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Colonel Regan. The normal sale cycle for selling through the Foreign Excess Sales Office is 90 to 120 days. This is the normal sales cycle, and we must recognize that all the sales cannot be made at one time so they have to be staggered.
Mrs. HECKLER. Do you have any target date for the final disposition of all these properties?
Colonel REGAN. In the initial talk with Ambassador Bohlen it was estimated the maximum life for MLS would be April 1969. That seems a long time off but it must be recognized there are other matters to be disposed of. This is, again, an estimate.
Mrs. HECKLER. You told us of an overhead of $1.5 million a year. Colonel REGAN. This is an estimate too. Mrs. HECKLER, Does this include cost of administration ? Colonel Regan. When I said $1.5 million a year, this is associated with the Military Liquidation Section functions. There are portions of our offices, for example, Mr. Sidman's office, that deal with the handling of military aid, which are not our functions.
Mrs. HECKLER. The cost of the custodial functions, would that be included!
Colonel Regan. They are in the total of $1.5 million.
Mrs. HECKLER. I think it would be interesting to know the cost of the custodial functions on installations in which the French Government has not expressed an interest. I would be interested in that figure.
Colonel REGAN. I can get that.
(Subsequently, the following information was supplied by the Department of Defense :)
COST OF CUSTODIAL FUNCTIONS ON NON-INTEREST BASES
The cost figure of $1.5 million as it is contained in the text is not clearly understood and evidently was an estimated figure furnished at a time when the budget for the Military Liquidation Section was still being formulated. The Military Liquidation Section FY 68 budget submitted recently to higher headquarters is in a total amount of $3.9 million. This includes pay for both military and civilian personnel, utility coets, rent, communications, costs for necessary travel, etc. Included in the military and civilian personnel costs are the custodial charges for those bases in which the Government of France has not expressed an interest. The estimated cost for this purpose is $418,000 for FY 68. It must be noted that these costs are only an estimate and are dependent entirely upon actions of the Government of France in negotiated sales and turnover of the bases themselves. For budgetary planning, we have used the following factors :
a. That all negotiated sales on interest bases and the turnover of these bases to the Government of France would be completed by 31 October 1967.
b. In order not to jeopardize the negotiations on the interest bases, sales by the Foreign Excess Sales Office (except in those selected areas which will not place the negotiations in jeopardy) are scheduled to commence full activity 1 October 1967. The normal cycle for sales by the Foreign Excess Sales Office is froni 90 to 120 days. Therefore, it has been estimated that the turnover of noninterest bases will be completed by 15 February 1968.
Mrs. HECKLER. You talked about the general functions of MLS, one being to negotiate operational base sales.
Colonel REGAN. Yes.
Mrs. HECKLER. Who does the negotiation for the sale of other property?
Colonel Regan. We do on all sales. This was spelled out because it was felt the Commanding Officer would want to negotiate the sales.
Mrs. HECKLER. You mentioned housing. Will you negotiate that!
Colonel REGAN. Yes, our office will negotiate that.
Mrs. HECKLER. Your office will negotiate the 339 installations plus the housing?
Colonel REGAN. Yes.
Mrs. HECKLER. You talked about releases to the French Government without compensation. Will you explain that?
Colonel Regan. I can't talk about before MLS. We came into business on the 1st of March and the ones released were strictly leases in which we had no property of value to the U.S. Government, except ToulRosiere, which we turned over, and we have complete records of the property we did not sell, both U.S. and NATO, so we can compute the value NATO would ask for and the value of U.S. property.
Mrs. HECKLER. Do you have any figures on the cost of continuing the use of the pipeline?
Colonel REGAN. No, that is not in our section at all.
Mrs. HECKLER. We have heard about the suggested concept, maybe newly created, of negative residual value. Has this been considered in the negotiations so far? Colonel Regan.
No, residual value is not a responsibility of MLS. This is the State Department. In the last week we have been working with the Embassy and NATO on this.
Mrs. HECKLER, Then this negotiation concept will only be considered in those cases where the French Government is not interested in property?
