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million (acquisition cost) have been approved to various Latin American countries. In addition, $1,650,000 worth (acquisition cost) of property has been approved for specific in-country voluntary agency programs in Latin America under the sponsorship of the Summer Institute of Linguistics, Caritas, Community Development Foundation, Inc., and World Neighbors, Inc. Types of items and equipment ordered by those recipients include grinders, forming machines, wrenches, sterilizers, sleeping bags, clothing, generator sets, hydraulic jacks and roadbuilding equipment.
For the first three quarters of fiscal year 1967, Latin America has received $1,775,345 worth (acquisition cost) of 608 excess property. This is an increase of $202,000 over all of fiscal year 1966. We anticipate that considerable more property will be shipped to Latin America during the fourth quarter of this fiscal year. Also, Peru, in which the subcommittee has shown great interest, has expanded its acquisition of excess property under the 608 program during fiscal year 1967. Through the first three quarters of this fiscal year, Peru has obtained $469,679 worth of equipment, while during all of fiscal year 1966 only $76,972 worth (acquisition cost) was shipped to that country.
In order to further increase the effectiveness of the program in Latin America, we plan to establish an Excess Property Regional Office in Panama.
Mr. Chairman, in conclusion, we are proud of the progress which has been made in effective utilization of excess property not only in Latin America but in aid recipient countries generally. Due primarily to the advance acquisition program, we have gained increasingly general acceptance of excess property as a valuable resource. Naturally, with a unique, new, and rapidly expanding program requiring many technical decisions and coordination of military, and/or contractor operated rehabilitation facilities, various problems and difficulties arise. As the result of reports of poorly repaired equipment, a team headed by the Assistant Chief, Government Property Resources Division is now in the Far East reviewing contractor performance, rehabilitation standards, quality control, and final inspection hefore shipment. In order to manage this complex, expanding, worldwide program with maximum effectiveness, we have concluded that additional technical personnel and facilities will be necessary. We are gaining new satisfied customers and we look for continueri moderate expansion, particularly in the utilization of foreign excess.
Mr. MONAGAN. Thank you very much, Mr. Waters. It is a very helpful, complete statement, and we are nleased to be brought up to date on the development of this program. I think it is extremely interesting.
Mr. Romney, do you have any questions?
Mr. ROMNEY. Mr. Waters, could you explain some of the factors which account for what appears to be a relatively small amount of acquisitions under the direct acquisition program—the $1.2 million in acquisition cost from the U.S. military in France ?
Mr. WATERS, Mr. Romney, the entire direction of our program since the start of the 608 authority has indicated a growth in vse of the 698 approach as contrasted to the previous use of the 607 or direct anthority. We still have a fairly constant level of the 607 and direct program
authority, but we have not had the expansion of these programs as we have had in the 608.
Our own missions and the countries to which we are cooperating in providing equipment seem to prefer having us do the rehab for them rather than trying to do the rehab themselves. Sometimes this is due to the lack of good rehab facilities in the developing country. But we are trying to make maximum use of all authorities. But there shoes appear to be, when we look over the reports, of both the growth of the 608 and a slight tapering off of the 607 and direct authority, there seems to be a substantial shift.
Now, we did endeavor to keep our mission fully informed of the potential new opportunity that might arise in the activity in France. And the largest amount of the acquisition, however, was made for the 608 program.
Mr. ROMNEY. On page 4 of your statement, Mr. Waters, the bottom paragraph, you refer to the establishment of regional offices for excess property and related marshaling sites in Germany and Tokyo. Could you describe these related marshaling sites and explain why you use the word "related"?
Mr. WATERS. We established, picked the locations for our regional property offices where we felt we had the best communication center for access to information about the availability of excess property.
For example, Frankfurt is pretty well a communication center. However, in looking for rehab sites, we looked primarily at access to shipping facilities as well as repair facilities. And out of the one central office, regional office in Europe located at Frankfurt, there was the major marshaling site at Antwerp, and the smaller marshaling sites, rehab centers at Rota, Spain, and at Camp Darnby, Livorno, Italy.
Tokyo is our regional office, but the marshaling sites and rehab operations are where we could find the best rehab work to be done as well as shipping facilities and the cost for moving the equipment.
