defense on the other, can X State take it and then change their minds and give it all to the hospitals and schools or all to the civil defense on their own authority?

Mr. LUND. Yes, sir. We do not determine for the State. It is the State's responsibility to make its distribution after we have made the allocation.

Senator COTTON. So that I revert to what I originally said-and I don't mean this is necessarily a bad feature-but under this bill any conflict of interest or controversy that might arise between Civil Defense and your Department could first have a determination in Washington and have to be done through all over again when it gets to X State.

Mr. LUND. Not quite, basically, except you take out the Federal Government.

We would not make a determination here as to what its use might be, if it fell in any one of the categories, hospitals, education, or civil defense, we leave that entirely to the discretion of the State.

Senator COTTON. I want to get this clear. If, occasionally, there should be a conflict of interest between the civil defense and the educational or health institutions, that conflict under this bill would be settled at the State level.

Mr. LUND. Yes, sir. Your statement is correct. Our experience has been that the State people know the needs of the State. They bring in the parties who are involved, and to date we have had no serious problem in its distribution, because there is an effort made, a very definite effort on behalf of each State administrator to do an equitable job of distribution in relation to need.

It is also possible to develop certain need factors-for example, a burned-out school would have priority over any other, because they have no school facilities or a hospital which needs a standby enginewe would assume that Federal defense in an instance of that kind would grant that in relation to their program a standby engine for power or a boiler needed by a hospital.

Senator COTTON. As you see the workings of this bill, should it become the law, all that any State does is to certify to a proper authority in Washington, "We need such and such things for our hospitals or our schools, we need such and such things for civil defense." Then they are allocated.

But do you go into any detail? Is it contemplated that under this bill the Federal agencies would go to any detail to check the need as represented by the State, or check whether their hospitals needed these various things, or their schools, or whether the civil defense needed them, before you made the allocation of the materials?

Mr. LUND. Generally speaking, we would not. We do not go behind the certification of a responsible authority in the State.

We have one other principle, however, and it is found also in the

law.

That is of equitable distribution to States on the school and health program.

Senator COTTON. How in the world are you going to determine what is equitable unless you make some examination of the needs?

I am not necessarily inquiring that these perfectly responsible and respectable authorities in the States would falsify their requests, but

it is not unheard of for States to ask for more than they really need so they will be sure and get their share over some other State.

What are you going to do about that?

Mr. LUND. On that we do a review of each State's operation once a year, and if we found that allocations were made excessively, or were not needed, or were stockpiled, we would ask them to either transfer to another State that needed it, or to sell it to the account of the Government.

There is also a compliance program for given items.

Senator COTTON. In other words, you review what they have done with what they have received, rather than to attempt to project into the future what they are going to need and test their requests that way? Mr. LUND. That is correct, sir.

Mr. HILLER. In addition to that, Senator, we have what we believe to be another safeguard. Under the provisions for minimum standards which are prescribed by us for operation of State agencies, we have established certain requirements for State agencies to demonstrate the methods that they use for determining need within their States. So, for example, we look in our minimum requirements for such procedures as the States may use for circulating questionnaires among the schools and health institutions within the State which would evince the information regarding the types of things that the schools and the health institutions need.

Senator COTTON. I have just an observation I would like to make on that, Mr. Chairman.

If this contest or this scramble, if there is such a thing takes place within the State, I can visualize, based on what I know of my own State, that the Civil-Defense organization may very well come out at the little end of the horn, because I think the public pressure and the public realization of the necessity and the importance is much more developed in the matter of hospitals and schools and other thingsand that is quite justified—than it is in the matter of the vital need of civil defense. And I can visualize where, under the system of sending this to the State and letting the State authorities divide it, the Federal Civil Defense Administration might find itself the orphan child.

Do you want to comment on that?

Mr. LUND. Yes. Now, we are not fully aware of all complications in the adding of civil defense to this program, because we do not know all the details. We can say, however, that we as well as theybecause we work cooperatively under certain specific legislation with respect to disasters, have had a bit of experience.