Colonel Regan. I cannot address myself to that. I don't know
Mr. Sidman, would you be kind enough to give us a summary of your activities?
STATEMENT OF ABRAHAM SIDMAN, CHIEF OF MERCHANDISING,
MILITARY LIQUIDATION SECTION, FOREIGN EXCESS SALES OFFICE
Mr. SIDMAN. I will give you a brief outline of what the Foreign Excess Sales Office does.
The Foreign Excess Sales Office was created in February 1964. The purpose of FESO was to dispose of all foreign excess personal property in France by sale.
Mr. Monagan. This is in what department ?
Mr. SIDMAN. This is under the Department of the Army for all services, which is Army and Air Force.
Mr. MONAGAN. It is in the Defense Department?
Mr. SIDMAN. Yes, DOD. Actually, the Foreign Excess Sales Office has a dual program. It disposes of U.S.-generated foreign excess personal property and the so-called MAP property. Mr. MONAGAN. What is that? Mr. SIDMAN. Military assistance pact property. Mr. MONAGAN. Pact?
Mr. SIDMAN. Yes. This MAP property is the major part of our task. It represents, acquisition cost wise, about 85 percent of our total program. This is acquisition cost wise, I want to stress. This property is
found in anywhere from 80 to 100 depots scattered through France. So, as you can see, 15 percent of the original value type property that we sell is actually generated at U.S. depots.
With the establishment of MLS 5 months ago, FESO was absorbed as an integral unit of MLS. It continues its function of selling this MAP property. It continues to dispose of the remaining foreign excess personal property still in these depots. It has disposed of very little of this RPP due to the reason Colonel Regan expressed, and at the moment, as far as assisting MLS in the primary duty of getting rid of these U.S. installations, our role is relatively small. We expect it to become larger but at the moment we give them est imated prices, import prices, of what FESO could get for it througli our usual competitive methods, and the negotiators take that as a minimum base to jump from.
We have been receiving inventories of those installations the French are not interested in and preparing them for sale. I have copies of the manner in which we will sell them through competitive sales.
Mr. MONAGAN. We will be glad to receive that for the file.
Mr. SIDMAN. I have draft copies. Unfortunately the terms and conditions are not ready but I have a draft copy of the nomenclature.
Mr. MONAGAN. May we have a copy of that for the file? Mr. SIDMAN. I will be happy to furnish it. Mr. MONAGAN. We will receive these for the files. Mr. Barash. Does AID get a crack at the property? Mr. SIMAN. They really do. Their program has been tremendous with us. It has been increasing almost on a daily basis.
Mr. MONAGAN. You go ahead and finish your statement and then we will ask questions.
Mr. SIDMAN. Principally, our major task is this MAP property at the moment.
Mr. Monagan. Where does that property come from?
Mr. Smman. This was property given under grant aid from 1948 up to about 1952 to the French military forces.
Mr. MONAGAN. The program was for the benefit of the French?
Mr. SIDMAN. There is an agreement with the French-this agreement I do not have—that when they are finished with it they will turn it back to the United States. They are now turning it back to us at the rate of about $200 million acquisition cost per year and we receive it and put it on sale.
Approximately 65 to 80 percent-it varies from year to year-of the property turned in to the United States by the French is sold as scrap.
Mr. MONAGAN. What percent?
Mr. SIDMAN. It varies. Last year it was 80 percent. The year before it was 65 percent. The property turned over by the French is sold as scrap. The reason is, it is mostly tanks, guns, halftracks, ammunition, and arms.
Mr. Monagan. In other words, you are saying this property would not be suitable for other governmental use?
Mr. SIDMAN. We have had inquiries from other governments.
Mr. SIDMAN. No.
Mr. MONAGAN. And the items you speak of would largely be sold as scrap?
Mr. SIDMAN. To scrap dealers, sir.
Mr. Monagan. On the 20 percent or 15 percent or whatever it might be that would be suitable for other governmental use by our own Government, what is your procedure there!
