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Mr. WATERS. A lot of it is out of Japan and Korea, a lot out of Okinawa.

Mr. MONAGAN. With relation to sections 607 and 608, you have indicated, in response to questions by Mrs. Heckler and elsewhere, that section 608 gradually seems to be taking precedent. Is that, would you say, because section 607 is very difficult to administer; because the detailed job of following the property all over the world on the part of the mission that are perhaps more than one can expect the missions to do?

Mr. WATERS. I think that is true. If the mission has a great deal of experience with excess property, if it has good technicians and they know that a country has its own good shops, they may feel that they can claim equipment and supervise this repair.

Some of the unfortunate experiences earlier, however, in 607 were the result of eager beavers wanting to order a lot of equipment and not being able to put the equipment in an operable condition. So, it gave a black eye to the U.S. image. It didn't

make an effective program. The tendency has been to turn to the 608 portion except where there has been a great deal of experience in a pretty sophisticated administrative machinery—a country further along on the road to development.

Mr. MONAGAN. We have had furnished before a table showing the utilization of excess property by AID, and starting in 1960, and I think that you might furnish us with a table bringing those statistics up to date.

Mr. WATERS. I would be happy to bring that up to date showing you the various types of programs.

Mr. MONAGAN. Actually, you have the figure in your statement. I think the details would be helpful.

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Mr. MONAGAN. Do you have any further questions?

Mr. BARASH. Mr. Waters, this subcommittee is not only interested in how AID picks up excess property available as a result of FRELOC, but how other agencies do as well. I am curious to know, do you have competition from other Federal agencies having operations abroad on this property?

Mr. WATERS. We have had some. We have encouraged the State Department's administrative people to look at the potential that might come out: office equipment, desks, things of that kind. I don't know how effective they have been in finding what they have wanted, but we have offered our facilities, and they have used our offices in some of our locations to try to help locate what might be useful to them.

As to my knowledge so far, that is the only one that I directly ran into that is trying to claim excess overseas. We have been the channel of help as part of our program to work with the voluntary agencies of this country that are operating abroad—the registered American volunteer agencies operating overseas who are authorized under the act to participate in these programs.

It took a while to develop the procedures for them to do so, but from the overseas aspect of this, they are now participating in groups in the various services. And they are carrying on many of the programs that are really an effective supplement to government development activity at the village level ahead, and are making rather good use of this equipment themselves paying the cost of the 15 percent surcharge on the equipment.

Mr. BARASH. I believe you testified that most of the property that was picked up by AID as a result of FRELOC was screened in France; is that correct?

Mr. WATERS. Yes, this is correct.

Mr. BARASH, What percentage, if any, of the property screened in France was not shipped directly from France to your rehab sites?

Mr. WATERS. I think about 5 percent of it came from Germany after the move from France, and back to Germany or from other sites. Mr. Barash. But the 95 percent went directly?

. Mr. Waters. Of course we are continually maintaining this search for equipment for inspection in Germany.

Mr. BARASH. Once the property was selected by AID in France, how long did it take to get from France to the rehab site ordinarily?

Mr. WATERS. I am informed by Mr. Woll that it varied between 60 and 120 days for the movement.

Mr. BARASH. That is all.

Mr. Romney. Mr. Waters, when property that you have acquired under the advance acquisition program appears dead, as you put it, and you have to dispose of it, would you classify this technically as being foreign excess property; that is, excess at that point to the needs of AID?

Mr. WATERS. If we had acquired it from a foreign base, yes.

Mr. ROMNEY. Are you familiar with the foreign affairs manual, volume 6, subchapter 233 which relates to the disposal of personal property abroad? This is part of the uniform State-AID-USIA regulations.

Mr. WATERS. Yes, I am fairly familiar with that.

Mr. ROMNEY. And of course the disposal of foreign excess property under this regulation. My question, then, is this: În the disposal of property acquired under the advance acquisition program because it is not needed, do you follow this uniform regulation, or is there some other procedure ?

