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Those engines cost the Air Force $20,000,813, and we have reclaimed from them parts which are required on the current-model airplanes. Of this $20 million cost, we have already reclaimed from these 815 engines $8,254,00 worth of property. This reclamation was done in the Maintenance Directorate.
Mr. RIEHLMANN. Now that property is going back into the different stockpiles ?
Colonel RAMME. Right back into Air Force stock.
Mr. RIEHLMANN. All over the different parts of the country wherever they are needed ?
Colonel RAMME. All of our material, prior to going into disposal or salvage, is processed through reclamation in order to get off any components or end items or bits and pieces which we require and can use, in order to try and keep from getting into the disposal yard those items the Air Force actually needs and may be going out to buy.
Mr. RIEHLMANN. That need has been carefully screened so that you know these parts are adaptable to the airplane motors that we have at this time and will be for some time to come?
Colonel RAMME. Yes, sir; that is right. Each prime depot makes up what they call a "save" list. We make them up on our prime classes and give everyone ours, and they give us theirs. That "save" list is in the reclamation yard, and they screen all parts against that.
Mr. HOLIFIELD. Is that reclamation service or project fairly new!
Colonel RAMME. No, sir. About 2 years ago we published a directive that everything would go through there, with the exception of lumber, paper, and garbage from the messhalls.
Mr. HOLIFIELD. Well, I know that immediately after World War II, when there was such a tremendous job of disposal, that there was very little attempt to salvage for a year or two at that time; so I presume that it is recent in terms of 2 or 3 years that you really set up policies and procedures.
Colonel RAMME. Two years ago this summer we established the policy that everything would go through the reclamation yard.
Mr. HOLIFIELD. We have knowledge, of course, of many millions of dollars worth of engines sold at the Maywood Depot to the Reynolds Metal Co. for about $26 apiece. These engines cost the Government in the neighborhood of $20,000 to $25,000, and no attempt was made at all to reclaim them. This was, I would estimate, in 1947 or about 1948, so I know your reclamation emphasis certainly wasn't in existence at that time.
General HEFLEY. There were certain types considered to be excess in large quantities, and I believe that is possibly the explanation of large numbers of types associated with old aircraft or aircraft that were being washed out; e. g., the B-24's. Mr. HOLIFIELD. It would seem certainly that
could find parts that were interchangeable and usable in any engine worth more than $26 apiece.
Colonel RAMME. This next example, sir, is V-1710 engines used on F-82E's; there is nothing we could reclaim from these.
Mr. HOLIFIELD. There is nothing on that. Well, this might have been in the same class.
Colonel RAMME. They are the V-1710 type of engine. There is nothing on that that we could recover at all-650 pounds of steel.
Mr. Balwan. Mr. Holifield, if we can get on the record the discussion that we had here with Colonel Packard which we had just a minute ago and is in relation to the discussion here, but also goes back to our discussion at Warner Robins Field. We were asking at that time if instead of cannibalizing they might not be able to sell these obsolete engines as a complete end item before it is stripped down and get more money for it than they could in this way. Actually, when they say an engine is obsolete, it is obsolete to the Air Force itself. It is not their business to go into the marketability of the end item to see exactly what it would bring on the outside as a return to the Air Force. I would like to have Colonel Packard's comments on that point, which was raised at Warner Robins.
Colonel PACKARD. At Warner Robins, Mr. Riehlman and the committee brought up a point that perhaps we might realize a greater return from an engine at commercial adaptation or other use in the service; such as the Navy service rather than, let us say, reclaim $1,000 worth of parts. Perhaps we could get $5,000 from a commercial source or perhaps the Navy could use it as a complete end item.
I must say in all fairness that previously if we had a need for the parts we would reclaim the engine. That had been quite a standard practice.
However, recently, and even prior to Warner Robins, we established a new policy, which we are in the process of coordinating with the Navy, whereby we will determine whether or not the item as a complete engine has commercial adaptation, what we might receive for it from a commercial sale as a complete item, whether or not the Navy has a need for it as a complete engine, and then balance against that what the reclaim value of the parts are. Finally, a fourth determination will be: even if we do sell this engine or do give it to the Navy, can we get the parts?. For example, have they done away with the tooling? There may be a critical need for the parts.
