PAGENO="0001" HEARINGS BEFORE A SUBCOMMITTEE OF TilE COMMITTEE 1 T ~0VERNMENT ~ HOUSE OF prjyi~ NINETIETH CONGRESS FIRST S~SS1ON MAY 16, 22, 27, 29,80, 31, AND JUN1~ 1, 1967 Printed for the use of the Committee on Government Operations COLLEGE OF SOUTh JERSEY UBRP~R1 OAMDE~N, M~ i ~8iQZ U.S. GOVERNMENT PRINTING OFFICE WASIIINGTO~: 1967 GUN1~RULNLE4JSE~DF EXCESS PROPERTY A~DRELATEft~ ASSISfANGE PROBLEMS FOLLOWING U.S. MILITARY EXCL - FROM FRANCE-1966-~67 7o~2c611 DOC. ~CT 4'%967 PAGENO="0002" PAGENO="0003" CONTENTS Hearings held on- Page May 16, 1967 1 May 22, 1967 37 May 27, 1967 75 May 29, 1967 107, 129 May 30, 1967 165 May 31, 1967 166 June 1, 1967 189 Statement of- Adriaenssens, Joseph L., president, J. & M. Adriaenssens N.V., Ant- werp, Belgium 175 DiGiorgio, Joseph D., Director, European Branch of Intern~tionaI Division, General Accounting Office, Frankfurt, Germany; accom- panied by Robert M. Gilroy, audit manager; Frank M. Mikus, audit manager; and Allen Moore, audit manager 76 Mikus, Frank M., audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany Regan, Col. John, Assistant Deputy Military Liquidation Section, 184 U.S. Embassy, Paris, France; accompanied by Col. William H. Tarver, Evreux Base commander; Capt. Robert W. Donley, Evreux Base civil engineer; Lt. Scott E. Larson, officer in charge,~ Military Liquidation Section, Evreux Base; and M. Sgt. George A. `Hu~kins, noncommissioned officer in charge, Military Liquidation Section, Evreux Airbase 190 Sidman, Abraham, chief of merchandising, Military Liquidation Sec- tion, Foreign Excess Sales ~ 209 Stolarow, Jerome IL, Assistant Director, Defense Division, U.S. Gen- eral Accounting Office; accompanied by Charles W. Kirby, Associate Director, Defense Division, U.S. General Accounting Office 25 Waters, Herbert J., Assistant Administrator for War on Hunger, Agency for International Development, Department of State, accompanied by Jack K. Woll, Director of Government Property Resources Division 3 Woll, Jack K., Director, Government Property Resources Division, Office of Procurement, Agency for International Development, Washington, D.C.; accompanied by Paul Scordas, officer in charge, European Office of Government Property Resources Division, Office of Procurement, Agency for International Development; and James A. Gibson, Hoboken/Antwerp marshaling site superintendent, Agency for International Development 93, 16~ Zaretzky, Hyman S., director, supply management policy, Office of the Assistant Secretary of Defense (Installations and Logistics), accompanied by Joseph M. Heiser, brigadier general, U.S. Army, Assistant Deputy Chief of Staff for Logistics (Materiel Readiness), Department of the Army; Charles C. Case, brigadier general, U.S. Army, Chief, Supply and Maintenance Agency, U.S. Army Euro- pean Command; John J. Kiely, Jr., colonel, U.S. Army, Communi- cations Zone, U.S. Army, Europe; Frederick S. Wyle, Deputy ASD (Planning and North Atlantic Affairs) (ISA); John M. Mullen, OASD (ISA); Glenn E. Blitgen, OASD (ISA); Lester T. David, colonel U.S. Air Force, OASD (I. & L.); and William W. Cave, Office of the Chief of Support Services, Department of the Army.. - 37 In PAGENO="0004" IV CONTENTS Letters, statements, etc., submitted for the record- Adriaenssens, Joseph L., president, J. & M. Adriaenssens N.Y., Ant- werp, Belgium: Copy of certification of work performed 179 Example of shipping document 182 David, Col. Lester T., U.S. Air Force, OASD (I. & L.): Disposition excess and foreign excess personal. property at Army property dis- posal activities in Europe; table ~ 62 Heiser, Brig. Gen. Joseph M., Assistant Deputy Chief of Staff for Logistics (Materiel Readiness),~~Uepartment of the Army: Distribution of FRELOC theater excesses to MAP 73 Storage and logistics-related construction in Europe-Authorized and funded through fiscal year 1966 and fiscal year 1967, table.. 60 Nelson, Col. Robert K., commanding officer, U.S. Army General Depot, Kaiserslautern, Germany: Briefing tour of Germersheim Depot activity, with charts 107 Briefing tour of Kaiserslautern General Depot, with charts 129 Regan, Col. John, Assistant Deputy, Military Liquidation Section, U.S. Embassy, Paris, France: Cost analysis of related personal property sales to anticipated returns 215 Cost of custodial functions on noninterest bases 208 Interest bases, table 202 List of Installations turned over to MLS as of April 5, 1967 199 Organizational chart-Military Liquidation Section, U.S. Em- bassy, Paris, France~ 192 Recapitulation through July 31, 1967, of Military Liquidation Section sales, table 203 Sales negotiations-related persdnal property, as of June 30, 1967, table 204 - Romney, Miles Q,, counsel, Special Subcommittee on Donable Prop- erty, House Committee on Government Operations: Lettei~ from Lawson B. Knott, Jr., Administrator, General Seryices Adminis- ti'dtion, to Hon. John ~. Monagan dated May 26, 1967, regarding foreign excess property returned to the continental United States - 57 Scordas, Paul, Officer in Charge, European Office of Government * Property Resources Division, Office of Procurement, Agency for International `Development: Chart 1.-Acquisitions 97 Chart 2.-Inventory 98 Chart 3.-tlndelivered orders 99 Chart 4.-Inventory frozen 100 Chart 5.-Production 101 Chart 6.-Shipments 101 Chart 7.-Revolving lurid 102 Chart 8.-Financial status revolving fund 103 Sidman, Abraham, Chief of Merchandisipg, Military Liquidation Section, IPoreign Excess Sales Office: FESO volume of ~alé~ ir, ton- nage, fisCal year ~967 214 Stolaröw, Jerome H., Assistant Director, Defense Division, U.S. General Accounting Office: Property Disposal Office action by Army and Air Force in France during FRELOC 34 Waters, 11e4~ert J., Assistant Administrator for war on hunger, Agency for International Development, Department of State: Bti~klo~ of orders for excess property 12 SectiOn 608 material shipped to DOD 20 Shipments of excess prope~ty to ViC~riam, table~~~~ 15 Utilization of excess property~ tabl.e..~. 23 Woll Jack K., Director,, Government Properi~y Re~ources DiviSion, of Procurepient, Agei~cy for Int~rnati~iial Develop~ent: ,A,ID Cont~ractor,A11t'wctpr 1%elgium, Marcti~ 31, 1967, tables~ - - 167 Avernge 4 wepk period Ant~erp productron - - - - 172 Zaret~ky~, Hyman s~; DIrector, Supply ManagemCSt Policy, Office of the Assistant Secretary of Defense: Material relocated (U.S. Army and U.S. Air Force), March 31, 1967, table PAGENO="0005" CONTENTS V APPENDIXES Appendix 1.-Total acquisition cost of removable related personal property (not including labor) for Phalsbourg, Airbase, France 221 Appendix 2.-Production at all EPRO marshaling sites 223 Appendix 3.-Copy of Antwerp contract 224 Appendix 4.-AID receiving reports and work orders 334 Appendix 5.-Terms of reference for U~ S. Military Liquidation Section, American Embassy, Paris, France 355 Appendix 6.-Sales proceeds experience in connection with the sale of foreign excess property in France 362 PAGENO="0006" PAGENO="0007" CONTROL AND USE OF EXCESS PROPERTY AND RE- LATED FOREIGN ASSISTANCE PROBLEMS FOLLOW- ING U.S. MILITARY EXCLUSION FROM FRANCE- 1966-67 TUESDAY, MAY 16, 1967 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY, COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 2203, Rayburn House Office Building, Hon. John S. Monagan presiding. Present: Representatives John S. Monagan, Fernand J. St Germain, and Margaret M. Heckler. Professional staff members present: Miles Q. Romney, counsel; Peter S. Barash, legal assistant; and William H. Copenhaver, minor- ity staff. Mr. MONAGAN. I will call the hearing to order. Since 1965, the Special Subcommittee on Donable Property has been engaged in an active examination of the use of excess property in the U.S. foreign aid program. "Excess property" is, of course, any prop- erty under the control of any Federal agency which is not required for its needs and the discharge of its responsibilities. As excess, it is avail- able for use by other Federal agencies. The principal authority for the use of excess property in the U~S. foreign aid program is the Foreign Assistance Act of 1961, as amended. In enacting the Foreign Assistance Act of 1965, Congress added new language which directly called upon AID to util~ze excess personal property whenever practicable in lieu of the procurement of new items for U.S. assisted projects and programs. During the 89th Congress, the subcommittee undertook an extensive review of the use of excess property by our AID program in Latin America. That review resulted in House Report No. 1466, 89th Con- gress, entitled, "The Use of Excess Property by 1~he U.S. Foreign Aid Program in Latin America." Significant improvements in the effective- ness of the program there have ensued. The hearing today has been called to receive testimony on the oppor- tunities and problems created by the generation of foreign excess property as a result of Operation FRELOC, the relocation of materiel necessitatej by the pullback of NATO and the closing of U.S. military bases and related facilities in France. Our concern is focused on U.S.- owned personal property, now largely removed from France, which is or can reasonably be expected to become excess to the needs of the Department of Defense and thereby become available for use by AID 1 PAGENO="0008" 2 USE OF EXCESS MILITARY PROPERTY IN FRANCE or other Federal agencies. The magnitude of this move and the oppor- tunities available thereby to AID are clearly illustrated by the fact that some 800,000 short tons of supplies and equipment have been trans- ported out of France, and, by the fact that since March 19(36, personal property having an acquisition value of one quarter billion dollars has been offered to AID for its possible use. The subcommittee's ,con- cern with efficiency and economy of Government operations warrants careful scrutiny of agency programs, procedures, and practices with respect to the availability, screening methods, accounting, storage, rehabilitation, and program utilization of these vast amounts of property. Pursuant to the mandate of Congre~s, AID has utilized since 1960,. excess property with an acquisition cost of $367 million. This prop- erty includes such items as passenger vehicles, road equipment, build- ing construction machinery, `diesel locomotives, and engine lathes. Most of it was generated by the Department of. Defense. This subcommittee has seen much substantiating evidence, that without the ready and efficient availability of excess property, AID would either have had to request substantially more funds or the. eco- nomic assistance, efforts of the U.S. foreign aid program would have been far less effective. It is incumbent on this subcommittee, therefore, to make a careful review of agency operations associated with the ex- cessing and eventual utilization of U.S.-owned property generated by the closedown of U.S. bases and related facilities in France. While our initial focus is on the use of this excess property by AID or other Federal agencies having operations abroad, we also want to develop information on the extent and nature of Operation FRELOC- generated personal property which has been shipped back to the Tjnited States. Eventually some of that returned property may be de- clared excess, and as such available for further Federal use within the United States. Moreover, if other Federal agencies should not have need for that property, it would', of course, become surplus prop- erty. The subcommittee's interest in the potential surplus status of that property lies in the fact that as surplus' it would be subject to screening for disposal under the Federal donable property program authorized by section .203(j) of the Federal Property Act, Our first witness this morning will be Mr. `Herbert J. Waters of the Agency for International Development. Mr. Waters, has appeared before our subcommittee before. He recently became Assistant Ad- ministrator of Aid for the War on Hunger, but before that he was AID's Assistant Administrator for Material Resources. `We are happy to have you before us again, Mr. Waters. Mr. WATERS. Thank you, Mr. Chairman. Mr. ST GERMAIN. At the outset, I ,would like to apologize to Mr~ Waters and the subsequent witnesses who will testify because of a con- ifict. , I wanted to be here at the beginning, however, to greet you, Mr. Waters, to tell you how much we appreciate your testimony. I will take it with me and will be reading it at the other subcommittee. Should the occasion arise where I. am needed, I will be in the other area. Mr. WATERS. With me is Mr. Jack Woll, Director of the Govern- ment Property Resources Division connected with this program. PAGENO="0009" USE OF EXCESS MILITARY PROPERTY IN FRANCE 3 STATEMENT 0F HERBERT J~. WATERS~ ASSISTANT ADMINISTRATOR FOR WAR ON HUNGER, AGENCY POR INTERNATIONAL DEVELOP- MENT, DEPARTMENT OP STATE, ACCOMPANIED BY SACK K. WOLL, DIRECTOR OP GOVERNMENT PROPERTY RESOURCES DIVISION Mr. WATERS. Mr. Chairman, members of the committee, I want to thank you for the opportunity to discuss AID's utilization of excess property in support of our economic development programs through- out the world, with special emphasis on AID requests for acquisitions during the U.S. military movement from France. We feel we are figuratively beating swords into plowshares, by mak- ing effective use for peaceful, civilian purposes of extensive equipment excess to military requirements_-at considerable savings to the tax- payer. We are making such savings by both substituting rehabilitated equipment for new procurement as well as stretching the effectiveness of appropriated economic assistance dollars in accomplishing develop- ment objectives. Nearly 2 years have passed since I reviewed the status and opera- tions, of AID excess property programs before this committee. Then I was Assistant Administrator of AID for Material Resources, having responsibility for the excess property programs as well as the Agency's new procurement. While the Agency's functions under my direction have just recently been changed under a reorganization ~al1ed for by the. President in his foreign aid messa~'e to Congress in March, and I no longer have direct responsibility for the excess property program, it was my responsibility for the period, you are reviewing and J~p- preciate this opportunity to account for my stewardship. Hereafter, in AID the excess property program will come under the direction of the Assistant Administrator for Administration, while I concentrate my attention on the many facets of our Government's war on hunger throughout the world. Mr. MONAGAN, Mr. Waters, who is the Assistant AdmInistratoj~. Mr. WATERS.. He is William 0. Hall. He is presently away from the United States. Mr. MONAGAN. Thank you. Mr. WATERS. In order to more fully brief the new members of the committee, my statement includes some general background informa- tion about our programs reviewed in earlier hearings. Since 1960, we `have acquired over $360 million worth of U.S. Gov- ernment-owned excess propeity to complement other available re- sources for the economic development of developing countries. This added resource has served to stretch available AID funds and per- mitted more effective acComplishment of economic development goals. ~A. few examples `of utilization of this property in AI~D projects and programs are as follows: cots, water distributin~g equipment, blankets, clothing, et cetera, are now being used in the refugee program in South Vietnam; machine tools, woodworking equipmcnt~ ~and handtools in the vocational educational pI~ogram in South ~Vietnam; medical sup- plies, cots, wheelchairs, et cetera, in the medical education program in South Vietnam; construction and roadbuilding equipment-bufl~ PAGENO="0010" 4 USE OF EXCESS MILITARY PROPERTY IN FRANCE dozers, graders, scrapers, vehicles-in various roadbuildirtg programs in Turkey; roadbuilding equipment-vehicles, bulldozers, machine tools, et cetera-for highway maintenance programs in Peru. Other projects and programs are receiving vitally needed items and equip- inent to further AID objectives in developing countries. Since its iiiception, the program has been strongly supported by both the legislative and executive branches. The policy statement rel- ative to optimum use of excess property in AID programs appearing in the Foreign Assistance Act of 1961 was further strengthened by re- vised (1965) language which states that "~ * * excess personal prop- erty shall be utilized wherever practicable in lieu of the procurement of new items for U.S. assisted projects and programs." Former Ad- ministrator Bell's strong directive of April 13, 1964, and subsequent guidance relative to establishment of excess property units in TISAID's abroad are prime examples of the continuing executive sup- port accorded to our programs within AID. Each regional bureau has designated a regional excess property officer to coordinate and increase regional acquisition of excess property for utilization in AID pro- grams. We have received continued assistance, cooperation, and support of General Services Administration and Department of Defense person- nel. The Army-AID-GSA Memorandum of Understanding of March 1962 relative to operation of the advance acquisition (sec. 608) pro- gram formalized the required joint actions under the domestic program.1 Our relationships with the domestic donable property program for State agencies have been consistently good. Since 1962, the relatively small group of excess property utilization officers in the three domestic AID excess property regional offices have maintained cordial and mutually cooperative relationships with representatives of the State agencies for surplus property. In practice, the surplus donation program and our programs can and do work productively side by side. During the past year this mutual cooperation has expanded and matured. We have maintained direct communication with top State agency representatives, and we are not aware of any complaints regarding our operation of the pro- gram during this period. ADVANCE ACQUISITION PROGRAM. Shipments of excess property and equipment acquired and proc- essed under the advance acquisition program have about doubled each year since its inception. Section 608 of the Foreign Assistance Act of 1961 was designed to overcome the twin obstacles (short matching period and unknown degree of servi~eabiiity) to much fuller utiliza- tion of excess property by authorizing AID to ac4uire av'ailable excess property in advance of a specifically identified program requirement Section 608 authorizes AID to- S (a) Repair oi~ rhanl, ~reserve, store, pack, crate, and trans- port such property as the need arises, and (74 Use $5 million ~from appropriate funds as a revolving fund to pay all costs related to these actions. This revolving fund is 1 The document was supplied for the subcommittee files. PAGENO="0011" USE OF EXCESS MILITARY PROPERTY IN FRANCE 5 now healthy, having recovered from a partial depletion during the buildup of ready for issue inventory. Available section 608 property is offered to our AID missions abroad periodically by catalogs. Domestic 608 excess catalogs are issued by AID-Washington; foreign excess catalogs by the appropriate overseas excess property regional office. Special offerings of section 608 prop- erty, directed to a selected group of missions, have proved very successful. FOREIGN EXCESS There has been increasing utilization of excess property generated overseas. During the first three quarters of fiscal year 1967, $62,669,- 367 (or 80 percent of the $78,189,417 requested by AID) was foreign excess, the balance (20 percent) being domestic excess. Until the estab- ljshment of effective foreign excess property regional offices and related "marshaling sites" in Frankfurt, Germany, and Tokyo, Japan, the primary source was domestic excess property rehabilitated under the initial Army-AID-GSA agreement. Our European operation was started in June 1962, but very little was accomplished with the section 608 program until November 1964. Prior to November 1964 we had many and varied difficulties obtaining rehabilitation capacity. For approximately the first year operation we requested the service of the Department of Army to rehabilitate our equipment in their established facilities. After a period of time we were informed that the Department of the Army was not able to assist AID in this matter as their facilities were overloaded with their own work. We then turned to the Air Force, who at that time had a contract with a commercial firm, Behernan-Demoen, in Antwerp, Belgium. The Air Force took our work on a subcontract basis, but after a relatively short period of time terminated their contract with this firm. Being subcontractors we also moved out when the Air Force moved. The Air Force then obtained a contract with an English concern, Henly's, in Western Super Mare, England. This contract was in operation for a little more than a year and it was also terminated. At that time we realized that we would have to obtain our own contractOr. In October 1964, the Air Force procurement region EurOpe nego- tiated and procured for AID a commercial contract with a firm in Antwerp, Belgium, which went into effect in November 1964. The Air Force performed all selection and negotiating services other than the signing of the contract. From that date on, our European Opera- tion has been successful. Our Antwerp contractor is the firm of J. &M. Adriaenssens, N.V., a~ large Belgian truck body manufacturer. Their production of AID work has risen steadily over the past months. At the present time,. monthly production averages . approximately $1'~ million to $1.6 million acquisition cost, depending upon the types of items ~hich they work on during the month During the month of March 1967, we obtained approximately 6,200 man~-hours of work each week and we anticipate raising, thiS weekly figure to 9,000 hours.~ This will give us `approximately $2.5 million acquisitionS cost of production monthly. . . The U.S. Air Force also came to our rescue in providing `production capacity at the U.S. Naval Base in Rota, Spain, in 1.963. This is under an interservice support agreement with the Air Force, which in turn PAGENO="0012" 6 USE OF EXCESS MILITARY PROPERTY IN FRANCE has an agreement with the Navy. Until the past year, this operation hus been relatively small,, but recently it has taken an upturn. We are obtaining approximately $500,000 acquisition co~t of production monthly. Our last site in Europe is located at camp Darby, Livorno, Italy. It is under an interservice support agreement with the U.S. Army and is small in scope. This agreement was entered into in 1966 and basically provides one main service and' that is that property which we acquire in Italy does not have to be transported to Belgium or Spain for rehabilitation. rfhis we have found to be quite economi- cal. Our acquisitions from Italy have in the past been very small so we do not at the present time require large production capacity. If this should change in the future and we would require additional production capacity, we would have to obtain this additional capacity from commercial sources. In fiscal year 1963, our European operation obtained excess, prop- erty from U.S military generating points, for our advance acquisition prograni, totaling only $257,300 in original acquisition cost. In fis~al year 1964, we obtained $5,153,922 worth. Li fiscal year 1965, it was $13,917,826, `and in `fiscal year 1966, $13,979,072. Through March 1967 we have requested from the milithry equipment ~vOrth $40,403,231 at acquisition cost, Of `this $40.4 million worth of equipment of all ki'nd~s, approximately $12,146~069' in acquisition value is `di~'ectly att~ibutabIe to the movement `of U.S troops from `France. Also, two of our missions have requested, under~ `the direct acquisition program equip-' ment worth a total of $1,913,879 at acquisition cost from the U S mill tary in France, which. also' i's dh'e~tly~ attributthie to the movement of U.S. troops from France. The possibility exists that there have been other acquisitions by AID, under the direct acquisition program, but as yet we have not been informed. This information will be available during the first quarter of fiscal year 1968. The method our European excess property regional office used to request transfer of the $12.1 million directly attributable to the U.S. movement from France is the same method that is utilized by all our offlues. Equipment specialists (exceSs property utilization officers) visited the various bases in France and personally viewed and in- spected all property in which we were interested. The reason for these personal inspections is to insure that AID does not acquire property which eventually will not be used in AID's projects and programs worldwide, and also to insure that the property acquired is generally, in pre'tty good condition `and can be rehabilitated without the neces- sity of spending large sums for'the rehabilitation. The perecentages breakdown-in terms of acquition cost-by types of eq~iipment relating to the total $12.1 million acquisition cost figure is as `follows: 65 percent consisted of military type vehicles: jeeps, 21/~-ton trucks, 5-ton tractors and various size trailers; 5 percent con- sisted of' commercial type vehicles: :%-ton and 1l/2~ton trucks, Ford, Chevrolet, and International Harvester; 15 percent engineer equip- ment: cement mixers, cranes, full track tractors, graders, et cetera; 5 percent consisted of medical equipment: beds, cabinets, dental and surgical instruments, et cetera; and 5 percent consisted of miscellane- ous items: handtools, machine tools, kitchen equipment, electrical items, etcetera. PAGENO="0013" USE OF EXC~S~ MILITARY PROPERTY IN FRANCE 7 Also, we have claimed excess in the amount of $16,905,081 a~quisi- tion cost of military assistance program property located in France. This is not considered related to the movement of our troops from France. And finally, we have requested $11,352,081 worth of excess from the military from European countries other than France, which include but are not necessarily limited to England, Germany, Italy, and Spain. Our goal for outshipments of property from our European opera- tion to AID projects and programs for fiscal year 1967 was $16 mil- lion acquisition cost and through March 31, 1967, we have shipped $11,825,193. We feel our goal in this respect will be met and possibly exceeded. In all of fiscal year 1966 we outshipped from our European operation a total of $10,977,922. Through the first three quarters of this fiscal year, we have shipped more than we did in fiscal year 1966. We anticipate that in the future additional large quantities of prop- erty will be exoessed by the military in Europe and be made available to AID as well as other interested U.S. Government agencies. Our operation in the Far East was started in November 1962 in Tokyo, Japan with the signing of an interservice support agreement with the U.S. Army to furnish services, including rehabilitation for excess property generated in Japan. In 1963 our shipments of 608 excess property totaled $76,653 acquisition cost. The program has grown to the point where this office shipped $8,358,442 in fiscal year 1966 and for the first three quarters of fiscal year 1967 shipments have totaled $7,544,867. We have since outgrown the capacity furnished by the military at the start of the program and now have commercial contractors in Yokohama, Japan; Inchon, Korea; and Naha, Okinawa. Mr. MONAGAN. That is for rehabilitation? Mr. WATERS. Yes. The majority of property shipped from this area is being utilized in Southeast Asia projects and programs. SOUTHEAST ASIA Special effort has been made to meet Southeast Asia requirements for excess property. The General Services Administration agreed to accord "special treatment" or priority to Southeast Asia requirements for domestic excess property. Special Vietnam prior screening pro- cedures have been established for both domestic and foreign excess property available under the section 608 program. These procedures provide absolute priority to USAID/ Vietnam during a 1 month prior screening period. Shipments of section 608 property to Vietnam dur- ing the first 9 months of fiscal year 1967 amounted to $14,143,348 (43 percent of total shipments). This is an $8.9 million increase over the shipments of $.2million (22 percent of total shipments) to Viet- nam for the same period in fiscal year 1966. LATIN AMERICA This committee's continued interest in the increased utilization of excess property for the economic development of Latin American coun- tries, expressed by special hearings and committee visits to representa- tive Latin AmerIcan countries, has begun to bear fruit. Dnring this fiscal year, 16 new 607 determinations totaling approximately $13.7 PAGENO="0014" 8 USE OF EXCESS MILITARY PROPERTY IN FRANCE million (acquisition cost) have been approved to various Latin Ameri- can countries. In addition, $1,650,000 worth (acquisition cost) of property has been approved for specific in-country voluntary agency programs in Latin America under the sponsorship of the Summer In- stitute of Linguistics, Caritas, Community Development Foundation, Inc., and World Neighbors, Inc. Types of items and equipment ordered by those recipients include grinders, forming machines, wrenches, sterilizers, sleeping bags, clothing, generator sets, hydraulic jacks and roadbuilding equipment. For the first three quarters of fiscal year 1967, Latin America has received $1,775,345 worth (acquisition cost) of 608 excess property. This is an increase of $202,000 over all of fiscal year 1966. We anticipate that considerable more property will be shipped to Latin America during the fourth quarter of this fiscal year. Also, Peru, in which the subcommittee has shown great interest, has expanded its acquisition of excess property under the 608 program during fiscal year 1967. Through the first three quarters of this fiscal year, Peru has obtained $469,679 worth of equipment, while during all of fiscal year 1966 only $76,972 worth (acquisition cost) was shipped to that country. In order to further increase the effectiveness of the program in Latin America, we plan to establish an Excess Property Regional Office in Panama. Mr. Chairman, in conclusion, we are proud of the progress which has been made in effective utilization of excess property not only in Latin America but in aid recipient countries generally. Due primarily to the advance acquisition program~ we have gained increasingly gen- eral acceptance of excess property as a valuable resource. Naturally, with a unique, new, and rapidly expanding program requiring many technical decisions and coordination of military, and/or contractor operated rehabilitation facilities, various problems and difficulties arise. As the result of reports of poorly repaired equipment, a team headed by the Assistant Chief, Government Property Resources Divi- sion is noW in the Far East reviewing contractor performance, re- habilitation standards, quality control, and final inspection before shipment. In order to manage this complex, expanding, worldwide program with maximum effectiveness, we have concluded that addi- tional technical personnel and facilities will be necessary. We are gaining new satisfied customers and we look for continued moderate expansion, particularly in the utilization of foreign excess. Thank you. Mr. MONAGAN. Thank you very mach, Mr. Waters. It is a very help- ful, complete statement, and we are pleased to be brought up to date on the development of this program. I think it is extremely interesting. Mr. Romney, do you have any auestions? Mr. Ro~iNEY. Mr. Waters, could you explain some of the factors which account for what. appears to he a relatively sm~ill amount of acquisitions under the direct acquisition program-the $1.9 million in acquisition cost from the TJ.S. military in France ~ Mr. WATERS. Mr. Romney, the entire direction of our program since the start of the 608 authority has indicated a growth in u~e of the 608 approach as contrasted to the previous use of the 607 or direct author- ity. We still have a fairly constant level of the 607 and dire~f program PAGENO="0015" USE OF EXCESS MILITARY PROPERTY IN FRANCE 9 authority, but we have not had the expansion of these programs as we have had in the 608. Our own missions and the countries to which we are cooperating in providing equipment seem to prefer having us do the rehab for them rather than trying to do the rehab themselves. Sometimes this is due to the lack of good rehab facilities in the developing country. But we are trying to make maximum use of all authorities. But there does appear to be, when we look over the reports, of both the growth of the 608 and a slight tapering off of the 607 and direct authority, there seems to be a substantial shift. Now, we did endeavor to keep our mission fully informed of the potential new opportunity that might arise in the activity in France. And the largest amount of the acquisition, however, was made for the 608 program. Mr. IROMNEY. On page 4 of your statement, Mr. Waters, the bottom paragraph, you refer to the establishment of regional offices for excess property and related marshaling sites in Germany and Tokyo. Could you describe these related marshaling sites and explain why you use the word "related"? Mr. WATERS. We established, picked the locations for our regional property offices where we felt we had the best communication center for access to information about the availability of excess property. For example, Frankfurt is pretty well a communication center. However, in looking for rehab sites, we looked primarily at access to shipping facilities as well as repair facilities. And out of the one cen- tral office, regional office in Europe located at Frankfurt, there was the major marshaling site at Antwerp, and the smaller marshaling sites, rehab centers at Rota, Spain, and at Camp Pamby, Livorno, Italy. Tokyo is our regional office, but the marshaling sites and rehab operations are where we could find the best rehab work to be done as well as shipping facilities and the cost for moving the equipment. Our major center there is now Yokohama, plus supporting facilities in Okimiawa and Korea on a smaller scale. Mr. ROMNEY. Are these sites selected in conjunction with the mili- tary in any way? Mr. WATERs. Only Rota, Spain, and Livorno, Italy. The rest of them are private contracts. Mr. ROMNEY. The memorandum which was entered into between AID-Army-GSA, March 1962 applies to the domestic program, does it not? Mr. WATERS. That is right. Mr. ROMNEY. Is there any corresponding agreement with respect to the operations abroad, in any particular region? Mr. WATERS. We do not have the same form of agreement. It is a triparty arrangement: GSA, partly under us, and with the military. We do have with the military overseas a memorandum agreement relating to the services they perform for us in specific instances such as the interservice agreement we are a party to in Rota, Spain, and Camp Darby, Livomno; plus an overall agreement on the transporta- tion side of the program. We still use military services for transporta- tion whenever possible. PAGENO="0016" 10 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. ROMNEY. Mr. Waters, in the acquisition of these substantial quantities of excess property which are then brought to your rehabili- tation centers, can you describe your procedures for ascertaining the continued justification in keeping property there which you have not been able to move? And what happens when you have to move this property? Mr. WATERS. So far, we think our turnover has been very satisfac- tory. We, first, in the selection process, are trying to select articles or items we know are generally usable in our programs while not having a specific request for them. In many instances, we also have quantities and types that have been sent to usby missions. And much of the equip- ment in rehab is in effect on order. If in fact we have property for which we do not have a use, or a use doesn't develop, why, we would excess it out and make it available for any other purpose. Mr. BARASH. If I might interject. If I understood your testimony, Mr. Waters, you said that you had gathered from European sources approximately $40.4 million acquisition cost in excess property, and you state your goal for shipping out in fiscal 1967 is $16 million. Now, what has happened to the property represented by the difference be- tween the $16 million and the $40 million? Mr. WATERS. Mr. Barash, I said we requested the $40 million. There is quite a long pipeline in the movement of this before it gets to the rehab site. So in effect when we have requested it, made a claim on it, and when it starts the process of moving~ it may be several months before it even gets to the rehab site. So we are having a backlog of material that is going to be moved into the rehab site. We will have a pickup program early in 1968. But we do not have that $40 million on hand in our hands. It is still being moved to us from the military and from the military installations. Mr. Woll informs me that actually at the site we have only received $17 million worth of this amount. So there is a pipeline both in time and in value of equipment that runs several months-even more than a full quarter-in having some of this moved. Much of it has to be moved even at the convenience of the military when they are handling the movement for us. Much of the equipment that we requested, for example, on the trans- fer of material from France has been part of the process of moving to Germany and down from Germany to Antwerp. Mr. BARASH. Thank you. Mr. R0MNEY. How large a staff do you have at your Antwerp site? Mr. WATERS. Actually at Antwerp it is a one-man staff. It is a con- tract operation with our one man being inspector and supervisor of this equipment. The personnel work is done by contract. In our Frankfurt office in Germany, there are eight on the staff~ This includes not only the officer in charge, but from there are the screeners who go out and locate property as well. Mr. ROMNEY. And what about the sites at Rota and Livorno? Mr. WATERS. Rota and Livorno, I think, are only-Mr. Woll has put me up to date. We have one man of our own who is stationed at Rota, but covers Rota and Liverno to inspect the operations at the two smaller sites. PAGENO="0017" USE OF EXCI~SS MILITARY PROPERTY `IN FRANCE 11 Mr. ROMNEY. Is there a basis for your determining, in cases `of large quantities of property being available, what you would take or request during the screening process? Mr. WATERS. Yes. We try to watch the utilization and the types of things most in demand by our missions. We have encouraged our field missions, our technicians developing projects in the field, to give us as much advance guidance as possible: The types of equipment they would desire that would help them avoid the necessity for new pro- curement. This guidance is passed to the people doing the examination at bases and sites. Quantity, condition of the equipment, frequency of use are all factors to be considered. Mr. ROMNEY. Are these requests from the missions coordinated through Washington, or are they made directly to your- Mr. WATERS. Both ways. Dual copies go to Washington on a world- wide basis in Washington. There are Southeast Asia missions through which most of their activity is directly with the Tokyo regional office, and certainly Africa and the Middle East missions. Turkey and Pakistan do have extensive business with the mission in Europe. Mr. R0MNEY. Much of the property which has been made available for possible use by AID, particularly in the European area recently, has been passed over. What opportunity would AID have to go back and perhaps recapture some of this which it found that it had later a need for? Mr. WATERS. As long as it has not been sold or otherwise disposed of by the military, we could always go back. Our inspections of these bases is a continuing process. It is true that we are somewhat under time pressures on the movement out of France. We are continually examining the facilities in Germany. Much of the readjustment of equipment may lead us to additional excess out of Germany, now, and we will watch and follow that. However, we feel that all of the normal processes were followed even in the speeding up processes in France. We still make our requests, and the military would still go through all of their channels to see if there was a need for any other military unit for this equipment before it was made available to us. Mr. ROMNEY, In Europe, in some of the bases and installations there is some property described as related personal property. We might `think of it more as fixtures. And some effort is now being made, as we~ are informed, to dispose of this in France. But failing success in that,, it would in some cases be removed. I was wondering if Mr. Woll has any knowledge of the nature of' some of this property that might be of use to AID, and whether AID~ has any plans with respect to that property? Mr. WOLL. Yes, we do, Mr. Romney. Various missions have come to us for requests for household type items: fixtures and so forth; and we have acquired some. Now, the American School which is going to start operations in Antwerp has requested various type items like this, as well as school supplies and equipment. We have made arrangements to assist the Department of State in setting up this school in Antwerp. As Mr. Waters has said, we have, and will continue to keep on top of' everything that is generated in France as well as the other countries. And anything that we think we can use, we will request from the military. 82-554-67---2 PAGENO="0018" 12 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. MONAGAN. In other words, the discrepancy between what has been made available and offered to you and what you take is determined by the suitability of the equipment, and not by any made- quacy of the selective process or anything else? You take all that you think you can use? Mr. WOLL. That is right, sir. Mr. MONAGAN. There is quite a discrepancy, of course, between the amount available and what you have taken. Mr. WOLL. Well, a great deal of this equipment that we understand was excess consists of military scrap and things such as that. We have no use for it. It just wouldn't pay for us to take it. Mr. MONOGAN. That is the point I wanted to make clear. Mr. ROMNEY. Mr. Waters, I was wondering if you could provide to the subcommittee some specific details by category of items, by rmm- bers, by value, perhaps, of the worldwide backlog which the AID missions now have pending for the receipt of excess property? I would assume that you probably do not have it broken down in domes- tic and foreign excess. But whatever information you can provide- Mr. WATERS. Is it the backlog of the requests? Mr. ROMNEY. Yes. Mr. WATERS. I will be glad to provide even further information as best we can break it down. Mr. Woll informs me that we have a backlog in round figures of about $19.2 million in firm orders. There is a distinction between the firm orders that are funded documents waiting for equipment, and the so-called want lists which are general indications of the types of items that the mission would like to have. We will be glad to try to expound on this for the record in a detailed statement for you. (Subsequently AID provided the following information:) BACKLOG OF ORDERS As of March 31, 1967, our worldwide backlog of mission orders for excess property available under section 608 but not yet shipped amounted to $19,217,578 (total acquisition cost) or 43 percent of the $44,926,375 total inventory held as of that date. Of this total backlog, foreign excess accounted for $13,934,142 or 73 percent; the remaining $5,772,728 or 27 perceflt, being domestic excess. This backlog represents a fair cross section of the current onband inventory. In terms of total acquisition cost; motor vehicles, trailers, construction, and roadbuilding equipment items comprise approximately 60 percent of the backlog items. Tractors, machine tools, material handling equipment, and miscellaneous other small items constitute the balance of the backlog. Mr. MONAGAN. Mr. Copenhaver? Mr. COPENJIAVER. Mr. Waters, allow me to explore a couple points for my own information. As I understand it, you prepare catalogs of your needs for excess property, both domestically and in foreign theaters? Mr. WATERS. The catalogs are on the property that we have acquired rather than our needs. They are provided to our missions and our tech- nicians in our projects. So, in developing projects, they screen the availability of excess that they can use before requesting purchase of new equipment. Mr. COFENHAYER. Therefore, this is separate from the want list which Mr. Romney just mentioned? PAGENO="0019" USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. WATERS. Yes. I might say that the want lists are general indica- tions. For example, if the country is going into a major highway pro- gram, they will say, "We are interested in all forms of highway equipment." With this, we are able tobreak down with our technicians the types of equipment that will be useful in highway construction. We might not have a specific request for certain types of bulldozers or certain types of scrapers. But if there is a highway project coming up to be funded with loan funds, for example, we will have an alert to that effect; and we will try to make sure that in addition to our regular catalogs, if our excesss property regional offices are alerted, and if they have highway equipment they find, they notify that selected mis~ sion the availability of highway construction equipment. Our loan programs now have standard language in the loans- development loans-that provides for examining the use of excess equipment before going to new procurement. It is difficult to measure this at times, because a good job of planning the use of excess results in a never showing up of new procurements. A mission could order the new equipment and then cancel it out if jj found excess available. We are trying to encourage the planning of programs around the excess in the first instance to avoid having to ask for new equipment. Mr. COPENHAVER. I am anxious to obtain from you an explanation as to actually how the screening program was operated in relation to Operation FRELOC. Is it your understanding that all the property which was declared excess as a result of Operation FRELOC was sent by list back to a central inventory control point in the United States? Is this how it was done-for the military? How did AID get into the picture as far as learning about the excess property? Was it through AID operation in Washington here? Mr. WATERS. I think Mr. Woll might be able to explain this. Mr. WOLL. After lists of equipment have been made up by the military for theater screening, they are then sent here to the United States for CONUS screening. After that has been accomplished by the military, they make lists of equipment available to us that they did not have requirements for either in European area, the CONUS area or the worldwide area. In other words, the lists that were supplied to us were those lists of items that were completely excess to the military requirement. Mr. COPENHAVER. Now, these lists came to you here in AID, CONTJS? Mr. WoLL, No. A fter they were screened here in CONUS, they went back to the military in Europe who made them available to our excess property regional office in Frankfurt, Germany. Mr. COPENHAVER. Now, how does your office in Frankfurt know your needs in Vietnam or Africa or Latin America? Mr. WOLL. All requirement lists that are sent in by the various missions in the regions come into Washington; and also, if they do not go directly from the regions and the missions to our excess prop- erty regional offices, we send these lists to them. Mr. COPENHAVER. Therefore, your office in Frankfurt would know of your want list for the entire world? Mr. WOLL. Yes, sir. PAGENO="0020" 14 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. WATERS. I may add on this from experience of watching the operations in Europe, or excess property offices, utilization oflicers are usually one step ahead, even if an individual installation is plan- fling to excess something, they are right on their toes and usually know about this and, are following the request made for clearance through the European theater and are waiting for the clearance to come back from CONTJS to see whether they can get the property. So, they are following the clearance process, even after it has been cleared. We try to anticipate the clearance rather than just wait for the list. Mr. COPENHAVER. Now, when your Frankfurt office gets the list of property from DOD that has been excessed by the military, do you use your screening officers who are located in Germany or in France to screen all this property, or do you bring in screening officers from Vietnam,~ Latin America or Africa, for example? Mr. WOLL. For our own 608 program, Mr. Copenhaver, we use our own people. Now, there have been AID technicians from missions and regions who have come into Europe and screened also. Mr. COPENHAVER. But primarily, it is your screening officers who are located in Europe who screen for the other theaters, is that right? Mr. WOLL. Yes. Mr. COPENHAVER. Without seeking to take too much time of the com- mittee, do you have any opinion as to how your screening operations compare to the screening operations of the military? And particu- larly, I ask this question: In your opinion, does the military now have the same high caliber operation onsite screening that AID has? By way of background, there was a time when the military did not have sufficiently trained screening officers to actually go out and screen property in some cases which has been declared excess as AID had. Do you have any opinion, now? Mr. WATERS. We follow their procedures pretty well. But how they arrive at their decision on it, this is pretty difficult for me to judge. Mr. COPENHAVER. All right. You indicated in your statement that there was a change of organization within AID concerning excess prop- erty programing. As I understand it, initially, the excess property program was tied in with your procurement program? Mr. WATERS. Yes. Mr. COPENHAVER. Now, it is to be changed, and the excess property program is to be placed under the assistant AID Administrator for Administration? Mr. WATERS. Perhaps I did not make that clear enough. Part of the move in reorganization was to move all procurement operations of the agency under the Assistant Administrator for Administration under a new Office of Procurement. So, the relationship is still preserved and protected in the relationship to the new procurement. Mr. Pat O'Leary, who was formerly an Associate Administrator of mine, is in the Office of Procurement. Mr. Woll will be operating under his direction. He, in turn, will be operating under the Assistant Administrator for Administration. I mentioned him because that is the level of the presidential appointee provision of the program. I want to assure you, however, that my own interest in this program will continue. I expect to move from a supplier in the program to a user in the program, because I see many opportunities for use of this PAGENO="0021" USE OF EXCESS MILITARY PROPERTY IN FRANCE 15 excess property in forwarding our war on hunger activity in agricul- tural development. Mr. COPENHAVER. Do I understand that you mentioned that you used military transports for shipment of excess property to your other countries? Mr. WATERS. In most instances. Mr. COPENHAVER. In most instances? Mr. WATERS. Yes. Mr. COPENHAVER. With regard to the type of excess property which you have selected for shipment to Vietnam out of Operation FRELOC, do you have any breakdown of categories of equipment that you have shipped to Vietnam which you could supply the committee at the chairman's permission? Do you have any categories that you could supply for the record? Mr. WATERS. You wanted just the breakdown-the breakdown from FRELOC, now, not the total amount of excess? Mr. COPENHAVER. If you could do both. (Subsequently AID provided the following document:) MAY 23, 1967. Mr. Jack K. Woll, Chief, PROC/GPR, AID/Washington. P. H. Scordas, 010, AID/EPRO-4, Frankfurt. Shipment of Operation FREILOC source excess property to Vietnam. SHIPMENTS TO VIETNAM Unit Total Descriptwn Quantity acquisition acquisition cost cost Motor vehicles, trailers: Truck, utility, `~-ton 583 $2,410 $1,405,030 Do 22 2,614 57,508 Truck, ambulance 2 4,514 9,022 Truck, wrecker 1 21,350 21,350 Truck, cargo 4 6,512 26,048 Do 6 5,883 35,298 Do 3 6,901 20,705 Do 1 2,096 2,096 Do 1 7,040 7,040 Truck, tractor 1 10,733 10,733 Truck, wrecker 1 13,832 13,832 Truck, tractor 1 10,873 10,873 Truck, dump 1 7,690 7,690 Truck, pickup 1 1,600 1,600 Do 1 1,311 1,311 Trailer, water 37 1, 278 47,268 Do 1 1,032 1,032 Tractors: Tractor, full tracked 1 21,874 21,874 Vehicular equipment components: Axle, rear 1 2,337 2,337 Construction, mining, excavating, and highway maintenance equipment: Crane, shovel 3 27,634 82,902 Du 2 22,733 45,466 Roller, road 1 10,116 10,116 Do 1 7,496 7,496 Grader, road. 1 16,357 16,357 Do 1 14,534 14,534 Mixer, concrete 1 3,752 3,752 Distributor, water 2 17, 118 34,236 Do 1 14,065 14,065 Materials-handling equipment: Truck, forklift 1 3,596 3,596 Tractor, warehouse 1 2, 026 2, 026 Do 1 1,884 1,884 Trailer, warehouse 2 334 668 Firefighting equipment: Trailer, firefighting 1 22, 404 22, 404 Communication equipment: Telephones, dial, 1,325 each (1) 11,925 11,925 Telephones, dial, 1,050 each (1) 9,450 9,450 Telep1aonex,~ctial, 750 each (1) 6,750 6,750 Telephones, dUd, 3,580 each (2) 32,220 32,220 Telephones, dial, 541 each (1) 4,869 4,869 Teletypewriter 4 2, 100 8,640 Paper, teleprint (1) 673 673 See footnotes at end of table, p 18. PAGENO="0022" 16 USE OF EXCESS MILITARY PROPERTY IN FRANCE SHIPMENTS TO VIETNAM-Continued Unit Total Description Quantity acquisition acquisition cost cost Electric power and distribution equipment: Generator 1 $4, 782 $4, 782 Do 2 2,444 4,888 Do 1 5,432 5,432 Do 3 3,305 9,915 Do 1 4,000 4,000 Do 1 5,289 5,289 Do 1 5,463 5,463 Do 1 4,750 4,750 Do 1 2,400 2,400 Do 1 2,750 2,750 Miscellaneous equipment: Ice cream plant 1 3, 271 3,271 Chair, dental 1 483 483 Insecticide (DDT) (1) 15, 294 15, 294 Paint (1) 5,985 5,985 Mattresses (1,270) (1) 22, 560 22,560 Cu~5s, Oper, water 2 24 16 384 Total 2,134,326 ORDERED BUT NOT YET SHIPPED Motor vehicles, trailers: Truck, Utility, 3~a~ ton 369 Do 1 Do 33 Truck, travelette 1 Truck, pickup 26 Truck, cargo Do Truck, tank Truck, dump Do Trucker, wrecker Do Truck, tractor Truck, tractor, 5-ton Truck, wrecker Do Truck; cargo Do Do Truck, ambulance Do Truck,S&P Do Do Do Do Truck, pickup Do - Do Truck, I ton Do Do Truck, van Auto, station wagon Bus, 29 passenger Bus, 36 passenger Bus, 29 passenger Do Do Do Trailer, semi Do Trailer Trailer, semi Do Trailer, water Do Trailer, office See footnotes at end of table, p. 18. $2,410 $889,290 2,614 2,614 2, 080 68,640 3,000 3,000 1,600 41,600 6,512 6,512 6,901 6,901 15,566 31,132 17,206 17,206 7,667 7,667 7,360 14,720 13,018 26,036 3,853 3,853 3,889 3,889 10,920 32,760 23,215 23,215 213,423 20,423 4,428 4,428 7,132 28 528 6,708 67,080 7,132 49,924 4,514 22,570 3, 200 3,200 2,186 10,930 2,186 8,744 7, 352 7, 352 2,096 2,096 3,000 18,000 1,255 1,255 1,311 3,933 1,600 1,600 2,382 4,764 2,079 4,158 2,024 2,024 10,222 10,222 2,512 2,512 3,736 7,472 3,830 3,830 15,183 15,183 3,736 3,736 3,938 3,938 3,259 3,259 3,922 3,922 3,758 3,758 15,545 15,545 2,187 2,187 4,~60 4,860 5,063 5,063 945 2,835 1,278 1,278 2,000 2,000 PAGENO="0023" USE OF EXCESS MILITARY PROPERTY IN FRANCE 17 ORDERED BUT NOT YET SHlPl~ED-Continued Description Quantity Unit acquisition cost Total acquisition cost Tractors: Tractor, wheeled, nd 1 $2, 881 $2, 881 Trdctor wheeled 1 9, 258 9, 258 Vehicle equipment components: Miscellaneous automotive parts (1) 68, 898 68, 898 Miscellaneous automotive parts and tools (1) 2, 641 2,641 Do (1) 87,058 87,058 Engines: Engine, gas 1 633 633 Do 1 90 90 Do 2 100 200 Do 2 58 116 Do . 3 96 288 Do 2 79 158 Woodworving, metalworking and special industry machinery: Preys, arbor 1 616 616 Drill press 1 142 142 Lathe, woodworking 1 475 475 Do - 1 607 607 Lathe, planer 1 71 71 Drilling, machine 1 10 10 Bending, machine 1 44 44 Welder, electric 1 2,297 2,297 Do 1 2,519 2,519 Welder, arc 1 3, 540 3, 540 Construction, mining, excavating and highway maintënaiu~e eqilipmetit: Crane, shovel 2 22,733 45,466 Crane 1 7,285k 7,285 Crane, shovel 1 31,512 31,512 Crane 4 17,433 69,732 Crane, shovel 1 27,634 27,634 Mixer, concrete - 1 1,492 1,492 Do 1 3, 752 3,752 Block, tackle, 4ton 1 337 367 Materials handling equipment: Truck, forklift - 3,451 3,451 Do 6, 588 6, 588 Do 2,589 2,589 Do . 