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Mr. Woll. Mr. Chairman, I would like to bring out that all that $27 million and the $9,6 million on chart No. 1 is not directly attributable to FRELOC but to the overall request for acquisitions.

Mr. Scordas. It was compounded by FRELOC. At this time it is dropping off in the summer and dry months, and it picks up in the fall. This dip is attributable to investigative processes. It slowed everybody up.

Our inventory at this time is shown on chart No. 2. In our marshaling sites we have about $17.8 million and $28 million are due in. These are items we have requested from the military to turn over to us. Some of it is on ships, some on rails, some on barges, and some are on the way to our marshaling sites. This $5,3 million is ready for issue, and this $12.5 million is the backlog we have at the marshaling sites that is not ready for issue but is to be reworked.

The demand for excess property is increasing very rapidly. This is attributable to the policies generated by Mr. Woll's office, and also it is required that we screen our services prior to placing new procurement to see if it is available. As you can see, chart No. 3 shows that the demands are going up rapidly. At this time we have $7.4 million.

The items that are earmarked for the various missions worldwide and we do not have firm purchase orders on them—have gone up to a figure of $24 million. This is chart No. 4. These are items we have told the missions are available or will be available and they have asked us to earmark them for their projects in lieu of new procurement or in connection with other projects that they have.

Chart No. 5 shows that production is at this time a little over $4 million a quarter. We were hitting a resistance point at $4 million for a period due to the fact the contractors we have in Europe practice

paternalism. When they hire an employee he is hired for life or for an extended period and they were apprehensive about hiring more people. Mr. Woll and I convinced them this project was here to stay. As a result, our contractor at Antwerp has hit a new peak of 7,000 man-hours in the second week in May. We have set an objective of 9,000 man-hours a week.

At Rota he is giving us more man-hours. This quarter we expect to produce more than $5 million worth of property, and subsequent quarters will show a sizable increase.

Mrs. HECKLER. Mr. Scordas, what do you mean by production?

Mr. SCORDAS. The rehabilitation of this equipment so we can ship it to the various missions.

Our shipments are right around $4 million, as shown on chart No. 6. We were also hitting a barrier at this point due to lack of shipping space, but now we will get more and more space in the Atlantic and also bet ween here and Southeast Asia from the Military Sea Transport Service. During the month of June we will get space on two ships. This is most encouraging.

Mrs. HECKLER. Who furnishes the space?
Mr. Scordas. MSTS, the Military Sea Transport Service.

Mr. Woll. This is not a subsidized operation, using MSTS. Usually these are commercial rates.

Mr. SCORDAs. How do we stand financially? Chart No. 7 deals with that. Congress, in the Foreign Assistance Act of 1961, appropriated $5 million to get the revolving fund started, and from the small portion we had we pay international transportation, parts and repairs, handling and crating, and then we move it free alongside ship and from there the recipient country pays the costs. Recent legislation permitted administrative costs to include travel and supplies to be paid out of this revolving fund, and then it is reimbursed by the 15 percent of acquisition cost which comes from the development grants and development loans.

Financially, on chart No. 8 it is shown how this particular office stands. These are in thousands of dollars, again in quarters. We were in the red and during the fourth quarter of fiscal year 1965 we came out of the red and into the black up to about $400,000. At this time we are dipping down for several reasons. First, we are starting an investment in these items. We are investing in equipment with rehabilitation, parts, and repairs. We feel, again, that with the increase in production and the increase in shipments we will probably maintain a level along in here rather than increasing the fund to any extent.

I also have some photographs of some of the equipment we have rehabilitated. You are certainly welcome to look at them.

Mrs. HECKLER. What percentage of the property that you get requires rehabilitation?

Mr. WOLL. Seventy percent.

Mr. Scordas. I would say more than that. I would say 90 percent requires rehabilitation and the other 10 percent does not. This is the rule of thumb.

Mr. Monagan. What is the status of the $5 million fund, in brief?

Mr. WOLL. In brief, sir, we show a profit for the first three quarters of this year of $71,896.99.

Mr. Monagan. You are doing better than paying your expenses !

Mr. WOLL. That is right. From the inception of the program we show a profit of $932,470.58.

Mr. Monagan. But this is really only a rehabilitation fund, is it not? Mr. WOLL. Rehabilitation and storage.

Mr. MONAGAN. Rehabilitation and storage but the idea of the capital aspect of, let us say, the $10,000 truck, that means somebody is getting that truck for a payment of only 15 percent, $1,500 out of $10,000, whereas if it were not for this program the Government of Turkey would have to pay back to AID all the development loan or whatever it is plus interest?

