2. Plant Equipment (Tables 42 and 43)

This is personal property of a capital nature, including machinery, equipment, furniture, vehicles, machine tools, and accessory and auxiliary items for manufacturing or administrative use. Prior to 1964, this property was owned by the military departments whether it was in use at military-owned installations or at' private contractors' plants, or was held in an idle status in departmental industrial equipment reserves. During fiscal year 1964, the Defense Industrial Plant Equipment Center (DIPEC), an element of the Defense Supply Agency, located at Defense Depot, Memphis, Tennessee became operative. DIPEC has management responsibility for idle industrial plant equipment within its scope, and it controls the allocation and re-utilization of such equipment. military departments and DSA itself, for equipment used in its manufacturing processes, retain control over IPE in active use and in mobilization packages. DIPEC, however, maintains the records of much of the equipment and has contributed much of the statistical information appearing in Tables 42 and 43.

The

Included in these tables are the plant equipment and property owned by the Defense Supply Agency, reported separately, as well as that of the Advanced Research Projects Agency, which is included with the equipment of the military department that is managing and using it.

The total value (acquisition cost) of plant equipment reported by DIPEC and the military departments as of 30 June 1966 was $10.4 billion, an increase of a little over 8 percent since a year ago.

To facilitate reporting, and to provide more meaningful categories,

a change was made this year in the definitions of the types of plant

equipment to be reported. Metalworking machinery (see Table 43) remains unchanged in description, but the value shown is the value of metalworking machinery that has been reported by the Army, Navy, Air Force, and DSA to the Defense Industrial Plant Equipment Center, and the value as of 30 June 1966 is the value as carried on the records of that organization, regardless of location or custody. Similarly, the value of other industrial plant equipment (IPE) shown is that on the DIPEC books at 30 June, rather than the value of a selected, and outmoded, list of "other production equipment", as heretofore. categories now represent the worldwide inventory of IPE carried on DIPEC records; other items of equipment are shown in the final column.

These two

The result of these changes in criteria is to reduce slightly the value of metalworking machinery reported, but to greatly increase the scope of the second column which now embraces a wide range of IPE not formerly covered in the arbitrary, selected list.

For these reasons, no comparison is made with the inventory, by type, at the close of the preceeding year. Comparison can, however, be made in total. The Army plant equipment inventory increased about 10 percent during the year, the Navy, less than 5 percent, the Air Force, about 16 percent, while the DSA inventory decreased about 13 percent. The overall DOD increase is owing to acquisition of new equipment, but the movement from DSA to the military departments is owing to activation of idle tools from the DIPEC-controlled idle inventory to active use by the departments to meet current production needs.

The inventory of metalworking machinery, by Production Equipment

Code, is shown in Table 43.

3. Inventories Held in Industrial Funds (Table 44)

Reported as personal property of the Department of Defense are inventories, consisting of raw materials, supplies, and work-in-process, held in all industrial funds. Use of industrial funds, authorized by Section 405 of Title IV of the National Security Act, permits the financing of industrial or commercial-type activities and the development of production costs to be used as a basis for charging the appropriations of customers for the products or services furnished to them by the activity financed by the fund. For financial details of the Department of Defense Industrial Funds, see the annual report, "Working Capital Funds of the Department of Defense"

As of 30 June 1966, 62 activities in the Department of Defense were operated under industrial fund charters. The Army operated 20; the Navy, 38, one of which is a printing activity located in 33 separate plants; the Air Force, 3 (one of which is a printing activity located in 10 different plants; another is a laundry and dry cleaning activity operated at 40 installations); and DSA, 1.

The total inventories, consisting of raw materials, supplies and work-in-process, held in all industrial funds of the DOD amounted to $288 million on 30 June 1966, an increase of $77 million in the year. 4. Excess, Surplus, and Foreign Excess Personal Property (Table 45)

This is personal property on which disposal action has been initiated

by a military department; it is no longer on supply system records but on the property disposal records. It is considered an element of DOD personal property until actually disposed of through sale, donation, or transfer