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total of 75 days. They cannot make their request for the property until the end of the 60-day period. We believe they have adequate notice. This is with respect to reportable property.

With respect to nonreportable property, they also have access to it for purposes of screening for not less than 15 days.

I believe they get adequate time.

Mr. SCHWEIKER. One complaint was made earlier this morning on the fact that some of the States were ready to receive this property, and then at the last minute it would be withdrawn. Is this because we are not following the 60-day limitation, or what has entered in here?

Mr. BOUTIN. Really, Congressman, the reason for this is that we say, as a matter of our policy, that Federal utilization must have the first priority. If we can save the Federal Government from going out and buying something new by obtaining something which is excess, this must come first.

Occasionally it does happen. It is unfortunate when it does, because it just casts a shadow on the whole program. We do not like, at the end of 65 days, after the screening period is over, all at once to get an emergency request for something which they have once passed over, but because of the importance of trying to save money wherever it is possible, if there is a bona fide need, which we require that they demonstrate, we will then sanction a withdrawal for continued Government use. This is not a frequent thing. We do not like it when it happens, and would like to avoid it. But sometimes it just does happen, either because the agency was not aware of the need at the time it was passed over, or perhaps the attention was not given which should have been given.

Mr. SCHWEIKER. One other point brought up this morning-I do not understand the mechanics of this, so you may have to explain that, too—is that GSA tended to bypass the State agencies in certain respects, and assigned property directly without going through the procedure prescribed by the law. I wonder if one could say how this is done and why it is done.

Mr. MOODY. I believe this has reference to the service educational allocations by the DOD. It is a fact that under our present regulations, the Secretary of Defense makes the transfers direct, as distinguished from transfers to the State agency for distribution to the eligible donee as determined by the Secretary of Defense. I understand that today the State agents have made a recommendation that we modify the procedure to conform with the letter of the law as distinguished from the spirit. Certainly we are willing to reexamine the procedure and see what might be accomplished by way of benefit to all interests.

Mr. SCHWEIKER. The question I immediately raised was, if you did modify the procedure, then who does say who gets the property at this point? In other words, if you were to put it through a State agency and they determined that they had a need which they felt was just as justifiable as the Defense Department's earmarking a certain need, the question would come up, Who would have the final say in a case like that?

Mr. BOUTIN. It would have to be predetermined, Congressman, that actually this is the way it was going. I realize what the law says specifically, but we have tried all the way through here to ease the

requirements, to cut out some of the redtape, to cut out the number of hands it goes through. As long as we are convinced this is a bona fide need for which DOD makes the allocation, we find it hard to justify, simply for the sake of going through the process, putting it through another pair of hands. As Mr. Moody has said, we are not hidebound on this thing. We shall be glad to consider it. We are trying to make it easier.

I enjoyed a talk a few moments ago with a gentleman from California who says that he regularly has lunch with our man out there who handles this program. This is the type of relationship we are trying to build up, rather than to make it more cumbersome, so there is direct communication, there is a cordial feeling and good relationship all the way through.

Mr. SCHWEIKER. That is all I have, Mr. Chairman.

Mr. MONAGAN. Thank you very much, Mr. Administrator. I appreciate having you with us.

Mr. BOUTIN. Thank you very much, Mr. Chairman and Congress

man.

STATEMENT OF HERBERT J. WATERS, ASSISTANT ADMINISTRATOR, OFFICE OF MATERIAL RESOURCES, AGENCY FOR INTERNATIONAL DEVELOPMENT

Mr. MONAGAN. We are happy to have with us Mr. Herbert Waters, who is Assistant Administrator for Material Resources of the Agency for International Development.

Mr. Waters, in view of the Foreign Assistance Act of last year, of course, there are added legal responsibilities that the AID has in connection with excess property. We have felt that this committee should keep in touch with developments. We shall be glad to hear from you in this connection.

Mr. WATERS. Mr. Chairman, members of the committee, I appreciate having this opportunity to discuss with the committee AID's utilization of excess Government property and the actions we are taking to increase this utilization, particularly in the field of foreign excess property.

U.S. Government-owned property of interest to the Agency for International Development (AID) is personal property.

