(Subsequently, the following tables showing interest bases as of June 30 and July 31, 1967, were supplied by the Department of Defense :)

Item

number FRELOC

SALES NEGOTIATIONS-RELATED PERSONAL PROPERTY, AS OF JUNE 30, 1967

Installation

Total U.S. investment

Acquisition
value of

Bid received Agreed sales

report

(1)

RECAPITULATION THROUGH JULY 31, 1967, OF MILITARY LIQUIDATION SECTION SALES

1 Total U.S. investment as it appears in col. 2 includes the total U.S. expenditure for construction and improvement at the installations, encompassing not only the related personal property but also all brick and mortar, i.e., buildings, airstrips, hardstands, parking areas, etc. Therefore, this figure is not related to the remaining columns except to provide the magnitude of the U.S. investment. It is this brick and mortar that will be the subject of future negotiations with the Government of France for residual value.

Mr. MONAGAN. You stated the French are interested in a certain number. Have they stated they are not interested in the remaining number?

Colonel REGAN. Yes. We have asked the French to list those bases in which they have an interest. They have given us those. We have asked, "If you have no interest in the others, please tell us."

What we have found out-for example these additional two that came in yesterday-we have found as we progress along they find someone interested in U.S. property on a facility, and this may fluctuate.

Mr. MONAGAN. There is nothing up in the air so far as you are concerned in the fact the French are interested in some and not interested in others in the total number involved?

Colonel REGAN. No, sir.

Mr. ROMNEY. With respect to the so-called noninterest bases, Colonel, what efforts are being made to dispose of the related personal property?

Colonel REGAN. Very little right now. I would like to explain that. We are taking some property off the bases where we have a requirement, such as chain fencing, pierced steel planking, and other items. The reason we are not disposing of related personal property at the bases of noninterest is that we feel it might jeopardize the sale. For example, when we sold Toul all the related personal property at Toul, it was sold at a good price. Now take a base near here where you have radiators and related personal property. If FESO sold it at scrap value the French could compare and say, "Why should we pay you more at Toul when you sell it here at scrap value?"

Mr. ROMNEY. You said FESO sells at scrap value. Does FESO always sell at scrap value?

Mr. SIDMAN. No. This is not so. It is sold for whatever the market will bring.

Mr. ROMNEY. Is it not so that FESO is now engaged in some disposals?

Colonel REGAN. Yes. Mr. Sidman will talk to that.

Mr. ROMNEY. If that is so, don't the disposal sales FESO is now engaged in create the same kind of situation as if we would sell the RPP now?

Mr. SIDMAN. The type of items FESO is selling are generally derived from MAP property, 90 or 100 of them; and they consist mainly of tanks, guns, et cetera. There is nothing at all like the type of property MLS is selling.

Mr. ROMNEY. Have you sold at an earlier time, property of the type MLS is selling?

Mr. SIDMAN. We have sold some years ago, but the French have either ignored it or are not aware of it. Some of it was in the distant past. But if we made a current sale they would have a current comparison.

Mr. ROMNEY. This is an assumption or a judgment you are making, is it not?

Colonel REGAN. That is right, it is a judgment factor that I think is logical. If you sell a man a radiator on base "X" for a certain value which is about scrap value, and on base "Y" you are negotiating a sale where you are getting more, the people negotiating to buy at base "Y" will ask why they can't get it at the same price as at base "X". Mr. ROMNEY. Do you have present estimates for FESO sales returns?

Mr. SIDMAN. We have given MLS data on what we would expect through our procedures and they have looked at it and I think they have rejected it as an undesirable value. You must remember MLS has a captive market and can get more than FESO.

Mr. ROMNEY. Colonel, you are only maintaining custodial personnel with respect to these bases now?

Colonel REGAN. That is right.

Mr. ROMNEY. If you removed the related personal property what would be the effect on the custodial personnel?

Colonel REGAN. If we removed all property we could turn it over to the Government of France and would not require custodial personnel. Mr. ROMNEY. Do you have any idea of the cost on the bases where the custodial personnel remain.

Colonel REGAN. I would say about $1.5 million for a year. I don't have exact figures.

