415. Memorandum From the Assistant Secretary of Defense for Installations and Logistics (Shillito) to Secretary of Defense Laird 1

SUBJECT

  • Proposed Reduction of Strategic and Critical Materials Stockpiles

Dr. Kissinger’s office (General Haig) advised your office verbally that the Bureau of the Budget had submitted a proposal to the effect that the Strategic and Critical Materials Stockpile be abolished. It also was reported that a preliminary White House discussion resulted in a verbal modification of the BoB proposal so as to impose only a 50 percent reduction. Whether this means 50 percent reduction in objectives, or in physical inventories, has not been made clear. My office has not seen the original BoB proposal, nor heard the modification, hence we have only a very general picture of its nature. It is alleged to be based on the presumption that the strategic planning factors underlying the present stockpile objectives are unrealistically conservative. As of 31 October 1969, these inventories totaled $6.75 billion at current value. The inventory objectives totaled $3.84 billion.

With the advent of NSDM-27,2 it certainly is logical that an examination of stockpile objectives be conducted to reflect the policies in that decision.

There are two major factors that should be considered in the examination of stockpile objectives. First, certain countries or areas of the world may be assumed inaccessible as suppliers of basic or raw materials. The JCS developed a list of assumed inaccessible countries in a future non-nuclear engagement. This information was furnished OEP on 6 March 1968.3 Naturally, this list should be re-examined in the light of NSDM-27. Second, since the possibility exists that it might become necessary in the future to engage in a non-nuclear conflict of such magnitude as to warrant the application of emergency powers, the need for strategic and critical materials under such circumstances must be [Page 1028]provided for. The planning of requirements and production for military items, which forms the basis for computing the DoD strategic and critical materials needs, is specified in the DoD 4005 series of directives. This provides the data to identify needs and capabilities to meet such an emergency.

The existing stockpile planning assumptions were established by Presidential decision, 31 October 1968, following a lengthy study by a special committee and discussion in the NSC. This approved planning basis represented a compromise between the views of DoD and OEP.

DoD believes that stockpile objectives should be computed on the basis that supplies of materials will remain available to the United States, throughout the period of the conflict, from all normal world sources except those specifically excluded by JCS for strategic reasons. OEP had long favored a much more conservative assumption as to accessibility of sources. The 1968 decision envisages very limited source accessibility (U.S., Canada, Mexico and the Caribbean area) for the first year of war, and the much broader JCS view for subsequent years.

Were the DoD strategic assumptions to be fully accepted, in lieu of the 1968 compromise decision, a reduction in objectives of perhaps 25 percent in total dollars might result. Re-evaluation of the DoD guidance, in light of NSDM-27, could have an even greater effect. In either case, however, the effect on reducing objectives would vary greatly between individual materials because no two exhibit the same source pattern.

It should be pointed out that the Government inventories contain nearly $3 billion worth of materials in excess of existing stockpile objectives. One billion of this has been authorized for disposal and the balance still requires Congressional authorization. Thus, if attainment of additional funds is the prime objective, a more aggressive disposal policy could result in a significant increase in Government income.

I recommend that in any discussion of this matter you take the position that the entire basis of stockpile planning should be re-examined in light of NSDM-27, including maximum tightening of all planning and safety factors, but that no arbitrary across-the-board cut should be made in stockpile objectives.

Barry J. Shillito
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 396, Stockpile. No classification marking. Attached to a memorandum from Colonel Robert E. Pursley, Military Assistant in the Office of the Secretary of Defense, to Secretary Laird. Both were transmitted to Haig under cover of a handwritten memorandum dated December 26 from Captain Daniel J. Murphy. (Ibid.)
  2. NSDM 27, dated October 11, 1969, is entitled “U.S. Military Posture.”
  3. Not further identified, but see Foreign Relations, 1964-1968, vol. IX, Documents 371, 374, and 375.