ment that should not be undermanned, but which should be fully staffed to keep a close tab on things, it would be the General Accounting Office. It would certainly be my observation, or suggestion, that if you think you need any more people at all, that those wishes be made known because, on the basis of information you and your sub-. ordinates here have given the committee, certainly it deserves all the help that we can give you at the legislative level because you are certainly performing a function not only for us but for all of the American people and apparently doing a very good and thorough job.

а As much as I have been opposed to increased staffs and mounting costs of Government, it would certainly seem to me that in this one field, and probably the Internal Revenue Service and the FBI, we should not be cutting corners as far as adequate personnel is concerned.

I just leave that observation for the record.

Mr. Blair. I want to thank you, Mr. Congressman, for your remarks.

Mr. FASCELL. Mr. May?

Mr. May. I think that is a very suitable conclusion to be drawn from Mr. Blair's testimony and others' here today.

The only other question that I could perhaps have raised before this, and which might be answered briefly, is the one that you raised on supplies in your surveillance of inventories in the area that you have covered. I am now talking about the item of $300 million in one place. Are there any specific items in overabundance that are glaring, outstanding in that area ? That is, in the field that you have covered ?

Mr. BLAIR. I do not know that I fully understand the import of the question?

Mr. May. We were talking earlier about the supply problem and your surveillance of it.

Are there any glaring examples of an excess item in oversupply that you have uncovered and of great value !

Mr. FASCELL. They testified about cancellations of procurement. That is a good point about the determination of excess supply on hand though. I think you have testified that you have found plenty of it, have you not?

Mr. BLAIR. Yes; at Chateauroux.

Mr. May. On the whole, there were big totals involved there but were there any particular items you can mention?

Mr. FASCELL. Like left-handed carburetors or 1918 trench coats?

Mr. MAY. When we received the Hoover report we heard something about canned hamburger.

Mr. ROSENBERGER. Mr. Fascell, a moment ago you mentioned the cancellation of procurement. Let me go into some detail here, please.

Mr. FASCELL. Before you answer my question, how about answering
Mr. May's question?

Mr. ROSENBERGER. I did not hear it.
Mr. BLAIR. I am sorry.

I thought he was going to respond to your question.

Mr. Hunter, do you have any particularly outstanding examples in mind?

I might point out that with occasional exceptions the nature of our examinations do not concentrate on particular items like that. We

look at the problem from an overall basis rather than picking out these individual items. That is, we do not go into, let us say, so many cans of hamburger. Maybe we should, but we do not. We look at the overall program in general oversupply, but we have not checked these individual items.

Mr. May. As a result, those in authority will straighten out any problems involved?

Mr. BLAIR. Yes.

Mr. BUCKLEY. Mr. Chairman, in connection with that point under tab G, the document on audit and accounting responsibilities states :

* * * In some instances, Army excesses have not been considered in supplying Air Force requirements, and excess lists were not being sufficiently circularized so that items listed could be screened for possible filling of customers' requisitions. * * *

It then goes on to say that

The GAO staff examined records of supplies classified as excess and surplus and found that orders for the same types of supplies recently had been placed with depots in the United States *

Then it says:

* *

Subsequently, during the period July 1 to October 31, 1956, the Army saved ordering supplies valued at $14,641,000 by recouping quantities already on hand and in excess and disposal channels. No estimate is available on what has been saved since this period. *

I think that the point Mr. May was raising there had to do with the system of inventory control. You have apparently gone into it very thoroughly and found certain items far in excess of present needs. The point was, Is there anything such as canned hamburger and catsup that would fall into this survey that you undoubtedly conducted ?

Mr. BLAIR. That information would, of course, be known to the particular auditor who performed the job and would turn up in the working papers. I have no knowledge of any particular item like that. That has not gotten into the report.

The two program supervisors have not called that to my attention. The auditor himself in going through the line items would select naturally those errors in oversupply. We have not made a headline out of them in the sense that we report an excess of so many cans of hamburger or an excess of so many boots. We have conducted a study with respect to excess ammunition, but we certainly are concentrating on this area of inventory control. It is an area where considerable additional corrective action is required and we are working on it but it is a tremendous problem. We have a tremendous amount of supplies over here and the problem is complicated by the fact that they have to train these Frenchmen to speak English. They have given up on trying to get us to speak French. They have to teach the Germans, too, to speak English and read our invoices. They have problems here that we do not have stateside. The language problem

Also you are using lower grade employees to begin with and you are expecting these low-grade employees to develop proficiency in the English language.