Excess personal property is defined as "any personal property under control of any Federal agency which is not required for its needs and the discharge of its responsibilities."

The largest share of excess property within the Federal Government originates in the Department of Defense.

Excess personal property located within the United States, Puerto Rico, and the Virgin Islands is known as domestic excess personal property and is subject to control of the General Services Administration. Department of Defense personal property located outside the United States, Puerto Rico, and the Virgin Islands is known_as foreign excess personal property, and is subject to control of the Department of Defense.

Domestic excess personal property is made available for screening by the General Services Administration for possible transfer to other agencies of the Federal Government. After the screening period, if the property is not earmarked for transfer to other agencies, it be

comes surplus property and is available for donation through health, education, and welfare programs or for public sale in accordance with prescribed procedures. Surplus property is not available for transfer to AID-financed projects.

The property of interest to AID comprises a wide range of items, including tugboats, floating cranes, railroad equipment, small vessels, construction and roadbuilding equipment, electrical generating equipment and associated items, machine tools, motor vehicles, small tools, et cetera. Not all of these items are available at any given time but do occur from time to time. The composition of excess property is an ever-changing one. It is considered complementary to the AID-financed programs, and is not the primary source of supply for AID programs.

Congress has provided a sound legislative base on which a prudent program of excess property utilization can be built.

Section 607 of the Foreign Assistance Act of 1961, provides authority for the transfer of excess property to friendly countries, international organizations, the American Red Cross, and voluntary nonprofit relief agencies registered with and approved by the Advisory Committee on Voluntary Foreign Aid. There is no charge for the property, but the recipient pays, on an advance-of-funds or on a reimbursable basis, all repair, handling and transportation charges involved in the acquisition of such property. In fiscal year 1961 such transfers to other governments amounted to $37.8 million, and in the first half of fiscal year 1962 to $6.3 million. No AID expenditures were involved in these transactions. An example of the type of transfer possible under section 607 is presently taking place. AID is furnishing property with a value of approximately $15 million to the Government of Colombia, for improvement of four port facilities and allied undertakings.

Among the items being acquired by the Government of Colombia are three excess U.S. Navy ships which are classified as APD's and which originally cost the Navy $3,200,000 each or a total of $9,600,000. The Government of Colombia will pay $525,000 from its own resources to defray the costs of demilitarization, modification, and repair of these ships. The primary purpose of this type vessel is the generation of electric power for the use of shore activities. Each ship has a capability of maintaining a generation of 3,600 to 4,000 kilowatts; production is dependent upon the voltage characteristics desired. A total capacity, therefore, of 10,800 to 12,000 kilowatts can be produced in Colombia immediately upon delivery of these three excess APD's at a capital cost of $525,000 or approximately $46 per kilowatt.

This contrasts with the construction of new shore based plants of similar capacity at a capital cost of $2,400,000 or approximately $211 per kilowatt and with an attendant delay of 18 months for construction.

Further, if these vessels were not utilized by AID, they either would be sold as scrap for approximately $46,000 each or a total of $138,000 or would be towed to sea by the Navy and used for target practice.

One of the obstacles to full utilization by AID of Government excess has been the problem of timing. Because the period of availability (30-45 days) and the need for the item may not coincide, much property has been lost to the AID program. Section 608 of the Foreign

Assistance Act of 1961, authorizes a program to overcome this difficulty. This authority provided for a $5 million revolving fund to be used by AID for the payment of costs involved in the advance acquisition and storage of property for later shipment to meet U.S. AID requirements. Under this section, AID may acquire on a priority basis, domestic property having a total value of $45 million for use in its oversea programs.

Recognizing the complexities involved in establishing marshaling sites to activate the section 608 authority, we asked the General Services Administration to recommend the best method to get this done. The following approaches were examined:

1. Use of established facilities of other Government agencies, specifically those of the Department of Defense.

2. Use of GSA-operated facilities.

3. Use of private contractors.

4. Use of a combination approach.

After consideration of such factors as operational readiness of facilities, availability of trained personnel, and cost, it was concluded that the most feasible method of carrying out this program was through existing U.S. Government-owned and operated facilities for the following reasons:

1. Facilities were available and operationally ready;

2. Personnel trained in reconditioning mechanical and electrical equipment of use to the AID program were available;

3. This arrangement will, over a period, provide us with specific cost information not now available. From this we will be able to determine whether or not the arrangement is in the best interest of the program.

