What is meant by the recurring phrase in your February 10 response, "Industry was not interested"? How was this determined? Were specifics released and bids called for in all cases? Mr. MCCONE. I can give you an example. Several years ago we attempted to interest private industry in the chemical processing of fuel. We made available the technology and know-how and various groups examined the prospects and they were not interested for the simple reason that the volume of business obtainable was not sufficient to warrant the investment in the plant, properly amortized. Mr. JENSEN. At that time. Mr. MCCONE. At that time. Now, more recently there has been interest expressed by a group, and we are working very closely with them, giving them all information, including classified information, so they can make their new evaluations to determine whether this represents an area of sufficient business interest, business opportunity, so that they can make the necessary investment. As I said in my prepared statement, in view of this investigation, we are not going forward with modifications to our plants which have been previously authorized by your committee, Mr. Chairman, because if industry can come along and do this job that will be fine. We would like to see Government get out of that business. There are innumerable examples where economic and commercial outlook is not sufficient to warrant industry's participation. Mr. JENSEN. We all know this is an enterprise in which Government and private industry must cooperate to get the best job done. I can readily understand this problem, Mr. McCone. You have a most difficult task, you and your fine staff, but I have nothing but praise for you. I ask these questions because I want to give you an opportunity to explain it before the committee. Now, in connection with the questions I have asked Mr. McCone, I ask unanimous consent that copies of the various correspondence between industry groups mentioned and AEC and the Joint Committee on Atomic Energy be inserted in the record at this point. Mr. CANNON. Without objection, it may be included. (The information referred to follows:) Mr. JOHN A. MCCONE, NATIONAL ASSOCIATION OF MANUFACTURERS OF THE UNITED STATES OF AMERICA, Chairman, Atomic Energy Commission, Washington, D.C. DEAR MR. MCCONE: A special task force of our nuclear energy committee has reviewed in considerable detail activities in the nuclear energy field as they might come within the scope of Bureau of the Budget Bulletin 60-2. This letter outlines the results of the initial deliberations of that group. The Atomic Energy Act of 1954 states in chapter 1, section 1b that, among other objectives, it shall be the policy of the United States to use atomic energy to "strengthen free competition in private enterprise." We believe that Congress intended that the full strength of the private enterprise system be brought to bear on the development of a healthy, competitive nuclear industry. Your stated policy as Chairman of the AEC has reemphasized that point on numerous occasions. We recognize that the situation existing today is considerably different from that which existed at the time of the passage of the 1954 act. At that time. indusry was just entering the nuclear field and needed technical assistance from the AEC. Today, industrial capability has greatly increased and there are a number of areas in which the AEC is operating programs in Government-owned facilities which are in direct competition with industry. It is our fundamental belief that in the area of civilian programs, Government-owned facilities should be used only for research and development activities requiring special facilities which do not exist in industry. However, insofar as possible, activities should be carried on by privately owned facilities, financed with private funds. From this fundamental viewpoint, the special task force outlines below several areas of specific competition: A. Fuel cycle (1) There is a substantial existing private industry to process uranium from the mine to fabricated reactor cores with the exception of the uranium 235 enrichment process. Everywhere that the Government operates in its own facilities in this area, with the noted exception, there is direct competition with industry. (a) Conversion from UF. and fabrication of fuel elements for AEC nuclear rocket program at Livermore; for subcritical training reactors; for heavy water components test reactor, Savannah River; for process heat reactor to be built at Point Lomas, Calif. (b) Supply of enriched uranium oxide, pellets, or metal for gas-cooled reactor project; ETR and MTR at Arco, Idaho; NPR at Hanford; and all. uranium alloys or compounds for the "Nuclear Navy." (2) Government-owned laboratories are fabricating depleted uranium into shielding casks and other forms for reactor projects. Private industrial capability exists for such operations. For example: (a) Supply of blanket fuel elements for zero power reactor at Argonne National Laboratory. (b) Conversion from UF, of depleted uranium required for shielding cask at Bettis Field. (c) Supply of depleted metal for shielding cask project at Schenectady. (3) In the area of reprocessing of irradiated fuel elements, the Government can and should greatly aid in the transition to a commercial mode of operation by making maximum use of industrial groups in process research and development and in construction of, and operations related to, reprocessing plants. To promote the growth of a healthy industry in this area, Government funds should be used to finance research and development programs in privately owned facilities in preference