in order to finalize the product engineering before we go out to industry. But the arsenals provide the workshop so that our technicians can attain and retain the technical competence and knowledge which they require.

As a specific example, sir, we are currently starting off with the new M-14 rifle. Springfield, one of our arsenals, is engaged in this—they developed the rifle. They are engaged in operating a pilot line. That pilot line which is operating at a low, but efficient production rate, will give them the knowledge to finalize the product engineering and prepare the specifications.

We are then proposing to go out to industry with those specifications and get competition from industry for the volume production of these rifles.

This is just one item, but it is an indication of how an arsenal is used from a pilot line status to the point of bringing in supporting industries.

Mr. HÉBERT. My question was in the arsenal system, does the Army engage in the actual production of the weapon on the basis or the scale as indicated by the Jupiter or the Redstone contract to Chrysler?

General ENGLER. We don't engage in volume production of a weapon, sir. In other words, in the case of the Jupiter and Redstone, at Redstone Arsenal, at the Missile Command, they manufactured a number of those two types of missiles in order to carry it through development and get it to the point of product engineering.

The volume production is the responsibility of Chrysler at the plant in Detroit. So here is another example to illustrate that we do not put our arsenals, and these are our technical arsenals, in volume production.

However, in order to clarify the air, I must immediately indicate that in the case of loading plants and explosive works, some of which have the name arsenal tagged to them-they are not in this same sense an arsenal. They are strictly a manufacturing facility, sir.

Mr. HÉBERT. On Government operation?

General ENGLER. They are in the main Government-owned, contractor-operated facilities, sir.

Mr. HÉBERT. You mean the Government-owned facility?

General ENGLER. The Government owns the facility, but the facilities are operated by contractors, sir.

Mr. HÉBERT. The point of the question that I asked you as an example: Here is an identical plant at Michoud that cost millions of dollars, erected by the Government. I asked you whether the arsenal system engaged in production? Because if it did engage in production, why let a contract, why not utilize an existing facility that is costing $600,000 at the moment just to maintain it in a caretaker's status?

General ENGLER. Basically, sir, we engage industry to produce those items for which they have the capability to produce. They have the basic capability to produce. And where the requirement is such that an arsenal or a Government facility would not be able to meet the total requirement. In other words, where there is a high volume requirement and you have the basic capibility within industry, we use industry for that type of production.

Now, where it is necessary to construct a new facility or engage in a costly modification of an existing facility, either in industry or in the Government, we will explore to the fullest, the available Government-owned facilities and attempt to use the Government-owned facilities before engaging in the building of a new facility.

Mr. HÉBERT. Now take this specific case. Because I still insist that it is a classic example. When Chrysler got the contract for the Redstone and the Jupiter it had to modify its engine equipment, didn't it,:; to manufacture those missiles?

General ENGLER. Basically, sir, the facility which was provided to Chrysler was the brick and mortar that was there the utilities and such as that, but the production equipment that was required was entirely different than the production equipment that was necessary for the manufacture of the jet engines.

There may have been a certain amount of general purpose type machine tool equipment that was saved and utilized. We utilized all we could. But in the main you have a different type of item which requires specialized type of equipment.

Mr. HÉBERT. Now this building in which the missiles are being produced by Chrysler: Is that a Government-owned facility? General ENGLER. That is a Government-owned facility.

Mr. HÉBERT. So then you did utilize a Government-owned facility? General ENGLER. Yes, sir, we did.

Mr. HÉBERT. You have answered my question.

General ENGLER. Yes, sir.

Mr. HÉBERT. Because the Michoud plant was operated by Chrysler. General ENGLER. It was, sir. May I comment with regard to that, sir?

Mr. HÉBERT. Certainly.

General ENGLER. At the time we determined we needed an engine facility, we scoured the complete United States in an attempt to find a building in order to avoid the construction of a new facility. And as a result of our search, we did locate this facility at Michoud, which at the time was only being used, I think, by a number of contractors for warehousing purposes. It was not in any kind of an industrial operation.

Mr. HÉBERT. Oh, yes, it was. Quite a number of tenants in there. General ENGLER. There were quite a number of tenants in there. Mr. HÉBERT. Manufacturing tenants.

General ENGLER. There were quite a number of tenants in there, Mr. Chairman. It was my understanding that it was primarily being used to store products, commercial products, in the facility. Mr. HÉBERT. That is not quite the situation.

General ENGLER. Yes, sir.

Mr. HÉBERT. Mr. Hess, have you any questions?

Mr. HESS. No.

Secretary HIGGINS. Mr. Chairman, may I just make a general comment on the arsenal system, since it has come up here.

I am a very strong believer in the Army's arsenal system. And this is our policy. We have a new item coming out. There are no drawings on specifications available. It is necessary to make by hand, if you will, what we call first mockups, and then test instruments, and then engineering test instruments, to test these, find the weaknesses, modify,

find the weaknesses, until we feel that we have a weapon, and then we make drawings and specifications in the arsenal.

Then we have a vehicle we can take out to industry and say: "Here is what we want, here is the drawing, and here are the specifications, and now it is ready to go into production.'

Hence, the relation of the arsenal to the production.

Now, there has been history where, in wartime, we would run these arsenals to the hilt, along with everything else, to get production in an emergency. But in peacetime, they are a repository of know-how and the beginning cycle of the work which eventually passes out to industry.

Mr. HÉBERT. Well, where does the arsenal system of the Army differ from the Air Force situation, whereby they let out X number of dollars to a corporation, private industry, and say: "Take this, and you develop it, and you get this missile or this weapon out." They have no control, except to look in it once in a while.

Mr. Courtney, what do they call that system?

