the Secretary of the Air Force as the Single Manager. Directive 5160.10 creates a Single Manager Assignment for Ocean Transportation designating the Secretary of the Navy as the Single Manager. Directive 5160.11 creates a Single Manager for Subsistence designating the Secretary of the Army as the Single Manager. Directive 5160.14 creates a Single Manager Assignment for Traffic Management within the United States, designating the Secretary of the Army as the Single Manager. Directive 5160.15 creates a Single Manager Assignment for Clothing-Textiles, designating the Secretary of the Army as the Single Manager. Directive 5160.16 creates a Single Manager for Medical Materiel, designating the Secretary of the Navy as the Single Manager. Directive 5160.18 creates a Single Manager Assignment for Petroleum, designating the Secretary of the Navy as the Single Manager.

34. Regulations Governing the Use of Project Orders (DOD Directive 7220.1), reissued 27 September 1958.

This Directive prescribes the regulations governing the use of

be reimbursed.

project orders and the basis upon which the performing establishment will A project order is a specific, definite and certain order issued for the manufacture of materials, supplies and equipment, or for other work or services, which, when placed with and accepted by a Governmentowned and operated establishment, serves to obligate appropriations in the same manner as orders or contracts placed with commercial enterprises. 35. Accounting and Reporting on Expenses and Disposition of Proceeds from Sale of Scrap, Salvage, Surplus or Foreign Excess Personal Property (DOD Instruction 7310.1), reissued 5 January 1959.

This Instruction sets forth the policies with respect to accounting and reporting on disposition of proceeds from sale of scrap, salvage, or

surplus materials, including foreign excess personal property of the Department of Defense, except (a) proceeds from sale of such material held by working capital funds of the military departments (these are handled in accordance with Regulations Governing Stock Fund and Industrial Fund Operations) and (b) proceeds from sale of such material held for the Material Assistance Program.

36. Regulations Governing Industrial Fund Operations (DOD Directive 7410.4), reissued 17 July 1958, and subsequent amendments.

Funds

This Directive provides for the establishment of three Industrial

one in each military department. It also establishes the policy for the initial transfer of funds, inventories, and properties to the Industrial Funds, the handling of project and other work orders and reimbursements for such work, provision for accounting and cost accounting systems, authorization to incur obligations and expend funds, budgetary control, reporting on operations, and auditing.

37. Regulations Governing Stock Fund Operations (DOD Directive 7420.1), reissued 19 December 1956, and subsequent amendments: (a) Authorized Donations of Surplus Materiel from Working-Capital Funds to Health, Education and Welfare; (Instruction 7420.3), issued 9 June 1955, and subsequent amendments; (b) Constructive Methods of Billing for Stock Fund Sales (Instruction 7420.4), reissued 2 July 1957; (c) Principles to be Obser ved Determining Materiel to be Included in Stock Funds (Instruction 7420.5), issued 26 November 1956.

Directive 7420.1 provides for establishment of a Stock Fund in each

of the four services setting up procedures for the issuance of charters, initial transfer of funds, inventories, and other assets, pricing policy, management policy, sales of stocks, accounting, authority to obligate and expend funds, budgetary control, reporting and auditing. Instruction 7420.3 provides for establishment of accounts in each industrial fund and departmental stock fund and division thereof to reflect the authorized donations of surplus materiel for health, education and welfare purposes. Instruction 7420.4 provides for the establishment of sales and accounts receivable at the time delivery of goods to a common carrier is made. Instruction 7420.5 clarifies the criteria for inclusion and exclusion of materiel for stock fund financing.

38. Financial Reports for Department of Defense Stock Funds (DOD Instruction 7420.6), issued 10 June 1957.

This Instruction provides the financial reports and budget forms to meet requirements of the Office of the Secretary of Defense in overall financial review, for use in the preparation of reports to the Congress and other Government agencies, and in financial control actions under the budget process.

39. Reimbursement by Single Manager Stock Fund Division for Retail Inventory Losses (DOD Instruction 7420.7), issued 7 January 1958.

This Instruction prescribes uniform procedures for reimbursement by Single Manager stock fund divisions to the to the retail stock fund divisions of the military services for net inventory losses of the corresponding retail category or division of assigned material estimated to be recovered in surcharges established by the Single Manager.

40. Report on Real and Personal Property and Financial Assets (DOD Instruction 7500.1), issued 8 July 1958.

This Instruction prescribed uniform reporting for formats and criteria to the military departments for the recurring annual submission of narrative, accounting and statistical material required by the Office of the Assistant Secretary of Defense (Comptroller) for the preparation of a consolidated Department of Defense report to the Congress and the President on property records maintained under Section 410 of the National Security Act. It also prescribes the instructions and reporting format for the financial assets of each military department exclusive of real and personal property, required annually by the Chairman of the Committee on Government Operations, House of Representatives.

41. Uniform Pricing Policy for Materials, Supplies and Equipment Financed by Military Appropriated Funds (DOD Directive 7510.1), issued 31 December 1956 and subsequent amendment.

This Directive provides the basic policies and criteria pertaining to pricing materials, supplies and equipment in the supply distribution system other than those inventories financed under working capital funds. 42. Use of Source Documents and Source Records in Quantitative and Financial Inventory Accounting (DOD Instruction 7510.2), issued 2 July 1957.

This Instruction defines the type of basic source documents and source records to be used in the military departments to ensure that the inventory accounting and reporting systems provide for the accumulation of both quantitative and financial data from original transaction documents and stock records.

Section B - Department of the Army

Reduction in Number of Line Items

As of 30 June 1960, there were approximately 608,250 line items stocked in the Army supply system, a reduction of 48,850 during the fiscal year.

Application of the Accelerated Item Reduction (AIR) Program, the first phase of which was completed by the services by 30 June 1960, resulted in the elimination of 326,000 Federal Stock Numbers from the Army supply system during the year, but the addition of newly developed items and their repair parts resulted in a net increase in cataloged items of supply. These include, however, standard commercial-type items which are cataloged but not stocked.

The elimination of Federal Stock Numbers cited above reflects

the efforts being continually exerted by supply managers at all echelons to effect maximum reduction in the number of items in the Army supply system commensurate with supply support requirements. Improved management practices including the AIR Program are contributing to the reduction of Federal Stock Numbers (cataloged items of supply) in the Army supply system. This reduction in cataloged items in turn directly affects the number of items stocked in the Army's depot system. Utilization of Automatic Data Processing in the Supply System

The Army is continuing its program to employ modern data processing equipment to improve the performance of logistics functions in peacetime and to facilitate adjustment to the demands of mobilization or

war.

Since the inception of this program in fiscal year 1956, 32 automatic data processing systems have been installed for supply operations