notify the President and present the issue to him for decision. To the extent possible disposals should be made in accordance with long-run disposal plans which have been worked out in consultation with the interested departments and which take into account probable trends in supply and price both at home and abroad.

In making such disposals preference shall be given to materials in the Defense Production Act inventories.

Disposals of materials that deteriorate, that are likely to become obsolete, that do not meet quality standards, or that do not have stockpile objectives, are to be expedited.

The Administrator of General Services shall be responsible for conducting negotiations for the sale of materials and will consult with and advise the agencies concerned.

o. Public notice on disposals. Generally the sale of excess materials acquired under the Defense Production Act will be made only after appropriate public announcement of the quantity or quantities to be offered in a specified period of time.

p. Direct Government use. Government agencies which directly use strategic and critical materials shall fulfill their requirements through the use of materials in Government inventories

that are excess to the needs thereof whenever such action is found to be consistent with over-all disposal policies and with the best interests of the Government. Except where appropriate in the judgment of the Administrator of General Services, the requirements of subsection n, above, with respect to approval by Government departments or agencies and consultation with industries, shall not be applicable to transfers of strategic and critical materials for direct Government use.

4. Delegation of authority—a. Preparation of reports. The Administrator of General Services shall prepare on behalf of the Director of the Office of Emergency Planning and forward to him for transmittal to the Congress the reports required by section 304 of the Defense Production Act of 1950, as amended, and section 4 of the Strategic and Critical Materials Stock Piling Act.

b. Supplemental Stockpile. The Administrator of General Services shall on behalf of the Director of the Office of Emergency Planning and in accordance with programs certified by him, purchase or contract for the purchase of materials for the Supplemental Stockpile under Title I of the Agricultural Trade Development and Assistance Act of 1954, as amended.

[29 F.R. 5076, Apr. 14, 1964]

DMO 9700.1-THE NATIONAL
DEFENSE EXECUTIVE RESERVE

1. Purpose. This order prescribes the basic objectives, authorities, organization, and administration for the National Defense Executive Reserve.

2. Cancellation. OEP Circular 9700.1 dated July 10, 1963 (28 F.R. 8402) is hereby cancelled.

3. Authorities. Section 710(e) of the Defense Production Act of 1950, as amended, and Executive Order 11179 of September 22, 1964, Providing for the National Defense Executive Reserve.

4. Objective. To provide an effective reserve of executive talent for Government service in the event of the occurrence of an emergency requiring such employment.

5. Organization and administration. a. The Director of the Office of Emergency Planning, under the direction of the President, is responsible for developing the overall policies and plans for the Executive Reserve program of the Federal Government. Agencies of the Executive Branch having emergency responsibilities are authorized, after appropriate consultation with the OEP Director, to establish and maintain national units with field elements of the Executive Reserve. Such agencies shall recommend individuals to be designated to serve as members of their units. Upon their approval by the OEP Director such individuals shall be designated by the agency head for a term not to exceed 3 years, and may be redesignated with the approval of the Director of OEP for additional 3-year terms. An individual who on the date of issuance of Executive Order 11179 was a member of an Executive Reserve unit may continue to serve therein without further designation for a term of 3 years from that date. Each unit of the Executive Reserve shall be under the supervision of the agency head or a ranking official designated by him for the conduct of the program. This order does not limit the authority of the agency head to terminate the membership of any individual in an Executive Reserve unit at any time.

6. Security clearance. The degree of security clearance necessary for each Reservist shall be determined by the agency involved in accordance with existing security standards. The designation of Executive Reservists shall be withheld until such security clearance is obtained. 7. Conflict of interest. Executive Reservists, whose activities are limited to reserve training for possible emergency mobilization, cannot be considered to be officers or employees of the United States within the meaning of sections 203, 205, 207, 208 and 209 of title 18 of the United States Code. Executive Reservists' training within the meaning of this section does not include advising, consulting or acting on any matter pending before any agency. Executive Reservists to be engaged in these latter activities shall be appointed by the agency involved as temporary or intermittent employees under appropriate statutory authority. With respect to such employment, such Federal employees are subject to the conflict-of-interest statutes.

8. Interagency committee. There shall be established and maintained an Interagency National Defense Executive Reserve Committee to advise the OEP Director and the agency heads on the coordination of the Executive Reserve program. Members of the committee shall be designated by the heads of agencies with Executive Reserve units. The OEP Director shall appoint the Chair

man.

[30 F.R. 1939, Feb. 11, 1965]

DMP 4-PLACEMENT OF PROCUREMENT AND FACILITIES IN AREAS OF PERSISTENT OR SUBSTANTIAL LABOR SURPLUS

1. Introduction. Success of the defense program depends upon efficient use of all our resources, including manpower and facilities, which are preserved through practice of the skills of both management and workers.

A primary aim of Federal manpower policy is to encourage full utilization of existing production facilities and workers in preference to creating new plants or moving workers, thus assisting in the maintenance of economic balance and employment stability. When large numbers of workers move to already tight areas, heavy burdens are placed on community facilities-schools, hospitals, housing, transporation, utilities, etc. On the other hand, when unemployment develops in certain areas, unemployment compensation costs increase and plants, tools, and workers' skills remain idle and unable to contribute to our defense program.