Mr. SIDMAN. We have a list of different U.S. agencies that we distribute this list to. This is done before it reaches our office. The main screening is done at Mainz-Kastel. We supplement that screening with a list of our own agencies, our agencies and foreign governments that might be interested. And after 30 days, if we have no request for it, we put it on sale.
The agency that picks up a good portion of that property is AID, as you probably know,
Mr. Monagan. You inform AID of the availability?
Mr. SIDMAN. We inform AID automatically of every listing we have.
Mr. MONAGAN. What does AID do after you inform them?
Mr. SIDMAN. They send personnel in the field to look at it. When they make a determination they notify us and we freeze it and notify the French that AID will pick it up.
Mr. MONAGAN. Without exception this 15 or 20 percent is screened by AID?
Mr. SIDMAN. Absolutely.
Mr. MONAGAN. And whatever portion of that amount is sold as scrap at public sale has already been screened and rejected by AID?
Mr. SIDMAN. Yes.
Mr. SIDMAN. I don't know of any being done here. The State Department recently got in on this. They came around and have been picking up a small amount of it.
Mr. MONAGAN. Any other department?
Mr. SIDMAN. State is circularized, all our MAG's and about 10 Embassies here and in parts of Africa.
Mr. Monagan. You said also that about 15 percent of your total activity was related to U.S.-generated foreign excess personal property?
Mr. SIDMAN. Yes, sir.
your activity was related to this type of property?
Mr. SIDMAN. No; 15 percent came from U.S. depots and the other 85 percent from French depots.
Mr. MONAGAN. Is the same procedure followed that you have been describing as is followed by AID? Mr. SIDMAN. Yes.
Mr. Monagan. Would a major portion of this property be of the type that would be suitable for AID use?
Mr. Sidman. Of this 15 percent you are talking about, sir?
Mr. SIDMAN. A good part of it, yes. Mr. Scordas can probably answer this better than I can but in the last few months they were taking almost 100 percent at Toul. Percentagewise that would mean more from the United States than from France. For instance, they now take 30 percent or 50 percent that is United States and only 10 percent of the French because more goodies are found in the U.S. depots than in the French depots.
Mr. Monagan. You said you expected that your activity would increase in this area !
Mr. SIDMAN. In the RPP area. Now we are doing practically nothing in it but we expect to go deeper in those sales.
Mr. Romney. You have your own disposal yards under FESO?
Mr. SIDMAN. Yes. We had about 20 yards. Most of them are closed now. Right now there is practically no activity in the yards due to the fact the stock has been transferred or sold. We have five major yards also but there is very little in them outside of scrap.
Mr. Romney. Would these be used as your activity increases?
Mr. SIDMAx. No. When we sell RPP practically none will go in the yard because they will be fluorescent lights and things like that that will be picked up by the purchaser.
Mr. ROMNEY. Have French commercial interests or French businessmen expressed interest in any of the RPP in the so-called noninterest bases by the French?
Mr. Sidman. Yes, there is interest.
Mr. Romney. Do these French business people have an opportunity to inspect the facilities?
Mr. SIDMAN. Yes. We have sent them to several Air Force bases to take a preliminary look and to give us an opinion on it and they have come back and expressed a desire to buy.
Mr. ROMNEY. İs possible interest by French business people made known?
Mr. Sidman. We have a mailing list of about 1,600 people and it has been augmented by people who have contacted our office and requested if we could sell radiators or other items. We have a good list of potential buyers.
Mr. ROMNEY. With respect to the negotiations with the French Government regarding the RPP, are minutes kept of these negotiations?
Mr. SIDMAN. I am not capable of answering that.
Colonel REGAN. Yes, sir. Complete minutes are kept of each negotiation that is conducted. For example, in the case of Toul, when we have completed a sale we have a complete record that records everything from the time MLS takes over the base until the documents are signed, including the minutes of the meetings.
Mr. Romney. I would like to ask you, Mr. Sidman, about the 212 ton 6 by 6 model CCKW trucks.
Mr. SIDMAN. Yes. Those are World War II trucks. We have sold hundreds or thousands of those.
Mr. ROMNEY. Do you have any idea what the price of them has been?