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Mr. HOLIFIELD. On a spot-bid sale, you would notify people that you have a list of these materials that would be subject to spot-bid acquisition.

Mr. BUTLER. Yes, and they would come and look it over, and you would have a date they would put in their bids. Then we have a stipulated date and time of the opening. The bids must be in the box prior to that time. These people all come on the morning of the bid and, at that time, drop in their bid.

Mr. HOLIFIELD. That bid does not have any money in it ?
Mr. BUTLER. No, sir.

Mr. HOLIFIELD. When opening bids, you open at a set time in the morning—you find one of these bidders, read them off and make the award to the highest bidder? At that time, he pays you?

Mr. BUTLER. We go through a formal opening, and inform the highest bidder of the bid, and inform them they owe us so much.

Mr. HOLIFIELD. He doesn't have to be present?
Mr. BUTLER. No, sir.

Mr. HOLIFIELD. He is not tied down unless he comes in, so that means you must have a time limit for him to appear.

Mr. BUTLER. We have a 10-day payment and removal period.

Mr. HOLIFIELD. What if he does not come in? Does it go to the next man in line?

Mr. BUTLER. It can be worked that way. We have never awarded to the next highest bidder.

Mr. HOLIFIELD. You mean the high bidder always came in?

Mr. BUTLER. We have had two cases where bidders refused to take delivery, and therefore I withdrew the lot rather than passing to the next highest.

Mr. HOLIFIELD. Why?

Mr. BUTLER. There is too much chance for collusion, because two bidders might get together. One bids high, the other low. The high man takes it if there are other bidders in between. If there are no bidders between them, then the high man would say "I don't want this stuff" and split the profit with the low man. So, I protect the Government by withdrawing it completely and readvertising.

Mr. BALWAN. How frequently would you withdraw items from the sales after getting bids?

Mr. BUTLER. On numerous occasions, I have rejected lots on the basis that we felt there wasn't a large enough return.

Mr. Balwan. Was that not true on spot-bid 154.

Mr. BUTLER. That is so, sir. Sometimes they are withdrawn because a certain portion of one lot may be required here.

Mr. HOLIFIELD. You reserve the right to withdraw at any time?

Mr. BUTLER. At any time up to the time awards are made and in the mail.

Mr. RIEHLMAN. After bids are opened, and you come to an item that is advertised for sale on which you feel you are not getting what you should for that item, you still can withdraw it and put it up for sale at a later date?

Mr. BUTLER. Yes sir.

Mr. HOLIFIELD. You have not had to do that? In most instances, the spot-bid sales have been satisfactory and you have gone through with the sale?

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Mr. BUTLER. Yes, sir. On spot-bid sales we receive one copy of the invitation back from the bidder. On the sealed-bid procedure when property is awarded, we have to get a second signed copy from the bidders and 5 more copies, which make 7 copies distributed throughout the system, so we have a saving of 6 copies of the IFB.

Mr. HOLIFIELD. That is in case of sealed bids?
Mr. BUTLER. Yes, sir.

Mr. HOLIFIELD. Sealed bid sales must have a deposit along with them and if they don't go through with the sale, they are penalized by the Government for the amount of the deposit if they withdraw.

Mr. BUTLER. Right. Scrap material cannot be sold by spot bid. Scrap must be sold on sealed-bid sale.

Mr. HOLIFIELD, How do you determine whether a lot of merchandise is to be sold on spot or sealed bid?

Mr. BUTLER. On spot bid, there must be usable items or salvageable parts which can be reclaimed. Of course we have a limitation, dollarvalue-wise as to property going on spot bid. The limitation is $2,000. If over that, it has to be sealed bid.

Mr. Balwan. Of these 5 sealed bid sales, were they all scrap?

Mr. BUTLER. They contained 90 percent scrap. There might have been 1 or 2 items along with them advertised on "each" basis.

Mr. RIEHLMAN. Do we have any figure on spot-bid sales as to the percentage of recovery you have derived in comparison with acquisition cost?

Mr. BUTLER. No, sir.
Mr. HOLIFIELD. But you have poundwise?

Mr. BUTLER. Yes, sir. On one of the charts we went over we briefly estimated the acquisition cost of property; that will give it to you.

Mr. Balwan. On form 488, do you have to list the stock-catalog value of everything you sell ?

Mr. BUTLER. Stock catalog value is not known for the type property received. Since we are a central disposal activity for the Los Angeles area, therefore a lot of it is estimated.

