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STATEMENT OF HERBERT J. WATERS, ASSISTANT ADMINISTRATOR

FOR WAR ON HUNGER, AGENCY FOR INTERNATIONAL DEVELOPMENT, DEPARTMENT OF STATE, ACCOMPANIED BY JACK K. WOLL, DIRECTOR OF GOVERNMENT PROPERTY RESOURCES DIVISION

Mr. WATERS. Mr. Chairman, members of the committee, I want to thank you for the opportunity to discuss AID's utilization of excess property in support of our economic development programs throughout the world, with special emphasis on AID requests for acquisitions during the U.S. military movement from France.

We feel we are figuratively beating swords into plowshares, by making effective use for peaceful, civilian purposes of extensive equipment excess to military requirements—at considerable savings to the taxpayer.

We are making such savings by both substituting rehabilitated equipment for new procurement as well as stretching the effectiveness of appropriated economic assistance dollars in accomplishing development objectives.

Nearly 2 years have passed since I reviewed the status and operations of AID excess property programs before this committee. Then I was Assistant Administrator of AID for Material Resources, having responsibility for the excess property programs as well as the Agency's new procurement. While the Agency's functions under my direction have just recently been changed under a reorganization called for by the President in his foreign aid message to Congress in March, and I no longer have direct responsibility for the excess property program, it was my responsibility for the period you are reviewing and I appreciate this opportunity to account for my stewardship. Hereafter, in AID the excess property program will come under the direction of the Assistant Administrator for Administration, while I concentrate my attention on the many facets of our Government's war on hunger throughout the world.

Mr. MONAGAN. Mr. Waters, who is the Assistant Administrator?

Mr. WATERS. He is William O. Hall. He is presently away from the United States.

Mr. Monagan. Thank you.

Mr. WATERS. In order to more fully brief the new members of the committee, my statement includes some general background information about our programs reviewed in earlier hearings.

Since 1960, we have acquired over $360 million worth of U.S. Government-owned excess property to complement other available resources for the economic development of developing countries. This added resource has served to stretch available AID funds and permitted more effective accomplishment of economic development goals.

A few examples of utilization of this property in AID projects and programs are as follows: cots, water distributing equipment, blankets, clothing, et cetera, are now being used in the refugee program in South Vietnam; machine tools, woodworking equipment, and handtools in the vocational educational program in South Vietnam; medical supplies, cots, wheelchairs, et cetera, in the medical education program in South Vietnam; construction and roadbuilding equipment—bull

dozers, graders, scrapers, vehicles in various roadbuilding programs in Turkey; roadbuilding equipment—vehicles, bulldozers, machine tools, et cetera--for highway maintenance programs in Peru. Other projects and programs are receiving vitally needed items and equipment to further AID objectives in developing countries.

Since its inception, the program has been strongly supported by both the legislative and executive branches. The policy statement relative to optimum use of excess property in AID programs appearing in the Foreign Assistance Act of 1961 was further strengthened by revised (1965) language which states that "*** excess personal property shall be utilized wherever practicable in lieu of the procurement of new items for U.S. assisted projects and programs.” Former Administrator Bell's strong directive of April 13, 1964, and subsequent guidance relative to establishment of excess property units in USAID's abroad are prime examples of the continuing executive support accorded to our programs within AID. Each regional bureau has designated a regional excess property officer to coordinate and increase regional acquisition of excess property for utilization in AID programs.

We have received continued assistance, cooperation, and support of General Services Administration and Department of Defense personnel. The Army-AID-GSA Memorandum of Understanding of March 1962 relative to operation of the advance acquisition (sec. 608) program formalized the required joint actions under the domestic program.

Our relationships with the domestic donable property program for State agencies have been consistently good. Since 1962, the relatively small group of excess property utilization officers in the three domestic AID excess property regional offices have maintained cordial and mutually cooperative relationships with representatives of the State agencies for surplus property.

In practice, the surplus donation program and our programs can and do work productively side by side. During the past year this mutual cooperation has expanded and matured. We have maintained direct communication with top State agency representatives, and we are not aware of any complaints regarding our operation of the program during this period.

