PROMOTE UTILIZATION AND CONSERVATION OF A PERSONAL PROPERTY: DIRECT AND PERFORM REDISTRIBUTION CHELI AIR FORCE DEPOT EXHIBIT NO. 8 Name: Charles F. Butler. Age: 37. Government service: 12 years-permanent appointment November 17, 1941. Residence: Resided in southern California since birth. Clearance: Cleared for top secret December 11, 1950. Experience: November 1941 through April 1942, in basic supply operations; 1942 to 1944, in disposal operations in SBAMA; 1944 to date, in disposal operations at Cheli Air Force Depot; 1945 to date, Chief, Disposal Division, Cheli Air Force Depot. Mr. HOLIFIELD. I will want to do some questioning on this excess and surplus property. Do you have any estimate as to the amount in tons or dollars of the material you have in the Excess Property Section? Mr. HORTON. Yes, sir, we have that on one of the charts. Mr. HOLIFIELD. We will go into that later. Is that the excess material that has been declared by other bases and sent in here to a Central Property Excess Depot? Mr. HORTON. Seventy-five percent of the excess material which we handle on this depot is shipped in from other classes, from subcontractors, from prime contractors, from the entire area. Mr. PORTER. I am afraid not. Mr. BUTLER. The excesses on this base are the only excesses that are in our excess property class. They generate from this base and normally are not sent from other bases into this base unless in error. Mr. HOLIFIELD. What happens at the other bases when they generate excess? Mr. PORTER. They are supposed to have a class 27 to handle excess at their own base. Mr. HOLIFIELD. This is a central base of supply? Do you serve an area out of that excess property stock? Mr. PORTER. The prime depot determines what shall be retained of a given item in our behalf. They give us that information and we tell the bases how much they retain and the balance they transfer to class 27 or account 7. Mr. HOLIFIELD. That is not the transfer of property physically, in warehouses in which they put their excess? Mr. PORTER. They report that material on form 120 to the prime depot and the prime depot tells them what disposition will be made of the material. Mr. HOLIFIELD. The prime depot tells them to either sell or ship them to another point where it can be used? Mr. PORTER. The prime depot will go to the other agencies or GSA and find out who wants it; and if no one wants it, they are told what to do with the property. The prime depot sends information to them on a copy of the form they report it on. Mr. HOLIFIELD. Do you let this excess accumulate and lie in warehouses months or years or is there expeditious system of end use or disposal of this excess? Mr. PORTER. When a report is submitted by any agency having the property in account 7 or class 27, the prime depot has 10 days to acknowledge receipt of that report and then, depending upon the type of property and who has to be given a chance to know about it, there are definite specified numbers of days each agency has to circularize the listing. When they send the listing to any activity, they must acknowledge receipt in 10 days. Mr. HOLIFIELD. They acknowledge receipt of notice, but is there a time limit on what they shall do about it? What do they do about it? Mr. PORTER. There are definite specified lengths of time they have for the disposition. Within a certain number of days they must tell the activity what to do with the material depending upon the various types of material. Mr. HOLIFIELD. The point I am getting at is the utilization or disposal methods. Mr. PORTER. I believe that particular point has had a lot of attention by the Air Force and Department of Defense. If we do it too fast and don't get everyone's requirement, we are between two pressures along that phase. We have to have enough time to see that everyone having requirements are given a chance to do so. Mr. HOLIFIELD. Let's take a specific case. How long for instance do you tie that property up in an inactive excess status? You said for different types of material different lengths of time were required. For instance, petroleum stock, clothing, etc. What are the time limits, is it 60 days? Or on some types, 90 days? Mr. PORTER. Those are types of items wheich have ready value and can be commercially disposed of in a hurry. Mr. HOLIFIELD. How about scrap metals? They did not have to be reported. Mr. BUTLER. They are not reported to anyone. They can be sold direct by the using agency. On certain types of property-when we report that property to the prime depot and acknowledge, it is in 10 days. Mr. HOLIFIELD. Are those acknowledments of receipt of the notices given in 10 days? Mr. PORTER. That is acknowledgment that they have received the report. Mr. HOLIFIELD. How long are they given to draw? Mr. BUTLER. The prime depot forwards the lists on to the Surplus Materiels Division, Washington, D. C. They have 90 days to screen it with the Department of Defense to see if any department can utilize the material in any other services. Mr. BALWAN. Isn't it 45 days? Mr. BUTLER. No, sir. It's still 90 days. When it is out of surplus, that list is forwarded to GSA which has 75 days. They screen with other agencies. After that period has been accomplished, GSA will give us a release on the remaining material to be disposed of. Mr. HOLIFIELD. It is approximately 6 months then for the minimum of working off excess and it might be longer. Mr. BALWAN. After the form 120 is generated, the material may lie around 2 years before they come to the point of listing it on the 120. Mr. HOLIFIELD. I was going to follow through on the excess-property procedure first. At the end of that time-6 months or a yearthen you are given notice from Washington that this is not excess any longer. It is surplus and hasn't been called for. Then, what do you do with it? Mr. BUTLER. It is transferred directly to the Surplus Property Branch and logged up for sale. Mr. HOLIFIELD. When directives are received from the Surplus Property Branch of the Air