cisions regarding procurements, redistributions, and disposals. In its reply to our report, the Army stated that:

As a general rule, stocks issued to and owned by tactical forces should not be considered as available for redistribution to satisfy worldwide requirements unless reported as excess in accordance with existing Army regulations.

In our opinion, the Army's policies in regard to retention of material can lead to overprocurements, additional storage costs, and possible shortages in one command while another command has an overstockage. Also, other Government agencies such as AID and MAP could possibly make use of such material if it were made available.

Our preliminary data indicate that some portion of the new construction being planned by the Army, at a cost of about $100 million, in Europe, will be for storage of inventories falling into the economic retention category.

In closing, I should like to point out that our initial survey, the results of which are contained in the report already transmitted to you, were for the purposes of obtaining general background information and for identifying those areas which appeared to require further audit effort. In this connection, we recently initiated four detailed reviews in Europe, including the review of disposal activities previously discussed. The other three are:

1. Review of stock control procedures.

2. Survey of the procedures and practices of the Military Liquidation Section.

3. Survey of need for new construction in Europe.

The general objectives of the four reviews are outlined in the attachment to this statement. We plan, at a later time, to review FRELOC cost data and the requirements area.

This concludes my prepared statement. I shall be happy to answer any questions that you may have at this time.

Mr. MONAGAN. Thank you, Mr. Stolarow.

First of all, I want to say that I am interested in the activities that you project here, and are now engaged in because I think they are extremely important, and it is encouraging to know that you are making studies along the lines that you have indicated.

Also, I feel that your statement about future construction, and also about the retention of materiel in excess quantities are vitally important, too, and we will look forward to the results of this study which you indicate will be coming in August.

Now, with regard to classification, you have furnished us with certain material, some of which is classified and some of which is unclassified. Of course, the unclassified, we can put into the record at this point.1

Mr. MONAGAN. What is the basis of the designation of the other material?

Mr. STOLAROW. We accept the classifications placed on this material by the Department of Defense.

Mr. MONAGAN. I see. That is not your designation?

Mr. STOLAROW. No, sir.

Mr. MONAGAN. Now, you refer to 10,000 tons of excess mission stock was disposed of in France. And you say around 48,000 tons of Army

'The report, dated April 1967 and a revision dated May 1967 are classified and are in the subcommittee files. Certain unclassified portions are printed below at p. 34.

post, camp, and station stocks were disposed of. How were they disposed of, and under what regulations?

Mr. STOLAROW. As I have indicated in the statement, we haven't gotten very deeply into this; but I would venture to say that we do have a little information on some of the disposals. For example, certain items were disposed of in France by the use of invitation for bids, and we have a listing of some of these items.

Mr. MONAGAN. Well, it is conceivable, for example, that some of this might be used in the AID program, and I just wonder if you know, what the policy consideration was and what the regulation was that determined that this should be sold at public sale.

Mr. STOLAROW. No, I don't know offhand, sir. I would assume that the AID people did have an opportunity to obtain that property before it was sold. This is the normal procedure. When it is turned over to a property disposal office, the AID people do have an opportunity to screen it.

Mr. MONAGAN. Mr. Woll, do you know anything about this?

Mr. WOLL. I am sorry, sir, I wasn't paying too much attention to what was said. I was reading the opening statement.

Mr. MONAGAN. There were certain stocks that were disposed of in France, and I was trying to determine how the disposition was made, and whether or not AID had an opportunity to acquire the property before sale.

Mr. WOLL. If the property were excess to military needs, sir, I would say that AID had an opportunity before any final disposal action as far as sale was concerned to obtain this property.

Mr. MONAGAN. And other Federal agencies as well. So that although you don't know specifically, this apparently was an action that took place after the screening and offering the property to the Federal agencies?

Mr. STOLAROW. Yes.

Mr. MONAGAN. You speak about your work covering excess personal property being generated in Europe and not just limited to FRELOC. Would there be a substantial amount generated other than through FRELOC? And where would that be principally?

Mr. STOLAROW. Well, there is excess property being generated in the military services at any location where they do store material. This comes about through changes in requirements or changes in technology, whereby certain items become obsolete.

