, Part 1, p. 10.