4, 893 4, 893 Do 4,673 4,673 Do - 4,813 4,813 Tractor, warehouse 1 2,015 2,015 Do 1 2,481 2,481 Do - 1 2,026 2,026 Do 1 2,698 2,698 Conveyor, roller 5 75 375 Do 38 45 1,710 Do 6 100 600 Conveyor 10 75 7513 Conveyor, roller, 131 each (1) 8,646 8,646 Trailer, platform 1 340 340 Do 1 1,920 ~,920 Tractor, warehouse 7 3, 727 26~ 089 ~refighting equipmpe~mt: Truck, firefi~hting 1 8,335 8,335 Communication equipment: Cable, telephone (1) 13,870 13,8~7O Electric power and distribution equipment: Generator 1 5, 197 5, 197 Do 1 3,266 3,266 Do 1 6,647 6,647 Generator, 5 kilowatts 4 1,172 4,688 Generator, 15 kilowatts 1 2, 444 2,444 Generator, 30 kilowatts 2 5,024 10,048 Do 2 2,493 4,986 Generator, 10 kilowatts 3 1,549 4,647 Generator, 30 kilowatts 2 4, 680 9, 360 f3enerator, 15 kilowatts - 2 2, 444 4, 888 Generator, 10 kilowatts 22 1, 549 34, 078 Medical and dental equipment: Miscellaneous medical equipment (1) 64, 222 64, 222 Rubber sheets (1) 724 714 Maintenance and repair sloop equipment: Shop equipment set 1 16, 762 16, 762 Shop equipment (1) 1, 02$ 1,029 Do (1) 219,202 129,202 See footnotes at end of table, p. 18. - PAGENO="0024" 18 USE OF EXCESS MILITARY PROPERTY IN FRANCE ORDERED BUT NOT YET SHIPPED-Continued Description Quantity Unit acquisition cost Total acquisition cost Handtools, measuring tools, hardware, and abrasives: Miscellaneoustools Do Miscellaneous tools, spare parts, aid hardware Miscellaneous tools `Calipers Gage Surface plato Level (1) (1) (1) (`) 4 4 1 1 $1,098 45,998 87, 058 477 9 4 80 4 $1,098 45,998 87, 058 477 36 16 80 4 Machine, metal brake Miscellaneous tools Die thread cutting Miscellaneous hardware and tools Do Miscellaneous equipment: Photographicequipment Cot, folding Miscellaneous, metal bars Cot, metal Bakeryequipment Sprayer Boat, alum - Total (1) (1) (1) (1) (1) (1) 1 2 150 39 4 1 401 1, 764 114 15,561 15,757 5,037 7 4,516 12 1,725 280 7,520 401 1, 764 228 15,561 15,757 5,037 1,050 4,516 468 1,725 1,120 7,520 2,492,390 ~1 lot. Cartons. Mr. WATERS. The biggest part of FRELOC were jeeps. We ear- marked the jeeps that were available to Vietnam. Mr. COPENHAVER. After you have a program for rehabilitation of equipment, this is then shipped to various countries for your on-going programs. Do you have `any problems with regard to spare parts there- after for the maintenance of this equipment? How do you go about obtaining spare parts for this equipment? Mr. WATERS. Spare parts has always been a problem, not only for excess property, but for all equipment provided in developing areas of the world. There is too little attention paid by people acquiring equipment in developing countries tothis question of maintenance and ~part support. So we are aware of and constantly are trying to tighten our regu- ~Iations procedures, whether for new procurement or excess property which would require that parts are included in the original `order. We do have, however, people in the excess property regional offices who are under instructions to take parts support into account in ap- proving transfer of equipment. We have special procedures in trying to encourage parts support. We notify the original manufacturer of the equipment when equipment is being introduced into a new area in the hope that they can establish parts support themselves. We do require our missions in the field, and this is particularly true in the Latin American area. They have set up a special procedure ask- ing for excess property to be used in a program to set aside as funds to buy new parts to support the equipment. So, we are constantly con- cerned with this parts problem in trying to keep the equipment from not being fully utilized because of lack of parts. Whenever we find that a line of equipment or a type of equipment or parts are not avail- able from the original manufacturer, we just discontinue using that equipment. PAGENO="0025" uSE OF EXCESS MILITARY PROPERTY IN FRANCE 19 Mr. COPENHAVER. Have you found a situation existing whereby the military will declare excess pieces of equipment,~ and yet have in their depots, perhaps, excess quantities of spare pau1t~ for the equipment which they have not declared excess? And if so, do you seek to get the military to declare that excess, also? Or what do you proceed on? Mr. WATERS. We go after parts as well as equipment, and it all depends. If the military is excessing out a certain line, if the excess is a result of phasing out a certain line of a year's model, that sometimes happens, then, we have more success in getting the old parts as well. If it is individual pieces of equipment because of condition, but they are still making parts support for that line of equipment, they have use for these parts, we either have to turn to the manufacturer for parts, or turn to cannibalization of other pieces of equipmei~it for parts, or just try to buy parts supports in the open market. Mr. COFENHAVER. Finally, in regard to a question that Mr. Rom- ney explored with you, do you have-do you maintain any inventory list of property which you lye acquired through the excess pro'p~ erty program stored at marshaling sites or other locaMons where you store equipment having been repaired which would show how tong you have had this in inventory? For example, perhaps a crane which you have had in inventory for a year or 2 or 3 years which was either picked up by a want list? Mr. WATERS. Yes. The turnover is rather rapid. We do keep the individual cards on the equipment. I think we could provide you with the average time held and the turnover of these items. Mr. COPENHAVER. If in going through these lists you were to dis- cover that you had a crane, for example, which you had in inventory for 2 or 3 years and you decided you probably would not have a want list requested for that piece of equipment, what would you do with it? Mr. WATERS. We would turn it back to the military. In other words, if we didn't have use for it, we would turn it back to the military. Then, it would be their determination, whether they declared it sur- plus or used it in some other activity. But we do-we would not hold this unduly. In the first place, Mr. Woll is a pretty good businessman operat- ing this program. Every time we hold equipment very long without having use for it, it ups our cost because we are paying for the space we rent for these marshaling sites. We want to keep the equipment moving. So, we find that when we have dead items that are not being moved, we have to write it off as a bad investment and turn it back to the military. This results in our being rather careful in our screen- ing to make sure we have items we can use. Mr. COPENHAVER. Has the military obtained any large amount of equipment from AID in the last year or two which they had formerly declared excess? Mr. WATERS. They have required some back from us when they have discovered a particular need for something we had. I don't know the quantity of that. Mr. Woll could probably give us more informa- tion. Mr. COPENHAVEIt. If you could supply it. (Subsequently, AID provided the following information:) PAGENO="0026" 20 USE OF EXCESS MILITARY PROPERTY IN FRANCE SECTION 608 MATEEIAL TO DOD One-half fiscal year 1967. Advance domestic $16, 236 Advance foreign $467, 839 Defense Construction Supply Department of Navy, 2 each Center, Columbus, Ohio lox plants, total acquisition (electric motors) 14, 160 cost 462, 830 Defense General Supply Cen- SACASC-2, Texas acquisition ter, Richmond, Va. ($880, cost 5, 009 pry bars; $1,196, cot adap- ters) 2, 076 No activity for fi~cal year 1966 and, fiscal year 19q5. Mr. WATERS. If I may add one comment to this. On the domestic side of this, if we had property which did not move which we found we did not have a need for that we anticipated we might have, we would return it to GSA. The GSA is our transfer point in the United States, back to the GSA. If the GSA found no other governmental user, it would be declared excess to our needs. Mr. COPENIJAVER. Thank you. Mrs. HECKLER. I have a few questions. I first of all wondered what type of facilities you have for ware- housing, and how do you arrange this? Do you pay for the ware- housing of these items? Mr. WATERS. It is primarily open storage so far as the marshaling sites are concerned. Particularly, we have a fast turnover. We have some closed warehousing space for small items. But for construction equipment and things of that kind, it is primarily open storage. It is space we are renting in most instances. Mrs. HECKLER. In other words, you just don't keep this material at the military site free of charge? It is necessary to separate it? Mr. WATERS. That is right. It is moved out. In looking for a rehab center, we have to look at a place where we can get rehab facilities and potential storage space and shipping move~ ments in all one locality so we don't have a lot of movement going back and forth. Mrs. HECKLER. I am interested in knowing a little more about your pricing structure. When you acquire items, obviously in certain cases you have to spend a certain amount to rehabilitate these same items. How do you finally arrive at a price or value? Mr. WATERS. We went through great struggles on this in trying to set up a program to arrive at a fair basis. We discussed individually priced items, but we arrived at a figure of 15 percent of the original acquisition cost. So, when we offer property to our missions in sup- port of a program or to volunteer agencies, we are offering it at 15 percent of the original acquisition value. That means that we have to handle our cost, rehab within that 15 percent, to preserve the in- tegrity of our revolving fund. It doesn't mean that every item is re- paire~I within that 15 percent. Some items go up, and some items we do better on, and are less. But we have to maintain that average to come out. That is also a strong factor on reenforcing the carefuT selection of equipment. If you were having an open-end repair job, you might have selectors go out and find almost any piece of equipment and finally put more in the rehabbing than the equipment would be worth. PAGENO="0027" USE OF EXCESS MILITARY PROPERTY IN FRANCE 21 Then, you would have a real question in the mind of user as to whether to obtain used equipment in excess or whether to buy new equipment. So, we found in a practical way, 15 percent has worked out pretty well with our customers. And we have been able to do a good break- even job and pick up more of the administrative cost of the program. Mrs. HECKLER. Do you have a special group of individuals who have a responsibility for setting these prices or overseeing them? Mr. WATERS. We run this price worldwide at 15 percent. We do a very careful review and keep monthly reports of our financial trans- actions that we relate to revolved funds. If we make a decision to change, it would be a decision probably worldwide. We do feel that the uniformity of price offering so that the person can look at the acquisition value of the equipment and know what he can get it for is better than trying to have an individual price for each item. Mrs. HECKLER. Well then, does your list state the acquisition value ~ Mr. WATERS. That is right. Mrs. HECKLER. So, this is immediately obvious to any purchaser? Mr. WATERS. Yes. Mrs. HECKLER. I have just one final question, Mr. Chairman. Ob- viously from the statement, the advance acquisition program seems to be the whole strength of the physical integrity of your program. Mr. WATERS. Yes. For example, this year, out of some $31 million property moved in this advance acquisition program, we in effect show a profit of about $71,000. Well, that is trimming it fairly close. But we feel that we are able to break even. We are not trying to make money on the program. We are trying to do the best job we can do in trying to hold it at a break-even point. There will be little dips and little gains. But we are constantly watching the program to see if we can give an effective job within a given price range. Mrs. HECKLER. You have discussed a few of your onsite screening processes, the excess property utilization officers and so forth. But in relationship to Vietnam, you talk about a special priority or screening procedure. Tell us something about that. Mr. WATERS. Before we submit the property we have picked up to other missions in the field, before it goes in a general catalog, there is the advance notice of this to Vietnam. They have 1 month to decide whether they want that equipment. They have first crack on any of this equipment. We felt in view of the Government's ganeral priority for meeting our obligations in Vietnam, we thought this was a correct way to proceed with this. However, if they don't ask for it within a month, then, it becomes available to circulate to all of our other missions. Mrs. HECKLER. This means that they get the list a month early? Mr. WATERS. Yes. Mrs. HECKLER. You talked about $14 million in 1967 for Vietnam. And you said in relation to another question this is mainly for jeeps. Fourteen million dollars worth of jeeps? Mr. WOLL. $14 million is the total equipment, and a good part came from the Japan center. Out of France in closing out FRELOC was primarily jeeps. Mrs. HECKLER. What about the rest? PAGENO="0028" 22 USE~. OF EXCESS MILITARY PROPERTY IN FRANCE Mr. WATERS. It is a pretty broad range of items. It is probably the/ broadest range of any one place to which we had~ pi'ograms: vocational training equipment, medical equipment, refugee equipment. It is a pretty broad range. Mrs. HECKLER. Let me ask you this: Why couldn't you use other property than jeeps from FIRELOC? Mr. WATERS. We have used others. The majority that came out of there-probably because the jeeps weren't readily avail~ible in the past. When. they saw the jeeps, they claimed the jeeps. They have a real need for jeeps. Mrs. HECKLER, That is all.~ Mr. MONOGAN. Is it now expected that there will be other substantial excess property generated in Europe? Mr. WATERS. We think so. We have to follow military development. Mr. MONAGAN. Even though it may have been moved from France `to Germany without a declaration, there may still be other declarations of excess? Mr. WATERS. And other changes ar,e going on continually that do generate this. Mr. MONAGAN. ~There has been an increase as you have indicated in both Europe and in Asia in the declaration of excess. I assume that this is due first of all to the movement in France; and then secondly to the military activity in Southeast Asia; is that right? Mr. WATERS. That is right. Mr. MONAGAN. So, in the first case, after a period of time, the volume would tend to go down, and in the latter we hope with the reduction of military activity? Mr. WATERS. I feel, Mr. Chairman, on a continuing nature, we would probably have a higher portion of our program overseas than domestic because we are now geared to have it. One factor that I am pleased about in this program is the feeling that we made good in our intentions we expressed earlier to this com- mittee and other committees to try to develop a program that would not interfere with the domestic donable program. When we started this, most of it was called for to be out of the domestic programs in the United States. We have got this new machinery to work overseas. As you see, a great percentage of our program is now coming from overseas sources. That lessens the pressure on equipment coming out of the United States. Mr. MONAGAN. Is it true, also, without going too greatly into detail, that most of the excess that is generated in Southeast Asia is used in that area? Mr. WATERS. Yes, I think that is true. Occasionally a particular item shows up that is needed someplace else. Mr. MONAGAN. And is it moved from South Vietnam to Japan, and then back to South Vietnam, for example? Mr. WATERS. I am told that there are some instances. But I think it is rather small. I think in that case I would anticipate some day a rather substantial program in South Vietnam when and if peaceful conditions are restored in the country. But as of this time, it is making poor use of the equipment in the country. There is very little of it moved from there into Japan. Mr. MONAGAN. Where does the Japanese center get its equipment? PAGENO="0029" USE OF EXCESS MILITARY PROPERTY IN FRANCE 23 Mr. WATERS. A lot of it is out of Japan and Korea, a lot out of Okinawa. Mr. MONAGAN. With relation to sections 607 and 608, you have indi- cated, in response to questions by Mrs. Heckler and elsewhere, that section 608 gradually seems to be taking precedent. Is that, would you say, because section 607 is very difficult to administer; because the detailed job of following the property all over the world on the part of the mission that are perhaps more than one can expect the missions to do? Mr. WATERS. I think that is true. If the mission has a great deal of experience with excess property, if it has good technicians and they know that a country has its own good shops, they may feel that they can claim equipment and supervise this, repair. Some of the unfortunate experiences earlier, however, in 607 were the result of eager beavers wanting to order a lot of equipment and not being able to put the equipment in an operable condition. So, `it gave a black eye to the U.S. image. It didn't make an effective pro- gram. The tendency has been to turn to the 608 portion except where there has been a great deal of experience in a pretty sophisticated ad- ministrative machinery-a country further along on the road to development. Mr. MONAGAN. We have had furnished before a table showing the utilization of excess property by AID, and starting in 1960, and I think that you might furnish us with a table bringing those statistics up to date. Mr. WATERS. II would be happy to bring that up to date showing you the variOus types of programs. Mr. MONAGAN. Actually, you have the figure in your statement. I think the details would be helpful. (The document follows:) UTILIZATION OF EXCESS PROPERTY [Original acquisition cost in millions of dollarsj Advance acquisition Direct acquisition Non-AID.financed Total Fiscatyear Do- For- Total Do- For- Total Do- For- Total Do- For- Total mestic eign mestic eign mestic eign mestic eign 1960 12. 5 3. 6 16. 1 6. 4 6. 4 18. 9 3. 6 22. 5 1961 9.8 11.5 21.3 37.8 37.8 47.6 11.5 59.1 1962 14.2 23,3 37.5 19.3 19.3 33.5 23.3 56.8 1963 .9 .1 1.0 10.8 14.6 25.2 7.5 7.5 19.0 14.7 33.7 1964 6. 9 2. 3 9. 2 7. 9 19. 0 26. 9 10. 3 15. 0 25. 3 25. 1 36. 3 61. 4 1965 8.9 9.9 18.8 6.6 10.1 16.7 1.5 .4 1.9 17.0 20.4 37.4 1966 15.7 19.3 35.0 1.7 21.3 23.0 1.3 2.5 .3.8 18.7 43.1 61.8 1st half 1967 9. 6 13. 2 22. 8 - 2 9. 0 9. 2 - 3 2. 0 2. 3 10. 1 24. 2 34.3 Grand total, - 42. 0 44.8 86.8 63. 5 112.4 175.9 84.4 19. 9 104.3 189.9 177. 1 367. b Mr~ MO~AGAN. Do you have any further qu~stious? . , Mr. BARASH. Mr. Waters, this subcommittee is not QI1ly:iI~tere$ted in how AID ~ieks u~ excess property available as a res~lt,~f `FRELOG, but how other agencies do as well. I am curious to kIiow~do you have competition from otheT~ Federal agencies htwing operation~ abroad `on this property? . , , ~" PAGENO="0030" 24 USE OF EXCESS MILITARY PROPE1iTY IN FRANCE Mr. WATERS. We have had some. We have encouraged the State Department's administrative people to look at the potential that might come out: office equipment, desks, things of that kind. I don't know how effective they have been in finding what they have wanted, but we have offered our facilities, and they have used our offices in some of our locations to try to help locate what might be useful to them. As to my knowledge so far, that is the only one that I directly ran into that is trying to claim excess overseas. We have been the channel of help as part of our program to work with the voluntary agencies of this country that are operating abroad-the registered American volunteer agencies operating overseas who are authorized under the act to participate in these programs. It took a while to develop the procedures for them to do so, but from the overseas aspect of this, they are now participating in groups in the various services. And they are carrying on many of the programs that are really an effective supplement to government development activity at the village level ahead, and are making rather good use of this equipment themselves paying the cost of the 15 percent sur- charge on the equipment. Mr. BARASH. I believe you testified that most of the property that was picked up by AID as a result of FRELOC was screened in France; is that correct? Mr. WATERS. Yes, this is correct. Mr. BARASIIL. What percentage, if any, of the property screened in France was not shipped directly from France to your rehab sites? Mr. WATERS. I think about 5 percent of it came from Germany after the move from France, and back to Germany or from other sites. Mi. BARASH. But the 95 percent went directly? Mr. WATERS. Of course we are continually maintaining this search for equipment for inspection in Germany. Mr. BARASH. Once the property was selected by AID in France, how long did it take to get from France to the rehab site ordinarily? Mr. WATERS. I am informed by Mr. WoT1 that it varied between 60 and 120 days for the movement. Mr. BARASH. That is all. Mr. R0MNEY. Mr. Waters, when property that you have acquired under th~ advance acquisition program appears dead, as you put it, and you have to dispose of it, would you classify this technically as being foreign excess property; that is, excess at that point to the needs of AID? Mr. WATERS. If we had acquired it from a foreign base, yes. Mr. ROMNEY. Are you familiar with the foreign affairs manual, vol- ume 6, subchapter 233 which relates to the disposal of personal prop- erty abroad? This is part of the uniform State-AID-USIA regulations. Mr. WATERS. Yes, I am fairly familiar with that. Mr. ROMNEY. And of course the disposal of foreign excess property under this regulation. My question, then, is this: In the disposal of property acquired under the advance acquisition program because it is not needed, do you follow this uniform regulation, or is there some other procedure? Mr. WATERS. I think Mr. Woll should answer this. Mr. W0LL. Mr. Romney, we have a procedure of our own in this re- spect. Whenever we acquire property that we find we do not have a use for after a period of time, rather than dispose of it through our chan- PAGENO="0031" USE OF EXCESS MILITARY PROPERTY IN FRANCE 25 riels-in other words, sell it as surplus-we turn it back to the military. We feel that we could be criticized unduly for acquiring the property which eventually we don't have a use for and trying to make money on the sale of the property. So, we turn it back to the military who in turn disposes of it, and they keep the funds, we do not. Mr. WATERS. I might add, Mr. Romney, that the pattern of the State- AID-USIA regulation applies basically to our own generation. I don't think it was intended to cover construction equipment, but rather of- fice equipment. Mr. WOLL. I said that the military keeps the money. I don't know whether that is true or not. But AID does not get the money. Mr. MONAGAN. Thank you very much, Mr. Waters and Mr. Woll. Mr. WATERS. Thank you. Mr. WOLL. Thank you. Mr. MONAGAN. Our next witness is Mr. Jerome H. Stolarow, Assist- ant Director, Defense Division, U.S. General Accounting Office. We appreciate your coming and shall be happy to hear you. STATEMENT OF JEROME IL STOLAROW, ASSISTANT DIRECTOR, DEFENSE DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOM- PANIED BY CHARLES W. KIRBY, ASSOCIATE DIRECTOR, DE- FENSE DIVISION, U.S. GENERAL ACCOUNTING OFFICE Mr. STOLAROW. I have with me, Mr. Chairman, Mr. Charles W. Kirby, Associate Director. Mr. MONAGAN. Do you have a prepared statement which you would like to proceed with? Mr. STOLAROW. Mr. Chairman and members of the subcommittee, I am pleased to be here today to discuss the work that the General Ac- counting Office has recently completed in Europe, in connection with Operation FRELOC, as well as our plans for additional audit efforts in this area. During the fall of 1966, it became evident to us that many of the committees and subcommittees of the Congress would be interested in the events occurring in Europe as a result of President Dc Gaulle's decision that all foreign military forces must leave France. In order to be able to provide interested members and committees with in- formation regarding Operation FRELOC, we undertook a broad survey covering military supply matters, disposition of surplus ma- terial, disposition of real property and related personal property, and new construction requirements arising from the movement of supplies and personnel. The results of the survey are contained in our classified report, copies of which have been furnished to the committee. The U.S. Government operated and maintained in France, a com- plex military establishment consisting of several major headquarters activities, depot complexes and Air Force bases. Utilization of French territory provided ports of entry for supplies arriving from the United States, storage areas for war reserve materiel and peacetime operating stocks, a pipeline for the main supply of bulk petroleum, oil, and lubricants, storage for petroleum war reserves, and an ex- tensive communication system. France was strategically important because these facilities were somewhat~ removed from. the geogr~phi- PAGENO="0032" 26 USE OF EXCESS ~TLITART PROPERTY IN FRANCE cal areas where an initial attack ~oi~id be expected in the event of hostil~ities in Europe `and, over `the years, the United States invested about $565 million for physical `facilities in FranCe, exclusive of the amounts contributed through the NATO infrastru~ture program. At ~Mardh 31, 1966, th~ Army and Air l~'orce had about 660,000 short tons of mission stocks in France, as well ~s about 150,000 tons of post, camp, and ~tation stocks such as desks, chairs, typewriters and similar items. We were informally advised that, at the direction of the President of the United States, the military services were required to vacate most of the installations, and to move all of the opei~tiug stocks from France by April, 1967~ Some activities in France are still open to support dependents who were permitted to remain until the end of the school years. As of March 31, 1967, about 6,000 tons of post, camp, and station stocks remained at these locations, and vcill be moved or other- wise disposed of during the pext several months. As you can realize, the movement of over 800,000 tons of material was a formidabletask, and we believe the military services should be commended for the completion of the relocation by the April deadline. "With respect to the real property, only a relatively small number of `the installations have actually been turned over to the French Gov- ernment or to the lessors at this time. A group, known as the Military Liquidation Section, has h,~en established ~ an integral part of the American Embassy in Paris, to maintain control of the real property until the French Governmeiit assumes jurisdiction. Also, the ~Iilitary Liquidation Section has' beei~i given the responsi- ~bilit~ frn~, ne~tiating; with `the ~?rench Governme~t~ the sales prices for installed equipment that the French have indicated' they wish' to have remain in phee ~atee~tai,n iocations.~ At those locations where the Frenchh'a~~e' `expressed no i'nterest~ th~ military services gdnerally fol- lowed the po'icy of rem~fing eqtiipment for which' there was. a fore- seeable; need. Othei~ equipmeut ~as eit'he~te be left' in place or disposed of, whichever appeared to be the most economical course of action' un- der the circumstances. Because of the rapid movements of material during the several months preceding April 1, 1967, our audit efforts in the nrea of excess, `surplus, and potential donable property were generally limited to ~Obtaining `available statistical data and some information on the pro- cedures utilized h~ the services to screen ext~ess property. The procedures followed by the services generally called for screen- ing of all excess personal property, both within the theater and by the natiOnal inventory control points in the United States. We do hnow that the military assistance and AID programs obtained sup- plies and equinment from the services during the move, but we have Tidt yet evaluated the screening procedures to determine if all possible material was transferred to those pxograms, or to other military com- mands in oth~r parts' of the world. `The dath' that we `were able to obtain' prior to April 1, 1q67, inch- cated tMt' during the; 12 months ended March 31, 1967, about 72,000 tO~s:OfA~i~ excessmission stock `was moved from France, and `about 10,000 tens wa~'disposed of in France. In addition, about 48,000 tons of ArMy post, `camp; and station' stocks `were disposed of in France during the same period. Data on Air Force excesses and disposals were not readily available at the time of our survey. PAGENO="0033" USE OF EXCESS MILITARY PROPERTY IN FRANCE 27 We are currently engaged in a detailed review of the whole area of disposals, surplus property, and redistribution of assets resulting from Operation FRELOC. The objectives of our review are to (1) deter- mine specific types and quantities of material disposed of, (`2) deter- mine where the disposals took place, and the recipients, and (3) evaluate the propriety of the disposal actions by reviewing the ade- quacy of screening procedures utilized to ascertain if other Govern- ment agencies had a need for th~ material. We hope to complete this review by August 31, and to have a report available sometime in September. With respect to the question of the adequacy of AID's procedures for screening, transporting, rehabilitating and putting into program use excess property made available to it as a result of FRELOC, we do have some work underway in Europe touching on this matter. However, within the time availab]e to prepare our testimony on this subject, we do not have sufficient information here in Washington to discuss the matter adequately. Our work in this matter covers all excess personal propert,y being generated in Europe and is not limited just to FRELOC. It deals with (1) transportation of property to and from marshaling sites at Antwerp, Belgium; Livorno, Italy; Rota, Spain; (2) AID's func- tions in contracting for rehabilitation of excess property; (3) the use by AID of this property whether as a supplement to their usual pro- gram or whether it is being used in lieu of procuring new equipment; and (4) the utilization of excess property by the recipient country. In connection with the subject of excess and surplus material, we believe there is one matter that should be brought to your attention at this time; namely, the Army's policy of retaining certain stocks that are in excess of their operating and war reserve requirements. Tinder the provisions of Army regulations, oversea commanders are per- nutted to retain in their inventories quantities of stocks equal to an 18-month supply over and above all computed operating and war re- serve requirements. This situation comes about when, for example, computed requirements of an overseas command for a particular item decrease below the quantity of ~tock~ already on hand. Instead of the oversea command reporting this material back to the inventory con- trol point in the United States for possible redistribution, the excess stocks, up to an 18-month supply~ are classified as economic retefltion stock and remain under the control of the overs~a command for pos- sible future needs. As a result, the inventory ~control point in the United States may be procuring the same item to meet the urgent re- quirements of other Army cornmands~ other services, or the military assistance programs. On April 10, 1967, we issued a report to the Congress on the avail- ability of selected stocks of the U.S. Army in Europe for require- ments of other commands, wherein we stated that repair parts and electronic components which exceeded requirements in Europe were not redistributed to meet urgent needs in other areas because of weak- nesses in the Army's inventory reportiiig procedures and practices. In our report, we suggested that all existing stocks of items that exceed current operating and reserve requirements should be routinely reported to the appropriate national inventory control points so that the availability of such stocks could be considered in arriving at de- 82--554-67---8 PAGENO="0034" 28 USE OF EXCESS MILITARY PROPERTY IN FRANCE cisions regarding procurements, redistributions, and disposals. In its reply to our report, the Army stated that: As a general rule, stocks issued to and owned by tactical forces should not be considered as available for redistribution to satisfy worldwide requirements un- less reported as excess in accordance with existing Army regulations. In our opinion, the Army's policies in regard to retention of ma- terial can lead to overprocurements, additional storage costs, and pos- sible shortages in one command while another command has an over- stockage. Also, other Government agencies such as AID and MAP could possibly make use of such material if it were made available. Our preliminary data indicate that some portion of the new con- struction being planned by the Army, at a cost of about $100 million, in Europe, will be for storage of inventories falling into the economic retention category. In closing, I should like to point out that our initial survey, the results of which are contained in the report already transmitted to you, were for the purposes of obtaining general background informa- tion and for identifying those areas which appeared to require further audit effort. In this connection, we recently initiated four detailed re- views in Europe, including the review of disposal activities previously discussed. The other three are: 1. Review of stock control procedures. 2. Survey of the procedures and practices of the Military Liquidation Section. 3. Survey of need for new construction in Europe. The general objectives of the four reviews are outlined in the attach- ment to this statement. We plan, at a later time, to review FRELOC cost data and the requirements area. This concludes my prepared statement. I shall be happy to answer any questions that you may have at this time. Mr. MONAGAN. Thank you, Mr. Stolarow. First of all, I want to say that I am interested in the activities that you project here, and are now engaged in because I think they are extremely important, and it is encouraging to know that you are mak- ing studies along the lines that you have indicated. Also, I feel that your statement about future construction, and also about the retention of materiel in excess quantities are vitally impor- tant, too, and we will look forward to the results of this study which you indicate will be coming in August. Now, with regard to classification, you have furnished us with cer- tain material, some of which is classified and some of which is unclassi- fied. Of course, the unclassified, we can put into the record at this point.1 Mr. MONAGAN. What is the basis of the designation of the other material? Mr. STOLAROW. We accept the classifications placed on this material by the Department of Defense. Mr. MONAGAN. I see. That is not your designation? Mr. STOLAROW. No, sir. Mr. MONAGAN. Now, you refer to 10,000 tons of excess mission stock was disposed of in France. And you say around 48,000 tons of Army I The report, dated April 1967 and a revision dated May 1967 are classified and are in the subcommittee files. Certain unclassified portions are printed below at p. 34. PAGENO="0035" USE OF EXCESS MILITARY PROPERTY IN FRANCE 29 post, camp, and station stocks were disposed of. How were they dis- posed of, and under what regulations? Mr. STOLAROW. As I have indicated in the statement, we haven't gotten very deeply into this; but I would venture to say that we do have a little information on some of the disposals. For example, certain items were disposed of in France by the use of invitation for bids, and we have a listing of some of these items. Mr. MONAGAN. Well, it is conceivable, for example, that some of this might be used in the AID program, and I just wonder if you know, what the policy consideration was and what the regulation was that determined that this should be sold at public sale. Mr. ST0LAR0w. No, I don't know offhand, sir. I would assume that the AID people did have an opportunity to obtain that property before it was sold. This is the normal procedure. When it is turned over to a property disposal office, the AID people do have an opportunity to screen it. Mr. MONAGAW. Mr. Woll, do you know anything about this? Mr. WOLL. I am sorry, sir, I wasn't paying too much attention t~ what was said. I was reading the opening statement. Mr. MONAGAN. There were certain stocks that were disposed of in France, and I was trying to determine how the disposition was made, and whether or not AID had an opportunity to acquire the property before sale. Mr. WOLL. If the property were excess to military needs, sir, I would say that AID had an opportunity before any final disposal action as far as sale was concerned to obtain this property. Mr. MONAGAN. And other Federal agencies as well. So that although you don't know specifically, this apparently was an action that took place after the screening and offermg the property to the Federal agencies? Mr. ST0LAR0w. Yes. Mr. MONAGAN. You speak about your work covering excess personal property being generated in Europe and not just limited to FRELOC. Would there be a substantial amount generated other than through FRELOC? And where would that be principally? Mr. STOLAROW. Well, there is excess property being generated in the military services at any location where they do store material. This comes about through changes in requirements or changes in tech- nology, whereby certain items become obsolete. Mr. MONAGAN. This would be in Germany and in Spain? Mr. STOLAROW. Yes. For Army stocks in Germany and at the air bases and naval bases throughout Europe. Mr. MONAGAN. You refer to your work involving the utilization of excess property by the recipient country. Just what do you have in mind there, specifically? Mr. STOLAROW. I would like to ask Mr. Berngartt who is from our International Division, which is responsible for this work, to answer that, if I might, please. Mr. BERNGARTT. At present, we have people over in Europe who are going to the various recipient countries and checking on the equip- ment as to the condition that they found the equipment after it has been rehabilitated and ascertaining what use the recipient countries are making of the equipment. PAGENO="0036" 30 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. MONAGAN. In other words, this is property that has been taken by AID and then turned over under the AID program to a recipient ~country? Mr. BERNGARTT. That is right, sir. Mr. MONAGAN. And it is limited to the AID program, or perhaps military assistance? Mr. BERNGARTT. I am not aware of the work that we are doing under the military assistance program.. 1 am aware that we are doing some under the AID program. Mr. MONAGAN. Do you know of any specific examples that are being followed up and what country or countries would be involved? Mr. BERNGARTT. I know they are doing some work in Turkey, for instance. Mr. MONAGAN, Most of the property generated in Europe would be used in the Middle East, wouldn't it? Do you know that? Mr. BERNGARTT. No. Mr. MONAGAN. Mr. Well? Mr. WOLL. For the All) program, most of the property would be utilized iii the Middle East and Africa. Mr. MONAGAN. Mrs. Heckler, I know that you have some other de- mttnds on your time. Would you like to ask some questions, now? Mrs. HECKLER, Well, Mr. Chairman, I would just like to say that I was impressed with the statement that this gentleman made. I think, Mr. Stolarow, that you have outlined some of the. areas of inquiry that were on my mind. The fact that you have undertaken this procedure of review, in the sense stated, helps to define the problems that we all face in looking at this whole program. I will await your response and your review. Apparently you feel that you have not had enough time to~ go into the Army inventory procedures. Mr. STOLAROW. That is correct. In general, what was i~rivolved. was a rapid movement on which mostof the military peciple were involved with the prime purpose being to move the stocks and maintain control of them; that is, to move them out of France to other lOcations to com- ply with General De Gaulle's decision. A~d we didn't feel that we could get in the middle of this type of operation at that time. But now that the move is substantially over, we feel that we would like to go back and see what was done and how it was handled and call to the attention of the Department of Defense and the Congress any area that we think needs improvement. Mr. MONAGAN. Well, there isn't much we can do about it now as far as improving it, I guess? Mr. STOLAROW. Except we may run into similar situations in the future. Mrs. HEOKLKR. Have you had problems with this before? You in- timate that in this report. Mr. STOLAROW. Yes. Inventory controls have been a caitinuing prob- lem througho~it the Department of Defense for a long time. And of course when you move large amounts of stock, this compounds your problem in determining where it is and what the condition of it is, and we wanted to take a look at this right away ~ that if there were certain areas that could be corrected immediately, we could call them to the attention of the military services. Mrs. HRCKLER. I have no further questions. PAGENO="0037" USE OF EXCESS MILITARy PROPERtY IN FRANCE 31 Mr. BARASH. Mr. Stolarow, within the limitations of security, can you discuss where some of this property is being stored and under what conditions? Mr. STOLAROW. The bulk of the property is being stored in Germany, and some in the United Kingdom. Because of the shortages of ade- quate storage space at the present time, some storage is outdoors. And of course some of the material that is outdoors should probably be un- der a roof. The Army does have plans for construction of storage space, and they are going ahead with this. Mr. IBARASH. Is it possible for you to estimate at this time how long it may be before the items standing outside that should be under cover, will be under cover? Mr. STOLAROW. No, I wouldn't be able to estimate that. Mr. BARASH. That is all, Mr. Chairman. Mr. MONAGAN. And is it fair to say that the grea~t majority of these items that have been declared excess, or have been moved, would nor- mully have continued to be used in the regular military program? Mr. STOLAROW. To a certain extent, yes, sir~ The services did~r~adjust their stockage ~bjertives within certain limitations, realizing thflt they would be short of storage space in Germany. They did reduce some stockage objectives and declared some items excess which they nor- mally would have done had not Operation FRELOC been eiiforced upon them. Mr. MONAGAN. There was both amové fromFrance of equipment, and also a movement from France as I recall 18,000 personnel, plus dependents, totaling about 39,000. I don't suppose that you have any distinction between the availability of stocks due to the one item as against the other? Mr. STOLAROW. I am not sure I follow your question. Mr. MONAGAN. Well, we had to move. We were faced with the neces- sity of moving equipment out. We also had a reduction in force; pre- sumably in both instances there was some property that was declared excess? Mr. SToI~ARow. I think that the reduction in force in Europe as a re~ult of FRELOC was relatively minor. Mr~ MONAGAN. It was 18,000 according to Secretary McNamara. Mr. KTRI3Y. Were these foreign nationals? Mr. MO~AGAN. No, these are personnel that were brought back to the United States with their dependents as a result of the move from France, Mr. STOLAROW. Some were brought back. Som~ were transferred to Germany or the United Kingdom or other locations in Europe. In gen- eral, .we did not have any tactical military forces in France outside of Air Force squadrons. Mr. MONAGAN. But at any rate, it is impossible to distinguish be- tween those two elements insofar as yOu are cthicerned? Mr. STOLAROW. That is correct. Mr. MONAGAN. Mr. Copenhaver? Mr. COPEN~IJAVFR. You indicated iii your statement that the military in declaring property excess screened it prObably at the ICP point within the European command Sand then back to the NICP pointh in the United States. Did you find that the property which was declared excess in Germany in order to make room to bring in property from PAGENO="0038" 32 USE OF EXCESS MILITARY PROPERTY IN FRANCE France was also screened through the same process, put through the ICP point in Europe and then the NICP points in CONTJS? Mr. STOLAROW. We haven't gotten into detail on that, but I believe the procedures required a central screening within Europe of excesses, whether they were located in Germany or in France through the head- quarters of the communication zone. They did have an inventory con- trol point in France. They are responsible for theater stock control. So no matter where it was, whether it was in France or in Germany, it should have been screened at a central point for the requirements in Europe. Mr. COPENITAVER. You may recall my questions of Mr. Waters, and I wonder whether you have formulated any opinion as to whether the military now has available skilled screening officers who actually are assigned to go and screen property declared excess? Mr. STor~&Row. I have not come into contact with any individuals or any procedures of that type. My knowledge of the screening pro- cedures is that it is pretty much on the basis of documentation. In other words, they have inventory records which would indicate the type of item and the condition it is in. And periodically as require- ments are recomputed, it becomes evident that certain quantities of stocks are excess to their needs. These are then reported through standard procedures for screening within the Department of Defense and then to other Government agencies. I am not familiar with any procedures wher~by the military actually sends people out to look at property for screening purposes as you have discussed. Mr. `COPENHAVER. Does GAO intend to look into this facet of the matter when you perform your other surveys? Mr. STOLAROW. As to whether the- Mr. COPENHAVER. The actual procedures used by DOD. Mr. ST0LAR0w. Yes; we are. Mr. COPENHAVER. The reason why I asked this is because as you know they have on-the-spot screening officers trained. From information in past hearings it has been brought out that perhaps the military does not have the same skilled officers who can make on-the-site inspections. Mr. `STOLAROW. I might say that there are people in depots that are continually reviewing the condition of the equipment that is in those depots, not particularly for the purpose of screening it for excess. Mr. MONAGAN. Wouldn't it be true that you are really talking about two different functions? Mr. `STOLAROW. Yes, sir. Mr. MONAGAN. Defense is going to determine whether it is excess or not, and then that is their function. Then AID would have their function of deciding what is suitable from this ,e~cess. Mr. COPENHAVER. My point was this: Let's say that the Army com- mand in Europe declared the property excess. Well, if other Army commands may have another need for it or the Air Force or Navy, the question is: Do they have officers available to screen for their purposes? Mr. `STOLAROW. The information is circulated to the other commands and to other services which would indicate the condition of the equip- ment which is determined by inspectors in the warehouse. Mr. COPENHAVER. Of this property which was generated excess under Operation FRELOC did any of that become available to the property program back in CONTJS? PAGENO="0039" USE OF EXCESS MILITARY PROPERTY IN FRANCE 33 Mr. STOLAROW. I don't know. Mr. COPENHAVER. You mentioned in your report that you planned to look into the operations of the Military Liquidation Service and their negotiating procedures. Does GAO have any plans to look into negotiations with regard to the residual value of installations which the French do not have any intention of acquiring in a usable form? Mr. Kim3r. Yes. You mean once it is turned over `to the State De- partment for negotiations? Mr. COPENHAVER. When property is declared excess by the military, does the military assistance program get first crack at that property priortoAlD? Mr. STOLAROW. Yes. Mr. COPENHAVER. Do you intend to examine into that phase of the program to see whether the property acquired through the Military Assistance program is such that they actually need or require it? Do you follow my way of thinking? Mr. STOLAROW. Yes. That would be covered in our review; yes, sir. Mr. COPENHAVER. With regard to your classified report, you men- tioned that this is-this is an unclassified page that I am reading from. You indicate that with regard to material moved out of France that there was returned to the United States 7,000 tons for MAP. I am curious what type of property would be returned to the United States for the MAP program. Mr. STOLAROW. I am not certain at this time. We do not have any de- tails on this matter at this time. This is one of the things that we are looking into in our continuing review and that is what type of material was moved and who got it. Mr. COPENHAVER. Finally Mr. Chairman, after property is screened by the Military in Europe, and has been declared excess, it is screened by NICP's in CONUS. I imagine that this goes to Battle Creek, Mich.? Mr. STOLAROW. It would first go to the National Inventory Control Point which is responsible for the management of that particular item. It would first be determined if the Army had a need for it. If it was then determined to be excess to the Army's needs, the information would be forwarded to Battle Creek where it would then be circulated to other Government agencies-first, within the Department of De- fense, and then through other Government agencies. Mr. COPENHAVER. I understand. Mr. STOLAROW. I might say that the inventory control points through- out the United States which have worldwide management responsi- bilities periodically do submit requirements to Battle Creek. These would not come from the overseas command directly to Battle Creek, but from the Inventory Control Point here in the United States. Then, Battle Creek would match this against available assets and try to effect transfer. Mr. COPENHAVER. Perhaps a further study along these lines- Mr. STOLAROW. We have a review currently underway. It has been underway for sometime, looking into the adequacies of the procedures being utilized in this matching process. Mr. COPENHAVER. And that would be directed particularly to FRELOC, will it not, as well as others? Mr. STOLAROW. No. This is an overall-type review. PAGENO="0040" 34 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. COFENHAVER. Is there anyway whereby you could single out the property declared excess through FRELOC? Mr. ST0LAR0w. I don't know at this time whether it would be feasi- ble topick out those particular items that were forwarded from Europe during the FRELOC period for examination. Mr. MONAGAN. Why don't you check it and let us know and we can put it into the record one way or another. Mr. SToI~&Row. Yes. (The following information was subsequently received from the GAO:) Our inquiry at the Defense Logistics Services Center, Battle Creek, Mich., shows that the Center (1) does not have information readily available showing tbfl disposition of excess in that FRELOC transactions and other transactions are commingled, and (2) plans to have information concerning FRELOC trans- actions by the latter part of June 1967. Mr. MONAGAN. Mr. Stolarow, in addition to the 18,000 personnel I mentioned before, it has been announced that there will be 35,000 more taken out of NATO. Do you know enough about the situation to know whether that presages the generation of a substantial amount of excess~? Mr. ST0LAR0w. No, sir. But that is one of the points we hope to cover. in one~ of our reviews which will start this summer. Mr. MONAGAN. Now, we will put into the record if t1ier~ is no ob- jection these two tables that are unclassified that you have already furnished us showing the material moved from France and the material transferred to property disposal activity. (The information follows:) PROPERTY DIspoa4L OFFICE ACTION ny ARMY AND AIR FORCE IN ~`RANCE DURING ~`RELOC The Army maintained four Property Disposal Offices (PDO) in France where significant quantities of materiel and post, camp, and station materiel were dis- posed of by sales as useable equipment or as scrap. In addition, significant quan- tities of MAP excess property were disposed of by sales of this property in place at French military installations. Since the Army is the executive agent for. prop- erty disposal in France and conducts all property disposal sales in France, the Air Force after screening for redistribution either reported excesses generated at bases in France to the Army's Foreign Excess Sales Office in Paris or trans- fe1~red the excesses to its Redistribution and Marketing Center at Mainz-Kastel in Germany. We were informedby both USAEEUR and USAFE personnel there has been no significant increase in PDO activities in France as a result of FRELOC. The following tabulation lists PDO materiel receipts in France for fiscal year 1966, and the receipts during the F~tELOC period commencing on April 1, 19436 through January 31, 1967. MATERIEL TRANSFERRED TO PROPERTY DISPOSAL ACTIVITIES [In thousands) .. ~., Returned by Army Air Force Total MAP Fiscal year 1966 $219,000 $31,400 $18,300 $266,700 4th quarter, fiscal year 1966 80, 600 8, 300 5, 600 94, 5110 lstquarter,fiscalyearl967 18,200 5,200 8,300 31,700 2d quarter, fiscal year 1967 36,800 8,300 4,100 49,200 January1967 . 7,900 1,900 (1) 9,800 Total, Apr 1,1966, to Jan. 31, 1967 143,500 23,700 18,000 185,2110 I Not available at date of preparation of this report. PAGENO="0041" USE OF EXCESS MILITARY PROPERTY IN FRANCE The following schedule surn~iaarizes Army redistribution and transfers to other federal agencies, primarily AID, from PDQ activities in France during the FRELOC period: ARMY REDISTRIBUTION OF PDO RECE1PTS IN FRANCE [In thousandsj Total receipts Redistribution within DOD To other Federal agencies Total redistribution Fiscal year 1965 Fiscal year 1966 4th quarter, fiscal year 1966 1st quarter, fiscal year 1967 2dquarter,fiscalyearl967 January 1967 Total $234, 500 250,400 (1) $1,640 (1) $6,300 (1) $7,940 88,900 23, 400 45,100 9,800 600 500 390 90 770 5, 320 13,680 1,310 1,370 5, 820 14,070 1,400 167, 200 1, 580 21,080 22, 660 1 Not available. Air Force data on redistribution of excess is available only in total for all bases in Europe including France. Transfers to AID, however, are identified by the country of origin. This inforniation for the FRELOC period is summarized as follows: AIR FORCE TRANSFERS TO AID [In thousandsj - From France Air Force total Fiscal year 1965 $70 $2,300 Fiscil year 1966 - 660 4,770 4th quarter, fiscal year 1966 70 950 1st quarter, fiscal year 1967 356 2,290 2d quarter, fiscal year 1967 540 - - 5,590 Total FRELOC available (since Mar. 31, 1966) 960 8,830 Mr. MONAGAN. I would just like to conclude by asking you if you would explain just what this Army policy is that you speak about that led to the retention of excessive stocks? In other words, they have their current and war requirements, and then they have an additional reserve. Apparently this is a sort of supplemental reserve, is that it? Mr. STOLAItOW. In essence, the way we look at it is that it is excess material. It is over and above any authorized stockage objectives within the theater. It is material that exceeds their current operating stock levels; that is, stock levels they maintain for day-to-day opera- tions, plus their war reserve requirements. And as I indicated in the statement, periodically, requirements do change. The need for a cer- tain type of repair part would drop, say, because the end items have been transferred to another command or another theater. The stock on hand then exceeds the computed requirements. Under Army regula- tions, the overseas commander does have an option of retaining that in his inventory. Mr. MONAGAN. Is there any limitation on that option? Mr. STOLAROW. The Army regulations say that he can retain up to an 18-month supply. I might say that we have recently been advised by the Department o ~ Defense that some attempts are going to be made within the next PAGENO="0042" 36 USE OF EXCESS MILITARY PROPERTY IN FRANCE year to get reporting data back from the overseas commands to the Inventory Control Point so that they will have more information. Mr. MONAGAN. Do you have any more questions? Thank you very much. We will recess until May 22 at 10:30 a.m. in this room. (Whereupon, at 12 p.m., the committee was adjourned, to recon- vene at 10:30 a.m., May 22, 1967.) PAGENO="0043" CONTROL AND USE OF EXCESS PROPERTY AND RE- LATED FOREIGN ASSISTANCE PROBLEMS FOLLOW- ING U.S. MILITARY EXCLUSION FROM FRANCE- 1966-67 MONDAY, MAY 22, 1967 HOUSE OF REPRESENTATrVES, SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY OF THE C0MM1rIEE ON GOVERNMENT OPERATIONS, Wa$hingto'It, D.C. The special subcommittee met, pursuant to adjournment, at 10:30 a.m., in room 2203, Rayburn House Office Building, Hon. John S. Monagan (chairman of the subcommittee) presiding. Present: Representatives John S. Monagan and Margaret M. Heck- ler. Professional staff members present: Miles Q. Rómney, counsel; Peter S. Barash, legal assistant; and William Copenhaver, minority staff. Mr. MONAGAN. The' hearing will come to order. As I understand flow, Mr. Zaretzky, who is the Director of Supply Management Policy, Office of the Assistant Secretary of Defense for Installations and Logistics, will, offer the testimony and then the other gentlemen who are here will be available for questioning. Is that right? Mr. ZARETZKY. Yes, sir. Mr. MONAGAN. You have a statement, Mr. Zaretzky. You may pro- ceed. STATEMENT OF. HYMAN S. 2ARETZKY, DIRECTOR, SUPPLY MAN. AGEMENT POLICY, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE (INSTALLATIONS AND LOGISTIC'S), ACCOMPANIED BY JOSEPH M. HEISER,, BRIGADIER GENERAL, U.S. ARMY, ASSIST- ANT DEPUTY CHIEF OF STAFF FOR LOGISTICS (MATERIEL READINESS), DEPARTMENT OF THE ARMY; CHARLES C. CASE, BRIGADIER GENERAL, U.S. ARMY, CRIER SUPPLY AND MAIN- TENANCE AGENCY, U.S. ARMY EUROPEAN COMMAND; JOHN L KIELY, JR., COLONEL, U.S. ARMY, COMMUNICATIONS ZONE, U.S. ARMY, EUROPE; FREDERICK S. WYLE, DEPUTY ASD (PLANNING AND NORTH ATLANTIC AFFAIRS) (ISA); JOHN M. MULLEN, OASD (ISA); GLENN E. BLITGEN, OASD (ISA); LESTER T. DAVID, COLONEL, U.S. AIR PORCE~ OASD (I. & L); AND WILLIAM W. CAVE, OFFICE OF THE CHIEF OF SUPPORT SERVICES, DEPART- MENT OP THE ARMY Mr. ZAREPZKTY. May I introduce my colleagues? On my right is Gen. Joseph M. Heiser, who is here in Washington, as Assistant Dep- 37 PAGENO="0044" 38 USE OF EXCESS MILITARY PROPERTY IN FRANCE uty Chief of Staff for Logistics in the Department of the Army; General Case is the Chief of the Supply and Maintenance Agency iii Europe; and Colonel Kiely is from what we call COMZ, or the Corn- inunications Zone in Europe. Mr. MONAGAN. May I ask in each case you explain just a bit more what their functions or responsibilities are? Maybe each of them can briefly put that in the record. General HEISER. Yes, sir. I appreciate the opportuiiity. I am As- sistant Deputy Chief of Staff for Logistics, covering materiel readi- ness. Included in materiel readiness are the Directorates of Supply and of Maintenance. It is our responsibility to supervise policy and pro- cedure at the Department of the Army le~e1, covering functions in- volved in supply and maintenance, which includes responsibilities pertaining to property disposal. Mr. MONAGAN. Thank you. General Case? General CASE. I am the Chief of the Supply and Maintenance Agency of COMZ in Europe. I act in, a dual capacity. I act as principal staff officer to the commanding general of the Communications Zone for the wholesale supply and maintenance functions in support of the Army in Europe; and I operate the Supply and Maintenance Agency~ which is the operating agency through which all the depots and mainte- nance shops in Europe are controlled, which procures all the materiel needed iii support of the Army in Europe and maintains it and which has the mission, in addition, of procuring subsistence offshore for the forces in Europe. Mr. MONAGAN. Thank you. Colonel KIELY. Until April 1, I was Chief of Installations and Services Division in COMZ Headquarters. As such, I was responsible for their retail supply support, the support facilities for both the military and their dependents, and for such things as the construction program and property disposal activities as they occurred in France. Since April 1 I remained behind with the group that was continuing the closeout of the U.S. Army in France and I am now with that group as the Installations and Services Division Chief. Mr. MONAGAN. Do you have concern with any new construction that may be required elsewhere as a result of the move from France? Colonel~ KIELY. Only in~ the beginning, sir. I do not have any now. It has moved with the headquarters, and there is a new organization formed there to take care of that. Mr. MONAGAN. Would that be under General Heiser ~ General HEISER. May .1 address this, sir? Actually, we did not come with a specific DA representative on construction. Mr. MONAGAN. I do not know that we are parti~ularly interested in it, but merely for informational purposes. General HEISER. All right, sir. I can address the overall function of construction which is involved. Mr. MONAGAN. Fine; thank you. PAGENO="0045" USE OF EXCESS MILITARY PROPERPY IN FEANCE 39 Mr. ZAEETZKY, Mr. Chairman and rnember~ of the committee, thank you for the opportunity to review with you the disposition of Depart- ment of Defense supplies and equipment necessitated by the closing of U.S. facilities in France. The committee chairman's letter to Secretary McNamara, dated May 11, 196~, requested that we respond to a number of questions related to this move. In the course of this statement, I will address questions posed in that letter. For all practical purposes, the relocation of materiel held in France has been completed. Of the 813,000 tons on hand on April 1, 1966, all but 6,000 tons have been consumed or removed. The materiel still in France is required for `support of U.S. personnel and their depend- ents remaining in France until the end of the current school year. Because we wished to ease personal hardships as much as possible, arrangements were made for 6,000 U.S. personnel, a large number of them either students, teachers, or administrators at dependent schools, to remain in France, with the approval of that Government, until the end of June. This total includes a small number of U.S. personnel re- quired to remain in France for longer periods in order to complete property disposal actions and perform certain needed tasks in con- nection with SHAPE activities. Disposition of materiel: Discounting the 6,000 tons of property just mentioned, FRELOC involved the relocation of approximately 807~000 tons. The preponderance, 722,297 tons, was held by the Army. The Air Force had 84,279 tons and Navy only 196 tons. Mr. ZAReTZKY. Yes. The Navy materiel, which consisted of house- keeping type items, was located near Marseilles and shipped to Gaeta, Italy, home of the 6th Fleet. The combined tonnage of the Army and Air Force have been treated as follows: 388,294 tons were moved to Germany; 146,518 tons were moved to United Kingdom; 86,000 tons have been returned to the United States as excess to theater requirements; 9,753 tons were moved to Italy; and 6,528 tons were moved to Benelux. These relocation actions account for 637,093 tons of the 807,000 tons in France on April 1, 1966. In addition to these bulk moves, approxi- rnately 100,000 tons of property were consumed through `attrition dur- ing the FRELOC period. These 100,000 tons of property were applied to requisitions generated by the U.S. force elements in Germany as well as the forces still in France. I will speak further to this point in a moment. It can be determined from the foregoing, and I think this is a key point, that slightly less than 70,000 tons of property, or 8.5 percent, held in France became available for reutilization purposes or ultimate disposal action. Attached to my statement for inclusion in the record are detailed tabulations showing the disposition of Army and Air Force materiel. Mr. MONAGAN. That may he made a part of the record at this point. PAGENO="0046" 40 USE OF EXCESS MILITARY PROPERTY IN FRANCE (The tabulations referred to follow:) MATERIEL RELOCATED, MAR. 31, 1967 U.S. ARMY Vital stocks General Ammu- supply nition MAP General Ammu- supply nition Excesses Post, Nonap- ,___ camp propri- and ated station prop- General Ammo- prop- erty supply nition erty and supply Miscel- laneous Total United Kingdom Federal Republic of Germany Italy Benelux Conus Attrition, disposal, other Total 52, 763 215,497 5,403 3,296 78, 188 60, 169 61,422 128 22, 413 1,200 7,000 106 27,894 7, 990 44,548 1, 597 2,676 21 70,139 142 1,314 962 10 232 43, 083 90 9,377 2 4, 585 115, 629 356,683 8,045 4,270 79,674 157, 996 355,145 144,182 1,200 7,000 35,990 46,145 118,406 263 13,964 722,297 U.S. AIR FORCE . Vital stocks ,,,.,_ General Ammuni- supply tion Post, Nonappro- camp and priated Miscel- station property laneous property and supply Total United Kingdom Federal Republic of Germany Italy Benelux Cones Attrition, disposal, other Total 24, 258. 