Hon. RICHARD M. NIXON, THE SECRETARY OF DEFENSE, DEAR MR. PRESIDENT: There is enclosed a draft of proposed legislation to amend section 203 (j) of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 484 (j)), to provide that the Department of Defense may allocate surplus property under its control for transfer under that act only to educational institutions conducting approved military programs. The proposal is part of the Department of Defense legislative program for 1959. It is recommended that this legislation be enacted by the Congress. PURPOSE OF LEGISLATION The purpose of the proposed legislation is to limit distribution of surplus property under the control of the Department of Defense to educational institutions conducting military training programs at standards acceptable to the Department of Defense and to transfer the responsibility for administering the requests of other educational activities now receiving such surplus property to the Department of Health, Education, and Welfare. Under criteria developed over the past years within the scope of the present statute, the Department of Defense has found certain fine organizations eligible to receive surplus property. It is unnecessary to emphasize the worth to this country of organizations such as the Boy Scouts, Campfire Girls, and the Boys Clubs of America; however, it is believed that determinations with respect to the distribution of surplus property to such organizations more properly belong within the purview of the Department of Health, Education and Welfare. On the other hand, the Department of Defense has a direct responsibility for military training programs conducted at educational institutions maintaining and conducting military programs at standards acceptable to the Secretaries of the Army, Navy and Air Force. The Armed Forces benefit from these programs by receiving militarily trained manpower. It is therefore entirely reasonable that a direct responsibility for supplying needed surplus property to institutions of this nature should be imposed upon the Department of Defense. Similar reasoning impels the inclusion of the proviso in the bill which would preserve the present eligibility of the Civil Air Patrol to receive surplus property under the control of the Department of Defense. The Civil Air Patrol maintains a capability to assist both civil and military activities during emergency and during periods when no emergency exists, by the voluntary efforts of the Civil Air Patrol senior members who operate and maintain light aircraft, mobile support units, and a nationwide radio communication network. Therefore, it is the position of the Department of Defense that the Civil Air Patrol should continue to receive support of their overall program through the donation feature as heretofore. The Bureau of the Budget advises that there is no objection to the submission of this proposal to the Congress. Sincerely yours, NEIL MCELROY. [S. 3493, 86th Cong., 2d sess.] A BILL To amend the Federal Property and Administrative Services Act of 1949, as amended, so as to authorize the use of surplus personal property by State distribution agencies, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 203 (n) of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 484 (n)), is hereby amended by adding at the end thereof the following new sentences: "Under such cooperative agreements, the Administrator may, subject to such conditions as may be prescribed by the Secretary of Health, Education, and Welfare (in the case of surplus property donated for use in any State for purposes of education or public health, or for research for either such purpose) or the Director of the Office of Civil and Defense Mobilization (in the case of such property donated for use in any State for the purpose of civil defense or for research for such purpose), transfer any of such property to the agency of that State so designated for the distribution of surplus property, for its own use, if the Secretary or the Director, as the case may be, has determined that such property is necessary to, or would facilitate, the effective operation of that State agency in performing its functions in connection with the appropriate program. Upon a determination by the Secretary or the Director, as the case may be, that such action is necessary to, or would facilitate, the effective use of surplus property so made available under the terms of such a cooperative agreement, and with the approval of the Administrator, title to property so transferred may be vested in that State agency." [S. 2605, 86th Cong., 1st sess.] A BILL To amend section 203 (f) of the Federal Property and Administrative Services Act of 1949 to permit the donation of surplus property to certain civilian youth organizations Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the first sentence contained in paragraph (2) of subsection 203 (j) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484 (j)) is amended to read as follows: "In the case of surplus property under the control of the Department of Defense, the Secretary of Defense shall determine whether such property is usable and necessary for (A) educational activities which are of special interest to the armed services, such as maritime academies or military, naval, Air Force, or Coast Guard preparatory schools, or (B) nonprofit civilian youth organizations sponsored and supervised by personnel of police departments or agencies of any State, or any municipality or other political subdivision of any State, for the purpose of combating juvenile delinquency.". (b) The second sentence of that paragraph is amended by inserting therein, immediately after the word "educational”, and the words “or youth”. [S. 3288, 86th Cong., 2d sess.] A BILL To amend the Federal Property and Administrative Services Act of 1949 to permit the disposal of certain surplus property to State fishery agencies Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 203 (j) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484 (j)) is amended to read as follows: "(j) (1) Under such regulations as he may prescribe, the Administrator is authorized to donate without cost (except for costs of care and handling) for use in any State