ROTATION OF MATERIALS Can you tell us why you need this additional money? (Statement off the record.) Mr. YATES. In addition you have castor oil, feathers, down, and shellac? Mr. HARLAN. Those were safety items. Some small quantities may need to be rotated. Mr. TURPIN. Net cost to the Government of rotation is only $3.2 million for 1962. Mr. Chairman, the $32 million includes $18 million which is the gross replacement cost of the materials which will be rotated. About $14.8 million will be received from the sale of the old materials. That goes into miscellaneous receipts. Mr. YATES. What about deterioration of materials? Mr. CASTO. The cordage fiber we rotate out on a 7-year cycle. We have tests we have been conducting annually since we first started to stockpile this material. The original cycle was a 3-year period. We extended that cycle to a 5-year period and we have now extended it to a 7-year period. We hope in the future we will be able to extend it to a 9-year period. Mr. YATES. That is very good but my question is not answered. Have you found deterioration? Mr. CASTO. Yes, sir. They cannot use the cordage fiber in the manufacture of baler twine, which is the big item for the sisal, or marine cordage for rope without blending it with fresh material. Mr. YATES. What is the loss to the Government likely to be? Mr. CASTO. Loss to the Government on the cordage fiber programs would be roughly $2,800,000. Mr. YATES. This is for the cordage material alone? Mr. CASTO. This is for the abaca and the sisal, which is the big bulk of the rotation for 1962. Mr. YATES. Has the stockpile suffered deterioration in any other items? Mr. CASTO. Rubber deteriorates. Coconut oil deteriorates. We are now able to move on outright disposal all of the quantities of coconut oil that deteriorate. Mr. YATES. Do you take a loss in the sale of that? Mr. CASTO. We sell at current market less roughly three-eighths of a cent a pound for age. STORAGE OF MATERIALS Mr. YATES. Insert the chart on page III-14 in the record. (The chart referred to follows:) NATIONAL INDUSTRIAL EQUIPMENT RESERVE Mr. YATES. We go to page III-18. This relates to the national industrial equipment reserve. Under this item you ask for $2,156,000 which is a reduction of $600,000 under the current appropriation. Put page III-18 in the record. (The page referred to follows:) "STRATEGIC AND CRITICAL MATERIALS" "The reserve of Government-owned machine tools and other industrial manufacturing equipment authorized by the National Industrial Reserve Act of 1948 consists entirely of items selected by the Secretary of Defense from lists of such property declared excess to the needs of the three military departments and other executive agencies. “Items in the national industrial equipment reserve are intended primarily for the expansion in an emergency of defense-supporting industries such as manufacturers of ball bearings, gears, tools and dies, and machine tools. Each of the military departments also maintains a reserve of production equipment for current and mobilization requirements of direct military contractors and producers specifically designated as mobilization suppliers. "The Department of Defense estimates that for 1961 and 1962 approximately 3,000 items will be selected annually for the NIER from excess declarations of production equipment. Budget estimate for 1962 is based on anticipated receipt of 2,500 items. Items received in 1960 totaled 2,349." (From the budget for 1962.) 1960. 1961. 1962 Transportation, processing, and storage (total cost or estimate) JUSTIFICATION $1, 284. 713 2,756, 000 2, 156, 000 Transportation, processing, and storage. Covers nonrecurring costs of loading, transportation, handling, processing, and testing of tools for long-term storage, and recurring storage costs. More detailed identification of cost categories follows: (1) Transportation of equipment from location at time of selection to NIER processing and storage center and some transportation in connection with leasing of equipment. (2) Loading costs include skidding and loading on common carriers of equipment at the plant or depot where located at time of selection. (3) Material handling includes handling of new selections, handling of leased items in and out, handling of equipment within facility, transfers, and disposals. (4) Processing includes analytical testing of operating condition of the equipment and preparation for long-term storage. (5) Machinery upkeep includes operation of dehumidification system, periodic equipment inspection and reprocessing of equipment to extent necessary. (6) Building maintenance includes maintenance and upkeep of storage