The White House has done an about-face and given the Army permission to add five new generals who would oversee purchasing and monitor contractor performance.

In early May, the Army was told by the Office of Management and Budget, President Bush's administrative arm, that it already had enough generals and rejected the plan to increase the numbers in its upper ranks.

But service officials, working to improve a much-criticized contracting system, successfully appealed that decision. They argued reinforcements were needed to deal with the heavy demands on the existing leadership created by the wars in Iraq and Afghanistan.

"Approval was granted after final internal consideration of the Army's request," OMB spokeswoman Jane Lee told The Associated Press on Tuesday. Lee would not comment on the reason for the changed position. OMB's initial denial of the request was first reported by the AP last week.

The Army has more than 300 full-time generals. Adding five more would generate $1.2 million per year in personnel costs.

The boost in brass was a key recommendation from a blue-ribbon panel that last fall faulted the Army for contracting failures that undermined war efforts, wasted U.S. tax dollars and sparked dozens of procurement fraud investigations.

There were too few experienced people negotiating and buying equipment and supplies, according to the panel. And there wasn't a single Army general in a job with contracting responsibilities. This shortage of clout and competence created a "perfect storm," said the panel, chaired by former Pentagon acquisition chief Jacques Gansler.

Senior officers are needed to make sure past mistakes are not repeated, the panel said. Having generals in contracting jobs also will build the talent pool by showing junior soldiers that contracting is a promising career path.

Nelson Ford, a senior Army civilian official, briefly discussed the negotiations with OMB in written responses to questions from the Senate Armed Services Committee, which met last week to consider Ford's nomination to be under secretary of the Army.

Ford, who has been working as assistant secretary of the Army for financial management, said taking generals from current assignments to fill contracting slots was possible. But, he hinted, doing so could cause problems.

"The key question is, given the current (operational tempo) and the stress on Army leadership, both military and civilian, does the Army need more general officers to meet the leadership demands of the force?" Ford wrote.

The Gansler panel called for two major generals and three brigadier generals. One of the major generals, who wear two stars, would run a newly established Army Contracting Command. Formation of the command was another of the Gansler panel's recommendations.

The second two-star general would be assigned to a senior staff position at the Pentagon.

Two of the brigadier generals, who wear a single star, would also be assigned to the contracting command while the third would become chief of contracting at the Army Corps of Engineers.

Federal law prescribes how many each military branch may have. The Army has 306 generals leading nearly 525,000 troops. More than 240 of those are one- and two-star officers.

Adding a brigadier general to the ranks costs roughly $217,000 a year in pay, benefits and retirement contributions; a major general costs $261,000 annually.

Congress is expected to approve the Army's plan for more generals. In its May 16 report on the 2009 defense budget, the House Armed Services Committee noted its support for the Gansler panel's fixes and said the Defense Department should reserve general officer slots for the command of contracting organizations.

Outside the Army, the Gansler panel said another five generals or admirals should be assigned to contracting positions in other military organizations to improve the department's ability to manage contracts and contractors. Those slots will be filled by shifting existing personnel instead of creating new billets, however.