STATEMENT OF CHESTER LUND, DIRECTOR OF FIELD ADMINISTRATION; ACCOMPANIED BY WILLIS T. FRAZIER, CHIEF, SURPLUS PROPERTY UTILIZATION DIVISION; MANUEL B. HILLER, ATTORNEY-ADVISER, OFFICE OF GENERAL COUNSEL; AND THEODORE ELLENBOGEN, LEGISLATIVE ATTORNEY, OFFICE OF GENERAL COUNSEL, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

Mr. LUND. Mr. Chairman, the Department has a very brief statement, I would like to read if it is your pleasure.

Mr. CHAIRMAN. You may proceed, Mr. Lund.

Mr. LUND. The subcommittee has received a copy of the Department's report, dated February 21, 1956. We would like to highlight two portions of that report.

The Department of Health, Education, and Welfare favors the basic objective of the proposed legislation to make Federal surplus personal property available for donation for civil defense purposes to the civil defense organizations of the States and their political subdivisions and instrumentalities.

While we have in the past questioned the extension of the surplus property donation provisions of the Federal Property and Administrative Services Act-section 203 (j)— on a piecemeal basis, the Department believes, however, that the overriding national interest in the civil defense program warrants special exception in this instance. Discussions have been held by the staff members of FCDA and this Department, as yet not formalized, to reach an understanding that in the event of enactment of this bill, the FCDA would delegate to this Department, under the authority of the bill and the Federal Civil Defense Act, the operating functions under the civil defense surplus property donation program, that is, the functions of screening with the assistance of State surplus property distribution agencies the surplus property available, making allocations to State distribution agencies, and carrying out the other Federal operating functions involved in the program.

The FCDA would advise this Department of the kinds of property usable and needed for civil defense purposes. This Department, in agreement with FCDA, would establish minimum standards of operation for State agencies, and would establish terms, standards, and conditions as to the care and use of property by the ultimate donee similar to those established for civil defense property contributed under the Federal Civil Defense Act, to the extent that this will be permitted by the bill as finally enacted.

Utilization of the facilities of this Department by the FCDA on a reimbursable basis, through delegation of the operating functions under the civil defense surplus property donation program, would give promise of achieving effective coordination of the present health and education donation program and the proposed new program, preventing unnecessary friction, and promoting economy by avoiding duplication of personnel and services.

We, therefore, believe that under the existing circumstances that the overriding interest in the civil defense program warrants an exception in this instance, and we favor this bill.

I would be very glad to answer any questions that I can.

Senator KENNEDY. Senator Cotton.

Senator COTTON. No questions. Thank you.

Senator KENNEDY. What is the value of surplus property you are now receiving each month?

Mr. LUND. I can't answer exactly, Senator. If I could put it in terms of our current donations, we are donating roughly $20 million per month. According to our figures, to try to answer your question specifically, this amounts to about 7 percent of the surpluses that come to us on the surplus list.

Senator KENNEDY. You are donating 7 percent, which is $20 million?

Mr. LUND. Yes, sir.

Senator KENNEDY. What happens to the remaining?

Mr. LUND. It is the type of equipment that is not usable primarily for health and educational purposes, and it is disposed of by GSA. Senator KENNEDY. You make the decision, don't you, as to what will be disposed of and what will be turned over to the GSA?

Mr. LUND. The department and the State agencies; yes, sir.

Senator KENNEDY. If this bill is passed you will still continue to dispose of whatever you feel you will need, which we would assume to be the $20 million.

Of the remaining 93 percent disposed of by the GSA, what percentage do you think from your conversations with the Civil Defense Administration be useful to them?

Mr. LUND. I don't think I would be able to answer with any degree of intelligence. To my thinking there is enough surplus so that we could probably maintain our donation program at about the present level and still meet to a degree the needs for civil defense.

Senator KENNEDY. In other words, this bill will not interfere with your program at all?

Mr. LUND. I think there will be areas where some determination of conflict will have to be made. But in the general discussions we find that there are many types of equipment that we now turn down as not needed or useful in education that would be of importance and useful to civil defense.

Senator KENNEDY. The House bill put the Department of Health, Education, and Welfare and the Federal Civil Defense Administration on an equal basis, as I understand it, and this bill would maintain your position; is that correct?

Perhaps the legislative counsel could answer that.

Mr. ELLENBOGEN. Sir, it is the exact opposite. This bill places the two programs on a parity basis. The House bill gave a priority to the Federal Civil Defense Administration.

In the first place, it said that if the item was under the control of the Department of Defense, then it was the duty of the Secretary of Defense to determine whether, in the case of any item other than a common-use item, it was usable for civil-defense purposes, and if so, he would donate it to civil-defense uses.

If he did not donate it for that purpose, then it would still be available to the Civil Defense Administration on the same basis as to us for donation, under the House-passed bill.

The Senate bill puts the two programs on a basis of complete parity. Senator KENNEDY. It goes through your hands?

Mr. ELLENBOGEN. Not by the terms of the bill. However, the bill directs the Civil Defense Administration to utilize its powers under the Federal Civil Defense Act, which provides for delegations and maximum utilization of existing facilities of other agencies, and amicably between the two agencies there has been worked out an understanding whereby the Civil Defense Administration—as it desires in any event-would utilize the facilities of the Department of Health, Education, and Welfare and in turn that Department would utilize the State agencies for surplus property distribution.

That is another distinction between the two bills.

The House bill would have provided for direct donations of civil defense suitable property to State civil defense agencies or local civil defense agencies, whereas your bill, Senator, as I understand it, would create, or rather require the creation of, a single overall State surplus property distribution agency which would handle all of these types of property and which, subject to any Federal standards which may be established, would then within the State determine its distribution among these competing interests to the extent that they are competing. I am not sure whether I have made myself clear, but that is it in

summary.