Mr. MONAGAN. This would be in Germany and in Spain?

Mr. STOLAROW. Yes. For Army stocks in Germany and at the air bases and naval bases throughout Europe.

Mr. MONAGAN. You refer to your work involving the utilization of excess property by the recipient country. Just what do you have in mind there. specifically?

Mr. STOLAROW. I would like to ask Mr. Berngartt who is from our International Division, which is responsible for this work, to answer that, if I might, please.

Mr. BERNGARTT. At present, we have people over in Europe who are going to the various recipient countries and checking on the equipment as to the condition that they found the equipment after it has been rehabilitated and ascertaining what use the recipient countries are making of the equipment.

Mr. MONAGAN. In other words, this is property that has been taken by AID and then turned over under the AID program to a recipient country?

Mr. BERNGARTT. That is right, sir.'

Mr. MONAGAN. And it is limited to the AID program, or perhaps military assistance?

Mr. BERNGARTT. I am not aware of the work that we are doing under the military assistance program. I am aware that we are doing some under the AID program.

Mr. MONAGAN. Do you know of any specific examples that are being followed up and what country or countries would be involved?

Mr. BERNGARTT. I know they are doing some work in Turkey, for instance.

Mr. MONAGAN. Most of the property generated in Europe would be used in the Middle East, wouldn't it? Do you know that?

Mr. BERNGARTT. No.

Mr. MONAGAN. Mr. Woll?

Mr. WOLL. For the AID program, most of the property would be utilized in the Middle East and Africa.

Mr. MONAGAN. Mrs. Heckler, I know that you have some other demands on your time. Would you like to ask some questions, now?

Mrs. HECKLER. Well, Mr. Chairman, I would just like to say that I was impressed with the statement that this gentleman made. I think, Mr. Stolarow, that you have outlined some of the areas of inquiry that were on my mind. The fact that you have undertaken this procedure of review, in the sense stated, helps to define the problems that we all face in looking at this whole program.

I will await your response and your review. Apparently you feel that you have not had enough time to go into the Army inventory procedures.

Mr. STOLAROW. That is correct. In general, what was involved was a rapid movement on which most of the military people were involved with the prime purpose being to move the stocks and maintain control of them; that is, to move them out of France to other locations to comply with General De Gaulle's decision. And we didn't feel that we could get in the middle of this type of operation at that time. But now that the move is substantially over, we feel that we would like to go back and see what was done and how it was handled and call to the attention of the Department of Defense and the Congress any area that we think needs improvement.

Mr. MONAGAN. Well, there isn't much we can do about it now as far as improving it, I guess?

Mr. STOLAROW. Except we may run into similar situations in the future.

Mrs. HECKLER. Have you had problems with this before? You intimate that in this report.

Mr. STOLAROW. Yes. Inventory controls have been a continuing problem throughout the Department of Defense for a long time. And of course when you move large amounts of stock, this compounds your problem in determining where it is and what the condition of it is, and we wanted to take a look at this right away so that if there were certain areas that could be corrected immediately, we could call them to the attention of the military services.

Mrs. HECKLER. I have no further questions.

Mr. BARASH. Mr. Stolarow, within the limitations of security, can you discuss where some of this property is being stored and under what conditions?

Mr. STOLAROW. The bulk of the property is being stored in Germany, and some in the United Kingdom. Because of the shortages of adequate storage space at the present time, some storage is outdoors. And of course some of the material that is outdoors should probably be under a roof. The Army does have plans for construction of storage space, and they are going ahead with this.

Mr. BARASH. Is it possible for you to estimate at this time how long it may be before the items standing outside that should be under cover, will be under cover?

Mr. STOLAROW. No, I wouldn't be able to estimate that.
Mr. BARASH. That is all, Mr. Chairman.

t

Mr. MONAGAN. And is it fair to say that the great majority of these items that have been declared excess, or have been moved, would nornially have continued to be used in the regular military program?