We will take these four criteria, we will balance them off, and come up with the most economical return to the Government.
I think we have to recognize that in some cases there will be a return to the Government which will actually be a cost to the Air Force, because if we sell the engine as a commercial engine at, let us say, $5,000, we could get a thousand dollars return worth of parts-that would cost the Air Force a thousand dollars. The Government as a whole would gain a net of $1,000. So we are putting that policy into effect to try to get the greatest amount from the net return.
Mr. RIEHLMAN. I think we appreciate that statement. I would like to have this on the record that we have invited here today two people from the airplane parts industry to take a look at what you have here, and get their thinking and advice on whether or not it would be feasible to dispose of these types of engines, and what greater return we might get by taking some advice from that industry. We would appreciate the people at the base here giving every courtesy that they possibly can while they are here because we want information from them, and the only thing we hope to derive is something that may be helpful in securing more for these parts than is possible through other channels. It is one facet that we might be able to follow, and that might show greater returns.
Mr. HOLIFIELD. Could I come in for just a minute Colonel Packard ? Colonel PACKARD. Yes, sir.
Mr. HOLIFIELD. On these criteria which you speak of, it seems to me that you are approaching the problem in the right way by using that type of criteria.
It seems to me, also, that there should be some way whereby you could set up a credit or at least keep account of that material which you have disposed of at a disadvantage to you, but at an advantage to the Government. As guardians of the tax dollar, of course, we feel the Government should be considered first and the budget of the Air Force second. I realize, of course, that your main interest is keeping the Air Force going, but I think both of those things could be coordinated in some way by having a presentation or a figure which you could use in substantiation of your budget requirements, showing you have at a disadvantage to yourself, recovered more for the Government by a better method.
Colonel PACKARD. I believe that is very true, Mr. Holifield, and I think we will attempt to develop something like that. For example, we could transfer a good number of engines to the Navy rather than reclaim a portion of the parts, but that would require us to go out and buy out of our budget fund; so if we could take advantage of that as a savings to the Government as a whole, it might help our defense budget.
Mr. HOLIFIELD. I think you are entitled to do that, and I think you should be allowed to do it. I believe the Appropriations Committee would take into consideration the effort on your part to save the Government a large sum of money even though it was at a disadvantage to yourself.
Mr. Balwan. At the Maywood hearing there was some good information brought out for which the Air Force has probably not taken credit. That was in adding to the revenue received from the sale of surplus the value of the material that was being skimmed off and transferred to DOD agencies, and part of the value of the operation is this recovery program.
Colonel PACKARD. There is a case that works exactly in reverse to the vehicles; they are skimming off good items and yet we have to charge acquisition costs against the net return which is not included.
Mr. RIEHLMAN. I think that should be broken down and the information made available, because then the service would get the credit for their efforts in that field of activity.
Mr. HOLIFIELD. Before we leave point four here, I noticed the $8 million figure, which is very impressive to me, in recovery value. Maybe that figure should be analyzed. That does not include the cost of separating those parts, does it? In other words, there would be quite a maintenance cost in tearing those engines down and separating them.
Colonel RAMME. This is the stock-list price of the items.
Colonel PACKARD. I believe Mr. Holifield is talking about the net value of returns.
Mr. HOLIFIELD. Yes. The net value to the Government to tear down the engine. So if there were a thousand dollars worth of parts there and it took you a thousand dollars worth of reclamation costs, I think there would be a net loss to the Government.
Colonel PACKARD. That would almost have to be analyzed part by part.
General HEFLEY. Well, that runs around $10.000 per engine worth of parts. This cost of disassembly is considerably below that. Colonel Perry, could you estimate the man-hours for disassembly?
Colonel PERRY. Slightly under 100 hours, even including declassification.
Mr. RIEHLMAN. Of course those parts would have to be cleaned and preserved, would they not? That isn't taken into the cost.
Colonel THOMAS. Forty-eight hours is the tear-down time; declassification and everything would not exceed that number of hours.
Mr. RIEHLMAN. But that would not take into consideration the cleaning and preserving of the equipment ?
Colonel THOMAS. Yes, sir.