Mr. MONAGAN. I would like to mention the fact that our primary interest is in determining the availability of excess personal property for other Government agencies, and although we are touching necessarily on other questions here, they are not primarily the responsibility of this subcommittee. Mr. Holifield's subcommittee would be the one that would be primarily interested in the broad policy of military questions.

Mr. ROMNEY. Colonel, you mentioned three bases recently sold to the French and one of them was the Jeanne d'Arc Hospital.

Colonel REGAN. Yes, sir.

Mr. ROMNEY. We visited that facility 2 days ago and they still maintained a custodial force there. I was wondering why that was necessary?

Colonel REGAN. Well, sir, this is based on release to the French. We have to keep a custodial force there until we release it to the French. The reason we have not released the property we have sold to the Government of France, with the exception of Toul, is that we are having a difference of opinion with the French on the wording of the sales contract. As soon as the sales contract is signed it is my intent to turn the bases back as soon as we can to cut down on our overhead expense.

Mr. ROMNEY. In other words, you have a broad agreement and further terms are to be worked out later?

Colonel REGAN. No, sir; the sales agreement is actually consummated but this is the wording in the payment clause. We have an agreement that they pay in dollars, but it is the legal wording of the contract. Mr. MONAGAN. I just have one or two questions.

MLS is under the State Department, really, in acting in an advisory capacity, is that right?

Colonel REGAN. That is right. We were placed under the Embassy as a section of the Embassy, sir.

Mr. MONAGAN. We spoke a little bit about policy decisions. For instance, in the sale of the Jeanne d'Arc Hospital and Toul-Rosiere, where would the decision be made as to the acceptability or nonacceptability of a given price?

Colonel REGAN. The final agreement was made in the case of ToulRosiere by General Kyser based on guidance from Washington that gave us the limitation.

Mr. MONAGAN This was under an authority granted to him?
Colonel REGAN. That is right.

Mr. MONAGAN. He didn't have to

go

further?

Colonel REGAN. No, sir. And as of Monday of this week he has delegated this authority to our negotiator. I think it is very important for the man sitting in the negotiations, under guidance from Washington, to have that authority. This is important from a psychological standpoint in negotiating a sale.

Mr. MONAGAN. With reference to the bases that you have told us about and the bases or installations that have been sold, those appear to be the ones the French want the most?

Colonel REGAN. That is correct.

Mr. MONAGAN. So it is quite possible that as you negotiate down the line your returns will not be so good?

Colonel REGAN. That is right, sir. We anticipate increasing difficulty in negotiating sales.

Mr. MONAGAN. As I recall, one of your comparisons of sales price was with the appraisal of present fair market value.

Colonel REGAN. Yes, sir.

Mr. MONAGAN. Who establishes that value and what is the basis for it?

Colonel REGAN. We establish it in MLS and this was done again I will qualify this, I am not a sales negotiator. It is a computation based on initial cost, depreciation, and what your market is here.

Mr. MONAGAN. In other words, it is initial cost and depreciation?
Colonel REGAN. Yes, sir. 5

Mr. MONAGAN. And is it also based on recent sales, or are there comparable recent sales?

,,

Colonel REGAN. No, sir. This is the first.

Mr. MONAGAN. Can you answer that, Mr. Sidman?

Mr. SIDMAN. Not adequately. I think they have taken the replacement valué.

Colonel REGAN. I would rather not address myself to that.

Mr. MONAGAN. We will get that somewhere else.

Mrs. Heckler, have you any questions?

Mrs. HECKLER. Yes.

I was wondering, Colonel, if you could tell us who drafted the MLS as a mechanism for the disposal of property in France? How did this come about?

Colonel REGAN. It was decided it was necessary because the component commanders could not take care of the residual matters in France after the 1st of April. The initial guidance came from JCS and DOD and State. They were first prepared by EUCOM at Camp Des Loges outside of Paris and sent to Washington and Washington sent them back to EUCOM and they were the nucleus and they went through the component commanders to EUCOM and were approved in Washington.

Mrs. HECKLER. You suggested that you felt that the duties of MLS could be concluded by July?

Colonel REGAN. No, this is the negotiated sales of MLS and my speculation was they could probably be completed by the 1st of July. Mrs. HECKLER. This refers to the 41 properties?

Colonel REGAN. Forty-three.

Mrs. HECKLER. Do you have any estimate as to when the other properties can be disposed of?