2. Benefits. As a result of the adoption of the Q plan at Cheli Air Force Depot, a larger volume of disposal action is authorized. Under the new system, items which prior to July 1, 1953 were reportable on standard form 120 are now authorized for direct transfer to the disposal activity. Of those standard forms 120 which have been submitted to the prime depots for P and Q type property since implementation of this plan, results have indicated more expeditious screening and disposition of property falling within the P category of high-value items. Mr. BALWAN. This has not been explained to the committee. Mr. HOLIFIELD. What is the Q plan? Can you explain that, Colonel Betz? Colonel BETZ. It is a Department of Defense plan to release restrictions formerly placed on certain property-high-cost property. The Q category is the low-cost material. Since the large majority of the items handled are low cost, it means a lot less paperwork in circularizing stock available to other agencies. Mr. BALWAN. What places material in Q category? Mr. BETZ. Material with a value under $100 per line item. Mr. BALWAN. The understanding I have is that there are two classes of reportable property to SMD's. If material is over $300 every prime depot has to report to SMD and also if less than $300 but more than $100 per line item. For instance, a rug or uniform worth $200, there is no use to list these so they advertise regionally only, in the western area. That reduces the cost of advertising and the time to get it cleared. If less than $100 it is not reportable, and put in X category and sold. That is as I understand it. Mr. HOLIFIELD. Mr. Hull, do you have a correction? Mr. HULL. I couldn't give you a correction. Mr. HOLIFIELD. Colonel Betz, do you accept Mr. Balwan's explanation? Colonel BETZ. Yes, sir. I have never seen the Q plan. I have had it explained to me. Mr. HORTON. That concludes the presentation if there are no other questions. Mr. HOLIFIELD. I want to determine whether the Q plan was an extension of this plan you spoke of Colonel Betz or just part of it? Colonel BETZ. It is not a part of our program at all. Ours applies to the determination of excess items by nature, and this plan is for handling excess items according to their dollar value. Mr. BALWAN. This is a paper-expediting proposition. The Surplus Materiels Division (Navy) at Washington was getting a flood of requests and eliminated it by making an analysis of the kind of material they were screening, including items possibly over $300. About 70 percent of paperwork was eliminated. It doesn't pay for any man from a distant city to bid on a Q item as it wouldn't pay him to move it. Mr. BUTLER. The Q plan is hard to explain on account of the dollar value and the utilization rate feature. It could be either type of property, Qor P according to condition and fair value. Mr. RIEHLMAN. We are ready to take our tour. (Adjourned at 10:45 a. m.) AFTERNOON SESSION Mr. BALWAN. We have one question we might want to developfrom the form 488 disposal property report that you give to AMC, they extract figures and make comparison against AMA bases. For Norton, including Cheli-the stock catalog value of materials sold in July 1953 was $16 million. Revenue received, $22,000. That is about 1/10 of 1 percent return which is the lowest rate of any of the bases, which includes Brookley, Hill, Tinker, Olmstead, and Wright Patterson. CHELI AIR FORCE DEPOT EXHIBIT NO. 19 U. S. Air Force-Sale of surplus and replacement material, July 1953 (includes salvage and usable material only) This amount includes: (a) $201,666.32, revenue received from sale of surplus material, and (b) $117,724.88, revenue received from sale of material for replacement purposes. NOTE.-Revenue received from sale of waste and scrap by Air Force for July 1953, totaled $444,964.33. Mr. BUTLER. Is that a consolidated report for San Bernardino AMA? Mr. BALWAN. Yes. Mr. BUTLER. That property is largely aircraft property which has been turned into disposal activities and sold as scrap. The original cost was extremely high but return is very low. Mr. BALWAN. Is that cost the original cost including a large amount for labor? Mr. BUTLER. No, to clarify, a lot of aircraft frames, fuselage wings, etc., were transferred to disposal as items but sold as scrap with scrap certificate on the invitation. Therefore fuselages costing thousands of dollars were sold as scrap aluminum for a few cents a pound. Colonel LEE. The only way we could tell you would be if we were able to extract ours out of that, and tell you what happened here. We could not tell what SBAMA sold. Mr. BUTLER. We have our figures here. Mr. BALWAN. You have those which you can present-sales and