Our major center there is now Yokohama, plus supporting facilities in Okinawa and Korea on a smaller scale.
Mr. ROMNEY. Are these sites selected in conjunction with the military in any way?
Mr. WATERS. Only Rota, Spain, and Livorno, Italy. The rest of them are private contracts.
Mr. ROMNEY. The memorandum which was entered into between AID-Army-GSA, March 1962 applies to the domestic program, does it not?
Mr. WATERS. That is right.
Mr. ROMNEY. Is there any corresponding agreement with respect to the operations abroad, in any particular region?
Mr. WATERS. We do not have the same form of agreement. It is a triparty arrangement: GSA, partly under us, and with the military. We do have with the military overseas a memorandum agreement relating to the services they perform for us in specific instances such as the interservice agreement we are a party to in Rota, Spain, and Camp Darby, Livorno; plus an overall agreement on the transportation side of the program. We still use military services for transportation whenever possible.
Mr. ROM NEY. Mr. Waters, in the acquisition of these substantial quantities of excess property which are then brought to your rehabilitation centers, can you describe your procedures for ascertaining the continued justification in keeping property there which you have not been able to move? And what happens when you have to move this property?
Mr. WATERS. So far, we think our turnover has been very satisfactory. We, first, in the selection process, are trying to select articles or items we know are generally usable in our programs while not having a specific request for them. In many instances, we also have quantities and types that have been sent to us by missions. And much of the equipment in rehab is in effect on order.
If in fact we have property for which we do not have a use, or a use doesn't develop, why, we would excess it out and make it available for any other purpose.
Mr. BARASH. If I might interject. If I understood your testimony, Mr. Waters, you said that you had gathered from European sources approximately $40.4 million acquisition cost in excess property, and you state your goal for shipping out in fiscal 1967 is $16 million. Now, what has happened to the property represented by the difference between the $16 million and the $10 million?
Mr. WATERS. Mr. Barash, I said we requested the $40 million. There is quite a long pipeline in the movement of this before it gets to the rehab site.
So in effect when we have requested it, made a claim on it, and when it starts the process of moving, it may be several months before it even gets to the rehab site. So we are having a backlog of material that is going to be moved into the rehab site. We will have a pickup program early in 1968. But we do not have that $40 million on hand in our hands. It is still being moved to us from the military and from the military installations.
Mr. Woll informs me that actually at the site we have only received $17 million worth of this amount. So there is a pipeline both in time and in value of equipment that runs several months—even more than a full quarter-in having some of this moved. Much of it has to be moved even at the convenience of the military when they are handling the movement for us.
Much of the equipment that we requested, for example, on the transfer of material from France has been part of the process of moving to Germany and down from Germany to Antwerp.
Mr. BARASH. Thank you.
Mr. WATERS. Actually at Antwerp it is a one-man staff. It is a contract operation with our one man being inspector and supervisor of this equipment. The personnel work is done by contract.
In our Frankfurt office in Germany, there are eight on the staff. This includes not only the officer in charge, but from there are the screeners who go out and locate property as well.
Mr. ROMNEY. And what about the sites at Rota and Livorno?
Mr. WATERS. Rota and Livorno, I think, are only—Mr. Woll has put me up to date. We have one man of our own who is stationed at Rota, but covers Rota and Liverno to inspect the operations at the two smaller sites.
Mr. ROMNEY. Is there a basis for your determining, in cases of large quantities of property being available, what you would take or request during the screening process ?
Mr. WATERS. Yes. We try to watch the utilization and the types of things most in demand by our missions. We have encouraged our field missions, our technicians developing projects in the field, to give us as much advance guidance as possible: The types of equipment they would desire that would help them avoid the necessity for new procurement. This guidance is passed to the people doing the examination at bases and sites. Quantity, condition of the equipment, frequency of use are all factors to be considered.
Mr. ROMNEY. Are these requests from the missions coordinated through Washington, or are they made directly to your
Mr. WATERS. Both ways. Dual copies go to Washington on a worldwide basis in Washington. There are Southeast Asia missions through which most of their activity is directly with the Tokyo regional office, and certainly Africa and the Middle East missions. Turkey and Pakistan do have extensive business with the mission in Europe.