0 21, 186. 2 1, 204. 4 1, 756. 7 5, 901, 6 5, 713. 6 3,993. 4 3, 824. 6 253. 6 6. 0 655. 1 655. 7 2, 347. 2 4, 859. 6 190. 8 262. 7 32. 8 667. 8 155. 7 134. 7 325. 0 1, 416. 4 46. 7 12. 4 1. 4 231. 7 105. 2 79. 1 183. 5 818. 3 30, 889. 0 31,611. 8 1, 707. 9 2,258. 5 6,773. 8 11, 038. 9 63, 020. 5 9,388. 4 8,360.9 817. 5 2,692. 6 84,279. 9 DETERMINATION OF FOREIGN EXCESS Mr. ZARETZKY. All items were reviewed in the theater against firm retention rules (to be discussed in greater detail later), and those not required in Europe were reviewed by the Inventory Control Points in the United States on an expedited basis for determination of world- wide Department of Defense requirements, which include requirements for the military assistance programs. Any items excess to DOD world- wide requirements were released for disposal action promptly. FRELOO ACTIONS Four major actions in particular helped us avoid a storage crisis. One of these was completely fortuitous; the other three were carefully planned and executed. For over a year prior to the De Gaulle announcement, stocks in France had been gradually declining f or operational reasons having no relationship to the political situation. If the De Gaulle decision had come a year earlier, the relocation requirement would have been much higher than that which confronted us on April 1, 1966. The second was not accidental. Beginning immediately after the De Gaulle announcement, the computer at the Army Supply and Main- tenance Agency located at the Headquarters Communications Zone, which we call COMZ, was reprogramed to alter the sequence of its PAGENO="0047" USE OF EXCESS MILITARY PROPERTY IN FRANCE 41 search for assets to satisfy daily requisitions. Instead of searching for stock in the depots in Germany closest to the requisitioner, the computer was directed to search first in outlying depots in France, second in the large rollup depots of Ingrandes and Nancy, and finally at depots in the Federal Republic of Germany. This action, which succeeded far beyond our expectation, illustrates how a policy of management, once determined, can be executed routinely, effortlessly, and unfailingly by means of electronic computers. Instead of drawing down depot stocks in France by a predicted 14,000 tons, through issues against customer requisitions, we actually rid ourselves of nearly 100,000 tons in this fashion. In addition, we permitted the depots in Germany a respite from the drudgery of daily issues so they could concentrate their energies and manpower on receiving interdepot shipments from France. The many shipping depots in France, on the other hand, did almost no receiving of new material and thus were able to cope with customer requisitions as well as interdepot transfers. Thus, double handling was avoided, and congestion in German depots minimized. *The third measure that permitted the Army to execute FRELOC without a storage space crisis was the magnificent program executed by the depots in Germany to improve space utilization. Promptly after announcement by the French, the depots at Nahbollenbach, Miesau, Pirmasens, Einsiedlerhof and Kaiserslautern began rewarehousing operations designed to make space. Greater vertical utilization, im- provisation of sheds, elimination of honeycombing, relocation of non- storage activities from warehouses, and greater use of outside space were the principal devices used. The fourth action, reduction of retention levels in Europe, increased the tonnage of materiel available for return to the United States, if required. Prior to FRELOC, the Army in Europe was authorized to retain up to 18 months worth of supplies of secondary items, in addi- tion to peacetime stockage objectives and mobilization reserves. The reason for permitting retention stocks is, of course, to preclude pay- ing cross-haul fees for items which are not required currently but will likely be needed in their current location in the reasonably near future. As a result of FRELOC, theater retention criteria were reduced to 6 months, to promote the return of some items and thereby increase available storage space in Germany. DISPOSAL CONTROL One threat in the FRELOC operation was that, in meeting a short relocation deadline date, a large volume of U.S.-owned prop- erty would be dumped in property disposal yards, with only small financial return to the U.S. Treasury. The Army was determined to minimize this loss of assets. A computer-assisted program was designed to rescreen stocks before declaring them as surplus. This program included 14 specific checks to insure that property which could be used beneficially by the United States was not sent to the surplus yards. High-dollar-value items were isolated for manual review by commodity managers. In addition to these precautions, depot com- manders were enjoined to personally scrutinize disposal yards to recover items, the disposal of which appeared to satisfy technical criteria but not the demands of commonsense. A small percentage, but nevertheless a significant quantity, of valuable property was restored PAGENO="0048" 42 USE OF EXCESS MILITARY PROPERTY IN FRANCE to supply inventories through this approach. Finally, roving teams of practiced supply experts were dispatched to visit all disposal yards on a biweekly basis, with a license to question any disposal action that appeared not to meet the test of commonsense, They recovered over $600,000 worth of property thttt had suFvived all previous pre- cautions. SURPLUS SALES Of the total supplies remaining after beneficial transfer or use by the Department of Defense, approximately 69,000 tons were available for utilization by other Federal agencies or disposal. A major portion of this tonnage was in unique military materiel such as ammunition, combat-type equipment, combat vehicles and supporting spares. Less than one~half of the 69,000 tons was made up of property of possible utilization by other agencies or programs. This materiel was listed and offered for utilization screening. All items desired were shipped. and the balance reported to the Foreign Excess Sales Office for sale. Army and Air Force surplus property sold in France during this period should not be identified exclusively as FRELOC generated, since generation of surplus is an ongoing routine. However, the total acquisition value of surplus materiel sold in France in fiscal year 1966 amounted to $29,892,609. And in the first half of fiscal year 1967 the acquisition value of property sold was $15.5 million. Usable sur- plus personal property generated after January 1967 was shipped to Germany in order to assure adequate time for effective disposal action. MILITARY LIQUIDATION SECTION The Military. Liquidation Section was established on January 27, 1967, under the American Embassy in France. The accountability of Air Force and Army property remaining in France after April 1 has been transferred to the MLS for appropriate action. The Military Liquidation Section is responsible for sale of this materiel, in addition to the related personal property still at bases not yet transferred to the French Government. The rem.aining personal property is not required by the Department of Defense. We now estimate that the annual budgetary savings as a result of the relocation primarily to bases in Germany and the United King- dom will be at least $50 million to $60 million. Importantly. the annual foreign exchange savings will be between $110 million and $120 million. These major economies would mean little if the relocation had sig- nificantly decreased our combat readiness. But this is not the case. Combat effectiveness in fulfillment of NATO commitments has been maintained. In some instances, such as changes in the logistics net and in warehousing of military equipment and supplies, there will be significant modernization gains. Headquarters organizations have been streamlined. In April 1966 there were in France 32,000 U.S. military person- nel and civilian employees, their 38,000 dependents, and 15,000 for- eign nationals employed by the Department of Defense-a total of 85~000 personnel. The relocation has permitted us to save 16,000 military personnel billets in France and 2,000 more in Germany. Accompanying depend- ents account for 19,000 additional people returning to the United PAGENO="0049" USE OF EXCESS MILITARY PROPERTY IN FRANCE 43 States from France and 2,000 family members returning from Ger- many-a total reduction of 39,000 in the number of U. S. personnel in Europe. Further, in contrast to the 15,000 foreign nationals em- ployed by the U.S. Armed Forces in France, only 4,000 will be hired in other countries to replace them. The reduction of personnel asso- ciated with U.S. military operations in Europe will therefore total approximately 50,000. In closing, I should like to say that, for all practical purposes, the relocation has been completed. Its accomplishment is a great credit to our military officers and men, and our civilian employees. The task is done, and it has been done expeditiously and efficiently. Thank you. Mr. MONAGAN. Thank you very much, Mr. Zaretzky. Mr. Romney? Mr. ROMNEY. Thank you, Mr. Chairman. I refer to the tables at the back of your statement, Mr. Zaretzky, the table of U.S. Air Force and TJ.S~ Army materiel relocated, under the heading "Attrition, Disposal, Other" for the Air Force and the same heading for the Army Materiel Command. You have grouped the stocks together. What information have you or can you supply as to the type of items disposed of and the items specifically trans- ferred to AID or MAP? Mr. ZARETZKY. I might try to answer this in a general way and then possibly one of my colleagues here could be more specific oii an item basis. If we look at the Army chart and our total under "Attrition, dis- posal, other," we total 157,000 tons. This is the area where the 100,000 tons that I referred to in my statement was attrited by actual usage. Therefore, the remainder i's what we consider in the disposal and "other" area Colonel KIELY. The part that I can address directly is the "Post, camp and station" property. In the Army, you see, it shows 43,083 tons under "Attrition, disposal, and other." Part of this property was turned over to units as part of their post, camp, and station support, and it, in turn, went with them to their new locations. Of the total amount that we were disposing of through property disposal channels, this amounted to around 35,000 tons. The types of items were just about every type of item that we may have been using in Europe which, by condition or otherwise, was no longer worth the transportation to Germany or some other place. This would include desks, chairs, tools, and equipment; it would include messhall prop- erty, recreational type property. A big bulk of `this was engineering supplies. It would include such things as sand and gravel, such things as railroad track, and buildings that were not worth taking down and reerecting somewhere else which we would process through property disposal channels. In terms of what we gave to AID, through their total acquisitions they picked up some commercial vehicles that might once have been used in our motor pools. Vehicle parts that were declared excess when they were processed through the Supply and Maintenance Agency; engineer equipment; such things as compressors, generators, cranes, tractors, asphalt plants, and the like. They picked up medical equip- ment such as X-ray machines, dental chairs, and things of this sort. They picked up kitchen equipment, clothing, and tools of all types. This, generally, is the kind of items that we are talking about. 82-5~4----67----4 PAGENO="0050" 44 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. MONAGAN. Is there an indication of what amount went to AID out of the Army total of 157,9~6 tons? Do you have that information? Colonel KIELY. I can give it to you directly, sir, by tonnage. I do have some figures in terms of FRELOC and the acquisition value, which is the way we account for property in PDO. During the period of August through the end of March we gave a total of $12 million in acquisition cost to the AID. Mr. R0MNEY. Could you comment on the general condition of most of this equipment that was disposed of, Colonel? Colonel KIELY. During the FRELOC operation we went to exten- sive pains to make certain that the least would get into property dis- posal operations. We circulated to the Navy, to the Air Force, and to the State Department so they had an opportunity to examine the prop- erty before it was put into property disposal sales through our For- eign Excess Sales Office. The State Department, for instance, ap- pointed a respresentative who practically lived with us over a period of about 5 months. He would take the demands that would come through Embassy channels or State Department channels throughout Europe, the Middle East and Africa, and would then screen the lists that were going into property disposal and make their claims for them. AID was quite active in working directly with us. So as a result, we did not get this big flow into property disposal. Mr. ROMNEY. Colonel, you are speaking for the Army, of course. Mr. MONAGAN. Excuse me. I am not exactly clear what you mean by that. Do you mean because AID picked up this property that you were not compelled to sell it? Is that it? Colonel KIELY. Yes, sir. It reduced our inventory. This leads to the second part-and I am sorry about this-that most of the things that were put into PDO were in very poor condition and a big per- centage of it was reduced to scrap and sold through scrap sales. Mr. MONAGAN. But, of course, it was disposed of, what went to AID. But you were thinking of disposal in a particular sense when you made that statement, I take it. Colonel KIELY. AID, sir, gets only that property which becomes a candidate for property disposal sales. Mr. MONAGAN. Yes. Colonel KIELY. It has to have been screened through the supply and maintenance channels and any other military claimants before they have an opportunity to pick it up. General HEIsER. May I assist here? I think the definition may be causing us problems. In the logistics business in the services, when we talk of property disposal we are talking about the actual operation that Colonel Kiely is talking about. After we have gone through the supply management generation of excess, which means that the serv- ice that has it in the location in which it is found does not need it there, the item is then processed and screened for utilization within the services; then to Federal agencies outside the services. When we talk property disposal, it is only when we actually put it in our prop- erty disposal yards for sale to non-Government agencies, commercial ventures, and so forth. Mr. ROMNEY. Just to clarify the terminology, when you refer to "excess," you, of course, do not refer to excess in terms of the statute, which defines foreign excess property as that property which is no longer needed by the holding agency? PAGENO="0051" USE OF EXCESS MILITARY PROPERTY IN FRANCE 45 General HEI5ER. That is correct. Mr. ROMNEY. But, instead, as excess to a location or to a theater? General HEI5ER. That is correct. That is exactly it. Mr. CAvE. Foreign excess is the term that is generally synonymous with surplus. Surplus is the term used in the United States. Excess can be anything. It has to be clarified as to what kind of excess it is. It can be either station excess, command excess, Army excess, DOD excess, there are many different kinds of excess. General HEI5ER. May I suggest that we submit for the record the definition for the pertinent terms so that the record is clear on it. Mr. MONAGAN. I think you have cleared it up sufficiently without need for any further comment or documentation. Mr. RO~tNEY. Colonel, you were addressing yourself to the chart for the Army materiel. I was wondering if we have the corresponding information for the Air Force chart. Mr. ZARETZKY. I have no Air Force man with me today, but I worked with the Air Force on this and can address the same thing for that category. In the Air Force there is a little bit different situation. They moved a large part of their materiel with the units, as they moved out of France. So most of the post, camp, and station type materiel that the Air Force had went right with the units that flew out either to the United Kingdom or to Germany. You will note that the tonnage in the Air Force is only 667 tons. Most of this had been attrited out with the units. Very little excess was generated by the Air Force. Mr. ROMNEY. `Would this be the explanation for the difference in the breakdown between the two charts? In the case of the Army chart, you divide them into "vital stocks," "MAP" and "excesses;" whereas the Air Force chart does not have that three-way breakdown. Mr. ZARETZKY. That is right. There is no "excess" column for the Air Force chart for that reason. Mr. ROMNEY. I would like to make reference to page 5 of your state- ment, Mr. Zaretzky, in which you discuss the retention level of stocks in Europe. In the last paragraph of that section of your statement you state that the theater retention criteria were reduced to 6 months to promote return of some items and thereby increase available storage space in Germany. We have understood that in December of 1966 this retention level was readjusted to a 1'2-month supply. Can you comment on whether this 6 months' criterion is the current criterion or'whether it was only temporary? General CASE. We are authorized to retain up to 18 months. When we wei~t into FRELOC we reduced this to 6 months for the reasons Mr. Zaretzky has given. When all the FRELOC actions had been taken with respect to excess we restored on a selective basis the retention level on some items to 12 months. We did this as being within our authority within the 18 months' retention authority, and because it makes eco- nomic commonsense not to have items flowing in both directions across the Atlantic within a reasonably short period of each other. Mr. ROMNEY. Would it be possible for you here to give us a general idea of the items that were selected for a 12 months' retention level? General CASE. The nature of the items is that they have a repetitive usage in the theater. They are bread-and-butter items that we know we are going to need, (although we may not know exactly what quan- PAGENO="0052" 46 USE OF EXCESS MILtTARY PROPERTY IN FRANCE tity during what time period. Hardware would be a good example. Mr. ZARETZKY. May I add to that? In our business a keg of nails, for example, might amount to so many numbers of nails and if, based on our computation, they should only have half a keg of nails for peacetime and wartime reserve, it makes good sense to keep the keg of nails and not send half of it back, This is the basis for this authority to retain certain items beyond peacetime and mobiliza- tion reserve scientific computation of requirement.. General CASE. Sonic of the items on which the reteiition level was restored were blankets, office supplies, and clothing and equipment, on the theory we always are going to need them. Just because they are temporarily beyond our requirement, it doesn't make sense to ship them back and then reorder them. Mr. MONAGAN. You undoubtedly are aware of the point that has been raised by the GAO with reference to this practice and, as I understand it, the basis of their criticism was that not only was there regular stocks and a reserve which involved military contingencies hut also an additional reserve on top of that. This is perhaps simplifying it, but that is the way I understood it. Mr. ZARETZKY. Yes, sir. Mr. MONAGAN. We were very much interested in that point. Mr. ZARETZKY. Mobilization reserve items are a distinctive type of item. Not every item is kept in mobilization reserve. The items that General Case meutioned are generally not the kind of items that are kept in a mobilization reserve. Usually mobilization reserve in- cludes combat type items. Therefore, the items that we are talking about that are generally retained in excess of this mobilization reserve and peacetime requirement are, as he pointed out, the bread-and- butter type items that are not usually assigned as a mobilization re- serve type item. It is a different type of item. Mr. MONAGAN. He mentioned blankets, I think, as one item. Is that an example of what you are talking about? General CASE. Tha~t was an item on which we had retention. How- ever, it should be pointed out that with respect to those items on which we maintain a mobilization reserve we have no safety level. So we operate in our reserves. Of course, we do not replenish to this reten- tion level but if our requirements change and throw us into a long stock position, we retain the material, if it looks like it is going to be needed in the foreseeable future up to a certain p&'iod. We are author- ized 18 months. We selected some items to 12 months. Mr. MONAGAN. I was interested in what you said. General CASE. We did this after we had completely divested our- selves of all excesses occurring during the FRELOC period. So this is just something that will prevail in the future as further long stocks develop. General IIEISER. Sir, I was going to address the GAO reference that you made. Mr. MONACAN. Yes. General HETSER. The GAO report, with which I am familiar, sir, did find, and the Army did concur with the GAO. that we were not manag- ing this property as well as we would like. The problem involved the fact, as mentioned and explained earlier that if you already have something on hand in an overseas theater and the change in require- ment occurs because of the density of the equipment or troop changes, PAGENO="0053" TJSE OF EXCESS MILITARY PROPERTY IN FRANCE 47 or the equipment itself is reduced and moved elsewhere, the require- ment for the support involved is changed. Now, rather than move it immediately, if there is a peacetime. requirement, a continuing require- merit for this kind of item, as General Case and Mr. Zaretzky have indicated, there is a judgment decision made as to whether or not this item should be retained in the theater. rfhis is within the theater pre- rogative, as indicated by General Case. This doesn't. mean they would do it arbitrarily. It should be done only after consideration of many factors. Now, the GAO raised the point very well that when these retention levels are overseas, it is possible that the National Inventory Control Points, who manage the supplies nationally across the entire Army, should recognize these supplies as over and above the authorization of the theaters and that, therefore, they should be considered in deter- mining against a gross requirement that which is the net requirement for procurement, or whatever action is appropriate. Now, sir, they are definitely correct and we concur with this. In- volved in this are the problems which have existed in the past, though, with the automatic data processing equipment then available. These NJCP's are now becoming niore and more able to handle a large volume of items. We are talking, as you well recognize,. in te~'ms of hundreds of thousands of items. Now, when we were doing this, more or less, on manual or EAM-type equipment, it was really difficult to do this world- wide in all of these ways. Now, sir, we are getting to the state of the art where we are getting better able to handle this, We are still at a point of making some kind of a selection in order to manage well what we can manage rather than trying to approach the whole gross prob- lem that may at certain points still be unmanageable. What we are doing today, sir, is that on a quarterly basis the over- seas commands are reporting what they have in the way of cert~in assets on their books. This includes some approximately 20,000 items that are in depot stocks and some lesser amount of items that are below the depot stock at what we call the general support level or the direct support level, which is in the field army. These are not. today picked up on the balance fi'le~ of the National Inventory Con- irol Points hut they are reported quarterly, and they are or should be considered in every buy that is indicated necessary at the National Inventory control Point. Now, to take this a step further, sir, in accordance with O'SD guid- ance, in accordance with what the Army wants to do, and really in accordance with what the GAO wants us ~o do because it is efficient and economical, we have procedures that are right now being prepared which extend the pickup of these secondary items-and that is mostly what we are talking about, secondary items, repair parts, things like that-on a selective basis to begin with. As we gain ~ capability, more and more are going to be added, are going to be picked up on the balance files of the National Inventory Control Points so that they will know not only what is in retention levels but they will also know even what they have on hand against their authorizations. So then a determination can be made. at the national level: What is the most efficient, economical thing to do with the overall assets available in the light of the total requiremen~? PAGENO="0054" 48 USE OF EXCESS MILITARY PROPERTY IN FRANCE So that what I am saying is that we have room for improvement, we are improving day by day, and I think there is no question about the objectives of all parties concerned, including the GAO. Mr. MONAGAN. Thank you. Mr. ROMNEY. Just to follow through on this reference to the GAO report, General, the report is entitled "Review of Availability of Selected Stocks of the TJ.S. Army in Europe for Requirements of Other Commands, Department of the Army," dated April 1967. On page 2 the Comptroller General refers to "permissive overstockage inventories," and his comment about that type of inventory is that, "The Department of Defense did not concur with the finding of the GAO that permissive overstockage inventory should be reported to the Inventory Control Points in the United States." You spoke a minute ago about the small items which you were pick- ing up, secondary items. General HEISER. Secondary items, yes. Mr. R0MNEY. Can you tell .me what the permissive overstockage inventories might be in relation to these other small items you were referring to? General HEIsER. The items we were referring to up until now on retention levels are actually address~d at the depot level .stockage. In other words, in the depots under General Case, he has an author- iz~d level and then he may have this 18 months' retention level on those items that are consumed only during peacetime, or items that are in the mobilization reserve. Now; as I recall, the terminology of permissive overstocka~e with which there was some disagreement with the GAO. pertains not to the depot stocks that are in the depots under General Case and COMZ but pertains to nermissive overstocka~e which is in the hands of the field army, in this case 7th Army. If 7th Army, rather the units in the 7th Army, if their requirements chance-and, of course, this means a change downward-to make something excess to their requirements, they usually still have a requirement for using some of this. Rather than turning it in as. excess to the depot and then having to rerequisi- tion this almost the very next day when they have another require- ment, they are authorized permissive overstockage. This means that they are authorized to retain in the category I am talking about no more than 1 year's stock over and above their normal daily usage. They would then draw this down rather than turn it in, in order to keep from having all this back and forth movement. Now, with reference to the GAO, and the coniments of OSD and the Department of the Army, the point is that the GAO was recommend- ing that this permissive overstockage in the field army be reported to the National Inventory Control Points here in CONTJS for their overall visibility and management. Now, sir, the disagreement is not so vital a disagreement as it may sound, Our nosition has been, that permissive overtstockage. which is actually designed on an authority in line with the economics deter- mined to be appropriate, and has been done on a deliberate economic hssis, should be retained in the Army but should not be reported to the National. Inventory Control Points, but that General Case's organiza- tion, which is an inventorV control center for all of Eurone, and the same would apnlv to other theaters, should have a visibility, cogniz- ance, and an ability to manage these permissive overstockages in the PAGENO="0055" USE OF EXCESS MILITARY PROPERTY IN FRANCE 49 field army and that this then would be taken into account on any of the requisitions that General Case would place on a National Inventory Control Point. In other words, what we are saying is, we are not dis- regarding what is in the field army, but keep that management at the overseas theater inventory control point and let the National Inven- tory Control Points deal with the overseas theater inventory control point rather than having the field army units report this authorized material to the National Inventory Control Point back home. Mean- ing, if I may elaborate just 1 more second, if a particular unit in the 7th Army in Europe has a permissive overstockage of a certain item, let's say brake lining, General Case has an authorized requisitioning objective upon which he orders. If he knows there is a permissive over- stockage of brake lining, within 7th Army then, using judgment at that level, they will not order the normal amount of brake lining, but they would recognize there is a permissive overstockage down here which is available for redistribution, and so forth. So it is this kind of judgment we recommend be used rather than, as the GAO recom- mended, having these units in the field army report to CONUS Na- tional Inventory Control Points. As you know, one of the primary reasons for the Inventory Control Point in each theater is to manage those stocks in the theater. Excuse me, but that is it. Mr. R0MNEY. Mr. Zaretzky, I would like to turn again to page 5 of your. statement in which you comment on the storage and ware- housing improvements which resulted from the movement of the FRELOC-generated materiel. You, described some of these improve- ment techniques. My question is: Does this not indicate that the storage prior to these improvements was a needed improvement item? `General CASE. May I take that? To some extent what you say is true. However, when you have lots of space and space is not a par- ticular problem, you can sometimes operate more efficiently if you do `not pack your stuff in quite as snugly. Also, as to some of the things that were done, such as improvisation of sheds while we got the stuff under cover, it is not an efficient way to operate because it is hard to get into material with materials-handling equipment and retrieve it when you need it for issue. So it is not just an improve- ment. We did get better vertical utilization, we did take some non- storage activities out of storage buildings where we could find other space for them, and in this sense what you say is true, we improved our utilization. We had not done it before because we didn't have a critical space problem. General HEISER. May I bring out one other point? Rewarehousing for its own sake can be an expensive thing. Now, I think it is well to recognize, sir, that the stocks we had in France except for the support of the people in France, were actually there for a different purpose than peacetime support, and so they were actually located back there for emergency requirements. So that while we may have had some storage space in Germany that we utilized when FRELOC went into effect, up until the decisions pertaining to FRELOC were made it would not have been necessary or `appropriate to move that material into the depots in Germany. So I think this is a considera- tion as well, sir. PAGENO="0056" 50 USE OF EXCESS MJLITA1~Y PROPERTY IN F1~ANCE Mr. ROMNEY. Mr. Chairman, again on this terminology problem, I wonder if it could be explained to us what honeycombing means. General CASE. }Ioneycombing is a condition that arises in a ware- house in the case of normal operations where you get little patches of vacant space in various parts of the warehouse, none of which are very usable because they are too small and scattered to be used for the input of a large shipment. This happens when you issue down one stack and then you get a new shipment in and you have to put it somewhere else in the ware- house. You are left with little residual patches of space all over your warehouse. When you get in a bind on space, you consolidate your stocks so that you put your short lots on the aisle and make up large reservoirs of space out of your little pools. Mr. ROMNEY. When were the determinations made to relocate the personnel that had previously been stationed in France? This is in reference to Mr. Zaretzky's statement, that there were large numbers of personnel and dependents relocated. Mr. ZARETZKY. This was a continuous operation. Right at the beginning it was decided that certain jobs would be tranthrred to Germany without the people that were doing the work in France. Also, the people in France were generally support-type people, not combat types. When we consolidated the various agencies, administra- tive headquarters, and different installations, the additional work was fed right into a going organization which already had the ad- ministrative overhead, financial structure, and so on. Therefore, not all the people in France were required in Germany. This was a con- tinuing thing. As we moved the material and as we decided where certain units would go, the number of people in France were reduced. Mr. ROMNEY. Wasn't it necessary to determine what might be excess in line with your determining what these personnel might require? That is, in line with your excessing, the determination of where these people would g~. Mr. ZAHETZKY. Are you now talking about the materiel to support these people? Mr. ROMNEY. Yes. Mr. ZARETZKY. Yes, of course. One of the reasons why a good deal of the housekeeping equipment did not move out at the beginning was that we had to continue to support the people that remained in France. Even the 6,000 tons that remain now are just that kind of equipment. One of the reasons for a trip that I made to Europe, I guess it was last July, was tç see how we could get that materiel out as fast as possible. It. was apparent that you could not take the hospital beds out when we had the dependents and children still going to school, nor could we take out all of the school equipment while they were going to school. Mr. ROMNEY. Your reference on page 7, Mr. Zaretzky, to the miii- tarv liquidation picture prompts my next question. When were the guidelines issued for the Military Liquidation Sec- tion activity? Can you comment on these guidelines? Mr. ZAR1~TZKY. I wanted to include in my statement a copy of their charter but it is classified. I 1~ried to have it declassified and the origi- nator could not go along with me. There are certain things within this charter that need to remain classified. It does refer to some of the things that you are interested in. PAGENO="0057" USE OF EXCESS MILITARY PROPERTY IN FRANCE If you want a copy of this, you are certainly welcome to it, but not for the record. Mr. MONAGAN. Please furnish us a copy. Also there might be a con- ference between you and the staff and see whether we may want to put some of that in the record, or what disposition might be made of it. Mr. ZARETZKT. Yes, sir. Mr. ROMNEY. Is the Foreign Excess Sales Office still operating? Mr. ZARETZKY. As an integral part of the MLS. They were trans- ferred to the Military Liquidation Section. This was done on the 27th of January 1967. Mr. MONAGAN. I would like to ask a few questions. I think it is very interesting to realize that about 8.5 percent of the total property involved is what we are really talking about here, the balance being munitions and things of that sort. Is that true? Mr. ZARETZKY. That is true. Mr. MONAGAN. You speak on page 2 of a breakdown of the tonnage that was moved. Have you any estimate or do you know what the cost of that operation has been? Mr. ZARETZKY. We are now compiling these costs. There is a DOD directive or instruction which spells out exactly how to cost this. Our controller is now compiling these data. It will be very interesting to see what it actually did cost for all of the move, payment of people, and so on. Mr. MONAGAN. Have you any idea when that will be available? Mr. ZARETZKY. I checked. I thought you would ask this, and I checked on this Friday, but `they cannot commit themselves. It ought to be soon. Mr. MONAGAN. That is not surprising. Mr. ZARETZKY. It ought to be soon. Mr. MONAGAN. It is a continuing operation so that I suppose you would have to pick an arbitrary time and determine that up to `then. Mr. ZARETZKY. Yes, sir, that is right. Mr. MONAGAN. Naturally, not only the amount of tonnage but the cost of removal are interesting `to all of us. No one questions that it has been a very difficult problem for the Department of Defense; and, so far as we know, it has been carried out effectively. We are not in a position to raise any questions about that but we do feel that a lot of these questions are pertinent for the Congress because there might be similar situations at some other ,time.1 You have spoken of the 100,000 tonsof property that wero consumed during attrition. That is through normal use? Mr. ZAEETZKY. Yes, sir. Mr. MONAGAN. Is that a reasonably normal figure, would you say? Is it higher or how does it `compare with what would be `the normal attrition? General CASE. Actually, there is no normal attrition in this sense. By attrition here we mean that property which we would have issued from a depot in Germany but which was issued instead from a depot in France against a requirement i'n Germany. Of course, this is ~n abnormal thing. General HEISER. This goes back to what I said earlier, where we had stocks in France that, except for a small amount of support of 1 See p. 63, below. PAGENO="0058" 52 USE OF EXCESS MILITARY PROPERTY IN FRANCE the people in France, were designed for emergency purposes, not for daily filling of Germany's requirements. Mr. MONAGAN. The actual property allocated to the support-type personnel would be pretty limited, in relation to total tonnage and value, would it not? General CASE. YeS, sir. Mr. MONAGAN. We talked thout beds and household equipment and that sort of thing, and automobiles, to some extent? Mr. ZARETZKY. It might be automobiles. Mr. MONAGAN. My other question related to the value of the 70,000 tons of property, 8.5 percent, which became available for reut~1ization purposes or ultimate disposal action. Do you have thut figure? Mr. ZARETZKY. I believe we have some figures on that. Our general rule of thumb is that our equipment is valued at about $1 a pound. It usually works out that way, surprisingly. General CASE. In France the value of the mission stocks that went to PDO was $20 million. Mr. MGNAGAN. Acquisition value? Mr. ZARETZKY. Yes. The estimate is $33 million. Mr. MONAGAN. Of the 70,000 tons, how much was sold? Do you have that figure? By that I mean public sale, disposed of in that way. Mr. ZAEETZKY. I had in my statement a figure of how much was sold through December of last year. Here I believe I stated that, we sold $15.5 million worth in the first half of this fiscal year. That is, July to December. Mr. MONAGAN. Was that at public sale? Mr. ZARETZKY. That is right. Invitation forbid. Mr. MONAGAN. Is there any way of toIling how much of that was scrap and how much was- Mr. ZARETZKY. Well, generally our scrap percentage of our total runs somewhere above 60 percent and our last report we submitted to the Congress showed it was 61 percent last year. Mr. MONAGAN. What I have in mind is whether a procedure was followed that would guarantee that items that might be used by AID or other Government agencies would be preserved prior to their dis- position. Mr. ZAEETZKY. Yes, sir. Mr. MONAGAN. That was done in this instance? Mr. ZARETZKY. Yes, sir. Every single item was listed and shown, made available, to other U.S. Government agencies ~for their possible utilization. In fact, they sat right with us as we developed the listings. Mr. MONAGAN. The 86,000 tons that have been returned to the United States as excess to theater requirements, do you know whether there has been any determination that any of that is excess to DOD require- ments subsequent to its removal here? Mr. ZARETZKY. The first time we find that we brought something back that is no longer required, there will be a letter going out saying, "How come?" My answer is no. General HEI5ER. For the Department of the Army, may I say that the objective and the intent, sir, was to bring nothing back here except that for which we had valid requirements. So while there may have been something returned by mistake, we don't know about it. Mr. MONAGAN. Do you have same questions? PAGENO="0059" USE OF EXCESS MILITARY PROPERTY IN FRANCE 53 Mrs. HECKLER. I would like to know something, General, about this National Inventory Control Point and how you refer to this and also to the computerization. I would like to know a little bit about the operation of the overseas Inventory Control Point. how specialized is the computerization? General HEI5ER. May I start out by saying, of course, it varies to some extent, depending on the National Inventory Control Point that we talk about. Mrs. HECKLER. Is there just one? General HEISER. No, ma'am. We have seven in the Army, and act- ually across the entire spectrum of supply it really depends on how you count them. There are around 23 which include those Inventory Control Points that are outside the Army, such as the Defense Supply Agency and so forth. * Speaking to the Army National Inventory Control Points- * Mrs. HECKLER. Is there one headquarters for the whole operation? General HEISER. Yes, ma'am. The Army Materiel Command under General Besson is actually responsible for what we call wholesale ma- teriel management. He reports as a major `commander direct to the Chief of Staff of the Army. Mrs. HECKLER. Is this all computerized? General HEIsL~. Yes, ma'am.. Computerized. As you propably know better than I, the ,deg~ee qf computerization depends upon what place you are talking. about. We do not have, unfortunately, a cc~mpleteiy standardized system. That is the way it is. Generally, these National Inventory Control Points had their origin with the technical services. that existed under the `chiefs of technical services up until 1962. One of the reasons why the logistical structures of the technical services were abolished and the new organizational structure under the Department of Army, and Army Materiel Command was approved, was the prob- lem of nonstandardization. This still shows itself in National Inven- tory Control Points. We can go across the spectrum. We go from one NICP that has rather rudimentary type equipment which has not a great deal of capability, to another organization which has a more advanced state `of the art both in software, or the program of the equip- ment. as well as the hardware itself. We now have a definite improvement program which will end up in a standardization of. procedures and equipment so that what hap- pens at one place will happen at them all. This gives us a better man- agement control over what we are doing. Mrs. HECKLER. Of the 388,000 tons of equipment moved to Germany, this move presumably was determined by use of the overseas Inveh- tory Control Point and their screening and supply lists? General HEIsER. May I outline this briefly? We put out directives which said that we would follow the normal procedures for excessing and for generation of surplus. The only thing we did do to the procedures was to attempt to increase the speed with which we could go through the screening process. What happened was that General Case, and I will turn this over to him for his own part of this, and his organization had to come up with what was excess to their requirements in the light of the latest requirements that we knew of in Europe. At this point he declared this excess to each of the NICP's in accordance with standard procedures. The National In- ventory Control Points in CON1ITS then referred this internally to each PAGENO="0060" 54 US~ OF EXCESS MILITARY PROPERTY IN FRANCE of the commodity managers having responsibility for that particular kind of item. The manager in turn then looked at his total require- ments and his net requirement to see if anything was being procured or would have to be procured, and he then determined if he had a requirement for the item. If lie had no requirement for it, it was then referred to Defense Logistics Service Center, of which General Case once was the commander. This is the Defense agency which screens for requirements of all the services. If DLSC knew of a requirement, they so informed our people `who took proper action for the distribution çf the materiel. If there was no requirement known at DLSQ, then the NICP here in CONTTS would report back to Europe to General Case's organization that there was no requirement here. If you would like, General Case could tell you how they went about doing further screening within Europe in order to be sure that, as was indicated earlier, we would make the maximum use of the item for its original intended purpose rather than putting it into a property dis- posal yard, and selling it for scrap or something else and not getting the value out of it. Mrs. HECKLER. It seems to me that on page 6 Df the statement in the first sentence, there is some question raised about the significance or the performance of the initial screening process; is that right? Mr. ZAEETZKY. Yes, ma'ajm I have never yet been to a disposalyard that I have not seen something that I would like to have, and wonder, how in the world did that ever get there? In fact, the first place I went to in Europe last January was the first disposal yard I could find~ There was an open box of what we call blind rivets. They are used in the repair of aircraft. They looked brand new, s~ I took a handful and put them in my pocket. I asked wherever I went, "How come we dis- pose of these things which we buy n-eiy day'?" The people I asked embarrassed m~ very quickly. rnley looked at the handful of rivets and said, "There are seven sizes in your hand. This is the reason they were disposed of. They got mixed up somewhere." It is sometimes easy when you go to a disposal yard to find things that should not have gotten there. I would like General Case to take over and explain why he then set this program in motion to make sure that nothing slipped through the cracks, so to speak. General CASE. I did it for just the reason you mentioned. I, too, often find things in disposal yards that horrify me. I know that we will be buying these same items somewhere in the world soon. We put 14 checks into the computer, and if the items survived these cheeks they went through the process that General Ileiser mentioned. Then I released these items, and this left me with 34,000 items still excess which the NICP did not want. So I released 5,000 of these on a test basis. I found that in 92 percent of the cases the computer was right. The item was excess. A visual check and examination showed that there was an 8-percent error. This arose because, maybe the price on the computer was wrong, maybe a decimal point was in the wrong place, maybe the unit issue had been changed, or for some other reason. ` We then followed through the operation so that we could catch the 2 percent. I then sent teams into the depots and their major cri- terion was commonsense. Maybe on a purely matherrintical calculation you could say, this was not demanded three times iii the last year and PAGENO="0061" USE OF EXCESS MILITARY PROPERTY IN FRANCE 55 therefore we don't have a requirement for it; therefore it is excess; even the National Inveiitory Control Point had no requirement for it. But commonsense told you that it was not a good idea to leave it in France to be disposed of at 8 cents on the dollar. So we took it out of the property disposal yard. AID had a crack at some of this material, too. I might say in their behalf, they were very alert. They were very aggressive and I think they protected the taxpayer's interest very well in recovery. When you saw them in our yards they were after the best stuff; and some of the stuff they got was very good. Mr. MONAGAN. Could we suspend here? There are a few more ques- tions. I think that the best thing would be to reconvene at about 1:30, if that is convenient. Mrs. HECKLER. Just one more question? Mr. MO~AGAN. All right. Mrs. HECKLER. Mr. Zaretzky, you have talked about budgetary savings of $50 million to $60 million, by virtue of this relocation. You do not consider the cost of the move, and so forth? Mr. ZARETZKY, That is right. Mrs. HECKLER. You do not have that? Mr. ZARETZKY. Yes, ma'am. Mrs. HECKLER. This you estimate to be future savings, granted this year which would be reduced by virtue of the relocation costs? Mr. ZARETZKY. We say annual savings. Mrs. HECKLER. Not this year? Mr. ZARETZKY. Right. Mrs. HECKLEL Then yoti discussed on page 6 the significant mod- ernization gains. Do you mean that to include any gains by better use of the computer or screening processes, and tighter inventory son- trols over material; is that what you meant? Mr. ZARETZKY. Yes, ma'am. Actually we are no~ going to have in one place a computer system, whereas we had it in twO places in France. It is now in Zwe~brucken and it is, in fa~t, on a train, which is a real step forward, and it works well. Mr. MONAGAN. Thank you, gentlemen. We will suspend, then until 1 :30. (Whereupon, at 11 :55 a.in., the subcommittee adjourned to 1 :30 p.m. of the same day.) AFTERNOON SESSION Mr. MONAGAN. The hearing will come to order. I believe Mr. Romney has two more questionL Mr. ROMNEY. Mr. Zaretzky, I would like to return to the utilization of your storage and warehouse facilities thnt you refer to on page 5 of the statement, and ask this: Do these improvements which you discuss here represent permanent improvements or do you anticipate that ~ou would return to some of the prior methods of storage after the immedi- ate needs of the FRELOC relocation have been met? Mr. ZARETZXY. I believe-as General Case explained a little while earlier-some of the things that were done here were done because of FRELOC, hut they should have been done in the past had we had the time and ability to do it. PAGENO="0062" 56 USE OF EXCESS MILITARY PROPERTY IN FRANCE Those things that were aimed at improving space utilization were part of a continuing operation within the Army. The improvement of space utilization is a continuing program in Defense. Mr. R0MNEY. Does this mean that the plans which you have for other storage prior to the need created by Operation FRELOC have then been altered to provide for less, or fewer, facilities for storage than otherwise would have been the case? Mr. ZARETZKY. That is correct. Mr. ROMNEY. Mr. Zaretzky, I think we had indicated earlier an interest in a special situation which sometimes exists in the Defense Department's overseas activities, and in which the needs for property which has become excess to the Department overseas are then reevalu- ated in the United States-the property having been brought back to the United States for reevaluation. We are advised that in some cases this property, when it is returned to the United States, has been de- clared excess and made available to other Federal agencies, and on at least one occasion to eligible donees under the Federal donable prop- erty program. Could you comment on the instances in which this type of action has occurred; and also on the criteria or the factors which go into determining when this method of disposal should be employed? Mr. ZARETZKY. Yes, Mr. Romney. As a general rule, no items are brought back if the items are not required by the Department of Defense. However, there are a number of occasions that come to mind-and they may not be all-where we did specifically bring things back for donation to NASA, the Smith- sonian Institution, and the National Science Foundation. I think it was back in 1958 that we brought back some material from New- foundland, and this was for specific use by NASA and AEC. We brought back some material from Turkey and Italy, I believe, which was required by NASA, again, and I think by the National Science Foundation. This was related to a certain missile that was deployed at that time in those areas. I think in 1964 we brought a few things back from Europe-here, again, by specific request of NASA, the Smithsonian, and others like that. *Cqlonel David just advised me it was the phasedown of the Redstone missile when we brought some materiel back. Mr. MONAGAN. To this extent the response that you gave to my ques- tion is inaccurate; is that so? Mr. ZARETZKY. I was thinking of GSA picking something up and then a donation, in response to your question. Mr. MONAGAN. This would be almost the same thing. I think it would have to be technically done that way? Mr. ZARETZKY. Yes, sir. Mr. ROMNEY. How do the agencies which have used this property become aware that it is available at these overseas bases? Mr. ZARETZKY. Programs such as the Redstone phaseout or Jupiter phaseout are well advertised prior to the phaseout, and the other agencies who are interested are quick to let us know that they have an interest in that materiel. Mr. MONAGAN. You seemed to be defensive when I asked you about it, as if there were some reflection on the Defense Department, because PAGENO="0063" uSE OF EXCESS MILITARY PROPERTY IN FRANCE 57 you had property that became excess and was used-it is true that I referred specifically to property that was brought back to the United States, so there could be some difference in that, too. Mr. ZARETZKY. That is right. Mr. MONAOAN. But even that could become excess for reasons that you couldn't have foreseen. And then the fact that that went to other Government agencies would seem to be a helpful thing rather than the contrary ~ Mr. ZARETZKY. Yes, sir. One reason that I gave a quick answer earlier was that under the regulations it is not brought back specifically for this reason. However, it Is very possible that some of the materiel that comes back in time may become excess to all our needs and be available. However, a large portion of this was ammunition, and ob- viously this would not be that type of item. Mr. ROMNEY. Mr. Chairman, the General Services Administration has provided us informally with a list of this property which they, in collaboration with the Defense Department, have worked out in the return of the property to the United States. If you wish, we can insert it in the record at this point. Mr. MONAGAN. Without objection, it will be inserted. (Subsequently, the GSA provided the information by formal letter. The letter and its attachments follow:) GENERAL SERVICES ADMINISTEATTON, Was*iington. D.C., May 26, 1967. Hon. JOHN S. MONAGAN, Chairman, Speciai ~S'wbcommittee on Donabie Property, Committee on Government Operations, Honse of Representatives, Washinpton, DXI. DEAR MR. MONAGAN: Thank you for your letter of May 17 requesting informa- tion concerning Department of Defense personal property which was returned to the United States from overs~as locations during the past several years for fur- ther Federal use or donation. We are enclosing a summary sheet entitled "Foreign ETcess Property Returned to the Continental United States" which reflects information we were able to gather from readily accessible files on hand. At the request of Mr. Miles Romney of your staff, this sumimry information was given to him by phone on May 19, 1967. Also enclosed are detail sheets In support of the summary sheet which provide available information on the nature of the property returned, and the amounts of property which were transferred to each of the participating Federal agencies. In the case of the con~truction equipment returned from Newfoundland and Greenland, the Identities of the individual donees are not immediately available. We hope this Information is helpful. Sincerely yours, LAWSON B. Kxorr, Jr., Adm'inistrator. FOREIGN EXCESS PROPERTY RETURNED TO CONTINENTAL UNITED STATES In cooperation and coordination with the Department of Defense, arrangements were made for the return to continental United States of large dollar value excess items located in overseas areas. During the years 1958-62, the Corps of Engineers released $5 million of con- struction material located in Greenland. General Services Administration ar- ranged for this property to be returned to Norfolk, Va., where it was offered for further utilization and resulted in a number of transfers to various Federal agencies. The residue was made available for donation to educational institu- tions. During this same period, other construction items in the amount of $154,000 were returned to Norfolk from Newfoundland and transferred to Federal agencies. In 1963, equipment from the JUPITER missile was returned from Turkey to Mobile, Ala.; $6.4 million of the items returned were transferred to NASA and $13.6 million to NSF, ARC, and the. Office of Naval Research. PAGENO="0064" 58 USE OF EXCESS MILITARY PROPERTY IN FRANCE In 1954, equipment in the amount of $10.4 million from the Redstone weapons system was returned from several locations in Europe. to the continental United States. Transfers of this equipment were made to NASA; Smithsonian Institu- tion; Bureau of Indian Affairs; Geological Survey and Land Management in the Department of Interior; Forest Service, Department of `Agriculture; Office of Naval Research, Naval Propellant Plant, Naval Ammunition Depot, Department of Navy; National Science Foundation; and National Institutes of Health. Smithsonian Institution also acquired some items from the Corporal system in the amount of $20,300. All dollar figures are original acquisition costs. In cooperation and coordination with the Department of Defense, arrangements wcre made for the return to continental United States of large dollar value excess items located in overseas areas. 1958-60 Location Acquisition cost Description ` Transferee agency ` Newfounclland~,,.,,, Do ~ Greenland $28,488 126, 132 4, 200, 000 Trucks,Mack Scrapers, Caterpillar Pumps, tractors, and graders.,,,, AID. Koelong, Taiwan. AID for use in Greece, Brazil, and Korea 1963 Turkey 1 $20, 000, 000 "Jupiter" missile support equipment.., $6,400~O00 NASA, $13,600,000 (AEC) (NSF) (NAVY, ONR). Germany European area Do Do Do Do Do Do Do Do Do Do Db Do Do Do Do Do Do Do Redstone weapon system support equipment. do do do - do do do ` - 136,792 _.do 50,000 ..do 78,632 do do do do - do do do "Corporal" missile hupport equip- ment. Mr. BOMNEY. One further question. On page 4 of your statement you refer to the reprograming of the inventories and the job that was done by the computer attached to the Army Supply and Maintenance Agency of COMZ. It is my nnders'tanding that COMZ has now been relocated? Mr. ZAEETZKY. That is right. Mr. ROMNEY. Now, does the relocated COMZ have the same capa- bihty and does it perform that same function? Mr. ZAEETZKY. Yes, sir. 1964 $7, 282 2,401,068 5, 892, 279 37,500 24, 590 304, 276 180, 030 - 3,344 197,776 21,343 Smithsonian. NASA, Las Cruces, N. Men. Smithsonian. Geologicvi Survey, Departmeqt of the Interior, Flagstaff, Ariz. Dep~irtment of the Navy. AEC. NASA, National InstituteS of Health. Bureau of Itidian Affairs, Department of the Interior. - Forest Service, Deportment of Agri- culture. Land Office, Colorado, Departmeat of the Interior. U.S. Geological Survey, Department of the Intertor. Land Office, Wyoming, Department of the Interior. - OCAMA, Air Force. O.N.R. Navy. NSF. Naval Test Station, China Lake. Navy, lndisn Head, Md. Navy, Ammunition Depot. Smithsonian. 