By tying to the future planning the past usage, they are able pretty easily to predict what probably will be required under a certain plan for each item, and they will procure on that basis.

The question of disposal, if there is an excess

Mr. BURNSIDE. There will be an excess, just as the commander said a few minutes ago there will be a large excess if we get new equipment.

Commander FOLEY. Yes, of the older type.

Mr. BURNSIDE. Yes, that is what I mean.

Commander FOLEY. We attempt to procure in peculiar aircraft items on a program life basis at the outset.

Mr. BURNSIDE. That is right. As you are getting in these new types of planes, this other will become obsolete faster; yet, the private industry can use it, and if you get it into private industry's hands quickly enough we will get some value from it. If not, it will be outmoded and outdated, will it not?

Commander FOLEY. You are speaking now, Mr. Burnside, of the application of an item which we have on the shelf in private industry?

Mr. BURNSIDE. Yes; that is what I am thinking about: That it soon will be outdated and you will have to discard it.

Commander FOLEY. It is relatively easy, in the case of obsolete material in aviation, particularly. It is, I believe, picked up almost immediately and disposed of, because of our shortage of storage

space.

The aviation supply office has been very much on its toes.
Mr. BURNSIDE. You constantly screen this material?

Commander FOLEY. In the case particularly of obsolete and obsolescent material. It is not as much of a problem as the disposal of excesses, for example, of hardware; that is, general hardware items.

Mr. BURNSIDE. You require the companies to keep dies of this material in case you have to shift because of immediate stress due to war conditions? They have the dies where they can get the material in case you need it?

Commander FOLEY. Yes; I believe so. The manufacturers store them. I believe after a certain period of time those dies are destroyed when the Bureau of Aeronautics decides that there is no further need, or that there will be no further need, for that particular range of items. Mr. HOLIFIELD. Are there any further questions? If not, we thank you very much, Admiral Honaker, and all of you.

Admiral HONAKER. Thank you.

Mr. HOLIFIELD. We will next hear from Mr. John A. Priest, of the National Production Authority.

Mr. Priest, you are with the National Production Authority in the Department of Commerce. Will you take the witness stand at this time?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. We would like to have your opinion on this subject, first, from the standpoint of the National Production Authority, and then later we might want to ask you some questions in regard to your previous experience in this line of work. What is the interest in the National Production Authority in the subject of redistribution of excess materials and better utilization?

STATEMENT OF JOHN A. PRIEST, AIRCRAFT DIVISION; ACCOMPANIED BY EDWARD A. NICHOLS, OFFICE OF GENERAL COUNSEL, NATIONAL PRODUCTION AUTHORITY

Mr. PRIEST. Mr. Chairman and gentlemen, I would like to point this out, if I may: that I am not geared to answer the National Production Authority's interest in this particular series right now. When your request was made, I understood that it was to be based on past history.

I should like to present to you Mr. Nichols of our office.

Mr. NICHOLS. National Production Authority has not looked at the plan as yet. I have no knowledge of it. I am sure that the National Production Authority would like to look over the plan, and then, if it has any comments, we would be glad to give them. We are happy to make Mr. Priest available to the subcommittee. Since National Production Authority has no position as yet on this matter, Mr. Priest's personal views and his broad background may be of assistance to the subcommittee. Mr. Priest is appearing here in a personal capacity, not as a spokesman for National Production Authority.

Mr. HOLIFIELD. Would you ordinarily have interest in that type of a thing? I mean, does it come within your department in any way? Mr. NICHOLS. I believe the National Production Authority would necessarily be interested in this type of plan.

Mr. HOLIFIELD. You have a certain obligation in the way of allocation?

Mr. NICHOLS. The allocation of metals; yes, sir.

Mr. PRIEST. Of the three basic metals, yes; that is where the National Production Authority enters into this program.

Mr. HOLIFIELD. Do you have any information at this time that there are appreciable backlogs of critical materials that are tied up in these aircraft-production plans as the result of engineering changes or

termination of contracts?

Mr. PRIEST. I do; yes, sir.

Mr. HOLIFIELD. What is your information along that line?

