Mr. BARASH. Exactly.

Mr. ZARETZKY. That is over with, as far as command stocks are concerned, and I would expect only insignificant quantities insofar as related personal property is concerned.

Mr. COPENHAVER. Mr. Zaretzky, as I understand it, the MLS is in charge of disposing not only of the related personal property but are they also in charge of disposing of the actual real property which the French have indicated some interest in buying as a total, as a whole. Is that correct?

Mr. ZARETZKY. That is right.

Mr. COPENHAVER. In that regard, is there any possibility of developing any leverage by us in order to encourage France to negotiate within some degree of reasonable period of time on the residual value of the other property? Do you envision

Mr. ZARETZKY. You are now in the realm of politics within the MLS.

Mr. COPENHAVER. I will not pursue that further.

Since the MLS is negotiating on some real property, have you established a pretty good working relationship between the two groups, or has the Embassy?

Mr. ZARETZKY. It is the Embassy. The MLS is part of the American Embassy, as of the 27th of January.

Mr. COPENHAVER. Therefore when MLS is negotiating on that part, they are under the Embassy's control?

Mr. ZARETZKY. Yes, sir. They are part of the Embassy.

Mr. COPENHAVER. One final question. With regard to the MAP program we talked about earlier, is it possible you could supply some figures as to the distribution to MAP of property that was under our FRELOC? Is this possible?

Mr. MONAGAN. What was that question?

Mr. COPENHAVER. Try to determine the amount, and perhaps the categories of property to the MAP program as a part of Operation FRELOC.

General HEISER. By classes of supply?

(The following was subsequently supplied for the record:)

DISTRIBUTION OF FRELOC THEATER EXCESSES TO MAP

MAP recipients, primarily Greece and Turkey, received approximately 25,000 tons of materiel valued at $68 million acquisition cost. Of this materiel, 530 tons was ammunition. The balance consisted of about 6,000 cargo trucks, trailers, and wheeled/tracked vehicles rendered obsolete by modernization programs. These items had been maintained with a minimum expenditure for care and preservation and were offered to MAP in "as is-where is" condition.

Mr. MONAGAN. Is there anything further, gentlemen?

Thank you very much.

The hearing is adjourned.

(Whereupon, at 2:40 p.m., the subcommittee was adjourned.)

CONTROL AND USE OF EXCESS PROPERTY AND RELATED FOREIGN ASSISTANCE PROBLEMS FOLLOWING U.S. MILITARY EXCLUSION FROM FRANCE1966-67

SATURDAY, MAY 27, 1967

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Frankfurt, Germany. The subcommittee met at 2 p.m. in the annex to the American Consulate General AID Building, Hon. John S. Monagan (subcommittee chairman) presiding.

Subcommittee members present: Hon. John S. Monagan (chairman) and Hon. Margaret M. Heckler.

Subcommittee staff members present: Miles Q. Romney, counsel; Peter S. Barash, legal assistant.

Also present: Joseph DiGiorgio, Director, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Robert M. Gilroy, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Frank M. Mikus, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Allen Moore, audit manager, European Branch of International Division, General Accounting Office, Frankfurt, Germany; Jack K. Woll, Director, Government Property Resources Division, Office of Procurement, Agency for International Development, Washington, D.C.; Paul Scordas, officer in charge, European Office of Government Property Resources Division, Office of Procurement, Agency for International Development; and Col. John Pfeiffer, Headquarters, USAREUR, escort officer. Mr. MONAGAN. The hearing will come to order.

The Special Subcommittee on Donable Property is primarily concerned with the Federal donable property program authorized by section 203 (j) of the Federal Property Act of 1949. In addition, since 1965, this subcommittee has been engaged in an active examination of the use of excess Federal property in the U.S. foreign aid program. We have seen much evidence to suggest that without the ready and efficient availability of excess property, AID would either have had to request substantially more funds from the Congress or the economic assistance efforts of the U.S. foreign aid program would have been far less effective.

The generation of vast amounts of excess property by the Department of Defense as a result of Operation FRELOC in Europe has great significance to the U.S. aid program and, in addition, has possible im

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portance in relation to the Federal donable property program in the United States. Therefore, in April of this year I discussed the interest of our subcommittee in this subject matter with the Chairman of the Foreign Operations and Government Information subcommittee of the House Committee on Government Operations. That subcommittee is now inquiring into costs to the United States resulting from the U.S.-NATO withdrawal from France. An agreement was reached between the subcommittees with respect to our subcommittee's working cooperatively with the Foreign Operations and Government Information Subcommittee. Pursuant to this intersubcommittee agreement, which Chairman Dawson of the Full Government Operations Committee has approved, the Special Subcommittee on Donable Property has embarked upon the inquiry which brings us here. Specifically the interest of our subcommittee centers on U.S.-owned personal property, removed or to be removed from France, which is or will become excess to the needs of the Department of Defense.