209, 667 629, 334 30, 000 60, 000 120, 000 30,000 20,300 1 Approximately. Note: Residue of approximately $800,000 donated-to eligible institutions. PAGENO="0065" TJSE OF EXCE~S~ `t~ART~ P~01~E~TY 1N~ FRANC~ `Mr. ROMNEY. There ha~ been no change ite t1i~ relocatiqn ~ Mr. ZARETZRY. One of `the commentaries ott this n~ove is that `we did not lose control for ~ moment of our stocks in Ettrop~, de~i~e Uiis tremendous movement. S S Mr. ROMNEY. I think it. would be helpful for the recbrd if one~if th~ witnesses might comment, Mr. Chairman, on the distinctithi betw~en wholesale and rethil supply funt~tions. This is a specialized term ~+hib1i may not be `completely understood except as explain~d b~ the ~eoplé who use it itt their special competence. S ` S 5; Would' sotheone' diStih~uish between the con~imçn un~lerstanding of those terms attd your speèialized'use of them? " S Mr. ZARETZKY. Let me try for `all of Defense, and thin if ~róü w~nt detail with respect to Army, they could elaborate. Wholesale inventory is that. inventory which the Inventory t~otttrol Point-the manager-has on his bobk~ and is stored in what'~he~ con- siders his depots. In the continental United States, for exa fple, in the Army the Inventory Control Point is aware of every item that is ~toved within the depots in the continental United States. This is wholesale inventory. S When those items are requisitioned by a post~ camp or station, for example, ~Fort Dix, that inventory goes on the ~o~t X~ix records. When Fort Dix issues something to a user, this is the retail inventory that he issues to the consumer, and he replenishes his stock from the wholesale inventory in the depots that are under the cognizance of the Inventory Control Point. This is true also in the Air Farce, the Navy, and the Marines. It is the same way. Mr. MONAGAN. Mr. Zaretzky, you spoke on page 3 of stocks in France that had been gradually declining for operational reasons. Is that a technological matter, or what were you referring to there? General CASE. There had been some limited drawdown of the stocks in France for over a year before De Gaulle's aiuiouncement. A major part of that drawdown had to do with our combat vehicle fleet; vehicles were taken out of depot stocks in France, where they had beeii stocked against reserve requirements, and issued to the 7th Army. In turn, vehicles were withdrawn from the 7th Army and brought back into depot stocks, usually in Germany, where they could be either washed out of the system if they were too old, or rebuilt and put in reserve stocks. We did this so that all our vehicles-those in use, those in the hands of troops, and those in the depot system-would age and accumulate mileage at an even rate so that when the vehicle finally became obsolete we did not have some brand new obsolete vehicles, and other vehicles that had a high amount of mileage on them. Mr. MONAGAN. That had no relation to the political situation? General CASE. It had no relation to the political situation. S Mr. MONAGAN. Although you were moving from' one country to another? S ` S Gener~l C~si~ In addition to that, as some items became more critical owing to competition with Southeast rAst~, we w~re required t~take items out of the reserves in France for curr~nt needs and requisition replacements wh~ich didn't arrive dt~ring the pe~dod. S Mi~.. MONMMN. ~ don't know~a~Iac~tually asJ~ed this question, but it iñvOlvé~d-I th~nk I asked about construction of other facilities in- 82-554-67--5 PAGENO="0066" 60 USE OF EXCESS MILITARY PROPERTY IN FRANCE volved in the move to Germany would be the construction of some storage facilities. Is that so? Mr. ZARETZKY. Yes, sir. Mr. MONAGAN. And do you have any estimate of what the cost of that construction will be? Mr. ZARETZKY. General ]E[eiser, would you like to take that? General HEISER. Mr. Chairman, I have some figures that I can quote. Authorized and funded through fiscal year 1966 and fiscal year 1967 there is a total of approximately $10 million that is involved in storage facilities, and a part of this also is involved in those things pertinent to storage, such as the headquarters that General Case has, the SMA headquarters, which supervises all storage. No~, I can get a breakout for you of this, Mr. MONAGAN. Can you furnish it? Gencrai HEISER. We can submit it for the record; yes, sir. (The following, information was subsequently submitted for the record:) ~5toruge and iogisticd4reiated condtructiou in Europe-Authorized and funded through flscai year 1966 and fiscal year 1967 Programed Storage facilities, Germany $6, 931,000 Ammunition Renovation Shop, Miesan 360,000 Facilities required by the relocation of Hqs, U.S. Army Communica- tions Zone to' Worms, Germany and the Supply and Maintenance Agency to Zweibrucken 1,545,000 Storage facilities, United Kingdom 706,000 Total 9,542,000 Mr. MONAGAN. Is there a separation between NATO and the facilities that you are talking about ~ These are simply storage for equipment, but then the NATO headquarters in that move would not be witiiin your jurisdidtion or concern? General CASE. No. Mr. MONAGAN. And who would be concerned with that, Mr. Zaretzky? Mr. ZAEETZKY. Our International Security Affairs Office in OSD can answer those questions. I have Mr. Mullen from that Office, if you have any specific questions you wish to direct. Mr. MONAGAN. I would like to just have that, if you have that figi~ire on the cost of transfer of the headquarters. Mr. Mur~EN. I would have to provide the figures on the head- quarters ttself, and in terms of SHAPE headquarters and NATO headquarters. But it is in the range of $12 million. Mr. MONAGAN. Would there be any further storage facilities and personal property involved relating to NATO of any substantial degree, as distinguished from what we have talked about here? Mr. MULLEN. No, sir, Mr. COPENIIAVER. Would the chairman just yield for a second on that? Mr. ~tONAGAN. Go ahead. You ask all the ques1~ions you want. Mr COPENITAVER In regard to that, Mr Zaretzky, is it not correct, though, that we are keeping a record of all the costS that `ire being incurred by the United States to move out of France, in that we seek to approach NATO to request that they will contribute partially to the cost of our moving out, even thongl~ we are talking ~ihqut U.S.-~wned PAGENO="0067" VSE OF EXCESS MILITARY PROPERTY IN FRANCE 61 property as opposed to NATO-owned property? Would you agree with that? Mr. ZARETZKY. That is right, Mr COPENHAvIER In that regard, there may be some NATO financed costs for this? Mr. MONAGAN. There is in theory, but in fact there has been a lag. General HEI5ER. This is what they call ~`infrastruc.ture." Mr. COPENHAVER. That is right. Shall I go ahead? Mr. MONAGAN. Please do. Mr. COPENHAVER. Mr. Zaretzky, in connection with the Army you had screened all Army equipment and all GSA equipment above a certain figure, and this is .property located in France. Now, at the same time I understand that over a hundred thousand tons of property located in Germany had to be made excess-was declared excess to make room for the property coming in from France. Would that be ~ correct statement? Mr. ZARETZKY. I am not sure about the figure, but the philosophy is right. Mr. COPENHAVER. Similarly, perhaps, some in the United Kingdom? Mr. ZARETZKY. Nothing in the United Kingdom. Mr. COPENHAVER. Was the property that was declared excess in Ger- many screened through the identical procedures-by the Army-as was the property in France? Mr. ZARETZKY. That is correct. Mr. COPENHAVER. Do you have a breakdown of that property which was declared excess? How much of that was disposed of according to different channels, for example, disposed of as surplus and picked up by AID or sent back to CONUS? Could you perhaps supply that figure for the record? Mr. ZARETZKY. I am sure we could. Mr. COPENHAVER. Like you have done it in your statement, with the amount, for example, disposed of as surplus and the dollar value. That would be very helpful. Mr. ZARETZKY. It is available. Mr. COPENHAVER. I forgot, frankly-did you say that you could have a breakdown on broad categories of the type of equipmen.t from France disposed of as surplus? Is that possible-a broad categorical break- down? Mr. ZAEETZKY. If you mean ammunition, for example, Versus trucks and other items, I am certain that can be provided. Mr. COPENHAVER. In that case, if you could do that for Germany, too, it would be quite helpful. General H1~TsER. We will try to do this, but-you see, if we break it down we could probably break it down by class-but I would like to be sure, sir, that we work with you, because it may be difficult~ to break it down within the class, for example, parts away from vehicles and that sort of thing. Mr. COPENHAVER. Actually I am just seeking a broad categorical breakdown. In this regard, I wonder if you also could supply for the comtnlttee- with the Chairman's permission-a breakdown, shall we say, for fiscal year 1966, and maybe through January 1, 196!t, .or March B1-whatever you can-of the total surplus property disposed of in France and the United Kingdom, and here is what I am getting at. I want to see PAGENO="0068" u~s~ ~d~' E~C~S~ MILIPA~ ?R~P~rtT~ I~' PiU~Nc~ *hether in fa~t there ~was perhaps a significabi~ incr~as~ in surplus property disposals out of Germany as a result of that which `we pulled in from France, if you are following what 1~ am~t~ring to say. Becatise perthaps we haven'ti'~a~ed a gr&~tde~l if *e have pttlled out'ôf France but disposed out the back door in Germany. If you have son~e `kind'ôf historicai'~OtEiparison, the year befOre the pull-out a~nd `the ~ai~ `o'f the pull-out, you `cpuid give me a good historical comparison. I-s that possible? Mr. ZA1piPZKY. Let me ask. * `Colonel DAVITh. When yoii~ say ~urp'Ius~" are' you,talki~qg aboul that property which we sold? Mr. `CO~ENHAi~E, I h-iean both types. That declared' ~oe~s to the theater,'sh~ll ~ and to the comtiiand. * In other words; I am trying to out down your work if I can, `so perhaps if `I conid hold it down to that screened back to the inventory control pointsjn CQNTJS, if you wish. Oolon~l DAv~m. Phe most accurate information `we can give you is that property which we have sold in those t~wo countries during that period of time. Mr. COPENUAVER. All right. If you can give me that comparison of the surplus disposals, the sales- `ColonOl DAvIr. The sales; right. Mr. COPENHAVER. That would be helpful, Mr. Chairman, I believe. (The following information was subsequently furnished by the Office of the Assistant `Secretary of Defense (Installations and Logistics):) DISPOSITION OF EXCESS AND FOREIGN EXCESS PERSONAL PROPERTY AT ARMY PROPERTY O1SPOSAL AC- TIVITIES IN EUROPEt [Acquisition cost in millions of dollarsj ` 4th quarter, fiscal year 1966 1st quarter, fiscal year 1967 2d quarter, fiscal year 1967 3d quarter, fiscal year 1967 France Ger- many France Ger- many France Ger- many France Ger- many Expended to scrap *_~*~._ Utilized by other Federal agencies. 68.5 9.6 . 8 1. 8 13.5 8.3 5.3 1. 3 20.6 13.9 15. 6 7. 0 16.3 9.2 2.9 5.6 1 Excludes sales (other than scrap). (For sales figures, see foIlowin~:) SALES OF U.S. ARMY AND AIR FORCE FOREIGN EXCESS PERSONAL PROPERTY IN FRANCE AND GERMANY FISCAL YEAR 1966 AND F1RST HALF OF FISCAL YEAR 1967 [Acquisition cost in thousands of dollars[ ` ` Fiscal year 1966 1st half, fiscal year 1967 France: U.S. Army material U.S. Air Force material TotaL., Germany: ` * ` U.S. Army material U.S. Ai~ Force materiaL .,...~ ~ `. ` ~:~*** ~** ***~ ***~**~ $23,697 6, 196 $11,916 3,608 29,893 15, 524 37,800' 10,327 16, 500 6, 100 2Z 600 -*`t*, 48,127 ~ , ** ~ ~*. PAGENO="0069" OJ~ ~XC~ES~ ~JLITAB~ ~ROPERTT II~ JI'RANCE The following information is furnished concerning types of DOD personal property sold by invitatioji for bid (IFE) Commercial-type motor v~liit~les (trucks, sedans); construction equipment; hiundry and drycleaning equip- ment; telephone switchboards (French make); household and kitchen equip- ment; plumbing, heating, and sanitation equipment. Prior to sale, all property was made available to the Agency for International Development (AID) and other Federal agencies. The major portion of the material finally sold was in poor and/or unserviceable condition. Mr. COPENHAVER. Mr. Zaretzky, in response to a question Mrs. Heckler asked you, you indicated in your statement that there would be an annual saving of $50 million or $60 million a year. Without in any sense being critical of the military or DOD. is it not ~a~fact, though, that because of the move out of France it will cost us ~many millions of dollars, not to mention the property which we will have to leave in France and that we may not really get any savi1~g out of the French move for, perh~tp~ 5or 10 years. Mr. ZARETZKI'-. As I indicated earlier, I do not have the actual costs of the move, and I think the cha~rrnan indicated that certainly there is that trad~eóff, and this must be considered whe~i we lookLat thenet saving, in the number of years:it would take.~ Mr. MONAGAN. Mr. Zaretzky, will you furnish th~t~ in~ormation ~bout cost of removal when yoi~ do receive it? I don't ~e1ieve. I `specifi- cally asked you tc~d~ it. Mr. ZARETZKY. We certainly ~vill. (Subsequently, the Off~e of the Assistant ~ecretary of Defense (~Iñ- stallation~ and Logistk~s) supplied the following information:) As of May 31, 1967, appro~dma~ely' $100 milliOn had been expended for the relocation of United States and N4TO forces, materiel, and facilities out of France. Mr. Cori~NnAvEn. I raisa that point again b~oause, althoug1~ I think it is very good to show the savings, somel~ow it comes Qut wrong that we show a profit out of being kicked out of France with our billion or more dollars' loss that we have~ h~d to incu~, in there. That goes to the point I wanted to pin down. In regard to a, position that Mr. Romney wa~ discussing with you, am I correct that, after the excess property wo~s screened through th~ ~ntire DOD,, the remainder was partially picked up by the MAP ~program and AID, and that probably most of the balance of the property was then sold as surplus in~ Fran~e ~ Wpuld that be a, `fair stat~nent? , ~, ,. Mr~ Z rn~zwr. I think first w~ p~iust get,clear that' MAP is part c~Lt~he Defense requirement& , ` ~ ` Mr. COPENIiAyER. I r~cognize that point. Intra~DOD, you. might say,, and after, that it went to A[D primarily, an4 the rei~ainder of the balance would be sold as surplus in France. Is that a correct statement? Mr. ZARETZKY. That is right. Mr. COPENHAVEIR. Do the current laws and regulations prevent any of that property, prior to being sold as surplus in France, to be screened through the donable property program? Mr. ZARETZKY. I believe the jaw- Mr. COPENJIAVER. I am sorry. The domestic donable property program, Mr. ZARETZEY. As far as I know, the domestic donable property program does not screen overseas excess. PAGENO="0070" 64 USE OF EXCESS MILITARY ~RO?ERTY IN FRANCE Mr. CorENHAvsn.I wanted to explore this with YOU. First of all, was GSA or HEW invited to participate in, or to screen such property? Mr. ZARETZKY. Yes, sir. I personally checked with GSA, and asked them to accompany me on the last trip-two trips before- to do just that. They have a man in residence in Wiesbaden who I got together with, and we went through some of the items that they could possibly be interested in. Generally speaking they are not interested in pick- ing up used furniture, for example, and bringing it home, or for that matter, used tools. And so they practically said nil to any of the items that we offered. Mr COFENHAVER Were they talking about furniture or tools which GSA may believe the other Federal agencies would want, or whThh the potential recipients of donable property might want? Mr. ZAEETZKY. My contact with the donation program obviously is throuo'h GSA. Mr. ~OPENHAVER. And therefore they made no mention in that re- gard of what they wanted. We are dealing with $~5 or $30 million worth of property here. I wanted to check it out. If they-or HEW-had indicated that they wanted certain items of property, then you would have shipped them baók to CONUS? Is that correct? For their pi~ogram? Mr ZAaETZIiY Are you saying if GSA indicated a need, would we ship it back for GSA? Mr. COPENHAVER. For the dom~stic donable property program. Mr. ZARETZKY. `That is an assumption we never got to. They never indicated such a need. Mr. COPENHAVER. I am just curious-if they had, who would have `paid the cost of transportation? Mr. ZARETZKT. I don't know. Mr. MONAOAN. There is a legal question, I think, as to whether the domestic program can apply to foreign excess or not. Mr~ COPENHAVER. The reason I asked, I have looked into it some- what~-I don't have the statute or regulation before me-but as 1 in- terpret it-perhaps incorrectly-so long as it is not brought back to go into competitive cOmmercial channels in `competition with private businesses, it could be brought back. In other words, if it is brought back to be sold against a private business sale in the open' market; the answer would be "No," but to be brought back for the donable property program there' is a possi- bility of that, and those agencies have a better avenue-S--- Mr MO~AGAN It is hypothetical as far as these gentlemen are con cerned. ` Mr. COPENHAVER. I won't pursue that any more. Mr. Zaretzky, is it not correct that `France does do bu~iness with Communist nations-~-withboth Red Ohina and North Vietnam, and has sold equipment and prOperty to these countries? Mr. ZARETZKY. I am not aware of this. Mr. COPENHAVER. Would either of your other associates be aware of that? The reason I raise this point is-what checks does the Army impose hpon purchasers of `thi~ equipment-~-some of which I understand is military equipment, ammunition, andYwhnt-have-you. What ~èheck PAGENO="0071" USE OJ~' EXCESS MILITARY PROPEItTY IN FRANCE 65 have we installed to prevent l~rench buyers from turning around and selling this equipment to the North Vietnamese or to the Red Chinese? Mr. ZAPIETZKY. We have a real simple check. Anything of a military type is demilitarized. This means, if this is ammunition, it is taken apart for its content, under our jurisdiction; and if it is a gun, for example, it is cut into many, many pieces so it can never be a gun again. I think this is about as good a check as we might need. Mr. COPENHAVER. As I understand, you plan to supply-if you pos- sibly can-the categories of property which had been sold as surplus in France. You indicated to the chairman this morning that about 60 percent of that is scrap. I take it that what you just said about cutting up a rifle, this then would be scrap equipment. And you will show a oategorical breakdown of these sales, will you not; so I can get a picture as to wh~t may have gone out as a whole item and what was scrap? Mr. ZAREPZRY. The breakout indicates what is scrap-the toniiage that is scrap-of the toflal. Mr. COPENHAVER. Now, as I understandit,~wheri an item is declared excess and it comes back to the NICP point i~ CONtTS~ a particular item will show, will it not, the condition. Is that correct-the condition of the item? Mr. ZARETZKY. That is right. Mr. COPENHAVER. So perhaps ~there is a requirement in CONTTS-or perhaps in a different theater-4or a crane, let's sa~s~, and thi~~ parti- cular type of crane is declared excess. It is indica~ted. that it is ~LtheU crane, and has X number of hours of use on it. Now, the command that needs a cran&-do they have any authority to say, we don't want to pick up that crane because it is used, with X number of hours on it, and will therefore buy a new crane? Mr. ZARETZKY. A 7011 speaking within. Defchse t Mr. COPENHAVEii. Yes. Mr. ZARETZKY. Within D~fei1.se an item, such as a crane, is ched completely and in great deth~il as to the e~sct condition of the pa~t4cu~ lar item that is being con~idercd for return. ~:. I have copies of the type of detail we go thi'bugh. The other day at the hearings ther~ *aS some talk ~b&iit th~ fact ~hat AID seemed to have some real good. inspeotoi~, and the implication ~vas tli~t ~hé military did not. Mr. COPE~EAVER. That ~wasm3* question. Mr.ZARETzEY. Let me assure ~ou that every item is koked kt, Very carefully by a trained technician, and e~rerything wrOng ~with the vehicle is indicated. We have a checklist that is called a Special Form DD-13131. This even indicates if we have a taillight on the vehicle or if it doesn't have certain equipthent, on it; ~rhat the original cost wa~; how long it would take to repair it; hoc~ many man-hotirs; the cost of man-hours; and whether it is worth*hile shipping hbtiie ; and it estilnates the cost to ship it home. . All of these things are Considl~red b3r the in~ri~to1~y manager at home, as to whether it should or sh9ulcl hot be brought home. Same- times an item is brought home beo~thse that it~tii ~ bO,in a critical shortage category~nd is needed at ~hatêver th~ cost ~to repair it. Mr. Cor~HAvEti. Let me elaborate, M~ qii~estion to AID the other day was not that you don't have skilled inventory managers, shall we PAGENO="0072" 66 USL OF EXCESS. MILaITA~Y PROPEBT~ IN FRANCE say, in a depot i~Qerma~ny. My point was that th~procedure that is followed in DOt~ ~in a theater~ apart from Germa~iy, for example, let's say that Vietnam needs this crane. And on the report it shows it in fairly decent condition, without too much cost ~o repair it, but it has 3,000 or 4,000 hours on it and is a couple of years old and what- have-you. Now, does the control officer, the acquisition officer in Vietnam or back on OONTJS Who is acquiring for Vietnam, have the authority to say, well, we don't want to pick up that crane because it has been used x number of hours. We want to buy a new one. Or are they forced to acquire that crane? Mr~ ZARETZKY. Let's try~to put this in its perspective. The inventory manager is just that. The inventory manager computes requirements; buys the item if necessary; he is the purchaser. The man in the field who needs something makes his requirement known to him. Therefore, there is one man who makes that d~cision. 0rEWJUITER. Rig~it. Sew~at happens?. Mr. ZARETZKY. The inventory manager thei~,if, he hasiL ~equir~ment ~for a crane w~ich n~gc~4 ponditioi~. and will mçet the ~require~ent, ships it to the requisftiox~er~ He has no choice. Mr.. COPENHAVER..~I am n~t tryi~ig. to get too detailed or take your time. Are there not times when there may~ be need f9r requirements, for ~on-the-spot inspection or screening by the~ inventory control manager in the location seeking to acq~re the piece of property? Geheral HExs1~n. M~y~ I attempt to assist in this regard, sir? Phese inspections worldwide in the Army are made on a~standardized in- spection basis, and so the inspection is made of the crane, let's say, in Germany, that i~ excess. It is based o~ a standard for inspecting cranes. This then establishes he c~ondition of that crane, and~ a~ Mr. Zaretzky has indicated, the inventory ma~nager does recpgthze that the basis upon which this is established is a condition of servic~able, or unserviceable bu1~repairable. Then he takes tli~ appro~pr~4 action.. ~w, if ye assume ~f1?r the moment it is~a crane that is~serviceable in Germany and required in Vietnam, the inventory i~anager ~nows th~ requir~ient ~in Yietna~. Vietnam only goes to hin~ fortb~e~r require- memt.~He ~then ~vders that cr~e,~f, it happens tp be the a,ppropriate thing to do, from Geruiçway to Vietn~irn. ... . I think there is one other thing I would like to rnenticpp. The only constraint, you may say, thatthe ~flveutory n~nager ha~ is that where it~ is practieal; we have what we c~ill a stand~rdi~zation program~ As you knew, cranes can come i~ many makes and mçdels. In order to reduce the amount of parts require4 to support so many makes and models, we try to standardize cranes in certain geographical areas, but outside~of that the man in Vietnam expects. that he will get a service- able crane, and therefore that is what he gets. Of course, if we don't do it properly, at times there may be a complaint that what he got wasn't in the condition it was supposed to be. This is the normal thing. Mr. COPENHAVER. Cranes are just an example. I want to know the procedure used on this matter. With regard to the military assistance program, in the report by the GAO they indicated that about 7,000 short tons of equipment moved out of France was sent back to the United States, as I interpret it, for the military assist- PAGENO="0073" IJSE~ OF EXCESS MILITARY PROPERTY IN FRANCE 67 ance program. This may be inaccurate, but if that is the case, why? I am curious. Mr. ZARETZKY. It may be inaccurate. From which GAO report are you quoting? Mr. COPENIJAVER. This was the classified one. Do you have a copy of that available? Mr. ZARETZKY. No. Mr. COPENHAVER. Well, I will not pursue that right now. Mr. MONAGAN. Is this related to that question? Mr. St Germain has a few questions. I didn't realize it. Mr. Sr GERMAIN. If we could get back to a couple of items mentioned since I arrived at the scene-you mentioned, I think, that it was GSA, for instance, that was not interested in used tools and furniture, be- cause of the cost involved in shipping and the value here domestically. By the same token, I am wondering about this-~-the used tools and furuiture wouldn't be too expensive to transport, let's say, from France to Germany. Now, were the used tools and furniture sent to Germany from France first, prior to exhausting the supply of new tools and furniture? Mr. ZARETZKY. Yes, sir. This was one of the reasons I went to Eu- rope- to see just what was happening to housekeeping-type materiel. Not only did we do that first, but I assured that the Air Force, for e~o ample, looked very carefully at all of the Army materiel declared ex- cess within France to make certain that every one of the items they might require they would get, and the reverse was done also. There a record of how much they picked up, one from the other. Mr. ST GERMAIN. I think you could understa~d and appreciate and realize that when you went to requisition you always aim for a new item, no matter what it might be. You tried to get the new rather than something that ~had been used before.. It is a very ~human thing to ~do as a practical matter. 1 think we can agree that the~economical thing to do is to first dispoee of tha't which is used, and then the new is available and probably wouldn't be refused by other agencies for use. B~it according to what you say, they first saw `bo,it tha~t distribution was ~made-especially in the line of furniture~-of the used. Mr. ZA~ETZKY. Absolutely. Mr. ST GERMAIN. As far as tools arC concerned, that. surprises me because in most instanc~s-~--depending on the type ef tools-a used tool most of the time is as valuable as a new tool. It is not like a piece of furniture that gets banged around. Mr. ZARETZKY. I. thti not referring to machine tools, nor am I re- ferring to.the type of tools that ~e in Defense buy and ~manage. I~m only referring to those tools that GSA buys and stores and ~uppIies to us. These~ ~re hafidtools, wrenches, ~lier~, ~rewdriveTrs and that sort of thing. . . . Military-type~ tools are the ones we manage. They are handled the same, and they are repaired and reissued as required. Mr. ST GERMAIN. With respect to equipment, let's not restHet our- selves to a crane, but bulldozers and backhoes, et cetera, are involved. The general stated that-I think you said a worldwide standard? General HEISER. Yes, sir. . PAGENO="0074" 68 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. `Sr GERMAIN. Is any consideration given to the type of work which the backhoe, the crane or the bulldozer might be required to do, and as such, doesn't that sort of go against the grain of a set `standard or criteria? In other words, `as we know, a backhoe, for instance, ordinarily- even though it be in good repair-the value of the backhoe is `computed on the basis of the number of hours it has been in actual operation. And there are some operations that can be performed by a `backhoe that has been in operation for a great many hours, whereas in other instances requirements would be more stringent. I am wondering if you have a scale there also within the criteria that you mentioned? General HEI5ER. Mr. St Germain, there is a graduated scale for the economic repair limits within which we will repair on item. How- ever, recognizing that we `are comparing ourselves on a basis of readi- ness for an emergency, which is our mission, we do not have a grad- uated scale, sir, within which we will claim an item to be serviceable. As a result-it is either serviceable or it is not `serviceable, because as you well recognize, sir, this a worldwide situation-we have to be prepared to fight under any circumstances, and so there is a stand- ard of serviceability that is not graduated, sir. The thing that is graduated is the economic repair limits within which we operate. Mr. ST GEuMAIN. The thought occurred to me, if you had equip- ment in France, and there were requirements in Germany or in Italy, you are not there operating under fighting conditions `as we are in Vietnam. Many of th~e pieces of equipment are being used in what you might call regular domestic `work at this time, `and we hope for many years to come in these areas, and that is why I wondered a'bout this. General HEISER. There is local judgment used in the local area, sir. For example, at the post, camp, or station-many times you will find `them using equipment just as you were talking about, sir. However, when `we are talking `about standard equipment issued to troops, this is based upon a standard of servicethility It is constant, sir Mr. 8± GERMAIN. `Once again, `when you say "issued to troops," this implies troops no matter where they may be, but it doesn't recognize what they are doing. `General HEISER. Tactical units required to be ready to act in emer- gencies, such as the 7th Army in Europe, would be the kin.d I am talk- ing `about. Mr. Sr GERMAIN. When an item of Department of Defense equip- ment is declared excess and is turned over to AID or disposed of to AID, do the excess parts for that pa±ticular `piece of equipment go along also? General HEI5ER. This is a mixed answer, if you don't mind. If the end item happens to be an end item on the tail end of a situa- tion where it is the last of a kind, as opposed to being washed out be- cause it is not economically reparable, and there are no requirements for repair parts other places in DOD, then the repair parts will logical- ly be excess to our needs. However, sir, this is mostly the abnormal situation. ~ ormally, sir, for the equipment that is disposed of through the DOD, or the equip- ment made available to AID-usually it is found that there will be PAGENO="0075" USE OF EXCESS MILITARY PROPERTY IN FRANCE 69 no repair parts to accompany the end item because we often have ad- ditional requirements within the service for these repair parts, and therefore they would not be declared excess or surplus. Mr. ST GERMAIN. How long does AID have from the time an item is declared excess until they can make a request for that particular item of excess property?. Mr. ZARETZKY. Thirty days. Mr. S~ GERMAIN. Mr. ~Zaretzky, in your testimony on page 4- which I read in the plane coming in this morning-you have one state- ment here: "In addition we permitted the depots in Germany"-this intrigued me at 10,000 feet-"it was a respite from the drudgery of daily issues." I wonder if you might like to explain that one. Whoever helped to write this was waxing poetic or something of the sort. Mr. ZARETZKY. General Case is from Europe, and he is the man that ought to explain. General GASE. It was not unusual during the FRELOC period to go into a depot in Germany and find the entire shipping and receiving departments all working in the receiving department. In France you could see just the opposite. The entire shipping and receiving de- partment were all working in the shipping departments. We had a good many shippers in France, and only a few receivers in Germany, so we were able to take the French depots and give them a mission they were unaccustomed to, and that is daily issues. And in addition they could keep up with their interdepot transfer to Germany, whereas the depots in Germany could concentrate their energies on receiving the massive interdepot transfers and didn't have to be di- verted by making these many little loose issue shipments to their cus- tomers. Mr. ST GERMAIN. In other words, this was sort of a fringe benefit, a morale booster? General CASE. And it avoided double handling. We saved over a million dollars. Mr. ST GERMAIN. On the following page, page 5, the first full para- graph I think is interesting: Greater vertical utilization, Improvisation ot sheds, elimination of honeycomb- lag, relocation of nonstorage activities from warehouses and greater use of out- side space were the principal devices used. Would this be another benefit that was derived from the ingenuity applied? With the same amount of space and a good amount of in- genuity we avoided extra expenditures? Is that what your point was for warehousing facilities? Did we learn something from this for the future? General CASE. I think so, yes. But I think we may be misinterpret- ing this just a little bit. Some of the things we did were expedient. Some of the things we did kept us-enable us to take care of our property in the short term by improvising sheds, for example, but this would not be a good idea in the long term because they are inefficient to operate out of, and the property will deteriorate faster in these improvised shelters than it would if it was in proper storage inside. Some of it was, perhaps not exactly improvement, but it did serve us very well in the short term when we were faced with the space crisis. Mr. ST GERMAIN. I have nothing further. PAGENO="0076" 70 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. MONAGAN. Mr. Zaretzky, was any property given away of this total? Mr. ZARETZ1~Y. Given away? Mr. MONAGAN. Yes. Mr. ZARETZKY. In France? Mr. MONAGAN. Or any place. Primarily in Prance. Mr. ZARETZKY. I don't know of any property that was given away. Mr. MONAGAN. Is there any legal provision oi~ agreement whereby the French have some kind of option to acquire any of this property? Mr. ZARETZKY. No, sir. I have a legal paper on this. We checked that immediately, and they have no right to prior or first refusal-some sort of word like that. Mr. MONAGAN. That is the point. There was a rumor that they had the right to pick up this property, and they were expecting to get it at ex- cessively low prices and things like that. Mr. ZAflETZEY. No, sir. We checked that immediately when this hap- pened. Mr. MONAGM~, Then furnish that opinion for the record. That may be inserted at tbi~ point. (The following information was supplied by the Department of Defense:) An agreement on the procedures to be followed in the disposal by U.S. military forces in France of their excess property was executed between the Government of France, as represented by its chief of the Central Liaison Mission for As- ~istance to the Allied A~'mie~, and the Go~vernment of the United States, as repre~ntedby the commanding generaL U.S. Army Oommunlcations Zone Europe, on January 30, 1954. end an3endccl on February 10, 1959. This agreement i~cur- rently In' effect. It does not ro~iiI~ for any optiOn or right of first refusal in the French to acquire angof the pFO~eity. Mr. MoNAGA~. Now, you talk about, the budgetary savings as a result of the relocation being $50 to $60 million annually. That comes ~ the fact that you have fewer people there, isn't that so? Mr. ZTAIiETZKY. Yes, sir. Fewer depots to operate. Mr. MONAGAN. If you wanted to have,a really outstanding sa~vrng~on that basis, you could pull everybody out? Mr. ZARETZKY. Absolutely. Mi~ MONAGAN I ~ton't t~hink it is any great ~pornt I mean, it is `~rithmetic Mr. ST. Gi~RMAIN. It would be terribh~ if there~ hadn't been a saving, Mr. Chairth~n. Mr. MONAGAN.' The'sawe would apply to fo~efgn exchonge sOvings. Ym~i ar~ basing this calculation, I gather, on the a8,00'0-odd troops and kn additional number o~f dèpeiIdents that were taken out of France, That doesn't include the 35,000 that are coming out of NATO ii~ ad- ditiontothis~ Mr. ZARETZKY. It does not. Mr. MO~AGA*. But those are combat~ troops, ~IIO 35,000 troops, ~he~rea.s these Ore support troop~? `Mr. ZARETZItY. That is right. Mr. MONAGAN. Of course,' we ai~e not going into the poli~Idal qu~s- tions that are involved her~e; but there ~nuid be~a `grea~many~opinions as to yhy this happened, `and ~the desirability of these further cuts in NAT~, but itis not our function to investigate those or talk about them.~ PAGENO="0077" USE OF EXCESS MILITARY PROPERTY I~ FRANCE 711. Mr. ST GERMAIN. If I could just follow up ,oi~e question you askea about wliiether or. not there was a right of first refusal in effect. I imagine much o~f this land we were using was leased-~ ~Ir. MONAGAN. This is personal propertywe have be~n talkiflg abQut. Mr. ST GERMAIN. 1 am aware of that. But going onjust one step further, real estate in many instances, I would imagine, was leased. Mr. ZARETZKY. That is right. Mr. ST GERMAIN. Now, if there were buildings erected on th~s leased land, would some of these leases provid~ that bnildings would remain behind ~f they were ó1~.a permanent natth~e, and become the property of the lessor? Mr. ZA~ETZKY. Eaeh base that we ac~ui~ed, whether it w~ the lessor or whether.we built things On~ these properties, hadspe.ciffc agreements. One of the que~ions we asked was, similar to yours-we asked for every agreement that we had with the 1~rench regarding the bases we occupied. We had to sort these out to determine exactly what arrange- ments we had at each of the various bases. Some of the bases were exactly as you de~s~çribed. If a permanent or semipermanent building was erected, it remained on the property. If a temporary building was erected, it could be removed. In some cases the agreement stated that the base would be left as we found it, which is a pretty tough thing to do when youl haye alre~tdy erected some con- crete runways, for example. These are the things pur Military Liquidation SectiOn is now coping with in its negotiations with the French. Mr. ST GERMAIN. Will there be an estimate at the conclusion of this of what this type of lease costs us as a result of actually breaI~ing the 1e~se, the conclusion of the lease for a shorter term than originally. anticipated? Mr. ZARETZKY. There are a number of GAO men now sitting with our MLS men, physically, in Paris, checking these things. Mr. MO~AGA~. That ~buld get complicated when you are amortizing a capital investment over a 10- or 20-year period, and then have the lease broken off halfway through. Mr. ZARETZKY. That is right. Mr. MONAGAN. It appears that they are working on the an~wer. Will that be a GAO report or a Defense Department report? Mr. ZARETZKY. It will be a GAO report. Mr. MONAGAN. So they would be the people to get it from. if counsel will make a note of that. Mrs. Heckler? Mrs. HECKLER. Following that line of questioning, is it possible that we would have to return some property in France to its original statc~ COuld this generate mOre personal property which could become excess? Mr. ZARETZKY. It could, and I think you are referring now to related personal property such as radiators, light fixtui~es and the like. Mrs. HECKL!ER. That is correct. Mr. ZARETZKY. One of the things we are atteiuptha~ to do is to sell these light fi~tures ~nd other FelatOd persixial property as i~ where i~, tO the highest biadet~ This gets difficult so~netimés becanse the Prehch had nOt indicated an interest in the particular building and they suddenly realized that we intended to sell the fixtures and things that make it an operating building right out from under them. This is, PAGENO="0078" 72 USE OF EXCESS MILITARY PROPERTY IN FRANCE again, part of the negotiations. The French would like to buy some of this material in place so. that the building is still a usable building. We have complete inventories of every single item on each base, including the wiring, the poles that hold the wiring up, and so on Mrs. HECKLER. You mentioned something this morning in passing on the value-something like getting 8 cents on the dollar. Didn't you use that figure? Mr. ZABETZKY. Someone did. Mrs. HECKLER. What was that in reference to? Mr. ZARETZKY. That is the figure that the sales people were able to generate, based on acquisition cost-8 cente on the dollar, which compares favorably to what they get here. Mrs HECKLER It referred to surplus ~~roperty, which would mean that no Fe/deral agency chose to nsc it, Is that what you, meant? Mr. ZARETZKY. After the Fed.erai agehcies have skimmed it through. A good, deal of it is scrap. Mrs. HECKLER. I can't comprehend the fact that you have reduced your military personnel 1~y 18,000 or more, and yet you have found it possible to utilize over 600,000 tons of materiel. Does this mean that the bases in Germany and other countries in Europe, who received this materiel, will then decrease their present buying orders? Is that the type of arrangement that you envision? Mr. ZAIUTZKY. No, madam. Mrs. HECKLER. Is it forstoek? Mr ZARETZKY That is right, within the authorized levels ~f peace time operation and mobilization reserve. The materiel that was in the depots in France was the materiel held in Europe for our combat troops in Europe. Obviously the sup- port-type troops als6 had support-type materiel that went' along with them, but the heavy materiel, the ammunition, the guns, the tanks, and that sort of thing, are still required in Europe General CASE It might help you understand a little better if I ex plained to you that, taken either by tons or dollar value, 75 peicent of the inventory is either reserve or for special wartime pro)ects, so that the great bulk of your inventory is not operating stock. Mrs. HECKLER. I seq. General HEI5ER. This is based.. upon a judgment decision as to how long it would take us to resupply the theater `in time of war., Mrs. HECKLER. I didn't realize that this was the nature of the prop- erty held. This makes a tremendous difference. Mr. BARA5H. I have one question. Are you able to project at all how much additional property might become excess to DOD's~needs as a rosultof FI~ELOC? ` . Mr. ZARETZKY. We see no additional excessing because of,FRELOC. General HEISER. Except the possibility of personal property becom- ing available as weget rid of the additional real estate. Mr. B~uiASH. But, of the amount already moved out of France, you don't anticipate that any additional amounts of property will become excess to your needs?.. , General CASE., Well, yes. Property becomes excess every day. Every time the computer makes a calculation of your theater's supply posi tion, items. flow into excess.' But your question was, because of ERELOC? . ` , . PAGENO="0079" USE OF EXCESS MILITARY PROPERTY IN FRANCE 73 Mr. BARASII. Exactly. Mr. ZARETZKY. That is over with, as far as command stocks are con- cerned, and I would expect oniy insignificant quantities insofar as re- lated personal property is concerned. Mr. COPENHAVER. Mr. Zaretzky, as I understand it, the MLS is in charge of disposing not only of the related personal property but are they also in charge of disposing of the actual real property which the French have indicated some interest in buying as a total, as a whole. Is that correct? Mr. ZARETZKY. That is right. Mr. COPENHAVER. In that regard, is there any possibility of develop- ing any leverage by us in order to encourage France to negotiate with- in some degree of reasonable period of time on the residual value of the other property? Do you envision- Mr. ZARETZKY. You are now in the realm of politics within the MLS. Mr. COPENHAVER. I will not pursue that further. Since the MLS is negotiating on some real property, have you established a pretty good working relationship between the two groups, or has the Embassy? Mr. ZARETZKY. It is the Embassy. The MLS is part of the Amer- ican Embassy, as of the 27th of January. Mr. COPENHAVER. Therefore when MLS is negotiating on that part, they are under the Embassy's control? Mr. ZARETZKY. Yes, sir. They are part of the Embassy. Mr. OOPENHAVER. One final question. With regard to the MAP pro- gram we talked about earlier, is it possible you could supply some figures as to the distribution to MAP of property that was under our FRELOC? Is this possible? Mr. MONAGAN. What was that question? Mr. COPENHAVER. Try to determine the amount, and perhaps the categories of property to the MAP program as a part of Operation FRELOC. General HEI5ER. By classes of supply? (The following was subsequently supplied for the record:) DIsTrIBUTIoN OF FRELOC THEATER Excnssns To MAP MAP recipients, primarily Greece and Turkey, received approximately 25,000 tons of materiel valued at $68 million acquisition cost. Of this materiel, 530 tons was ammunition. The balance consisted of about 6,000 cargo trucks, trailers, and wheeled/tracked vehicles rendered obsolete by modernization programs. These Items had been maintained with a minimum expenditure for care and preserva. tion and were offered to MAP In "as ls.where Is" condition. Mr. MONAGAN. Is there anything further, gentlemen? Thank you very much. The hearing is adjourned. (Whereupon, at 2:40 p.m., the subcommittee was adjourned.) PAGENO="0080" `S PAGENO="0081" CONTROL AND USE OF EXCESS PROPERTY AND RE- LATJ~D FOREIGN ASSISTANCE PROBLEMS FOLLOW- ING U.S. MILITARY EXCLUSION FROM FRANCE~.-.- t966-67 SATURDAY, MAY 27, 1967 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY OF TIlE COMMITTEE ON. GOVERNMENT OPERATIONS, F~a'nk/urt, Germany. The Subcommittee met at 2 p.m. in the annex to the American Con- sulate General AID Building, Hon. John S. Monagan (subcommittee chairman) presidiiag. Subcommittee members present: Hon. John S. Monagan (chair- man) and Hon. Margaret M. Heckler. Subcommittee staff members present: Miles Q. Romney, counsel; Peter S. Barash, legal assistant. Also present: Joseph DiGiorgio, Director, European Branch of In- ternational Division, General Accounting Office, Frankfurt, Germany; Robert M. Gilroy, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Frank M. Mikus, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Allen Moore, audit manager, European Branch of International Division, General Ac- counting Office, Frankfurt, Germany; Jack K. Woll, I)irector, Gov- ernment Property Resources Division, Office of Procurement, Agency for International Development, Washington, D.C.; Paul Scordas, of- ficer in charge, European Office of Government Property Resources Division, Office of Proc~remeijt, Agency for International Develop~ mént; and Col. John Pfeiffer, Headquarters, USARETJR, escort officer. Mr. MONAGAN. The hearing will come to order. The Special Subcommittee on Donable Property is primarily con- cerned with the Federal don~ble property program authorized by sec- tion 203(j) of the Federal . Property Act of 1949. In addition, since 1965, this subcommittee has been engaged in an active examination of the use of excess. Federal property in the U.S. foreign aid program. We have seen much evidence to suggest that ~withdut the ready and efficient availability of excess property, AID would either ha~re ~had to request substantially more funds from theCongressor the economic a~sistance efforts of the U.S. foi~eign aid~ prçgram would have been far less effective. The generation of vast ampunts of. excess property by the Depart- ment of Defense as a r.e~ult of Operation FRELOC in Europe has great significance to the U.S. aid prog~am and,~in stidition, has possible un- 1;) PAGENO="0082" 76 USE OF EXCESS MILITARY PROPERTY IN FRANCE portance in relation to the Federal donable property program in the United States. Therefore, in April of this year I discussed the interest of our subcommittee in this subject matter with the Chairman of the Foreign Operations and Government Information subcommittee of the House Committee on Government Operations. That subcommittee is now inquiring into costs to `the United States resulting from the U.S.-NATO withdrawal from France. An agreement was reached be- tween the subcommittees with respect to our subcommitte&s working cooperatively with the Foreign Operations and Government Informa- tion Subcommittee. Pursuant to this intersubcommittee agreement, which Chairman Dawson of the Full Government Operations Com- mittee has approved, the Special Subcommittee on Donable Property has embarked upon the inquiry which brings us here. Specifically the interest of our subcommittee centers on U.S.-owned personal property, removed or to be removed from France, which is or will become excess to the needs of the Department of Defense. The successful utilization of the FRELOC-generated property in our foreign aid program, as well as the possibility of the use of some of this in the United States in the donable property program, is dependent, of course, on the adequacy of (1) screening procedures. by which the property becomes excess and is disposed of; (2) `storing; (3) the efficiency of inventory `control;* (4) the manner and expense of rehabilitation; and (5) the prices which this property may bring to the Government if sold as foreign excess, Thes~, then, are the matters on which this subcommittee study will. concentrate and to which our interrogation and inspection activities will be directed SNow, Mr. DiGiorgio, you have an introductory statement; have you, sir~ STATEMENT OP ~OSEPK DiGIORGIO, DIRECTOR, EUROPEAN `BRANCH OF INTERNATIONAL DIV1SION GPINERAI~ A000UNTING OFFICE, FRANKFURT, GERMAI~Y, ACCOM1~ANIED B~ ROBERT M GILBOY, AUDIT MANAGER, FRANI~ M MIKUS, AUDIT MANAGER, AN]) ALLEN MOORE, AU]~IT MANAGER Mr. DiGiOnoio. I have a brieQ, inf~rma1~ `introductory statement. I thought possibly, as we didn t have the benefit of this statement before-all we had ~ as your opening statement at the hearing in Wash ington, D C, `Lnd Mr Woll's statement-I thought our best approach to assist you would be to expand on the contribt~tion made by Mr Stolarow and Mr Berngart of our Defense Division and International Division, respectively, during your initial hearings As I understood it from the questions that were posed to Mr Berngart, your interest was' i,n the `actual acquisition of property by AID recipient countries and the extent to whjch the property was utilized. Mr MONAGAN What is your full name, please, and what ~s your position and what is your i!~inction ~ Mr DIGI0ROT0 My name is Joseph DiGiorgio I am Director of the European Branch of the International Division of the General Accounting Office. The men ~that we have with us today are those most closely associated with your area of interest. Mr. Mikus has been concerned in two projects, one being the commodity import PAGENO="0083" USE OF EXCESS MILITARY PROPERTY IN FRANCE 77 program in Turkey. One of his interests was to concern himself as to the extent to which excess property has been obtained as a substitution for new procurement, and also `to ascertain the extent to which there was control over custody and use `of this property. He is also en- gaged in the portion of our work pertaining to the review of the re- habilitation operations under the various AID contracts at Rota in Spain, Leghorn in Italy, and Antwerp in Belgium. Our concern is with the total operation starting from the point of acquisition by AID's European office to the point of disposition of the rehabilitated equipment by sale to recipient countries, and we have concerned ourselves with the contracts let to the rehabilitation center contractors. Mr. Moore returned just yesterday. He was in Turkey to follow through as to the actual use `to which the property was put. I,, have not had a chance to talk to him yet. Mr. Gilroy has been associated with the FR'ELOC operation from last September to the current date. We have a split functional responsibility here. Mr. Gilroy has been involved in the work resulting in the report to the Foreign Affairs Committee on NATO infrastructure, and he is also largely responsible `for the report we submitted to the Comptr~ol1er General on March 31, 1967.1 From that poin't to the current date we have ~tone several things both here and in Europe and in Washington to better define the areas in which we will do work. Mr MONAGAN Is this a portion of the activities you are involved in here or is this all you are involved in' here? Mr DiGionoro No, this i~ a very small part of our total operation To give you a picture of our total oper~tionin Europe, geographically we run from the Azores south to north Africa, north to Iceland, and east to Pakistan. In terms of functions and responsibilities we haze two primary areas in which we conduct our wOrk, one either by di- rection from Washington and the operating group associated with defense activities, or the International Division or the Civil Division. For example, FAA is one we have taken `on for the Civil DivlsiQn; and `for Defense our work can include work in supply and even through the readiness of the troops in Europe as they are affected by the supplies The International Division is concerned with Public Law 480 and AID operations and the military assistance program For brevity of definition, our operations consist usua'ly of a program, the `idministration of that program, and the effectiveness and utilization of the equipment obtained from the program I think that would be the briefest definition I could give of the total extent of our responsi- bilities. We have been asked to do work for the State Department group of our International Dlvlslon, various reviews, and some balance of pay ments problems that have been worrying the office for some time and for which we have difficulty in finding a solution. If you like at this point I can call on either the men ,tha~t are `princi- pally engaged in the AID operations or on Mr. Gilroy, who has been engaged in work in conneotion with F'RELOC~; `later revision of this report is dated May 1967. PAGENO="0084" 78 t$~ OF EXCESS MILITARY FT~PERTY I~ FRANCE Mr. MONAGAN. First I will ask counsel, d~ ~oii have any questions? Mr. ROMNEY. I have a broad question I might ask pertaining to assignments which apparently have been approved for the further GAO `study which you sta~ted would be ready by tbe end of August. Mr. DiGionoio. This is just one. There have been approved for fur- ther review two whic'b we~ have currently underway. One of the two currently underway i~ MLS and also one dealing with a review of the disposal ~tions r~kuting `to FRELOC. Mr. RoMth~Y. ~ I ask you to comment on the purp9se of your making these studies ~~th respect t~ FRELOC, and I would like you to address yourself to ~`hi~ qtiesti'oii ~in addition: Is FRELOC uniquç, and if tl~ie purpose qf the ~4~O's inqt~iry relat~es to ai~mique happening, i~ the purpose per~haps iti this regard acade~rnic ~ Mr. DiGio~tuio. `~7'& have `tusseled with this from the start, as you can im.agine, gping back to September. Our copcern is not with the fact it is unique in terms of the function involved in moving this property, but in terms of the time in which it has to be done. Also, as we all know, and it is trite to say so, but haste does make *a~te, and my personal feeling is they have had too much to do in u short time to do it without kroblems. The ontgrowth'~i!~these activities, wl~uch are itormal, is some- thing that goes on duly and roi~itinely. The custody and accounting of the property is daily and routine, and the storage of the property is daily and routine, `but in FEELOC each was an expedited action and recpñred'a high `degree of coordination as to the best use of the equip- ment in France, and `this is where it is unique, essentially, not in any other terms, and I think the assignments we are currently undertaking are really not to,;eview a new a're~i of acti~ity `but to determine the ex- tent to ~bich wh~at h~s occurred up to now may not have been corrcct and may have resulted in, the' reteption of equipment that shou'd not have been retained in the Europe~in theater but rather redistributed to other theaters; to others like AID or MAP, or sold. Mr. MONAGAN. I-low about the questi'on of whether it might have resulted in `the `disposal of property that might otherwise have been utilized? Mr. DiGioncuo. This is part of the work we are doing. We are con- cerned with dispositions that have occurred in the past and that will occur. Our concern will be with how the military determines it should be disposed of. In other words, we are in the process now of trying to establish the criteria for giving an item at a base or perhaps as exces~ to PDO, and `the values received for this property are traditionally very low. We are aware `of that. Our concern will be not only with the value assigned to it but with the actual factors that are considered, and one of our prime concerns, which I mentioned before, is to under- stand whether or not all factors that should. be considered in setting a fair value are conside,red or are considered thoroughly prior to a sale. Our ability in this aré~a is limited. In the SILS sales th~s~ can a long protrRcted `activity even `aftei~' the signing of a contract docu- ment. , ` ` Mr. MONAGAN. have mo~st of the sales of the e~cess property been completed by now? `., ` ` ` Mr. DiGloinGlo. I thiñk Lh~y' have moved physically mast of the stock. There is much in terms of asset value that remains. Mr. MONAGAN. But not in France? PAGENO="0085" USE OF EXCESS MILITARy PROPERTY IN FRANCE 79 Mr. DIGIOROJO. There is still Some that can be disposed of through the property disposal office of PDO. Physically in France you will have some pending sale that has been moved to the property disposal office of PDO. Does this answer your question? Mr. IROMNEY. Yes. I thought I would ask Mr. Gilroy about the problems hi~ study has encountered in trying to obtain information with respect to the operations and the results of the oper~ti~n~ of MLS and FESO. Mr. MONAGAN. Do you have any questions of Mr. DiGiorgio? Mrs. HECKLER. Yes. I would like Mr. DiGiorgio to explain about the asset value that still remains in France. Do you mean in the sense of property that has not physically been disposed of? Mr. DIGI0RGIO. Basically the property seems td break down into three categories: Installations or property in which the French have indicated an interest__~ Mrs. HEOKLER. You mean fixtures? Mr. D1GI0RGI0, Fixtures and related property physically attached to the facilities that may have a disposal value elsewhere. Mrs. HECKLER. But you feel almost all the physical property that was unattached has been removed? Mr. DIGTOEGI0. That is my understanding, yes. Mr. GILR0Y. I think sometimes in your questions when we talk about stock moved out of France, COM~ operates more or less like a na- tional inventory control point and they control Over $2billion of stock. A lot of the theater reserve stock waS in Frahce and some of the ~ea~e- time operating stock was in France. They had to move it out and they declared a lot excess that had not been declared excess before, ~asically in the supply function you have a peacetime ,operating level ~f 5 months at COMZ. They also had permissive overstockage for eco~ nomic retention that they c~u1d hold for 18 thonths~ They decided to i~educe that from 18 months to 6 months and declare ~l1 the excess back to CONtJS'. They did this and redistribi~ted it tôo'ther l4sers arbund the world or the remainder was scheduled for disposal. Rather than going into disposal, the military decided if it was an active item they could raise the economic retention to 12 tiionth~ orback to 18 months. This action of reducing the economic retention level to 6 months created a lot of excesses. Sometimes when they went back to CONUS `the~neyer did get an answer ba~k on disposition; and' in those instances they shipped the stock to Kaiserslautern I have a list of all those ite~ñs sOnt to Kaiserslautern This is more or less on the missjoit stock. On the non~ission stock there would be post, camp, and station prOperty. We had quite a few Army ba~es and Air Force bases in Fran~e. Some were reserve Ai~ Force bases that were Physically set up to receive incoming additional support in time of war. They had to relocate these `and the Air ~orcO never got permission to completely i~elocate al~ Their bases i~i F~anee. They got tentative permission to. relocate two-~-Chevelsthn and SCul- thorpe. Recently they got permission to use Greena,n COmgjon. Mr. MONAGAN. For the sake of the record; would you please indicate whenever any of this information is OlassMed. Mr. GILROY. They do have a lot of supplies stored here. The type of supplies they store could border on classified information since it is a war reserve. It possibly could be classified information. The DOD PAGENO="0086" 80 USE OF EXCESS MILITARY PROPERTY IN FRANCE officials have told our officers in Washington recently they are not in a hurry to make a decision as to these dispersed operating bases. They have `a lot of supplies stored there. The Air Force merged some bases in the United States and in Germany. Mr. MONAGAN. Would that include any of the 3~,OOO? Mr. GILR0Y. No; this was prior to that time. Since that time we read in the papers they will reduce, 96 planes or four squadrons pulled out of Europe and one `brigade that *111 be pulled out in addition to the FRELOC exercise. You can see where FRELOC created a lot of excesses, particularly in residential- and office-type equipment. Some of, it was in very poor shape. Residential furniture has been moved to Germany. Mrs. HECKLER. All residential furniture has been moved to Germany? Mr. GILRoY. Yes, as far as we know. We have not checked it in detail. During our FRELOC review we tried to cover all areas at FRELOC. We are now in the process of reviewing `that and also the new facilities and construction which would result from FRELOC. On MLS operations, in trying to anticipate what your subcommittee would be interested in, `we thought property located in France which the French have not e~pressed an interest to buy might be of ,~ome particular interest. The military component commands in Europe have a detailed inventory of this property which they passed to the liquida- tion office in Paris They are m the process of making an economic cost analysis to determine whether it is best to sell it as is, where is, or remove it for sale, or ~o include it in a realty claim that we will put in later. We do know that they have asked DOD to move out any property of which there is a shortage in Defense. To the best of my knowledge, they have not made an attempt to go to other agencies, and I under- stand they will have someone from MLS meet this week with this committee at either Nancy or Evreux, and I asked Colonel Grimes to have Colonel Regan, Assistant Deputy Chief of MLS, to `bring copies of related personal property for which the French have not expressed an interest to buy to show you the type of property involved.1 Mr. MONAGAN. With reference to the items the Air Force and the Army have listed, is that movable personal property? M. GILROY. Yes. In fact, that is a better definition than related per- sonal property. They used to call it related real property, then related personal property, and it actually comes down to a definition of movable property. The agreement `between the French and the United States `says any movable property may be moved from France in the event we move out. We have in some instances torn out walls and removed copper wiring and restored the walls as they were before we removed the wiring. At one time there was what we called the scoi'ched earth policy of removing everything; then that was modified to only removing the things for which there was a real need. This was further modified in that anything the French have indicated a desire to buy we would not remove. They are in the process of taking an inventory because since March 31 some people have come in and removed some things they need. 1 An example of the kinds of property hrcrolved is the Ipventory of related personal property for the former airbase at Phalsbourg, France, printed as app. 1, infra. PAGENO="0087" USE OF EXCESS MILITARY PROPERTY IN FRANCE 81 Mr. MONAGAN. Our own people? Mr. GILRoY. Yes, sir. Mr. MONAGAN. Where is this listing of personal property? Mr. GILROY. The Military Liquidation Section in Paris will have one and also the Army Logistics Command should have a listing of all related personal property. Mr. MONAGAN. I am not talking about the related property. I am talking about movable personal property that I understood you to say the Air Force and the Army had listed that is in France but has not been removed yet. Mr. GILitoy. Yes; they made an inventory of all personal property which is movable. Mr. MONAGAN. Technically we are supposed to be looking at mov- able personal property which could be used by other agencies, includ- ing AID, and not really real estate because that is in another sub- committee. Mr. GILR0Y. That is what I am talking about, other than what we call real estate. If there is any particular area you want me to expand on I shall be happy to. Mr. DiGioaaio. Perhaps you might want to talk a little bit about the method of disposal as it moves from excess to disposal. Mr. GILR0Y. There is quite a similarity between the Air Force and the Army, with the Army having the most excess at this time. During FRELOC, particularly, they reduced it down to zero dollar criterion. That means they would have to go back to NICP and ask if there was any need for it. Any items they had in their inventory they went back and asked NICP to give them permission to go to disposal. After this exercise back to NICP, they checked to see if the Air Force had need for it. When the determination was made that there was no need for this property, it would be ready for disposal. Before it goes to disposal sale, AID has an opportunity to inspect this property and if they want it they so notify the Army. There were two sales agencies here when we were in France. There was a foreign excess sales office in Paris and the Army was the sales agent in France, but FESO would do the selling. They would ask for bids and sell the materiel. The Air Force is the sales agent here in Germany and the Air Force goes through a similar screening procedure They turn it over to the redistribution and marketing centers. Where you have COMZ, each Air Force station in Europe goes back to CONTJS. At one time there was one at Ohateauroux, so they would get their instructions and when it went to It. & M. it would be reported to the sales office outside of Weisbaden, Mainz-Kastel. Mr. BARASH. You said something about the Army coming back to the bases where France had not indicated an interest and removing personal property. Do you know of any instance where property the French have indicated an interest in that could be used elsewhere is ~itting there pending the French making up their minds? Mr. GILROY. That is a very pointed question. We are testing this out. We know at one time the Department of Def~nse team was going through with a criti~al item list and said whether the French wanted it or not they would take it. Some items we have not removed because we felt they could bring a better price by leaving them than by taking out an ingredient. But we intend to make a test to see if there is a real PAGENO="0088" 8 USE OF EXCESS MILITARY PROPERTY IN FRANCE need for some of the items. I do not know if you know of the progress made to date at MLS. Didn't General Case and Colonel Kiely come in and mention the progress they had made to date? Mrs. HECKLER. Not reaUy. Mr. GILR0r. There are some items the French are very anxious to get hold of. They have sold so far the Toul-Rosiere Air Force Base. That is an operating base. That is, they sold all the movable property on this base. They also sold a hospital outside of Nancy, the Jeanne d'Arc Hospital. This was sold completely. A~nd we understand they have sold four bases-Laon, Etain, Chaumont, and Qhateauroux-~as a paGkage. One of the. problems we are having is they will not let us se~ any computations they make for negotiation prior to a sale in trying to compute replacement value and what we are going to say our negotia- tion objectives are. Mr. BARASH. Which Chateauroux is this? Mr. GILR0Y. This is more or less a complex. Mr. BARASH. Do you know how much they `sold that for? Mr. GILROY. On Toul-Rosiere they got $795,000. On the Jeanne. d'Arc Hospital outside of Nancy they got $465,000. . . , Mr. ROMNEY. We are talking now about the movable property? Mr. GJLROY~ Ye~ ` .