In the first half of 1967, the required data on four materials-diamond dies, ruby and sapphire, jewel bearings, and feathers and down-were assembled and sent to OEP.

Allocation of materials being sold from the stockpile

Nickel, molybdenum, and copper have been in tight supply in varying degrees throughout fiscal year 1967. Accordingly, when OEP approved plans for the disposal of these materials from the stockpile, it was concerned about assuring the equity of their distribution to industry. It, therefore, directed GSA to dispose of them in accordance with instructions from BDSA which would prepare a pattern of allocation appropriate for each material. Accordingly, BDSA developed disposal procedures acceptable to OEP which would primarily take care of defenserated orders and hardship cases, particularly where small business was involved. More specifically, the following actions took place.

Molybdenum

Congress had approved in May 1966, the disposal of 14 million pounds of surplus molybdenum (contained) from the national stockpile. By direction of OEP, BDSA surveyed the market and based on the survey instructed GSA to distribute in May and June, for domestic consumption only, 4,269,000 pounds to specified firms to provide for defense orders and replace depleted inventories. During fiscal year 1967, about 200 firms qualified for allotments on the basis of defense orders and hardship and, under BDSA direction, GSA sold to them directly or through producers, 6.1 million pounds, of which 3.1 million pounds was used in defense production. While the shortage had been substantially overcome by June 1967, current strikes at producing and processing plants (which began in July 1967) have reduced industry stocks seriously and allocation of the remaining 3.8 million pounds will probably have to be continued when disposals are resumed. Nickel

The distribution plan of surplus nickel from the national stockpile as authorized by the Office of Emergency Planning under Public Law 89-740 was announced by the Department in December 1966.

The 24.5 million pounds made available for release was distributed by GSA under direction of BDSA on the basis of 90 percent (22.05 million pounds) for defense-rated orders and 10 percent (2.45 million pounds) for hardship cases. Furthermore, all nickel distributed had to be consumed domestically. About 6.3 million pounds were allocated for use in December of which 5.1 million pounds were alloted to defense-rated orders and 1,225,000 pounds to hardship cases. The remaining 1,225,000 pounds set aside for hardship cases was distributed in January and allotments of the balance of 17 million pounds set aside for defense was spread equally over January, February, and March 1967.

Copper

On March 21, 1966, the President approved the release of 200,000 tons of refined copper from the national stockpile. Approximately 125,000 tons of electrolytic cathodes and 75,000 tons of wire bars were authorized for release. This copper was to be sold for domestic consumption only and could not be exported. Producers of primary domestic refined copper distributed the 200,000 tons in minimum of quantities of 20,000 pounds to consumers on the basis of instructions from the Business and Defense Services Administration. Of the total, 87,212 tons were ordered reserved for defense-rated orders to be consumed during the period from May through September 1966; of this quantity, 64,212 tons were released July through September. Of the remaining 112,788 tons, 73,733 tons were authorized to be sold on a hardship basis to 369 companies for consumption in May and June 1966, and 39,055 tons were authorized to be similarly sold to 378 companies for third quarter 1966 consumption.

On December 1, 1966, the President authorized another release of 150,000 short tons of refined copper from the Federal Government stockpile. BDSA in cooperation with other Government agencies formulated plans for the release of the copper. The total quantity was to be sold to producers of refined copper from domestic ores for resale to controlled materials producers to fill defense-rated orders only. The following release schedule was established:

January through March

April and May

June and July

August and September

85-568-68-15

Tons

each

month

22, 000

20,000 13, 000

9,000

BDSA has furnished monthly instructions to GSA releasing the copper through the nine domestic producers of copper participating in the stockpile program. Based on these instructions, GSA sells the copper to the participating producers to fill defense-rated orders accepted by them or to replace in inventory copper shipped against defense-rated orders.

For the first 6 months of 1967, BSDA authorized for release 116,421 tons of the 119,000 tons originally authorized for that time period.

