Mr. COTTON. The only line items which were excluded from Springclean were those items on which we had a firm buying item. When we computed the 1953 buying program if we came out with a firm buying program for an item we dropped it from the Springclean computation.

Mr. COTTER. Are you buying against D-plus 36?

Mr. COTTON. No.

Colonel PACKARD. No. We can save items for D-plus 36 because it might be excess otherwise, but we do not get new money to stockpile. Mr. IKARD. In other words, you are saving against it.

Mr. BISHOP. This accounts for the separation of disposal program from the procurement program.

Colonel PACKARD. We hope by next January to be able to say that we have in our inventory $10 billion worth of property, and we should know that $3 billion is an operating stock for 1 year, $6 billion is a reserve stock for mobilization, and $1 billion is excess or some other type of property. But when we get to overall types of figures, we should segregate our stock, and we are attempting to do it now.

Mr. BALWAN. Eventually you will get a stratified item?
Colonel PACKARD. That is right.

You applied the same formula against 152,000 items?

Mr. COTTON. Yes, sir.

Mr. BALWAN. Where are these 39 cabinets?

Mr. COTTON. I had hoped at the time that this item was selected that there would be a quantity of this particular item which might be in excess at the station. However, the quantity on hand of this particular item is less than the retention level for the eastern zone.

The prime depots established the overall excess and from that it is broken out between our eastern and western zone depots to establish retention levels within their zone.

The major portion of these items are at Topeka, Kans. Consequently, the inventory on hand here at Warner Robins is less than the normal retention level would be for that item to supply the Air Force bases within the eastern zone. The excesses are at Topeka, for instance.

Mr. BALWAN. You might have to supplement what you have here or wait until you get other retention levels.

Mr. COTTON. When we get to that point we will issue shipping instructions to Topeka, Kans.

Mr. COTTER. Does your computation lend itself to machine computation?

Mr. COTTON. By and large, this is a manual computation.

Mr. COTTER. Have you actually spot-checked a sufficient proportion of your computations to determine whether it is practically feasible to do it in this manner with the people you have?

Mr. COTTON. As related to what?

Mr. COTTER. Whether you are getting the right answers or not.
Colonel PACKARD. Can you verify it?

Mr. COTTON. Our buying program is under perpetual audit.
Mr. COTTER. I have heard that there are some mistakes in that.

Mr. COTTON. The "Springclean" computations are audited in that

same manner.

Colonel PACKARD. It is like our inventory. We do not take too much on faith. They are spot checked, subject, of course, to human error that does creep in.

Mr. COTTON. Assuming that 39 of these items which we are talking about were totally here, that all of the excess was here, I shall run through the steps to get the item completely out of the system.

WARNER ROBINS AIR FORCE BASE EXHIBIT NO. 16

Determination made as to location of property and quantity will be disposed of in actual location.

PROCEDURE FOR DISPOSAL PROCESSING (FOR EXAMPLE, WARNER ROBINS) Transferred to class 27.

Inspection personnel determines: condition code: (N-1); fair value code: A (50 percent of acquisition cost); commercial description.

Reported weekly to SMD-Washington-ON standard form 120 by individual item.

Received by SMD and forwarded to Army-Navy screening points and to service educational activities.

Notification received on quantity desired by Army-Navy.

Normal processing time equals 75 days.

On balance not taken by Army-Navy SMD forwards to GSA regional office (Atlanta) with copy of transmittal notice to activity holding a property (WRAMA).

Atlanta regional office of GSA forwards to: All Government agencies (exclud ing DOD) within their region.

These Government agencies indicate acceptance and request for property is submitted to WRAMA by GSA regional office.

Residue made available to other GSA regional offices.

No time limitation on screening process within GSA, but followup for disposition instructions is made at the end of 90 days from date of receipt of letter of transmittal from SMD.

Those items still available and desired are released to the service educational institutions.

GSA circularizes residue to Department of Health, Education, and Welfare (Atlanta) for 15 days.

Property not accepted by Department of Health, Education, and Welfare is released by GSA to the holding activity as surplus property.

Surplus property transferred to base disposal officer for disposition.