facility. Mr. HARLAN. That is right. We have tightened up our estimates based on experience that we will get 2,500 new selections rather than the 3,000 we had been estimated on. Our experience over the last couple years indicates it will be closer to 2,500 than 3,000. We have also saved on transportation by making an arrangement with the military departments whereby we may, on a reimbursable basis, leave tools at their facilities when they originate at that facility or nearby. We pay about 40 cents a square foot for reimbursement for dehumidified space. OPERATING EXPENSES Mr. YATES. Mr. Turpin, back to your fund, your part of the strategic and critical materials. Mr. TURPIN. This is not all mine. This operating expense includes three items-service direction, program cost to the DMS, and then the administrative operations. There is a decrease in each item. Mr. YATES. Decrease of $117,000 under the current budget? Mr. YATES. This is for supervision provided by the Commissioner and staff over the various regions? Mr. HARLAN. As well as the Washington office. Mr. TURPIN. That is right. Mr. EVINS. How much time does the supervisory staff at headquarters spend in this area of your activities? Mr. HARLAN. In the strategic and critical materials area? Mr. EVINS. Talking about operating expense. Mr. HARLAN. This is just for strategic and critical materials, the national and supplemental stockpiles. Mr. EVINS. Do you have personnel at headquarters assigned just for this? Mr. HARLAN. We have other personnel assigned to the Defense Production Act and others assigned to the CCC barter program. Mr. EVINS. Are you very active at the headquarters of GSA! Mr. EVINS. How many personnel work on this alone at headquarters? Mr. HARLAN. Ten; under Service direction. Mr. YATES. Insert page III-31 in the record. (The page referred to follows:) STRATEGIC AND CRITICAL MATERIALS SUMMARY STATEMENT ON "OTHER OBJECTS" FOR 1962 Of the $40 million obligation program for 1962, $3,466,700 is for personal services. The remainder of $36,533,300 is for other objects as follows: 12 Personnel benefits, $262,000.-For expenses directly related to personal services, including: contributions to retirement fund, $221,700; health benefits, $28,000; group insurance, $4,300; and employer's FICA, $8,000. 21 Travel and transportation of persons, $136,000.-Travel rates vary among the several activities due to nature of duties, differences in methods of travel, duration of trip, etc. Amount includes $110,000 for 4,762 days regular travel, at average of $23 per day, and $26,000 for motor pool services. 22 Transportation of things, $4,261,900.-For transportation of new and upgraded materials delivered to stockpile; relocation of materials from temporary or indefinite to more permanent storage facilities; sales under approved disposal plans; and movement of NIER items. 23 Rent, communications, and utilities, $66,300.-$6,900 for fixed charges of supplementary space required by warehousing, inspection, and industrial equipment activities; and $59,400 for telephone, teletype service, postage meter rentals, etc. 24 Printing and reproduction, $19,700.-$4,500 for special procurement and stock level forms; $3,000 for manuals, regulations, etc.; $4,800 for bulk printing and bills of lading, classification guides, shipping and receiving manuals, and instructions pertaining to inventory management activities; $3,000 for various special reports required by program officials and other interested agencies; $2,100 for reproduction of forms and reports; and $2,300 for miscellaneous printing and reproduction. 25 Other services, $6,002,000.-$7,000 for tests and analyses performed by facilities other than GSA; $4,000 for repairs to office machines and equipment; and $11,000 for miscellaneous services including health room services and security investigations. Remainder is for commercial warehousing and handling contracts, expenses connected with rotation and disposal sales, and other miscellaneous accessorial costs. 25 Payment to administrative operations fund, $956,600.-For administrative operations necessary to support this program, including related travel, for contribution to the retirement fund, etc. 25 Services of other agencies, $6,931,300.-Largely for reimbursement to DOD for custody of materials and equipment at military depots. 26 Supplies and materials, $17,858,000.—Includes $16,200,000 under rotation program, $1,568,500 under acquisition program, $72,100 under NIER program, and $17,400 for office supplies. 31 Equipment, $39,500.-Primarily for handling, testing, and processing equip ment under the inventory management and industrial equipment activities. |