ADVANCE ACQUISITION PROGRAM

Shipments of excess property and equipment acquired and processed under the advance acquisition program have about doubled each year since its inception. Section 608 of the Foreign Assistance Act of 1961 was designed to overcome the twin obstacles (short matching period and unknown degree of serviceability) to much fuller utilization of excess property by authorizing AID to acquire available excess property in advance of a specifically identified program requirement. Section 608 authorizes AID to

(a) Repair or overhaul, preserve, store, pack, crate, and transport such property as the need arises, and

(6) Use $5 million from appropriate funds as a revolving fund to pay all costs related to these actions. This revolving fund is 1 The document was supplied for the subcommittee files.

now healthy, having recovered from a partial depletion during

the buildup of ready for issue inventory. Available section 608 property is offered to our AID missions abroad periodically by catalogs. Domestic 608 excess catalogs are issued by AID-Washington; foreign excess catalogs by the appropriate overseas excess property regional office. Special offerings of section 608 property, directed to a selected group of missions, have proved very successful.

FOREIGN EXCESS

There has been increasing utilization of excess property generated overseas. During the first three quarters of fiscal year 1967, $62,669,367 (or 80 percent of the $78,189,417 requested by AID) was foreign excess, the balance (20 percent) being domestic excess. Until the establishment of effective foreign excess property regional offices and related "marshaling sites” in Frankfurt, Germany, and Tokyo, Japan, the primary source was domestic excess property rehabilitated under the initial Army-AID-GSA agreement.

Our European operation was started in June 1962, but very little was accomplished with the section 608 program until November 1964. Prior to November 1964 we had many and varied difficulties obtaining rehabilitation capacity. For approximately the first year operation we requested the service of the Department of Army to rehabilitate our equipment in their established facilities.

After a period of time we were informed that the Department of the Army was not able to assist AID in this matter as their facilities were overloaded with their own work. We then turned to the Air Force, who at that time had a contract with a commercial firm, Behernan-Demoen, in Antwerp, Belgium. The Air Force took our work on a subcontract basis, but after a relatively short period of time terminated their contract with this firm. Being subcontractors we also moved out when the Air Force moved. The Air Force then obtained a contract with an English concern, Henly's, in Western Super Mare, England. This contract was in operation for a little more than a year and it was also terminated. At that time we realized that we would have to obtain our own contractor.

In October 1964, the Air Force procurement region Europe negotiated and procured for AID a commercial contract with a firm in Antwerp, Belgium, which went into effect in November 1964. The Air Force performed all selection and negotiating services other than the signing of the contract. From that date on, our European operation has been successful. Our Antwerp contractor is the firm of J. & M. Adriaenssens, N.V., a large Belgian truck body manufacturer. Their production of AID work has risen steadily over the past months. At the present time, monthly production averages approximately $1 million to $1.6 million acquisition cost, depending upon the types of items which they work on during the month. During the month of March 1967, we obtained approximately 6,200 man-hours of work each week and we anticipate raising this weekly figure to 9,000 hours. This will give us approximately $2.5 million acquisition cost of production monthly.

The U.S. Air Force also came to our rescue in providing production capacity at the U.S. Naval Base in Rota, Spain, in 1963. This is under an interservice support agreement with the Air Force, which in turn

has an agreement with the Navy. Until the past year, this operation has been relatively small, but recently it has taken an upturn. We are obtaining approximately $500,000 acquisition cost of production monthly. Our last site in Europe is located at Camp Darby, Livorno, Italy. It is under an interservice support agreement with the U.S. Army and is small in scope. This agreement was entered into in 1966 and basically provides one main service and that is that property which we acquire in Italy does not have to be transported to Belgium or Spain for rehabilitation. This we have found to be quite economical. Our acquisitions from Italy have in the past been very small so we do not at the present time require large production capacity. If this should change in the future and we would require additional production capacity, we would have to obtain this additional capacity from commercial sources.

