Mr. KASTER. Yes.

Mr. COTTER. But you had one bid in for $5.05.

Mr. KASTER. That is right.

Mr. COTTER. That stuff is still here?

Mr. KASTER. Not all of it.

Mr. COTTER. Has the sale been approved?

Mr. KASTER. Yes, sir; I think we have the teletype right here, the approval.

Mr. COTTER. I was wondering if you were going through the motions on a scrap sale where your expenses of your sale would amount to more than the recovery, and certainly you wouldn't want to do that. This would not be an example. You have some tonnage in there that is very substantial and some valuable types of scrap.

Mr. RIEHLMAN. Are there any other questions?

Before we leave I would like to make this commendation in respect to Mr. Kaster: In the field that we have been in and traveling around, I think that we need to commend people when they are doing a good job, as well as to condemn them when they are not.

I do not think we have had anyone in the field who has been able to answer questions better than Mr. Kaster has, and who has as clear an insight on it, and who does not have to ask anyone else the answers to the questions propounded to him.

Mr. KASTER. Thank you.

Mr. IKARD. It is really refreshing for us to see someone like Mr. Kaster who obviously knows the answers and does not have to go into a conference every time a question is asked.

General MARSHALL. Might I ask that the committee put that in writing to help out Mr. Kaster's record?

Mr. RIEHLMAN. We would be glad to do that. We have sat through a good many meetings. When you get into a field of asking specific questions about certain parts of surplus and what was in the lot and so forth, we have found that other people have had to hesitate quite a bit in answering the questions, and I think that Mr. Kaster certainly has been able to answer any questions the staff has asked him.

Mr. COTTER. You are talking about local surplus property officers. Mr. RIEHLMAN. Yes, certainly.

General MARSHALL. I think a lot of Mr. Kaster and all of us do here. Mr. RIEHLMAN. I think we should try and correct evils if we find them and make constructive criticisms, and we would be just as frank if Mr. Kaster were doing a poor job and speak to you about it, just as we now tell you how we appreciate his work.

General MARSHALL. We all appreciate the committee's attitude, and are glad that you found it that way.

Mr. RIEHLMAN. Well, thank you again, gentlemen.

That concludes this hearing, and we will now go out and inspect some of this property which we have been discussing.

(Whereupon, at 2: 10 o'clock p. m., the hearing was adjourned.)

SURVEY OF MILITARY SUPPLY MANAGEMENT AND SURPLUS PROPERTY DISPOSAL PRACTICES

TUESDAY, OCTOBER 13, 1953

HOUSE OF REPRESENTATIVES,

MILITARY OPERATIONS SUBCOMMITTEE OF THE

COMMITTEE ON GOVERNMENT OPERATIONS,

United States Naval Supply Depot,

Mechanicsburg, Pa.

The subcommittee met, pursuant to notice, at 11:10 a. m., at the United States Naval Supply Depot, Mechanicsburg, Pa., Hon. R. Walter Riehlman (chairman of the subcommittee) presiding.

Present: Hon. R. Walter Riehlman, chairman of the subcommittee, and Frank Ikard, member of the subcommittee.

Also present: Paul J. Cotter, chief counsel, Michael P. Balwan, staff director, and Robert T. Morris, staff member.

Present from the Mechanicsburg (Pa.) United States Naval Supply Depot: Rear Adm. A. A. Antrim, Supply Corps, United States Navy, commanding officer; Lt. Comdr. J. D'Amico, Supply Corps, United States Navy, surplus property disposal officers; and George Eurich, chief civilian employee, Surplus Property Disposal Section.

Present from the Ordnance Supply Office, Mechanicsburg (Pa.) United States Naval Supply Depot: Capt. L. H. Thomas, Supply Corps, United States Navy, commanding officer; and Lt. Comdr. J. F. Tynan, Supply Corps, United States Navy, assistant planning officer.

Present from the Ships Parts Control Center: Mechanicsburg (Pa.) United States Naval Supply Depot: Capt. T. G. Reamy, United States Navy, commanding officer; and Comdr. J. D. Custer, Supply Corps, United States Navy, assistant planning officer.

Present from the Bureau of Supplies and Accounts; Department of the Navy; Washington, D. C.: Comdr. D. H. Lyness, Supply Corps, United States Navy, head, Stock Finance Branch, Inventory Control Division, Office of Assistant Chief for Supply Management.

Mr. RIEHLMAN (chairman of subcommittee). The subcommittee will be in order.

Admiral Antrim, will you call on the first one who is to make a presentation this morning.

Admiral ANTRIM. The first presentation will be on stratification. That is the name for the program analyzing the layers of our stock, and the presentation on that will be made by Commander Lyness.

(NOTE. Asterisks denote deletions of classified security information.)

475

STATEMENT OF COMDR. D. H. LYNESS, SUPPLY CORPS, UNITED STATES NAVY, HEAD, STOCK FINANCE BRANCH, INVENTORY CONTROL DIVISION, OFFICE OF ASSISTANT CHIEF FOR SUPPLY MANAGEMENT, BUREAU OF SUPPLIES AND ACCOUNTS, DEPARTMENT OF THE NAVY, WASHINGTON, D. C.

Commander LYNESS. As the admiral has indicated, we popularized a new word, "stratification." Actually, the objective is to layer our inventory, trying to show what it is composed of, and the end purpose for which we hold it.

It is basically similar to the problem that any industry has. The problem of doing it is not quite as simple as the objective, and that stems from the basic difference between the military supply system and any commercial supply system.

We have in the military two supply requirements. We first have to supply the operating forces at whatever level they now exist or is planned for the immediate future, but then we have to be ready for the big Christmas sale that will come in the event of mobilization.

We are trying to divide, for our own information, the inventory into segments. As Admiral Fox (former Chief of Naval Material) said, we have an inventory problem in the Navy. We have $13 billion worth of inventory, and annual sales of approximately $22 billion.

One of our own deficiencies has been that over the past few years we have not presented our picture either accurately or properly. We have gone before various budget hearings and before Congress with the tremendous bulk of inventory and a low sales ratio, and haven't looked too effective.

In the process of stratifying our own inventory, we think we can prove to our satisfaction that we are not quite as bad as we looked before. At the same time, we can identify areas where we have faults and take steps to correct them.

I have a chart on the problem area of mobilization. If you are going to stratify your inventory, you must find out what your top requirement is. We do not want to dispose of any material for which there may be a demand in mobilization.

Basically, in the Navy supply system we have two ways of projecting a mobilization demand.

For a lot of our material we can estimate a future demand much as a civilian organization can, in terms of past demand, for instance. I can mention, for example, clothing, provisions, fuel, and so forth. This is the method used by the General Stores Supply Office, and we have others that took as the basis for estimates of future demand the demand they obtained for their material subsequent to Korea, which is indicated by this line on the chart. They took the Navy strength and developed various indices of steaming hours, and so forth. They had that index for the same period, and the relationship was indicated or considered as 100. For instance, if it took 100 brooms to satisfy a Navy of this size or any other, the relationship was 100. You can see that there is a sharp increase in this chart, and these are 3-month periods.