sibility for implementing section 402 and has exercised this responsibility in a manner which serves the interests of only the large manufacturing companies with which BDSA is in constant contact as the "focal point" of industry-government cooperation. It was demonstrated, for example, that BDSA industry specialists were prone to rely entirely upon whatever alleged facts and information were given to them by their manufacturing industry contacts, even where such information was palpably erroneous and distorted.

10. It was shown that broader and more liberal importation of foreign excess property would increase the return to the Government on surplus sales, would generate additional economic activity, would keep vitally necessary equipment in the United States instead of letting foreign business interests get it, and would improve the export market for American manufacturers.

Up until this time, Mr. Chairman, what I have done in my prepared text is merely to summarize the brunt of the hearings that took place last June, but I am certain that those hearings will be incorporated in your deliberations in any event.

Since the conclusion of last summer's hearings, the Department of Commerce has in a very minor way modified its former embargo policies. Whereas, during the first six months of 1951, the Foreign Excess Property Officer of the Department of Commerce authorized importation of surplus in only two cases out of 73 formally considered by him, during the latter six months a handful of applications were approved. The basic inflexibility and unreasonable discrimination against perfectly proper and necessary importation of foreign proper remain. This was particularly evident during the recont steel strike. Despite the grave economic peril caused by the strike, despite the grave shortages of construction equipment and other steel products, and despite the fact that the President of the United States, through the Department of Justice, submitted affidavits to the Courts alleging that a national crisis existed because of the shortage of steel products, the Department of Commerce refused to authorize the importation of readily available steel-constructed surplus equipment for which hard-pressed businessmen were clamoring. So eager is the Department to continue its embargo policies that not even such a situation would meet its arbitrary test of what constitutes domestic shortage or what is beneficial to the economy of the country.

Time and time again the Department of Commerce has reiterated that this problem cannot be solved merely by sensible administration of the present law, and has insisted that if Congress is not happy about the Department's present policies it should amend the law. We are pleased, Mr. Chairman, that you have accepted this challenge. We had hoped, and we still hope, that the Congress will see fit to eliminate the anomalous distinction between domestic and foreign excess property which requires American businessmen to obtain the consent of Washington before they can bring American made items back to the United States to fulfill important economic functions. We cannot see that foreign excess property is any kind of a special problem warranting this special treatment. Foreign surplus sales are only a small fraction of domestic sales, and only a small fractionless than 5 percent-according to the testimony of Colonel Rey todayof surplus property sold abroad would reenter the U.S. economy even if there were no limitations at all on such reentry.

I would like to point out at this time, Mr. Chairman, that according to the testimony of Mr. Drumm, there is only an informal agreement between the Department of Commerce and the Department of Defense with respect to domestic surplus disposal, and yet for the far smaller problem of foreign excess property, we apparently require a formal statute, and are not satisfied with the informal agreement between the Department of Commerce and the Department of Defense.

If, however, Congress believes that some restrictions on importation of surplus property are still necessary, we believe the provisions of H.R. 9996, the Dawson bill, represent an important forward step and improvement in the situation. Under this bill, the burden of proof would be altered. No longer would small businessmen who desire to bring surplus property into the United States have the cumbersome burden of attempting to convince the Department of Commerce that shortages exist or that the imports would be beneficial to the economy. Rather, under the language of H.R. 9996, imports would be authorized unless the Department of Commerce determines that they would be injurious to the national economy.

Although this is a thoroughly commonsense standard, we do not regard H.R. 9996 as a panacea, since there remains ample latitude for arbitrary administrative action. We have had a number of truly incredible experiences in the last 2 years which have illustrated the BDSA's reliance in making its determinations on import applications upon palpably incorrect and biased information obtained from interested and definitely not impartial sources-manufacturers and their trade associations. We are understandably reluctant to continuing virtually unlimited discretion in the hands of BDSA.

What is necessary, Mr. Chairman, is that the Department of Commerce recognize that when we are talking about the welfare of the national economy, we mean the national economy and not just a small segment of that economy. What we would like, Mr. Chairman, is some mechanism for providing representation within BDSA for the small business interests so vitally dependent upon availability of surplus property, so that their viewpoint, along with the viewpoint of the manufacturers, will receive the Department's consideration.

We hope and trust, Mr. Chairman, that if your bill is approved by the committee, the committee will make it clear that it must be implemented fairly and equitably from the standpoint of all economic interests.

It is interesting, incidentally, Mr. Chairman, in connection with the testimony this morning that once again we were presented with a horrible example, namely tire chains.

We had previously been presented with horrible examples that we were able to, with time, show the facts on. Even this horrible example of tire chains we learn does not reflect any importation of foreign excess property, but was an illustration of a domestic sale, not a foreign excess property sale.