to Government owned facilities. B. Irradiation services The AEC should announce a policy to utilize privately owned reactors for materials testing to the extent that industry is able to provide space. This use of private reactors should be in preference to the use of a similar Government owned facility. The current use of MTR and ETR for Government sponsored research, which constitutes the great majority of the materials testing business, results in severe competition for the private test reactors. C. Supply of other materials and services (1) There are industrial facilities available with the capacity to furnish practically all special materials and services; these should be used in preference to Government owned facilities. For example: (a) Supply of thorium oxide for homogeneous reactor development at ORNL. (b) Supply of thorium metal for special projects at Los Alamos, Sandia, Lawrence Radiation Laboratory at Livermore. (c) Supply of high purity cobalt for High Intensity Radiation Development Laboratory, Brookhaven. (d) Design, construction, and testing of reactors, reactor prototypes, and reactor experiments for which industrial capacity and capital exists. (e) The first reactor in the Army low-power reactor program was fabricated by an industrial concern at its own facilities, but the second will be fabricated in a Government-owned facility. (f) Furnishing of film badge service for personnel monitoring. Although a number of industrial firms offer this service, competing services are performed at Oak Ridge, Brookhaven, Savannah River, Sandia, etc. (g) Personnel radiation monitors are developed and produced in instrument production sections at Government-owned laboratories. There is an instrument industry capable of furnishing such monitors and it should be used. (h) Government construction of radiation measuring equipment is also in direct competition with the private instrument industry. To reiterate my opening comment, programs in the nuclear field should be carried out in privately owned facilities wherever possible. Government-owned facilities should be used only for research and development projects for which equipment is not available in industry. We trust these comments will be of value in connection with your consideration of Bureau of the Budget Bulletin 60-2. As time goes on, there may be other instances of similar activities which come to our attention and we should welcome the opportunity to discuss them with you as the occasion arises. Sincerely yours, J. F. FAIRMAN, Chairman, Nuclear Energy Committee. Mr. JAMES F. FAIRMAN, Chairman, Nuclear Energy Committee, ATOMIC ENERGY COMMISSION, Washington, D.C., December 29, 1959. DEAR MR. FAIRMAN: Since receiving your letter of December 4, 1959, and similar requests from two other organizations, we have undertaken a review of the projects listed in your letter. To assist us in arriving at reasonable conclusions on an expeditious schedule, we need certain information from you. For each of the products and services you mention we need specific data on industry's existing facilities and capacity by company to handle the work. We would like to have these data available by January 25, 1960, to coincide with our collection of data from the organizations requiring the material or service. Sincerely yours, A. R. LUEDECKE, Maj. Gen. A. R. LUEDECKE, NATIONAL ASSOCIATION OF MANUFACTURERS General Manager, Atomic Energy Commission, DEAR GENERAL LUEDECKE: This is in reply to your letter of December 29, 1959, requesting specific data on industrial facilities and capacities to carry out various projects outlined in my earlier letter. We fully understand your need for specific information and we wish to cooperate as fully as possible. As I mentioned in my letter, we, and you, are interested in the development of a healthy, competitive nuclear industry. In the areas outlined in the letter, members of the NAM nuclear energy committee indicated that the functions could be performed by private industry, but we are not certain, by any means, that they represent the entire industrial potential. For us, as representatives of a large and variegated association, to gather the data in anything like a comprehensive form would require a survey of considerable magnitude, which the time schedule specified in your letter would not permit. In our opinion, to furnish you with a hastily prepared list of companies and capacities would, in the long run, be detrimental to the long-term objectives of both of our groups. On the other hand, you mention that you are collecting data from your facilities which require materials or services. If you could make such data available to us, we would be glad to find out from our members what projects they are capable of undertaking. There is still another and perhaps better approach which should serve to furnish you with the type of information you seek. For a given project, within the general areas outlined in my letter, the AEC could solicit proposals from industry; this would very quickly inform you as to industrial capability for that particular job and would do so more effectively than any general survey. Of course, both of these last two suggestions could be carried out; they are certainly not mutually exclusive. Sincerely yours, J. F. FAIRMAN, Chairman, Nuclear Energy Committee. Mr. JOHN A. MCCONE, Chairman, Atomic Energy Commission, BIG CHIEF DRILLING Co., Oklahoma City, Okla., December 7, 1959. DEAR MR. MCCONE: The Chamber of Commerce of the United States and its committee on commercial uses of atomic energy have been and continue to be vitally concerned with the degree to which the activities