Public Law 883, 80th Congress, the "National Industrial Reserve Act of 1948," provides for establishing "adequate measures whereby an essential nucleus of Government-owned industrial plants and a national reserve of machine tools and industrial manufacturing equipment may be assured for immediate use to supply the needs of the Armed Forces in time of national emergency or in anticipation

thereof."

The properties still owned by the Government are managed by the General Services Administration (as successor to the Federal Works Agency) under general policies established by the Secretary of Defense. Since the Department of Defense has a contingent claim and production priority rights in all the National Industrial Reserve plants, including those which GSA has disposed of or leased with a National Security Clause, data on these are included in this section of this report. However, data on none of the properties in this Reserve have been included in the totals for real property (Part I) or metalworking equipment (Part II, Section B) of this report because they are held by the General Services Administration.

The National Industrial Plant Reserve contained ten facilities as of 30 June 1968, the same number as at the end of the preceding fiscal year. Only portions of some of the facilities are being set aside for use by the military services. The sponsoring military department and

status of these plants at the end of fiscal year 1968 were:

Army

Navy

Air Force

In keeping with Department of Defense policy to release as many Reserve Plants as possible to private corporations, nine of the ten plants have been sold subject to appropriate restrictions and recapture clauses and one is being operated under lease or contract agreement.

The status of the ten plants by category of product is shown in Table 46. The plant still owned by the Government produces jewel

bearings.

3. Equipment Reserve

The National Industrial Equipment Reserve on 30 June 1968 contained 8,541 items of metalworking machinery and 800 nonmetalworking items of industrial production equipment. The original acquisition cost of the 8,541 items of metalworking machinery was $65.0 million and of the 800 other industrial production items, $1.5 million.

Under existing legislation these tools are available for redistribution to essential civilian industry, Armed Services, qualified nonprofit educational institutions and training schools, and to other Federal agencies.

Department of Defense-wide policies, programs, and projects developed

or continued in fiscal year 1968, all aimed at improvements in the management,

recording, and reporting of inventories, are summarized below:

Improvement of Logistics Information Systems

During fiscal year 1968, progress was made in DOD-wide logistics data systems through (1) the implementation of short-range, quick pay-off improvements and (2) the development of long-range plans for the next generation of information system change, which would begin to occur towards

the mid-1970s.

Existing DOD-wide standard systems were used to improve supply performance and reduce costs. For example, the backorder reconciliation procedures implemented within the framework of Military Standard Requisitioning and Issue Procedures (MILSTRIP) were expanded to include a larger number of requisitions. The General Services Administration joined in this purge of over-age backorders. Overseas requisitions which used to be referred for reconciliation after 120 days are now referred after 90 days, the age criteria used for CONUS requisitions. Under these improved reconciliation procedures in fiscal year 1968, approximately 284,000 requisition lines were cancelled resulting in total cancellations valued at $688.6 million. Another extension of MILSTRIP permitted the automatic referral and processing of backorders from one Service Inventory Control Point (ICP) to another Service ICP. This was a practical demonstration of the interService communications capability provided by military standard logistics systems.

The implementation of Military Supply and Transportation Evaluation

Procedures (MILSTEP) has produced standard supply availability and workload data for each military service/DSA distribution system. Intransit pipeline and performance data is also being aggregated to measure logistics systems performance over all pipeline segments on a comparable basis.

Phased implementation of Military Standard Contract Administration Procedure (MILSCAP) also was initiated. MILSCAP provides standard data elements and formats which will be used to expand the use of automation and to improve the flow of information among buying offices, ICPS, contract administration activities, and Defense contractors. During the year, machine-sensible Shipment/Performance Notices and acceptance reporting were implemented in accordance with MILSCAP by several activities.

A major program aimed at improving the accuracy of inventory record keeping was initiated as a result of the findings of the special DOD study group on inventory control. This group reviewed the practices of military and industrial activities in managing wholesale-level supply systems, and submitted a comprehensive report in April 1968 listing more than 50 recommendations for DOD-wide management actions to improve and standardize inventory control procedures. They may be summarized under the following headings:

1. Improve and expand DOD standard data systems to (a) provide more useful identification of the various reasons for materiel denials, thus preventing unnecessary physical inventories being taken and keeping loss adjustments to a minimum, and (b) prescribe systems specifications to improve control of receipts in process.

2. Augment basic DOD policy guidance to provide uniform and improved systems to reconcile and validate stock location information.