APPENDIX HOUSE OF REPRESENTATIVES, EXECUTIVE AND LEGISLATIVE REORGANIZATION SUBCOMMITTEE, OF THE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, Mr. JESS LARSON, DEAR MR. LARSON: The problem of disposal of surplus property was placed in the hands of the General Services Administration with power to delegate to other agencies of the Government. The basic legislation authorizing this program was written by my subcommittee, the Executive and Legislative Reorgani zation Subcommittee of the Committee on Expenditures in the Executive Departments and became Public Law 152 of the Eighty-first Congress. My subcommittee has a continuing interest in the methods and procedures adopted by the General Services Administration and other Government agencies to effectuate the provisions of this law. It would be of interest to our subcommittee to know whether any plans are now being contemplated by your agency for the conservation, redistribution, or recovery of the surplus or excess supplies of materials being generated through defense contracts. I would appreciate an early reply to this inquiry. Sincerely yours, CHET HOLIFIELD, M. C., Chairman. NOTE.-Identical letters of same date sent to John D. Small, Chairman, Munitions Board; Charles E. Wilson, Director, Office of Defense Mobilization; Thomas K. Finletter, Secretary, Department of the Air Force. Hon. CHET HOLIFIELD, GENERAL SERVICES ADMINISTRATION, House of Representatives, Washington, D. C. DEAR MR. HOLIFIELD: This acknowledges your letter of February 22, 1952, regarding plans for the conservation, redistribution, or recovery of surplus and excess property being generated through defense contracts. I understand that Mr. Russell Forbes, Deputy Administrator, also discussed your letter with Mr. Herbert Roback, of your staff. I and members of my staff have for some time been considering questions such as you raise in your letter and which were amplified by Mr. Roback. The principal future potential source of excess and surplus property resulting from the present defense effort obviously will be the three military services. What that volume will be is an important factor in any consideration of this subject. Accordingly, early in February I wrote to the Secretary of Defense, asking for his estimates of excess property that may be generated in fiscal years 1953, 1954, and 1955. That letter has recently been acknowledged, stating that the estimates for 1954 and 1955 particularly would be difficult to make, but that the matter was being studied and that we would receive further information as soon as possible. While there is a general belief that the volume of excess property will increase as new production for the defense effort accelerates, it is my opinion that this increase in excess is going to be in an entirely different pattern than after World War II. Then we had huge inventories of both new and used property of all kinds suddenly declared surplus, clogging plants and other installations. Furthermore, during that period there were serious shortages of all kinds, and many urgent problems pertaining to reconversion to peacetime activities. Under the 125 presently foreseeable conditions I believe it is a reasonable assumption that, even though the volume of excess generated will doubtless increase, the accumulation will not approach the volume of property War Assets Administration had to dispose of, and that the release of this property as excess will be spread out more gradually. Furthermore, I believe the property will consist in larger proportion of military-type items, used or obsolete, with a much smaller proportion of "common use" items that could be used generally by other agencies of the Government. The approach and the regulations issued by this Administration have been designed to emphasize and encourage maximum utilization and better property management practices within each agency as the prime starting point. The question that you raise, pertaining to conservation and redistribution, bears directly on this point. In view of the conditions and assumptions outlined above, I believe that the primary responsibility for conservation and redistribution is within the Department of Defense. The Department of Defense is the only agency that can determine its own future requirements or the needs of its various contractors based on its own strategic and logistic plans. Property does not become excess within Department of Defense until that agency determines that the property is no longer needed. That agency should not determine property excess until it has completed full coordinated evaluation of the needs and future plans of all of the military services; and should make maximum provision for conservation and redistribution of the property that is under its own control or that of its contractors. After that point, GSA will endeavor to find utilization for excess usable items in other agencies of the Government to the maximum extent feasible with the funds the Congress appropriates to this Administration. Common use items will be given consideration for taking into Federal Supply Service warehouse stocks for subsequent redistribution, if no immediate use is found. After these efforts have been exhausted, I believe the residue should be released back to the owning agencies for disposal as surplus under regulations which establish the ground rules, as at present. Under the expected conditions as outlined above, I believe that such disposal methods are in the best interest of the Government. I know that you recognize, as I do, that there are many ramifications to this subject that are difficult to cover briefly in a letter. Accordingly, I would be glad to meet with you and discuss these matters more fully, if you desire to do so. Sincerely yours, Hon. CHET HOLIFIELD, JESS LARSON, Administrator. MUNITIONS BOARD, Washington 25, D. C., March 13, 1952. Chairman, Committee on Expenditures in the Executive Departments, House of Representatives. DEAR MR. HOLIFIELD: This is in reply to your letter of February 22, 1952, requesting information relative to Department of Defense plans for the conservation, redistribution, or recovery of surplus supplies or materials being generated through defense contracts. Your letter may involve several types