Mr. COURTNEY. Weapons concept system.
Mr. HÉBERT. Weapons concept system.

Mr. COURTNEY. I don't believe the Air Force has an arsenal system.
Mr. HÉBERT. I know they don't.

And that is the committee's concern, too, to find out whether this so-called weapons concept system is not removing from the supervision of the cognizant service its production and just giving a blank check to industry.

Now, I agree with you on the arsenal system. I think it is a fine system. I am just wondering what is wrong with the system that the Air Force didn't adopt it. Of course, the Air Force will have to answer it.

Mr. COURTNEY. Dudley Sharp will be here in a couple of days.
Mr. HÉBERT. All right, Mr. Cunningham.

Mr. CUNNINGHAM. No questions.

Mr. HÉBERT. Mr. Bates?

Mr. BATES. Mr. Secretary, is the San Jacinto ammonia works a part of the ammunition depot down there?

Secretary HIGGINS. Yes, sir.

Mr. BATES. That is a part of the ammunition depot?

Secretary HIGGINS. It is on the property; yes, sir.

Mr. BATES. Now, what is going to happen to this?

Secretary HIGGINS. Well, I would like to get one of the detail folks here to answer that.

Mr. HÉBERT. Nobody from Texas here?

Mr. BATES. I thought we ought to go over this with rather close scrutiny, Mr. Chairman.

Mr. HÉBERT. Did he answer?

Mr. BATES. No.

Mr. HÉBERT. Mr. Osmers

Mr. BATES. He is getting the answer.

Mr. HÉBERT. Oh, he is getting the answer.

General ENGLER. Mr. Chairman, may we supply that answer, sir, with regard to the future disposition of it? I am not certain that we have it here it is being outleased currently, sir.

Secretary HIGGINS. My broad knowledge, Congressman Bates, is that it is surplus.

But what the modus operandi is from here as to what we are going to do with it, this detail we will furnish to you.

Mr. BATES. I am just wondering whether that is going to be an additional cost to the Government over and above the bill that the Congress passed last year. I just wanted to know what the total figure of that transaction is going to be.

Secretary HIGGINS. Rightly so, sir.

General ENGLER. Sir, I have this information with regard to this facility.

The installation is the San Jacinto ammonia works. It is currently leased to the San Jacinto Chemical Co., a division of Smith-Douglas Co., of Houston, Tex.

Mr. BATES. I have that, General.

General ENGLER. Oh, you have that information?

Mr. BATES. Yes.

General ENGLER. This lease is on the basis that it may be terminated by the Government giving 30 days' notice in the event of a national emergency and the lessee also may terminate at the end of 7 years. It is presently being used for the manufacture of anhydrous ammonia for commercial use.

The facility has been declared excess to the Ordnance Corps requirements, and is to be submitted in the near future to the Armed Services Committee for approval.

It is my understanding that the anhydrous ammonia-that this particular facility will not be included. However, I would like to find

this out, to be sure, and advise you, sir.

Mr. BATES. Well, you have a lease factor here, you know, where the Government can give 30 days' notice in the event of a national emergency.

I just wonder if they might run into a problem getting rid of that part of the property, too.

Well, you put that in the record, will you, General?
General ENGLER. We will; yes, sir.

Secretary HIGGINS. Yes, sir; we will take care of that.
(The information referred to is as follows:)

SAN JACINTO AMMONIA WORKS, HOUSTON, TEX.

The San Jacinto ammonia works is a Government-owned facility designed and constructed for the production of anhydrous and aqua ammonia. It is located on about 33 acres of land which is a part of the San Jacinto Ordnance Depot which contains about 4,900 acres. The site borders close to the western perimeter of the reservation on the west on West Main Avenue and by Talcott Street on the north, which is about 1,200 feet from the northern perimeter of the reservation. The eastern border of the site is Benet Street and the southern border is Wadsworth Street. There are no depot improvements located on the site of the ammonia works.

The lease contract with the San Jacinto Chemical Co. division of SmithDouglas Co., Inc., provides for the supply to the lessee by the depot of domestic and fire water, fire protection, machine-shop service, rail switching service, and certain railroad trackage on a reimbursable basis. However, the lease further provides that "the Government shall be under no obligation to furnish utilities or services."

The San Jacinto ammonia works was declared excess to the needs of the Ordnance Corps in January 1958. The Corps of Engineers, after screening

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the Department of Defense for any interest in acquisition without success, obtained agreement for disposal from the House subcommittee on September 23 and from the Senate subcommittee of the Armed Services Committee on October 17, 1958. The facility will be reported to General Services Administration in December 1958 if possible or in January 1959 at the latest. GSA has 1 year -from the end of the quarter during which the facility was reported to them before it is obligated to take over accountability. Thus GSA must take accountability either by January 1, 1960, or April 1, 1960.

The surplus declaration of the San Jacinto ammonia works and the land pertaining, is separate and distinct from the current actions concerning the San Jacinto Ordnance Depot. Since the western boundary of the depot reservation runs along Penn City Road (a county road) which is parallel to and about 100 feet from West Main Avenue, which is the western boundary of the ammonia works site, it is evident that any disposal of the depot land must except the narrow strip from Talcott to Wadsworth Street between West Main Avenue and the western perimeter to allow ingress and egress to the lessee. Otherwise, there appear to be no problems in connection with the ammonia works which would tend to interfere with any disposal action on the depot itself.

The current lease of the ammonia works runs to July 31, 1970, with rights of termination by the lessee in 1960 or 1965 by 120 days prior written notice. The Government can terminate this lease at any time by giving 30 days written notice to the lessee under the following conditions:

(1) A declaration of national emergency by the President or Congress of the United States; or