USE OF AIRCRAFT In the disposal of aircraft the location of airports are in many cases very remote. The use of aircraft for travel purposes is restricted in the general language of the Independent Offices Appropriation Act of 1947. The need for maintenace, operation, and repair of aircraft prior to sale does not require further justification but the employment of aircraft as a transportation vehicle by the disposal agency to and from airports has proved to be much less expensive than other means of transportation. ACQUISITION OF LAND AND BUILDINGS The acquisition of lands and buildings has been included in the language to provide for the needs of warehousing operation. An average of $13,000,000,000 worth of property will be on hand during fiscal year 1947. Particularly in the plant clearance program, the need for acquiring land and buildings is important. Much of this plant machinery and equipment is very large and would be clostly to ship to distant points for the purpose of storing. Therefore, it is very desirable to store this property within the proximity of the plant being cleared and particularly within a manufacturing area. Extensive studies, in which representatives of the Senate Surplus Property Subcommittee have taken part, of the disposition of manufacturing facilities erected by Government agencies under emergency plant facilities contracts, reveals the fact that as of April 1, 1946, the Army had under its control 90 such facilities with an aggregate cost to the Government of $282,000,000; as of the same date, the Navy Department controlled 20 facilities representing an aggregate cost to the Government of $90,000,000. There are, therefore, 110 manufacturing facilities costing the Government $372,000,000, which the Army and Navy constructed during the War on land to which the United States Government does not have fee simple title. Provision has been made in the proposed appropriation language to authorize the War Assets Administration to acquire such land by negotiation with the owners, as the facilities are declared surplus, and when it is determined necessary to protect the Government's interest in the disposition of these facilities. I might interpolate here that, in general, hereafter when facilities are located on land of which the Government does not have ownership, the owner of the facility on which those buildings have been constructed has usually come forward with a fairly reasonable offer for the property; but this language has been inserted so that if he does not, we are still protected so that we can acquire the land and sell the whole property, the land and buildings, to the best advantage. PAYMENT OF TAXES The payment of State and local taxes is necessary where the Administration assumes the custody of and accountability for surplus real property owned by Government corporations which by law are subject to such taxation. Title to such property does not pass to the Government while it is in the custody of the Administration for the purpose of disposal. HANDLING OF CASH AT SALES Provision has been included in the language to make advances of money to employees of the Administration upon furnishing bond for the purpose of handling cash transactions to the surplus property sales. CONTRACTS WITH EXPERTS AND CONSULTANTS Provision has been included in the proposed language to obtain reports from or the services of experts or consultants or organizations thereof, by contract without regard to the civil service and classification laws and section 3709 of the revised statutes. In order to clarify the intent of section 5 (b) of the Surplus Property Act of 1944, the words "may employ" used within the section of the Surplus Property Act if given a very literal interpretation could act as a prohibition against use of contracts for such reports or services. It is essential to the Administration that it have the authority to enter into such contracts since the reports and services of experts and consultants in connection with advice on such highly technical matters as valuation, conversion, or disposition of electronics, industrial plants and aircraft components cannot be obtained by other means. Services to be furnished personnel at site sales This authority is requested due to the fact that a number of site sales will be held at Army and Navy posts, camps, and stations and depots which were built in isolated areas to provide the maximum protection from the standpoint of location. At many of these sites the armed services have withdrawn their complement of personnel and maintain caretakers only. During the period of prep→ aration for site sales and during the sales, at such remote locations, the Administration must move the required complement of personnel to the sites and provide the necessary living accommodations for them. They will be required to pay a reasonable charge for such accommodations and these charges will be credited to the appropriation. It is believed that the authority requested in the appropriation language offers the only practical solution to the problem of disposing of the surplus property with maximum speed and of meeting and furnishing the living needs and requirements of the employees who will be located in areas where such requirements are not otherwise available to them. Personnel ceilings The provision made in the proposed language to relieve the War Assets Administration of the personnel restrictions imposed by the ceilings which are now mandatory by reason of the Federal Employees Pay Act of 1946, is vitally necessary. The War Assets Administration has embarked on an emergency site-sale program of tremendous magnitude and complexity, in a determined all-out effort to dispose of surplus capital and consumers' goods which cost the Government $8,800,000,000. It is the Administration's goal to sell as much of this property during the fiscal year 1947 as can possibly be disposed of. This means that large numbers of people must be hired on a strictly temporary basis for 3 or 4 months at each of 1,706 different major concentrations of surplus property located at widely scattered points throughout the continental United States. Sales at these locations have been scheduled to allow only a very shortperiod for their preparation and for