Mr. WATERS. I think Mr. Woll should answer this.

Mr. Woll. Mr. Romney, we have a procedure of our own in this respect. Whenever we acquire property that we find we do not have a use for after a period of time, rather than dispose of it through our chan

hels-in other words, sell it as surplus—we turn it back to the military. We feel that we could be criticized unduly for acquiring the property which eventually we don't have a use for and trying to make money on the sale of the property.

So, we turn it back to the military who in turn disposes of it, and they keep the funds, we do not.

Mr. WATERS. I might add, Mr. Romney, that the pattern of the StateAID-USIA regulation applies basically to our own generation. I don't think it was intended to cover construction equipment, but rather office equipment.

Mr. WOLL. I said that the military keeps the money. I don't know whether that is true or not. But AID does not get the money.

Mr. MONAGAN. Thank you very much, Mr. Waters and Mr. Woll.
Mr. WATERS. Thank you.
Mr. Woll. Thank you.

Mr. MONAGAN. Our next witness is Mr. Jerome H. Stolarow, Assistant Director, Defense Division, U.S. General Accounting Office. We appreciate your coming and shall be happy to hear you.

STATEMENT OF JEROME H. STOLAROW, ASSISTANT DIRECTOR,

DEFENSE DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY CHARLES W. KIRBY, ASSOCIATE DIRECTOR, DEFENSE DIVISION, U.S. GENERAL ACCOUNTING OFFICE

Mr. STOLAROW. I have with me, Mr. Chairman, Mr. Charles W. Kirby, Associate Director.

Mr. MONAGAN. Do you have a prepared statement which you would like to proceed with?

Mr. STOLAROW. Mr. Chairman and members of the subcommittee, I am pleased to be here today to discuss the work that the General ACcounting Office has recently completed in Europe, in connection with Operation FRELOC, as well as our plans for additional audit efforts in this area.

During the fall of 1966, it became evident to us that many of the committees and subcommittees of the Congress would be interested in the events occurring in Europe as a result of President De Gaulle's decision that all foreign military forces must leave France. In order to be able to provide interested members and committees with information regarding Operation FRELOC, we undertook a broad survey covering military supply matters, disposition of surplus material, disposition of real property and related personal property, and new construction requirements arising from the movement of supplies and personnel. The results of the survey are contained in our classified report, copies of which have been furnished to the committee.

The U.S. Government operated and maintained in France, a complex military establishment consisting of several major headquarters activities, depot complexes and Air Force bases. Utilization of French territory provided ports of entry for supplies arriving from the United States, storage areas for war reserve materiel and peacetime operating stocks, a pipeline for the main supply of bulk petroleum, oil, and lubricants, storage for petroleum war reserves, and an extensive communication system. France was strategically important because these facilities were somewhat removed from the geographi

cal areas where an initial attack could be expected in the event of hostilities in Europe and, over the years, the United States invested about $565 million for physical facilities in France, exclusive of the amounts contributed through the NATO infrastructure program. At March 31, 1966, the Army and Air Force had about 660,000 short tons of mission stocks in France, as well as about 150,000 tons of post, camp, and station stocks such as desks, chairs, typewriters and similar items.

We were informally advised that, at the direction of the President of the United States, the military services were required to vacate most of the installations, and to move all of the operating stocks from France by April, 1967. Some activities in France are still open to support dependents who were permitted to remain until the end of the school years. As of March 31, 1967, about 6,000 tons of post, camp, and station stocks remained at these locations, and will be moved or otherwise disposed of during the next several months.

As you can realize, the movement of over 800,000 tons of material was a formidable task, and we believe the military services should be commended for the completion of the relocation by the April deadline. With respect to the real property, only a relatively small number of the installations have actually been turned over to the French Government or to the lessors at this time. A group, known as the Military Liquidation Section, has been established as an integral part of the American Embassy in Paris, to maintain control of the real property until the French Government assumes jurisdiction.