Mr. STOLAROW. To a certain extent, yes, sir. The services did readjust their stockage objectives within certain limitations, realizing that they would be short of storage space in Germany. They did reduce some stockage objectives and declared some items excess which they normally wouldn't have done had not Operation FRELOC been enforced upon them.

Mr. MONAGAN. There was both a move from France of equipment, and also a movement from France as I recall 18,000 personnel, plus dependents, totaling about 39,000. I don't suppose that you have any distinction between the availability of stocks due to the one item as against the other?

Mr. STOLAROW. I am not sure I follow your question.

Mr. MONAGAN. Well, we had to move. We were faced with the necessity of moving equipment out. We also had a reduction in force; presumably in both instances there was some property that was declared excess?

Mr. STOLAROW. I think that the reduction in force in Europe as a result of FRELOC was relatively minor.

Mr. MONAGAN. It was 18,000 according to Secretary McNamara.
Mr. KIRBY. Were these foreign nationals?

Mr. MONAGAN. No, these are personnel that were brought back to the United States with their dependents as a result of the move from France.

Mr. STOLAROW. Some were brought back. Some were transferred to Germany or the United Kingdom or other locations in Europe. In general, we did not have any tactical military forces in France outside of Air Force squadrons.

Mr. MONAGAN. But at any rate, it is impossible to distinguish be tween those two elements insofar as you are concerned?

Mr. STOLAROW. That is correct.

Mr. MONAGAN. Mr. Copenhaver?

Mr. COPENHAVER. You indicated in your statement that the military. in declaring property excess screened it probably at the ICP point within the European command and then back to the NICP points in the United States. Did you find that the property which was declared excess in Germany in order to make room to bring in property from

France was also screened through the same process, put through the ICP point in Europe and then the NICP points in CONUS?

Mr. STOLAROW. We haven't gotten into detail on that, but I believe the procedures required a central screening within Europe of excesses, whether they were located in Germany or in France through the headquarters of the communication zone. They did have an inventory control point in France. They are responsible for theater stock control. So no matter where it was, whether it was in France or in Germany, it should have been screened at a central point for the requirements in Europe.

Mr. COPENHAVER. You may recall my questions of Mr. Waters, and I wonder whether you have formulated any opinion as to whether the military now has available skilled screening officers who actually are assigned to go and screen property declared excess?

Mr. STOLAROW. I have not come into contact with any individuals or any procedures of that type. My knowledge of the screening procedures is that it is pretty much on the basis of documentation. In other words, they have inventory records which would indicate the type of item and the condition it is in. And periodically as requirements are recomputed, it becomes evident that certain quantities of stocks are excess to their needs. These are then reported through standard procedures for screening within the Department of Defense and then to other Government agencies.

I am not familiar with any procedures whereby the military actually sends people out to look at property for screening purposes as you have discussed.

Mr. COPENHAVER. Does GAO intend to look into this facet of the matter when you perform your other surveys?

Mr. STOLAROW. As to whether the

Mr. COPENHAVER. The actual procedures used by DOD.
Mr. STOLAROw. Yes; we are.

Mr. COPENHAVER. The reason why I asked this is because as you know they have on-the-spot screening officers trained. From information in past hearings it has been brought out that perhaps the military does not have the same skilled officers who can make on-the-site inspections.

Mr. STOLAROW. I might say that there are people in depots that are continually reviewing the condition of the equipment that is in those depots, not particularly for the purpose of screening it for excess.

Mr. MONAGAN. Wouldn't it be true that you are really talking about two different functions?

Mr. STOLAROW. Yes, sir.

Mr. MONAGAN. Defense is going to determine whether it is excess or not, and then that is their function. Then AID would have their function of deciding what is suitable from this excess.

Mr. COPENHAVER. My point was this: Let's say that the Army command in Europe declared the property excess. Well, if other Army commands may have another need for it or the Air Force or Navy, the question is: Do they have officers available to screen for their purposes? Mr. STOLAROW. The information is circulated to the other commands and to other services which would indicate the condition of the equipment which is determined by inspectors in the warehouse.

Mr. COPENHAVER. Of this property which was generated excess under Operation FRELOC did any of that become available to the property program back in CONUS?