As a result of this study, an agreement has been negotiated among AID, GSA, and the DOD. This agreement sets forth broad responsibilities of the three agencies. Implementing procedures are now being completed and we expect to be in operation before May 15.

The length of time required to establish this program on a sound basis has had no adverse effect on AID's normal utilization of excess property.

AID uses a decentralized system for acquiring domestic excess property. U.S. AID missions overseas receive directly from General Services Administration regional offices notices of availability of items of domestic excess property. Such items, if desired, can be ordered by a mission directly from the appropriate GSA regional office. To service this system, AID has four representatives located in the following GSA regional offices: New York, Atlanta, Chicago, and San Francisco.

This decentralized system also includes a central locator service administered by GSA/Washington, whereby missions are authorized to submit requirements to GSA/Washington for items of excess property not appearing in GSA regional offices notices of availability, but in anticipation of the items subsequently being declared excess. Under this program, U.S. AID missions acquired property with an acquisition value of $9.8 million in fiscal year 1961, and $4.2 million in the first half of fiscal year 1962.

On the question of utilization of foreign excess property, AID is developing a program aimed at maximizing utilization of this property. We are working with the Department of Defense on the establishment

of two AID excess property branch offices for carrying out operations in Europe and Africa, and in the Far East. Operating procedures for implementation of this program have been drafted by AID and forwarded to the Department of Defense. As soon as these procedures are agreed upon, the foreign program can be put into operation. Under interim procedures, U.S. AID's acquired foreign excess property valued at $11.5 million in fiscal year 1961, and $12.3 million in the first half of fiscal year 1962.

Before concluding my remarks, Mr. Chairman, allow me to comment on two additional considerations of substantial importance to the overall utilization of unneeded Federal property.

We

The first involves the interests of the Department of Health, Education, and Welfare in this property for use in schools, etc. are convinced that the relationships among GSA, HEW, and AID are such that the respective interests of each are recognized. These relationships will continue to improve. Field personnel of the agencies will be coordinating their efforts even more than in the past to assure the prudent utilization of excess property to meet the policy objectives laid down by Congress. The second consideration is our apprehension about a proposal advanced by the Department of Defense to increase its use of the exchange/sales provision of section 201(c) of the Federal Property and Administrative Services Act of 1949, as amended, to property likely to qualify for excess status. the proposal were put into effect, we anticipate an adverse effect on the AID program since it would make the expanded authority granted by Congress last fall less meaningful, thereby tending to nullify the objectives of the legislation.

If

Thank you for giving us this opportunity to report to the committee on AID's efforts to utilize excess property thereby stretching the aid dollar and assisting in our efforts to expand markets for U.S. production.

Mr. MONAGAN. Thank you very much, Mr. Waters. Your statement above answers the principal question, I think, that the committee had in mind. Of course, we are anxious that there be no substantially injurious effect on the donable property program though the operations of AID or any other agency. I am very happy to see that there is consultation between HEW, GSA, and AID, and that the interests of each are recognized.

Of course, there is the limitation of $45 million on domestic excess property that AID may acquire that is written into the Foreign Assistance Act. But is there also some difference in the type of property that the two agencies might be interested in?

There are some types

Mr. WATERS. That is true, Mr. Chairman. of items that possibly would be in conflict, but by and large there are many, many items that are of advantage and use to AID that would be of no interest to the State agencies. We are working very closely with the other interested agencies GSA and HEW-to make sure as we plan our advance acquisition at marshaling sites that we are not seriously jeopardizing any of the domestic programs.

I think it was indicated earlier by Mr. Moody that even though property is not available for domestic agencies until it is in surplus, as a practice, as a matter of actual fact, our people who are doing the locating work, if they see something they think HEW or others would be interested in, they try to contact others that might be interested when it does become surplus. It works both ways. If their field

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