revenue? Mr. BUTLER. Yes, average is between 1.5 and 2.6 cents per pound for the material. The total would give you a percentage. Mr. BALWAN. Well, your figures are on scrap per pound. Mr. BUTLER. Our surplus records are maintained on a pound basis. Everything is in terms of pounds. Mr. RIEHLMAN. Suppose you had a lot of electronics equipment— that is very light. Do you figure that in pounds? Mr. BUTLER. Yes, sir. You will find that our return on our dollar value will go up based on the estimated acquisition cost, also pound wise-we will be getting more money for the property due to the fact we are in clothing-very light poundwise, but will get good returns. Mr. HOLIFIELD. Why use pounds at all? Mr. BUTLER. At such time as material is transferred from active records and accountability terminated, identity of that property is lost as far as any records are concerned; therefore material is set up under salvage code. In the brochure you have, salvage code classifications listed and all material received as surplus is picked up under one of those classifications and carried in pounds scrap paper in tons, gross or net. Mr. HOLIFIELD. I can't see the reason for that. Don't you lose track of the recovery as a percentage of acquisition costs? I can't understand why you change it to pounds. Is it to obviate carrying it on the record? Mr. BUTLER. No, on most of these sales, even though we do advertise by so many each or sets, or correct unit of issue, the scrap dealers many times, will want to know the number of pounds in that lot, and they buy it as so many pounds in the lot even though sold by units. Mr. BALWAN. Let's get part of that from AMC. They set the requirement and it seems foolish to report in pounds instead of a more meaningful figure. Mr. HOLIFIELD. We would like to know the reason for reporting in pounds. Colonel BETZ. I don't know sir, never had anything to do with that; but I'll get the information for you. Colonel SMITH. We are having people in Monday from AMC at Sacramento, and these questions proposed here and not answerable at this level will be transmitted to AMC, the answers forthcoming at Sacramento. I do appreciate the questions being brought up, and I want you to receive the answers. Mr. RIEHLMAN. Is a record of these questions being kept on which answers are not furnished? Colonel SMITH. Yes, sir. Mr. BALWAN. A transcript will be typed tonight and sent to AMC. They will have answers Monday. Mr. HOLIFIELD. No one here knows why they figure that in pounds. Mr. BUTLER. That comes from AMC. Mr. BALWAN. How much material do you have here that was not reported on form 120? Does the supply officer have the answer as to which material is excess but is not on form 120? Mr. BUTLER. According to the charts we have, there is a little over $1 million worth which has just become excess. As a matter of fact, the largest part of that is physically in process of transfer from account code 1 to Property Disposal Branch, which will then be reported on 120. Mr. BALWAN. How much excess is getting into the screening system every month and how much is coming into you as disposal officer? Mr. BUTLER. That would be hard to say. It is very fluctuating. Mr. BALWAN. Do you have any figures available? Mr BUTLER. We have that on the charts, the figures for the last quarter of what was reported on standard form 120, and how much by dollar value has gone to the disposal officer. Mr. BALWAN. Where is that? Could we have that shown? Mr. BALWAN. The value of excess property transferred from account code 1 to disposal is over $2 million for the preceding quarter? Mr. BUTLER. $2,633,238 for the last quarter. Subtract the column 4 total ($1,879,991) from the column 2 total ($2,598,376) and you get the total amount screened ($718,385). Mr. RIEHLMAN. That period is a year. Mr. BALWAN. How much backlog do you have, and are you keeping up with it or is it getting ahead of you? Mr. BUTLER. We have no backlog other than the flow time of the paperwork at this depot in submitting the items on the 120. Mr. PORTER. At no time will there be a period of 2 months here that won't be reported. We have the AMC area activities team here now. They checked that area and are officially reporting that we have no backlog that could be reported, other than normal paperwork flow. Mr. BALWAN. Total amount of excess property received by you and total amount sold by you in September. How does that balance out? Mr. BUTLER. The two figures have nothing to do with one another. Mr. BALWAN. It ought to give us some indication if we take 3 months or 6 months at a time. Mr. BUTLER. We are speaking of excess property here and the property I have has never been excess. It is condition condemned. It is never excess. The