First of all, the determination is made as to the location of the property and the quantity to be disposed of at the actual location. Assume that the total quantity is here. The procedure is as follows: The item is transferred to class 27. In the process of transferring that item to class 27 inspection personnel determine condition codes such as the fair value code. That fair value code has guide lines of A, B, C, and D. I list these for illustrative purposes only.

Mr. MORRIS. What is the purpose of the fair value code?

Mr. BISHOP. Should the property be acquired by some other agency, then the Department of Defense uses it for reimbursement purposes. Mr. BALWAN. On a replacement item, if it is transfererd to another section or branch within the Department.

Mr. BISHOP. Stock fund items.

Mr. BALWAN. Well, for instance an automobile.

Mr. COTTER. Do you pick up your acquisition cost at that stage itself?

Mr. COTTON. The acquisition is on the form at the time it is reported as excess the form 120.

Mr. COTTER. Your acquisition cost does not go on the form 120. It goes through the screening?

Mr. COTTON. Yes, it does.

Mr. COTTER. Why are you checking up fair value?

Major BROSE. This is information supplied to the man making up

the form 120.

Mr. BISHOP. As to how much he will have to pay.

Mr. HAINES. This is by an inspector who determines by its condition its fair value.

Mr. COTTON. At the time of the inspection, the inspectors indicate a commercial description in order that the item could be utilized by the various services."

At this point the material is reported weekly on form 120's to Washington. It is received by SMD and forwarded to Army-Navy screening, the Department of Health, Education, and Welfare, the Civil Aeronautics Administration, Boy Scouts of America, and so forth.

Now the normal processing time equals 75 days.

On the balance of the material not taken by the Army, Navy, the SMD forwards consolidated listings taken from form 120's to the regional office of the General Services Administration, which in this case is located at Atlanta, Ga., with a copy of the transmittal notice to the property holder holding the property.

The Atlanta regional office of the General Services Administration forwards this listing to all Government agencies, excluding the Department of Defense, within their region.

These Government agencies may indicate acceptance, and request for property is submitted to Warner Robins by the General Services Administration regional office at Atlanta.

The residue is made available then, in the event that the Atlanta regional office has not gotten rid of the property reported to them, within the Atlanta region.

There is no time limitation on the screening process within the General Services Administration, but followup for disposition instructions is made at the end of 90 days from the date of the receipt of the letter of transmittal from SMD.

Mr. BALWAN. What was that last part for? Are you trying to say that even though you have to screen this within the military in a hurry the General Services Administration has no limitation on it? Mr. COTTON. It can take 6 months or 1 month.

Mr. BALWAN. What was that other part about following up for disposition instructions and the end of 90 days from the receipt of the letter?

Mr. COTTON. At the end of 90 days if we have not received any instructions on the release or transfer of that porperty, we ask the General Services Administration.

Mr. COTTER. Based on experience, what is the average time, do you know?

Mr. COTTON. I wouldn't hazard a guess on the average time. Some of it is in there a long time.

We

Mr. HAINES. We felt that this no-time-limit deal was bad. went to Washington and General Services Administration told us that they were not willing to put a time limit on it, but they said they were trying to move this out within 90 days. They said they had no

objection if we did this. 90 days from the time it goes through the regional office to ask the regional office for disposition. Up until the time of decentralization we were processing all the standard form 120's through headquarters, AMC. At the time we were doing this we were really surprised to find that we had only a small majority of the items which were 90 days old. We found that the followup had been mutually beneficial and I would say that itemwise, we were getting probably 90 percent of our instructions within 90 days. Dollarwise, it is not quite so good because if you give them an item with a very high dollar value on it, the regional office can only authorize a surplus authorization up to $10,000 on a line item. If they have an item that costs $20,000 and have not been able to redistribute it, they have to go to Washington and recommend surplus authorization on that.

They will make every effort they can and hold onto it. Dollarwise that 10 percent of the items represents a high-dollar figure.

Mr. BALWAN. Is this pretty much a thorn in your side, this time limit?

Mr. HAINES. It has been, yes, sir.

Mr. IKARD. It stymies you because you cannot move for an indefinite period.

Mr. BALWAN. It stays in class 27, and it is frozen, and there is nothing you can do about it.

Mr. HAINES. That is right.

Mr. BALWAN. You are criticized for having a lot of surplus about which you can do nothing.