Force and Under Secretary of GSA, you dispose of it? a local agency Mr. BUTLER. That property does not require a local screening. Mr. HOLIFIELD. To get back to the point Mr. Balwan brought up. How long does this material lie around in the bases before determined to be excess? Is there an activity or do you have teams assigned to scrutinize your inventory all of the time and generate this excess or is it a task which you dislike and allow to accumulate without declaring it excess? Mr. BALWAN. Colonel Betz represents AMC. I believe he could answer that. Colonel BETZ. To answer your question. We have to consider there are four general types of property-all excess for different reasons— "wear-out" property, scrap and junk; the unsafe and condemned property, such as spoiled food and bad ammunition; then the obsolete items superseded by something new, that is old, out of date, and still usable for another purpose. That excess is constantly being generated and turned over to class 27 and immediately put on a form 120. Mr. HOLIFIELD. What method do you use? It isn't done automatically. I have had reports from different people that a great deal of material lies around in warehouses. What is your procedure to determine it's excess? Colonel BETZ. That is the fourth category, property in excess of actual requirements, but still serviceable, still standard and that is bought oftentimes on a computation for requirements that are never generated. For instance, on new aircraft, we buy the parts on an anticipated life of the aircraft. Say for example, we don't use as much as we thought. We may have 30 or 40 years of supplies or parts of aircraft on hand. Since the Korean war, we had not made any computation to determine how long we needed to support our aircraft. In project Springclean we entered into a computation considering future operations of aircraft on the basis of hours to be flown, to determine what material we would need; and with that computation we could tell how much we must retain and dispose of. That is the first time that has been done since the big cleanout at the end of the war. We are now developing a program to take disposal out of the project status and make it a normal operation, that is, an annual part of the logistics cycle. Mr. HOLIFIELD. Is that done by a team coming in, or by information furnished the commanding officer on the base to screen the material on the base? How is that done? Colonel BETZ. The prime depot are the ones that keep the procurement records. They make the computation, based on the future program, and assign to the other depots and each base a level of supplies that these installations must retain and tell them to dispose of the balance. Mr. HOLIFIELD. They are then told to check their inventory again on the new level of requirements, and declare the excess on a 120 form, and do it then? Colonel BETZ. There are many items in Springclean not known to this depot. There are 1,200,000 items to think about. The other part of that program was to enable the determination of excesses on aircraft parts that I spoke of. Mr. HOLIFIELD. But how about the common-use items, or are they not considered in that type of program? When the commanding officer goes out and sees 10,000 kegs of nails which have been there ever since he has been on the base, how does he know whether that 10,000 kegs of nails should be 5,000 or 1,000? He looks at it and sees it there, how can he determine he has too much? Colonel BETZ. With the beginning of this new program this year it will include all of the common-use commercial items as well as the aircraft. We have not had any way to determine requirements to date, but there is a program now being developed that will do that on all these items. Mr. HOLIFIELD. Won't that involve a lot of work? Colonel BETZ. Yes, sir. That is going to involve a tremendous amount of paperwork. Mr. HOLIFIELD. Do you carry it on individual items? Mr. BALWAN. When you have a financial account of inventory, won't that assist you in knowing what the turnover is, and where there are no items going out at all you would know you have too much stock? Colonel BETZ. No, sir; not particularly. A financial inventory sometimes gives the wrong impression of quantities of items on hand. For example, a base may have $10 million worth of stock and still need a million dollars more because it does not have the items needed, which must be purchased with additional money. Financial accounting will help us manage our property, but it will not give any idea of the turnover of individual items. Mr. BALWAN. You have 1 million items. In order to control the inventory you have to resort to dollar control for financial purposes. Colonel BETZ. Yes, sir; but of course we supply and dispose of items instead of dollars, and we must therefore compute items individually for disposal action. Mr. HOLIFIELD. That is the problem of all manufacturers and merchandisers, balancing items against the dollars. The dollar value and the inventory value would probably be out of balance and it would be a matter of getting into balance. I can see where your dollar item would not reflect the need, nor reflect the balance inventory or reflect your need to resupply. Colonel BETZ. We have the stock balances, and record of movement of property by item, and if we find stock of certain items not turning over, then it is either out of balance with consumption or may be entirely inactive and excess to our needs. That is why we have to look at each item in our computations. We have to pick out the specific items, no matter what the money value. Mr. HOLIFIELD. Mr. Lane just suggested that I ask if you have had on this base or have at the present time on this base any items which are excess from the standpoint of being inactive or not having appreciable requisitions for the past year and which you have not yet been given the authority to declare excess. Will you answer that? Do you have an active items in inventory in your opinion which should be |