two figures cannot be tied together. Mr. HOLIFIELD. The excess property you have here is never declared surplus? Mr. BUTLER. Yes, sir. It is declared surplus after all screening has been performed. Colonel LEE. Cap frames and cap covers, for example. That is contained in item 1 which did not go through excess but went direct to disposal. Butler is saying that when it gets into surplus category where he is going to sell it, he loses the identity of it. I think it could be kept separate. Mr. HOLIFIELD. Don't you sell them as units? Mr. BUTLER. They are advertised on invitation as units but picked up as pounds on records, and will be disposed of as pounds. Also, in the initial contract, they are indicated as units. Mr. MORRIS. Those caps were never screened as excess property; sent directly to scrap? What conditions existed that made it unnecessary to go through the screening process for the caps? Colonel LEE. The prime depot probably has the directive on disposal which does not make a reportable item of a military cap. This is specifically outlined in the directive, but the prime depot must give us authority to transfer to 27 and salvage according to the regulation covering that. The prime depot gives us authority to dispose of that item and I am sure that prior to doing that they checked with the Army. We have been trying to get them to help us dispose of those items; they take up so much of our space in the warehouse. I am sure they would screen with the Army to determine whether they wanted the items. Mr. MORRIS. If an item is peculiar to one service and not usable by the two other services, it would not be a reportable item, but is that an exceptional case? Mr. BUTLER. There are several listed exceptions in the directive, and that is one of them. Mr. BALWAN. Do you have a chart which gives the number of sales by types of spot bids? Mr. BUTLER. Yes. Getting back to your original question of how the amount of excess property transferred to disposal ties in with our sales. As time goes along, I will put out material on bid for sale, and on that same invitation there will be property that is excess and which has gone through account code 7, and some not, because it is condition condemned. That is why you can never tie the figures together so as to relate to each other. Mr. BALWAN. How many pounds of material received is surplus, and do you have a figure that tells how many pounds were sold that month? Can you give us a figure on that to indicate how you are keeping up pound-wise per month. Mr. BUTLER. I can send for our 488 forms which indicate how many pounds are received, donated, transferred, shipped, sold, reclaimed; but it only covers just this base. Mr. BALWAN. Can you provide us with that? Mr. BUTLER. Yes; I will phone down for that and have it sent up. Mr. BALWAN. I want you to explain what a spot-bid sale is. Can you explain how spot-bid sales operate? A spot bid is not like a spot-bid sale during the War Assets Administration program. Colonel LEE. Let's wait for Butler. Mr. HOLIFIELD. While he is gone, you make your excess property available first to Defense Department and other Government agencies. Do you make it available to all Government agencies? Mr. PORTER. Some, yes; and some, no. Some property definitely to other Government agencies concerned with military-type items, such as CAP. There is some property which no other Government agency is interested in. Those items are not referred to other agencies. Mr. HOLIFIELD. Because they are not interested? Mr. PORTER. Yes. Mr. HOLIFIELD. Is there any regulation preventing other agencies of the Government from taking advantage of excess property? Mr. PORTER. No, sir; in fact it is encouraged if it is the type of item they have any use for. Mr. HOLIFIELD. Can the Forestry Department or Department of Agriculture come in and get some? Mr. PORTER. Very definitely. Only those items they can use. Mr. HOLIFIELD. That information is furnished to Indian agencies? Mr. BUTLER. Surplus or excess? Mr. HOLIFIELD. Either. Mr. BUTLER. On excess property that is screened by GSA they will give shipping instructions or disposal on that. Mr. HOLIFIELD. Can the Indian agency come in and get that as donable property or do they have to pay for it on their budget? Mr. BUTLER. Indian agencies do have to pay for it. They are exempt, under certain laws to be reimbursed with the exception of certain property, for instance if sale property is stock fund clothing which is reimbursable under any conditions. Mr. HOLIFIELD. In other words if it is shoes and blankets they would have to pay for it? Mr. BUTLER. If it is a stock fund item. Mr. HOLIFIELD. Are those items stock fund items? Mr. BUTLER. Most shoes are; some are not. |