their actual conduct. As the Administration progresses through this emergency selling program, the people required to main tain the schedule of site sales will be constantly hired and laid off. In these circumstances, the Administration believes that it is essential to have the greatest degree of flexibility possible in its requirements at any given date during the fiscal year 1947. It feels that the imposition of a fixed ceiling at specific dates could only result in retarding the sale of the surplus property now scheduled for disposition in a fluid, rapidly changing program of acceleration. Variations in amounts, types and locations of property make it impossible to forecast and schedule on an exact time basis the precise number of employees needed. This employment is of an emergency and temporary nature and will not have a significant effect upon the continuing employment in the Federal Service. All provisions and safeguards have been made, with the approval of the Civil Service Commission, to utilize the Commission's regulations which permit hiring and termination on short notice so that the Administration can increase or reduce the number of employees with the utmost speed. SUMMARY OF 1947 BUDGET I should like to insert at this time the summary of the 1947 Budget broken down by projects. (The summary follows:) War Assets Administration, and disposal and service agencies-Summary 1947, Budget 01 Personal services.... OTHER OBJECTS 02 Travel... 09 Equipment.. 10 Lands and structures. 11 Taxes... Total other objects.... Total all objects.. 50, 761. 2 $144, 998, 150 22,388.7 $66, 564, 355 +28, 372.5+$78, 433, 795 General GREGORY. This estimate covers the cost of the carc, hadling, and disposition of the Federal Government's surplus property in the United States, Hawaii, Alaska, and Puerto Rico. No estimate is provided for the disposition of surplus property in foreign countries since Executive Order 9689, effective February 1, 1946, placed the responsibility for this activity in the State Department. The inventory of property available for disposal during fiscal year 1947 (excluding that on lease) will amount to approximately 25.4 billion dollars, of which it is estimated that 14.3 billion dollars will be available for disposal at the beginning of fiscal year 1947 and 11.1 billion dollars will be acquired during the fiscal year. It is estimated that we will sell or otherwise dispose of 15.4 billion dollars, and will lease an additional 2.6 billion dollars of surplus property. Our proceeds from these sales and leases will be approximately 2.9 billion dollars. The estimated costs for the care, handling, and disposal of surplus property in this budget are $545,100,000 or 18.8 percent of proceeds and 2.1 percent of the value of the inventory. The chart on the opposite page, titled "The Long and Short of Surplus Property" indicates how the size of the estimate is dwarfed by the value of the surplus property to be maintained and sold. On the following page is a chart, "How the Budget Is Divided," illustrating the proportions of the budget by activity as follows: 1. Approximately 276 million dollars is for the "care and handling" of surplus property, both personal and real, or 50.6 percent of the entire estimate. In relation to the declared value of the property to be maintained, however, this cost is less than 1 percent of value. "Care and handling" comprises the maintenance of industrial plants and other real estate, the warehousing and preparing for shipment of personal property, the reimbursement of owning agencies for their expense in maintaining and shipping surplus property, and the storage and scrapping of aircraft. 2. The demolition of buildings at camps, ports, and other installations is estimated to cost approximately $19,000,000. Demolition is undertaken to salvage building materials for the housing emergency and also to restore the land to its best future use. It is estimated that the sale of the resulting materials will yield a return of $23,273,000. 3. The estimate of disposal expenses is approximately $147,000,000, or 27 percent of the estimate. Direct selling costs are thus approximately 6 percent of proceeds. Of this expense $47,000,000 is for the payment of commissions and expenses of sales agents who will assist in the disposal of specialized types of property. Approximately $77,000,000 is for personal services of the sales staff. 4. Inspection is estimated at approximately $14,000,000, or less. than 3 percent of the estimate. Of this amount, approximately $4,000,000 is for the appraisal of industrial property. 5. Advertising including all direct and indirect costs-totals 21.1 million dollars, or about 4 percent of the estimate. 6. Staffing and other services in connection with the administration of priorities and preferences totals over 7.6 million dollars. . 7. Inventory control (the recording of all documents relating to acquisitions and sales) will cost about $16,000,000 or 2.9 percent of the estimate. This accounting system will cost 0.0006 percent of the value of inventory. 8. General administrative and unallocated expenses amounts to approximately $44,000,000 or approximately 8.1 percent of the estimate. Looking at the budget by object of expenditure, it will be noted that 64.5 percent is for contractual services and 27.2 percent for personal services. By agency, 93.7 percent of the estimate is for the War Assets Administration and 6.3 percent for all other agencies, including six responsible for actual disposals. Every effort has been made to calculate specific costs based upon program estimates and known experience factors. The complexity of the program is such, however, that additional costs may arise which cannot now be anticipated. No estimate is provided for such contingencies. For example, to date we have authorized an expense of $3,096,510 for the rehabilitation, alteration, or partitioning of industrial plants for multiple use. In addition, certain industrial facilities are located upon leased land. It may be necessary to acquire such land in order to dispose of such facilities to the best interests of the Government. Yet, because these costs arise out of disposal negotiations, there is no basis for estimating such expense in advance. |