of the Atomic Energy Commission are directed so as to "strengthen free competition in private enterprise" as stated in the opening declaration of the Atomic Energy Act. Our meetings with you and your associates at the Commission have been extremely valuable in this connection and we look forward to meeting with you again on January 27, 1960. We have given a great deal of thought and study to the recent Bureau of the Budget Bulletin No. 60-2, to the heads of executive departments and establishments, on the subject of "Commercial-Industrial Activities of the Government Providing Products or Services for Governmental Use." We are convinced that Atomic Energy Commission acceptance and implementation of the policy stated in Bulletin No. 60-2 and the review of its commercial-industrial activities will go a long way to "strengthen free competition in private enterprise." As a result of our interest in Bulletin No. 60-2, I appointed a subcommittee on Government competition with industry of our committee on commercial uses of atomic energy. This subcommittee was assigned the responsibility of compiling specific examples of Government competition with industry in the atomic energy program that the national chamber has received from its members. I am transmitting, with this letter, a listing of our subcommittee on Government competition with industry and some specific examples of commercialindustrial activities of the Government in the atomic energy program. We believe that a detailed evaluation of such cases is warranted under the terms of Bulletin No. 60-2. We hope that a public statement of the results of such a review will be made as a contribution to clarifying Government policy in this area. We expect to communicate additional examples to you in the near future. We recognize and are pleased with the progress made by the Commission in reducing some of its activities which compete with industry and submit the enclosed examples in an attempt to assist in furthering this process. We know, from our constructive relationship with the Commission, that we share the basic belief that a strong atomic energy industry will be of great benefit to the American public and practices which retard progress in this area will be costly to the public. We will be happy to discuss the enclosed examples with you and your associates and trust that we can be of further service to the Commission in connection with the objectives of Bulletin No. 60-2. We would appreciate your keeping us informed of the Commission's activity in this area and hope to discuss the matter with you when you meet informally with our committee on commercial uses of atomic energy. Sincerely yours, JACK H. ABERNATHY, Chairman, Committee on Commercial Uses of Atomic Energy, CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, COMMITTEE ON COMMERCIAL USES OF ATOMIC ENERGY, SUBCOMMITTEE ON GOVERNMENT COMPETITION WITH INDUSTRY Frank K. McCune, subcommittee chairman, vice president, Atomic Business Development Marketing Services, General Electric Co. Howard Cadwell, president, Massachusetts Electric Co., and vice president, Yankee Atomic Electric Co. Dr. V. L. Parsegian, dean, school of engineering, Rensselaer Polytechnic Institute. James M. Phelan, president, Nuclear-Chicago Corp. Dr. Philip N. Powers, president, Internuclear Co. Dr. Chauncey Starr, vice president, Atomics International. Edwin Vennard, vice president and managing director, Edison Electric Institute. Charles H. Weaver, vice president, Westinghouse Electric Corp. George M. Wunder, managing, Nuclear Metals Division, National Lead Co. EXAMPLES OF COMMERCIAL-INDUSTRIAL ACTIVITIES OF THE GOVERNMENT IN THE ATOMIC ENERGY PROGRAM WARRANTING DETAILED EVALUATION UNDER THE TERMS OF BUREAU OF THE BUDGET BULLETIN No. 60-2 I. FUEL ELEMENT FABRICATION Substantial industrial capability in this area now exists going all the way from mining to the fabrication of reactor cores (except for enrichment processing). Activity in production fuel element fabrication at Government-owned facilities should cease unless it is clearly demonstrated that, in a particular instance, capable commercial fabricators cannot undertake the responsibility. Government laboratories and facilities have and are continuing to fabricate fuel elements for various research, testing, military, and production reactors which could and should be procured from industry. Specific examples which warrant review in accordance with the above policy and Bulletin No. 60-2 have been submitted by members of the national chamber. The following are some of these specific examples: 1. The Oak Ridge National Laboratory makes the fuel elements for most of its reactors. Examples include the bulk shielding reactor and the LITR. 2. The conversion and fabrication of fuel elements for the process heat reactor project to be built at Point Lomas, San Diego, Calif. 3. The conversion and fabrication of the fuel elements for the nuclearrocket program (Project Rover). 4. The Savannah River site makes some fuel elements for its reactors. Savannah River is also doing fuel element development work. This includes the conversion and fabrication of fuel elements for the heavy water components test reactor being built at Savannah River. 5. Fuel elements for the Hanford site are fabricated in Government facilities. II. RESEARCH AND DEVELOPMENT Research and development work should be conducted in private facilities, except where it is clearly demonstrated that such are unavailable for a particular job. The policy of the Government should be to fully utilize and encourage the growth of industrial capacity rather than according preference to Govern |