2. Purpose. It is the purpose of this Defense Manpower Policy No. 4 to direct attention to the potentialities of areas of persistent or substantial labor surplus, hereafter referred to as labor surplus areas, for the placement of procurement contracts or the location of new plants or facilities, and to assign responsibilities to specified departments and agencies of the Government to carry out the policy stated below.

3. Policy. It is the policy of the Federal Government to encourage the placing of contracts and facilities in areas of persistent or substantial labor surplus, with first preference being given in areas of persistent labor surplus, and to assist such areas in making the best use of their available resources in order to achieve the following objectives:

(a) To preserve management and employee skills necessary to the fulfillment of Government contracts and purchases; (b) To maintain productive facilities; (c) To improve utilization of the Nation's total manpower potential by making use of the manpower resources of each area;

(d) To help assure timely delivery of required goods and services and to promote readiness for expanded effort by locating procurement where the needed

(3) Identify skills which are in surplus supply within such areas and make this information available to firms requiring such skills and interested in establishing new plants and facilities.

(4) Identify occupations and skills for which labor will be needed by new or expanding industries; and, in collaboration with other governmental agencies, make assistance available to area institutions and manpower users in developing on-the-job apprentice or other training programs for developing skills of the workforce.

(b) All procurement agencies shall: (1) Use their best efforts to award negotiated procurement contracts to contractors who will perform a substantial proportion of the production on those contracts within labor surplus areas, giving first preference to contractors performing in persistent labor surplus areas, to the extent that procurement objectives will permit: Provided, That in no case will price differentials be paid for the purpose of carrying out this policy.

(2) Where deemed appropriate, setaside portions of procurements for negotiation at prices no higher than those paid on the balance of these procurements exclusively with firms which will perform or cause to be performed a substantial proportion of the production on these contracts within labor surplus areas, giving first preference to firms in persistent labor surplus areas: Provided further that firms which will perform

in areas not meeting the minimum size qualifications for classification by the U.S. Department of Labor shall be eligible for participation in set-asides, if these firms submit a certificate issued by the U.S. Department of Labor that a persistent or substantial labor surplus exists in the area in accordance with standards and procedures prescribed by the U.S. Department of Labor.

(3) Assure that firms in labor surplus areas which are on appropriate bidders' lists will be given the opportunity to submit bids or proposals on all procurements for which they are qualified. Whenever the number of firms on a bidders' list is excessive, there will be included a representative number of firms from labor surplus areas.

(4) In the event of tie-bids or offers on any procurement, award the contract to the firm which will perform a substantial proportion of the contract in persistent or substantial labor surplus areas by incurring costs on account of production or manufacturing in such labor surplus areas (by itself or its firsttier subcontractors) that amount to a substantial proportion of the contract price, giving first preference, other things being equal, to the firm that will perform in persistent labor surplus areas.

(5) Encourage prime contractors to award subcontracts to firms which will perform a substantial proportion of the production on those subcontracts in labor surplus areas, particularly in areas of persistent labor surplus.

(6) The preferential actions described in this policy shall be in addition to other such actions to which firms may be entitled because of performance in substantial labor surplus areas, such as additional preference under the "Buy American Act."

(7) Cooperate with the other agencies listed herein in achieving the objectives of this policy.

(c) The Department of Commerce shall:

(1) In cooperation with State development agencies, the Department of Defense, the General Services Administration, and the Small Business Administration, assist manufacturers in areas of persistent labor surplus in obtaining Government procurement business by (a) providing such firms with timely information on proposed Government procurements; (b) maintaining current in

formation on the manufacturing capabilities of labor surplus area firms with respect to Government procurement and disseminating such information to Federal procurement agencies.

(2) Urge firms planning new production facilities (where Federal assistance or interests are involved) to consider the industrial location advantages of labor surplus areas.

(3) Provide technical advice and counsel to groups and organizations in labor surplus areas on planned industrial parks, industrial development organizations, expanding tourist business, and available Federal aids.

(d) The Small Business Administration shall make available to small business concerns in labor surplus areas all of its services, endeavor to insure opportunity for maximum participation by such concerns in Government procurement, and give consideration to the needs of these concerns in the making of joint small business set-asides with Government procurement agencies.

(e) There is hereby created within the Office of Emergency Planning a Surplus Manpower Committee:

(1) This Committee shall be chaired by the Deputy Assistant Director for Manpower of the Office of Emergency Planning and shall include representation from the Department of Defense (including the three military departments), Department of Commerce, Department of Labor, General Services Administration, and Small Business Administration.

(2) The Committee shall advise the Director of the Office of Emergency Planning and its member agencies on policies, procedures, and activities in existence or needed to carry out the purpose of this policy.

(3) When an entire industry, which sells a significant proportion of its production to the Government, is generally depressed or has a significant proportion of its production units located in areas of persistent or substantial labor surplus, the Committee may make appropriate recommendations relative to that industry in lieu of recommendations relative to specific geographical areas. In such cases, after notice to and hearing of interested parties, the Director of the Office of Emergency Planning will give consideration to appropriate measures applicable to the entire industry.