Mr. HOLIFIELD. Would you get lower value for scrap as of the day of sale on spot-bid sa le arrangement? Let us assume aluminum is selling for 5 cents, and you were offered top bid of 3 cents, you would sell it at 3 cents ?

Mr. BUTLER. No. Aluminum scrap must be sold on sealed bids.

Mr. HOLIFIELD. Is that question a good question for scrap iron or any other kind of metal?

Mr. BUTLER. If the market was 5 cents today and I only received a bid of 212, 3 or 314 cents, I would check into it-maybe some foreign material in it which would pull the price down, as they would have to separate it themselves. But, if it is good clean scrap, would expect to get top market price.

Mr. Balwan. How many people do you have in Disposal Division?

Mr. BUTLER. At the present time, I have an allotment of 35 people in the Division.

Mr. Balwan. What do they do? Mr. BUTLER. Two people in the Division office; two people in the office of the Excess Property Branch, making out standard form 120 and stock control functions. Seven people in Warehouse Branch, storing class 27 property. Surplus Property Branch-5 people in the office, handling records, sales, reports of surplus property. Nineteen people out in the disposal yard-laborers and lifts.

Mr. BALWAN. We asked Colonel Betz to make a request of you to prepare statement of experience of your top civilian and military men.

Colonel LEE. That is in your brochure. (See chart 7A.)

Mr. Balwan. Do you have an analyst in your Division who would know whether you are getting a good price for the different types of material? Or, is that something you acquire from experience ?

Mr. BUTLER. We have three people familiar with that.

Mr. HOLIFIELD. Would it be fair to say that cost of handling surplus is more than $81,000 for the year!

Mr. HORTON. 72,068.

Mr. HOLIFIELD. In other words, we have these people tied up in this deal plus people handling it before it gets in here, and we can't honestly say that the Government is making anything out of it, can we?

Mr. BUTLER. Yes, sir. 162,000 was the total revenue-salaries were less than revenue, receipts and scrap.

Mr. HOLIFIELD. What is your budget?
Mr. BUTLER. 72,000 last year.

Mr. HOLIFIELD. Subtracting overhead cost $72,000, $90,000 represents a net recovery as far as you are concerned at this base?

Mr. Balwan. There is a lot of administration work to get it to the disposal officer.

Mr. BUTLER. But that would have to be done anyway. It has to be dropped off the accountable records of the supply officer.

Mr. HOLIFIELD. Let us assume that at the point of declaration for surplus you had a private business concern sell it for you and give you 3 percent of the acquisition cost, the Government would be better off, wouldn't it?

Mr. BUTLER. I would like to see that kind of business.

Mr. HOLIFIELD. Just say that if private business would offer you 4 percent, you would be better off.

Mr. BUTLER. It would be the best method if we first screened it for redistribution within other Federal agencies. I have more or less prided myself that we have been getting one-fourth property receipts in surplus redistributed to the other Federal agencies. At this base we haven't been able to push this fast enough, so that you cannot only consider the factor, how much did we take in and how much were operating costs, but have to go a little further and consider how much would we redistribute and how much of this property other agencies get.

Mr. RIEHLMAN. Is that chargeable to your staff—that type of activity ?

Mr. BUTLER. Yes, sir.

Mr. RIEHLMAN. How many items or dollars worth passed on to other agencies?

Mr. BUTLER. I have data in pounds and what I have figured out between dollar value received and tons received. It works out to $7,000 per ton. I have the number of pounds per month transferred to other facilities.

Mr. RIEHLMAX. The disposition to other agencies comes about after being declared to your Division? Approximately one-fourth redistributed to other agencies?

Mr. BALWAN. What do you have in your form 488 on transfers without reimbursement to Department of Defense agencies?

Mr. BUTLER. Here is something-tons received, tons shipped, tons handled, sold, transferred and donated. 4,503 tons sold-1,526 tons redistributed, which we do not get any credit for.

Mr. RIEHLMAN. You gave us some figures—$7,000 per ton.
Mr. BUTLER. Yes, we figure $7,000 per ton.

Mr. HOLIFIELD. If that value is there, then in addition to $162,000, there is this intangible amount for which you should take credit.

Mr. BUTLER. It has been taken up with AMC to try and figure out some type of figure on the form 488 for redistribution of property. As yet no determination has been made.

Mr. RIEHLMAN. It would put your Department in a lot better light as to revenue received for the work you are doing.

Mr. BUTLER. Right.

Mr. HOLIFIELD. I don't blame you for wanting to get some record made of that to give this committee some knowledge of how to evaluate this program.

Mr. RIEHLMAN. Chances are that property being transferred has more value than your sales.

