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98. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford 1

SUBJECT

  • Strategic and Critical Materials Stockpile

Based upon discussions at the August 9, 1976 National Security Council meeting,2 I have prepared for your consideration alternative National Security Decision Memoranda (NSDMs) incorporating the stockpile policy guidance associated with each of the principal options—Options A (projected ultimate value of $10.2 billion), B ($7.3 billion), and E ($2.5 billion).

There was a question raised at the NSC meeting as to how we would explain differences in planning assumptions between stockpile policy and other military planning. There are two distinct views on this matter.

—One view, held by Jim Lynn, is that establishing stockpile guidance based upon factors not intimately related to present military planning will be difficult to justify and could result in embarrassment to the Administration. Studies of military force requirements will clearly be influenced by assumptions on the length of war and the warning time for conflicts. Decisions on stockpile planning should more properly be deferred at this time until review of military force requirements is completed.

—The other view, shared by Bill Clements and myself, is that the stockpile should allow us to expand and support our existing forces during wartime and should provide a hedge against failures in force structure planning. Because of its “insurance policy” nature, the stockpile should use planning factors based upon larger and more extended conflicts than those used to determine present forces and their supplies. We believe this can be clearly explained to the Congress.

In choosing among the options, an appropriate focus would be the amount of “insurance” necessary or desired. Option B provides a stockpile to support defense and civilian needs during the first three years of a major two-front war (or one-front war with redeployment), assuming a “standing start” industrial expansion beginning at the outbreak of [Page 426]hostilities. Option A offers a somewhat greater hedge by providing for the same requirements plus extra materials for the expanded economy possible with a one-year mobilization “running start” should earlier strategic warning occur. Option E provides a much smaller stockpile based upon a more limited war scenario and less coverage of civilian economic needs. For all options, the Annual Materials Planning Process supported by all agencies provides numerous opportunities for review and revision of guidelines in the out-years.

In the event you desire further details on the options, I have attached at Tab IV the Executive Summary of the stockpile study.3

Agency Positions

I have reconfirmed agency positions on the options, following the NSC meeting:

OSD, JCS, State, Commerce, Interior, CIA, and the Federal Preparedness Agency favor Option A. All but Commerce indicate that Option B would also be acceptable, but less desirable than A because of its reduced size.

CIEP (Bill Gorog) recommends Option B.

—Treasury favors Option E but would accept B or A, assuming that appropriate market disruption constraints are utilized in annual acquisitions and disposals. (Each draft NSDM satisfies this concern.)

—Of the three options discussed, OMB would prefer Option E but is concerned with possible difficulties in reconciling differences between stockpile and force structure planning assumptions, and recommends deferring any final new stockpile guidance pending further rationalization of these differences.

Congressional View

As noted at the NSC meeting, Congressman Bennett supports a conservative policy which maximizes the insurance value of the stockpile. For Bennett, the key considerations are the assumptions regard-ing type of war scenario, three-year coverage, and extent of civilian economy coverages. On these grounds, Option E would not be acceptable to him.

I believe that Option B represents a stockpile which provides for national security requirements at an acceptable cost. Option B can be expected to produce a favorable reaction in the Congress and thus facilitate movement on new stockpile legislation.

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Your Decision

Approve my signing the NSDM for Option B ($7.3 billion) at Tab I4 (NSC, CIEP recommend; acceptable to OSD, JCS, State, Interior, CIA, FPA).

Alternatively, that you authorize me to sign the NSDM for Option A ($10.2 billion) at Tab II (OSD, JCS, State, Commerce, Interior, CIA).5

Alternatively, that you authorize me to sign the NSDM for Option E ($2.5 billion) at Tab III6 (Treasury).

Defer new stockpile guidance pending further rationalization of differences in planning assumptions (OMB).

  1. Source: Ford Library, NSC Institutional Files (H-Files), Box 67, NSDM 337 (1). Secret. A note at the top of the memorandum indicates that the President saw it. No drafting information appears on the document, but Boverie forwarded it to Scowcroft under a covering memorandum, August 11, with the recommendation that he sign it. (Ibid.)
  2. See Document 97.
  3. Tab IV is Document 93.
  4. Tab I was not found attached.
  5. Ford initialed his approval. Tab II as signed is Document 99.
  6. Tab III was not found attached.