Mr. FASCELL. As an example, Mr. Blair, if you were to find out that as a result of this administrative problem, you built up a supply of spare parts of an obsolescent engine and the parts were enough to supply you a thousand years, you would fire the German and get

is one.

а

somebody who spoke English. I appreciate that you would want to go to the defense of the agency and we recognize that it is a problem, but it does not lessen the error in any way.

Mr. BLAIR. Speaking of a specific example, we did have a specific matter that was developed as a result of an investigation in the early stages of the existence of the branch and it involved the procurement of automotive heaters. These heaters were required for jeeps and through a clerical error they ordered some heaters that were to be installed in trucks. I have forgotten the exact facts, but we can supply that for the record, if you are interested. Maybe I have it here. Anyway, we issued a special investigative report on it because we thought that was an aggravated instance and should be reported separately. That may be, for your information, a distinction between an investigation and an audit. The investigations disclosed that back in August 1952 the Army command in Austria had requisitioned some 4,398 automotive heater kits from United States supply sources without knowing the proper description or the actual cost of the item. Later, upon learning of the unexpected great cost involved of one-and-a-third million dollars, the command canceled the order but not before 1,969 of the heaters had been shipped to ports of embarkation of which 1,845 had been placed on ships bound for Europe. Contracts were let for the remaining 2,429 and the command returned 1,740 to the United States. At the time in question they had installed only one.

Mr. HUNTER. We had pictures of them. They were almost as big as the jeep.

Mr. BUCKLEY. Is cost cited here?

Mr. BLAIR. Acquisition cost is $113 million. Had this gone ahead and been completed, that would have been a considerable loss. This was not a heater for a jeep and somebody finally caught it although they had requisitioned some 4,400. By the time someone in the command canceled the order, 1,845 of them had been placed aboard ship and were en route to Europe.

Mr. BUCKLEY. What was the eventual cost to the United States Government?

Mr. BLAIR. The cost of shipping and handling the heaters in the United States is approximately $50,000. That is shipping costs.

Mr. FASCELL. Then you had the items in stock and they could not be used. You had 104 of those ?

Mr. BLAIR. Right.

Mr. FASCELL. Plus the one that was installed, plus the aspirin tablets needed ?

Mr. BLAIR. Right.

Mr. FASCELL. We have another group of people waiting and unless there is somebody with another question, perhaps we had better go on.

Mr. BLAIR. Mr. Chairman, I might suggest for your consideration that we have not gotten into a number of areas that may prove of interest to you. We could supply for the record a synopsis of some of our examinations that may prove of interest.

Mr. FASCELL. On specific cases?

Mr. BLAIR. I have a number of them here and hoped to get into them.

Mr. FASCELL. Just generally give us an idea of that without all of the details and then we will take the information for the record, as you suggested.

Mr. BLAIR. As a result of one of our recommendations that Germany be charged for certain expenses incurred for some $1,397,000 recovered. In another instance, USAREUR canceled requisitions in the United States for unauthorized items of ordnance equipment for special reserve programs. They canceled $188,000 of requisitions.

Another example was where they were declaring some vehicles and spares surplus that were needed by NATO nations, and the NATO governments had to go out to the surplus yards and compete with the other surplus buyers for this equipment. We felt it would be advisable to make this equipment available to the user nations. In other words, the foreign government would buy this eqiupment from us and pay at least 20 percent of the cost. Then we examined the Bordeaux Depot some 2 years ago and recommended that it be closed. The Air Force came back with the answer that for strategic reasons they could not close it. Then a decision was made back in the States that they were going to close out their depots. They used our report and determined the feasibility of closing out Bordeaux. We feel that while we certainly cannot claim total credit for closing out that depot, the services used our information and it served some purpose.

Mr. FASCELL. Is that on the basis of duplication of effort or uneconomical operation ?

Mr. BLAIR. That is right. They were stocking tires and we felt it could be more economically done at Chateauroux. The order came to close down and that will save some $1,358,000 annually.

Mr. FASCELL. We would like to have in the record at this point the information on the details and specifics that you have on this list.

Mr. BLAIR. That is roughly the type of material I have.

Mr. FASCELL. We would like to have that detailed in the record at this point in each one of these cases.