Mr. BUTLER. Right.

Mr. HOLIFIELD. In order to give this committee a fair amount of knowledge, I think this last factor quite important. I want to get it on the record about these 10-gallon milk cans and the field stoves.

Mr. RIEHLMAN. I would like the complete history of what was procured with each one of those units in the way of additional utensils, bowls, kettles, and all equipment that goes with them.

Mr. HOLIFIELD. On that point, may I ask you if, at the time of procurement, the stoves were procured and a certain number of utensils to go with the stoves were also procured and that makes a full unit?

Colonel GREEN. We will have to get that information from the prime depot.

Mr. HOLIFIELD. Leading up to this, in addition to the full unit for one set, do you have additional pots, pans and things?

Colonel GREEN. I cannot tell you, sir. Mr. Balwan. Let's get this question relayed to Colonel Betz so that AMC can clear this point up with the prime depot.

Mr. HOLIFIELD. I inderstand from Colonel Lee, as we went through the warehouses, that if a stove appeared in inventory without these other parts they would be declared excess, but if parts showed up later, it is possible to take stove and parts from excess declaration and put back into regular stock.

Colonel LEE. I explained the prime depot has declared these various units excess. How they fit into our stock here and theirs combined, I would not be able to answer.

Mr. BUTLER. As Colonel Lee says, the prime depot tells us what parts are excess. This particular shell, fire box, kettles, different parts are under different stock numbers. The prime depot tells us certain of these items are excess, to be transferred to account code 7. When that assembly has been transferred to excess, the remaining parts for that complete kit could still be in active stock. But if you would get

the two together, it would make an active item. If made an active item, maybe the complete stove would be excess and the whole stove go to excess property class.

Mr. RIEHLMAN. Do you know what four items are the ones that are missing and are now permitting the prime depot to say the stove itself is excess?

Mr. BUTLER. No, sir.

Mr. HOLIFIELD. We are wondering about that. If at one time the prime depot decrees 100 of these stoves excess because they do not have other components with it and the components are declared excess because they do not have the stove, obviously both are being declared excess in error. There should be some way of putting them together so they could remain in active stock. Are they purchased separately?

Mr. BUTLER. We do not know.

Colonel Suitii. I suggest we leave the question go until we get to the prime depot.

Mr. RIEHLMAN. We'll be happy to do that, Colonel. We want to know whether we purchased this additional equipment for the stoves. There is some question as to whether or not the pots and pans for the stoves would be in stock. We want to know how this comes about.

CHELI AIR FORCE DEPOT EXHIBIT No. 20

HEADQUARTERS, AIR MATERIEL COMMAND,

DEPARTMENT OF THE AIR FORCE, Wright-Patterson Air Force Base, Ohio, 18 December 1953. Subject: Official Visit, Riehlman Subcommittee for Military Operations, House

Committee on Government Operations, Cheli Air Force Depot, Maywood,

Calif. To: Office of Legislative Liaison, Office of the Secretary of the Air Force, Wash

ington 25, D. C. Attn: Col. William H. Smith. 1. Reference is made to letter from Cheli Air Force Depot, Maywood, Calif., to your headquarters dated November 13, 1953, concerning visit of the Subcommittee for Military Operations, House Committee on Government Operations, to that installation on November 5, 1953.

2. During the subcommittee's visit to Cheli Air Force Depot, questions were raised concerning Pack “A” Range, S/N 6920-631800, and Pack “B” Range, S/N 6920-631850. There was also a query as to can, milk 10-gallon capacity, having been in class 27. Answers to these questions have been compiled by the Directorate of Supply and Services, this headquarters, and are inclosed herewith for transmission to subject subcommittee. For the commander:

LINCOLN C. MACKAY, Captain, USAF, Legislative Liaison Officer.

FIELD RANGE AND UTENSILS

Since the Air Force has assumed bulk storage and issue of the pack B range, which consists of the cabinet, fire unit, pots and pans, no procurement has been initiated by the Air Force. All pack B units, including components, were received through the division of assets.

Question. Are stoves and spares procured to make a full unit?

Answer. They are procured as complete sets only. Pack B is the range, including cabinet, fire unit, pots, and pans. Pack A is the kit of minor utensils and accessories.

Question. If stoves appear in warehouses without utensils would the stove be declared excess, and in event utensils show up later would it be possible to complete a unit by bringing stoves back from excess or vice versa?

Answer. (1) Stove would not be declared excess on basis of being without utensils. It would be logical to dispose of incomplete range if adequate stocks of complete range are on hand.

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