Mr. ROMNEY. Much of the property which has been made available for possible use by AID, particularly in the European area recently, has been passed over. What opportunity would AID have to go back and perhaps recapture some of this which it found that it had later a need for?
Mr. WATERS. As long as it has not been sold or otherwise disposed of by the military, we could always go back. Our inspections of these bases is a continuing process. It is true that we are somewhat under time pressures on the movement out of France. We are continually examining the facilities in Germany. Much of the readjustment of equipment may lead us to additional excess out of Germany, now, and we will watch and follow that. However, we feel that all of the normal processes were followed even in the speeding up processes in France. We still make our requests, and the military would still go through all of their channels to see if there was a need for any other military unit for this equipment before it was made available to us.
Mr. ROMNEY. In Europe, in some of the bases and installations there is some property described as related personal property. We might think of it more as fixtures. And some effort is now being made, as we are informed, to dispose of this in France. But failing success in that, it would in some cases be removed.
I was wondering if Mr. Woll has any knowledge of the nature of some of this property that might be of use to AID, and whether AID has any plans with respect to that property?
Mr. WOLL. Yes, we do, Mr. Romney. Various missions have come to us for requests for household type items: fixtures and so forth; and we have acquired some. Now, the American School which is going to start operations in Antwerp has requested various type items like this, as well as school supplies and equipment. We have made arrangements to assist the Department of State in setting up this school in Antwerp.
As Mr. Waters has said, we have, and will continue to keep on top of everything that is generated in France as well as the other countries. And anything that we think we can use, we will request from the military.
Mr. MONAGAN. In other words, the discrepancy between what has been made available and offered to you and what you take is determined by the suitability of the equipment, and not by any inadequacy of the selective process or anything else ? You take all that you think
you can use? Mr. WOLL. That is right, sir.
Mr. MONAGAN. There is quite a discrepancy, of course, between the amount available and what you have taken.
Mr. Woll. Well, a great deal of this equipment that we understand was excess consists of military scrap and things such as that. We have no use for it. It just wouldn't pay for us to take it.
Mr. MONOGAN. That is the point I wanted to make clear.
Mr. RoMNEY. Mr. Waters, I was wondering if you could provide to the subcommittee some specific details by category of items, by numbers, by value, perhaps, of the worldwide backlog which'the AID missions now have pending for the receipt of excess property? I would assume that you probably do not have it broken down in domestic and foreign excess. But whatever information you can provide
Mr. WATERS. Is it the backlog of the requests?
Mr. WATERS. I will be glad to provide even further information as best we can break it down.
Mr. Woll informs me that we have a backlog in round figures of about $19.2 million in firm orders. There is a distinction between the firm orders that are funded documents waiting for equipment, and the so-called want lists which are general indications of the types of items that the mission would like to have. We will be glad to try to expound on this for the record in a detailed statement for you.
(Subsequently AID provided the following information:)
BACKLOG OF ORDERS
As of March 31, 1967, our worldwide backlog of mission orders for excess property available under section 608 but not yet shipped amounted to $19,217,578 (total acquisition cost) or 43 percent of the $44,926,375 total inventory held as of that date.
Of this total backlog, foreign excess accounted for $13,934,142 or 73 percent; the remaining $5,772,728 or 27 percent, being domestic excess.
This backlog represents a fair cross section of the current onhand inventory. In terms of total acquisition cost; motor vehicles, trailers, construction, and roadbuilding equipment items comprise approximately 60 percent of the backlog items. Tractors, machine tools, material handling equipment, and miscellaneous other small items constitute the balance of the backlog.
Mr. MONAGAN. Mr. Copenhaver ?
Mr. COPENHAVER. Mr. Waters, allow me to explore a couple points for my own information.
As I understand it, you prepare catalogs of your needs for excess property, both domestically and in foreign theaters ?
Mr. WATERS. The catalogs are on the property that we have acquired rather than our needs. They are provided to our missions and our technicians in our projects. So, in developing projects, they screen the availability of excess that they can use before requesting purchase of new equipment.
Mr. COPENHAVER. Therefore, this is separate from the want list which Mr. Romney just mentioned ?