It is my judgment that the types of things that are essential to civil defense for example, let's take standby engines-maybe some steam shovels or caterpillars for moving dirt, and so forth--they would not generally be needed by schools or hospitals. Crutches, certain reserve beds, all of that kind of thing, shovels, picks, items that can be used for housing such as tents, clothing that might be essential generally are not taken by schools, but which may be desired to stockpile for civil defense certain other types of equipment, lifts, standby trucksthe schools use these but only in limited quantities.

Now, if there is a surplus of these items, obviously, it would not interfere. You are raising, Senator, exactly the question that was

raised at the time this program was expanded from the educational side alone to the health and hospital side. And we were worried that the hospitals would not get their fair share. Generally speaking we have not in the past years, to my knowledge, had a single complaint from a single hospital that its share of needs has not been met.

The people in the field are a service organization, and the States, in our judgment, have done a fair and equitable job. Now, we are not sure of their position with respect to this matter. But I feel qualified that their thinking is the same as ours, that we are here together for the purpose of making the best possible use of Government surplus property in civil defense, and its relative relationship is as important as any other factor on the basis of which we make distribution. Does that answer your question, sir?

Senator COTTON. I am very much interested in what you say. And I thank you.

Thank you, Mr. Chairman.

Senator KENNEDY. I am glad that Senator Cotton brought this up. It seemed to me that it was important that the Department of Health, Education, and Welfare be assured that its basic program would not be interefered with by the passage of this bill.

Do you feel there is sufficient protection in the bill and in the relations it establishes in the States so that your programs for hospitals and schools will continue as before?

Mr. LUND. Yes, sir. We have confidence in the operation of the State agencies, in their judgment that within their jurisdiction, property will be equitably distributed. Now, there may come a time when this surplus falls off and you get to a point which we do not know or do not anticipate. But, I am speaking of the conditions as we know them at the present. And we feel that there is adequate protection in this in relation to the varying differences of needs.

There will be some duplication of requests and there will be some vying for property. But I don't believe it will be serious.

Senator KENNEDY. After the bill has been in effect for a year or two, we might be able to make a better judgment of that. Senator Martin.

Senator MARTIN. I have nothing.

Senator KENNEDY. Any further comments?

Mr. HILLER. One further comment, if I may, for the sake of clarifying the record. There was some discussion during the testimony of the representatives of the Federal Civil Defense Administration regarding minimum standards as they are applicable to the donees or recipients. That is somewhat inaccurate.

The minimum standards that have been established for State agencies in connection with the administration of the health and educational aspects of the donation program are established for the State agencies and not for the subsequent donees or distributees. In the same way, since the same agencies would be handling distribution of the donable property for civil defense as well as health and education, the same words would be applicable to the identical State agencies, but not to any subsequent State civil-defense organizations.

Senator KENNEDY. The responsibility, then, becomes the local agency's responsibility rather than yours?

Mr. HILLER. That is correct.

Senator KENNEDY. Mr. Frazier.

Mr. FRAZIER. I would like to make one comment in relation to the $2,500 items. It has been our experience over the past 6 months that less than 1 percent of the items being donated have an acquisition cost of over $2,500. So I think the subcommittee should understand, then, that the terms and conditions we are permitted to place on items over $2,500 are on property which would not be applicable to about 99 percent of the property. In other words, there are no strings, as you might say, other than the State certification and the school certification on 99 percent of the property.

Senator KENNEDY. What restrictions or conditions did you attach to items costing over $2,500?

Mr. FRAZIER. Over $2,500 cannot be sold, leased-or otherwise disposed of without approval for a period of 4 years-must be used for health or education purposes.

Senator KENNEDY. Do you think there is any value in HEW's efforts to have the $2,500 lowered?