SUPPLY-REQUIREMENTS STUDIES AND FACTS FOR EMERGENCY DECISIONS

Supply-requirements studies in the field of industrial, military, and essential civilian production and construction determine generally the feasibility of providing logistical support for strategic military plans and provide statistical facts for the administration of title I of the Defense Production Act during an emergency or war period. In this respect, specific products involving critical production and supply problems are studied from time to time at the request of and in collaboration with AEC, DOD, and OEP.

BSDA made studies of the supply and availability of 12 essential processing materials required to meet defense needs involved in the reactivation and continued operation of Government ordnance plants and for other direct and indirect military requirements.

Materials covered included the following:

Acetone
Benzene

Chemical cotton

Ferric chloride, anhydrous

Formaldehyde

Glycerine

Herbicides (2,4-D and 2,4,5-T and intermediates)

Phthalic anhydride

Propylene

Sodium and lead azides

Sulfur and sulfuric acid

Tetrachlorobenzene

In connection with the above herbicides, BDSA continued to assist the Department of Defense in meeting its increasing needs for defoliants for use in Vietnam. After discussions with OEP, USDA, and DOD, BDSA held individual meetings with each producer of defoliants to discuss the increased requirements and to inform each company of what would be expected of that company. DOD was then notified of the level of rated orders to be placed on each company.

The continuing tight copper situation required an analysis of supply and demand over a 5-year period, as the basis of policy decisions regarding such matters as export control, stockpile releases for defense and other purposes, and financial incentives for copper expansion. In conjunction with the Council of Economic Advisers, the Office of Emergency Planning, and the Bureau of Mines, BDSA prepared a detailed forecast of copper supply and demand annually through 1971. The report indicates shortage conditions in 1967 and 1968, close to a balanced situation in 1969, and surplus conditions in 1970 and 1971.

CONTINUITY OF THE NATIONAL INDUSTRIAL PLANT

The industrial defense program is another major mobilization responsibility of BDSA. Under Executive Order 10999, the Secretary of Commerce is required to "provide industry [with] protection guidance materials adapted to the needs of assigned facilities and promote a national program to stimulate disaster preparedness and control in order to minimize the effects of overt or covert attack and to maintain continuity of production and capacity to serve essential users in an emergency." In addition, the order requires that such guidance be prepared and distributed "in consonance with national civil defense plans, programs, and operations of the Department of Defense." The Secretary of Commerce has delegated this function to BDSA.

The objective of the industrial defense program is to furnish guidance and leadership to industry in the development of programs to insure continuity of essential production in the event of an enemy attack. Such planning necessarily includes protective measures against the effect of nuclear weapons. BDSA maintains close cooperation in this program with the industrial participation staff of DOD's Office of Civil Defense.

BDSA's principal efforts at this time are directed to the publication and dissemination of planning manuals and brochures which will assist the managers of specific classes of industries in carrying out their industrial defense programs. The information in these manuals deals primarily with the threat of a nuclear attack, but guidance is also included to minimize the effects on industry of natural disasters.

BDSA must depend on the cooperation of industry to produce guidance in developing practical measures for protection. Specialists in BDSA's industry divisions work closely with knowledgeable industry experts and with other Federal agencies to tailor manuals to the special problems of individual industries. Seven manuals and four brochures are currently in preparation.

To supplement this work an "Industrial Defense Kit" has been prepared containing a number of recent issuances and publications of the Office of Civil Defense and of BDSA which will assist business and industrial executives in developing emergency and disaster plans. The kit has been distributed through 600 chambers of commerce, the 42 field offices of the Department of Commerce, and to each of the 1,400 members of the BDSA executive reserve. This distribution should stimulate and maintain industry's interest in the continuation of the national industrial plant and its output.