In fiscal year 1963, our European operation obtained excess property from U.S military generating points, for our advance acquisition program, totaling only $257,300 in original acquisition cost. În fiscal year 1964, we obtained $5,153,922 worth. In fiscal year 1965, it was $13,917,826, and in fiscal year 1966, $13,979,072. Through March 1967 we have requested from the military equipment worth $40,403,231 at acquisition cost. Of this $40.4 million worth of equipment of all kinds, approximately $12,146,069 in acquisition value is directly attributable to the movement of U.S troops from France. Also, two of our AID missions have requested, under the direct acquisition program equipment worth a total of $1,913,879 at acquisition cost from the U.S. misitary in France, which also is directly attributable to the movement of U.S. troops from France. The possibility exists that there have been other acquisitions by AID, under the direct acquisition program, but as yet we have not been informed. This information will be available during the first quarter of fiscal year 1968.

The method our European excess property regional office used to request transfer of the $12.1 million directly attributable to the U.S. movement from France is the same method that is utilized by all our offices. Equipment specialists (excess property utilization officers) visited the various bases in France and personally viewed and inspected all property in which we were interested. The reason for these personal inspections is to insure that AID does not acquire property which eventually will not be used in AID's projects and programs worldwide, and also to insure that the property acquired is generally in pretty good condition and can be rehabilitated without the necessity of spending large sums for the rehabilitation.

The perecentages breakdown in terms of acquition cost-by types of equipment relating to the total $12.1 million acquisition cost figure is as follows: 65 percent consisted of military type vehicles: jeeps, 212-ton trucks, 5-ton tractors and various size trailers; 5 percent consisted of commercial type vehicles : 12-ton and 11/2-ton trucks, Ford, Chevrolet, and International Harvester; 15 percent engineer equipment: cement mixers, cranes, full track tractors, graders, et cetera; 5 percent consisted of medical equipment: beds, cabinets, dental and surgical instruments, et cetera; and 5 percent consisted of miscellaneous items: handtools, machine tools, kitchen equipment, electrical items, et cetera.

Also, we have claimed excess in the amount of $16,905,081 acquisition cost of military assistance program property located in France. This is not considered related to the movement of our troops from France. And finally, we have requested $11,352,081 worth of excess from the military from European countries other than France, which include but are not necessarily limited to England, Germany, Italy, and Spain.

Our goal for outshipments of property from our European operation to AID projects and programs for fiscal year 1967 was $16 million acquisition cost and through March 31, 1967, we have shipped $11,825,193. We feel our goal in this respect will be met and possibly exceeded. In all of fiscal year 1966 we outshipped from our European operation a total of $10,977,922. Through the first three quarters of this fiscal year, we have shipped more than we did in fiscal year 1966.

We anticipate that in the future additional large quantities of property will be excessed by the military in Europe and be made available to AID as well as other interested U.S. Government agencies.

Our operation in the Far East was started in November 1962 in Tokyo, Japan with the signing of an interservice support agreement with the U.S. Army to furnish services, including rehabilitation for excess property generated in Japan. In 1963 our shipments of 608 excess property totaled $76,653 acquisition cost. The program has grown to the point where this office shipped $8,358,442 in fiscal year 1966 and for the first three quarters of fiscal year 1967 shipments have totaled $7,544,867. We have since outgrown the capacity furnished by the military at the start of the program and now have commercial contractors in Yokohama, Japan; Inchon, Korea; and Naha, Okinawa.

Mr. MONAGAN. That is for rehabilitation?

Mr. WATERS. Yes. The majority of property shipped from this area is being utilized in Southeast Asia projects and programs.

SOUTHEAST ASIA

Special effort has been made to meet Southeast Asia requirements for excess property. The General Services Administration agreed to accord “special treatment” or priority to Southeast Asia requirements for domestic excess property. Special Vietnam prior screening procedures have been established for both domestic and foreign excess property available under the section 608 program. These procedures provide absolute priority to USAID/Vietnam during a 1 month prior screening period. Shipments of section 608 property to Vietnam during the first 9 months of fiscal year 1967 amounted to $14,143,348 (43 percent of total shipments). This is an $8.9 million increase over the shipments of $5.2 million (22 percent of total shipments) to Vietnam for the same period in fiscal year 1966.

LATIN AMERICA

This committee's continued interest in the increased utilization of excess property for the economic development of Latin American countries, expressed by special hearings and committee visits to representative Latin American countries, has begun to bear fruit. During this fiscal year, 16 new 607 determinations totaling approximately $13.7

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