any vessels, equipment, material, books, or other supplies under the control of any executive agency which have been determined by the Administrator to be surplus property and by the appropriate Federal officer in conformity with the provisions of this subsection to be usable and necessary for any of the purposes specified in this subsection (including research for any such purpose). In determining whether property is to be donated under this subsection, no distinction shall be made between property capitalized in a working-capital fund established under section 405 of the National Security Act of 1947, as amended, or any similar fund, and any other property. No such property shall be transferred for use within any State except to the State agency designated under State law for the purpose of distributing, in conformity with the provisions of this subsection, all property allocated under this subsection for use within such State. No such surplus property may be so transferred until such Federal officer has received from such State agency a certification that such property is usable and necessary for one of the purposes specified in this subsection, and has determined that such State agency has conformed to minimum standards of operation prescribed by such Federal officer for the disposal of surplus property for that purpose. Such Federal officer may impose reasonable terms, conditions, reservations, and restrictions upon the use of any single item of personal property donated under this subsection which has an acquisition cost of $2,500 or more. "(2) In the case of surplus property under the control of the Department of Defense, the Secretary of Defense shall determine whether such property is usable and necessary for educational activities which are of special interest to the armed services, such as maritime academies or military, naval, Air Force, or Coast Guard preparatory schools. If he determines that such property is usable and necessary for such purposes, he shall allocate it for transfer by the Administrator to the appropriate State agency for distribution to such educational activities. If he determines that such property is not usable and necessary for such purposes, it may be disposed of in accordance with any other paragraph of this subsection. "(3) In the case of surplus property under the control of the Department of Commerce, the Secretary of Commerce shall determine whether such property is usable and necessary for exploratory fishing, the enforcement of State or Federal fishery conservation laws in coastal or international waters, or the propagation and rearing of migratory fish, by State agencies. If he determines that such property is usable and necessary for any such purpose, he shall allocate it for transfer by the Administrator to the appropriate State agency for distribution for use for such purpose. If he determines that such property is not usable and necessary for such purposes, it may be disposed of in accordance with any other paragraph of this subsection. "(4) Determination whether such surplus property (except surplus property allocated in conformity with paragraph (2) or paragraph (3) of this subsection) is usable and necessary for purposes of education or public health in any State shall be made by the Secretary of Health, Education, and Welfare, who shall allocate such property on the basis of needs and utilization for transfer by the Administrator to the appropriate State agency for distribution to (A) taxsupported medical institutions, hospitals, clinics, health centers, school systems, schools, colleges, and universities, (B) other nonprofit medical institutions, hospitals, clinics, health centers, schools, colleges, and universities which are exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1954. "(5) Determination whether such surplus property (except surplus property allocated in conformity with paragraph (2) and paragraph (3) of this subsection) is usable and necessary for civil defense purposes in any State shall be made by the Federal Civil Defense Administrator, who shall allocate such property on the basis of need and utilization for transfer by the Administrator of General Services to the appropriate State agency for distribution to civil defense organizations of such State, or of political subdivisions and instrumentalities thereof, established pursuant to State law. The provisions of sections 201 (b), 401(c), 401 (e), and 405 of the Federal Civil Defense Act of 1950, as amended, shall apply to the performance by the Federal Civil Defense Administrator of his responsibilities under this section. "(6) The term 'State', as used in this subsection, includes the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States." Senator GRUENING. This morning the subcommittee is embarking upon a new topic, the disposal of foreign excess property to donees abroad, and also on the terms and conditions under which some of this foreign excess property may be returned to the United States for sale here. The subcommittee is interested in learning the amount of foreign excess property that is now being generated, how much of such property it is anticipated will be generated in the future, what disposition is now being made of this property, the kinds of property generated, its potential use, alternative methods of disposal, how, if at all, the foreign excess property disposal program would be coordinated with the domestic donable personal property program, and any other information which will enable the subcommittee to arrive at sound conclusions with respect to its action on the bills referred to it. STATUS OF S. 2442 Last year, in executive session, the subcommittee determined that it had insufficient facts before it to take action on S. 2442, a bill which I, together with Senator Bartlett, introduced to enlarge the categories of eligible donees under the donable property program in Alaska. Subsequently, pursuant to authority given by the chairman of the Senate Committee on Government Operations, I undertook an investigation of the donable personal property program in Alaska. I have filed a report of that investigation, and printed copies are available to those who are interested.1 I mention this