Mr. PRIEST. I have had manufacturers state to me that they have aluminum running out of their ears.

Mr. HOLIFIELD. Only aluminum, or are there other materials?
Mr. BURNSIDE. Nickel?

Mr. PRIEST. Not copper, not nickel.

Mr. HOLIFIELD. There is at this time?

Mr. PRIEST. Steel and aluminum overages.

Mr. HOLIFIELD. Is that material tied up through one technicality or another in unused inventories? Is it susceptible to declaration as excess?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. And better utilization.

Mr. PRIEST. Mr. Chairman, if I may, I want to answer that; yes, sir. It is due to excess at one spot, not used there, which could be redistributed.

Mr. HOLIFIELD. A condition where critical supplies of metals are concerned that are in excess in one plant and in the meantime another plant is going out and buying from a primary producer. In other words, we are not utilizing our metals to the best advantage, are we? Mr. PRIEST. In the main, I think that is a fair statement.

Mr. HOLFIELD. Do you have any ideas as to the extent of the inventory in materials that might be stalemated?

Mr. PRIEST. Only in aluminum, sir. I cannot talk about copper. Mr. HOLIFIELD. Do you have any information in regard to aircraft component parts that are already manufactured being in excess in supply, either by certain military departments that are holding them or refusing to declare them, or by airframe manufacturers?

Mr. PRIEST. Your hearing, Mr. Chairman, is on a given subject. However, I know that there are certain warehouses that are full of materials that could be redistributed.

That I know, but it is not because of long supplies. It is because of technical orders demanded by the Air Force, and the Navy, as far as inspection is concerned.

Mr. HOLIFIELD. Will you please clarify that a little bit?

Mr. PRIEST. Yes, sir. For instance, technical orders exist wherein an instrument should be inspected every 30 days, 1 out of 12, or 1 out of 10. I cannot quote the order; I cannot even remember the numbers of them. But if they are not handled or inspected during this period of time they get a red tag on them. They sit back in the corner of the warehouse.

And in comes all of the jet material, and back in the corner goes the stuff that they do not have time for, to reinspect.

Mr. HOLIFIELD. To inspect thoroughly?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. And to declare as excess?

Mr. PRIEST. That is correct.

Mr. HOLIFIELD. In your opinion, there is an appreciable amount of these parts which have been red-tagged because of a lack of inspection and have been held from excess declaration?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. It would seem beneficial to the Government if some kind of plan could be evolved whereby speedier declarations of excess would be made by the owning agencies?

Mr. PRIEST. Yes, sir; except that, naturally, the man desires to get out the current type of aircraft demanded by the tactical groups. So, therefore, everything is geared to the maintenance of the jets and back in the corner goes the other material.

Mr. HOLIFIELD. Would these materials be usable by commercial airplane lines?

Mr. PRIET. We do not have any commercial jets. Yes; they would be.

Mr. HOLIFIELD. Is it your thought that there could be a greater recovery to the Government if this Government-owned material was declared excess now than to have it withheld for long period of time?

Mr. PRIEST. Absolutely, sir. My own feeling is that those areas of storage could be taken over by commercial people and gain a recovery and do the commercial lines some good.

Mr. BURNSIDE. Right there, on that point; evidently, they are not so short of storage as the commander was just saying.

Mr. PRIEST. They are short of storage. You can ask Mr. Larson's organization. They are trying to buy all of the warehouse space they can; that is, General Services Administration. Is that not correct?

Mr. WINKLER. I would rather have our real-property people answer that.

Mr. BURNSIDE. The commander said that, but he said that because they were short of space they were examining this right away. Evidently, they are not examining it if it is stored away.

Mr. PRIEST. You have a priority listing, for instance. My feeling is that what I stated to the chairman before.

Mr. BURNSIDE. They are not checking.

Mr. PRIEST. You have a priority status. If you are going to keep jets going, you cannot check the reciprocatings.

Mr. BURNSIDE. A shortage of personnel in making the checks; is that it?

Mr. PRIEST. You are the people that give them the money; so I guess it is up to you.