THE EXECUTIVE RESERVE PROGRAM

BDSA as the production agency in a war emergency is responsible for production, distribution, and construction for 90 percent of all manufacturing industries. A large executive manpower force is needed to direct these activities, which have a profound effect on the entire economic structure. Under the mobilization readiness program for executive manpower established in the Defense Production Act of 1950, as amended, BDSA has recruited and designated as national defense executive reservists 1,435 executives from industry, labor, and the professions out of an authorized complement of 2,000. These executive reservists stand ready to fill positions of responsibility in BDSA as the emergency production agency at national headquarters, regional offices, and Department of Commerce field offices when called or after an attack upon the United States. BDSA keeps the reservists informed of current mobilization production plans and mobilization responsibilities. The reserve recruitment program is designed to assure wide geographical distribution of the reserve force while satisfying specific area manpower needs. Status and composition of the BDSA component of the executive reserve

As of June 30, 1967, BDSA's executive reserve component stood as follows: Authorized complement--.

2,000

The following table shows the number of reservists by OEP/OCD region:

The number of BDSA reservists increased by 61. Another 41 candidates have been cleared for approval and are awaiting formal designation. Applications of an additional 166 are in varying stages of processing. Exhibits 1 and 2 provide further analyses of the BDSA reserve component showing the distribution of reservists by OEP/OCD region, by State, and BDSA industry division.

The recruiting program for fiscal year 1967 has been the most successful in several years. However, because the 3-year renewable terms of appointment will expire in September 1967, for nearly 1,200 reservists, some losses are to be expected. About 100 reservists will be placed on an inactive status with the implementation of a new policy requiring compulsory retirement at age 70 from

the active reserve. These losses are expected to be greatly exceeded by new recruitment resulting from a new comprehensive program which is discussed in more detail below.

Existing Department of Commerce field office jurisdictions, based on economic trading areas overlapping two or more OEP/OCD regions, created jurisdictional anomalies which were eliminated during the year by realinement for emergency operating purposes to coincide with regional boundaries. This action necessitated reassignment of some 53 reservists to different field offices.

Activation of reservists in an emergency

Of the 1,435 reservists designated, 1,290 have executed the appointment affidavit form, a personnel action allowing immediate employment and activation of the executive reservists in an emergency. Executive reservists who have not accepted the provisional postattack appointment will not be reappointed to the reserve when their 3-year terms expire.

The appointments become effective upon proclamation of a national civil defense emergency or upon attack on the United States when the reservists report for duty at their assigned emergency duty stations.

Recruitment

BDSA has systematically analyzed its executive research manpower requirements and developed staffing patterns for each of the 42 field offices, eight regions, and national headquarters units of the BDSA executive reserve. Specific area requirements have been developed for all four-digit standard industrial classification industries which are considered direct defense, defense supporting, and essential civilian industries. Existing manpower deficits have been pinpointed by comparing current reservists (classified by four-digit SIC) with manpower objectives by industry by area. Estimated manpower requirements were developed to parallel the patterns of industry concentration in the country.

Each Commerce field office has received a staffing pattern for its emergency production operations showing the number of executives from specified industries which must be recruited in order to assure a fully effective emergency field office organization. Similar staffing patterns have been developed for the regions and national headquarters. Recruitment will be concentrated on these systematically derived and identified manpower deficits. In this manner, an executive reserve with the best possible geographical distribution and industrial coverage I will be developed and maintained.

Efforts to broaden the recruitment program to include not only production executives and specialists but all types of personnel who would perform executive functions in a wartime production agency have met with some success. Numerous candidates with valuable experience in economics, statistics, public relations, and labor are currently in the process of being designated executive reservists. This aspect of the recruiting program will continue to be emphasized during the coming year.

A pyramidal program of three-level staffing at field office, regional, and national levels is projected. Currently about 88 percent of BDSA reservists are assigned to the field office base of the triangle, with the remaining 12 percent divided evenly among the regions and the national headquarters. Assignments on this basis provide the geographically dispersed executive reserve necessary for nuclear attack planning. Limited war planning envisages a centralized operation in which all reservists regardless of assignment will be subject to call for duty in Washington.

Recruitment will be concentrated on reservists in the 35 to 55 age bracket. A backup recruitment policy is being implemented which calls for recruitment of a new reservist as backup support to each reservist who reaches age 60. Experience indicates that attrition from the reserve is for the most part age related in the 60 to 70 age group.