` Mrs.' HECKLER. Are you saying. they sold all the property for those tigures or just the movable property? Mr. GILR0Y., Just the movable' property: According to the agree- went, we are supposed to see' i~ we can negotiate and decide on residual property at some later date. ` Mr. MONAGAN~ That ~is what MLS is doing~ among other things? Mr. GILROY, They are supposed to furnish, input data on residual value. ` ` .` ~` . . ,. ` Mr~ DiGioi~e;ro. MLS has no `res.pousibility foi4 ~negotiating residual value. ` Mr. MONAGAN. The attempt'will be to place avalue on the remain- ing term of the leases aiid~th'at will be done under the State Depart~ meut acting directly through the Ambassador? . ` Mr. DTGI0RGI0. That is correct. ` . .` Mr. MONAGAN. Is there; a tieaty ~or agreement ~knder which' Frauce would agree to pay whatever was determined to b~'a fair price;1? Mr. D'IGTQRGIO. I think there are six agreements involved and the terms are e.ither.specifie'or not specifle~as to residual value. Mr. MONAGAN. Do they go;hadk to th~ time the base; was established? Mr. DLGIOR.GIO. Yes. ` ` `~" Mr. GThROY. Under NATO we have separate .~tgre~m~nts. The bi- lateral `agreements between the United St~tes' and France, all it says in the agreement is we will try to find a way to negotiate residual value or some kind~of value. Mr. MONAGAN. Has there been any contact with the French on this? Mr. GILROY. I talked. to Ambassador Bohlen last week, and h~'~aid he had'not, and I asked ~if there' wa~ a target date, and he' said tcs date he had not set a target dtht~. ` Mrs. HECKLER. What is your authority in this area? You have commented on the fact you will not be given access'to information on PAGENO="0089" USE OF EXCESS MI~r4rrA~y PEOpEmn~ IN PEANQE 83 which to make a determination of value prior tç the actual s~k~ or agreement. Are you bound by law not to have this access? Is this a limi- tation on GAO in general? Mr. GILF0Y. I think it can be. It is more or lees executive privilege. This is all planning information, and they say we cannot look at the data~ because this will be executive action. For instance, in the sales agreement for the Jeanne d'Are Hospital they entered into a fixed agreement, Colonel Hoover for the United States and a representative from the French Government had signed a sales agreement for this hospital, They said they agreed on the price of $465,000. This is final; the input data will not change here. But the formal contract has not been signed as yet. So we cannot see the input data on that yet. On Toul-Rosiere the contract has been signed, and we ~an look at that. But we are not able to take a ~Iook at the data they are accumu- lat~g. Each time we have to wait until a coj~tra~t is signed. Since April 25, whei~ they entered into the sales agreement for~Jeanno d~Arc Hospital, the four bases have b~n sold~ and we have not got the data on Jeanne d'Arc Hospital to compare yet. Mr~ MONAGAN. In es~ence it is.the e~ecuti~e J~ranch saYing they hive the ~rivilege of not revealing this~inform~tion isn't that it? Mr: DIGIORGIG. To put it ~i~ply,~there is an operational pterö~a~ tive~ Essentially,. ~intil they have had ~uj opportunity to exercise their judgment they will not let anyone review any of the fa~th gathered a~ the basis for exer~ising this: prerogative. That may b~ reason~le in an on going job, but it is not ~in this case, in our opinion, because the observations we might have made are lost to them. This is what gives FRELOC the essence of uniqueness. Mrs. HECRLER. What do you mean by the executive branch? Do you mean the military? Mr. GILROY. It can be the military or the State Department. Mr. MONAGAN. Any executive department. Mi~, HRCKLER. The GAO is considered a part of the executive branch,js~jt not? Mr. DIGIOROI0. No. Mr. MONAGAN. It is an arm of the Congress. Mr. BA~&sH, WilJ Yon go into the reasonableness of the contract price at which th~se propertie~ were sOld? M~ DIGIoimGIo. W~ wanted to go into what we thought the price shouJ~ he that Would be attained. Mi~.. BARASH~ Do yOu know whether. they have a formula? Mr. DIGI0RGI0. We have requested that and~we have some of it but not suMcie~t, This has been Slow in Qoming. Mr. ROMNEY: I do not know whether Mr. Gilroy completed what he statted out to say. Mr. GILR0Y. We had gone through the process of determining what property was excess to the needs of the military and were down to MLS operations as such. I think I had exhausted the background. The one area I did want to stress was that Some of this property may not be offered to other agencies, the movable Property the French do not in- tend to buy. The important thing is the economic analysis they will make. They may leave it to be negotiated with the residual value of the realty. We do not expect to get a preper return for the real prop- PAGENO="0090" 84 USE OF EXCESS MILXTA~ PROPERTY IN FRANCI~i erty left in France. So the French may come in with what we might call a negative plan and say they will return it to farmland and it will cost more to return it to farmland. NATO expects the same thing. There is another thing. Almost all the air bases except Chateauroux were funded with United States `and NATO funding. Take a runway, the NATO criteria might say 14 inchesof concrete and the U.S. criteria might say 18 inches~ NATO pays for 14 inches and we pay for 4. They might say a generator does not meet their criteria. Mr. MONAGAN. Does NATO receive any funds from the sales? Mr. GILROY. No. They have not tried to sell but NATO has put out a mem'orandurn to its member nations that if they have need to take it and they say they will put in a claim against France. They have not determined what kind of claim it will be. It is Our understanding a man in the State Department is trying to establish a basis for a claim against France. They do not know what basis they will pursue. In some of these bases, since we have an interest and NATO has an interest, we should perhaps have the same type plan. Another thing is if NATO gets ~ settlement for ~this runway we talked abotit where we paid for 4 inches, if NATO gets $10,000, NATO would owe $2,500 to the United Statewar~d the other $7,500 would be split among the 14r members. NATO told me last Tuesday they don't know' hoW they will handle these claims. But this is on realty rather than remoVable property. Mr. RO~NEY. On the removable property, aren't the FESO and MLS people sometimes working at cross purposes ~ Mr. Gtt~uoy. I don't think I understand the qu~stion "at cro'ss pur~- poses." ` ` Mr. ROMNEY. FESO's objective is to sell. Mr. GILB0Y. Yes. Mr. RoMNi~. And' MLS's objective is not necessarily to sell right now but to take a broader view of the disposal. My question iswhether yuã' have had any indication that those responsible for the ~FESO~ `op- eration are not able to carry out what they think their job `is? Mr. GILR0Y. I think there is one important area, and that is that FESO is holding back selling or attempting to sell that property that the French have not indicated an interest in. FESO is now a part of MLS since we moved out of Frant~e. They are holding back `at `all these installations. This economic cost analysis is being made~ aiiil in this regard FESO is holding back. On the' other han'd, FESO is con- tinuing to sell any `prop~rty that'remained' in France after we moi~ed out that is virtually scI~ap. ` The Air Force tried to get everything oht that was excess byNovem- ber 1 because they thought it would take 5 months to process the sale, find that meant it would take until March 31. Then the Army had a bigger problem' because they had `mOre supplies to move1 and~ in December, after discussions with the French, they `found out they could shorten this 5 months to 75 days~ ~1hich gave them `to January 15 to move the excesses out. ` 1 Mrs. iIEcicLER~ Is the most economical *ay'to dispose `of the moi~e- able property which can be detached'~from the real est'ate'to sell it to France? PAGENO="0091" VS'E OF EXCESS MILITARY PROPERTY IN FRANCE 85 Mr. GILROY. I don't know. If we could examine the data we could come up with a determination of whether i1~ was a good price or not. Initially the French came up with a figure of $220,000 for Toul- Rosiere, which was ridiculous. When they fin~fly came to negotiation the United States set a low of $865,000. It is a horse trading business. They say we will give $400~000 and we say $865,000 and we finally reached $795,000. We don't know if that is a good price or not. Mr. MONAGAN. Of course you do not have much of a market for secondhand air bases, either. Mr. DIGI0RGI0. You are trying to get the price that would represent the cost of dismantling it and moving it out. Mr. MONAGAN. I think niaybe in view of the fact that we have other witnesses here, and in view of the time situation, we will ask each to give a statement, and when they have finished we can all pitch in with any questions we have. Mr. DIGI0ROT0. Mr. Mikus, why don't you give us a short summary of what our interest has been in rehabilitation. Mr. Mii~us. My name is Frank Mikus. I am audit manager of the European Branch of the Interhational Division of the General Ac- contnting Office. We. are reviewing the excess property activities of AID here in Europe. We started by looking at the negotiations for the contracts, for~rehabilitation at the three locations-~-Antwerp, Bel- glum; Rota, Spain; and Leghorn, Italy. After that we took a look at their screening processes. From that we followed the matetiel into the rehabilitation centers, and we have looked into the area of how they cost out the rehabilitation of the property and the contrô1~ and administration of the ~ontracts themselves. From that we followed it down to the countries and we went to Turkey, and while in Turkey what we did was identify the equipment to see that it was being used, and we looked into what condition the property was when. it arrlyed in the country. We looked at the commodity import program ~in Turkey and the utilization ~of excess equipment rather than new equiimient. We piefred two loans, a highway loan of $18 million and ar~ irrigation lOan of $5 million, and all the eqttipthent acquired under these two `lo~tis was heW equipment, so *e screened the catalogs to see if there was excess property available, and we identified some that was a~r~tilab1e.~ We went to the project manager and determined the time the excess prop- erty was available. In one case the loan would have beøifredueed by $8~5,000 had they used excess property in lieu of new property. We believe they could ha*re reduced the Other loan by $544,~0~ `hid they bought excess propE~rty rather than new property. . Thn we have~he arguments as tp *hy they d~on't use exces~ prnp- e~tty. One ar~iiment was they did~t h~re the1ki~o*ledge, and in.ti~e case of the highway loan they felt the excess eqnlpth *~wa~ too old and not troper for their purposes. . Mr. MONAGAN. In that ease we were merely loaning and there was a Turkish company doing the construction ~ Mr. MIKU5. No, sir; these were agenci~s of the Turkish Govern- ment. PAGENO="0092" T~TSL OF ~XCES~ MII~TA,RY PROPERTY ~N FRANCE Mr. MONAGAN. But they wanted newequipment? Mr. Miiuis. That is right. I~a one case we found they had frozen-I think it was the highway loan- Mr. DIGI0EGI0. They had reserved some stocl~. There are a number of problems involved in the coordination of a program in a country with the available excess stock and we are trying to develop a method or scheme for better coordination of the program with a recipient country. Mr. MONAGAN. That condition would have to appear in the original loan agreement, I guess, and I believe it does appear, doesn't it? Mr. MIKUs. We had a problem with `the highway loan and the irri- gation loan. I believe the highway loan specifically stated that to the extent they used excess property the loan would be reduced. In the other case it was silent but we think it could have been reduced. Mr. MONAGAN. Did we have the right to require the use of exCess property ?~ Mr. MIKUs. The mission goes dowr~ the list and tries, to indicate that you shouid iIs~ ~xcess property but it has fo je ~utu~~ly accept- a~e~ The `~urkisb~ Governu~ent ~n th~ ~case would have to agree. Mr. W0LL. If I n~ights~ysomethingiu `this respect, I ~asin Turkey receutly and talked w&th mission person~l a~d people ~n the `Uurkish side, and in relation `to the highway loan it~ ~ their opinion that inas- `as the property that was ~va~labIe was older property than they were~pning on gettiug ri4 of when they got the new equipment, they did not think it would be feasible or advantageous to obtain the older property, Mr. Mixus. We did go to several dealers who handled this property and asked if repair parts were available and they said equipment of that agewas still being serviced by that firm, so we felt the equipment was usable in that ease. Mr. MONAGAN. Does that complete your statement? Mr.~Mi~us. Yes. , * Mr. Di8ioneio. Mr. Moore, I think, cau explairL the immedi'at~ ob~ `j'eotiyes in going to, Turkey, the cond~'tion in which the property had been. received and the~current use being ipade of the property. ~Lr. 1~QQRE. MyaupneisAblen Moore. ~ `am an audit manager in the ~uropeai~ Br~nch of the~nter~iationa~t Division, Gener~d Accounting Qffi~e. ~ ,~ ~ . `., ~ Phe mp~ 9b)eCtive wa~ to 4etcrimne the conthtion of the equip mentre~ire~Luuder the ~ec~tion 6QS program (program' for advance ~eqiiisition of property as authorized by section 6O~ øf the Foreign Assist'ance Act of 1961 as amended) and whether or not there waa ac- couptability by both the 41D mission and the Government of Turkey aiicl whether or not it was bei~i~ e1~ectively utilized. We found in gen- eral that the ~procedures `that were supposed to be in effect `both b~ the AID mission and the Government of Turkey were not being carried out to control the utilization `and to identify the condition of the equipment when it was received. I don't know whether we want `to go into `any details as to what we found. Mr. MONAGAN. I think you might give one example. Mr. MooRE. We found a great many instances where AID is not aware of the arrival `of the equipment. In other words, they do not have accountability. For approximately 30 percent of the items we checked PAGENO="0093" VsE W E~c~S MItI~rARY ~RO1~ERTY IN 87 w~ ~otrhd the ë4u~ptriënt had not been reeeht~d ~n' good' operating condition as was represeñt~d. by the AID exc~sS ~property office here. Mr. MIK~us'. Excuse me. The mission and the Goverliment of ?Turkey have established pr9cedures under which when materièl~ arrives a re- port~will be made iio'AID, but the GovernreentofTurkey has not been furnishing thi~ infoi~mat~on. Mr. MooRE. Initially~ its receipt in tbe .country; secondly~ inspec- tjón of the equipment to determine if it i's operational; afid~ third, w~iether it is being uti1i~ed in the eouut~r. We fo~irrd theSe w?ere,laCk~ big both in repoi~ting by the Governmeilt' of Tutlte~y and AT~'s: re- sponsibility as to ac.countabi1it~ of the e4uipxpen~ aiid to insure it was being properly utilized. Mr. MONAOAN You said 30 percent of the items were not in as good condition as was represented? Mr. MOORE. For that we tested, that is correct. Mr. MONAGAN~ Do you mean the deficiencies existed at the time the equipment was sent to Turkey? Mr. DIGI0ROT0. I think we had better be more specific abopt that. I don't know that the procedure is such that we can attribute `the cause of the defects in the equipment to the rehab contractor or to the ac- tions takCn by the Turkish people at the time of receipt. Have you fixed that responsibility?' Mr. MOORE. With one or two exceptions-for example, in one case the receipient, the Government of Turkey agency, picked up the equip- roent and drove it to Ankara and when it reached Ankara he found the equipment had a cracked block. We can't say it was due to im- proper deprocessing to get it ready to move or not. If he had not put in water it could have caused that cracked block. Mrs. HECKLER. But you said in 30 percent of the casCs? Mr. MOORE. In 30 percent of the eases we examined w~ found major defects and we thought it was the responsibility of the contractor. Mr. MONAGAN. In other words, AID had turned them over to a con- tractor to `repair this defect? Mr. MOORE. That is right. Mr. MONAGAN. And if the contractor had operated properly the de- fect would have been repaired? Mr. MOORE. That is what we believe. Mr. MONAGAN. And AID had turned that responsibility over to the contractor? Mr. MOORE. That is correct, except AID has the re~ponsibility on the completion of the i~ehabilitation to determine it was properly dolie. Mr. MONAGAN. How many contractor~ are involved in this work? Mf. MOORE. There are two commercial contracts, one at Rota~ Spain, and one at Antwerp, Belgium, and the Army `is doing it at Leghorn. Mr. MONAGAN. You say this is 30 percent of a certain total. What would that total be in any standard you can use for measurement, ac- quisition value or number o'f items? Mr. MooRE. Number of items. When I say 30 percent, that was 30 percent of a selected sample~ Mr. DIGIORGI0. He just came in from Turkey yeste'rday.' Mr. MooRE. We examined 49 items physically that had been tested by the user upon receipt. Of the 49 we found 25 items had minor deficiencies which did not render them inoperable. Fourteen items had PAGENO="0094" 88 USE OF EXCESS MILITARY PROPERTY IN FRANCE major deficiencies serious enough that they could not be operated. Fourteen of the 49 is the percent I was quoting. Mr. Mn~us~ Mr. Chairman, would you like some idea how we arrived at that percent? Mr. MONAOAN4 I think it is a very important point and could affect the validity of the whole program. If your excess property is not going to be usable or if it is going to be defective, it is better not to do any- thiiig at all with it rather than have it break down after it is received Mr MooRE I don't think this affects the validity of the program I believe it is the quality control within the sites that is causing this. Mr. MONAOAN. Quality control where? Mr. MooRE. At the rehab centers. Mr. MONAGAN. In other words, you are saying it could be improved, is that it? Mr. MooRri. Oorrect. Mr. MONAGAN. But certainly in this sample if 14 out of 49 items-I assume they are more or less the same size-if they could not be operated I don't know how you could say that. Mr. Mucus. The 49 is just a sample. Mr. DIGI0RGI0. I don't know if that is really representative of all repairs and whether it could be corrected by quality control or whether the percent of deficiency could make it uneconomical. Why don't you talk of the percentage first? Mr. BARASH. Are you talking now about an investigation based on post-FRELOC? Mr. MOORE. No. Some of this is post-FRELOC. Mr. DIGI0RUT0. We had undertaken this before we got into FRELOC at all. Mr. MONAGAN. It does involve excess property? Mr. DiGroRolo. A large part they are now handling is the result of FRELOC but I don't know if that has anything to do with the condi- tions we found. Mr. BARA5H. Then it could not be based on the additional influx of items? Mr. MONAGAN. It is still excess property that is used in the AID program? Mr. DiGroRolo. That is correct. Mr. MONAGAN. So that we have an interest in it whether or not it was created by FRELOC. Mr. Moon~. I can explain how we got down to this 49. We started out making a selection of the property shipped to Turkey since June of 1966 up to April of 1967 which amounted to a total of 180 items. If any o~f you have been to Turkey you know it is hard to get around the country. We ~eiected three areas-Izmir, Istanbul, and Ankara. We tried to cover all the users within the three cities and the surrounding vicinity. We finally examined, I believe it was 80 pieces all told, physi- cally. Approximately 24 had not been picked up yet from customs by the recipients. Mrs. HECKLER. Different kinds of items? Mr. Mooiu~. All types. Mrs. HECKLER. Assorted? PAGENO="0095" USE OF EXCESS MILITARY PROFER~Y IN FRANCE 89 Mr. Mooi~i. Yes. Seven of the items had been received by the recipient country but had not been tested as yet; 49, 7, and 24 should total the 80. So the 49 are the pieces we examined that had been tested. Mr. DIGI0RGI0. How do you get from the 180 to 80? Mr. Mooim. Sixty of the items were received by an agency of the Government of Turkey similar to GSA that orders the equipment for allocation to the various municipalities. These 60 pieces were someplace in Turkey but we could not identify them. That brings us down to 120, and subtracting the 40 we could not get to leaves 80. bo our sample was fairly small but it covered a wide variety of government agencies and municipaJities. Mr. MIKU5. How did you determine that the.y were in an inoperable condition? Mr. Moom~. In some cases we could actually see, for example, the cracked block. When I said 14 had major deficiencies, it could be a small bearing, but it had to be repaired or replaced before it would be operable. Mr. MIKuS. I think one of the principal things ~cre found in this area was lack of communication from the Turkish Government to the mis- sion. Some of the users had no instructions as to whom they should re- port to if they received a piece of equipment that was not operable. That is one area we are working on, and this may indicate a need for better quality control or better inspection at the port of receipt. In my personal opinion I would not want to criticize the entire program based on this one test. Mr. MONAGAN. Has any comparable experience been found anyplace in the world in this program that you know of? Mr. DiGionoio. I think it has been something we have not undertaken in depth before. We have had indications that items received were not being used. In some cases it may be due to the inability of the people receiving it to use it. Mrs. HECKLER. You never investigated this before? Mr. DiGionoio. No; we have not. Mrs. HECKLER. Isn't it strange that so many items could not be lo- cated? Mr. DIGI0RGI0. A part of our probe was tp determine the extent to which there was accountability. We don't know, and nobody else seems to know, where it is. I understand there is some procedure underway that would insure knowledge of where they are. Mr. MIKus. I was there 2 weeks ago and based on my discussions with the mission staff and others I think the mission is moving in the right direction to get procedures established so that we would know where the equipment is. In this case, of course, you have to have the cooperation of the host country. I think our sample here does not show conclusively but it points up a need for a feedback. Some of the defects may have occurred in transit. When you identify the problems, then you can go into investigating what is the cause. Mr. MONAGAN. If it is still vague to the extent whether it was caused in transit or after its receipt by the Government of Turkey, it leaves a hole as to whether the contractor is responsible We don't want to put the bee on an agency or a contractor unless we are pretty sure to what extent they are responsible. PAGENO="0096" us~ W ~ M1~RTY IN ~C~E Mr. Mn~. Thisis~thC area we are working o~now, Mr. MO~AGA~N. Of o~u~rse this is not direct evidence, this is second- ary evidence, and I think we will have to be~ very cautions as to the conclusions we could draw. When do youc~e~t~ your report ~to be completed? 1 ) Mr. MIKiis. Right now w~ will look to see w~iat ~ve have aceom- pi'ished to date~ Mr. MONAGAN. Is it weeks or Mr. DIGIOROTo. It wOi~tId probably~take us to the en~t of *Juue to get a draft out ~f this offi~e. Mr. MONAGAN. You see my point.~ Mr. DIGI0RGI0. We are all concerned with the same thing, I believe. AID is concerned with optimum use and so are we. Mr. MONAGAN. On Turkey I can imagine there are some problems on use and attitude and so on. Mr. MIKU5. I would say on the use side of it they do have a pfroblen~ with some of the people disenchanted with the program bec&ise they equipment they received was in bad shape. Mr. MONAGAN. I think it woi~i1d be a mistake to take an example of 40 bulldozers that broke down~ Mrs. Hr~i~. But if you can't locate 60 pieces, how do you know whomyonare benefiting? Mr. DIGI0RGI0. That bothers us too. We have had some suSpicions but we don't have any facts to prove it. Mr. MooRE. I might say we found no indication of any misuse~ or diversions. This is strictly a case of inaccurate recdrdkeeping on the part of the Government of Turkey. Mrs. HECKLER. You mean AID does not have information as to what comes in at a port? Mr. MooRE. AID does not get information as to who winds up with the piece of equipment. Mrs. HECKLER. But AID gets information as to what has arrived? Mr. MOORE. No. They know it was shipped. Mr. MIKUS. There are methods established but you have to appre- ciate the fact that some of these countries are not as sophisticated as we are. Mrs. HECKLER. Does AID have the personnel to check equipment coming in a country before it is actually used? Mr. MIKU5. Their responsibility is to determine the condition when it arrives in the country~ Mrs. HEcKLER. Do they have information that equipment has been received? Mr. Mnccxs. After the fact. S Mr. DIGI0BGI0. They do not know about it until they determine it has been there for along period of time. Mrs. HECKLER. Do they know when equipment is en route? Mr. MITctrs. There is a 6-month utilization report that has to be submitted by tire recipient that is not being submitted. Mr. M0N~' CAN. Do you want to mention the matter of the limitation 011. the amonilt that C~UI he spent for rehabi1~tat.jon? S \~i~ fliQ~'~cm The 15 percent? i\Ir. 1\JONAGAN. Yes. PAGENO="0097" Us~ OF EXCESS MILITARY PROPERTY IN FRANGE, 91 Mr. DIGIORGIO. One of the problems that might come up in deter- mining the ~ause~ of the items nt being tully operable on r~çeipt is. that they wei~e not properly checked upon receipt fr~rn~tlae contractor, or this may be due ,t~ the limitation on the amou~it paid to the con- tractor. If an estimate is made thatis limited to 15 percent of 1~e cost, it may be the contractor will arbitrarily take it to 100 hours of~repair work and if it gets rolling he may notgo further. ,So~ it rnaynàt be amatt~r of quality control but a question of the~price dictated by Mr MIKus Fifteen percent is not a limitation on any particular item I think Mr Woll will agree with me that sometimes in trying to preserve this revolving fund they are working from they will try to, accumulate 15 percent of the acquisition cost, but if a contractor says they need 200'hours ~nc1~ it is 20 percent, they.will go up to 20 percent. In the desire to preserve this $5 million fund, there may be a tendency to perhaps short-cut or. bring pressure on the contractor to keep down the hours he spends. Mr. WeLL. If I can explain this, each piece of equipment is set up on a `work order `when it comes to the contractor's `shop. It is `tested out and the number of hours and number of parts needed are agreed to. If for some reason after the completion of this nuinber of hours and t1~is number of parts needed for the item it is found the item is not in. serviceable condition, the work order is amended and additional hours and/or parts are added. So the 15-percent limitation has no ba~is' in fafct at all. We have gone as hi.gh as 30 or 40 percent of the acquisition cost if we have, found it needed and worthwhile~ On the other,.hand,. we acquire many items that reqpire no rehabilitation whatsoever,~q in many instances we can exceed the 15 percent and make up the dif- ference on items that do not require the full 15 percent. We call it an average service charge. Mr. ROMNEY. Could you comment on the adequacy of storage in Germany of property that has been removed from France? This would break down between the Air Force and the Army `and' also perhaps between mission stocks and property that has become excess and property not yet in the process. This is a long question but I' hope we can get a short answer to some of these. Mr. DIGI0ROT0. A short answer to a long question? Let me say this. The question of storage is one we are concerned ,with in two ways., One is that the storage that does exist in Germany is not being fully utilized; and the second is that new storage space paust be found. Some property moved out of France may be held in open space and may deteriorate. We may not need new construction if better utiliza- tion is made of the storage space that now exists.1 Mr. GILR0Y. `There are items today that arc stored outside in~ Ger- many that are deteriorating from not having proper storage. We can't give you quantities. In our FRELOC report we ,did estimate, based on Army estimates, that there would be a given amount lost each year because of deterioration We are now attempting to go across the board in the Army and Air Force `and find,out what they will build and find out why and find out what they have available in warehouse space. We can see no reason why, if the Air Force hasi warehouses that are not completely utilized, why the Army opuid not utilize it and take "the stock that is outside and put it in that storage, space. We don't 82-554--~-67-7 PAGENO="0098" 92 USE OF EXCESS MILITA1~Y PPtOPERTY IN I~RANCE know if that spac~ is available. Say you have an item YOU really need~ and you have 18 months' suppiy and you only need 5 months' supply.. In effect what you have is the economic retention of what is above your' needs taking up space that should be taken by itenis stored outside. W~ have only really approached this in the last week. Mr. ROMNEY. When an item is declared excess, is any different stor-- age handling made of that item? Mr. GILR0Y. NOt when it is declared. When it comes through they may ship it somewhere else. When it comes to dispos~U it would go to a' disposalyard and be in a different storage area. Mr. MONAOAN. So far as the screening and idei~tification of prop-- ~rty, in your obser~ration AID has been active in that field? Mr. Gir~no~. Yes, sir~ Mr. MONACAN. SAnd has done a good job in following it up so far as~ you know? Mr. GILROY. When yoti say "follownp" do you mean do they ear- mark an item as to whether they have movj3d it in; a certain time frame? Mr. MONAGAN. Whether they have been active in following it up.. Mr. Mu~trs. Our observation is that to the extent the property is made available to AID they do make their screening and selection,. and we understand in the Air Force there is so~ne lack of getting- the informat~bn. AID makes the inspection at PDO yards. Mr. BARASTI. Getting back to MLS~ did I understand you to say' earlier that no time limitation has been placed on MLS in disposing of thesé items? You have not been advised by MLS itself or any other- s~urbe that -there is a time limitation? Mr. DiGi~noio. There has `been a period established in ciiscussions~ It is not firth to my knowledge. Mr. GILROY. We have directed this question to Brigadier General Harvey,. Deputy Chief of MLS, and he says his only time frameS is ~s expeditionsly as possible. We asked if it was 90- or 120 days and he- said' he could not tell us, that they would do it, as fast as: they ~itn. They' have moved faster than they thought `they woUld on the' initial sales. In the case of the sale of Toul-Rosiere, the French were moving squadrons out of Germany and they needed it, and' they *ere very anxious to get the Jeanne d'Arc Hospital, but where their interest is not as keen it may take longer to negotiate a sale., Mr. BAnASTI. Can you distinguish between mission stocks and post, camp, and station stocks? Mr. GILROY. Mission stocks are needed to resupply the operating' troops. Post, camp, and station stocks can be like desks and chairs. Mr. BARASH. We were told of the total amount of some 800,000~ tons involved in FRELOC, that only a~bout 8 percent was sold. Mr. DIGI0ROT0. You mean in France? Mr. BARASH. Yes. Have you had occasion to' check that'? Mr. ThGionoto. I think the figth~es you quote are right. I' think t)aey are in our survey report. JVIr. BARA~H. This was the testimony of Mr. Zaretzky. `Mr. DiGionoio. I don't think we have come up with what percent- age of the total 800,000 tons was sold. - Mr. MONAGAN. Offhand it does not seem outrageous to you? Mr. DiGionoio. No, sir. PAGENO="0099" I if ~snot~'aninterest would the~ advertise to private en- terprise in I ~ In January they started advertising these locations to industry. Most of the industries in France are located in the northern part of Paris and the\French have been trying to relocat~e them. If the French had this property they could turn it ove~tO them. In Nancy there are hundreds and hurtdreds of buildings and 300 kilometers of road and the French did come up with an offer of something like $30,000 for certain parts of the movable property. Mr. MONAGAN. We do not have title to the realty, do we Mr. GILROY. No. Mr. MpNAQAN. Thank you, gentlemen. Mr. WolI will you proceed? STATEMENT OP JACK K. WOLL, D~flECTGR,~ GOVEI IMENT PROP- ERT~ RESOURC~B DIVISION, OrPICE OF PROCUREME1~T, AGENCY POE INTERNATIONAL D1~VELOPM~T, WAS1UNGTON, D.C.; AC- COMPANIED BY PAUL SCORDAS~ OFFICER IN CRARGE, EUROPEAN OFFICE OF GOVERNMENT PItOP~RTY RESOURCES J)IVISION, `OFFICE OF PROCUREMENT, AGENCY FOR INTE1tNA~iONAL DEVELOPMEI'IT M~. WOLL. I wjlI give y&u a general runctown of our operations. First of all, Mr. Chairrnah, I would Iik&to welcome you andthe ~ub- committee methbers to AID's Excess~ Property Regional Office ico. 4111 Frankfurt. Welare shicerèly glad you are here. A few of the things I have heard by GAO tare quite disconcerting, but to give you a general outline 9f our operations here similar to the statement made by Mr. ]?Ierbert J. Waters- Mr. MONAGAN. ~Let me s~y first of all that I assume some of the things they have said are new to yo~i and some of them may very well be not inthe final statement. This is all raw material. I think all of us appreciate what the situation is and would h~tve to take it for what it is worth and be very careful about founding any committee conclu- sions on it. But however it is done, you will have a right to file a state- ment or give testimony ai~d imiica~e wl~ere you think the fa~t~or fig- ures are wrong, so the Agency will certamly be p~otected to that extent. Mr. WOLL. Thank y~u very much. PAGENO="0100" 94 USE OF and in the ~ai1y %1~y~ we - military for rehabilitation ~ ~, but after ~ period of time we found they were very preoccupied i i their own mission and we then turne~t ~o the AirS Force, who had a contract with an organization ~called Beliernan & Demoen in Antwerp, Belgium The Air Force was kind enough to take us on as a subcontractor or partner, and we started to put property in this contract shop. After a relatively short period of time the Air Force terminated their contract and obtained a con, tract wath a ~itish firm c~lled Henley's. When the~Air Force moye4 ~Ut of ,Antwerp we, as a ~ubcontractQr, had to move with them an4 this wast expensive for us to move the property from Germany and Fran~e. tç. Antwerp and the~a to England. After about a year the Air Force terminated their contract with henley's and we realized at that time we had to have our own contractor, that we could not, tie ourselves to the ~Air Force because they were entering into contracts and then terminating them. In 1963 the Air Force had an arrangement with `acommercial con- tractor in Rota, Spain, which was a prime contractor to the Navy. The Navy allowed us to ride on the Air Force contract, which made us a subsubcontraetor partner This arrangement is still ~n operatiop and tha operation in Rota has grown to a fair size operation.- I think it is somethiaiglike half a m.i1li~n dollars a. month. Mr. MONA. Isthat the amount spent for rehabilitation? Mr. WOLL. ~o, this is theacquisition value. In February of 1966 we obtained an agreement with the Army at Oamp Darby Livorno Leghorn This agreement specified that the Army would rehabilitate some of our property for us. It is a very small operation and basically it serves one purpose and that is that property we acquire in Italy does not have to be transported to Rota, Sp~in, pr to Antwe~p, Bel~imn, and we do-not have that transportation cost. This was an economical move and resulted in a saving as far as we were concerned, and the operation is going bi~t not very well and that is because we just fill the peaks and valleys of the military's produc- tion. Our main contract is with J. ~ M. Adriaensscns, which went into effect in November of 1964. Originally we anticipated inputting in this operation $100,000 to $200,000-this is actual dollars-for repair and rehabilitation: In 2'/2 years it has risen to a $1,250,000 contract and until now we thought we had a very good contract. Mr. MONAGAN. What period does that cover? Mr. WOLL. The $1,250,000 covers the period November 1966 to No- ve~iber 1967. Mrs. HECKI~DR. That is just for rehabilitation? Mr. WoLL. Rehthilitation and storage. Mrs. HECKLER. What is the acquisition value of the property in- volved? I say the statements w PAGENO="0101" USE OF EXCESS MILITARY PROPERTY IN FRANCE 95 TOLL. This is aci a ~ has not as yet been received at our marshaling site. We differentiate between receiving and requesting. In the past there have been times when we have requested or issued a transfer document to the military for a certain item they had declared excess, and subsequently they have realized they had a need for it theiuselves and they have kept it. For in some cases where we have issued a docu- ment covering a large number of items, by the time we receive them they are short. So we only consider property is ours when we have received it. On shipments, in fiscal year 1964 we shipped out $300,000 acquisi- tion cost; in fiscal 1965, $7.6 million; in fiscal 1966,, approximately $13 million; and for the first three-quarters of fiscal 1967 we have shipped out approximately $12 million. Our program goal for all of 1967 is $16 million. We have every expectation of meeting it and will prob- ably exceed this figure. I believe during GAO's brief talk here they brought up the 15' percent surcharge, and I made a statement in regard to this. I believe it would be helpful for all concerned if I go into this a little further at this time. We do not charge anything at all for the property itself. This 15.. percent surcharge is necessary for us to recoup our expenses for our revolving `fund. As I explained, in many instances we spend 20~, 25, 30, or 40 percent, depending on what is necessary to spend in order to put a piece of equipment in operation. In other instances we pick up items like clothing, metals, beds, cOts, which only involve packing and such as that, and maybe it only costs 3 or 4 percent, so that with what we make on items like that and what we lose on items we go to 30 or 40 percent on, we think we can live on the 15 percent average. Mr. MONAGAN. The fund charges an amount plus the 15 percent; is that it? Mr. W0LL. Nd, sir. The fund does ~ot charge any amount. The 15 percent is the total charge. Mr. MONAGAN. There is no reimbursement from AID? Mr. W0LL. The recipients reimburse `the fund. Mr. MONAGAN. That isiS percent `of acquisition cost? Mr. WOLL. Yes. Mr. MONAGAN. So that could be high? , For cumulative production figures at all EPRO 4 marshaling sites, see app. 2, infra. PAGENO="0102" 96 USE OF EXCESS MILITi~ I wouldn't think it i ~It~~on Mr. MO~AGAN. But how do you determine what they ~ ~l have to pay for that item of equipment? Mr. WOLL. Actually if it is a project loan the piece of equipment- let us say it i~ a truck that cost$1O,000. The recipient would pay to 15- percent surcharge, which would be $1,500, but if the item was listed in the project as. a $10,000 item, they would be charged 15 percent and the loan would be reducedhy $8,500,. Mr. MONAGAN. So there would not be a reimbursement for the cur- rent value of the item? Mr. WoI~L. No, sir. Mr. M0NA~AN. Did you have a statement? Mr. SCORDAS. Yes. I am Paul Scordas, officer in charge of the Excess Property Regional Office No.4 of AID. It is with a great deal of pleasure that we welcome you t~nd thank you for the opportunity of telling you how we are implementing the wj~shes of the Congress and the President of the United States in the utilization of excess property. This office covers all of Europe, North Africa, the Middle East, and Englahd in the disposition of property declared excess by the military. The military declares this property excess utilizing various lists. These are from the military assistance program. This is a list put out by the redistribution center in Mainz. Mr. MONAGAN. I think we wilireceive these for the files. Mr. ScoiwAs. We screen the lists put out by the military. We also ~urnne the property, select the best and the property suitable for AID worldwide, and then we transport it to our three marshaling sites-~Antweirp, BeJgium; Rota, Spain; and Leghorn, Italy. The amount of property we have acquired over the past quarters- you can see the trend is high. These two peaks are the result of Project FRELOC. During the second quarter of fiscal year 1t~67 we requested from the military $27 million of property. Mr. MONAGAN. Will we have a ~dpy of this? Mr. SCORDAS. Yes, sir; 1 have, copies of these charts for you. Mr. MONAGAN. How many of them are there? Mr. SCORDAS. There are eight, sir. Mr. MONAGAN. I think this kind of thing is quite important because it shows the relationship of FRELOC to the other statistics, so we will rec&ivethose for the record. Mr. SOORDAS. Very well, sir. PAGENO="0103" PAGENO="0104" 98 ~ OF Ekc~s 10 6. 2-INvE~ToE~i F ~ `II : 2.2~ - -J - -2 NItFI - - ---- .- - - - - -~-~-- i_ 2 - - - u - - - - - - - - u - UT 0 ~IL N j~ 3~ 2 3 14 1 2 ?r6~ Fr66 QUARThRS 3 141 2 3 14 ir 67 PAGENO="0105" USE OF EXCE$S MILITARY ~ROPERTT IN FRANCE 99 3-UNDELIVERED ORDERS n6~ Fr PAGENO="0106" PAGENO="0107" PAGENO="0108" 102 VSE OF EXCESS MILITARY PROPERTY IN I~RANCE 7-REVOLVING FUND V - PAGENO="0109" USE dF EXCESS MILTPARY' PRO1'Elk IN ~A]~CE Mr~ ~WoLL. Mr. Chairman, I would like to bring out that all that $27 million and, the $9M million on chart No. 1 is ~nçt directly attrib- utable1 tO FRELOC but to the overall request for s~cqui~itions. Mf~. SCORDAS. It was compounded by FRELOC. At thi~s time it is droppin~ off in the summer and dry months, an~I it' picks" up in th~ fall. This dip is attributable to investigative processes. It slowed everybody up. Our~inventory at this time is shown on chart No. 2. In our marshal- ing sites we have about $17.8 million and $28 million are due in. These are items we have requested from the military to turn over to us. Some of it is on ships, some on rails, some on barges, and some are on the w~y to our marshaling sites. This $5:3 million is ready for issue, ~nd this ~$12.5 million is the backlog we have at the marshaling sites that is not ready for issue but is to be reworked. The demand for excess prop~rty is increasing very rapidly. This is attributable to the policies generated by Mr. WoJJ's ofilce, ,andalso it is required that we screen our services prior to placing new procure- ment to see if it is available. As you can see, cJ~iart No. 3 shows that the demands are going up rapidly. At this time we have $7.4 million. The items that are earmarked for the various missions worldwide- and we do not have firm purchase orders on them-have gone up' to a figure ot $24~ `million. This is chart No. 4. These are iten~s we have told the missions are available or will be available and they have~ asked us ,t~iearm~rk them for their projects in lieu of~new procurementS or hi connectrion ~ith~~fther p~jects tj~iat they have. Chart No. 5 shows that produc~tion is at' tl~is~ timeS a li~tl~ over $4 million a quarter. We were hitting a resistance point at $4 million' for a period due to the fact the contractors we have in Europe practice 8-Ffl~ANCIAt STA~Js REVOLVth~ Pu~ p~ 65 F! F! 6? PAGENO="0110" ~O4 USE OF J~XCESS M*U~ITARY PROPERTY IN FRANCE paternalisir a theyhire. an employee he is hired for life or for ar~shipn We were also Ii ~ space, but now we will get more and more space in the Atlan.~ ~t also between here and Southeast Asia from the Military Sea Transport Service. During the month of June we will get space on two ships. This is most encouraging. Mrs. HECKLEn. WI~o furnishes the space? Mr~SCORDA5,~~TS~he Military Sea Transport Service. Mr. W0LL. This~is not a subsidized operation, using MSTS. Usually these are commercial rates. Mr. SCORDAS. How do w~ stand financially? Chart No. 7 deals with that. Congress, iii the Foreign Assistance Act of 1961, appropriated $5 million to get the revolving fund started, and from the small portion we had we pay international transportation, parts and repairs, handling and crating, and then we move it free alongside ship and from there the r~cipient coinitry ~pays `the costs. Recent legislation permitted admini~trative costs to include travel and supplies, to be paid out of this revolving fund, and then it is reimbursed by the 15 percenit of acquisition cost which comes from the development grants and development loans. Financially, on chart No. 8 it is shown how this particular office stands. These are in thousands of dollars, again in quarters. We were in the red and during the fourth quarter of `fiscal year 1965 we came out of the red and into the black up to about $400,000. At this time we are dipping down for several reasons. First, we are starting an invest- ment in these items~ Weare investing in eouipment with rehabilitation, parts, and repairs. We feel, again, that with the increase in production and the increase in shipments we will probably maintain a level along in here rather than increasing the fund to any extent. I also have some photographs of some of the equipment we have rehahilitated. You are certainly welcome to look at them. Mrs. HECKLER. What ~ercentage of the property that you get re- quires rehabilitation? Mr. WeLL. Seventy percent. ~tr. SCORDAS. I would say more than that. I would say ~0 percent re~piires rehabilitation and the other 10 percent does not. This is the rule of thumb. Mr. MONAGAN. What is the status of the $5 million fund, in brief? Mr. WOLL. In brief, sir, we show a profit for th&first three quarters of this year~f1~9'~EL99. PAGENO="0111" USE OF EXCESS MILITARY PROPERTY IN FRANCE 105 You are c~ome is ai~out-and~out gran~? nir. n r. Mr. MONAGAN. `1~ Ve are saying that our own Government i~ saving money there, but from the other aspect it seems to me there could be cases where there is quite a windfall. Mr. W0LL. We don't like to call it savings or a windfall. We like to think of it as a way of stretching AID*appropriated dollars in achiev- ino our objectives. Mr. MONAGAN. I understand that, but you see, th~ American tax- ~paver has paid for the item in the first place when it was put in the milil-ary program, so it isn't as if it is coming free of any obligation whatsoever. Mr. WOLL. Yes, sir. Mr. MONAGAN. So it might be advisable in some cases to have some recoupment rather than deduct from the loan the amount which you say is done. Mr. SCORDAS. Mr. Chairman, the potential of this program looks ex- ceptionally good. We feel as long as the military relocates and moder~ nizes and reorganizes property will be available to AID. Mr. MONAGAN. You indicated there was some reduction in the volume being generated. Mr. SCORDAS. Yes, sir. I feel-this is my personal opinion-that we will have another peak in the fall and this coming winter, in the sec- ond and third quarters. The military had to move out of France and it is possible they did not declare excess all the items they had on hand that were excess. Mr. WOLL. Mr. Chairman, the committee knows that in the last 4 or 5 years the Department of Defense has excessed $4 to $6 billion annually. With the appropriations going tip each year I would think the excessing of property would increase rather than decrease. Mr. MONAGAN. Of course, that works both ways. You probably have more beds and mattresses but you have less electronic equipment and thinqs like that. Mr. W0LL. There really does not seem to be any end to the excess property situation. I know most everybody in it, in private industry, as well as in Government since World War II and there doesn't seem to be any end to it. Mr. MONAGAN. I think this is very useful in making some recoup- ment. Mrs. HECKLER. May I ask a question, Mr. Chairman? PAGENO="0112" 106 LiS~E OF EXCESS MILITANT 1~BOPERTY IN FRANCE Mr. MONAGAN. Certainly. Mrs. }IsCxIsn. Thyour procedure now to place relh~nce on the c~ tract rehabilitation firms or do you have any inspection procedures after the work is ôompiethd? Mr. SCORDAS. Yes, we inspect the items. We have a aombination. of our ~ntectors and the contractor's inspectors. i when we are in Antwerp~ lreceive the photographs I e file (Thereupon, at 4:45 p.m. on Saturday, May 27, 1967, thehearing ~.. adjourned.) PAGENO="0113" ~n S. Monagan and Hon. present Miles Q Romney, counsel, K Nelson, commanding officer, I. Li~ special assisi~ant, St~pply and Mainte- nance Agency, Communications Zoh~; ~Cd1. William Pencak, I. &. S. Communicaf~ion~ Zone; Brig. Gem Frank B. Clay, C/S, Oommun~iça- tions Zone Lt. aol. P. M. Princigaili, commanding officer, IJSADAG; Maj. James J.. Lancaster, commanding officer~ 7t~Maintenance Bat- talion, NARG; 1~4r. Felix Piantanida, C/STD~ USADAO; Mr. Robert M. Gilroy, audit manager, European Branch of~Interf~atiQna1 Divi- sion, General Accounting Office, Frankfurt, Gerthaxiy; Mr. Jack K. Woll, Director, Government Property Resources Division, Office of Procurement, Agency for Intern~tionaJ ~evelopme~it, W~hington, D.C.; and Col. John Pfeiffer~ Headquartc~rs, TJSAREUR, escort officer. BRIEFING BY ~JOL. ROBERT K. ±~LSON Colonel~ N~LS0N. It is indeed a pi~asurè to welcome you to the Germertheim Depot activity. This depot activity is a stthordinate element of the Kaisersiatitern General Depot. It was established orgi- nally in 1951 as an ordnance vehicle storage park for the purpose of handling World War II vehicles that became surplus in the Euroi~ean theater, and has served in that mission up until we moved from France. At the present time it is being converted into a general depot. C~{ART NO. i-MISSION The mission of the depot is shown on this chart here. We have a storage and issue mission of both reserve and peactime operating stocks. 