Colonel RAMME. Plus the fact that some of these items are critical. Even though we had the dollars, it would take us a year or so to
Mr. HOLIFIELD. And if the tooling had been changed, it would be even more valuable to you.
Colonel RAMME. Yes, sir. There were six items I know of that were critical which we needed in the Air Force.
Another one of our major reclamation or salvage programs, of course, is Project Spring Clean, which we have already mentioned. This was started last fall. The program and criteria on which we made the computations were given to us by AMC. We accomplished this in four phases. Based on those programs, we did an actual computation by item in the property classes for which we are prime. After we arrived at the items which were excess, we sent a retention list to the Air Force bases concerned.
MCCLELLAN AIR FORCE BASE EXHIBIT No. 16
PROJECT SPRING CLEAN
1. The original directive and criteria to govern project Spring Clean was received by this depot under cover of a letter from Headquarters, AMC, dated July 11, 1952. Detailed instructions and programing data were received in November 1952. Supplementary instructions to govern replacement-type items was received under cover of a letter dated December 9, 1952.
2. Deadline dates for the accomplishment, by various property classes, of this project were established and furnished Headquarters, AMC in teletype SRPP-1-363, dated January 16, 1953. Monthly status reports have been submitted to Headquarters, AMC, attention : MCSY.
3. The deadline date of June 30, 1953, for the completion of computation by all prime property classes, the compilation of retention lists, and the dissemination of these lists to be made to all activities was met. These lists were forwarded to activities as follows:
(a) All activities in the Western Zone reporting balances of the items involved, for which we have prime responsibility.
(6) The Alaskan Air Command.
(e) All activities in the Western zonal depots, for those items which they reported as available, and for which we received lists from the Eastern zonal depot, which has prime responsibility.
4. A letter from Headquarters, AMC, dated August 17, 1953, established a deadline date of September 30, 1953, by which this depot was to compile a recapitulation of all excesses authorized for disposal and the action taken by activities to which our lists of retention had been forwarded. This deadline
has been extended to December 31, 1953, by Headquarters, AMC teletype MCS-10–70-E dated October 29, 1953.
2. All retention lists for prime classes have been disseminated. Items in the holding account were considered as assets along with USAF inventories. Those quantities set aside for holding account were considered as firm requirements. No levels were set specifically for holding account quantities. The number of items in account code 7 as of November 4, 1953, is 56 items.
3. In accordance with Hq AMC TT MCS-10–70-E the target date for final recapitulation of excesses has been extended to December 31, 1953. SMAMA foresees no difficulty in meeting the established deadline date.
4. In order to achieve even greater results from the Project Spring Clean program, SMAMA made the following recommendations to Headquarters, AMC:
(a) That phasing out programs be established for all aircraft which have limited production rather than just types and models of aircraft phasing out of the Air Force.
(b) That all AMA's and specialized depots be delegated the authority to effect automatic disposal of excess reparable items, without prior reporting to the prime depot for disposition instructions, when the following conditions exist:
(1) Item has a unit cost of less than $400.
(2) Item has been in possession prior to June 30, 1950, and no issues made since this date.
(c) That a new formula be devised for determining retention levels for reparable items.
Headquarters, AMC has indicated that the first recommendation is consistent with its recommendations to Headquarters, USAF. It further advised that the First and Second Life Committee in Headquarters, USAF has been charged with the responsibility for establishing phase-out programs for all aircraft. It is expected that expanded criteria based on these programs will be forthcoming from the committee. Headquarters, AMC, expressed its desire that these expanded criteria extent the provisions of SMAMA's second recommendation to all aircraft. Furthermore, headquarters indicated that SMAMA's recommendation for a new formula to determine retention levels for reparable items is in line with the criteria established for World War II aircraft items. When the retention life for post World War I aircraft is established by Headquarters, USAF the formula will apply to these types of aircraft as well.
MCCLELLAN AIR FORCE BASE EXHIBIT No. 18
Property processed as excess 1. EXCESS PROPERTY TRANSFERRED FROM ACCOUNT 1 TO DISPOSAL OFFICER
tonnage dollar value
1st quarter. 2d quarter. 3d quarter 4th quarter
450 2,061 1, 138
$1.508, 000 6,906, 400 3,813, 400 3, 149, 900