Mr. FRAZIER. We haven't come to any conclusion as yet. When we do, we expect to come back and inform the subcommittee of our views. Senator KENNEDY. If it only hits 1 percent, it doesn't affect very much the material that passed through your hands. On the other hand, I suppose that civil defense would have about the same problem that you do. In other words, if $2,500 is satisfactory to you, I suppose it is satisfactory to them. Or would you think there was some distinction?

Mr. FRAZIER. There might be some room there for discussion. But since we don't have very much experience as yet on it, I think perhaps it could be deferred until later.

Senator KENNEDY. Thank you for your help in preparing this bill. Mr. ELLENBOGEN. Mr. Chairman, in our report on the committee print, which I think is the same as your bill, we recognize-we said we would have no objection if the subcommittee should decide to not require, not have, this $2,500 figure in relation to civil defense.

In other words, we do not feel that symmetry in this particular aspect is essential. We did oppose a $2,500 limit or any such limit when Public Law 61 was before this committee.

Senator KENNEDY. Thank you very much.

Mr. John Thomas, Director of Personal Property Utilization, and Mr. Charles W. Gasque, Assistant General Counsel, General Services Administration, are our next witnesses.

STATEMENT OF JOHN THOMAS, DIRECTOR OF PERSONAL PROPERTY UTILIZATION; ACCOMPANIED BY CHARLES W. GASQUE, JR., ASSISTANT GENERAL COUNSEL, PERSONAL PROPERTY DIVISION, GENERAL SERVICES ADMINISTRATION

Mr. GASQUE. Senator Kennedy, we do not have a prepared statement.

At the start I would like to express to you, however, the regrets of our Administrator at his inability to be here at this hearing today. Likewise, we had hoped that our General Counsel, Mr. Elliott, could be here. He has been detained, although he may come in before the hearing is concluded.

In general, sir, we are in accord with the overall concept of S. 3693. As you know, we have had the opportunity-which we deeply appreciate of working with the staff of your subcommittee on your proposed changes of the House version of the bill.

GSA is in accord with the provisions of the bill which you have now introduced as S. 3693.

In passing, I would like to say-and this is without the benefit of any agency consultation or discussion-and also without having had a chance to obtain the views of the Bureau of the Budget-with respect to the amendment which has been offered today to your bill, that I believe GSA would oppose any amendment at this time to the bill.

As you know, sir, your subcommittee has had before it many bills suggesting the extension of the donation program for various interests such as the 4-H Clubs and other worthwhile organizations.

GSA has consistently opposed a piecemeal extension of the donation program from the standpoint of the Government's interest in the efficient administration of the donation program.

We believe, however, as you know, sir, that Federal Civil Defense is a different sort of a program, and rightly deserves to be brought into the present donable program.

Now, if there are any questions that you would like to ask, sir, as to detailed operations of our surplus disposal program, Mr. Thomas here will be very glad to answer them.

Senator KENNEDY. Senator Cotton?
Senator COTTON. No questions.

Senator KENNEDY. Senator Martin?

Senator MARTIN. No questions.

Senator KENNEDY. How much money does the Government realize each month from the sale of surplus property?

Mr. THOMAS. The figures on that I can furnish you, Senator (see p. 44). In the beginning let me say they are all based upon acquisition costs. We don't have it broken down to a monthly basis.

Each agency reports to us as required by our regulation on a quarterly basis.

I believe I have a copy of the second quarter. I don't have it broken down in detail as to agencies, it will have to be governmentwide.

This is for the first two quarters of the fiscal year 1956. The overall, other than scrap and salvage, the average return now runs approximately 7.6 percent.

Senator KENNEDY. Do you have that by dollars?

Mr. THOMAS. Yes; I do have.

I can give you the overall return figure. I don't have the complete details.

Senator KENNEDY. That is all right.

Mr. THOMAS. The overall figures other than scrap and salvage is $684,721,259.

Senator KENNEDY. What are the mechanics of working out your program with the Department of Health, Education, and Welfare at the present time?

Mr. THOMAS. Our operational program is a decentralized operation by regional office. We have a good, complete program as far as control of property and what we will service them with. We service them with