107 82-554-67---5 CONTROL AND USE OF EXCESS PROPERTY AND RE- LATED FOREIGN ASSISTANCE PROBLEMS FOLLOW- ING U,$. MILITARY EXCLUSION FROM FRANCE-~ 1964E-67 MONDAY, MAY 29, 1967 HOUSE O1~ REPRESENTATIVES, STEOIAL SUBCOMMITTEE o~ DONABLE PRoPERTY, OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Germe'rsheim, Ger~many. `committee ir"~ at 9:45 a.m. in the Office of the Depot Corn- T*5 Army `~ mersheir , Germany, Hon. John S. eomii nres PAGENO="0114" 108 USE OF EXCESS MILITARY PROPERTY IN mai This next chart shows the status of our stocks. It is a si~ ~ one because it shows a change~ in our stock status in shifting from an ordnance vehicle storage park to a general depot configuration. A significant part in this shows the major increase in our serviceable tonnage. We have reduced the number of major items of equipment. These are such Items as tractors that have been reduced after the serviceability of these itenis has J3een increased. Mr~ ~IONAGAN, What is the legend "Unserviceable"? Colonel NELSON. These are items that are not ready for issue4, They require overhaul or rebuilding or have exceeded their serviceable life. It is used equipmen~, sir, that would require repair before it could be reissued forcofnbat~serviceabi1ity. Mr. MONAOAN. The major portion for fiscal year .1966 is in that category. Colonel NELSON. Yes, sir. Sir, this was the principal issue and turn-in point for all the combat vehicles for the 7th Army, so as you modernized the 7th Army we received back from the 7th Army the old vehicles. So as we issue a good vehicle we get back an unserviceable o~ne. Mr. MONAGAN.S These figures are numbers of items, is that right? CôloneiF~NJ~SoN, Yés~ ~number of major items of equipment. ~\{r~MONAGANS. So your total is actually smaller? ~k~nel NELSON. Yes, sir. Mr. MONAGAN. But your percent of serviceable is almost the same as unserviceable. Colonel NELSON. The third item in the legend below is "Disposition instructions received." This indicates that we have received disposition instructions on 3,000 items. This may be directing us to ship the item back to CONUS or to a rebuild plant or ~to the property disposal activity. . S Mrs. HECKLER. Would the orders be from the NIOP? Colonel NELSON. That is correct. All our instructions come from the commodity agency here in Europe. PAGENO="0115" USE OF EXCESS MILITARY PROPERTY IN FRANCE 109 Mrs. HECKLER. How is it you have reci verys11~~ ng~ condition r are se~eened and the determination made as to whether or not we should repair them for disposal. There muse be established a definite need for this specific item before it is put in serviceable condition. Mr. MONAGAN. In this summary as of June 30, 1966, the majority of those items are those which were normally a part of this installation? Colonel NELSON. Yes, sir. Mr. MONAGAN. And as of May 26, 1967, was most of the increase due to the FRELOC uiovemen? Colonel NELSON. No, sir. Mr. MONAGAN. Can you separate that? Colonel NELSON. We are lking about the total number of items? This chart is in tonnage. Mr. MONAGAN. In either category. Colonel NELSON. From prance we received essentially serviceable property. The majority of ~ disposi~ion instructions had been issued to the French depots as pertains to this type of equipment, disposing of it before it was shipped. So our receipt has been primarily in the serv- iceable propei~ty~ Mr. Levins .o you know of any shipped in from the l~rench depots for rebuild? Mr. LEVINSON. I have n ~ ~ ~bt there was some. Mr. MONAGAN. In the serviceable category how can you divide it as between what came from ~J~LOC? C1 ~l NELSON. I think ~~uext chart will e~" PAGENO="0116" 110 1YSE ~OF EXCESS 1~'IILt~AEY P~~EETY IN FRANCE ai contin- ne use as tar as ~jSuC ( ~ Yes, Mrs. ITh0RLER. What is the timelag between the time ~ou you have this unserviceable equipment and the time N1CP might decide to give you orders on it? Could this be a long time? Could it be years? Colonel NELSON. Well, it would vary by types and pieces of equip- ment and whether or not there is a requiremet~t for. this particular equipment in the continental United States To give you a good example, we are receiving now from the 7th Army unserviceable armored personnel carriers. These are being received and as they are reo6ived we are preparing them for moveffient ha~k to CONUS f~r re- build. In other ~ses we find a long~r period of time. The M-38 l/4-ton vehicles took a longer period of time. Mrs. HECKLER. In fiscal year 1966 the majority of your iteliis were unserviceable? Colonel NELSON. That~ is correct. Mrs. HJ~CKLER. But in 1967 you have cut this down significantly? Colonel NELSON. That is correct. Mr. GILRo~. Do you have a bi~eakdown of what ha~pen~d between 1966 and 1~7 where you went doWn in unser~ic~tt~lê~ and also do you have a general idea where they went? Colonel NELSON. The bulk .of the vehicles have moved out of here essentially to one or two or three sources on the unserviceables. The military assistance program picked up a large number of armored per~ sonne] carriers and a large number of M-S8 i,4-ton vehicles. The num- ber that went to property disposal and was subsequently pielcecl up by the Agency for International Development was relatively small. And we have sent some back to the continental United States for rebuild, and some were sent to the area theater rebuild facilities. Mr. MONAGAN. Most of it was used by the military in one way or another? Colonel NELSON. A great deal was picked up by the military asskt- an.ee program. Mr. MONAGAN. For what. countries, do you know? Colonel NELSON. Primarily Greece arid Turkey. PAGENO="0117" USE OF EXCESS MILITARY PROPERTY IN FRANCE 111 CHART NO. 4-RECEIPTs BY SOU ~ con~entai ui~. Mr. MONAGAN. What about shipments to AID? Colonel NELSON. AllY shipments are refle~ted in our property dis. ~osal activity and are not reflected on this chart, sir, In discussihg our jiroperty disposal activity I wottid prefer to defer that until this after- noon wl~en we talk at Kais~rslauiern, because this is the home of the i~ecorcis~of all our property disposal acittvities within the compl~k. Mr. MONAGAN. What is "S/ton"? Colonel NELSON. Short tons, sir. Mr. MONAGAN. So that in January there was something like 5,000 tçms ~ Cóloñel NELSON. In January we shipped about- Mr. MONAGAN. In 1966 I was looking at. There is some amount of that almost every month. Colonel NELSON. A little bit of that is moving almost every, month. Mrs. HECKLER. Why is there such a dropoff? Colonel NELSON. In what regard? Mrs. HECKLER. Well, July, August, and September. Colonel NELSON. Well, we moved out large~ shipn~ents back to ~QNUS. This was as a result of the efforts of. General Kyser ai~d the. pe~ple in the agency in obtaining prompt instructions from CO~TT~. So we released all of these early and this then dropped off, and we were running a little bitless thannormal because many of our French depots ~yere shipping directly to customers and, giving preferenCe to ship- ments to customers from the French depots rather than double han~ dung the materiel. Mr. MONAGAN. Diçl any of .the~e OQNUS shipments go to Vietnam? Colonel NEI~SON. Not directly. `~hese were returned to CONUS to go through a rebuild facility and the ultimate disposition is extremely difficult for us to determine here. Mr BARASH Do you have any surplus materiel here at this depot g Colonel NELSON. You are talking ~bout property disposal? Mr. BARASH. Yes. Colonel NELSON. Material in property disposal, yes. But we do not know at the installation level what the stratification of our stocks is PAGENO="0118" 1i~ TJSE OF Colonel NELSON. in category "A" or for issue or whether it is unservi~. Mrs. }IECKLEn, Do y~i, know what precise type of stock it is? Colonel Nr~soN. We know actnally everything that we have here. We know everything that we have but we do not know its ultimate use, and the same pertains to our activity in Kaiserslautern. Colonel PF~IFFER~ They. know ~where, it is and what it is. They ~o not know its ultimate use. C~IART~NO. 6-PERSON~NEL STRENOTH ~AG Colonel NELSON. This chart, shows our personnel strçngth~ To oper- ate the activity we employ a~mixed labor fOrce, the largest segment of which are German nationals. We also have Our labor service and the military. The number of personnel shown here are far less than the number -required to operate this installation as a general depot. CHART I~O. 7-CONSTRUCTION, PHASE I This next ebart is on construction. As a result of FRELOC and with Th~e decision t~ increase the depot ~ct-ivity here to a general depot, consttu~tion was required and this is broken into- phases. The first phase is under active construction now. We have four sheds. These sheds were taken down in France and reconstructed here in Germer- sheim. The construction was start~d the first of November and we should gain occupancy of all of these in a few days. We have eight refrigerators for the storage of dry cell batteries. These have been in operation since early in March. We have nine warehouses under commercial contract and the con- tract is progressing ahead of schedule. These are located in this gen- eral area here [indicating] and as we tour the activity today you will see the construction work. In addition we are obtaining 1~,OOO square yards of concrete hard- stand for this location here. - Mr. MONAGAN. On -this construction, that does not include any of the transportation or cost of dismantling? PAGENO="0119" 113 and third, what does USE OF EXCESS MILITARY PROPERTY IN FthNCE Colonel NELSON In t of thei tL~ ~~i1 Colonel NELSON. There are three increm~uts of phase III, sir. Then when we have an increase in troop population, we will have to support the troop population. And, most importantly, is the additional storage required. Mr. MONAGAN. Would that represent a net increase? In oth~1~ words, would not this to some extent be spending here what you or~gifiaIly spent in France? Colonel NELSON. I did not understand that, sir. Mr. MONAGAN. Well, what you area doiiag here is storing equipment that was stored in France before. You had to have troops there at that time, so essentially you are spending the same dollars in a different place, are you not? Colonel NELSON. This is something different~ You spend a million dollars for your troop maintenance-~-- Mr. MONAGAN. In France, and you are spending a million doli~rs here, so this aspect is `not costing any more, or is it~ Colonel PFEIFFER. This is the `classic~ example of what we hedged at saying was a saving. There was a certain amount of S. & M.A~ that was spent in France that will be spent locally, but Colonel Nelson is a depot commander here and we had a depot commander in France, so to that extent there will `be one ~depot commander where there were two before~ Mrs. HECKLER. The construction cost, would have to be duplicated and the final cost would depend on what we could trade off or get for property in France. Is that correct? Colonel PENCAK. To a certain extent that is right. Mrs. HECKLER. But the real cost depends on how we negotiate the sale of the real property?' Mr. MOWAGAN. You are comparing pears and grapefruit. You won't get anything back at all for these items here. Mrs. HECKLER. This whole thing, then, would be the direct cost? Colonel NELSON. This is all military construction of facilities. No pay of personnel or pay of troops is involved. PAGENO="0120" 114 usi~ oii' 1~XCESS MILITARY PROPERTV I~ it at the Mrs. HEOKLi~R. But wouldn't there be some offset when you thing to France? General Cr~v Some very interesting things have developed Mr. BARASH. What factors went into the determination of how much you would build in additional facilities as a result of FRELOC ~ Is this 1vh~~ ~y moved out of France? good question. I was anyone~ "neral d uoloiel NEI50N. ~, that ~onclt les my ~ - - on the map, you fi~w in here (md cating) r is our current troop support area in here We have six controlled humidity warehouses here There are additional warehouses in here These are controlled humidity facilities that belong to the U S Army European Augmentation Readiness Group Our major storage pads are ~n here in~ the new shed construction. This [indicating] is property that is shared and controlled by the Federal Government of Germany They have a small organization here ~m Germersheim and use this in one of their storage activities These along here are operatmg facilities We are limited in here as far as our own plant facilities Prior to FRELOC it was essentially open air vehicle storage. Mr. MONAGAN. As a result of your increased requirements you will have, of course, increased personnel? ~olouei NELsoN. Yes, sir,. Mr. MONAGAN. Will they be on the proportion that wasprevionsly indioati~d ~ That is, the maior share of it would be in local employees ~ Colonel NELSON Actually, the details are not reel firm as `to the ac tual breakout as between local or labor serviee or U S military We are getting into a hard to hire ceiling, and it will be extremely diffi cult to hirec~locai peopled Germersheirn is a city of about 9,000 people. It is an agricultural community and it is difficult to attract people off th~ farms to perform the jobs we have here. So our ultimate oonfigiira- tion is built on utilizing a mixed work force of labor services, which are third country displaced persons; the U.S. military.; and national locals, with supervisory civilian personnel. Mr. MONAGAN. What would you estimate your annual cost increase will be because of this added responsibility? Colonel NELsoN. I do not have that figure broken out. I can get that figure this afternoon, sir. Mr. MONAGAN. I realize there are niany contingdhcies invOlved.' ~Colonel NELSON. Yes, sir. PAGENO="0121" USE OF EXCESS MILITARY PROPERTY ~N 1~EANCE 115 Mrs. HECKLI3in. What typ$ of equipment do you intend to stoi~è in the new facilities ~ Colcinel NELsoN I hate to thick this, but perhaps General Clay could answer that. General CLAY. This is a time-consuming proposition. Initially you will have the same type of things he has here now, and over sevetal years we will see a change in the configuration so that they are all true general facilities. Mrs. HECKLER. Including ammunition? General CLAY, No, ammuniti9n and medical supplies are separate and distinct. Mrs. HECKLER. You do not store ammunition at this depot; is that correct? Gener~l CLAY. Neither ammunition nor medical ~uppiie~. The idea is not to put all our eggs in one basket. Mr. MONAGA~. You don't have any POL either, do you? Colonel .NELSQN. No, sir. Mr. ROMNEY. Could you describe your inventory system at this base? How do you maintain it? ~JOlonel NELSON. I have to answer the que~tion twci ways. I do not maintain the official records of what I have in stock. This is maintained by the supply and maintenance agency at COMZ. We do maintain at the local level an unofficial stock record count which is strictly for wartime contingency operations, so if we were to lose the computer we could effect issues locally. Inventories are conducted on a cyclical basis for general commodities. For your special management items they are inventoried semiannually. We get a regular cyclical form from the supply and maintenance agency and they instruct us to inventory the general commodities. We then inventory the items and report back our physical count on the ground to them. This is used to update their master data file. Mr. ROMNEY. Could you give us some figures a~ of a certain time as to the number of materiel release orders you have rec~ived that you cannot fill because somewhere there has been a lapse? Colonel NELSON. This is a very poor installation to discuss this., I would prefer discussing this this afternoon at Kaiserslautern. First of all, here at Germersheim, since it is essentially concerned with vehic- ular activities, they get relatively few release orders every month. So your rates are very erratic. It is not that we don't have the item but it is not in the code we were directed to ship. ButT would like to reserve this and discuss it with you at Kaiserslautern this afternoon. Mr. ROMNEY. Do you make performance reports to the Kaiserslau- tern installation? Colonel NELSON. From Germersheim they report to me every month. I in turn report, as far as the performance of the supply maintenance activity, to General Kyser every month. In some of our operations it is every 2 weeks. So they are abreast of things going on. Mr. LEYIN5ON~ May I interject that all the depots in Europe, as to warehouse denials, are exemplary. Very rarely do they exceed 2 per- cent. A denial is caused not by reason of not having the item ordered shipped, but rather it does not pass a condition test.. Mr. MONAGAN. One question that I know will come up-I don't know if this is the place to ask it or not-but as we come in we see all this PAGENO="0122" lo~ttion. ~v. theii p .~ cyclical inspection. ~ ~ these items on an annual basis depend- ing on when they were preserved and we examine the components to see how they are holding up. If there is any deterioration it is moved to a more extensive care facility to bring it back up to the desired condition of that equipment for issue. Mr. MONAGAN. And that preparation or preservation has been aone with reference to the jeeps that are here, for example? Colonel NELSON. Yes, sir. Mr. MONAGAN. Is there any equipment here, apart from the type you have mentioned, that is not being stored in the way it would and should be stored as a normal matter? Crlonel NELSON. You will see certain examples of equipment, as we go around the depot today, that should be in warehouses or in shed- type storage. We are currently moving equipment inside that we had no place to put except outside and covered with tarps. They are now being moved to our shed-type storage to give them maximum protec- tion that we have available. Mr. MONAGAN, What would be a good example? Colonel NELSON~ Cargo nets. We have som~ assemblies of various types that perhaps should be under shed storage. Mr. MONAGAN. Do you have a priority as related to those items? Colonel NELSoN. Yes; and we have a priority o~ moving what we have outside that shoi~ld go first in the inside storage. Mr. MON~GAN. Can you make any estimate, either as to number of items or tonnage, with relation to the whole of these items that are not being properly stored? Colonel NELSON. Actually at the present time we have from 4,QO0 to 5,000 tons sitting on the ground that should be in shed-type storage, as a minimum. One thing the supply and maintenance agency h~s done in directing the movement of stock to Germersheim, they h~ve avoided moving stocks in here that require warehouse. storage. These were not moved in the dislocation. So that our problem here is a little different than at Kaiserslautern, for example. I think you will see a good many items at Kaiserslautern that are stored outside. Mr. BARASH. Based on your projected construction schedule, how quickly will the 4,000 or 5,000 tons be under proper cover? Can you estimate when that will be? Colonel NELSON. Well, all 4,000 to 5,000 tons in the next 3 to 4 months will go into these four sheds. Mr. BARASH. But you plan additional warehouses? PAGENO="0123" USE OF EXCESS MILITARY PROPERTY IN FRANCE 117 Colonel NELSON: On t1" L :ved for outside storage. That re- quires additional processing to withstand outside storage. So we pay in terms of manpower and effort on this end after we receive the item. Mr. MONAGAN. Colonel, you were not able to make an estimate of cost as to the future, but looking at the personnel chart you have had an increase of roughly 100 since January 1967. Do you foresee further increases, and if so, to what extent? Colonel NELSON. Our total increase when this becomes a full-scale operating general depot, with all our construction completed and with the automatic data processing, will require from 1,450 to 1,500 people to staff this location. Mr. MONAGAN. The local nationals have gone up in that period. Colonel NELSON. Mr. Chairman, actually this bar should be at the ~same level. Labor service has gone up. Mr. MONAGAN. Labor service didn't exist in May. What is it, by the way? Colonel NELsoN. This is essentially displaced people from behind the Iron Curtain who came in at the end of World War II and were put in quasi-military units. They were Poles, Lithuanians, Hungar- ians, and so on. They have been here since 1946 and 1947. These people actually were stationed in France and were mQved out of France and we have them billeted in Karlsruhe. Mr. MONAGAN. Is there a further supply available? Colonel NELSON. The supply gets limited. We were supposed to get 155. Of the 155, about 119 or 115 finally showed up and by the time we got through with the German permits and so forth, we were down to 104. We are trying to recruit additional personnel. When you lose one of your labor service people the possibility of replacement is very difficult because these people are getting on in years. Mr. MONAG~, The likelihood would be that of the 600 additional required most would have to b~ military? Colonel NELSON. Not most. We would like to incr~ase our military by 230 or 235 with something like 250 U.S. military and a few De- partment of the Army civilians and the balance of the 1,500 would be in the local national category, and this will be a very hard recruit- ment program to get these people. Mr. MONAGAN. Is there any possibility of bringing help in, or is it practical, from other European countries? Colonel NELSON. One of the problems, if you analyze our work force, is that while we classify them as local nationals, many of these people look at their basic country~-we have French, Italian, Portuguese- many, many nationalities. But to import, for example, from Spain PAGENO="0124" 118 USE OF EXCESS MILITARY PROPERTY IN FRANCE ig. This is ncessa `.3 very e~. I you start 1 - the more 5 it is to emplo~ t .. Also, we have difficulty in clerical positions because most of these people have to be bilingual. Wb have difficulty in mechanical type positions. So Germersheim will have a real tough problem. We probably will have to run special classes tO attract people at a later date. General CLAY. Some of the higher skilled people from France are willing to come to Germany but th~ German Government ~ays that it is only in the event the positions cannot be filled by a local German na- tional that they will be permitted to come to Germany. Mrs. HECKLER. Would the French who are unemployed by reason of this move be willing to come here? Colonel NELsoN. We have gotten a few but these, again, are in the prpfessional skills where the U.S. Government has invested a consider- able amount of money in this individual for 10 or 15 years. Particu- larly in the management engineering work we were able to pick up about six or seven out of all France. We have actually sent our em- ployees to schools and we do this on a continuing basis, trying to up- grade the man's knowledge and ability and ijob accomplishment for future promotion in the jobs in the depots. Mr. MONAGAN. Thank you, ColoneL We shall adjourn this phase of the hearing. (The following doeumei~ts were submitted for the record.) (The following charts were used by Col. Robert K. Nelson during his presentation at U.S. Army Depot Activity Germershein.) 1. MissioN Receive, store, maintain in storage, issue, reserve, and peacetime operating stocks. Provide direct and general support maintenance to designated elements USARETJR Augmentation Readiness Group. Act as transfer point under cooperative logistics program. 2. TONS IN STORAGE Materiel category On hand as of- June 30, 1966 May 26, 1967 Tank automotive Weapons and fire control Missile Ground forces Electronics Total 38, 000 15, 000 500 6,000 51, 280 12,930 350 51,720 `150 59 500 - 116, 43a PAGENO="0125" PAGENO="0126" PAGENO="0127" this chart. PAGENO="0128" 122 T~1~F OF E~CESS~ MIL~ARY VRO~ERTY IN FRANCE This chart shows tile receipts iji toiis by source. The ~ for fiscal year 19G~ and the first nine iiiontiis of fiscal year tonnage from April through March. CONUS E~pointj P.O. & S.: interdepot transfers [poiiit]. During the FRELOC year we liL. of 74,000 tons.from the French depots. [Chart off.] [Chart o~.j This chart shows the shipments by des of prior fiscal years. CONUS [point] P.&. shipments made to maintenance overhaul and shipments to MAP recipients [point]. [Chart off.~j [Chart oh.1 Our per~onnel status is indicated on this chart. The largest part of our labor force is local national. Las1~ mOnth a labor service company from France was assigned. The total personn~l re4uired to staff tl~is ineçeased workload at the depot is approximately 1,5~O. [Chart off.] To accomplish the expanded inission of the depot construction of warehouses and facilIties. [Chart on.] This chart shows the ~q~p4'oved construction program that is under work; The starting date~ and the ettitaal*d completion dates. [Chart off.] [Chart on.] This chart shows the balance of the fiscal year 1967 program which has been approved except for the funds. The fiscal year 1968 program is at DOD for approval. [Chart off.] This is the layout of the depot yQu are, located in here. The facilities under construction are shown in hlue. Pbese sheds being erected here [point] were dismantled in France. The refrigerated storage facility was aICo taken down in France and r~1~edted here. The balance of the fiscal year 1967 program is indi- cated by the reel hauher. Ph~ fiscal year 1968 program is shown in re~d. ly tonnage PAGENO="0129" tTS~ or ~ MILITARY PROpERTY IN rRANcj~ OR 2 PAGENO="0130" 124 USE OF EXCESS MILITARY PROPERTY HISTORY time, various i s have i in i sonnel requirements ere were changes in command and organizat over the years which having an impact at the time did not materia change the mission of receipt storage and issue of major items of Ordnance equipment. Presently, the Depot is employing about 123 US military and civilian, 560 German and 107 LS personnel. The installation is a part of the North Baden District and is directly subordInate to the Karisruhe Sub-District. The Depot Commander has the additional responsibility of Installation Coordinator In addition to the Depot there are two (2) other major US Army Units on the in stallation The 7th Maintenance Battaliox~ and A' Battery, 2d Missile Bat talion, 5th Artll1ery~ Throughout the year~ thousands of pieces of equipment have bOen stored and proeemed through the Depot and it enjoys the reputation of having re- sponded to all demands on a timelybasis. On 1 3anuary 1065 the US Army Depot Activity Germersheim, was placed under the US Army General Depot, Kaisersiautern, which, in turn, reports dlireetly to Hq, USACOMZI~UR. PAGENO="0131" PAGENO="0132" L I & Ls~aVICEs 0 Acreage: 365. Acquisition: $2408,000. Total covered: Gross: 31. Net avai1abje-~9, Net occupancy: 9. Percent occupancy: 100. Improved: Gross: 3. Net available: 1. Net occupancy: 1. Percent occupancy: 100. Unimproved: Available: 6,945. Net occupancy: 6,062. Percent occupancy: 87. - 1,506, 400 ~2,425, 000 ~26 ~ ~ E~CE~ ~LI1'A~1 PROPERTY ~N ~P4NC~ PER5O] OFF EM DAC .~ IN ISU Total 4 69 13 323 155 561 104 *564 1 800 Includes temporar~overauthorizati4n.. FUND REQUIRJOMENT Budget program~~ 2200 central supply: Fiscalyear 1966 -- Fiscal year i~r~_~_~ 1No un~inaneed requirement. 1,469 PAGENO="0133" USE OF EXCESS MILITARY PROPERTY IN FRANCE S/tons Lines 1. Annual workload program: Receiving 96,908 51,681 Shipping 70,979 29,009 C. & P. cyclical 178, 034 31, 425 C. & P. processing 70,289 7,050 Other storage 85, 159 1,228 2. Stocks: Number of line items stored 2,011 Tons stored 116,429 (Thereupon, at 10:40 a.m. on Monday, May 29, 1967, the briefing session was concluded and the subcommittee proceeded to tour the depot grounds. Colonel Nelson accompanied the subcommittee throughout the tour. Major Lancaster conducted the tour of the con~ trolled humidity storage warehouse. (During the course of the tour large quantities of pierced steel planking were observed. The question was asked if all of it was needed. Colonel Nelson replied they could use as much as they could get but they could not afford to send someone to France to get it. (Among other things observed were unserviceable axles awaiting instructions as to disposition, and bridging materiel that came from France. The inspection tour was concluded at 11:10 a.m.) OPERATIONAL DATA, MAY 26, 1967 127 PAGENO="0134" PAGENO="0135" PAGENO="0136" 130 USE OF EXCESS MILITARY PROPERTY IN FRANCE OHAR~ NO. 1.-PRINC~AL MISSi~NS the c ~rn~rshe~'ii~ ~ receive, store, and ship ~ perform 1 UR.~ And generally we are ch nance of all U.S.~~owned ra~ii~ CI~UT NO. 2~-~-DEP4DT IN&]1~LLATIONS ~ctiially., Kaise,rslautern General Depot is a depo~ .c~ornp3ex, as y~u. can ~ee on this chart. We have. the Rhrn~ Ordnance~ ~Barracks wheie we store pipeiwe Rtocks rnd this `tg'un, was est~bh~hed `ts `t re~lt ~f FRELOO.. We have a stat.ic storage sit~ ~t No~r~h Poi~ w~i~e~ ~e store reserve bridgi~. We have pipeline materiel stored11eréj~t `[~Th1erborn. At Waldorf we have pipeline mat~ri&j ~t i~è~d,~nd we ~iso have some at. Germer~1ieim which you saw this r~ornii~ig We have a rail ma intenaii~e activity at Rhe~i1~u ancl,~heingonheiin~ we store pipeline stocks. At South Point we stoie reserve ~tocks of 1*id~ing. And ~nal1y, we 1i~.y~ the. clepo~t activity at Genriiersheim, wkfrJ; you `~ isited tins morning AERIAL PHOTOGRAPII~IcAISERSLATJTERN GENERAL PEPO2 next 1S au aerial 1ihot&gr~p1i of "the activities at Icaise~slaute.rn.Oth~ rthrtherft boundary itl~i~ S~nrbrucken-t.o-Mauinheim autôbahn. The east end of the ~oi~th&n~'bo~ndary is Highway 37. he city of Raisers-, lantern i~ our wèsteni boundary. The area co~er~ about 737 t~cr&~. A13~RIAL riIO~ö~uIuA1~I~-RnINE ~bPDNA~thE~ ~ARRAciKS Next we have an ~eriaJ~ p~h~t~gra~ph of our sto~ra~e site at Rhine Ordnance Barracks~ These are pipeline stocks.aloi~g with thç, i~ece~sary s~iipport1hg~ e~iip~ent~inhM~. We. havetht~ut I*,0O~Y t'cnis .~f teri~l stored at the Rhine Ordna~ic~ Barracks A1~RIAli PIXOTOGRAPR-TJIILEIIBORN This is an ~aeriai photograph of Uhierborn. We sh~r~th~s~ `facility with the 7th Army. This, again;~was opened up as ~ result of ~RELO(L We hav~e about 14,000 tons of pipeline stored at tThlerborn. tlfl the ar~a. PAGENO="0137" This next clurt is in ierial photograph of South Point Pa1rlçed along the drives aretrupks plaoBcl in long~-term storage conftgur~~n. AE1~L~L ~ Next is au a~ri~l pho~ograph of Gerinersh~sim,~ which w~ j~re P~RELOC I think that is on~ of the mo~ dramatic examples i~ ~n shbw you~of the cli~nge in thatinsta1IatiOi~ as ~ result of:F~Lpq~~ crnL~ur Nq~ 3-O~~qA~iZATIAL CUA~~ To aepomplish our i~issiç~i we are organize4 in. ~4Lis f~hion~ My ~t~ff here serves in the dna~ role as ~n operakor ~ts it pe~rtarns t~ 1~userl~utern General Depot and as sta1~? ~s i~t~ ~l~tes tq tlie Oer~nei~ ~h~ip activit~r rrhese are supporting functiou~ wh~ch suppq~t th~ satire depot clear aqros~ 1~he 1o~rd (iHART NO 4-TONS IN 6TO1~AGB BY tATE1~IEL ØATEGORY ks ~r 1967 The next chart shM~ the stratificatioii of ó~u1~ stOcks by materiel category. Tb eol~w~ ~efleets the st9rage at (~ermei~heim an4 this 4~Olu~n]I reflects the storage at 1~aiserslai,itei~n The bottoki, line r~f1ects t1i~ tonnage we had i~n ~torage as of June 30, 19(36, 4aiid i~ re~fiects th~ significant increase that has taken place particu1a~riy in view o~ F~ELQC. : CHART NO. 5-~-RECEIPTS BY SOURc~, SHORT TON$ This ñelt' pjiiart shpws our re~eivi~xg activity herd ~tt iserslakit&~n, nsi'ng the s~me~rinat ~s we saw thi~n1ornitig at~ Germershèim. It shøws our monthly av~rages for `fiscal year 19(35 and for th~ th~1~ ~ n~Onths of fiscal y~ar 1966, and monthly foiL the jiod April through March. The red portion ~f the bars represOnts tonnage shipped to us from the French depots. The yellow portion represents unit returRs from posts, camps, and stations here in Germany~ And the green por- tion repr s~nts CO~JS in-bound receipts. `CHART NO. 6-RECEtPTS BY SOU CE~-LIN~ ITEMS This chart reflects our activity receiving-wise in terms of line items. Our two big peaks in August and again in Fthruary were the result of sli~iprnents of small repair parts shipped from France. uSE OF EXCESS MILITARY PROPERTY IN FRANCE ``A 131 PHOEAPH-RHEIXAIY PAGENO="0138" 132 times and the section we are primarily - the depot tTnder high priority requisitions the times shown there are in hours From the time we receive the order from the stocking div~ sion until we have it out the front gate we have 16 hours, andthis is 16 clock hours 365 days a year. The times shown here are in days. Thes~ are calendar days on positions 7 and 8, respectively. CHART. NO. 9-SHIPMENT PROCESSING The next c~hart shows how we process these requisitions internally A materiel rel&~e order is transcerved from the stock control division in Zweibrucken The first day is spent processing this in our data processing division It is necessary to do this because the COMZ stock control division does not maintain special location of these items. So we must match the two together. We print out the shipping document, which goes to our storage division, who is allotted 2 days to locate, pick, pack, and prepare. the item for shipment About 40 percent of our iine~ items move out through. the Army Post Office.. However, this amounts to less than 1 percent of the total tonnage that we ship. Our tonnage items are moved out through our transportation division, ~yho- ai~e allowed 2 days. About 75 to 80 percent of our totaF tonnage moye~ to th~ customer by the Military highway 37 Transportation Group, which is another COMZ urit. The rail portion shown here is ordinarily outsize cargo tanks, trac- tors, bulldozers, as well as shipments being moved to a location not serviced by the Highway 37 Transportation Group, for instance, Ant- werp and Amsterdam. CHART NO. I 0-SHIPMENT BY DBSTINATION This next chart shows our shipping activity by destination. The blue portion of the bar represents shipments of the military assistance program. The red portion represents shipments to other depots or PAGENO="0139" PAGENO="0140" 134 USE OF EXCESS MILITARY PROPERTY Mr. ROMNI~r. Colonel, are ~ou saying this pe by~ the graph represen$s denials of individual ~ Colonel NELSON. `I~his is a petcentage ~hich represétits ~ denial Qf a c*stoiner order whether it is for a part of the ordet or a denial of the fill req~iisitiôn; Every it~n,~ a torekeeper cannOt find goes to oui~ in- ventory inv~stigatz~on seetlQn and these people are at the depot every day running down ~lënial~ Mr. ROMNEY. Is this~t~ the estixilator come~ in ~arid asks you to make reconciliation ~ Cololiel NEt~SON. No; this i~ after we say we cannOt fill the order. ~fr Rpi~i~~, 4~ncl tl~y caii as1~or a recount ~n ~ rdeni~L~ Colonel NE~ON. T~es; but we ii~vestigate it ~efore we e~er report ~t.~~'he p~ople ~iu *e ~yentory Ini~e~tigntion S9cti~n s~pro~essionals ~t~t do ñot~ii~ug i~t l~b~i~ ~4 as a resi~t1t are, ~iwately familiar with the storage activities thro~ig~iç~ the~4epot.Th~y c~mt~t~pretty well by looking at the FederalstOck number where is the best place to look for it if it is not in, it npjpa~.stor~ge location. Mr. BARASR. ff you did not have this reconciliation, what percent-. ~ would ~itbe ihe~nialra~, ~ Cølon~l Ns~V~ry little. ~ ~r, MEzzAP~LL.,I thnikdf we ~idn~t have, the hwsstiga~tion it would ~be about 30 percent, L Colo~nel N~ts~ It wou~Id~be ~n~r~sed b~r about ~Yperoént'if w~ did ~t have ~iir o~n, ilrvelltory inv~estigationrof The~denhtl befOre Mf e re- ported it;. ~ Mr. MONAGAN. That is from 1.5? Colonel N~LSON.~Q ai~outtw~ This rati~ is~Ewn above what we shoot for, but when compared to CONUS storage activities we are favorable. Mr. Lu~Ns~b~Th~y ateta~e about'2 perc~ht. ~Ii~t~ me ~ay this is the worst pibt~&amoñg ouf depots in Eilrop'e. ~ ~ Colonel N~LSON~ But w~ ha~e more pr4l~n~s~tou. Mrs. HECicLun,~W~hut is the~average at your other depots? i~ Mr. I~ I~TSO~WB aie Rveraging ~about three-fourths of 1 percent ~for the~th~ater~ ~ Colonel NutsoN. If you are dealing in class 1 tr~Op~ issue this is ~the thing that ~cansee oonsiderable~ change in your"denial~. If we h~d a large troop issue class I ~mission, our denials wo~ild be reduced per-. centagewise. Mr. LEVINSON. The interestibg thing about this chart, if you look ~at the extx~eMWEeft you will see the pro~ress made. Mr. MONAGAN. This is practically no denials. Colonel NELSON. It is low~ It is not as low as we would like. Mr. MONAGAN. Of 100 percent, 1.5 percent is 11/2 denials out of 100 requests. Colonel NELSoN. That is right. Mr. MONAGAN. Could this mean you are overstocked~ that you are never suppOsed to ~bet~out of any item that anybody demands? Colonel NE~iscn~. The COMZ objeetive is one~half of 1 percent. Mr. LEVINsO~ And their concern is the time to satisfy the customer. The thi~tomer may need it today and takes~ little comfort from the fact that our~o'verall denials ate low. Mr. MO~AcAN, II~re is ~what I am saying. Perha~ to thipply so many demands you would need a~supeiinarket. I might need a toothache PAGENO="0141" USE OF EXCESS MILITARY PROPERTY IN FRANCE 135 remedy right away but if it was talcum powder I could wait. Does that enter into it at all? Have you reviewed the stock to see those things that are held for demand but don't move? Colonel NELSON. I have no feel of what we have without activity. Mr. MONAGAN. And it could be you are achieving a low rate on denials at an exorbitant cost of inventory. Colonel PFEIFFER. If you come in the COMZ system asking for something we are supposed to stock, you have six chances in 10 of getting it. Mr MONAGAN This then is not a proportion of all potential de- mands but only of all projected demands? Colonel PFEIFFER. No sir. Four chances in 10 we don't hate it. Colonel NELSoN. Storage denial is in effect the measure of effective- ness of how well a commander is doing his job. You asked a question on our custoi~ers. Shown in each area next to the city is the number of customers. In Kaiserslautern we support 70 customers. It is also a great bulk point. Mrs. HECKLER. What kind of customers~? Colonel NELSON. From the Army Postal Unit to the 440 Signal Armored Unit. The customers are pretty well reflected by the troop strength in Germany. The number of customers and the density in each geographical area is almost identical. These items we store are consumed by all people in the area. CHART NO. i 4-REQUISITION AND SUPPLY FLOW-COOPERATIVE LOGISTIC CUSTOMERS Let me talk a moment about the logistic customers and I ~ill talk about the Federal Republic of Germany because it is the biggest cus- tomer. Their stock control center is located at Neucnalir. Requisitions are transceived to the COMZ Stock Qontrol Division at Zweibrucken, who directs a COMZ depot to ship the materiel to one of three delivery points where the materiel is physically turned over t~. the Federal Republic of Ge~mauy. They have four ai~ force officers t~iere and they sign for tlie property and arrange for the transportati9n to the Ger- man depot If the item is not in the theater storage, we direct a CONUS depot to ship the materiel to a delivery point here in Germany. CHART NO. 1 5-FRG SUPPLY GROUPS AND U.S. DELIVERY POINTS There are three delivery points in the I~ederal Republic of Germany supporti~g the~ three Ger~nan supply groups-Brei~uerhaven, Kaiser- slauteru, a1nd Germersheirn, The major part of all the support business within the Federal Republic of Germany comes from these two in- stallations, Kaiserslautern and Germersheim. Mr. MONAGAN. Do you have figures on pu~eiiases~imflscal year 1966? Colonel NELSON. We do not have the purchases. We have the number of tons we turn over to them. We do not have any oE the billing infor- mation here. Mr. MONAGAN~ You don't haveany concern with that? Colonel NRI~SON. NO, sir. Mr. MoNAGA~. What was th~ehuinage? Colonel NELSON. We averageabout 100 to 200 tons a month. It very rarely exceeds 200 tons~ Isn't that about right? PAGENO="0142" 136 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. MEZZAPELL. Yes. Mr. M~0NAGAN. I think the whole question of the purchases is im- portant for many reasons. If there were any significant figures it would be helpful to have them. Colonel NELSON. It is relatively small, sir. Mr MONAGAN Why would you have four Gel man Air Foi ce oth ei ~ Colonel NELSON. Because we ship to the air force. Mr. MONAGAN. What kind of supplies? Colonel NEr~soN. They are responsible for the missile system in Ger~ many. They don't organize precisely the way we do and that is the reason for it. CHART NO. 16-TYPICAL ITEMS OVERHAULED AT KOD This chart shows the typical items overhauled here at Kaiserslau- tern. Most of these are overhauled and repaired in small quantities, most of which is old equipment in terms of physical age Much of it ~s commercial manufacture and procurement. CHART NO. 1 7-OVERHAUL-GDK ITEMS The next chart shows our progi~ess in maintenance. The blue line is the program line. The red bars indicate we failed to meet our pro- gram, and. the solid red line represents our accumulative accomplish- ments so far this year. There are a couple of explanations on this chart. Last spring we were hit he~vily by reason of drawdowns on personnel to fill require- ments for Southeast Asia. Some of our maintEnance personnel were drawn from m~intenance operations to support our supply operations, and also we have repair part problems. Mrs. HECKLER. Did you say you failed to be able to overhaul items to meet needs in Southeast Asia? Colonel NELSON. No, our military personnel were withdrawn tomeet requirements in Sbutheast Asia. We lost some of our mechanical skills a~ well as diverting people from maintenance to supply operations to meet demands. CHART NO. 18-RAILWAY ITEMS OWNED BY THE UNITED STATES The next chart shows the railway items owned by the United `States. The Rheinau Rail Maintenthce Agency schedules and super- vises all maintenance of U.S.-owned rail stock in the theater. These railway stocks are located in Italy and Germany. The freight equip- ment i~ the* largest portion of it. Most of this consists of your heavy flatcars and th~ largest :segment of our freight equipment is in POT4 tankers Only 168 of the total quantity shown are items of U S manufacture. The rest is DM procured, deutsche mark procured. Mr. MONAGAN. Why do you say this is DM procured? Colonel NELSON. This was at the end of World War IT. These were bought by the German Government~for U.S. use and we~ have the full use of these up until the time they are ready to go back for final disposal and the German Government has the option of picking them up rather than going through regular eliarineis. Mr. MONAGAN. Some of it is getting pretty well along in age? PAGENO="0143" USE OF EXCESS MILITARY PROPERTY IN FRANCE 137 Colonel NELSON. Yes, sir. Mr. MONA~AN. The replacements we would have to buy? Colonel NELSON. The replacements we would have to buy out of TJ.S. money. We have to pay for maintenance and overhaul and up- keep. In rail equipment we must meet the German or French standards otherwise they will not pull the car, so we must keep them up. Mrs. HECKLER. Do they inspect this equipment frequently? Colonel NELSON. Yes. This item is scheduled for rebuild or overhaul at the end of 15,000 kilometers or so much time, and it has to be run through and tested before we can operate it. Mr. MONAGAN. Were we able to utilize this in our movement from France? Colonel NELSON. The bulk of this is POL tankers. Mr. MONAGAN. What about the flatcars? Colonel NELSON. They are primarily tied up. The bulk came out of the 37 group, which is a highway group. Here, again, it is a question of the dollar tradeoff, where do you run that car. CHART NO. 19-FOREIGN EXCESS PERSONAL PROPERTY INVENTORY This chart shows our foreign excess personal property inventory. I think the significance of this chart is to show the steady decline in in- ventory since last April to date. The conclusion I draw from this is that there was a heck of a lot of property dumped in property disposal, at least as far as that under my control was concerned. Mr. MONAGAN. That does not include property that is disposed of otherwise than by sale? Colonel NELSON. No. Mr. MONAGAN. AID property is not included? Colonel NELSON. It is excluded. This falls under the category of redistribution. Mr. MONAGAN. This is $5 million worth of property in the month of April acquisition cost? Colonel NELSON. That is the acquisition cost, sir. Mr. MONAGAN. How much of it is sold as scrap, would you say? Colonel NELSON. Gerry, do you have any figures on that? Mr. MANNING. No, sir. Mr. MONA~AN. Let me ask you this: Take the month of January in 1~67. You committed about $5 million worth. How much 4o you get for that? Colonel NELSON. What we usually term committed is that we prepare the necessary lists of materiel, submit it to Kastel or the Air Force. All this says is that this is out someplace in the bid cycle. Mr. MONAGAN. Do you have any experience of what is returned? Colonel NELSON. We have been running between 5 and 6 or 7 percent this year of acquisition value on usable property. Mr. MONAGAN. Is this property screened by other Government agen- cies and AID prior to its designation for this program? Colonel NELSON. Yes, sir. Mr. MONAGAN. So this is property they don't want? Colonel NELSON. Actinilly, the way it works is that this property is ~d fnr other cmveimmen thi ~i o~eiiei es before it is aetu ally mit in pp PAGENO="0144" 138 USE o~ ~xc~ss MILITARY P~RGJPERTY IN FRANCE from here for disposal, we run an internal screening ourselves to deter- mine if it is a newitern, or is it. an item that we don'tthink~ in our ~udg- ment, should go to property disposal. We then will query the supply agency and ask them to check. Sometimes they will come back and say "Yes," it should go to property disposal Occasionally we will find there is an error in the mission or in the decisionmakhig. Once we get a release order directing the shipment of this item to propert~i dis- posal, then AID screens it for their requirements, but they don t get it until it gets in the PDO channel. Mr. ROMNEY. Will you back up and explain the screening processes to show whether all of these items that were excess were actually screened by DLSC to provide an opportunity for other Federal agen~ cies to pick up the excess if they had' a requirement? Or did 3~fl just go by existing regulations which require you to send back to~ DLSC a listing of those items which are in excess of an estimated line item~value of $5,000? There can be many items going in your disposal yards that AID has an opportunity to look at but other Grnrernment agencies do not. Colonel NELSON. They may find the item is in NPDO, and they can withdraw it, * Mr. LEvINSON. In the course of FR~LOC the process `was more severe. For example, theater excesses were reported without regard' to dollar value. There were two exceptions, with regard to materiel man~ aged by DSA and GSA where there was a limit of $6 and $2~, but other items were reported back for worldwide screening in the Ilmted States. We understand the Army inventory control points reported them, and they went to DLSC. Colonel PFEIFFER. There is a related FRELOC figure there. If you ask did we ship things that wound up in property disposal to Germany and theii: junked them, the answer is "Yes." We were unCertahi `at' first whether France would allow us to work PDO yards after the magical date of April 1, s&we shipped"things' to Germany. When it appeared France would go along beyond April 1, we reversed that There is a period in time we did it `because we thought the French would cut us off the first o~ April. ` ` . Mr. ROMNEY. With regard tO this chart; "Foreign Excess PersOnal Property inventory," the segment in red which is not committed, does that include materiel that might have been committed at one time and iapsedb~tck? . ` ` Colonel NELSON It is essentially materiel that is in the process of the necessary listing which will go to Kastel There may be instances where an item had been put on the bid list, and when the bids were opened you didn't find the buyéi~: This `woul4 `have to `come back and be picked up We do get some of this occasionally, bi~t the bulk is essen tially our own working proceSs, ~o to speak, going up to the Air `Force for invitations to bid.~ CHAflP NO. 20-PERSONNEL STRENGTh 00K This next cbi~rt shOws our personnel strength at Kaiserslautern, local nationals~ military, labor service, and civilian ]~fr. MONAGAN. Will `there be any incFease here comparable to that at~Ge~nersheim because of FRELOC? PAGENO="0145" USE OF EXcESS MILITARY PROPERTY IN FRANCE 139 Oglonel NELSON. No, sir. There will be an increase but it will not be comparable. CHART NO. 21~-FI~ANCIAL MANAGEMENT, FISCAL YEAR 1967 REqUIRE- MENTS On the financiafrequirethents, this is strictly appropHated mon~y. It takes abôut$15 million to operate exclusive of military pay. If we had military pay we would add $3 to $3.5 million on top of that. Our supplies are included in this. Our contract portion represents almost all our railway maintenance activity. We do very little con- tracting ~xcept for that. You asked the question this itiorniñg as to what the cost was at Germersheim now and what it will be when it be5Omes' ~ `ull general depot. I think Mr. O~Boyle can answer that. Mr. O'BOYLE. At 900 we compute it at $4.~5 million~a±id at 1,400 we compute it at $6.5 million. Colonel NEL~ON. What do you figure per individual on mili~a;ry pay? Mr. O'Bom~. It would average about $5,000 a person. Colonel NELSON. And with a staffing o~ roughiy, 250 people? Mr. O'BOYLn. It would be $1,~50,000. ~CHART NO. 22-DErOT LA1~OtrT Colonel. NELSON. This is the depot l~yout. Here is where ~we haol lunch. You are currently located here in the headquarters building. Our central warthousing area is here. We have a good rail net and a good road net, although the war~houses leave a lot to be desired. Tbey~ are all street-level warehouses and quite small. This is our maintenance facility, and we store in all thes~ outside areas~Maiiy of them are nothing but little niches cut out nh'der the trees. We use a lot of outside storage here. The largest pad is ri~ht here. This morning we had about 25,000 to 30,000 thns stored outside that should be stored inside. Mrs. HECKLER. Is this due to FRELOC? Colonel' NELSON. We were short of storage ~pace' to start with, General CLAY. What is your percentage of~ occupancy? Colonel NELsON. 91 percent~ 85 percent is the normai.~ Mrs. HEcitLEn. Will you ~havea building program? , Colonel NELSON. We have submitted one for 16~,000 squai~ f~et o~ Storage space. Mrs. HECKLER. Why don't you consider having some of thi~ rnate~ riel go to Germersheim? Colonel NELso~ We would `be very happy because it would reduce the amount of storage on the streets. Of course a lo~ of this w~ili prob- ably m~*e dOwn there because of attrition or the commodlity th~nagers will have incoming shipments in there and eventuail~ you will come to a hard core `to balance but your sto~k. But the first choice is to ~e- direct incoming'shljnnent~ from OONUS so you just have to handle it once. Mrs. HECKLER. Do you expect to be short indefinitely? Colonel NELSON. We were short before and if we receive 165,000 square feet this will cut a part of our backlog of what we have outside. 82-554---67-iO PAGENO="0146" 140 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mrs. HECKLER. Is fhere a point of inefficiency by reason of having this depot overloaded so that perhaps you should consider another location? Colonel NELSON. When you see we have to take up half the street and this is the only hardstand we have, you start to get inefficient. If you are running 90 to 91 percent occupancy you are inefficient be- cause you have to handle materiel two or three times to store it or ship it out. S:o the answer is "Yes," we have a certain amount of inefficiency right now because of materiel stored in an inefficient configuration General CLAY. Another problem is the concentration. Colonel NELSON. And your risks are quite high both from, enemy loss and other losses which result from concentration. Mrs. HECKLER. is there any alternative to it? General CLAY. The alternative is more construction and dispersion. We are making a study on that. Mr. MONAGAN. Have you made any separation of the cost of FEE- LOC with reference to Kaiserslautern? Colonel NELSON. Yes, sir. The FRELOC portion we have accounted for. Mr. MANNING. I think the FRELOC portion was around $3 mil- lion, what we considered as FRELOC. Mr. MONAGAN. What did you consider as FRELOC? Mr. MANNING. What we used generally is the tonnage we received from France and then we used our cost per ton. Mr. MONAGAN. Cost of what perton? Mr. MANNING. Cost of handling. Mr. MONAGAN. You mean your overall cost of handling on other items as well? Mr. MANNING. Yes, sir. Mr. MONAGAN. And you applied a proportionate share to this on a tonnage basis ? Mr. MANNING. Yes, sir; what came out of France. Mrs. HECKLER. That had no relation to the acquisition value? Mr. MANNING. No. Mr. MONAGAN. I `didn't ask him the vaiue. I asked the cost of moving it. Does that in~'Tude salaries? Mr. MANNINc. Yes. The reporting, though, to higher headquarters was not done in `this fashion. In other words, if you `had a `body on board whether it was handling FRELOC or not FRELOC we did not report that body. We only reported FRELOC when they were han- dling FRELOC only. Mr. MONAGAN. So you may have left out a lot of `bodies? Colonel PFEIFFER. This $15 per `ton includes all the things. The addi- tive cGst is what Mr. Manning is talking about. Mr MONAGAN Is the reason you did this because of the detail in volved in estimating it in another manner? Mr MANNThG Yes~ It ~aould he practically impossible to do it `my other ww because von c mn't sa'~ one box w'is FRELOC `tnd the othem box was not FRELOC. PAGENO="0147" tJSE OF EXCESS MILITARY 1'ROPERTY IN FRANCE 141 General CLAY. I think I saw a recent chart of the total cost of FRE- LOC to the Army and I think it was $40 million which was far less than was anticipated.1 Mr. MONAGAN. The total cost by some authorities is estimated at $100 million. General CLAY. That probably includes other servic~s, Mr. LEVINSON. And construction of new facilities. Mr. MONAGAN. I think it is supposed to include everything. Colonel NELSON. This concludes our presentation today unless there are questions. Mr. R0MNEY:Oolonel, you said COMZ would not know the location of a given item. Colonel NELsoN. They only know by depot. For example, they know cups and saucers are stored at G-22. I have 235,000 actual storage loca- tions. But they don't know which pigeonhole I have cups and saucers in; and that is why I must match my records to find the exact location. These things are continually changing. For example, you have a stock location and as soon as the location is emptied I may have new stock coming in. As sooti as that one location is empty we kill that location so far as the storage location for that. The next `day I might have another shipment that goes in that same location.' We may have a single item in as many as four or five storage locations because we get more and more and could not put' them all together. We try to keep down the number of multiple storage locations and we try to consolidate our storage locations into one or two principal storage locations. `Mr. ROMNEY. One other question: When you ship the materiel back to the United States for repair there, how ~o you determine whether it is economical `to repair it back in the United St4tos ~ Colonel NELSON. E~ch major item of equipment that comes in. we prepare form 523 which outlines the estimated man-hours required and the dollar value of this labor along with the repair parts to repair that item. That is shown on the form based on published criteria. This goes to the commodity manager at SMA. In the case of ordnance we prepare form 471-7 which again outlines the cost to restore the item to serviceable condition. So it is based on an actual physical inspec- tion\of the item. It is not a decision made at the top of your head or the seat of your pants. Mr. `ROMNEY. Does there have `to be a decision made for This back in the States before you send it blick? Colonel NELSON. Definitely. Mr. ROMNEY. In t,he:case of FRELOC was the same criteria held to? Colonel NELSON, Of course, one of the things that has caus~d, addi- tiorial equipment going back to the States has been the actthty in Southeast Asia and the requirements. of CONUS are more than they were prior to the intensive staffing and manning of Southeast Asia. Some of these items may go through CONTJS on the way to Southeast Asia. Mrs. HECKLEE. I suppose there is no way you can estimate the value. You estimate the tonnage ~nd that is about it? 1 The Department of the Army subsequently advised that as of Apr. 30, 1967, total Army costs of approximately $55 million have been reported to the Department of the Army in accordance with special instructions for the accumulation of costs for the withdrawal of U.S. and NATO forces from France. PAGENO="0148" 142 USE OF EXCESS MILiTARY PROPERTY IN FRANCE Colonel NELSON. We ran an old one of about $400 million across the board, between $400 and $500 million. Mr. LEVINSON. This is your increase? Colonel NELSON. No; this is our total inventory. Mrs. HECKLER. Did you say $400 or $500 million? Colonel NELsoN. Between $400 and $500 million. Mr. O'Bomn. That is page 14 of the brochure. Colonel NELSON. That is our best estimate. General Cr~Y. The original estimate of the tonnage to be shipped out of France was based on value and it came out very close. Mr. LEVINSON. This was not applied to any one depot. Mrs. HECKLER. So the figure of $400 tO $500 million includes FRELOC? * C~lone'l NELSON. Yes, plus receipts from CONTJS. Mrs. HECKLER. Would it be possible to separate OONUS? Colonel NELSON. We could. We have never approached it that way. This is a figure we normally wouldn't deal with here internally and we never tried to keep track of it. Mi~s. ~HEOKI4ER. Was it physically possible for y~u to accept. a good deal of materiel from CONUS at the saule time you were accepting materiel from FRELOC? Colonel NELSON. We had no choice.. However, shipments destined for Fran~ce were diverted to Kaiserslautern. General CLAY. I heard that same story as to NahboUenbach. Colonel PFEIFFER. I think it is fair to point out we did have a mora- torium until we were in someposition to handle th~m. We were not doing ordinary business plus FRELOC Colonel NELSON. This concludes o~r briefing. General CLAY. Is there an unanswered question? Mr. MONAGAN. I don't think so. If we do have one, we will be glad to let you know. Thank you. (The following charts were used by CoL Robert K. Nelson. during his presentation at Kaiserslautern General Depot :)~ 1. PRINcIPAL MISSIONS Receive, store, maintain in-storage, and ship general supplies and repair parts as directed. Receive and store reserve and special project stoci~s. Receive and deliver supplies destined for military units of nations participating in the cooperative logistics program, Receive, store, and ship radiological wa~té and toYic chethicals. Perfc~m de-ot maintenance of eqmprnent as directed and general support maintenance to U~AREUR Augmentatloni and ET-A sites. )wned rail equipment. PAGENO="0149" U~ OF EXCE~ MILIThRT PROPERTY IN FRANCE 143 2-DEPOT ~ JL PAGENO="0150" 144 USE OF EXCESS MILITARY PROPERTY IN FRANCE~ 4, PONS IN STORACE BY MATERIEL CATEGORY, AS 01" MAR. 31, 1967 Materiel category LJSADAG IJSAGDK Total Ground forces Tank automotive Weapons and fire control P01.. allied products Missile materiel Industrial supplies Miscellaneous Clothing and textile materiel ._ Electronicsntatetlel Ammunition and other General supplies Total As of June 30; 1966 -- , 50,453 49,161 13,067 0 345 0 700 0 2 0 0 91,266 24,464 4,860 7~614 6,268 4,792 3,587 2,960 1,6~0 861 547 141,719 73,625 17,927 7,614 6,61.3 4, 79~ 4, 287 2,960 1,622 861 ~~I! 113,728 58,868 148,839 69,894 262,567 128, 762~ 5~REcEIPPs BY SOURCE GDK, S/ToNs `LEGEND~ 0 COHUS 0 ~cxs $ONTKLV AVERAGE ER rYgs~sMO5 Fygs DEPOTS PAGENO="0151" PAGENO="0152" 146 USE OF EXCESS MILITAR1~ ~ROPERTY I~ FRANCE 8. MILSTRTP SnIPPING PBOC~ISSING TIMES Issue priority group ~ Times allowed each activity (cycle segments) DSSA requl- sitioner unit - 12 3~ 1 2 Initial supply source ~______ Stock control Depot Verdun ~ 8 16 1 2 3 7 4 8 Movement (rail, truck, air) ~--~----------~- 72 4 8 14 consignee, Total time DSSA, (continuous de~very to clock hours 3(équisi- or calendar tloner days) j~ I (priority 1-3) II (priority 4-8) Ill (priority 9-15)__~__.~ IV(priorityl6-20)...4J__4__, 12 )~ 1 2 120 hours 8 days. 20 days~. 30 days. 9~-SntPMEN~ ~EOcE~SZ2r~ ~ Dt)S FUPW l~l LP~ACD~( ii I (PRR~R1h1'i~wtouPIXr) ~ ~ -~ -~- ~ PRO~cSs1~u~__DlV1SlO4~, ~tiscthv~o I - ~ ~ flSTO2tAGE DIVISION ~ L4JPICESa PACKS) j * ---,----i-------- ~~~-1-~~~~~~ PAF~CEL e LARGER pos-r ~ 4, $HlPl~tEN1~$ [~APo J L~rRAN$PORTATION DIVISION I ~ -~ I I J MILITARY I OR COMMERCIAL I RAIL- -~ TRUCK i--- w~:~ ~ CUST*MER 1 ----~--------~ ~L~- -~ ~ A 2~D VS . =1'- . .2DAYS - ~ ~ ~ ~ ~5 WORI( DAYS ~ -~-~---,--.----- PAGENO="0153" USE ;O]~ ~Xc~ MILITART PROPERTY IN ERANç~ 14I~ lO-SrnP1~r~TS ~3Y DESTINATION GDK~ S/TONS 11,174 125$ 6/P p1111 MONThLY AVERAGE L1L~ FY65 9~/OS FYce LEGEND; ~Jco,us~ 11SHIPMENTS J~Y DESTIT~Ä~~ GDK, LINE ITEMS TTT79 LEGEND 0 CON US DP,c,~s LJ DEPOTS PAGENO="0154" \ \ \ PAGENO="0155" PAGENO="0156" ~n~' ~ ~LILI'~rAI~iY~ ~R~J~E~Y IN FRANO~ 15-FRG ,SUP~~ ~4~P1k~S 4~D U.~D~ivw ~~oi~TS I ~1~Et~R -. ~ BREMIZFmAvEt3 - SUPP LV GR ou~ BRUEPIL * 4 RHEINBOELLEN NEUENAHR ARMSTAW~. , : * -~---~-- *~ KA1SERSLAUTERN PFEDDtRSHEIPI jJ SUPPLY C~OUP SOUTH / / LE~EM~i~ £ * A FRG ARMY GERMERSHEIM W MACHINE CENTER BAL1NGEN ~ ~RG CUSTOMERS HERBOLZHE1M ~ f US DEL. POINTS ARMY 16. TYPXOAL ITEMS OVERIIATYLED AT EGD Air compressors Mobile bridging Air conditioners Mobile shops Asphalt equipment Pipeline equipment Concrete equipment Printing presses Quarrying equipment Searchlights Tactical bridging Tellurometers Theodolites Water purification units PAGENO="0157" USF~ ~]3~ EXCESS ~hTiI1~A~Y' 6P~E]~T~t ~ A~C10 151 1~JOVEitEtAthr-~-G13~ I~riti~~s ~ t4ONTh~Y AVE1~AOE Item Number of pieces Value Mobile command posts Medical diesel trains Ambulance trains (8) Diesel locomotives 5 4 87 35 1,431 122 1,684 803,998 897, 140 4, ~89, 898 2,~71, 790 9,391,026 5,630,034 23,983,889 freight equipment &~assenger equipment Total 67 18. RAILWAY ITEMS OWNED BY `THE UN~T1ItD STATES 19-FOIIEIGN ExCESS PERSONAL PROPERTY INVENTORY HILLIOti' 20 I0 MONTHLY ~AVERAGE FY65 SMOS FY 66 LEGEND: S ft `if n ftJ[~LL: U1Ji.fln A t4~ -. ~i I.) FY66 UJ COMMITTED AS OflO,j F H *FY 67 CJAWARDED ~~NOT ~OHP4ITTED PAGENO="0158" PAGENO="0159" PAGENO="0160" 154 vsi ~ O~F ~xci~ss ~ithi~it+ p~Mi~npi iw Southpoint : Reserve stoeks Of bridging, ai~ftfia1iythe depOt activity at Germ- ersheirn, which you visited earlier today~ [Chart off.] ~ . ~ ~ ~ ~ ~ .. [Chart on.] ~ ~ This is an aerial photograph of Kaiserslautern General Depot It is bounded on the north by the Saarbrucken-To-Mannheim Autobabn an&we have our own entrance to the autobahn The eastern boundary is along this line Another main east west hig~vay is on the south boundary The western boundary is here (point). The area covers about 737 acres. Much of the storage area is hilly and heavily weoded. ~ ~ ~ ~ [Chart off.] . . . ~ [Chart on.] ~ ~ ~ ~ ThiMs an aerial photo of our storage site at Rhine Ordnance Barracks. [Ch~árt off.] [Ci~art on.] TI~is is an aerial photo of Uhierborn ~bown here are the pipeline st*cks nnd pol (primarily fog oil for smoke generato~) stocks belonging to 7th Arm3~. [Chart off.] ~ [Chart on.] ~ ~ At Rheinau we have a limite4 in house çap~ility to perform railway field main ten&nce One of the maui nort~u south rail lines of the German railway system is on the left These two buuldin~s are our shop bui~dings-some of the U S owned rail stocks are stored here (pou~t) Stored here are three ambulance traltis [Chart off.] [chart on.] Tl*s is a photo of south point one of the two si~uaIl static storage sites 1~rth point~s similar in appearance Along this road are loaded Y6lucles With fio7ating bridgutg ready for convoy dispatch Stored along th1~ road is e~quz~p~ient ill unit loads re~tdy for loading Five bridges are stored at south po1nt~ 91'*blve bridges are storM at north point [Chart~Ø~f] [Chart ot~] Thie is ah aerial photo of Germersheim This photograph wa~ taken pre FRELOC It iS e~yident what you saw this morning of the change ;~ that mstalla tion resulting froth )I'RELOO [Chart off] [Chart on] Kaisersiantern General tie 19~anuze(4~4ihe~ollow1ng manner to accom plish its mission. [Chart off.] [Chart on i~ c i This chart shOWs est~tification of our $tpçlç~ ~~nateriel category as of March 31 at Gw~iners1ieim m~d here at Kaiser5l4uit~n [Chart off.] [Chart on.] This chart shoivs ourj~eçe1pts by source, :th~ ~Pw4~3r;averages for fiscal year 1965 and for tlTh~1~i~st 9 mo1~t~is of fiscal year 1fi6t~ai~ monthly for the period April through Marcl~ The 1~4 portion of the l~~étfr4seifl~ tôttnage shipped to us from the French depots; iyellow_unit returns from posts, camps, and stations here in Germany; and the green portion are CONUS inbound receipts. [Chart on] `PMathart ~h vs T~eiptS~b3? sOurce b~i1i 1te1n~*; `1 ~1i [Chart off.] FOh~rt on:] -~ `this chart sho~Ws the re~jtu1sitiuii and su~p1y fiuiif l1er~ In the theate~ from th~ reçpnsuthoms being initiated by the unit The requisitions flow csaslv~ly to the rear until a supply sont~ce can be iOcat~d to et'itSdetnands:OOMZ StOck Cone trol Division in Zweibrucken places material release orders on the depot directing th~ Shl4nnetit ofthe Item to the customer~ [Chart off.] [Charton.] Tins chart shows the mllstrip shipping processing times Outlined In red is that segment which we are concerned with here at the dt~pot. [Chart off.] [Chart on.] PAGENO="0161" PAGENO="0162" 156 (ISE OF EXCES~i MILITARY PROPERTY IN FRANCE [Chart off.] [Chart on,] During the period of FRELOC~ there has been a slight dOcrease in the dollar value of our inventory of materiel in property disposal. [Chart off.] [Chart on~] Our personnel status is indicated on ~tihis chart, We have a mixed labor force, the largest part being local nCtionk},~ Airout 40 percent of our local nationals have worked for Ui.S. ferce~ foi' over i~ years. Military kpersonnel ate assigned to three P.O. & E. companies, two PD companies, and two P.O. & E, ;detacbments. The. balance of our work force consists of one labor service company and a German civilian labor group, additionally, we are authorized 44 Department of the Army civilians. 