Mr. WOLL. That is right, and if development grant funds are used, without a doubt, AID would have to come to Congress for more money.

Mr. MONAGAN. Where it is an out-and-out grant?
Mr. WOLL. Yes, sir.

Mr. Monagan. We are saying that our own Government is saving money there, but from the other aspect it seems to me there could be cases where there is quite a windfall.

Mr. WOLL. We don't like to call it savings or a windfall. We like to think of it as a way of stretching AID-appropriated dollars in achieving our objectives.

Mr. Monagan. I understand that, but you see, the American taxpaver has paid for the item in the first place when it was put in the military program, so it isn't as if it is coming free of any obligation whatsoever.

Mr. WOLL. Yes, sir.

Mr. Monagan. So it might be advisable in some cases to have some recoupment rather than deduct from the loan the amount which you say is done.

Mr. Scordas. Mr. Chairman, the potential of this program looks exceptionally good. We feel as long as the military relocates and modernizes and reorganizes property will be available to AID.

Mr. Monagan. You indicated there was some reduction in the volume being generated.

Mr. Scordas. Yes, sir. I feel this is my personal opinion—that we will have another peak in the fall and this coming winter, in the second and third quarters. The military had to move out of France and it is possible they did not declare excess all the items they had on hand that wero excess.

Mr. Woll. Mr. Chairman, the committee knows that in the last 4 or 5 years the Department of Defense has excessed $1 to $6 billion annually. With the appropriations going up each year I would think the excessing of property would increase rather than decrease.

Mr. Monagan. Of course, that works both ways. You probably have more beds and mattresses but you have less electronic equipment and things like that.

Mr. WOLL. There really does not seem to be any end to the excess property situation. I know most everybody in it, in private industry, as well as in Government since World War II and there doesn't seem to be any end to it.

Mr. Monagan. I think this is very useful in making some recoupment.

Mrs. HECKLER. May I ask a question, Mr. Chairman ?

Mr. MONAGAN. Certainly.

Mrs. HECKLER. Is your procedure now to place reliance on the contract rehabilitation firms or do you have any inspection procedures after the work is completed ?

Mr. Scordas. Yes, we inspect the items. We have a combination of our inspectors and the contractor's inspectors.

Mr. MONAGAN. We can go into that question when we are in Antwerp. I certainly think we should.

Mr. WOLL. We are putting another American as an inspector at this plant.

Mrs. HECKLER. It seems a little more control would be advisable.

Mr. MONAGAN. Thank you very much, gentlemen. We appreciate your assistance.

We will receive the photographs for the file.

(Thereupon, at 4:45 p.m. on Saturday, May 27, 1967, the hearing was adjourned.)



MONDAY, MAY 29, 1967


Germersheim, Germany. The subcommittee met at 9:45 a.m. in the Office of the Depot Commander, U.S. Army Depot, Germersheim, Germany, Hon. John S. Monagan (subcommittee chairman) presiding.

Subcommittee members present: Hon. John S. Monagan and Hon. Margaret M. Heckler.

Subcommittee staff members present: Miles Q. Romney, counsel; Peter S. Barash, legal assistant.

Also present : Col. Robert K. Nelson, commanding officer, USAGDR; Mr. I. Levinson, special assistant, Supply and Maintenance Agency, Communications Zone; Col. William Pencak, I. & S. Communications Zone; Brig. Gen. Frank B. Clay, C/S, Communications Zone; Lt. Col. P. M. Princigalli, commanding officer, USADAG; Maj. James J. Lancaster, commanding officer, 7th Maintenance Battalion, NARG; Mr. Felix Piantanida, C/STD, USADAG; Mr. Robert M. Gilroy, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Mr. Jack K. Wolí, Director, Government Property Resources Division, Office of Procurement, Agency for International Development, Washington, D.C.; and Col. John Pfeiffer, Headquarters, USAREUR, escort officer.

BRIEFING BY COL. ROBERT K. NELSON Colonel NELSON. It is indeed a pleasure to welcome you to the Germersheim Depot activity. This depot activity is a subordinate element of the Kaiserslautern General Depot. It was established orginally in 1951 as an ordnance vehicle storage park for the purpose of handling World War II vehicles that became surplus in the European theater, and has served in that mission up until we moved from France. At the present time it is being converted into a general depot.

CHART NO. 1-MISSION The mission of the depot is shown on this chart here. We have a storage and issue mission of both reserve and peactime operating stocks.




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