Also, the Military Liquidation Section has been given the responsibility for negotiating, with the French Government, the sales prices for installed equipment that the French have indicated they wish to have remain in place at certain locations. At those locations where the French have expressed no interest, the military services generally followed the policy of removing equipment for which there was a foreseeable need. Other equipment was either to be left in place or disposed of, whichever appeared to be the most economical course of action under the circumstances.

Because of the rapid movements of material during the several months preceding April 1, 1967, our audit efforts in the area of excess, surplus, and potential donable property were generally limited to obtaining available statistical data and some information on the procedures utilized by the services to screen excess property.

The procedures followed by the services generally called for screening of all excess personal property, both within the theater and by the national inventory control points in the United States. We do know that the military assistance and AID programs obtained supplies and equipment from the services during the move, but we have not yet evaluated the screening procedures to determine if all possible material was transferred to those programs, or to other military commands in other parts of the world.

The data that we were able to obtain prior to April 1, 1967, indicated that during the 12 months ended March 31, 1967, about 72,000 tons of Army excess mission stock was moved from France, and about 10,000 tons was disposed of in France. In addition, about 48,000 tons of Army post, camp, and station stocks were disposed of in France during the same period. Data on Air Force excesses and disposals were not readily available at the time of our survey.

We are currently engaged in a detailed review of the whole area of disposals, surplus property, and redistribution of assets resulting from Operation FRELOC. The objectives of our review are to (1) determine specific types and quantities of material disposed of, (2) determine where the disposals took place, and the recipients, and (3) eraluate the propriety of the disposal actions by reviewing the adequacy of screening procedures utilized to ascertain if other Government agencies had a need for tlie material. We hope to complete this review by August 31, and to have a report' available sometime in September

With respect to the question of the adequacy of AID's procedures for screening, transporting, rehabilitating and putting into program use excess property made available to it as a result of FRELOC, we do have some work underway in Europe touching on this matter. However, within the time available to prepare our testimony on this subject, we do not have sufficient information here in Washington to discuss the matter adequately.

Our work in this matter covers all excess personal property being generated in Europe and is not limited just to FRELOC. It deals with (1) transportation of property to and from marshaling sites at Antwerp, Belgium; Livorno, Italy; Rota, Spain; (2) AID's functions in contracting for rehabilitation of excess property; (3) the use by AID of this property whether as a supplement to their usual program or whether it is being used in lieu of procuring new equipment; and (4) the utilization of excess property by the recipient country.

In connection with the subject of excess and surplus material, we believe there is one matter that should be brought to your attention at this time; namely, the Army's policy of retaining certain stocks that are in excess of their operating and war reserve requirements. Under the provisions of Army regulations, oversea commanders are permitted to retain in their inventories quantities of stocks equal to an 18-month supply over and above all computed operating and war reserve requirements. This situation comes about when, for example, computed requirements of an overseas command for a particular item decrease below the quantity of stocks already on hand. Instead of the oversea command reporting this material back to the inventory control point in the United States for possible redistribution, the excess stocks, up to an 18-month supply, are classified as economic retention stock and remain under the control of the oversea command for possible future needs. As a result, the inventory control point in the United States may be procuring the same item to meet the urgent requirements of other Army commands, other services, or the military assistance programs.

On April 10, 1967, we issued a report to the Congress on the availability of selected stocks of the U.S. Army in Europe for requirements of other commands, wherein we 'stated that repair parts and electronic components which exceeded requirements in Europe were not redistributed to meet urgent needs in other areas because of weaknesses in the Army's inventory reporting procedures and practices.

In our report, we suggested that all existing stocks of items that exceed current operating and reserve requirements should be routinely reported to the appropriate national inventory control points so that the availability of such stocks could be considered in arriving at de

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