1 [Chart o~ff.] [Chart on.] The financial requirements to operate the depot are~bown on this clrart:~ [Chart off.] [Chart on.] We have an excellent data processing capability. Our maintenance shop i~ ex- cellent and modern. We have a good rail net and rail unloading facility. The layout of our mad net is good. Most of. our other facilities and the depot supI~ly operations need modernizing. Many of our roads and essentially all of our storage pads are not surfaced. Much of our storage area is niches in the woods. We have submitted a number of~ improvement projects to overcome our weaknesses in facilities. PAGENO="0163" OT `(AISERSLAUTERN E (INCLUDING EM CLUB) NG(INCLUDING OFFICERS CLUB GELWEH HOUSING ON U.S. ARMY GENERAL DEPOT, KAISERS~UTERN LOCATI ON SIEGELBACH I TO ~MORLAUTERN LAUTERECKEN //~a/// ~~~/// 3LAUTEF~N PIMMASENS 0 C12 0 a PAGENO="0164" 158 ~5SE OF EXCESS MILITARY PAGENO="0165" PAGENO="0166" 160 USE OF EXCESS MILITARY PROPERTY IN FRANCE PERSONNEL, MAR. 31, 1967 AssigOed Attached Total Auth Act Auth Act Auth Act Officers/warrant officers 56 37 Enlisted men 1,216 1,609 Total military.J~. 1, 272 1,646 OAC/CWS 56/1 83/1 LN 1,701 2,015 LS/CLG 243/183 87/203 Total personnel 3,456 4, 035 U.S. dependents 703 0 0 0 0 56 1,216 37 1,609 0 0 0 0 0 0 0 0 1, 272 56/1 1,701 243/183 1, 646 83/1 2,015 87/203 0 0 3,456 4, 035 PERSONNEL BY LOCATION (ACTUAL) Location Assigned Attached * Military Civilian Total Military Civilian Total Total Military Civilian Total U.S. Army general depot, Kaiserslau- tern U.S. Army depot activity, Germer- sheim U.S. Army railway maintenance ac- tivity, Rhein~u North Point South Point 1,474 106 59 0 0 1, 7~4 627 32 20 lb 3,268 0 S 733 0 S 91 0 ~0 05 19 0 17 0 0 0 0 0 0 S 0 0 II 1,474 106 S 59 0 0 1,794 627 32 ~0 19 3,268 733 91 20 19 S FUNDS S S Appropriation and budget program S S Fiscal year 1966 ~ Fiscal year 1967 available Operating and maintenance, Army: - 5 S S S 2000 Operating forces ~_~_ ~ .~i 2200 Central supply activity. 2300 Major overhaul and maintenance - - 2900 Equipment, general suppOrt, and maintenancodoThpany. Totgl O.&M, A., depot $85; 400. 8, 110,5170 2,982, 000 S~ 0 11.177,900 S S $125, 000 1 171, 057, 000 2,832, 000 600,000 14,604,000 I Does not include automatic reimbursable orders received in support of UARG, funds for logistical support of 37th Transportation Group, and unfunded stock fund dues-ip for Eastern France. PAGENO="0167" _______ 012 _______ 0 1,438 18,009,3013 786,721 k ~2l, 107,622.76 ~ - 012 0 63 -~ 100 Z 86 58 `~i 19 ~ 60 1~' ~i c2 FACILITIES Kaiserslautern Germersheim North Point South Point Rheinau Rheingonheim Uhierborn ROB Total Acreage Acquired value O&M.A.investmerntvalue - Capital equity value Family housing1 736.82 13,633, 100 674,578 ~21, 107,622.76 365 2, 408, 000 122 357, 500 126 441, 000 23 632,300 112,143 8 34,400 52 478, 000 5 25,000 1 The U.S. Army General Depot and its açtiTities are supported by the U.S. Army Area Command. A total of 1,8-71 family housing units are located in the Kaiserslautern area. - STORAGE SPACE UTILIZATION AS OF MAR. 31, 1967 [In thousand square feeti - - Covered Open improved Open unimproved Gross * Net available Net occupied Percent occupied Gross Net available Net occupied Percent occupied Available Occupied Percent occupied 1. Kaiserslautern(inc1udUngHq~Aot) 2. North point - - :_- -- .. 3. South Point 4. Germersheim 5. Rheingoenheirn 6.Uhlerborn 7. WaIIdorf 8. ROB 805 7 6 138 5 373 0 0 - - 5 329 88 0 0 9 100 - 5 100 -- 303 227 145 5 133 162 80 1 113 162 65 1 85 100 81 100 2,566 17 93 10,104 110 124 150 1,627 17 80 5,810 11 82 137 I. PAGENO="0168" 162 USE OF EXCESS MILITARY PROPERTY IN FRANCE OPERATIONAL DATA FISCAL YEAR 1966 AND 1967 1. WORKLOAD ACCOMPLISHMENT (AVERAGE PER MONTH) Fiscal year Kaiserslautern Germersheini Short tons Lines Short tons Lines 1966 1967 1966 1967 1966 1967 1966 1967 2, 253 1,982 1,955 1,386 925 3, 976 202 313 Receiving Shipping C. & P. cyclical C. & P. processing 3,601 15,682 3,769 6,433 17 445 25, 564 2,472 2,220 12, 323 24, 422 26,521 37,071 5, 494 8, 593 1,354 1,800 5, 004 10, 836 4,634 4,141 6, 561 22, 740 2,169 1,598 2. STOCKS Fiscal year Kaiserslautern 1966 1967 (June 30) (Mar. 31) Gemmershemni 1966 1967 (June 30) (Mar, 31) Lineitemsstored Tons stored - Value of stocks 101,736 123,261 69,894 148,839 $150, 000,000 $320, 000, 000 914 1,714 58,368 113,728 $128, 700, 000 $250, 000, 000 3. MAJOR OVERHAUL AND MAINTENANCE Worbload quantity Fund availability Overhaul Modification- Repair Inspection and test Support maintenance Capital equipment Total, P-2300 4,264 ,~ $2,419,500 11,900 129,000 33, 900 221,000 6,700 2,822,000 MORALE AND WELFARE Principal service area of Kaiserslautern is Vogelweh-a huge housing and shopping complex with a real estate value of more than $48,000,000. Vogelweh is situated two miles west of the city limits on Parisher Stras~e. From the auto- bahn, ii is r~ache4l dIrectly by e~ ing at the Kaiser9lautern M~tte exit. 1 ~ a period referred to l~ `~ Germans ~s an "econ"" c miracle", 4- `.`-.`~ 4-" ~ ""~-"~`~`-` ~" "~ of a 1 it has ? re 17phone services `e and Newsstand PAGENO="0169" USE OF EXCESS MILITARY PROPERTY IN FRANCE PANZER KASE~NE Palatinate District Headquarters itself is located at Panzer Kaserne, five miles east of the city center on lVlannheimer Landstrasse. This picturesque post houses such offices as the ~trea legal assistance office, civilian personnel office, finance, principle staff sections of the district, and the tranportation motor pool and Equipment Maintenance Center. Units stationed here include the U.S. Army Garrison, 45th Finance Section, the 15th Base Post Office and the U.S. Army Signal Service Unit, Kaiserslautern. Limited facilities on Panzer Kaserne include a snack bar, Post Exchange annex, NCO club annex, a barber shop, and EES pickup points for laundry and dry cleaning. Nearby, and considered a part of the kaserne, are a fire station and the central Army Post Office. KLEDER KASERNE Approximately half way between the city and Panzer Landstra~se is Kieber ~--~ "i' ~ 1~ s installation is primarily 0 Club, an EM Club and a ~, but it is the location of an: KAPAIJN BARRACKS On a hill above Vogelweh at the top of Kansas Street is Kapaun Barracks with its troop units and limited facilities. With Vogelweh at the foot of the hill only about a ten minute walk away, the Kaserne has only a snack bar, Army Educa- tion Center and EES pickup facilities for laundry and cleaning, plus a srn~ll PX. RHINE ORDNANCE BARRACKS Between the Raiserslautern Mitte autobahn access pattern and the Vogelweh center site is the Rhine Ordnance Barracks. Like Kapaun this installation is near enough to the major shopping and recreational center so that only limited snack bar, NCO club annex, PX and EES pickup point facilities are n~ RHOF 163 small barber shop. d piactice ~e top competi PAGENO="0170" 164 US~ G~ EXCESS ~I~ITARY PROPERTY IN FRAN~~E NOTHIL One of the largest U.S. military hospitals in Europe is located at Landstuhl, au easy 15 minute drive from Vogelweh. B~ides 1~e 2d General Hospital, other units of the 9th Hospit~l Center stajioned here incl~de laboratory detachments, a field hospital and many other medical, u,nits. These comprise the Landstuhl Army Medical Center. All normal EES facilities, clubs and other recreatior~a1 facilities, and chapel services are found in this area, just 12 miles west of Vogelweh. There is an dc- mentaryschool, and there are 192 units of enlisted Quarters and 143 officers family units in the housing area. Other Landstuhl based personnel live in Vogelweh. (Thereupon, at 2:30' p.m. `the hearing gras concluded and the sub- committee was taken on a tour çf the d,epot grounds.) PAGENO="0171" CONTROLAND USE OF EXCESS PROPERTY ANDRE- LATED FORJ~IGN ASSISTANCE PROBLEMS FOLLOW- ING U.S. MILITARY EXCLUSION FROM FRANtiE- 1966-67 HoUSE OP 1~EPR1~SENTATIVES, SPECIAL SIJBCOMWTTEE P~ DONABLE PROPERTY OP THE CoMMrr11~1E O~ GOVERNMENT OPERATIONS, Nancy, France. Th~ ~ubcommittee arrived at Nancy, France, at 9:50 a.m. and made an inspection tour of th~ ~Nancy Depot, followed by a tour of the Jeanue d'Arc Hospital (betwêeñ `Nancy and~Tôul), which' inspection tOurs were concluded at 12:30 p.m. Subcommittee members ~iresent: Hon. John S. Monagan (eliariv- man), and Höh. Margaret M. Heckler. Subcommittee staff members present :~Miles Q. Roinne~, c~iunsel; Peter S. Barash, I~gal assistant. ~AlsQ presen.t :Erig. Gen. Charle~C~Case, U.S. Ai~my, Chief, Supply and Maintenance Agency, European Command; Col. John J. Iciely, Jr., U.S. Ai~ny, Headquarters, France Support Group, Orleans, France; Col. TI. E. ~Jo~nes~ commanding ~fficer, France S~ipport Grdup, Verdun, France; Lt. Coi. Barney Lawrence, deputy ~otumandhig officer, France Support Group, Verdun, France; Mr. George Handy, administrative assistant, Military Liquidation Section, Verdun, France; Mr. Robert M. Gilroy, audit manager, European~ Branch of International Division, General Accounting Office, Frankfurt, Germany; Mr. Jack K. Woll, Director, Government Property 1~e- sources Division, Office of Procurement, Agency for International Development, Washington, D.C., and Col. James F. Dunn, Jr., USEUCOM (J-4), escort officer. Casteau, Belgium. The subcommittee arrived at Chieves, Belgium, at 2:15 p.m. and proceeded by car to the Supreme Headquarters Allied Powers Europe, Casteau, Belgium, where Hon. John S. Monagan (subcommittee chair- man) and Hon. Margaret M. Heckler conferred informally with Gen. Lyman L. Lemnitzer, Supreme Commander, SHAPE, until de- parture at 4:10 p.m. for Brussels. TUESDAY, MAY 30, 1967 1G5 PAGENO="0172" 166 USE OF EXCESS MILITARY PROPERTY IN FRANCE WEDNESDAY, MAY 31, 1967 HousE OF REPRESENTATIVES, SPECIAL SUBCOMMI11~EE ON DONABLE PROPERTY OF THE COMMITrEE ON GOVERNMENT OPERATIONS, Antwerp, Belgium. The subcommittee met at 9:50 a.m. at the Hoboken/Antwerp Plant No. I of J. & M. Adriaenssens N.V./AID, Hon. John S. Monagan (subcommittee chairman) presiding. Subcommittee members present: Hon. John S. Monagan (cha1r- man), and Hon. Margaret M. Heckler. Subcommittee staff members present: Miles Q. Romney, counsel; Peter S. Barash, legal assistant. Also present: Jack K. Woll, Director, Government Property Re- sources Division, Office of Procurement, Agency for International Development, Washington, D.C.; Paul Scordas, officer in charge, European Office of Goi~ernmen1i Property Resources Division, Office of Procurement, Agency for International Development; James A. Gibson, Hoboken/Antwerp tharslialitig site superintendent, Ag~ncy for International ~Deveiopment; Frank M. Mikus~ audit manager, European Branch of International ~Division,' General Accounting Of~ fice, Frankfurt, Germany; Joseph L. AdriaeAssens, president, J. & M. Aclriaenssens N.V., Antwerp Belgium; Hon. Charles Thomas, U.S. consul general, Antwerp, Belgium; and ~Col. James F. Dunn, Jr., USEUCO~{ (J-4), escort officer. Mr. MONAGAN. The hearing will come to orde~. Mr. Woll, it think what you w~tht t~ do is explain 1~rièf~y wihat your agency is dth~ here. You may prooeed. STATEM~NT O~' MC1~ K. WOLL, DIRECTOR, `GOVERN~ENT PROP- ERTY R~SOURGES DIVISION, OFFICE OP PROCIJREMENT, AGENCY POE INTERNATIONAL DEVELOP1~NT, WASHINGTON, D.C.; AC- COMPANIED BY PAUL SCORDAS, OFFICER IN CHARGE, EUROPEAN O~TICE OF GOVERNMENT PROPERTY RESOURCES DIVISION, OFFICE OF PROCUREMENT, AGENCY FOR INTERNATIONAL DE- VELOPMENT; AND TAMES A. GIBSON, HOBOKEN/ANTWERP MARSHALING SITE SUPERINTENDENT, AGENCY FOR INTER- NATIONAL DEVELOPMENT I\fr. W~LL. Mr. chairman all(l members of the committee, it is an honor ami a pleasure to have, you visit the Agemy :1-or liiteniatioiml Developments Ant.weip marshal I ug site. This is wi iere we rehain ii - tate. I ~.S. Government-owned exeess )ro~ )ertv that ~ I inve aequi red prmiaiily from military sources for reutilization by the U.S. Govern- ment in our foreign aid program. We started this operation in November of 1964, when we were unable to obtain rehabilitation capacity from the U.S. military. This contract went into operation in November of 1964 and through March of I1~ ~. `~, & U thiS inst'ull ition Ii i'~ C( Ci\ ((`1 ~2S 7~ 0O() in icqu i'.itioii cost, of ~`~1S'~1 ct~'io 00 (\r~r~ 1S~~ 1'S~'S~ ~ Ci4~ ~-i~:-. r1~io 0 ,~:ii... PAGENO="0173" Type oi - per moni 00 per mont PAGENO="0174" 1~8 USE OF EXCESS MILITARY PROPERTY IN FRANCE Fiscal 1967: July August - September - October November December February March April Total - Mr. WOLL. Originally, when we F skilled labor rate was $285 an hour I iNovem~cr ~ have risen so that we now have a skilled labor rate of $3.32 an hour. ~ e are getting to the point actually of-well, we just can't go very much higher and still maintain the integrity of our revolving fund. When I say that I am referring to the 15-percent average surcharge. Mr. MONAGAN. Does this wage rate include fringe benefits? Mr. WOLL. This is the direct wage rate. Mr. MONAGAN. And there are fringe benefits on top of that? Mr. W0LL. Oh, yes. Mr. SCORDAS. Not on top of that. It is included. Mr. WOLL. it is included. Mr. MONAGAN. I mean things like their Blue Cross, paid vacations and so on, the fringe benefits. Mr. WOLL. It is included in the average hourly rate. Mrs. HECKLER. How does that compare with the domestic labor rate? Mr. WOLL. It is considerably lower. In our domestic operations the Army is our agent and we use their contractors and our average rate in the States runs from $5 to $10 an hour. This includes overhead, management and everything. Mrs. HECKLER. Why did you choose to have a rehabilitation center in Belgium? Mr. W0LL. For various reasons. No. 1, this city is a port city and it is extremely advantageous to be able to reh~bilitate the property and not have to pay for long hauls to another port. No. 2, there is a suffi- ciency in this country of skilled mechanics, which we ne~ed.Aud No. 3, this country is susceptible to barter. This contract is underthebarter arrangement to preclude the outflow of gold and assist the balai~ce-of- payments situation, We found through the Commodity Credit Corporation that the countries of Germany and France were not susceptible to barter. So our only eligible places in Europe would have been Spain, Italy, or the Benelux countries, and as far as Spain and Italy were concerned we already had an operation going in Spain and very little property is generated there; so if we had4o take property from Germany and take it to Spain it actually would~-have cost quite a bit. This, generally, is we settled on this country and this city 1 1! hourly total was appro~ y 6,200 Payments to AID co~ityaetor, A~ti,ver~, Belgi~m-Contiu~c ~ PAGENO="0175" t~SE or EXCESS MTt~rL'ARY PEO~EETY IN F~ANCE T6~ This will give us a total output yearly of $30 million, which th feel is a very ~izab1e operation. We have been in the past very well satisfied with the quality of work performed here. The contractor has gone out of his ~vay to do every- thing he could to make this a st~ccessful contract, and I feel he has taken a good deal of pride in being a contractor for the U.S. Govern- ment. This particular plant here we call plant No. 1, and the type of work that we do in this plant is the rehabilitation of gasoline-engine-driven e(ltlipment. Plant No. 2, which I hope you will see later on today, is located down by the docks, and this is where we do the heavier equip- nient, diesel-engine-driven equipment and roadbuilding equipment, tractors, graders, and so forth. Right at the present time we obtained approximately 1,100 jeeps. * The chairman and members of the committee saw a good many jeeps at Germersheim. We obtained 1,100 jeeps from there not long ago and we have a production line running at our plant No. 2. Rather * than doing the work here and pulling all these jeeps up here, we felt it would be cheaper to do it at one installation and thereby cut down on the cost involved. Is that right, Paul? Mr. SOORDAS. Right. Mr. WOLL. Mr. Chairman, I think this is a brief general rundown. I will be glad to answer any questions. Mr. ROMNEY. Do you have a copy of the Adriaenssens contract that AID has entered into? Mr. WoLL. This is the contract [handing document to Mr. ROmney]. Mr. ROMNEY. Is this the entire contract? Mr. WOLL. Are all the amendments in it, Paul? Mr. SCORDAS. Yes. Mr. ROMNEY. Can we have a copy of that? Mr. MONAGAN. We will receive a copy for the file and such portions as may be pertinent may be made a part of the record at the appropri- ate point.' Mr. WOLL. Very good, sir. May I supply this contract and the amendthentswhen we i~ètAirn toiiVashington? Mr. M'NAGAN. Of cO~urs~ Mr. ~ixi~v. Do you have a copy of the laIe~~ catalog of ex~ess property? I\1 t. Scomi~s. I have them in Frankfurt. Does the catalog indicate the lOcation of the property rty in this plant would~ show up in the catalog? 2 es, sir. Do you have a copy of a recent work order that has Mr. W~ij~. Yes, we have old and new ones. Mr. Ro~iNEY. Mr. Chairman, I would like to suggest that we might take some examples from the work orders arid theim ask to see individ- ual pieces of eqmpment that are to be shipped out, and pick out two or three 0± clilferent categories and then ha~ e. an opportunity to look at them physically. The contract with an miments is printed as app. ~i. infra. 2 ~ `ois of Forelan Excess Property Catalog No. Ii, Mar. ~1i~ 19(17, froni EPEIO 4 I V PAGENO="0176" 170 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. WOLL. We might take a few jeeps, cats, road graders, and trucks. Mr. RoMNEY. My thought was to take a couple of work orders and at random see if they are here. Mr. SCOROAS. The work orders will be with the items in the shops. (Examples of work orders and related documents are found in app. 4, infra.) Mr. Ro1~LNEY. Mr. Woll, when an item of equipment is accepted by AID at a depot, your representative makes a preli~ninary inspection of the property, does he not? Mr. WOLL. Yes, sir. Mr. RO~'p~EY. And when the item is sent to the rehabilitation center, what inspection is made at that point of the equipment? Mr. W0LL. A receiving inspection is made when propert3r first ar- rives at the marshaling site to ascertain if the property has been dam- aged since the first inspection at the holding activity when we iss%led a request for it. Subsequent to that another inspection is made to deter- mine the actual amount of repair that is required to put this item in a serviceable condition. This will list hours, it will list repair parts that are required, and it will list the specific work that is to be performed. Mr. ROMNEY. If it appears that the work to be performed on this vehicle would exceed the norm, what decisions are made in such circumstances? Mr. Wou~. It just depends, Mr. Romney. If this item has been com- mitted for a high-priority AID project such as Saigon, we will go ahead and repair the item regardless of cost, whether it exceeds the 15 percent or goes up to 40 percent. If this item has been committed for a high-priority program, whatever amount is necessary we spend. If we are just building up a stock in hopes of a future order and we find our original offer is low and that it will take considerably more money, we probably cannibalize the item and use the parts to repair other items of equipment. Mr. ROMNEY. Will you explain how the commitment with regard to Vietnam works? Is it not true that a n~ission project officer or a country representative might eome to this base~ to see what they wish to acquire? In the case of Vietnam does a commitment occur with re- - )erty before the property arrives here? ~ ~ ~ \~e"~~" `~iven PAGENO="0177" PAGENO="0178" 172 usi~ oi~ EXCESS MILITARY PROPERTY IN PRANCE * Mr. W0LL. That is right. Mr. ROMNEY. How many people do you have to do all these mspec- tions? Mr.. WoLL. We have one AID representative ~here, and we certainly are understaffed. We anticipate in the very near future to have an- other AID man stationed ait Anttwerp. We have already made ar- rangements and this man is behig processed in the States. To carry on further with your question, Mr. iRomney, whei~ a piece of property is completely rehabilitated our AID man also inspects some. Naturally he cannot inspect all with his other dutie~ and respon- sibilities here, but this is a responsibility of the contractor. The con- tractor certifies that the work has been done and that the property is in serviceable condition. At the beginning when we first started and production ~vas not as high, the input was not a~ high. I issued instruc- tions to the previous marshaling site superintendent that he was to inspect each and every item. Now we can't do that. The work has grown too much. Mr. ROMNEY. Do you do any spot checking of the work done by the contractor? Mr. WoLr1. Yes. Mr. ROMNEY. On what basis? Mr. WOLL. Al, how do you go about it? Mr. GIBSON. Prior to the painting or final inspection It go out with the contractor's representatives and do the inspection with them. This includes going out on the road, roadchecking it, and testing it thor- oughly. We bring it in and check the hoses, fan belts, check to see if the air cleaner has been cleaned, the oil has been changed, and this sort of thing, and this is done on a spot-check basis, like checking a genera- tor unit t.o see that it is carrying the load, that the cycle is right. Mr. ROMNEY. You are talking now about a complete inspectiQn of a selected item made on a random or scientific selection basis from certified rehabilitated l)ieces of equipment? Mr. GIBSoN. That is true. And every time you go through to check, you check the work in process while it is being repaired, what they are (10! n~ to it. Mr. ROMNEY. ~f actual items you have r~ceived1~icl~ that 1, could you ~upply us~ith4 the eonagiveni~ 1 AVEIiAGu I A. Commercial vehicles all types: 14. B. 1/4-ton vehicles: 100. C. 21/~~ and 5-ton military vehicles all types: 96. D, Construction equipment all types: 6. B. Generators and compressors: 12. F Trailers all types 4 PAGENO="0179" USE O~ EXCESS MTLITAEY PROPERTY I~ PRANCE 173 * Preinspect~on In process Final Total f~-ton truck 3'~ 2~/2-ton truck Forklift Generator Tractor 1~ 3~ 3-~ 3/~ 1 2 1 1 3~ 3'~ 1 2 2 13~ 1% 4~/~ Mr. GIBSON. It' is difficult to pull it -out of the top of your head because as you go through the shop you don't, look at each piece of equipment and say you have put so much time on this or this. You train yourself to check many things as you go through, the san~e as when you go through an area to pick up something for `our program. You don't put it down in hours and minutes. Mr. WOLL. We can come up with a formula for this. Mr. ROMNEY. In the `acquisition of spare parts for the rehabilitation work, how are these charged into the cost of the work? Mr. GIBSON. If we have cannibalized parts that are listed as AID- furnished parts, whether they are cannibalized out of other equipment or parts we have in our own shop, or if it is a case of the contractor purchasing it, we have a bill for every part that is purchased. Mr. W0LL. When we acquire spare parts from the military through excess sources, each of these parts has an acquisition value. This acqui- sition value is charged dollarwise to the repair of the capital item, `but there isn't any spending of moneys on it. It is noted on the work order that one generator has been taken from lot 50 and put on lot 70, and that price is charged to it. This does not increase our total rehabili- tation cost because actually we paid nothing for this generator to start with, but it is so listed on the work order. In other words, inasmuch as we receive an excess part for nothing we do not charge ourselves anything for this. It is a matter of record that a generator that. costs $17.50 went into the repair of this item. Mr. ROMNEY. Does this affect your computa'tioii of 15-percent average? Mr. WOLL. No, sir. Mr. ROMNEY. It does not? Mr. WoLL. No, sir. Mr. RQ~LNEY. When the contractor acquires spare parts, -ho~y~nre these billed? Does the coi~traotor bill the purchase price to h~i~ or does he add an administrative co~t to that? ,, Mr. W0LL. There is an administrative cost of 11 percent oyer and above the purchase price of a part. This ~s set up in the, contract. Originally it was 12 percent and then it ~as negotiated ---~ 1 percent. This is for ~e use of the contractor's, purcha~ I] ~ the ~ve paits u~. ~nistr~ .. ~. PAGENO="0180" i74 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mr. WoI4L. I will have to ask Mr. Scordas. Do we pay any procure- ment charge through the Navy or 4ir Force or the contractor at Rota? Is that in the interservice support agreement? Mr. SCORDAS. We pay no service charges at Rota for parts. That is all included in the overhead. Mr. ROMNEY. Mr. Woll, are the administrative charges for the of- flees of AID now being reflected in the cost of rehabilitation? Mr. WOLL. All of our field offices, all of our personnel salaries, are reflected against the r~volying fund. I believe 8Q to 84 percent of the Washington staff is als~ paiçl out of the revolying fund. It is n~t 100 percent. I believe it is 80 to 84 percent Of all our e~peiises out of Wash- ington that is paid otit of the revolving fund, Mr. MONAGAN. You can get that information more accurately. Mr. WOLL. Yes, I can get that. (Subsequently, AID's Government Property Resources Division furnished the following information:) Number Washington staff - 16 Number not paid from revolvin~ fund 4 Percentage paid from revolving fund 75 Number worldwide personnel (including Washington) 57 Number not paid from revolving fund 4 Percentage paid from revolving fund 93 Mr. MONAGAN. I think we should note for the record the decorations here-the cartoons. That seems to be Mr. Waters on the top and Mr. Woll on the right and is that Mr. Adriaenssens on the left? And Presi- dent Johnson outnumbers King Baudouin 2 to 1. Is this a picture of the signing of the contract? Mr. Wou~. Yes, it was signed at the consul general's office. Mr. MONAGAN. I would like to ask a few questions about the contract itself. Is this a fixed-sum contract? Mr. WeLL. It is a fixed-price, indefinite-quantity contract. Mr. MONAGAN. And what is the unit? Mr. WoLL. I~ollars. Mr. MONAGAN. I mean, fixed price per what? Mr. W0UA. Per input per year. We have a minimum guarantee this year for $1,250,000. Mr. M0NAGAN. That is acquisition cost? Mr. WeLL. No, that is dollar cost. This is what we guarantee the contractor we will input in here for work. Mr. MONAGAN. Work to that ttmount? Mr. W0LL. Yes. Mr. M0NAGAN. But what is the unit of payment that is in the ~ingto ~-1-~~-~ ~ r~e? PAGENO="0181" PAGENO="0182" 176 US~ OF EXCESS MILITARY PROPERTY IN. FRANCE You mentioned, Mr. Woll, $30 million in acquisition cost y~rl~ is that right? Mr. WOLL. This is what we hope to attain in production out `of this one i nstallation. Mr. MONAGAN. Do you use any other means of measuring that vol- ume? We all know acquisition cost. can be an inaccurate measurement because of the age of the equipment arid things like that. Is there any other unit of measurement. you use in that comiect.ion? Mr. WTOLL. rI~akiflo. today's prices into consideral ion, I would say as a minimum this figure oii the riew market today would be at least ~45 million jfl r~ ~ an a""~'~"1 ~ ~\`ir. IIVIONAGAN. I aver it'. would 1I1O(lify t y su~ Mr. Woi~. Yes, sir. Lre like to thirik t ~. ~~iat is rehabili- tated here and in all oi.ir other marshalirig sites, a.~.. r rehabilitation, has 70 percent of life left in it. Mr. MONAGAN. ARd 70 percent acquisition cost in its current value? Mr. W0LL. Yes. Mr. MONAGAN. Well, I would like to think it, too. In reference to these 1,100 jeeps, what motivated yoii~to obtain i~100 jeeps so far as demand is concerned? Mr. .Wou~. Our AID mission in Saigon had requested jeeps'fromus for the past 2 years. All other AID programs and projects worldwide also' required jeeps~ Sd when we were able to acquiife this wind!fall~ of jeeps from the military we grabbed hold of them. .` ` * Mr. MONAGAN. Where are they now? ` Mr. WOLL. I think 500 or 600 have bee~ shipped~dut~to `Sa&~on aTre~dy or to other irecipi~nts,: ~nd the balance ~are her~ bdithg rehabflitated. ~ ` ` , Mr. MONAGAN. But at least 50 percent have already been shipped? Mr WOLL I~ that right, Al ~ Mr GIBSoN Yes, they have'alveady been shipped. Mr. MONAGAN. You spoke also of the method used of barter in order to prevent dollar payments on this contract. Mr. WOLL. Yes, sir. Mr. MONAGAN. Just what is that arrangement? Mr. WOLL. Well, when we enter into a barter arrangement we make an agreement with the Commodity Credit Corporation of the Depart- ment of Agriculture to supply surplus agricultural commodities to a dealer in these commodities for a certain amount of money, in this case $1,250,000. These agricultural surpluses are turned over to him. He in turn reimburses our contractor here to the tune of $1,250,000. In the meantime he takes that $1,250,000 in agricultural surpluses. ancj' sells them on the world market, so the TJ.S. Government i~ this way does not actually spend a~y dollars outside the `United States. Mr. MONAGAN. What happens, if anything, between the Commodity Credit Corporation and AID? Is there any recoupment there? Mr. WOLL. Yes; we pay the Commodity Credit Corporation $1,250,000. Mr. MONAGAN. Do you know what the unit of payment is with reference to per bushel, whether it is the acquisition cost? Mr. WOLL. No, sir. I can find out for you. Mr. MONAGAN. Well, that is a little far afield, I think. Mrs. Heckler, have you any questions? PAGENO="0183" USE ~OF EXCESS MILITARY PROPERTY IN FRANCE 177 Mrs. HECKLER. Yes, I do, Mr. Chairman. Mr. Woil, in the beginning of your statement you said primarily the source of the equipment for AID is n'iilitary. Are there other sources other than that? Mr. Wou~. Yes. Overseas it is exèiusively military but in th~e States it is any and all other Government agencies who have obtained prop~ erty that they no longer have any use for. Mrs. HECKLER. You also mentioned that at certain times you have changed your ordering procedure because you did not make a firm commitment due to the fact the property had been taken back by the military. Mr. W0LL. Yes, ma'am. Mrs. HECKLER. Is it possible for the military to keep property com- mitted to this base for their own needs and has this happened? Mr. WOLL. Yes, it has. Mrs. HECKLER. They then have a right to reacquire? Mr. WOLL. Yes; according to the Foreign Assistance Act of 1961 as amended there is seètion 605 which permits not only the military but any Government agency to obtain property from other Government agencies if they require it. Mrs. HTECKLER. At any time until you take physical possession can they reacquire it? Mr. WOLL. Yes, rna'am. Mrs. HECKLER. You talked about $28 million-odd acquisition value of property this year. Mr. WOLL. This is froni the inception of the contract `in Noveniber of 1964 through March of this year, $28,156,000. Mrs. HECKLER~Afld you shippeclou.t $17million? Mr~WoLL.$11,fl6,000. ` ` ` Mrs. HECKII~R. So mughly $10 million is in process out of $28 million, which is almost one-third? Mr. WOLL. Yes. ma'am. Mrs. HECKLER. Is that a high figure? Mr. WOLL. No. As a matter of fact, I would say we have rec~eived $10 million acquisition value of equipment in here during the past 4 months. Mrs. T-1r.i~ra~j~. Where is the bulk of the piopei~ty ATI) re en- erated Is it generated in Europe i~[i~. WOLL. r1I~S yen r it has been Europe but in the past y back to I 9G4. it was the Far Ea4 1)ecause we had a better operation in the Far East in those days than now. Mrs. I1E(1uLR. What (10 von foresee as the fohire pa~ tern? Mr. Woi~.. \Vell, depend in~.r non the situation in Vietnam T tii~ nk if thiS 5] ti tat i ( )1~ F~~( )l s-ed I tsei f that tl te Fa i ~ist would 1 e lb much in rger- MrS. lTriTcLnr~. Source of property? Mr. WOLL. Source of property, yes. Mrs. HECKLER. When you receive property from the `Far East it is transported to Germany? Mr. WOLL. No. We have facilities in Japan, Korea, and Okinawa ~ the property we would acquire from Vietnam would move there. 1n~ possibility exists we will even start a rehab center in Vietnam. PAGENO="0184" 178 VSE OF EXCESS MILITARY PROPERTY IN FRANCE Mrs. HECKLER. Considering the contract agreement you have with Mr. Adriaenssens, should the source change radically, do you have an escape clause in your contract that would allow you to be absolved of your contractual obligations? Mr. WOLL. Our legal counsel tells us we can terminate the contract at any time. Mrs. HECKLER. Is there any penalty for termination? Mr. WOLL. No. But from what I have seen over the past 4 years in Europe there is no doubt we will meet our minimum input. Mrs. HECKLER. There is no doubt you will not meet it or no doubt you will meet it? Mr. WOLL. There is no doubt we will meet it, Mrs. HECKLER. Are you satisfied with the quality of the work? Mr. WOLL. We have been up to date. I have not as yet learned the origination of the various items which the GAO related to us last Saturday in Frankfurt. I don't know whether they emanated from this site or the IRota site or our stateside sites. Mrs. HECKLER. How do you determine the quality of the work? Is a spot inspection the sole method? Mr. WOLL. No; I think really the main criterion is if we do not have complaints from our recipients. Mrs. HECKLER. Do you have the names of all the recipients,? Mr. WOLL. Each country, yes. Mrs. HEOKLER. Each what? Mr. WOLL. Each country. Mrs. HECKLER. Do you have the names of the recipients within the countries? Mr. W0LL. Not in every instance. In some recipien1~ countries they have an organization that acquires the property and then distributes it to others in the country. In such case we do not know the ultimate end user. Mrs. HECKLER. Do you have a list nf all the recipients wl4eh is available? Is this something you file in Washington? Mr. WOLL. In Washington or in our regional excess property offices. We could get this. It would be quite a job. If~you are interested in our goin~ ~ : to the inception of the program we can get it. CKLER. I am wonderin~ how you can judge the performance wn in a reference sense. 1. ~ you suggest this be done? PAGENO="0185" USE OF EXCESS MILITARY does he certify as to the uy of item? Mr. WoIL. TiTere is no particular time. It would be practically impossible to give a guarante~ or a warranty on this. I think that is what you have in mind. Mrs. HECKLER. Yes. Mr. WOLL. The conditions and countries in which this property could be used are such that no new manufacturer would give a war- ranty or a guarantee on it. Mrs. HECKLER. Mr. Chairman, would it be possible to have a copy of a certification put in the record? Mr. MONAGAN. Certainly. It may be inserted at this point. (The document follows:) Adriaenssens NV. £~,I.D. Polostraat 59-floboken Noordcrlaan 95-Antwerp "I hereby certify that I did on the _~ clay of 196-, complete work on - The Contractor certifies that there have bei J in the contract or c, Contracting Officer or - - )N. About 4 to 7. Mrs. HECKLER. Four to 7 months? Mr. GIBsoN. Yes. PAGENO="0186" 180 USE OF EXCESS MILITARY PROPERTY IN FRANCE Mrs. HEOKL~R. You mentioned that some of the ~jeeps have gone to Saigon. What percentage o1~ the property you have acquired this year would you estimate has been used in Vietnam? Mr. WOLL. How much have you shipped out to Saigon this year? Mr. SCO~DAS. I have that. Mrs. HECKLER. Is it a large peicent age this year? Mr. WOLL. It is higher this yea I than it was in past. years. The two largest recipients of our property from Europe have been Vietmun and Turkey. Jordan, Tunisia and Nigeria have. e~nie in also. Mrs. HECKLER. You have how niany marshaling ~ite~ Mr. WOLL. We have t hree. in Europe. Mrs. HECKLni. Is there a marshaling site supcriuteiiclent at. eac'~ place? Mr. WOLL. No. Our operation in Italy is so small that at the l)~i~ time it would not pay for us to have a marshaling site superintendent there. Mr. Scordas checks it from time to time. Mrs. HECKLER. Flow do you do the inspection in Italy, then? Mr. WOLL. We have an Army inspector. Mrs. HECKLER. An Army inspector assigned to this? Mr. W0LL. Yes. Mrs. HECKLER. Wl~at percentage of the items have been complained about as far as falling into disrepair? Mr. WOLL. Worldwide? Since I returned to Washington in l~964 I would say less than one-half of 1 percent. Mrs. HECKLER. Less than one-half of 1 percent? Mr. WOLL. Yes, ma'am. Mrs. HECKLER. What is your procedure following a complaint? Do you try to repair the item or do you write it off? Mr. ;WOLL. No. We insist that a recipient immediately inspect `the property as soon as it arrives in the country. This is the only valid way you `can determine if we `have been negligent in our. rehabilitatioii `process. In, many instances we have found that property h~ been damaged in transportation or has sat in a customs yard for 6 months or a year or has been cannibalized or deteriorates in a customs yard. If we receive a complaint we immediately check the work order to see ~.f what the recipient O~omplains about was actually `repaired. If he says the brakes were no good, we check' to see ~f new brakes were supplied. If they were not we will send out new brake linings or refund that amount of money to the recipient. We think we givu a better form of guarantee---whicfrit isn't-than ~ manufacturer does. ` ` Mrs. HECKLER. I, think you said~ `th& `other'.day you are not always informed when articles have arrived. , ` , ~` Mr W0LL When I speak of th~ recipient I inn, talking of the AID mission in the country which controls or is supposed to control tall the items in that.conn~ry~ . Mrs HECKLDR If the AID mission has not been informed of the arrival of equipment in ~he country, is there any way, to tighten this up? Mr. W0LL. Apparently, from what the GAQsaid last `Saturda~ there must he a breakdown between Turkey and our office. But theJJSAID is informed of every shipment from our worJdwide marshaling sites. They have the name `of the vessel, the estimated time of departure,' and the estimated time of arrival. PAGENO="0187" VSE OP EXCESS MILITARY PROPERTY IN PRANCE 181 Mrs. HEOKLER~. How does the AID mission theck ~on the arrival? Mr. MONAGAN. That is a problem for AID and for us if we want to go into it. He can't tell us about their procedure. Mr. WOLL. This is their responsibility. Mrs. HEbKLEE. This is the AID mission responsibility ~ Mr. Wou4. Yes, ma'am. Maybe they shipping documents are not for- warded to the right person. Mr. MONAGAN. We can either request from them their procedure or we cafl ask someb6dy from AID to come in and tell us about their procedure. Mrs. HECKLEIi. ~f"think a further investigation in this ai~ea could tighten it up. Mr. MONAGAN. It could very well do so. Mr. Mncus. May I say something off the record? (Discussion off the record.) Mr. W0LL. If I could submit this for the record. This is a copy of a shipping document which goes out to the consignee as well as to the mission. It lists the name of the vessel, the estimated time of departure from here, and the estimated time of arrival in Turkey. Mr. MO~AGAN. That will be made a part of the record at this point. (The document follows:) PAGENO="0188" PAGENO="0189" PAGENO="0190" 184 USE OF EXCESS MILITARY PROPERTY IN FRANCE STATEMENT 0]? flAN1~ 1VL MIKUS, ATYDIT MANAGER, ~URt~EAN BRANCH 0]? INTERNATIONAL DIVISION, GENERAL ACCO~UNTING O]?PICE, FRANKPURT, GERMANY Mr MIKUS A c&py does go to the AID mission, and they are aware this is being shipped to Turkey and it comes in a customs w~rehon~e. At that point, it is up to the Turkish official to get it out of customs It might go to a specific department, such as the highway department, or be assigned to DM0, which is similar to oui GSA They are sup posed to notify the mission they have it out of cnstomsand where it has gone to. This is where the breakdown is. The Government of Turkey is not furnishing this information to the mission Mr. MO~AGAN. According to this, this is furnished directly to the mission Mr. MIKU5. Yes, but when the highway department picks up the equipmei~ttii~ missioirdocs not know. This is the breakdown. The~i they are supposed to have6n~bnth status reports on the utilization which are not received. Mrs. HECKLER. What reports does the receiving country file at the time they take it out of customs? Mr. MIKUS. There are local forms. The way the Turkish Government works, in excess property there is no customs. There is a 5 $rcent handling charge and then they have to pay storage. it is up to the user of the equipment to pay the customs people. ~\J,rs. HECKLER. In addition to paying the charges, what about a report of acceptance? Isn't there some paperwork involved which, the recipient should execute? Mr. MIKU5. Yes, there is a form A. Mrs. HECKLER. But the mission is not informed? Mr. MIKus. That is where the breakdown is. Mr. MONAGAN. The breakdown being that the mission does not check lip on either the receipt or nonreceipt of this form A? Mr. MIKTJS. Yes. To my knowledge Mr. Gren is establishing what he calls an arrival system for excess property and his primary concern is not to let property stay in~a cestOms warehouse for any length oi~ time. He ~vould probably have someone go to the customs warehouse and see if the property is still lying around there. Mr. MONAGAN. Are there any auditors attached to the mission to make end-use. checks?,,. Mr. MIKUS. There is a Mr. Intepe with AID who spends 100 percent of his tim~ pr tic~ll~, goIh~ónt ifi'thè hinte~lands and looking at the equipment and how it is being used and we have copies of his reports. Mr. MONAGAN. Is that an adequate staff to do this work? Mr. MIKus. He works 7 days a week. Mr. MONAGAN. That does not answer the question. Mr. MIKus. It would be hard for me to evaluate, sir. Mr. WOLL. If I may clarify that point a little bit, Mr. Intepe is not an end-use auditor. He is connected with the Office of Commodity Import. But the mission does have end-use auditors, as is customary and they do go out and make a selection of property around the coun~ try and make an mspection. Mr. Mucus. He works for AID, doesn't he? Mr. WOLL. Yes, hut he is in the Office of Commodity Import. PAGENO="0191" I a~ none of Your rehab sites will the ;~ for that? This particular co1~trae know there WaS a ~nechanj0 a tTSE OF EXC~~ MILITARy PROPERTY IN FRANCE 0 Sites guaran~~ sed his OW~ fui PAGENO="0192" 186 USE OF EXCESS MILITARY PROPERTY IN (cc ~ ~JONAGAN. But tirely accurate to ~tate i-; igt - the impression it i~ what you pay the labor per includes your overhead and profit and everything else? Mr. WcLr~. That is right, with the exception of material. Mr. MONAGAN. Is any study of this being made at the prese4t time? Mr. MIKtT5, We tried to get a price breakdown which we caii't find. We have attempted to make an analysis of financial records here 1*tt it isn't possible. The internal auditors from Athens attempted the same thing but there is considerable difliculty in doing this. Mr. MONAGAN. Of course, the method of calculation of the hours would be important because that is the multiplying factor, and the and so forth would be tied to that. I think i~ would be help- 1 ~ ~ `~ which this was calculated. b. rj fringe I s esta sation, retirement, healthh and rance, sick and annual leave. Benefits equal 52% èf b~ise pay. e. Overhead, to accomplish the contract includes foreman, fiscal, taspection, receiving and documentation, and contract administration. d. Gen~al and administrative expenses which ii~lude- tools, heat, lights, building maintenance, taxes, fixtures, and also profit. received for the rec- ,, ~* t PAGENO="0193" USE OF EXCESS MILITARY PROPERTY IN FRANCE 187 Mr. W0LL. We have never found it necessary to put that date. Mr. MONAGAN. Maybe you ought to get a new form. Mr. WOLL. This is a military form we have been using. Mr. ROMNEY. There is no need for the bill of lading number? Mr. WoIL. No, sir. Mr. ROMNEY. Or the voucher number? Mr. W0LL. No, sir; or at least we have not found a need to date. Mr. MONAGAN. Wouldn't that help to follow up this property to determine whether or not delivery had been made and obviate some of the difficulty at the other end, this identification and use? Mr. WOLL. It probably would, but the same criteria would have to be used. The AID mission would have to check with the shipping coin- pany in the country to which the property was going to ascertain the date of receipt in the country. Mr. Mncus. May I interject something on the bill of lading? We looked at Mr. G-ren's accounting system and the key piece of informa- tion for him is the bill of lading. Mrs. HECKLER. Who is Mr. Gren? Mr. MIKtTS. He is the AID mission's controller in Turkey. Mr. WOLL. In answer to Con~resswoinan's Heckler's question as to how much property has been shipped out of this installation to Viet- nam, from July 1, 1966, to May 6 of this year, $4,165,255. Mr. MONAGAN. In acquisition cost? Mr. `WOLL. Yes, sir; in acqiüsition cost.. And our total outshipments from all of our European operations through March 31 were $11.8 million. Mr. ROMNEY. One final question, Mr. Woll. Mr. Waters, at our prior hearings, stated he anticipated the weekly man-hour rate by your con- tractor's operation here might reach 9,000 hours? Mr. WOLL. Yes. Mr. ROMNEY. Will this involve an amendment to your present contract? Mr. `\~\TOLI~. No, sir. Mr. ROMNEY. Does it represent an expansion of the contractor's present capability? Mr. WOLL. Only in terms of hiring additional employees by the con- tractor. His capability would be expanded with more people, but his facilities are capable of producing this production. Mr. ROMNEY. That is all, Mr. Chairman. Mr. MONAGAN. The hearing is adjourned. (Thereupon, at 11 : 30 a.m., the hearing was concluded and the sub- committee proceeded to visit the premises of plant No. 1, the Hoboken/ Antwerp plant, of J. & M. Adriaenssens N.V.; also one of t.he coin- pany's warehouses. Following lunch, the subcommittee proceeded to visit the dock area at Antwerp and plaiit No. 2 of the company, known as the Hansa 1)1 ant, which inspections were concluded at 4p.m.) 82-554-67-13 PAGENO="0194" PAGENO="0195" PAGENO="0196" 190 USE OF EXCESS MILITARY PROPERTY IN FR&NCE STAT~EMENT OP COL. J~OHN REGAN, ASSISTANT DEPUTY, MILITARY LIQUIDATION SECTION, U.S. EMBASSY, PARIS, PRANCE; ACCOM- PANIED BY COL WILLIAM H. TARVER, EVREUX BASE COM- MANDER; CAPT. ROBERT W. DONLEY, EVREUX BASE CIVIL ENO~NEER.; LT. SCOTT E~. LARSON, OYFICER IN CHARGE, MILl- T41~ LI(~UW4!fl(~N SECTION, EVREUX BASE; AND N. SGT. GEO1tG~ A. HUSEINS, I~ONCOMMISSIONED O~TIOER IN CHARGE, ~ILIT~A1~T LIQUIDATIO~N SECTION, EVREUX AIRBASE Colonel REGAN. I am Col. John Regan, the assistant deputy, Mili- tary Liquidation Section, for the 4ir. j~orce. Yoii know General Clay, sir, already. This. is Mr. Sidman; 1chief~f Merëhandising, from the Foreign Excess Sales Office. This is Colonel Tarver, our base commander here, representing USAFE Headquarters. Lieutenant! Larson is~the Military Liquidation Section officer in charge at Evreux. This is Captain Doniey, a civil engineer with USAFE working for Colonel Tarver. This is Sergeant Huskins of the Military Liquidatwn Section here at the Evreux Air Base. Sir, we had planned today to t~Lice you Qfl a trip around the facility, this being a base that has been turiied over to the Military Liquidation Section We had planned to take you through specific buildings tlitit have been closed and have been locked with the idea we will either sell the U.S. related property on this base to the French Government or dispose of it thrQugh the Foreign Excess Sales Office or remove items from here and take the items out. Mr. MONAGAN. We are interested in the organization and operation of the Military Liquidation Section and also of the Foreign Excess Sales Office; We are less interested in looking at buildings. We prob- ably would like to see just one or two as examples, but they are mostly empty, are they not? Colonel REGAN. They are, sir. The ones we would show you would mostly be empty. Mr. MONAGAN. We have about reached our quota of empty buildings. I `would like to ask you, Colonel, to give us a summary of the op- erations of M~LS and its organization, where it stands in the gov- ernmental chart of administration and its relation to the Foreign Excess ~ale~ `Office, ~nd when you have done that we will have ques- tions. If you feel someone~ else should answer, `any particular point, we shall be happy to have them do so. Colonel BEGAN. The Military Liquidation Section was established last February 24 to be in business by the first of March. It was estab- lished as an agency under the U.S. Embassy in Paris to get political guidance from the Embassy and military guidance from 1ITSCIN~ CEUR, and directive No. 60-47 of March 4, 1967, issued by the Head- quarters, United States European Command, established `the terms of reference for tile Military Liquidation Section. The Military Liquidation Section is a joint organization coin- mancled by the major general, U.S. Army, Gen. R. C. ~ who wears two hats. 1-Te is commander of the conmimin~catioiis zone in Ocr- PAGENO="0197" PAGENO="0198" J!1~F1iI!~~1 ~ r~!1 z 0 .Jw >.u~ 0 c~1 U- 0 PAGENO="0199" PAGENO="0200" 194 TJS~ 0]? EXCESS MIL]?E'ARY PItOPERTY IN FRANCE and one Air Force property which is the Suippes Gunnery Range. We have taken all of those over and as of now we own all in France except I have told ~ a about. AGAN. many are there ? ~ are a total of 311 installations. you owi~ them you mean of them and are responsible for ~~rAGAN. Colonel REGAN. false. I will go back to the figure of total personn over on the 24th of March as belonging to the ] ry Liquidation Section, and I released to Colonel Tarver on a hand receipt 19 build- ings so he could operate here using the 19 buildings, and TJSAFE is responsible for all the costs of electricity, water, sanitation, et cetera. Colonel Tarver on June 15 will start to fold his operations here and will be completely out by the. end of June and be in a caretak~r stath~ by the 1st of July. We will have from 15 to 18 personnel, mostly guards, 14 guards. These will be turned over to Lieutenant Larson to keep this base in fair condition, keel) it guarded until we either sell the base or dispose of the related personal property oii the base. Back to the total number of people. I said we had slightly under 400 for the Military Liquidation Section. rflIis is MLS proper. Re- cently we had to pick up 600 local nationals and 22 more military to take care of Army installations because we have taken these Army in- stallations over from what was called the French support group, the Army group that takes ~ remaining here until the end of the school yea~ ernmer t agreed we could keep the schools open - `1 will be he.re until the terminal 1 S have departed the Fren e from their bases, and i Colonel BEGAN. Yes. It ii~ ~ zone person- nel but when the communications zone I the 1st of April they left behind a French support group. Mr. ROMNEY. You don't mean French nationis, but that is a geo- graphical description? Mr. ROMNEY. You don't mean French nationals, but that is a geo~ graphical description. Getting back to the functions of the Military Liquidation Section, another function is described as follows: PAGENO="0201" USE OF EXCESS ~tILITARY ?ROPEETY IN FRANCE 195 Care and preservation ~on1y of any remaining U.S. assets ~(e.g., comI~uLud operating stocks) which are to be removed from France by the coniponen~ commander. In the case of the Air Force, all property has been removed from France for which there was a requirement elsewhere with the excep- tion of Evreux. Colonel Tarver has some items for operations-G~JA, 1 1 oach, and Tacan facilities. He will remove all of f July. The whole objective was, if there was a re- ny items, they were removed prior to our taking them i are speaking about a requirement within the nt and not a requirement for AID, for example? is true. But all the assets in France of both La Army and the Air Force have been screened thoroughly by Gov- ernment agencies. For example, some trailers from this base went to AID. Mrs. HECKLER. Were the requirements communicated through NICP? Colonel REGAN, Yes, all the way through, Air Force and Army. Mr. RoMN1~Y. When you talk about propert7 you are not stalking about related personal property? Colonel REGAN. I am not talking about radiators, lighting, and so forth, unless there was a iequirement for a generator or transformer. When we had a requirement for those we moved them. Mr. ROMNEY. But a listing of generators, radiators, and so forth, was not circulated to all Government agencies so they knew what was available here in France? Colonel REGAN. I am not familiar with that. I was not in headquar- ters and did not get in this business until Marth. Colonel TARVER. I believe it was circularized. In e1 ~ bases all the commands were invited to come and look ai and t1~ L~ ~ - ha but .~ial I goes off. has I ~ last 3 weeks. When we close the operation down on t~ Ii of June, actually, we will remove the high value items and ship them to Germany. Colonel REGAN. Another of our functions is as follows: Responsibility, with USAFE and USAREUR support, for the 1: "Operational Base" sales. "operatior ase" is defined as follows: t ii.. There were only two operational bases left i which the French desired to buy in operating eondition. One was Toul-Rosieres and the other was Cha~teauroux. On Toul-Rosieres, USAFE left $225,- 000 worth of items for which they bad a requirement or could use but it was not a critical requirement. We negotiated a sale with the Gov- PAGENO="0202" 196 USE OF EXCESS MILITARY PROPERTY IN FRANCE ernment of France on `Toul-Rosieres. We sold the Government of France~ all TJ.S.~futided related personal property~ We, through our computations, estimated that the maximums fair market value that we could 1 i for the related personal property ~-t Toul was $ . Tb i initial offer for this RPP was .000, and I turned the base over r~ .1 .L..~ T ~ it over portions. One is called D~ols and t~ ~er is Mrs. HECKLER. Are you negotiating that now? Colonel BEGAN. On the D~ols portion of Chateauroux the estimated maximum fair market value was The initial French off ei~ was $110,000, and we sold it for $360,000. This, again, applies to only the TJ.S.-funded related personal property. I will make a clarification here. Chateauroux is the only U.S. air base that is not NATO. This is strictly United States. All the others in France are NATO bases which we have occupied ~and used. On La. Martine~rie we are still negotiating. We have not sold it. In the case of Toul, this was purchased by the French Air Force. In the case of the D~ols portion of Chateauroux it was purchased by the French Government for the Serima overhaul depot. The French Army is interested in La Martinerie but we have not agreed on a price. Again on functions: MLS is not responsible for the disposition (by sale or otherwise) of NATO property, except as directed by competent authority in the section of final trans- for to GOP of the base/facility involved. I think this is self-explanatory. We do not sell NATO property. We do not have this authority in MLS. The next function is: Disposal of remaining personal and related personal property, according to ~ nation, i.e., disposal by procedures most economically ad- U.S. ~ ~ property not otherwise dispo~ed of will the PAGENO="0203" PAGENO="0204" 198 USE OF EXCESS MILITARY PROPERTY IN FRANCE recom ling thi: ~easl was fori~arded to the n~ ~ of comm.. be `able to take this surplus commodity housing a. or lease it. rflis is back in Washington for recommendation. General CLAY. We paid 20 years in advance for this surplus housing and lived in it 8 to 10 years and we ~gured out what our e.quity is and really do not expect to get it all back from the French. There Was `an engiiieering study made by a French organization which was not very favorable to our prospects for sale. We don't know what t' e answer is to this one. Mr. MONAGAN. Do we have title to the real estate invo General CLAY. A 20-year lease. Mr. MONAGAN. When you say 392 housing units ~ dwelling units, do you? General CLAY. Nineteen separate packages, each with houses or duplexes. They will house 392 families. MiS. GILi~OY. ~,400 units.1 * Colonel BEGAN. Is it 2,400 altogether? Mr. GILIIOY. Approximately 2,400. Mr. MONAGAN. Who knows? We can ~1l speculate. Mr. GILROY. I think it is 2,404, Mr. Chairman. There are 10 or 12 they didn't know for sure if they had ownership to. Colonel BEGAN. Again `on functions of MLS: As available and within MLS legal personnel resources, provide counsel and assistance to U.S. military egencies and offices in France, to include legal coun- Sel on any contract administration, contract termination, or procurement not otherwise provided for. There are some other matters such as: Labor relations, to include administration, and other matter's related to the employment of French nationals. All matters in connection with U.S. military personnel subject to French crim- lual jurisdiction. *Admini~tration of the field sales for MAP return from France until this cone tinuing function can be absorbed by CINOUSAFE. Effecting reimbursement settlements and reconciling financial accounts with the GOP for expenditures made under appropriate bilateral agreements. This concludes our functions. Mr. MONAGAN. Let us ask you questions and then we can go ahead with Mr. Sidman. Mr. ROMNEY. Colonel, we. were supplied, when we visited Jeanne d'Arc Hospital, a list of installations turned over to MLS as of April 5, 1967. This list includes 32. There are three others described as op- erational for support purposes. Is this a current list and how does this square with the number of facilities you said had been turned o~rer toMLS? Colonel BEGAN. This is not a current list. MLS has all that property on that list except for 32 real properties that belong to the Petroleum 1 See p. 201 below. PAGENO="0205" ~CUrate as to PAGENO="0206" lisL~. ç the k~~ry Li~1 Colonel REGAN. Yes. It was I U.S. Government to have taken care of all the r maining in rrance after the 1~t of April; which was the date President `de Gaulle had set for the remoyal from France, which we did not recognize. It was felt the component commar~ders could not handle the residual matters from their headquarters located, outside of France- USAFE at Wiesbaden and TJSARETJR at Heidelberg. It was felt was need for someGne on the ~pot~to take care of matters after April 1, and it was decided by DOD and State that a joint liquidation section would be established under the aegis of the Embassy to take care of residual matters after 1 Af*il. This is the rationale behind the establishment of the Military Liquidation~ Section. Mr. ROMNEY. Colonel, will'the organizational chart you said you would furnish the conimittee provide this information: At what levels must policy decisions be made?' Colonel REGA~.' `Tj~ie~re made generally at the military levels. The Departme~it. of the Army wilFact as the executive agent ~oi~ the De- ~`~ent of Defense. We still must go through EUCOM'all the way `we receive Our guid~nee'from the Am- PAGENO="0207" PAGENO="0208" 1. C 2. I~ 3. F 4. F 5. E 6. D 7. 1 8. H 9. H 10. 0 22.H ,......,...,, 23.C t 24 B...&nne 25. Chauniont Air Base 15, 2 26. Etain Air Base 12, 27. Tout 1. Sase 23, 2 .J(City) 1. `43. Ma,.~., 1 Bids represent only a portion of total RPP. a French offer has not yet been received. Note: There are 4 additional installations which are satellites to those liste4 above. 