Mr. McVEY. Do you think of any remedy for that situation?
Mr. PRIEST. Yes, sir. I do.

Mr. McVEY. We would like to hear it.

Mr. PRIEST. I think that commercial contracting to relieve the bulging warehouses that the services are now being faced with is No. 1; that is, storage. And No. 2, the merchandising aspect.

I think that negotiations should be made with commercial people. Mr. HOLIFIELD. In other words, you think that first there should be orders given from above to speed the declaration of this inventory. And, second, that the method of utilizing it should be through some type of free-enterprise redistribution?

Mr. PRIEST. Well, yes, Mr. Chairman.

Mr. HOLIFIELD. As I remember, you have had a lot of experience. You were before this committee during the Rizley subcommittee days. Mr. PRIEST. That is correct.

Mr. HOLIFIELD. That was back in 1946 and 1947. And, if I remember rightly, you were in the War Assets Administration at that time? Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. What position did you hold at that time, Mr. Priest? Mr. PRIEST. I was the chief of the section of the Warehouse Clearance Division—aircraft material. I started in the field and personally inventoried, probably, 40 warehouses. And then, due to a certain success in the Midwest, I was presumably brought down here because of my success there and made the Chief of the Depot Clearance Division, as it was called, for the War Assets Administration.

Mr. HOLIFIELD. You are familiar, then, with the competitive-bid sales and with the aircraft-agent type?

Mr. PRIEST. I have handled both and witnessesd both and engineered or directed the same.

Mr. HOLIFIELD. Would you advocate the type of aircraft-agent sales that we had before?

Mr. PRIEST. With certain confinement.

Mr. HOLIFIELD. You mean with certain safeguards?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. What safeguards would you suggest to prevent diversion of Government dollars into private pockets in an unwarranted manner?

Mr. PRIEST. That is a very good question. Qualified operators, Mr. Chairman.

Mr. HOLIFIELD. Qualified operators?

Mr. PRIEST. Yes. Now, then, what I would like to say about that is that I think it behooves the military to join the group of those to determine who is qualified.

Mr. HOLIFIELD. Who determines that?

Mr. PRIEST. What I do recommend is that inspectors from the Navy, inspectors from the Air Force, inspectors from the Army go into the plants that then are going to redistribute this material, if the plan is adopted. They are the ones who determine qualifications. You cannot have umbrella salesmen in this business.

That was the horror of the War Assets Administration, so far as I am concerned.

Mr. HOLIFIELD. That you had men selling materials who knew nothing about them?

Mr. PRIEST. Absolutely, sir.

Mr. HOLIFIELD. Some of them knew nothing about the principles of selling or merchandising?

Mr. PRIEST. Well, they were in a different league, a different field. Mr. HOLIFIELD. Is this field of aircraft materials and component parts and hardware a peculiar field that you think could not be handled by a general merchandiser?

Mr. PRIEST. It is definitely unique, Mr. Chairman, and cannot be done.

Mr. HOLIFIELD. You feel that it must be handled by specialists? Mr. PRIEST. Absolutely, sir. It is perhaps the most specialized field in merchandising today.

Mr. HOLIFIELD. How many breakdowns would you make in the disposal?

Mr. PRIEST. About six.

Mr. HOLIFIELD. Will you give us the benefit of your knowledge on that?

Mr. PRIEST. Yes, sir; I will. Engine parts, propeller parts, whole props and propeller parts-we will put that in one classificationlanding gear, hardware, instruments. I do not believe we have to get into armanent. Offhand, I would say there are about six categories that should be in that.

Mr. HOLIFIELD. Are there experienced firms at this time that are in those particular fields?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. That are doing the job of selling?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. And disposal?

Mr. PRIEST. Yes, sir.

Mr. HOLIFIELD. Where do they obtain their stocks at the present time?

Mr. PRIEST. Through two methods. One, as agents for the original manufacturer. For instance, you have your hardware people. They get them from the general manufacturers, Lamson & Sessions, and so forth.

And then there are general distributors. They call on Northrup, and so forth, and sell them their line of requirements.

The instrument people do the same thing. They get their stuff from Sperry.

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