It is believed that the new recruiting policies and programs will help to insure a functional, decentralized operation following nuclear attack and will provide an executive force having the skills and training for centralized limited war operations.

Training

Twenty-six conferences of BDSA executive reservists were held throughout the country during the year. Total attendance at these meetings amounted to 806 persons of which 511 were reservists and 295 were Government officials and business and civic leaders. Exhibit 3 shows the conferences held during the year and the attendance.

Several different formats were employed in work conferences. Some consisted of 1-day meetings with seminars and problem sessions. Others were in the form of luncheon or dinner meetings, attended by representatives of BDSA who conducted briefing sessions and explained the principles and procedures of industrial mobilization. Some of the conferences were attended by representatives of other Federal agencies, including the Office of Emergency Planning, Department of Agriculture, Department of Defense, Department of Labor, Department of the Interior, and the Office of Civil Defense. Reservists were familiarized with relationships between their own responsibilities and those of other mobilization agencies, including State and Federal civil defense organizations and State emergency resource agencies. While preparation for nuclear war was not neglected, there was some shift of emphasis during the year to preparation for the possibility of limited or conventional war.

BDSA also participated in seven OEP regional conferences during fiscal year 1967. These were generally 2-day meetings which included addresses by officials of OEP, special briefings on Southeast Asia, and problem-solving sessions conducted by the various agencies with NDER components. BDSA concentrated on limited war problem-solving sessions. BDSA executive reserve and candidate attendance at the regional conferences totaled 336.

Four orientation and training bulletins dealing with the theory and practice of industrial mobilization at all levels were prepared and distributed to the BDSA executive reservists during the year. Bulletins 3 through 6 described in some detail the principles and practices of the defense materials system and priorities. It is believed that the OT bulletins are particularly helpful to reservists who have had no prior mobilization experience.

For reservists with the time and inclination for still further training, BDSA made arrangements with the Industrial College of the Armed Forces, Washington, D.C., to make selected ICAF courses and study materials available. A number of reservists have applied for the correspondence courses in National Security Management and Management in the Defense Department.

Organization of area executive reserve groups

BDSA executive reservists in 26 field offices (Atlanta, Birmingham, Charleston (S.C.), Chicago, Cincinnati, Cleveland, Dallas, Detroit, Greensboro, Honolulu, Jacksonville, Los Angleles, Miami, Milwaukee, Minneapolis, New York, Philadelphia, Phoenix, Pittsburgh, Portland, Reno, St. Louis, Salt Lake City, Savannah, San Francisco, and Seattle) have organized area executive reserve groups, and reservists in Denver, Des Moines, Houston, and Memphis have taken steps toward organizing. The groups hold luncheon or dinner meetings every 4 to 6 months with a speaker or a short program on some phase of defense or mobilization readiness. Reservists of other agencies have been invited by many of the BDSA groups to participate in their activities. BDSA is encouraging the establishment of area reservist groups as a medium for fostering active and continuing interest in the reserve program and for improving the readiness of reservists.

Reexamination of relocation sites

Each of the 42 Department of Commerce field offices has an emergency relocation facility from which it would perform delegated emergency production functions with the assistance of executive reservists following an attack on the United States. A study is currently in progress to establish new standards of adequacy for sites in terms of vulnerability and operational suitability. Substandard sites will be upgraded. Additionally, arrangements are being made with the responsible agencies for provision of supplies and administrative services at the relocation facilities in an emergency situation. Thus, we plan to have the manpower and facilities to perform our emergency readiness responsibilities under any contingency that we can now conceive. The facilities available for this purpose include the mobilization data centers established at certain sites which contain industrial reference materials essential to decisionmaking under emergency conditions.

Currently, only one of the OEP/OCD regional sites is a hardened facility. Plans call for completion of hardened facilities in each of the other regions during 1968 and 1969. Current OEP/OCD regional facilities are being reviewed in terms of the adequacy of space for BDSA regional personnel during the interim period. Where existing facilities are deemed inadequate, auxiliary sites will be selected to provide working quarters until the hardened facilities are completed.