5, 202 USE OF EXCESS MILITARY, PROPERTY IN F~IiANCE INTEREST BASES - Investment cluding sys- tems andlabor offer I - d'Orlaans gny PAGENO="0209" Item number FRELOC report (1) 82_554~.or14 PAGENO="0210" a~ Desandrourn cago area instatlation aserne Gribeauval ~ozeIier Depot... Francois Hospital and~Depot is nothir~g up in the air so rench are interested in some ax~c1 not interested r involved? PAGENO="0211" PAGENO="0212" Q~O6 USE OF EXCESS MILITARXi PEOFERT)~ IN F1~A~TCJ~ Mr. ROMNEY. Colonel, you are only maintaining custodial persQnnel with respect to these bases now? Onlonel REGAN. That is right. Mr. ROMNEY. If you removed the related personal property what would be the effect on the custodial personnel? Colonel REGAN. If we removed all property we could turn it over tG the Government of France and would not require custodial personneL Mr. ROMNEY. Do you have any idea of the cost on th~ bases where the custodial personnel remain. Colonel REGAN. I would say about $1.5 million for a year. I don't have exact figures. Mr. MONAGAN. I would like to mention the fact that our primary interest is in determining the availability of excess personal property for other Government agencies, and although we are touching neces~ sarily on other questions here, they are not primarily the responsibility of this subcommittee. Mr. Holifield's subcommittee would be the one that would be primarily interest~d in the broad policy of military questions. Mr; ROMNEY. Colonel, you mentioned three bases recently sold to the French and one of them was the Jeanne d'Arc Hospital. Colonel REGAN. Yes, sir. Mr. RoM~eY. We visited that fac~1ity 2 days ago and they still maintained a custodial foi~ce thet~e. I was wond~ri~ig ,why that was necessary? Colonel REGAN. Well, si~', this is based on release to~ the French. We have to keep a custodial force there until we release it to the French. The reason we have ijot. rel~as~d the property we have sold to the Government of France, with the exception of Toul, is that we are having a differen~c~ of o~inion~wijt~h the Erench p~i the wording of the sales contract. As soon as the sales contract is signed ii~ ~ myinterit to turá the bases back .a~ soon ~ w~ ca4. to c~4 cio~v~t on our overhead expense. : Mr. Roa~?rNrn~. In. other word~you ha~r~ a l~roacl, ~gre~ent ~nd fur- ther terms are to be worked out later? Colonel RmAN. ~ si~ ~ the. s~le f~greem~nt is~tçt ally consum- mated but this is the wording in the payment clause. We have an agree- ment that they pay in dollars, but it i~ the l~gaI wordingof the contract. Mr. MONAGAN, I jttst ha~ve~rne or t~O q~estiens. MLS~ is under the State De~pa~t~nent, re$ly~n ~otipg ~p~n advisory capacity, is tha#t right? ~: ~ Colonel Ri~GAN. That is rig~it. We Were pid~der~h~n~imssy as a section.Iôf the Embas~y~, sir. ~ Mr. MONAGAN. We spoke a little ~it about policy decisions~ J3~OX in- stance, in the sale okhe Jeanne d'Atc Hospital and Toul-Rosiere, where wonld tbe~d~cision b~ nmdea~ to the ae~eptability or nonacceptability of a kivei4 price? , . . Colonel REGAN. Th~ final agreement wars ~nade in th~ case of Touh Rosiere by General Kyser based on guidance from Washington that gave us the limitation. Mr MONAG &N This was under an authority granted to him ~ 1Q T.1fl4~t PAGENO="0213" USE OF EXCESS MILITARY PROPERTY IN FRANCE 207 Colonel BEGAN. No, sir, And as of Monday of this week he has dele- ~gated this authority to our negotiator. I think it is very important for the man sitting in the negotiations, under guidance from Washington, to have that authority. This is important from a psychological stand- point in negotiating a sale. Mr. MONAGAN. With reference to the bases that you have told us about and the bases or installations that have been sold, those appear ~to be the ones the French want the most? Colonel BEGAN. That is correct. Mr MONAGAN So it is quite possible that as you negotiate down the ~1ine your returns will not be so good? Colonel BEGAN. That is right,'sir. We anticipate\ increasing difficulty in negotiating sales. `Mr. MONAGAN. As I recall, one of.yôur comparisons of sales'prh~e was with the appraisal of present fair market valtie. Colonel BEGAN. Yes, sir. Mr. MONAGAN. Who establishes that ~alüe and what is the basis for it? Colonel BEGAN. We establish it in MLS `and this w'as done-again I will qualify this. I am not a'sales negotiator. It is a computation based ~on initial cost,de~p~eciation, and what your market is here. Mr. MONAGAN. In other words, it i's initial cost and depreciation? Colonel' BEGAN. Yes, sir. Mr. MONAGAN. And is it also based oi~ recent sales, or are there com- parable recent hales? Colonel BEGAN. No, sir. This is the first. Mr. MONAGAN. Can you answer that, Mr. Sidman? Mr. SIDMAN. Not adequately. I think they have taken the replacement value. Colonel BEGAN. I would rather not add~ ~ ~1f to that. Mr MONAGAN We will get that Mrs Heckler, have you any que Mrs. HECcLcLER. Yes. I was wondering, Colonel, if yoi ~EGAN. It was decided it was necessary because the corn- amanders could not take care of the residual matters in after the 1st of April. The initial guidance came from J~S and DOD and State. They were first prepared by EtTCOM at Camp Des Loges outside of Paris and sent to Wa&~ and Washington sent them back to EUCOM and they ` ~ 1~ i the component commanders t i~. JEo1~LER. Do ~ou have any estimate as to when the other properties can be dispQsed of? PAGENO="0214" USE OF I I `V Colonel R~O~N. We do on it w~s felt thTe Commanding Mrs. HECKLER. You mentioned hottsing. you negotiate that? Colonel REGAN, The normal sale cycle for ~ tnrc eign Excess Sales~ Office is 90 to 120 days. `~i s is the normal sales cycle, and we must recognize that all the sales cannot be made at one time so they have to be staggered. Mrs. HECKLER. Do you have any target date for the final disposition of all these properties? Colonel REGAN. In the initial ta. estimated the maximum life for ~ seems a long time off but it must be rec to ~ posed of. s is, again, an - L told us of a tI~~ ~1ovcrnment of France in ~ Forbudgetary planning, we have used the following fae a. That all negotiated sales on interest bases and I turnover of these b to the Government of France would be completed by 31 October 1967. b. In order not to jeopardize the negotiations on the interest bases, sales by the Foreign Exenss Sales Office (except In those selected areas which will not `"`~-~ations in jeopardy) are scheduled to commence full activity I ~1e for sales by the ~ u Excess Sales Office is "t the turnover of non- PAGENO="0215" PAGENO="0216" 210 us~ OF EXCESS~ MIJJJ~TARY PROPE1~Y found in anywhere from 80 to, i~QO depots scattered tL So, as you can see, 15 percent o~ t~e original value t~pe property that we sell is actually generated at U.S. depots. With the establishment of MLS 5 months ago, FESO wa~ absorbed as an integral unit of MLS. It continues its function of, selling this MAP property It cc" i" ~"'"'~e of the remainrn~ foreign prices, of methods, and the negotiators take t from. We have been receiving inventories of thOse, i~sta1lations the French are not interested in and preparing them for sale. I have copies of the manner in which we will sell them through competitive sales. Mr. MONAGAN. We will be glad to receive that for the file, Mr. SIm~rAN. I have draft copies. Unfortunately the terms and eon- ditions are not ready but I have a draft copy of the nomenclature. Mr. MONAGAN. May we have a copy of that fo~ the file? Mr. SIDMANP I will be happy to furnish it. Mr. MONAGAN. We will receive these for the files. Mr. BARASH. Does AID get a crack at the property? Mr. SIDMAN. They really do. Their program has been tremendous with us. It has been increasing almost on a daily ba~is~ Mr. MONAGAN. You go ahead and finish your statement and then we will ask questions. Mr. SIDMAN. Principally, our major task is this MAP property at the moment. Mr. M0NAGAN. Where does that property come from? Mr SIDMAN This was property given under grant aid from 1948 up to about 1952 to the French militaiy forces Mr. MONAGAN. The program was for the benefit of the French? Mr SIDMAN For the benefit of the French military forces Mr MONAGAN And what are you doing with this property ~ Mr SIDMAN There is an agreement with the French~-~this agree ment I do not have-that when they are finished with it they will turn it back to the United States. They are now turning it back to us at the rate of about $200 million acquisition cost per year and we receive it and put it on sale. Approximately 65 to 80 percent-it. varies from year to year-of the property turned in to the United States by the French is sold as scrap. Mr. MONAGAN. What percent? Mr. SIDMAN. It varies. Last year it was 80 percent. The year before it was 65 percent. The property turned over by the French is sold as scrap. The reason is, it is mostly tanks, guns, halftracks, animunition, and arms. Mr. MONAGAN. In othe~words, you are saying this property would not be suitable for other governmental use? Mr. SIDMAN. We have had inquiries from other governments. Mr. MONAGAN. I mean for our own Government? PAGENO="0217" USE OF EXCESS MILITARY tPROPERTY ~iN FRANCE 211 Mr. SThMAN. No. Mr. MONAGAN. And it would not be suitable for use by AID? Mr. SIDMAN. AID usually does not pick up items such a~ that. Mr. MONAGAN. And the items you speak of would largely be sold as scrap? Mr. SIDMAN. To scrap dealers, sir. Mr. MONAGAN. On the 20 percent or 15 percent or whatever it might be that would be suitable for other governmental use by our own Gov- ernment, what is your procedure there? Mr. SIDMAN. We have a list of different U.S. agencies that we dis- tribute this list to. This is done before it reaches our office. The main ~creening is done at Mainz-Kastel. We supplement that screening with a list of our own agencies, our agencies and foreign govern~ents that might be interested~ An!d after 30 days, if we haite no request fpr it, we put it on sale. The agency that picks up a good portion of that property is AID, as you probably know. Mr. MONAGAN. You inform AID of the availability? Mr. SIDMAN. We inform AID ftutomatically of every listing we have. Mr. MONAGAN. What does AID do after yo\i inform them? Mr~ SIDMAN. They~ send personnel in the field to look at it. When they make a determination they notify us and we freeze it and netify the French that AID will pick it up. Mr. MONA~AN. Without exception this 15 or 20 percent is screened byAlD? Mr. SIDMAN. Absolutely. Mr. M0NAGAN. And whatever portion of that amount is sold as scrap at public sale has &~eady been screened and rejected by AID? Mr. SIDMAN. Yes. Mr. .MONAGAN~ What about other agencies of the Government? Mr. SIDMAN. There is no stateside screening done t.o my knowledge. Mr. MONAGAN. But screening here? Mr. SIDMAN. I don't know of any being done here.. The State De.- partment recently got in on this. They came around and have been picking up a small amount of it. Mr. MONAGAN. Any other department? Mr. SIDMAN. Not that I know of, sir. Mr. MONAGAN. Are they circularized? Mr. SIDMAN, State is circularized, all our MAG's and about 10 Em- bassies here and in parts of Africa. Mr. MONAGAN. You said also that about 15 percent of your total activity was related to U.S.~generated foreign excess personal prop- erty? Mr. SIDMAN. Yes, sir. Mr. MONAGAN. I thought you meant that poftion of your activity was related to this type of property? Mr. SIDMAN. No; 15 percent came from U.S. depots and the other 85~percent from French depots. Mr. MONAGAN. Is the same procedure followed that you have been deseribim~g as is fO1lQWed!by~A1D~?u Mr. SIDMAN. Yes. . PAGENO="0218" 212 USE iF EXCESS MI Mr. MONAGAN. Would a major portion of tL~ propert~ type that would be suitable for AID use? Mr. SIDMAN. Of this 15 percent you are talking about, sir? IAGAN. Yes. ~tAN. A good part of it, yes. Mr. Scordas can probably an- T ~e last few months they were taking 1 uld n i inor~ now. I fact the stock has been transferi also but there is very little in them outside of scrap. Mr. Rdi~~n~r. TWould these be used as your activity increases? Mr. STDMAN. No. When we sell RPP practically none will go in the yard because they will be fluorescent lights and things like that that 1 1 1 1 1 purchaser. 1 ~ or French busi- ~,IDMAN i augmented by ~r we could sell radiators or other items. potential buyers. Mr. ROMNEY. With respect to the negotiations with the French Government regarding the RPP, are minutes kept of these negotia~. of answering that. PAGENO="0219" PAGENO="0220" 214 t~s~ oi~ i~xc~ss M I~~AE1~ PR~PERTY IN I~RANCE Mr. Sn~w~. Most of them ~re French. Mr~ HECKLER. And they would have to get the saffie ctificatior~ from the Freñ~h Government? Mr. SIDMAN. Yes. At times the Frenchdisagre~ with u~ aild dO&t think the item should be controlleL We contact th~Embas~y and ask them to~heck of the item. S Mrs. HECK t ~ve, a - Mrs. HECKLER. Have you had n Government on this matter of security? Mr. STrMAN. No; not many. It probably runs in the 2 or 3 percent area. Mrs. HECKLER. And why do they object to this? It is ~~Dertation of the list. The list is so copious ent ~xis~. ~AGAN I Mrs HECKLER Mr ( the property to get toCommunist c. Mr. MONAGAN. We all agree; but I don't u: inquiry. 5 ~ 5 5 S S Mrs. HECKLER. What is your volume of sales in tonnage or whatever measure you wish to use? S Mr. SIDMAN. Acquisition costwise the U.S.-generate~ would amount to $8 million a year, and the French MAP property, $200 million a year. T~1us figure has changed bee~use there is no more stock here except this RPP business. S Mrs. HECKLER. You don't have the volume in tonnage? Mr. SIDMAN. I could get thi~t. Would. you like it later? Mrs. HECKLER. Yes, I would like it. S (Subsequently, the following informatiQn was su~pplied by the De- partment of Defense:) PESO VOLUME OF SALES IN TONNAGE FISCAL YEAR 1967 U.S. generated excesses, approximately 42,000 short tons. MAP-generated excesses, approximately 9~,0Q0 short tons~ Mr. MONAGAN. Do yoU have any figure on the average age of 1\{AP property? have this check oii all PAGENO="0221" US~ O~ ~CE~S MILITARY PROPEWI~Y ~ FR~ANCF~ 215 Mr. SIDMAN. Not precisely; but from experienc~ I can tell you i~ has varied. As we sell more arid more it ge~s~ better and better. At tIi~ present time the average ~ge would be, approximately 13 or ~4 yearè or 1~ years old. It would datefrom~ahout i95~. ~ Mr. MONAGAN. With respect to Communist countries, this property would not have muchvahietô them~ouId itq General CLAY. They would hiwe a ti~emendous job ge~tiñg sj~are parts. Mr. SIDMAN. The main thing is spare parts. I think there is a de- mand for ~it One i~a~i was selling spare parts to Cuba, ~ example As a general ~uleI46ii't thInk any Oommunist coun~try ~wouJcl want this MAP property. Mr. BARASILMr.'Sidt~Ian, it isour understa~nding that ácost analysis is in the process of being prepared which would relate the~cost of sales to anticipated returns~ for RPP at ~one of these bases in which the French are not interested; the thonght being in some insthnç~o~ it might be mere expensive to carry on the sale than you could get back. TH~ that analysis been made? Colonel BEGAN. I will address myself to that. The analysis has been made. It has not been approved to date. Mr. BARASH. Mr. Chairman, with your permission, could we receive a copy of that analysis? Will this be an analysis for each installation? Colonel RIIIGAN. It requires one for each installation. There is a general overall formula and policy f~r the making of economic anaF. yses. This will apply to all installations and be used as a guide for sales. The policy has not been approved. I would rather wait until it i~approved. General CLAY. In that respect, I think the economic analysis of each installation will be included in the property records when MLS closes out. Colonel BEGAN. Yes. (Subsequently, the following information was supplied by the De- imrtme.nt of Defense:) `COST ANAIX5IS OF RELATED PERSONAL PROPERTY SAI~Es TO ANTICIPATED RETURNS An economic aimly~is is made on those bases for which the Government of France has not expressed an interest. This analysis may indicate a net gain or a net loss will occur if Related Personal Property were to be sold. Should the analysis show a loss, from the strictly theoretical financial standpoint of that installation, it would appear to be logical to leave the property for residual value negotiations. HOwever, premature action may have, in the long run, an adverse effect on our to~tal return F~i'st, although the Government of France has been applying some pressure fOr the release of ,installations of uo interest, they are beginning to Indicate interest iii buying. ilistallatious which were, at first, identi- fied as having no interest. This jntere5t would probably not have occurred if sales of Related Personal Property had been opened at or near scrap value or the installations had been returned for residt~al value. It is anticipated that the Government of France has an interest in many more installations than was at ~f1rst indicated. Secondly, implicit in any form of ecoflomic an~tlysis used to make a decision ~to sell or return property for residual value negotiations is the assumption that certain majom~ ~osts can be avoided If the latter decision is made. In fact, thh~ assumption is largely fallacious in that the bulk ~of our costs are semi-fixed in nature, primarily in the form of salaries to civilian and military personnel. In ±he case of civilian persOnnel (the largest portion of our funded costs), we have PAGENO="0222" USE OP J~XCESS MILTTARY I the coefficient of 1~ 1967 vesus 1958 as established by the French those line items where the original c~ntraet costs are not available, r value is computed at current costs. Column 3 is the standard d based on a 20-year life. We can assume that under normal c [OILS, ~ average maintenance, the systems and equipment iiwolved wi 1 have a 11 expectancy of 20 years. Column 4 shows the d~epreciiited v~ilue on the basis of this 20-year life. The tOtal of this co1umn~is~usually~the basis for the first counter- offer by the Tiuited States. Column 5 rates a~rnore realistic evaluation of depreci- ation and life expectance of the systems~ Although It is recognized that the s~stems and the installations have an average of 20 years' life, many of the components of the systems, such as pumps, light fixtures, sanitary equipment~ have an expected life of anywhere from 7 to 12 years. On-site inspections nlay also reveal that due to lack of proper care and preservatiOn, some of the systenia - iipment are-deteriorating at-a faster rate. - revised deprec t value, as shown In Column 6, is the actual the ~1 r the ~ ~olumn 7 re- PAGENO="0223" USE OF EXCESS MILITARY~ PROPERTY IN FBANCE 217 VERDUN HO$PITAL-DESANDRWNS BARRACKS tern ~7,O52,1OO. Negotiated sales price, P153,156. Mr. BARASH. In talking about the number of bases in which the French have expressed an interest and the number that have been sold and turned over, I get a total of 152. At the outset you mentic~necl 311 facilities, so we are missing dyer 100 facilities here. What is the status of those facilities? Colonel REGAN. You mean those in which the French have expressed no interest? Mr. BARASH. No. You said the French have expressed an interest REGAN. Yes. RASH. F~ have I PAGENO="0224" 218 trs~ ~ ~xe~ss MILTTARY PROPERTY IN FRANCE Mr. BARASH. How `marI~r local nationals do *e now have? ColoneL Th~eAN. A total as of July 1 of 900 local nationals, sir. Mr. BARASn. With a yearly estimate of $1.5 million and 900 local nationals, that figure seems low. Oolonel REGAN. That was just an estimate, and that was the estimate given to Congressman Hohfield today ~ ~ ~l. Mr. SIm~AN. yes. You will even find some in F i. Y011 are t~1king about a yard or a sto~e? Mr. MONAGAN. This was a i~egular store on the main street: Mr. SIDMAN. You see less and less of them now. There were a lot of French nnd Belgian surplus stores after World War II when there. were a lot of items available like toothpaste and so forth and a lot ~f stores catered just to such items, hut now there are less and less ~f them. If you saw two you saw a lot today but they still e±ist. And some of them keep the `same name but though they say "ç.s. ,SurpJus" they don't sell U.S.. surplus,they just sell cheap things sad you may not find any U.S. items in the store. Mr. MONAGAN. Is it possib]~e that, the items that go to public sales could be acquired by individual purchasers and put into stores of this kind? Mr. SIDMAN. Yes, sir; but in general in Europe they don't have `surplus stores as in the States, especially in France, because it is very rare we sell them clothin~ or toothpaste that are very rare items. Mr. MONAGAN. It was a 1' 1? a shock, being engaged in this type of ii he protestations t1 t nothing useful ~ hands, h see t store a few miles pro-~-~,. Mr. SIDMAN. I can't x .5 or 10 years. Mr. MONAGAN. Thank you very much, gentlemen. Before I close the hearing, Colonel, you furnished us with this listing or recapitulation of data on sales. This is marked "Con- fidential.?' ~J~hat is the present classification? Colonel REGAN. Yes, sir. M~r. MO~TAGAN. Of course this may change in time, b~it the reason is `you are negotiating sales and this information should not be made ~available generally? ` PAGENO="0225" PAGENO="0226" PAGENO="0227" APPENDIXES APPENDIx 1 ACQUISITION COST OF REMOVABLE RELATED PERSONAL PROPERTY (NOT INCLUDING LABOR) FOR PHALSBOURG, AB, F1~ANCE ITotal acquisition cost, $610,446.68J Acquisition Total Item description Quantity cost acquisition (unit) cost ARCHITECTURAL 1. Blind, venetian - 0 $10.00 0 2. Closer, automatic door 210 4.60 $966.00 3. Curtain 0 150.00 0 4. Door, wood or metal 1,706 15.40 26,272.40 5. Mirror 263 1. 40 368.20 6. Screens,window 9 5.13 4617 7. Batterycharger 1 25.65 25.65 9. - - - 10. CIVIL ITEMS 11. Fence, chain link 6 feet 2,010 2.00 4,140.00 12. Fence, security ~ feet with 3S-BW 15, 985 3. 00 47,955. 00 13. Flagpole 2 100. 00 200.00 14. Railroad switch 5 3,846. 00 19,230.00 15. Railroad track 27, 873 10. 00 278,730. 00 16. Tanks above ground 0 0 0 17. Tank fuel 25GgaIs 0 275.00 0 18. Tank, steel, 500 gals 0 600.00 0 19. Walk in coolers 2 103.00 206. 00 20. Security lights 167 9.60 1,543.00 21. Obstruction Ii8hts 18 4.62 84. 16 22. Hi.tension switch gear 16 3,077, 00 49,232.00 23. Lo-tension switch gear 12 2,564.00 30,768. 00 ELECTRICAL 24. Alarm system 0 25, Battery charger 0 26. Battery set - 0 27. Circuit breaker 92 28. Clock, bell system 0 29. Converter 50-60 cycles 30. Fan 31. Fix, incandescent - 32. Fix, explosion proof * 33. Fix, exterior 34. Fix, flood - 35. Fix, fluorescent 36. Fi; obstruction 37. Fix, street 38. Fix, weather proof 39. Generator, - - - - kw 0 40. Heater, hot water 0 41. Outlet, switch, junction box 0 42. Panel, distributor 9 - 43. Panel, fused 221 44. Regulator 0 45. Speaker, amplifying 0 46. Switch, main 6 47. Transformer, 315 kw - 6 48. Water cooler elect 0 49. Transformer, 250 lw.-a 6 1,1 50. Transformer, 25 kw 3 1 51. Disconnect circuit breaker 1 52. ElectrIc distributor panel - - - 2 53. Junction box 553 00 no 221 PAGENO="0228" PAGENO="0229" PAGENO="0230" CONTRACTOR (Nam..ndAd&.u) 3 8~ M Ath~iaenssene LV. 59 Po1ostz~aaj VObOk3n~ ~e~L~ium APPENDIX 3 ACT SHIP TO(Conüs..aaad4d*...) See So'ieriule ic contract is negotiatoi Dnr1~t1a~t tho ~t~t~rtory AnthoDity~ touncl in ~ C08 OrL3 %S35 at the Porei~n Aa~i~t~nco Act oi~ 1~1 as amente3 (PL 87495 75 St~t 424) Polosirnat ~tobokon B~ O4~. ACCOUNTING AND Account ~Tr. 72X4590 $200,000.00 ~ t'un~s are h~z'e~r ~o1~ate~i ~.ONTRACTOR REPRESENTS 1. ThatitOlSiS procuremer empI"~- F- C APPROPRIATION DATA ~ ~Tr: AP1~ ~4-9..3 L ~-- ~, ~ 3 NOV ,~ 1) fr /,~ ~ c PAGENO="0231" USE OF EXCESs MILITARY PEOPERTY IN FRANCE 225 For the repair, overha~4', rehabs.. litatson, and storage of mieoen.. aneo~~ Vehiolee, SUpplies, and etluipaent. PAGENO="0232" 226 USE OF EXCESS MILITA1~Y PROPERTY IN FRANCE 3 & N ADRIAENSSENS Contract CSD-720 SCHEDULR Page 2 of 11 Part I. SUPPLIRS AND S~RVICES Upon receipt of written instruction in the form of Delivery Orders pursuant to Parts IV and V of the Schedule, the Contractor shall furnish plant, labor~ equipment and supplies necessary to aooornpUsr~ the following servioes~ Item L Inspect and repair, as necessary all mechanical equipment re- ceived at the contract facility in accordance with Agency for International Development Work Speoitioation, Appendix A, dated 3. June 1964. Z~t~m 2~ Restoration of non-mechanical items of equipment in acoordanee with instructions issued by the Contracting Off icer. * ~ On Site maintenance. It is the intention of the Government to rehabilitate and repair equipment at the Contractor's facility. However, in the event the Contracting Officer determines it is inthe best interest of the Government, the Contraotèr shall send a maintenance team to any site designatod by the Contracting Officer to effect required repair and rehabilitation. * ~tern 4, Receive, store arid prepare for shipment,.ncn-rneohanical it~ris not requiring repair, in a~oordanoe with Agency for International Development rk Specification Appendix A, dated 1 June 1964. Item 5,~ Provide enclosed outside storage area of 100,000 square feet. This area must be on level ground, suitably drained having a surface which will permit vehicular traffic of large construction type of eq~ipment. Item6. Provide secured warehouse storage area of 20,000 square feet. This warehouse spaoe must be dry and have a floor capacity and oei~ing height to accommodate up to a 6,000 pound forklift truck. item~1. The Contractor shall requisition Government Purnished Property in accordance with Agency for International Development appendix "B" dated 8 June 1964 and Amendment Nr 1 dated 19 October 1964. Itern6. The Contractor shall furnish the supplies identified as Govern- ment Purnished Property as identified in Appendix "B" referenced above to the extent the United States Government is unable to furnish same, provided the need for the Contraotor to manufacture such supplies is verified by the Contracting C cer, PAGENO="0233" USE OF EXCESS PROPERTY I~ M Oflt~'a~t CSD~. SCREDtJLB FR~CE 227 PZ'ior tc~ o. Po~ Se~j~05 away from the ~ ~ao~j~ Pe~o~54 under thj5 item, the Cont~ shaU be paid, in additj0~ to other ~~~ent5 made for tb~ item, not to eXosed the rat~ set torfl below, ite4 Zin~,~ Qreeo~ *SPain ~he Qo~t~~ sha~l be paj~ ~p to tb~ p~ di~ ~ above for ea~ empZo750 in travel status status oanejet8 ~ the tj~ required to travel ~ the Contractor, Plant to the On~sjt. iOOation, the ti~~ a~ the ti~5 requi~0~ to return to the eai~ pla~~~ In Oo~--~ `r 0OfltiflUOr1 travel, the calendar da7 ( ~ - ~ - - Iba1~r ~L'ur1cey 14by~ PAGENO="0234" 228 USE OF EXCESS MILITARY PROPERTY IN FRANCE 3 & M I~NS~lNS Contract CSP-~72O / Page4ofll b. The Contractor shall make frea,~~ent (not less than one tfme per. week) measurements of the enclosed, out,~tde storage spa~e in use. These rne~ ments shailbe verified by th~ Contraot~ng Officer. At the end of oa~h norf a cumulative total of the measurements taken during that month shall be sad and, this cumulative total shall be divided by the r~upber of measurements me that month to arrive at ar. avera~o uea~e factor. This average ussgd shall be the basis on whioh the Cøntza.~tcr shall suhmit his ir.voi~e f'ullconeid,orat±on is given to the 33'OOQ be the Ocvsrnment as stipulated in para~rai~ a that month to arrive at an average usage facto~k. ~ be the basia on whiob the Contractor shall submit his invoice tor th Item 1~.. No oost to the Oovernmen't, I~e~a~ $2.85 per direct labor hour. Item~9~ $2.85 per direct labor hour. e&iQ~ Reimbursement of preparation for, including associated serviC~ and trarasportation shall be i~ accordance with Part I~ P. below. B. Iadete~nining the d~reot labor hour rate for. the above items, the Contractor sbai~ nOt~inolude any cOst o~ purohs.ulng department opsratiobt. A prorated roenta~eot tb~e ~oet is Oenei~ered under Part U N below, - be no m t~ the Contractor for correction of d,Laore- tor as provid.~d. in Clause 22 o~ PAGENO="0235" PAGENO="0236" 230 USE OF EXCESS MILITARY PROPERTY IN FRANCE 3 & M A~RL4~TSS~NS Contract CSD~7~O SCB1~UL~ Pugs 6 ~t II Por the pu~poses of this contract, it i~ agreed that thts prorated ~ ~haU be l2~ of the inventory card price adjusted by ded.uo~ion ~f tax~c ~ ~t:~c, The inventory card. prices is composed o~ thn average ~pur~haas priOc, pl~ci 4i~. root expenses such as transportation GcCtY9 tncurenco ease, ~a~cae, du;~ee ~nd handling charges, and. the Contractor werran~e that no proftt is oonte4ried in either the inventol7 ca~rcI prices or the pereentage specified above, In the event that an audit by the United States Government personnel should. reveal that a profit has been realized by the Contractor9 the said pr~tt shall be returned. to the United States Government. Those parts manufactured ~y the Contractor will not be considered as withdrawals from stock as defined by. this paragr~ph. 3. Contraotor may irruoioe for any item purohaned under the prov'ietorts of this contract or any order issued thereunder as coon aS the items have le~n reoeive& by the Contractor and/or accepted. by th~ Government. F. The preparation for, including associated services, and. transportation of supplies and equipment under the provisions of this contract may be Govern.. sent provided. or, it it is in the best interest of the Government9 the Contractor may be required to provide all or any part of the preparation for, including associated services and. transportation required, If the Contractor is required to provid.e these services, an order pursuant to Part 1V9 entitled. "ORDPU$" shall made by the Contraoting Officer, or his authorized. representat~v~e end will be made in writing and will contain ~i) location of e~uipment and/or supplies (ii) nomenolature of each item, (iii) weight of eseh item (iv) destination, (v) required. date items are to arrive at destination, The Contreotor will imme-. diately obtain a minimum of three (3) bids from Px!oight Forwarding Agents, in writing, and. award. shall be made to the Freight Forwarding Agent quoting the lowest overall price consistent with the required. delivery date shown in the shipping notification, No award shall be made to a Freight Forwarding Agent without first obtaining written approval of the Contracting OffIcer, If the Contractor desires to provide his own treneportetion in lieu of oor.traoting with a Freight Forwarding Agent, he may do so subject to the approval in w writing by the Contracting Officer and. at a price no higher than the lowest bid from a minimum of three (3) bids from Freight Forwarding Agents. The Con.~ tracting Offioer has the authority to waive th~ requIrements for obtaining a minimum of three (3) bids from Freight ?orwnrd~ng Agente In oasa~i w~era exi~ genoy of the situation prevent solioita~tion of three (3) bid~s, Part III, ~ ~cne of this PAGENO="0237" PAGENO="0238" 232 ~ OF EXCESS MILITARY PROPERTY IN FRANCE 3 & M ADBITSS Contraet CSD~~7~0 SCHEDtJIZE Pago~o~ll `Within thirty (30) days after receipt of: such order and in every case prior to completion of 5C~ of the work eafled for the par~s ehall ~ot~aOe the ho~irs and delivery sohednle, and the order ~ha1l b& smended accordingly0 Paii~re to agree upon a roagonable number, of hours and. delivery schedule shall be considered. a "dispute concerning a q~iestion of fact" within the meaning of the clause of this oontraot entitled. "DZSPtITES". Part VI. PRIOR W~B~R~Ta The Contractor warrant8 that the prioes of the items sat forth herein do not exceed those oharge4, by the Contractor to any other customer purchasing the same items in like or comparable qnantit~es. .`. Part VII. ~PI~E S?AQRi~ Contractor shall make available to the Contracting Officer a partitioned office space of approximately i80 sinare feet in the immediate vicinity of the Production area The cost ~f tbi~ office space was oonsidared in the nego~ tiated. prices aM therefore is furnished at no additional cost to the 0ov~rnment. Part VIII, J9~~!~ ` .` In the utilization of secured warehouse storage area, the Contractor shall sake full use of bins, racks, pallets and. other warehousing storage items of eiuipment that will provide eqonomio utilization of space. Standard commercial warehousing practices Will be fol3~owed. ` ` ` ` Part XX. PRIOR O~RL' `` ` `"c" ~, The Contraotor represents that the prices set forth in this ~oontraot are based on (wage rates) established by the Governeont of Belgium and warrants that such prices do not include any contingency allowance to cover possible increase thereof. If such (wage rates) are `changed by that Government, the prices herein may be revised to the extent that the oontraotor's actual oost~ of performing this contract are, as a result of the change, (~) necessarily inoreased or (ii) actually reduced. Either party may submit a written reçuest for much price re-V vision to the other party within 30 days after the affective date of such change or within such further tine an the Oont~aoting Officer may allow Such a recuest by the oont2 iotor shall state the amount of aueh change' and show in detail the ~int - h contract prices are claimed. to be affected.. The parties shall - ~ to establish the amount, if any, by which contract prices -~ - -~- - ~bietotheCcntracilngOfti-er PAGENO="0239" USE OF EXCESS MILITARY PROPERTY IN FRANCE 233 3 & M ADRIAENSS~T~ Contract CSD-720 SCII~DtJLB Page9of ~ Part X. NOtwfthstarjaing the provision of Clause 4 of the General Provjsjo05 entitled "PAYM~~p~" the Contractor is prohj~t~ from iovoicin~ for Partially complet~~ items, The contractor shall invoico only upon Ooerij~~~~ accept.. anoe of the Completed item(or items. Part XI, _______ A. The Delivery Schedule will be in accordance with the scbei~lo oo~- tamed in each Delivery Order as agreed to by the Contractor and the dorrtraotjng °ffioer, B. The delivery point shall be the r'5 plant at Eoboken, Antwerp, Belgium or as specified by the Contracti,,,~ Officer. Part XXI. 17SPEOTION~ACCBPP~CE8 A. The inspection and acceptance point j~ Contraotorts plant ~oboken * Antwerp, Belgium except as indicated below: 1, Inspection and acceptance of items repaired "On..sièe" under the provisions of Part I 13 shall be made at the site designate4 by the Contracting Officer, B. In addition to the other provisions of this ccntract,;the Contractor shall, at the time for final inspection and acceptance, present an orj~jnal and four copies of a completed and signed certificate to the Contracting Officer *eacting Substantially as follows, "I hereby certify that I did nn the . ...~day of~~,,,196 complete wo~k on ______ The Contractor certifies that there have been no variations and/or devia.. tions from any specifications cited in the Contract or Other related contract terms, except those approved by the Contraotj~ Officer or his authorized repre.. sentative," Part XIII. ~D P ORXI OF CEOp ORD~j~gg The period of input of work under this contract will commence On the effec.. tive date of the contraot andAwifl Continue for a period of twelve (12) months, subject to the option provieioa, Part 117 below. PAGENO="0240" 234 USE OF EXCESS MILITARY PROPERTY IN FRANCE J ~ N Contract CSD-720 SCHEDULE Page 10 çf ~j ?art XIV. HElPED $TATES GOVERNLIENT OPTION A. Pursuant to Clause 39 of the General Provisions, tho Contractor grants the United States Government the right to extend. the period for isaw- anoe of orders up to 1 year after the expiration of Period of ~ork Input described above. During this period the unit prices and diroct~ labor rates specified in Part II will remain unchanged. B. Exercise of the above option in whole or in part shall 1,e svidonoed by the issuance by the Contraoting Officer of one or more change orders at any time prior to expiration of the period during which or&ers may be isnuod. Part XV. SPECIAL CONSII!ERATION Prior to undertaking performance of thin contraot, tho Contractor will be responsible for insuring that he has complied, with the laws and regulations of his Government in addit~cn to obtaining written certification ooverIng all lic- enses, permits, rights of entry, etc. directly or indirectly related to tho Contractor's performance under this contract, `art XVI * SOVIET - CO~ROLLED ~EAS * For the purposes of Cl~uae 17 of the General Provisions, the following areas are to be considered Soviet-Controlled Areas* Albania * Bulgaria China, excluding Taiwan (Formosa), but including Manchuria, Inner Mon~olia,{ * the provinces of Tainghai and Sikang, Sinkiang, Tibot, the former ICwantung * Leased Territory, the present Port Arther Naval Base Area and Liaonin,~ Province. Comrminist-controlled areas of Viet Nam and Communist-controlled area of Laos Cuba Czechoslovakia East Germany (Soviet Zone of Germany and the Soviet Sector of Lenin) * Estonia Hungary Latvia Lithuania North ICorea Outer Noztgolia Poland and Danzig Rumania * Union of Soviet Socialist Repüblica PAGENO="0241" USE OF EXCESS MILITARY PROPERTY IN FRANCE 235 M ADRI~~ Qont~ot CSD.~72Q SCREDtJL~ 82-554 O-67--------j~ PAGENO="0242" 236 USE OF EXCESS MILITARY PROPERTY IN FRANCE GENERAL PROVISIONS FIXED-PRICE MAINTENANCE OVERHAUL AND MODIFICATION CONTRACT (MATERIALS REIMBURSABLE) Clause 1. DEFINITIONS (OCT. 1 the in (a) The t Administr&~ and t term "his ~d r~ ~ese ,~ or persons or board C. ...~.. ...~ Cor...'aot~..., authorized to act for him. (b) The term "Contracting Officer" means the person executing this contract on behalf of the United States Government, and any other A.I.D. employee who is a properly designated Contracting Officer, provided, however, that in the case of contracts executed by an A.I.D. Washington Contracting Officer, the term shall mean an A.I.D. Washington Contracting Officer except as OtherwiSe notified to Contractor in writing by an A.I.D. Washington Contracting Officer. (c) The term "Excess Property Office" means ~.I.D.'s Excess x~roperty Regional Office, Frankfurt, Germany. Cd) The term "Contracting Officer's Representatives' means the Officer-in-Charge of A.I.D.'s Excess Property Regional Office, Frankfurt, Germany. Ce) The term "United States Government" means theUnited States of America. * (f) Except as otherwise provided in this contract, the term "subcontracts" means any agreement, contract, subcontract or purchase order made by the Contractor with any other party in ful- fillment of any part of this contract, and any agreement, contract, subcontract or purchase order thereunder. (g) The term "supplies" as used in this contract includ~s with- out limitation, the items mentioned in the clauses of this contract entitled "Inspeot~on" and all work to be performed under this con- tract. (NOV. 1963) (h) The term "Specifications" as used herein includes without limitation the statement of work to be performed upon U.S. Government equipment and/or other material being maintained, modified, recon- ditioned, rehabilitated, or repaired hereunder. CSD~.72O PAGENO="0243" PAGENO="0244" PAGENO="0245" PAGENO="0246" * ~l liab~ .~a, obL %.~ims a~.,5- ing out ~ under L~..s contract, subject onI~r to the following exceptions- * (A) specified claims in stated amounts. ~r in estimated amounts where the. amounts are * : not susceptible of exact 8tatement b~. the Contractor; *: (B) claims together with reasonable expenses incidental thereto, based upon liabilities of the Contractor to third parties arising out of the performance of this contract; provided, that such claims are not known to the Contractor on the date of the exe- out~on of the release; and provided further that the Contractor gives notice of such claims in writing to the Cqntracting Of- ficer not more than six (6) years after the date of the release or the date of any notice tG the Contractor that the United PAGENO="0247" PAGENO="0248" to froni recover, the L or o~ntingent i (i.ause 9. ThXES (JUL.1960) (a) The contract price, including the prices in any suboontracts hereunder, does not incLudeS any tax or duty whi~~ the Government of the United States~ and the Goverrunent of ~ have agreed shaU~not be applicable to expenditures made by the United States in BSLcUUM, ~. or any tax or duty from which the Con- tractor, or any subcontractor hereunder, is exempt under the laws of ________________________ If any such tax or duty has been included iii the contract price, through error or otherwise, the contz~act price shall be oorrespoadingly reduced. (b) If for any reason after the centract date, the ~ontraotoz' is relieited in whole or in part from the pa~nant or the bux~den of any. tax or duty included in the contract price) the contract price shell be correspondingly reduced. Clause 10. RNEG0~IATI~N ( JAN. 1961) (a) This contract wili be e~empt from the provisio~s of the Renegotiation Act of 1951 (50 U.S.C. App. 1211, et seq.), as amended, if it is wholly performed outside the UnitOd States, its possessions and Puerto Rico and if throughout the performance of the contract the Contractor is not engaged in a trade or busines~ in the United States its poøsessions and Puerto Aioo and is: of such commission, percentage, brokerage PAGENO="0249" PAGENO="0250" 244 USE OF EXCEsS ~`txed-Price Maintenance, Overhaul and Nod rnt'd DISPUTES ai.. lprooeed~ accord~oe with the' Contracting ?~5 decision. (b) This "Disputes"clause does not preclude consideration of ~ aw questions in eozmection with decisions provided for in paragraph ~a) above; providech that nothing in this contract shall be construed as making final the deeisioh of any administrative official, represen tative, or board on a question of law. 0 Clause 13 * NOTICE TO ~HE UNITED STATES GOVER~1ENT OP LAEOR DISPUTES (sEP. 1958) (a) Whenever the Contractor has knowledge that any, actual or potential labor dispute is delaying or threatens to delay the timely performance of this contraot~, the Contractor shall immediately give notice thereof, including all relevant information with respect thereto, to the Contracting Officer. (b) The Contractor agrçes to insert the substance of this clause inoludi~ this paragraph (b), in an~r subcontract hereunder as tc w~iich a labor dispute may delay the timely performance of this' contract; except that each such subcontract shall provide that in the event. its timely pezfo~nance is delayed or threatened b~ delay by any actual or potential labor dispute, the ~ubcor~tract~r shall immediately notify his next higher tier subcontractor,' or the pri~r.e contractor, as the case may be, of all relevant information with respect to such dispute. ` PAGENO="0251" PAGENO="0252" PAGENO="0253" PAGENO="0254" uniform i ~ (o) Cozitractor agrees to permit authorized representatives of A I D , at all reasonable times, to inspect the facilities, activi- ties and work pertinent to the contract, and to interview personnel T~ in the performance of the contract to the extent deemed sary by A.I.D. The Contractor further agrees to require the "f provisions similar to the foregoing in all subcontx~aots PAGENO="0255" PAGENO="0256" PAGENO="0257" PAGENO="0258" PAGENO="0259" E C~~8 MILIpA~y PROP~~~ IN ~`L~ ~ a ~? :11) Exi nd MOd1~tj~oat~ Gene~ai p~ (i) caused b tr'ans~Lt o~~ ~ Whfle th (LL) Used by ~ ~ Property ~~:x17 ~ tI]e ~ a. ;~~~;; ~ PrUs ~ - the~erpom'~Y ~ 253 PAGENO="0260" 254 USE OF EXCESS PAGENO="0261" PAGENO="0262" 256 USE or EXCESS MILITAItY PJ Fixed-~Pflce Maintenance, Overhaul )flt'd xi (inclttdin tractin~ C s contract). PAGENO="0263" PAGENO="0264" PAGENO="0265" PAGENO="0266" PAGENO="0267" PAGENO="0268" PAGENO="0269" PAGENO="0270" 1?ixed~price Maintenance Overhaul and Modification Genoral Provisions, ont'd liable te the United States Government for any oxco~s coct CQ~ cUCh similar supplies or services; crgv~d~d. that the Contractor shall continue the performance of this contract to the extent not ~rminated under the provisions of this clause. (e) Except with respect to defaults of subcontractors, the Con~- tractor not be liable for any excess cobte if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, aeta of the United States Government in either its sovereign or eutractuci capacity, fires, floods, epidemics, quarantine roctrictionc, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor, If the failure to perform is cause by the default of a subcontractor, and if such default ariz;es out of causes beyond the control of both the Contractor and suboon- tractor, and without the fault or negligence of either of them1 the Contractor shall not be liable for any excess costs for failure to perform, unless the suRplies or services to be furnishe4~by the subcontractor were obtainable from other sources in sufficient time to permit the Contractor to meet the required delivery schedule. (d) If this contrao~ is terminated as provi~e.c1 in paragraph (a) .~f this clause, the United States Government, in additiôn,to any other rights provided in this clause, may require the Contractor to transfer title and deliverS to the United States Government, in `tJ~e manner and to the extent diz~eoted by the Contracting Officer, (iJ any completed supplies, and (ii) such partially completed supplies and materialsa parts, tools, dies, jigs, fixtures, plans, drawings, informatioz~, and contract rights (hereinafter called "manufacturing materials") as the contractOr has specifically produced or specifi- cally acquired for the performance of such part of this contract as has been terminated; preserve property in possession of the Contrac - tor in which the United States Government has an interest.' Payment for~ completed supplies delivered to and accepted by the Ux4ted States Government shall be at the contract price. Payment for manufacturing materials delivered to and accepted by the United States Government and for the protection and preservation of property shall be in an amount agreed upon by the Contractor and Contracting Officer; failure to agt~ee to such amount Uhall be a dispute concern- ing a question of fact within the meaning of the clause of this contract entit~.ed "Dispute's'. The United ~;tates Government may withhold from amounts otherwise due the Contractoz~ for such completed supplies or manufacturing materials such sum as the Contracting Officer determines to be necessary to protect the United States Government against loss because of outstanding *liens or claims of former lien holders. PAGENO="0271" PAGENO="0272" PAGENO="0273" PAGENO="0274" PAGENO="0275" JOnt'd Naintenance Overhaul and Modjfj4 1 years. PAGENO="0276" PAGENO="0277" PAGENO="0278" PAGENO="0279" PAGENO="0280" PAGENO="0281" PAGENO="0282" PAGENO="0283" 1 be similar installed by manufacturer b. Windshield wipers will be functional and blades will not be hardened or weather cracked. Wipers will operate at not less than ~O strokes per minute..wet wind- shield. c, Door glass channel molding will not be worn to the point to allow glass to scrape against metal Portion of molding. Molding will not be torn loose from channel. 5.(2~) 1pholste~~ a. I' to i-" in diameter are acceptable; any.. thing lark be repaired. b. Tears will be repaired. ir material can be pulled together and stitched firmly in place, this repair will Suffice; otherwise, a patch must be applied, c. Patches Ofl Upholstered rigid panels may be cemented in place provj~e~ adequate adhesion can be obtained, especially at the edges, d. Canvas items will be repaired with canvas. Leatherette and fabric will be repaired with the like material matched as near as practical. e. Paperboard panels on doors, firewalls, headliners, and kick panels are acceptable with minor holes, 3/4" or less. Tears may be repaired by cementing edges back together~ Panels with sections torn loose and missing will be replaced. Headliners may be completely removed ir non repairable and no replacements are available. - f. Arm rests may be repaired by cementing, stitching, or recovering, whichever is most feasible for the particular type covering on the item. 5.(5) ~ a. Mountj~ brackets will not be cracked or broken and PAGENO="0284" 6.(A) Diesel Engines 1. InjectOrs, Fuel Pump. Engines having loss of power, missing, or excessive smoking, will be given a tune up. Injectors will be removed, cleaned, repaired and/or calibrated when required. Fuel pumps will be serviceable. 2. Injector Rack. ear. Adjust 1~. A. Gasoline starting motors. Change system will be capable of starting the main engine. B. During test engine runs snioothly'and shows I. leaks or excessive oil consumption, engine will ~rmal operational oil seepage is acceptable. PAGENO="0285" PAGENO="0286" 280 TJSE OF EXCESS MILITARY ci. Leaks. (1) Er~gines w PAGENO="0287" a. rnatte~, (1) 1 tS arid ev, PAGENO="0288" PAGENO="0289" 6. a0 PAGENO="0290" * * ~ 0OflI~tCtt0fl5 ttn8 bOltS and ca * 0old and (2) Start~'5 will ~~~quatelY crank a i~ot ~ngifl b. GeUeDato~ (3.) Generator mounttflS belt prOPeDtl adjU8t~ (2) wires be tight. PAGENO="0291" PAGENO="0292" PAGENO="0293" PAGENO="0294" 288 USE OF EXCESS ~. PAGENO="0295" OOflverte~, acceptable PAGENO="0296" PAGENO="0297" PAGENO="0298" (1) manu~aoturer' s vehicles greater `ates sately. be. adjusted or r (3) Gradual bends may be cold ~traightened~ ?at~ts sharply bent will be replaced. . 0. ICing Pins ~nd Bali Joints. let camber get out PAGENO="0299" PAGENO="0300" acceptable. 6.12, See~r1n~ a. Lealcs. (1) LeaI~ge from steering gear Ls not acceptable. (2) See~age is acceptable it an oil path has not tormed. b. Adjustment. ~more than 1 i PAGENO="0301" PAGENO="0302" 296 tJSE OP EXCES$ MILITARY PROPRRTY IN PRANCE 2. (a) - or grousers, wear. Items -- - -- placed to ~ ~s. (b) Worn grousers may be built placement bars to the existing stub. 3. Repair of' cracked or broken rails may - ~-~`danoe with good sI~op procedures. 6 ~ control cables shall show lost motion or rust; they will operate freely. 7. Drums and sheaves shal3 not be loose due to faulty bear~.ngs or bushings. ~of 1~o~.d~ing a capacity load PAGENO="0303" .flc1~e3 riders ~j than] c. Post Maintenance As directed by the ~oo and/or A. r.~* representative See attached Preparation for shipment term care and Preservation for Storae d. Sp~~j*i Instructi0~~ (1) Afl ~ Gover~ent Mijj removed Manufacturet,s plates win where PAGENO="0304" e PAGENO="0305" PAGENO="0306" (c) Engines are to be "fogged" tbz~u the intake inlets with "casite" or equivalent type of additive to insure a ~eseDvative coating on all Valves and Cylinders. sible the a~ ~missio~s, (1) All machined polished surfaces will be coated ~ a waterproof preservative compound. (m) Waterproof dated tags will be attached to each piece of equipment or vehicle * Tags will state date of. pr'e~ servation. Every ninety day~s an AID Inspector will examine equipment in storage and will determine and direct any addit~ ional in storage preservation required. All items will be examined for preservation at time of out~shipment. (n) Clutches will be engaged and disengaged several times at the end of the 90 day storage period to insure that the clutches an free and serviceable. PAGENO="0307" PAGENO="0308" 302 2. A11 A.X.D. property will be clearly labeled and identified with handclasp emblems applied as labels or tags before shipment to any destination from the ~0~t5 plant.. :~ furnished b~ A, I,D. PAGENO="0309" `V tZ'~~ SEC2~I~~ ~ 5. ~ The Cont~ac~o2, shaU tzlaflapoz,t tz'~ ht~ ~ t~ ~ as lflStZ'Uoted by the A~-- ~ PAGENO="0310" PAGENO="0311" PAGENO="0312" 6. Input shiprneute of en a. The A~O will inonit PAGENO="0313" PAGENO="0314" PAGENO="0315" SECflON PAGENO="0316" PAGENO="0317" PAGENO="0318" Stein " $ to " $ 500,000.". b. The iteui" $ 1,500,090.00 ~ in the last sentence on said Sheet Na. la is ohanged to ~ $ 5,000,000.". 2. Part I Ot the Schedule is amended by ad4ing thereto a PAGENO="0319" us 4. 150,0 `Is 5. 200, OO0.O~ 7. in it lec2ule is amende fOllows: PAGENO="0320" agree make and transmit to L.e Contract~. of the revision, it any, which is to be made. Any price ~ negotiated by the parties, or determined by the Contracting Offloer, pursuant to this clause shall be set forth in an amendment to this contract. Nothing in this clause shall excuse the Contractor from proceeding with the contract in accordance with its terms."This portion IX, Price Change " will remain ~e Schedule is PAGENO="0321" PAGENO="0322" 316 us~ OF EXCESS MILITARY PROPERTY IN FRANCE AMENDWN~ NO. 2 TO Contract No. L~~_ * CON~%ACT * B~WE~ THE UN1'~ED STATES 01? AN~flI~A AND J ANDM ADRIAZNS$ENS N. V. This Amendment No 2 to Contract No CSDJ72O between t and 3 & )f AEaZAENS$ENS N.Y. is made and ente~'ed into e~. day' of~.~/,~M1 d~X.$6$, by' and t ween~ the Government of the UN~ ntract No. C ~r on November ~ras amended PAGENO="0323" PAGENO="0324" ____ ___ I PAGENO="0325" PAGENO="0326" USE or EXCESS PAGENO="0327" :CESS MILITARY PAGENO="0328" PAGENO="0329" PAGENO="0330" 324 USE OF EXCES b. Os Act of 1961, as amended, (PL 8?.-195, 7~ Stat 1~2~&)j Now, Ther~~, the parties mutually agree as follows 1. Part 11.4 of the Schedule, as amended, is further ameruied as. a. Item 1. therein (on page 3) is changed to "Itent 1 $ 3 32 per direct labor hour" Iten 2. therein (on page 3) is Changed to th "Item 2. $ 2.82 per direct labor hour". Item 3.a. therein (on page 3) is changed to the following: "Item 3.a. $ 3.32 per direct labor hour performed in plant to support ~n..site naintenance". d. Item It. therein (on page 3) is changed to the following: "Item it. $2.82 per direct labor hour", Item 8. therein (on page 1~) is changed to the following: ~ $ 3.32 per direct labor hour". Item 9. therein (on page It) is changed to the foUowin~: 0ltent 9. $__~j3iper direct labor hour". ~ept as hereby- expressly amended, said contract is in all respects ratified, and continued in Lull force and effect in accordance with its terms e. No. it effective PAGENO="0331" J AND )1 ADRXAZNSSENS Lv. PAGENO="0332" changed to `$______________ b. The item'$158000,000"appearing therein is changed to "$L 000,000 i~ hereby amended to read as PAGENO="0333" PAGENO="0334" ;7 &M XAE1~TSS~1S N.V. PAGENO="0335" mix or A~D atu l8CE~S the 14th thia ne~OtLatod contr~t lunflt to the ~ 603 a~4 63~ot t .1 I' Amon~0~~ ~de *nter~ ~ J~*nuary1 flitø4 St~tø PAGENO="0336" 4. * 1~ho PAGENO="0337" Over 4~t T - PAGENO="0338" 332 USE OF Billings by the contrai United States Government ~ space will be in accordance. with the valid provisions of this contract, Iii the event oftormination of this lease agreement not caused by the United States Government, the contractor guarantees that the United States Gov~rnmGnt be givon a minimum period of nix months in which vacate ~tho. above described prcminot commencing with the data of recoipt of the written notification to ~vacate, by the United States Government. i~ho contractor guarantees furthermore that in the svent of termination of this lease agreement under s proceeding patagraph, the ~ove: ~`ata.loworpx amendment. PAGENO="0339" PAGENO="0340" PAGENO="0341" PAGENO="0342" PAGENO="0343" USE OF EXCj~5 Ml PAGENO="0344" USE 01? EXCESS ~4 PAGENO="0345" PAGENO="0346" 340 us~ OF EXCESS MUJITARY PROPERTY IN FRANCE ~..` ADRIAENSSENS W.V. . Maatschappelljke zetel Della Falllolaan 56 Antwerpen CURELEN: POLOSTRMT 89. H 080 KEN Back van Avtna~pev No 3003 TEL ~ ~74a~7 Hendesreg, Mteacpan 1652~3 WERKHUIZEN POLOSTR*AT 38. HOBOKEN NOORDERLUN 9$ ANTWERPEN `~ N. & U T 0 E R * AANKOOPORDER N° L/ (Ie vemiden op faktuUr en verzendlngelormuller) na D'I1OND? ANTWERPEN i juni 1966 GENT t GeNeva on. de hiernA vermelde goederen a everett Leverlngetermljnt * can ona edrea POLOSTRAAt 59 HOBOKEN. Voorwaarde NUMMER HOEVEEU4EID SPECIFCATE DEC GOEDEREN EENHGOS Operatifl9 levers hyster winch cosaplate Lor ~ AANDACHT: All. fakturen In dubbel examplaar moeten verge. z~ld tin van h$t duplIcate V$n deze bentelbon. "t0' _t~~On4 o.._o.,_~.'a~,a.voeBUr~dM.a~e .~ `~aa~o~n ,~o0'. ~ vr: ADRIAENSSENS N.V~ Afd. AID. j * `C, A~.31 ~6oaD Tracto2~ D7 PAGENO="0347" PAGENO="0348" 6,End~teinData "~iox~" ioo "` ~* (a) Make~ Model and Year (b) Size or Capacity (C) Electrical Data 6O~ 3765 (d) Item Serial No. : . U.S. R.eg. No (a) Engine(s) Make & Model.: ~ PAGENO="0349" PAGENO="0350" PAGENO="0351" USE O~ EX~~ MILITAEY PROPERTY IN PRAN ~stermjjn: ~fl 0fl9 ~cfr~1 P01 Voorwaard.n. PAGENO="0352" USE OF EXCESS MILITARY I (Complete Nomenci PAGENO="0353" irriIII ~1ORK ORDERED * ALLOWED' ,: HOURS _______ .hsa~t~'i ` ` ` . ` ( Q~g~~' ` __ ~tComprosslon I 2 3 4 5 6 ~ ,~ ~` ` : ~ , ,. 4 - 2. Make engine ready to start ~ 9 3~ Tune up engine and repair as necessary. ` ` 12 4. Check electrical equipment and repair as necessary.. ~ 5. Remove hubs (four) check bearing, brakelinings, brakecylinders, brakedrums, lnapeót ` ~. ~. brakeiines and master cylinder and repair as necessary. . 10 6. Check oil, rear axle, front axle, transmission and transfercase for leaks and repair . .` ` .~ as necessary. .. ~. ` .~ ,. 2 .~ ` .:~, Check steering gearbox, tie rods and ends, repair and replace when necessary~ .. -, 2.. 8. Check clutch propeliershaft for blackflaah and repair as necessary. `. .... `, Z.~ 9. Check condition of muffler, exhaust pipes and repair as necessary. ~.: : Q 10, Clean radiator, replace water, check for leaks and tighten. ` . ` .. " Clean olifilter and alrflfter replace oil and new filter 2.. 12. Check sprIngs and shockobsorbers for broken leaves and tighten 13. Check windschleldwlpers and repair as necessary. ` : 14. Check fuel system and clean as necessary (tank, filter and lines).: . `;~ `: ~. .; ~15. Body, check for dents and damaged, missing parts and repair as necessary !...:.. 16 Chetk tires condition and replace as necessary IT. Check seats and canvasses & bows and repair as necessary. ` `. : .`. I - 18 Prepare for paInting steamcleaning remove all lnslgns and letters ~O ~19. PaInt body yellow, engine grey, underside black. . .` . .. *. . I~' 20. Lubricate and change oIl. . ~-, ~- .: ::` ~ . :"~ FINAL !NSP0 NA PPROVED ~`::, `::. f 82-554 0-67-23 PAGENO="0354" 348 USE 0 F EXCESS MILITARY PROPERTY IN FRANCE ` A &~j . ~ ~ ~ , Descriptlon...f ~, ~ I ~ ~ 4~ ~ ~ I ~ ~ TOTAL ..-~ REMARKS ~ ~ . . . LABOR CONTROL CARD , ` ~ ~ . ~ - ~ . ~ . i(.~'~~7~' . Serial NO `t*~.. ~r:(~~'~ ~ ILL N°. * * ~ * 23 ~126~~i ~ ~31 ~ TOA~j ~ ~ ~ I ~ ~ ~ ~ H~ ~ , .. .. ..L `S HERE BY CERTIFY THAT TOTAL LABOR HOURS S IDIDONTHE 196 complete work on. * I ARAR RATE * S I . PAGENO="0355" PAGENO="0356" ADRIAENSSENS N. V. AID. Gelieve stipt uw werkuren op het juiste w vermE ~eM~t~ent~Mewerknummerteverm&den Datum Naarn .....~.. we2.- ~. `~.. No ~ A No ~ . Werk ?~ 7~ I J F ~ ~ *1 PAGENO="0357" PAGENO="0358" PAGENO="0359" PAGENO="0360" PAGENO="0361" APPENDIX ~ PAGENO="0362" according economicaLy advantageous to L~ S. Rela~ wise disposed of will be placed on real property records. This property thus becomes a part of the facility turned over to GOF, and will be the subject of Embassy residual value negotiations. ~pport and assistance to the U. S. Embassy, Paris, in residual real estate with the accountable officer until transfer to ~ PAGENO="0363" PAGENO="0364" USE OF EXCESS MILITARY PROPERTY IN `7 I `1. a. - Integral part of the America. Ambassador, and operates under the general through CINCUSAREUR. The Section will operate under general corn mand arrangernent until such tirne as there are no longer significant uni- fied command interests in France. At this time, as mutually agreed bet- weeñ CINCEUR and Chief of Staff, U. L Army, the responsibility for gene- ral threctioi of the Section will be transferred to the Department of the - ~d command arrangement 4 358 c Control. matters. (3) CINCUSAREUR exercises day-to-day supervision of MLS operations In coordination with Amemb, Paris, In support of USCINCEUR/ Embassy policy. This includes: (a) Review, evaluation and coordination of all action in areas of administration personnel support financial support and operations PAGENO="0365" nient(s) to~ USE OF EXCESS MILITARY PROPERTY IN FRANCE 359 PAGENO="0366" 360 USE OF EXCESS PAGENO="0367" PAGENO="0368" APPENDIX 6 OFFICE OF THE ASSISTANT SxCBETARY OF DEFENSE, Washington, DXL, June26, 1967. Mr. MILES Q. ROMNEY, Associate General Counsel, E~Xpeoial ~ubcommittcc on Do-n&blc Property of the Committee on Government Operations, House of Representatives, Wash- ington, D.C. DEAR Mn. ROMNEY: Reference is made to your telephone conversation with Mr. A. T. Bishop, of our Office, concerning sales proceeds experibnce in connec- tion with the sale of foreign excess property in France. I am enclosing a number of sales catalogues, together with lists of success- ful bidders, which we believe to be representative of the experience of the Paris Sales Offi~e. The lists of successful bidders are correlated by item number to the sales announcement, indicating unit price and total price received by item, as well as the successful bidder, and whether the proceeds were in U. S. dollars or French francs. We have attempted to select sales catalogues which concern the sale of end items of materiel on our understanding that you are not interested in the sale of scrap or sundry spare parts. We feel that the sample provided in the enclosed is representative of experi- ence in France. If, after analysis, you feel .a wider range of sales transactions is essential, please let us know and we will obtain them for you. Sincerely, H. S. ZARETZKY, Director, ~npply Management Policy. (NoTE.-~The following lists of successful bidders have been modified by sub- stiituting f or last column on the right (which relates to import or export limita- tions) a column showing the U.S. dollar acquisition cost and apparent condition for each item, as given in the sales catalog. (Unless otherwise noted in the last column, apparent condition of each item is poor, used.) 3~l2 PAGENO="0369" USE OF EXCESS MILITARY PROPERTY IN FRANCE c~4 z 00 I 82-554 O-67----24 PAGENO="0370" PAGENO="0371" PAGENO="0372" 366 1= PAGENO="0373" USE OF EXCESS MILITARY PROPERTy IN FRANCE ~1 ~ ~Cf) ~ ~-1 O~ o 1?1 ~*" ~ -0 0 -p ~ o1~ il PAGENO="0374" PAGENO="0375" I I PAGENO="0376" 370 ~ ~; ~ ~ ~ ~ :. ~. ~ JIlL t~L. 9 88~8 8 ~4c~ dd~ ~ HHC\ZH 888 ~ ~ ; ~ 4 -~1----~ ----~ -- ...,. a ~ ~ `0 `0 `0 `0~0 H -~f H H c~ c~ H -t H H H (~ C4 C~Z -4 0 ~ ~oc~ ~ ~: O~T~ r ~ 4~ ~4 ~ ~ ~ c ~ oo~ +,+-` ~_)~r\~ ~+~P ~ 4~~~o)ET 4~4~4.4 ~4 -4 ~ ;;;;;~;:;: :-;; ~H -; .-~. -~ L ~ ~ ~~3S~HJ6cC 91~*1~4 * ~ S14S0. ~ ~ . O3M333~~ D; ~4ri ~ ~ USE OF EXCESS MILITARY PROPERTY IN FRANCE 0 0 88888 ~S8888 ~-~-~H~O H H 41 0 )000 ~ 88888 C H H'0 `0'0 HO c~ H H E-l 00000) -4 `0H -10 OH 00) 441 H a PAGENO="0377" PAGENO="0378" g .~.i ~~~::i I fr~ PAGENO="0379" PAGENO="0380" PAGENO="0381" LOCATIONS: TOUL ~ NANCY DONGES S/MER NAME AND ADDR~SS L. BADIS ~:~eldijk 4 ~KENISSE Holland Page 2-of ~ US FOE ION EXCE~..S4IES OFFION 32~ &~e )~Ut PARIS Seme (~Q~ 9 Augnnd 1966 (CONI - - LI~T OF SUCCESSFUL BIDDERS RESULTING~FBC}t I.F.B. # 9i-60O..~-67..i1 , OPENED~ 3~Auguet 1966 at 10,00 Hr Ffrit end fin IT~( SHOFU ESCIEIPTION SENITRt~ILER, rtake, - 12 ton 34 I 0~1IG. 0 ~T! rr UNIT -PR~E GooDs~. OT F2ENCN 2. .-Ea~ $.~25.O0 - ~AUFM~N BROS & SON 505 Ho. Rainbow Dr - ~iOLLYWDOD florida U.S.A. 11 17 22 TFVCK CAROO, :* ton MISC. SHOP EQUIPMENT ENGINE LkTNE FLOOR NGUNTFO,16l~ ~.:ut,... ~` ` ~" - " -~_._-- : ~-- I 1 Lot. Na. 166~oo ~ 279.00 ~3 127.00 ~ `HeNeg 135 LEISWIJK Holland 6 7 DI&7RI~ETOR BITUMI. NODS MISC. ATT&CDEENTS*-FOR ROAD ~ONST~E1CTION EQU - )alftwog 26 - - ~1S.TSWIJK' Holland ~7t It a it 24 `l Ea~ e2,119.00 ~1 ,O19.OQ GASOLINE ENGINE It' It 4 e 48.0 -NCIENS ETS PSISTER o8AvedeStal~.ngrad 19 20 OSEERATOR SETS GERERLTt~R SETS `I It It I 1 Loti Lo1~ FF2150.00 FF1 500 CX~ FF. 2,150.00,; PP 1 ,500 CO TOTAL ?ICE - ACQUISITION COST -~ CONDITION $ ~ - - - - - 166.00.. - - ~ - 1~-(L. -, ~ 279.00 .~ - - ~ - - ~ 127~oo - 2~(('&%.oo - (s 2,119.00 - .. - -. - - - ~ 1,019.00 `- - . - ~ ~ ~. - - - -. -tø- o«=t~~. PAGENO="0382" LOCATIONS TOUL , NANC! DONGLS ~)CHEFOiV~ S/I4~R ANP ADDRESS PAGENO="0383" oc\, PAGENO="0384"