Without objection, we will include in the record at this point tab B of the brief which deals with the reports issued from August 1952 through June 30, 1957, by the European Branch of the General Accounting Office and tab C which is the list of assignments closed locally from August 1952 to June 30, 1957. I believe that covers everything in the brief that we can put into the record that can be useful and which is not classified.

(Tab B and tab C follow herewith :)

UNITED STATES GENERAL ACCOUNTING OFFICE, EUROPEAN BRANCH

SYNOPSES OF CERTAIN SIGNIFICANT MATTERS DEVELOPED

The following synopses were compiled to illustrate the nature of the more significant matters developed by the European Branch from its inception, the more current significant matters having already been supplied for the subcommittee transcript. These synopses indicate the various types of examinations conducted by the Branch and the savings being realized through its efforts.

CONTROL OVER BILLINGS TO THE UNITED KINGDOM

Background

As part of our effort to help improve military supply operations in the European area, we conducted an examination of supply operations and procedures at the Northern Air Materiel Area, Burtonwood Air Depot, England. We reviewed depot procedures and internal controls over the receipt of reparable property items from mutual defense assistance program (MDAP) countries and the invoicing for the repair or issuance of items exchanged for the reparable property. Findings and conclusions

We found at the Burtonwood Air Depot and MAAG-UK, London, that a special project “Eagle Eye" approved by Headquarters, United States Air Forces, Europe (USAFE), provided for the repair by the depot of reparable components of the MA-3 fire-control system received from the United Kingdom or for the issuance of serviceable components in exchange for the reparable items. Provision was made for reimbursement by the Air Ministry, United Kingdom, at the rate of 20 percent of the serviceable (stock list) cost of each component of the MA-3 fire-control system repaired or exchanged.

At the time of the project agreement, a United Kingdom Air Ministry official estimated that total payments by the United Kingdom under the project would amount to approximately $220,870. Although MAAG-United Kingdom records pertaining to the project contained the detailed provisions for reimbursement by the United Kingdom, Headquarters, USAFE, and NAMAE procedures published to implement the project made no reference to the reimbursement provisions of the agreement and personnel of NAMAE Supply Directorate and Office of Comptroller were not aware of these provisions.

We found that depot personnel had not billed the United Kingdom for serviceable components shipped through October 20, 1955. Recommendation

We brought to the attention of Burtonwood Air Depot officials the project agreement provisions for reimbursement by the United Kingdom and recommended that action be taken to invoice for past services provided. We brought this matter to the attention of the Commander, Air Materiel Force, European area (AMFEA), on February 2, 1956. Summary of action taken

On March 27, 1956, Headquarters, AMFEA, advised that a first invoice dated March 5, 1956, in the amount of $44,523.44 had been forwarded to the Air Ministry, United Kingdom, for services provided by the depot under project Eagle Eye. Total savings that will result are estimated at $220,000.

REPAIRS AND UTILITIES SUPPLY PROGRAM Background

A review was made of the Repairs and Utilities (R. and U.) Division supply program in the Southern Area Command (SACOM), United States Army, Europe (USAREUR), at the Munich and Stuttgart, Germany, installations which included a review of stock levels, the relationship of stock levels to issue experience, procedures for disposal of excess stocks and the physical custody of materials. Findings and conclusions

1. Excessive procurmeent.—The Munich and Stuttgart repairs and utilities supply locations have procured items of supply in greater quantities than required for the 90-day control level or the 180-day retention level. A selective examination of purchase requests submitted by the Munich location disclosed that deliveries on these requests resulted in the accumulation of supplies that would probably last from 1 to 4 years.

In addition, the accountable officer at Stuttgart requisitioned many items from repairs and utilities excess property lists for which there was no apparent need. Based on a 2-year consumption experience for 1 item, the quantity requisitioned would last the Stuttgart location over 60 years. At the time the requisition was placed, Stuttgart had about a 20-year supply. Other cases were noted where property of relatively high value was requisitioned from excess lists in greater quantities than required.

The procedures that have been established to make excess stocks of one location available to other locations that are in need of the item are sound. However, indiscriminate requisitioning of items for which there is no need defeats the purposes intended. The shifting of excess stock from one location to another, with the attendant shipping costs and paperwork, is obviously wasteful and precludes reporting of the true excess position to officials responsible for redistribution or disposal.