Senator KENNEDY. The Health, Education, and Welfare Department would still continue to receive whatever it felt was necessary to implement its program. Is that carrect?

Mr. LUND. I think basically that is correct.

Senator KENNEDY. Regardless of the needs of civil defense, who would make the decision if both of you desired surplus property?

Mr. LUND. We would propose that that be done at the local level. That would be passed to the State. We would screen the property, and on the basis of our agreement with Civil Defense where they establish the types of equipment that are needed, by agreement the State agency would then have the responsibility of allocation, and hopefully there would not be too many areas where this conflict of interest would arise.

Obviously as far as the Department is concerned, we would have to evaluate very seriously the jeopardization of the school and the hospital programs, and we would not take this position if we felt it was honestly going to make.serious inroads upon the school and hospitals of this country.

Senator KENNEDY. You feel that the language in this bill gives you sufficient protection in your program?

Mr. LUND. Yes, we do.

Mr. ELLENBOGEN. May I interpose for one moment?

There is one thing that no doubt will be mentioned by the General Services Administration's representatives, and should be mentioned here. That is, basically, of course, this entire function is subject to the discretion of the General Services Administration. It is within the framework of that discretion that this program would operate.

Now, they delegate, of course, and we also have a statutory function of allocation for public health and education purposes in this donation program. Civil Defense would have a function of allocation for civildefense purposes within that GSA discretion, but they expect to delegate to us as outlined by them.

Senator KENNEDY. Senator Cotton.

Senator COTTON. I may have misunderstood you, but I got the distinct impression from what you have been saying that in administering this bill if there should be any conflict of interest or clash between your Department and the Federal Civil Defense Administration, you would ship those controversies back to the States. Instead of having 1 argument, you would have 48 arguments.

Am I wrong?

Mr. ELLENBOGEN. I didn't make myself clear, Senator.

Normally—and I want to be subject to your correction if I am wrong, Mr. Frazier-but as I understand it, normally it is expected that once it is determined that this property is usable for any of the three different purposes, health, education, or civil defense, it would be transferred to, put at the disposal of, the State agency within the State within which it is determined to be needed, that is determined by the Federal agency to be needed, and then the State agency would determine where it should be distributed within the State, whether to health, education, or civil defense.

Senator COTTON. That is just my point.

Mr. ELLENBOGEN. But there would not be a conflict between one State and another.

Senator COTTON. I am not talking about that. You are going to send this property to the State of X, and then when it gets there they will determine whether it will go to your department or to Civil

Defense.

Mr. ELLENBOGEN. They will determine not to which Federal agency it goes; they will determine where it should go, let us say-a particular school district, or hospital, or civil defense organization within the State.

Those are State instrumentalities.

Senator COTTON. Then you won't make a determination before you turn this property over to the State?

Mr. ELLENBOGEN. The determination at the Federal level-and correct me if I am wrong, Mr. Frazier would be whether this property is needed within the State of X for health, education, or civil defense purposes, and the property would then be transferred for these three alternative purposes, rather than having the Federal agency to determine which of them it should be donated for, subject to Federal standards which would be worked out.

Senator COTTON. It seems to me you have confirmed my impression that you determine simply that certain items of property are needed in such a State, either for hospitals, or schools, or for civil defense, and you will send them on and let the State make the determination as between the various claimants.

It would be made after the property got there at the State level, would it not?

Mr. HILLER. I believe the situation would be clarified by saying that recipients of this donable property, the individual local schools, the local school districts, the local health organizations, do not come under the jurisdiction of any Federal agency but are purely local institutions, and if you consider that the property will be turned over then to the State agency

Senator COTTON. What State agency?

Mr. HILLER. A State agency for surplus property which is organized within the State pursuant to existing law and which performs the function of receiving the property from the Federal agencies, and then making distribution to the various local schools within the State. Senator COTTON. How does the State agency indicate to you or some other Federal authority what its needs are which causes you to allocate certain properties to them?

Don't they represent to you that they need certain things for schools or for hospitals and that they need certain things for civil defense activities within their State?

Mr. HILLER. That is correct, sir.

Senator COTTON. And then when you send it to them, isn't it a result of a determination which you have made which certainly takes into consideration the respective needs and requirements of charity and beneficiary institutions and the civil defense in that State?

Mr. HILLER. That is correct.

Senator COTTON. And when they get it there has been a certain determination of need made in Washington before it starts, before the property goes there?

Mr. LUND. Probably if I just explain the process very briefly it would help to answer your question.

For example, when all this surplus is desired, there are lists of all this property. Our people generally are either hospital trained people or educators.

They examine this property, and very frequently the State also does so through a cooperative agreement.

We know generally the types of things that are usable, then too the States advise us as to the types of things they can use. These lists are forwarded to the States after we have screened them to see that the items are usable to the States. The States then make their own determination as to whether or not there is a need in that State for these items.

They today make the decision between who shall receive the property, a hospital or a school, in relation to the criteria that the State itself has established.

So all we would do in addition under this proposal is to add one more category that of civil defense-it is assumed that the State organization would have its staff people who had competent knowledge allocate the property. If there were a disagreement a board could be established of a health representative, an educator, and a civil defense representative to settle the problem.

Generally the needs are not so close that it is too difficult to make a determination

Senator COTTON. Perhaps we are making a mountain out of a molehill, but the fact remains that your Department receives certain information, the Civil Defense has certain information, other Federal agencies, including General Services receive information that comes from X State indicating that they need various things for their schools and hospitals and that they also need the same or different things for their civil-defense activities.

Now, you release to the State certain amounts of certain commodities or instruments in accordance with those representations.

After this material arrives at X State, based on representations as to requirements of hospitals and schools on the one hand and civil