It is perhaps presumptuous on my part to say this, but I would not be at all surprised that a further investigation even of the tire chain problem would present the facts in a completely different perspective. We have a final comment to offer. Our association strongly supports and endorses those provisions of the bill which provide a mechanism for enforcing the limitations upon importation of foreign

53267-60-6

excess property. We believe that laws are made to be observed and kept, and that appropriate "teeth" should be available.

In connection with the proposal submitted by the Department of Commerce, which was not available to us at the time that we prepared our testimony, Mr. Chairman, I want to simply say that I was very much disappointed in it.

It seemed to me in reading it that, under the guise, to use the testimony's words, of "an effort to supply more specific guidelines," an amendment was proposed which ran directly counter to the thrust of the Dawson bill, and in fact does real violence to its underlying proposition.

By merely changing the word "if" to "unless" and adding a small word "not," the BDSA would in our judgment emasculate the Dawson bill and keep us in a posture realistically only a little improved from the present unsatisfactory conditions.

No property could reenter the United States unless the Secretary made an affirmative negative finding, in itself a very difficult concept. He would have to make a finding that an importation did not have an injurious impact before the property could come into the United States.

And here again the word "injurious impact," as Mr. Fascell said, does it mean any injurious impact? Is there any quantitative limitation on this injurious impact?

We would be left mercilessly within the administrative discretion of an agency, Mr. Chairman, in whose impartiality we frankly do not have confidence.

Chairman DAWSON. Mr. Fascell.

Mr. FASCELL. Mr. Kampelman, you made a comparison between the departmental handling of this subject with the Department of Defense and with foreign property.

But you recognize, of course, I am sure, the fact that you are talking about in one case between Government agencies and in another case private individuals. So you couldn't have an informal agreement between the Government and

Mr. KAMPELMAN. The form of the agreement I was suggesting, Mr. Fascell, would be between the Department of Commerce and the De-. partment of Defense.

Mr. FASCELL. Yes.

Mr. DRUMM. It is not quite as informal as it sounds. It is actually reduced to writing, and I would like to offer a copy for the record. Chairman DAWSON. It will be received. (The document referred to follows:)

[Distribution Code A]

U.S. DEPARTMENT OF COMMERCE

BUSINESS AND DEFENSE SERVICES ADMINISTRATION

MANUAL OF ADMINISTRATIVE AND OPERATING INSTRUCTIONS-PART II

Operating Instruction No. 11 (Revised).

Issuance Date: March 27, 1959.

Effective Date: March 27, 1959.

Subject: Domestic Excess and Surplus Personal Property.

SECTION 1. PURPOSE

.01 The purpose of this instruction is to prescribe the duties and responsibilities of the Assistant Administrator for Business Services and the Surplus Property Officer in administering the Department of Commerce functions in

respect to domestic excess and surplus personal property and its disposal; to implement the agreement of July 19, 1954, between the Business and Defense Services Administration, Department of Commerce, and the Department of Defense; to state the principles and criteria to be applied by BDSA personnel; to define the responsibilities of the BDSA Industry Divisions; and to establish procedures for furnishing the Department of Defense with authoritative information concerning commercial market impact likely to result from sales of significant quantities of certain items of personal property determined by the Department of Defense to be surplus.

SECTION 2. AUTHORITY

.01 The Federal Property and Administrative Services Act of 1949, as amended (P.L. 152, 81st Congress), provides for disposal of surplus personal property. .02 Department Order No. 152 (Revised), dated September 22, 1958, provides that the Assistant Administrator for Business Services shall be responsible for the formulation and direction of programs relating to the economic impact of the disposal of surplus domestic property.

.03 The "Memorandum of Understanding and Cooperation in Program for the Disposal of Surplus Personal Property (as distinguished from real property)" between the Department of Defense and the Business and Defense Services Administration, Department of Commerce, approved July 19, 1954, provides for a systematic review by the Department of Commerce of significant sales of Department of Defense surplus property, the preparation of Technical Market Impact Study reports concerning sensitive items, and the furnishing of advice and recommendations to the Office of the Assistant Secretary of Defense for Supply and Logistics regarding market impact of serious proportions likely to result from the sale or disposal of quantities of such items (Attachment No. 1).

SECTION 3. DUTIES AND RESPONSIBILITIES

.01 Under the general guidance and direction of the Administrator, the Assistant Administrator for Business Services shall be responsible for administering the Department of Commerce functions in respect to disposal of domestic excess and surplus personal property as set forth in the "Memorandum of Understand and Cooperation in Program for the Disposal of Surplus Personal Property" and for negotiating policies and procedures, and acting as official liaison with the Department of Defense, General Services Administration, Small Business Administration, and other Federal Agencies.

.02 The Surplus Property Officer shall assist the Assistant Administrator for Business Services in the execution of the above responsibilities and shall act in his stead during the absence of the Assistant Administrator.