investigation at this time because the findings reached as a result of that investigation have a direct bearing upon some of the bills on which testimony will be taken today relating to the enlargement of the eligible donees under the donable property program in all the States. In that connection, it should be noted that in my report I recommended, among other things, the following: The subcommittee immediately undertake a thorough study in depth of the Federal personal property disposal program in other States and abroad, such a study to include a thorough review of all procedures of all departments and agencies involved in the program in sufficient detail so that the subcommittee can fully evaluate the operations of the program. This study should include actual field inspections of Federal and State installations in sufficient number to obtain as comprehensive a review of the program in operation as possible. In addition, a definite attempt should be made to ascertain whether or not there are "slippages" of significant proportions in the donable personal property program, and, whatever the source, whether there is any considerable amount of surplus personal property now being sold which could be used by other donees if the classes of eligible donees under the donable personal property program were enlarged. Accordingly, in connection with testimony on S. 2605 and S. 3288, the subcommittee will be interested in hearing comments on thisand other recommendations-contained in my report to the chairman. We have a number of witnesses today, and I understand, also, that Senator Hart is here. We shall be very happy to hear him. We are very glad to see you, Senator. Senator HART. Good morning, and thank you for having me. Senator GRUENING. Come forward and give your testimony in whatever way you prefer, Senator. STATEMENT OF HON. PHILIP A. HART, U.S. SENATOR FROM THE STATE OF MICHIGAN Senator HART. Mr. Chairman, for all who will follow, I will say what I know all of them feel, that we are very grateful to you for your willingness to grab hold of what we think is an area requiring not only additional study but immediate action. We are grateful to you for scheduling hearings on S. 2732 which Senator Bartlett and I introduced in September of last year, which, as you know, would permit the donation of foreign excess property for use in foreign countries for educational and health purposes. The need for this legislation was called to my attention by a specific incident which apparently is the way most of us learn. Last summer, a doctor at the Providence Hospital in Detroit wrote me that he hoped to establish a hospital in the Upper Volta region of French West Africa. He asked me if foreign aid was available for such a project and, if not, whether I could help him locate quonset huts for such an undertaking. 1 Committee print entitled "Investigation of Donable Personal Property Program in Alaska," dated May 18, 1960. Discussion with various Federal agencies confirmed my understanding that our foreign aid program is only on a government-togovernment basis; that there is nothing in present law to authorize the donation of surplus property overseas to nongovernmental groups unless the property is of no commercial value; that surplus U.S. property overseas is sizable in amount and could be put to useful purposes; that the present practice of destroying property which, under a bill such as S. 2732, might be donated is harmful to our foreign relations; that a sound policy for disposing of this property would be welcomed by the Armed Forces, by the agencies responsible for improving our international relations, and by those groups and individuals who concern themselves with their fellow man. The present law, Public Law 152, 81st Congress, states in section 402 that the head of the executive agency concerned may authorize the abandonment, destruction, or donation of foreign excess property under his control which has no commercial value or the estimated cost of care and handling of which would exceed the estimated proceeds from its sale. The bill we offer would make it possible for the head of each executive agency having excess foreign property to donate such property for purposes of education or public health, including research for either purpose. DISPOSAL OF SURPLUS PROPERTY OVERSEAS The Department of Defense informs me that it is annually disposing of surplus property abroad, the original acquisition cost of which is $1 billion. Of this, I am told that 55 percent or 60 percent is scrap and of no value. This leaves about $555 million annually. That is on the original acquisition cost basis. If we were to donate the same proportion overseas that we donate of the surplus property within. the United States; namely, 10 percent, it would mean an annual potential of $55 million. Although I have been unable to obtain a breakdown of this figure in terms of kinds of property, it is obvious that we are dealing with something that could bring a significant return in good will abroad; and, more tangibly, it would be a promotion of economic development in those areas and an improvement in the living standard in those countries, and at very little expense to the U.S. taxpayer. I think the loss of revenue would be very small, since the Assistant Secretary of Defense for Supply and Logistics has testified that the cost of processing materiel for donation is considerably less than the cost of processing for sale; and, of course, the leadtime is also less. S. 2732 specifies that the agency heads shall be subject to overall policy control by the Secretary of State in this program, and provides that the determination whether such foreign excess property is usable and necessary for the purposes specified shall be made by the President or his designee. The bill lists as possible recipients of the property the following: Nonprofit or tax-supported medical institutions, hospitals, clinics, health centers, schools, colleges, and universities. Preference is to be given to the organizations directly or indirectly founded, sponsored, or supported by American citizens. Otherwise, no property is to be donated except to an agency designated by the foreign country involved. 57809-60- -2 |