of property problems: (a) utilization of military property, (b) utilization of contractor-owned property not consumed during manufacture, (c) utilization of contractor-owned property rendered surplus by reason of specification changes, (d) general management of Governmentfurnished property in the hands of contractors, (e) disposal of inventories in the event of contract termination. With respect to the utilization of military property, the Department of Defense and the military departments are bound by the General Services Administration Personal Property Management Regulation No. 3, Revised, dated October 9, 1950, as amended. Our activities in this field are in accord with the provisions of this regulation. The management of contractor-acquired property is basically the management responsibility of the contractor and the Department of Defense does not ordinarily intervene in this management. Notwithstanding this fact, several proposals are under consideration which are designed to assist the contractor in the redistribution and full utilization of his surplus property. The utilization of contractor-owned property rendered surplus by reason of specification changes is handled in the manner indicated in section VIII, Termination of Contracts, Armed Services Procurement Regulation, hereafter cited. Management of Government-furnished property in the hands of contractors is accomplished under the provisions of section XIII, Government Property, Armed Services Procurement Regulation, and particularly appendix B of the Armed Services Procurement Regulation, Manual for Control of Government Property in the Possession of Contractors. Copies of these documents are attached. Disposal of termination inventories is handled in accordance with section VIII, Termination of Contracts, Armed Services Procurement Regulation. A copy of this document is provided for your ready reference. It is believed that the foregoing information and the attached documents set forth the policies and our plans relative to the subject in question. If we can be of further assistance, please do not hesitate to call upon us. Sincerely yours, M. L. RING, Rear Admiral, SC, USN, Acting Vice Chairman for Supply Management. Hon. CHET HOLIFIELD, EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF DEFENSE MOBILIZATION, House of Representatives, Washington, D. C. DEAR MR. HOLIFIELD: Thank you for your letter of February 22 to Mr. Wilson with respect to the problem of disposal of surplus property. As you know, this matter is closely allied to the problems of contract termination, both of which are a part of the procurement activity. These matters are being organized for full consideration by the Procurement Policy Board in order that uniform policies may be developed for all Federal agencies. As soon as some specific information is available, we shall appreciate an opportunity to discuss it in detail with you and your subcommittee. Sincerely yours, A. E. HOWSE, Assistant to the Director. DEPARTMENT OF THE AIR FORCE, Washington, March 20, 1952. Hon. CHET HOLIFIELD, Chairman, Executive and Legislative Reorganization Subcommittee, House of Representatives. DEAR MR. CHAIRMAN: I refer to your recent expression of interest pertaining to the conservation, redistribution, or recovery of surplus property. Pursuant to authority contained in Public Law 152, the General Services Administrator issued Personal Property Management Regulation No. 3, revised October 9, 1950, subject: Utilization of Excess Personal Property and Disposal of Surplus Personal Property. Section 18 of that regulation delegated authority to the Department of Defense to dispose of contractor inventory under such order and directives as the Department may prescribe. The regulation further provides that, prior to disposition by the Departments, certain types of property, such as typewriters, office furniture, motor vehicles, Federal Supply Service stock-catalog items, construction equipment (except hand tools), property for which other contracting or Federal agencies had a requirement, reserve materials, intangible personal property, strategic and critical materials, and such other types of property as might be designated by the General Services Administration, would be fully screened among the Federal agencies for possible use. The regulation also authorizes the Department of Defense to dispose of surplus contractor inventory through retentions by subcontractors, and such other methods as prescribed by Department of Defense orders and directives. In addition, the regulation established certain safeguards and limitations pertaining to sales and provided that the proceeds thereof may be credited to the applicable contracts. On March 14, 1951, the Secretary of Defense issued the Department of Defense policy on conservation, utilization, and disposal of matériel. This policy requires that matériel determined to be surplus will be disposed of in accordance with the applicable General Services Administration regulations, Office of Price Stabilization ceiling-price regulations, National Production Authority orders and regulations, and other pertinent laws and Department regulations. Section VIII, part 6, of the Armed Services Procurement Regulation established uniform general policies and procedures for the disposition of excess contractor inventory by the armed services. Briefly, the Armed Services Procurement Regulation provides that serviceable and usable materials, and strategic and critical materials, will be screened for requirements by each of the services and further screened, if not required by the particular service, with the other two military Departments and the General Services Administration. If the property is surplus, then under the Armed Services Procurement Regulation it is disposed of by competitive-bid procedure or, in unusual and exceptional cases, by negotiation. It is the practice of the Air Force to retain all property that can be used and dispose of only that property for which no use within the Government can be found. As an example, screening of excess property during January and February 1952 valued at $4,354,991.84 was redistributed within the Air Force, and property valued at $892,471.30 was redistributed among the other services. All