Colonel PACKARD. The normal processing time is 70 days and there is 90 days, which is quite a long time.

Mr. COTTER. What has been the experience?

Mr. HAINES. We could get that figure.

Mr. COTTER. Is it substantial?

substantial percentage?

Have they been redistributing any

Mr. COTTON. I do not have the percentage figure.

Mr. HAINES. Last year they redistributed $9,923,000 and donated $4,600,000, making a total of somewhere around $14 million as against an overall total of $239 million.

I cannot say that all of that was reported. Our actual disposal for the fiscal year 1953 amounted to $293 million.

Mr. COTTER. Do you know how that breaks down into reportable and unreportable?

Mr. HAINES. We have it developed and it is in the final stage of approval and we do not have them now.

Mr. COTTER. You have a lot of big exceptions, but last year's figure would include the small-line items, so that outside of your exceptions, most of it was reportable; is that right?

Mr. HAINES. That is right.

Mr. BALWAN. The reportable and nonreportable items system went into effect July 24.

Mr. HAINES. That is the 90-day plan.

Mr. COTTER. Is the PQ plan very helpful to you?

Mr. HAINES. We don't know. Ninety days will be up on the 24th

of October, so we haven't got anything yet.

41957 0-54- -17

This new report will tell us how much fell into the P category and how much they reported and how much they have gotten disposi

tion on.

The only information available at this time is that during November 1953 the Air Force reported for screening "P" property valued at $804,987 and "Q" property valued at $546,713 and that during December 1953 "P" property valued at $3,156,395 and "Q" property valued at $533,094 was reported for screening.— (Excerpt from letter of Jan. 29, 1954, from Brig. Gen. Joe W. Kelly, USAF, Director, Legislative Liaison, Department of the Air Force, to Hon. R. Walter Riehlman, chairman, Military Operations Subcommittee.)

Mr. BALWAN. Isn't it your understanding that the PQ plan was a device developed to relieve the paperwork at SMD primarily because they were the ones doing most of the squawking?

Mr. BISHOP. If we were advertising nationally items which were not worthy of transcontinental transport. We were sending the same list to San Francisco as we were to Atlanta, Ga. Now we are screening only what we can get some value out of.

Mr. BALWAN. There is a good possibility it will be of help to you. Mr. COTTER. In connection with this Springclean Operation and some special effort to get rid of some of your excesses, do you people, based on the experience that you may have had, feel that the Government would get a much higher recovery from the surplus if you were to turn it over to an agent who would sell it rather than selling it by your bid process?

Colonel PACKARD. That is a long question and the answer is, briefly, "No."

Mr. IKARD. Do you have the reasons for that?

Colonel PACKARD. Yes, sir; we have them documented.

Mr. IKARD. Would you let us have those, please?

Colonel PACKARD. Yes, sir.

Mr. IKARD. If you can furnish that to us for our files it might save us some time here.

Mr. BALWAN. The thing that we are interested in is not so much the thing that General Rawlings gave, but the staff report.

Colonel PACKARD. We can furnish that to you. We carefully evaluated the paper upon the experience, the dollar return and the cost, and we feel that it is not a worthwhile program.

Subject: Property disposal service test.

NATIONAL AIRCRAFT SERVICE CORP.,
Washington, D. C., May 6, 1953.

COMMANDING GENERAL, AMC HEADQUARTERS,

Wright-Patterson Air Force Base, Dayton, Ohio.

(Attention: MCSYD.)

GENTLEMEN: As a result of the Air Force's announcement regarding the sale of a large amount of surplus aircraft material, a representative group of aircraft and parts distributors have jointly organized the National Aircraft Service Corp. This corporation consists of companies now engaged in the disposal of aircraft material made surplus after World War II.

Recognizing the problems of the Air Forces, as well as appreciating the value of some of the material which will be made surplus, it is the considered opinion of this entire group that the facilities of these highly specialized companies can be used to a great advantage by the Government. A large amount of warehousing, excellent CAA-approved shops, as well as a trained force of technicians and sales personnel, are available for this job.

Due to our many years of experience in this specialized field, we know that a much greater return than scrap value can be recovered by the Government if an orderly segregation and liquidation method is used for this disposal. This can be accomplished without cost to the Government and at the same time facilitate