The successful utilization of the FRELOC-generated property in our foreign aid program, as well as the possibility of the use of some of this in the United States in the donable property program, is dependent, of course, on the adequacy of (1) screening procedures by which the property becomes excess and is disposed of; (2) storing; (3) the efficiency of inventory control; (4) the manner and expense of rehabilitation; and (5) the prices which this property may bring to the Government if sold as foreign excess. These, then, are the matters on which this subcommittee study will concentrate and to which our interrogation and inspection activities will be directed.

Now, Mr. DiGiorgio, you have an introductory statement, have you, sir?

STATEMENT OF JOSEPH DIGIORGIO, DIRECTOR, EUROPEAN BRANCH OF INTERNATIONAL DIVISION, GENERAL ACCOUNTING OFFICE, FRANKFURT, GERMANY; ACCOMPANIED BY ROBERT M. GILROY, AUDIT MANAGER; FRANK M. MIKUS, AUDIT MANAGER; AND ALLEN MOORE, AUDIT MANAGER

Mr. DIGIORGIO. I have a brief, informal, introductory statement. I thought possibly, as we didn't have the benefit of this statement before all we had was your opening statement at the hearing in Washington, D.C., and Mr. Woll's statement-I thought our best approach to assist you would be to expand on the contribution made by Mr. Stolarow and Mr. Berngart of our Defense Division and International Division, respectively, during your initial hearings.

As I understood it from the questions that were posed to Mr. Berngart, your interest was in the actual acquisition of property by AID recipient countries and the extent to which the property was utilized.

Mr. MONAGAN. What is your full name, please, and what is your position and what is your function?

Mr. DIGIORGIO. My name is Joseph DiGiorgio. I am Director of the European Branch of the International Division of the General Accounting Office. The men that we have with us today are those most closely associated with your area of interest. Mr. Mikus has been concerned in two projects, one being the commodity import

program in Turkey. One of his interests was to concern himself as to the extent to which excess property has been obtained as a substitution for new procurement, and also to ascertain the extent to which there was control over custody and use of this property. He is also engaged in the portion of our work pertaining to the review of the rehabilitation operations under the various AID contracts at Rota in Spain, Leghorn in Italy, and Antwerp in Belgium.

Our concern is with the total operation starting from the point of acquisition by AID's European office to the point of disposition of the rehabilitated equipment by sale to recipient countries, and we have concerned ourselves with the contracts let to the rehabilitation center contractors.

Mr. Moore returned just yesterday. He was in Turkey to follow through as to the actual use to which the property was put. I have not had a chance to talk to him yet.

Mr. Gilroy has been associated with the FRELOC operation from last September to the current date.

We have a split functional responsibility here. Mr. Gilroy has been involved in the work resulting in the report to the Foreign Affairs Committee on NATO infrastructure, and he is also largely responsible for the report we submitted to the Comptroller General on March 31,

1967.1

From that point to the current date we have done several things both here and in Europe and in Washington to better define the areas in which we will do work.

Mr. MONAGAN. Is this a portion of the activities you are involved in here or is this all you are involved in here?

Mr. DIGIORGIO. No, this is a very small part of our total operation. To give you a picture of our total operation in Europe, geographically we run from the Azores south to north Africa, north to Iceland, and east to Pakistan. In terms of functions and responsibilities we have two primary areas in which we conduct our work, one either by direction from Washington and the operating group associated with defense activities, or the International Division or the Civil Division. For example, FAA is one we have taken on for the Civil Division; and for Defense our work can include work in supply and even through the readiness of the troops in Europe as they are affected by the supplies. The International Division is concerned with Public Law 480 and AID operations and the military assistance program. For brevity of definition, our operations consist usually of a program, the administration of that program, and the effectiveness and utilization of the equipment obtained from the program. I think that would be the briefest definition I could give of the total extent of our responsibilities.

We have been asked to do work for the State Department group of our International Division, various reviews, and some balance-of-payments problems that have been worrying the office for some time and for which we have difficulty in finding a solution.

If you like at this point I can call on either the men that are principally engaged in the AID operations or on Mr. Gilroy, who has been engaged in work in connection with FRELOC.

1 A later revision of this report is dated May 1967.