inventories of reportable items excess to a contract are screened for redistribution with the Air Force. When screening within the Air Force has been completed, the remaining items undergo further screening. Aircraft, aircraft parts and components are forwarded to the Naval Aviation Supply Office, Philadelphia, Pa. Other reportable property is submitted to the Department of Defense central screening agency. This agency is the Surplus Materials Division, Bureau of Supplies and Accounts, Department of the Navy, Washington, D. C. Only after complete screening of reportable items has been made, and it has been determined that the material is surplus to the Government will it be sold by competitive bid to the highest bidder or, in exceptional cases, by negotiation. I am happy to obtain this information for you. Sincerely yours, ROBERT E. L. EATON, Brigadier General, United States Air Force, FEDERAL CIVIL DEFENSE ADMINISTRATION, OFFICE OF THE DEPUTY ADMINISTRATOR, Hon. CHET HOLIFIELD, Chairman, Executive and Legislative Reorganization Subcommittee. House of Representatives. DEAR MR. CHAIRMAN: I have read with a great deal of interest your remarks in the House on May 13, 1952, concerning the need for a comprehensive review by your subcommittee of the laws relating to the disposition of surplus property of the Government. In the event your subcommittee determines to undertake such a review, I would like to suggest that it consider the feasibility of utilizing excess or surplus Government property on a nonreimbursable basis for Federal and State civil-defense purposes. In this connection you will recall that section 203 (j) of the Federal Property and Administrative Services Act of 1949, as amended, presently authorizes the Administrator of General Services to donate to taxsupported and nonprofit institutions surplus personal property determined by the Federal Security Administrator to be usable and necessary for educational purposes or for public-health purposes, including research. A number of persons take the position that a considerable quantity of surplus personal property is held in Federal depots which could be put to good use by the State civil-defense organizations if it were made available to them on a basis similar to that presently in effect for schools and nonprofit institutions. This is said to be true, particularly with respect to surplus generated by the Armed Forces. On the other hand, there are those who take an opposite view. Due to the press of other matters and the almost complete absence of readily available over-all information concerning Government surplus property, we have not been able to resolve these conflicting views. Accordingly, it would be greatly appreciated if your subcommittee would inquire into this matter at its earliest convenience. Sincerely, J. J. WADSWORTH. Hon. CHET HOLIFIELD, CLARY MULTIPLIER CORP., Member of Congress, Washington, D. C. DEAR CONGRESSMAN HOLIFIELD: We believe attention should be called to your committee to the fact that substantial quantities of aircraft materials are now being accumulated as excess, or long supply, among the various airframe manufacturers and their subcontractors. These excesses are materials for which the Government is liable. Unless steps are taken to rectify this condition, soon as possible, these excesses brought about by engineering changes, terminations, and the flattening out of aircraft production will ultimately result in the dumping of these materials as surplus, and possibly create undesirable conditions as were brought about after World War II. We feel that a method of redistribution should be established immediately which will result in the saving of manpower, the saving of critical materials, will alleviate the necessity of expanding production facilities, will assist in alleviating shortages in the aircraft industry, and generally result in tremendous savings to the Government. Such a program has been proposed by the Aircraft Production Resources Agency, Wright Field, Dayton, Ohio, and has been endorsed by the Air Force and the Aircraft Industries Association of America. Opposition has been encountered from the Bureau of Aeronautics, and for this reason we feel that your congressional committee should investigate the need and feasibility of such a program and recommend the proper steps to be followed which would have the approval of Congress and be beyond criticism from the people of America. Concurring with the Aircraft Production Resources Agency proposal, we recommend that qualified, established aircraft-parts distributors be invited to participate in such a program, as such groups are best qualified to achieve the aims set forth in the APRA program with the greatest return to Government. Further, such a group would generally be in a position to rehabilitate or modify aircraft parts and components which, if not handled properly, would ultimately be scrapped at no return to the Government. Our company and other companies whom we consider to be thoroughly qualified to participate in such a program are now engaged in the business of distribution and rehabilitation or modification of aircraft parts. By adopting such a program, experience would be gained, and evaluation could be made as to its merits, which could resolve itself into a pattern for the redistribution of other excesses or surpluses as they may be generated by the various branches of the Government. We are prepared to appear before your committee at any time you may so desire to explain the workings of such a program, as our experience and the experience of other qualified distributors was utilized from 1943 until the end of World War II. We respectfully request expeditious action, as we weel that this is the proper time to reestablish the proposed program. Very truly yours, CLARY MULTIPLIER CORP., P. S.-We are enclosing a copy of the APRA proposal and memorandum of understanding for your information. [Held in subcommittee files.] CLARY MULTIPLIER CORP., Mr. CHET HOLIFIELD, Member of Congress, Washington, D. C. DEAR CHET: We are enclosing letters received from Aircraft Production Resources Agency which in general bear out our statements of excesses being in existence. Very truly yours, CLARY MULTIPLIER CORP., General Manager. |