.03 The duties and responsibilities of the BDSA Industry Divisions are set forth in Section 5 of this Instruction.

SECTION 4. DEFINITIONS

.01 Personal Property.—Property of any kind or any interest therein, except real property, records of the Federal Government, and naval vessels of the following categories: aircraft carriers, battleships, cruisers, destroyers, and submarines.

.02 Excess Personal Property.-Personal property (as distinguished from real property) determined to be unnecessary to the requirements of the Department of Defense.

.03 Surplus Personal Property of the Department of Defense.-Personal property which, through screening or other means, has been determined to be excess to all Federal Agency requirements.

.04 Reportable Personal Property.-Excess personal property contained in Commodity Group Categories I through XI of the Federal Supply Classification Group, reportable to the Utilization Division, Armed Forces Supply Support Center, Department of Defense, unless specifically exempted from reporting by Appendix I of Department of Defense Instruction No. 4160.9, dated September 25, 1958, or by exceptions contained within each Federal Supply Classification Group under specific Commodity Group Categories. Reportable property is reported as excess and is subject to screening within the Department of Defense, U.S. Coast Guard, and other Government Agencies before being declared surplus. Specific types and categories of reportable property are contained in

Department of Defense Instruction No. 4160.9 (Revised), dated September 25, 1958. (Attachment No. 2.)

Other property is categorized as "nonreportable” and is not referred to the Utilization Division, Armed Forces Supply Support Center, Department of Defense, but is screened only on a local basis.

.05 "Report of Excess Personal Property."-SF-120 used by all military installations and other Federal Agencies to declare items of reportable excess personal property for screening and determination of surplus.

.06 "Sale of Government Property, Invitation, Bid, Acceptance."-Form SF-114 used by all military installations and other Federal Agencies to declare sales offerings of nonreportable surplus personal property.

.07 Technical Market Impact Study.-Study prepared by BDSA Industry Division to determine potential impact that would result from sale of specified item(s) of surplus property, setting forth conclusions and recommendations substantiated by factual data.

SECTION 5. OPERATING PROCEDURE

.01 The Surplus Property Officer shall receive all correspondence, excess property listings, invitations to bid, Proposed Procurement, Sales and Contract Awards, etc., and shall maintain a log of all incoming material exclusive of excess and surplus property listings, invitations to bid, etc.

.02 The Office of the Surplus Property Officer shall be the receiving point for the following material:

1. Four (4) copies of FSC Group "Excess Personal Property Listing" (from Department of Defense).

2. Three (3) copies of SF-114-"Invitation to Bid" or Auction Catalog (from field military installations).

3. Three (3) copies of "Synopsis of U.S. Government Proposed Procure ment, Sales, and Contract Awards" (from Office of Field Services). .03 This material will be processed as follows:

1. At least one (1) copy of each document will be retained for record purposes.

2. Other copies will be transmitted to appropriate Industry Divisions. 3. A notation will be made on the record copy of Divisions issued these documents, and the record copies of each type of document will be retained in chronological order in separate files of the Surplus Property Officer. .04 Upon receipt of a special request from the Department of Defense for technical advice on potential market impact of disposal of surplus personal property, the Surplus Property Officer shall consult with the appropriate Industry Division Director (s) to determine if a Technical Market Impact Study is necessary and the form of the report required by this request. The Surplus Property Officer and the Division Director shall jointly fix a target date for completion of the study and/or report.

.05 Upon receipt in the Industry Division of the excess personal property listing, invitation to bid, or auction catalog, these documents shall be screened for single or cumulative lots where appropriate of personal property the sale of which could result in adverse economic impact. The Division Director, if he deems a study necessary, shall so notify the Surplus Property Officer and, a target date shall be agreed upon for completion of the study.

.06 In screening the excess personal property listed on the "Excess Personal Property Listing," attention should be given to the codes describing the condition of the property. These codes are intended to achieve greater uniformity and dependability in describing the condition of such property. A complete list of condition codes is contained in Department of Defense Directive No. 4160.8, dated March 16, 1953. (Attachment No. 3).

.07 If any problems are observed upon reviewing Form SF-114, "Sale of Government Property, Invitation, Bid, Acceptance," expeditious handling is required because the property already will have been screened locally and is being offered for sale. The date of sale is generally thirty (30) days from issuance of the SF-114. Property listed on the FSC Group "Excess Personal Property Listing," is in process of centralized screening by the Utilization Division, Armed Forces Supply Support Center, Department of Defense.

.08 The Surplus Property Officer shall spot-check the excess property listings and the invitations to bid, and if he notes any listing of items in large quantities, he shall consult with the BDSA Industry Division Director to ascertain the advisability of having a Technical Market Impact Study made.