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Mr. POLAND. Two questions have occurred to me. One of them I should like to address to Mr. Haskell.

I understood you to say a moment ago that these situations could not be resolved by the procurement officers. You said "could not be resolved.” My understanding was—and I would like to be corrected if wrong—in some instances the procurement officers were ready and willing to resolve them.

Mr. HASKELL. I do not know if I used the word "could.” It seemed to me there may be other factors involved but it seems commonsense to me that when the chips are down and you are going to deal with the Government in one phase of the thing, and it may be a large corporation that a certain country had dealings with in the different services, but you get along better with a unified negotiation and a single person speaking for the Defense Department, or the United States Government for that matter, than you would if you had different ones in that thing when a government-to-government agreement is involved.

Mr. FASCELL. You do not mind my saying that is an extremely debatable conclusion.

Mr. HASKELL. That is my personal conclusion.

Mr. FASCELL. That is what we are doing now? We will await the results of this policy, but in my opinion it is an extremely debatable conclusion and I am not sure that the political considerations are warranted in this policy.

Mr. POLAND. There was an element in that which in a sense removed this matter from the hands of the procurement officers for their final determination and left it with your outfit and under the guidance of Mr. Hoagland?

Mr. HASKELL. We are not going to make the final determination.

Mr. POLAND. Taking it away from the procurement officer and leaying it with other authorities was a policy determination?

Mr. HASKELL. Negotiations to transfer negotiations with foreign governments to the level of ambassadors and the Department of Defense was the policy instruction which we received.

Mr. POLAND. That is what I assumed and I thought the record should show it.

There is one question I would like to ask Mr. Hoagland. If I understood you correctly a few moments ago, in determinations with respect to these matters you considered other factors.

What factors do you consider other than the contracts themselves?

Mr. HOAGLAND. May I ask again what particular point you refer to?

Mr. POLAND. A few moments ago in your testimony you stated that in your negotiations for settlement you considered "other factors." I wrote that down and now I want to know what other factors would have to be considered other than those within the four corners of the contract under consideration ?

Mr. HOAGLAND. I did not mean to say, certainly, and I do not think I said, we considered other factors apart from the contracts themselves. I think I was referring to the comments and views expressed to us by the General Accounting Office. I think I said that, in general, we found their views were entirely in accord with our own and very helpful and, in general, we adopted those views and followed them but there were some instances where other factors entered into our

own decisions and our own practices which might lead to a different result from what the General Accounting Office, from its own particular viewpoint, might have recommended.

Mr. FASCELL. They are in agreement with the General Accounting Office in most cases, except some.

Mr. POLAND. If I misconstrued your statement, I apologize.

Mr. FASCELL. You can still make the statement stick on the record because he has to stick within the bounds of his instructions which may or may not be within the four corners of the contract.

Are there any other questions on this thing?

Is there anything further that you gentlemen would care to add to the record ?

Mr. HASKELL. No, sir. I have nothing further.
Mr. HOAGLAND. No, sir.

I appreciate your saying that you would send us a copy of the record so that we could read it over later and if we have at that time anything to add, that we may

do so. Thank you very much.

Mr. FASCELL. Ăs a matter of fact, we hope that you will have plenty to add. We hope that by the time this record gets around and is submitted to you the Defense Department, on the recommendation of its special representative, will have undertaken to impress upon somebody at top level a good job for the Department of Defense could be done by making as much information available with respect to this matter as possible, despite any political considerations involved.

Mr. HOAGLAND. On questions of classification?

Mr. FASCELL. On the question of offshore procurement dealing with negotiations, the countries involved, the status, amount of money, how effective you are, ineffective, and whatnot. This is just a personal opinion that I am expressing and I do not expect the rest of the committee or the staff to share my opinion, but I think that we have drawn a veil across it, on something that need not have a veil drawn over it, and the result has been a lot of improper speculation with respect to our procurement practices which are extremely harmful to the Department of Defense.

It is just not good sense to me. I do not see it, so I would trust that in the course of time—you have been here now for over a yearthat you would look at your future operations with this viewpoint in mind. Then the Secretary of Defense could prevail on the Secretary of State to open up a little bit.

General Larkin, I am sorry that we have taken up so much time on the other material so that we cannot get into the problem of weapons development.

General LARKIN. That is all right with me, sir.

Mr. FASCELL. Let us leave it this way: We do not mean to slight you in any way but if we have a particular area of interest on this subject within our jurisdiction suppose that we have the staff communicate with you and you can give us the benefit of whatever information is available within the limits of classification.

General LARKIN. I will be glad to do that.

Mr. FASCELL. Mr. Haskell and gentlemen, we certainly appreciate the time and consideration that you have given to the committee on this problem. We recognize that within the limits of classification

it is very difficult to deal in generalities and still be specific enough to make sense.

We hope, however, that in this exchange we communicated to you, in a way, the feeling that the Members of Congress have in these types of problems. We assure you that we also recognize the problem which you have. We hope that by meshing the two, we have achieved a moderate approach for both of us to doing a job which is, in the final analysis, one that we are both trying to do; that is, a job in the best interests of the country. We want to emphasize again and trust that the Department of Defense will take into consideration the improper overtones that have been added to what ought to be a normal routine business operation (that goes on everyday with the Department of Defense) involving billions of dollars and normally the Department of Defense would not hesitate a minute to make it available to the United States people.

When you compare offshore procurement and the total defense spending, the matter is so comparatively small that perhaps we can prevail upon the State Department to do something about that situation.

With that final comment, the meeting will be adjourned and thank you very much.

(Thereupon, the hearing was adjourned at 6 p.m.)


(A Review of GAO Activities in Connection With Certain

Federal Expenditure, Procurement, and Inventory Practices in Europe)




Paris, France. The subcommittee met at 10 a. m., American Embassy, Paris, France, Hon. Dante B. Fascell, (acting chairman) presiding,

Present: Representatives Harden, Michel, and May. Also present: Christine Ray Davis, staff director; Orville S. Poland, general counsel; Orville J. Montgomery, associate counsel; John W. McGarry, assistant counsel; John R. Buckley, staff member; and John P. Carlson, minority counsel.

Mr. FASCELL. The meeting will come to order. General Babcock and gentlemen, this is the Executive and Legislative Reorganization Subcommittee of the Committee on Government Operations of the House of Representatives.

Our jurisdiction is primarily one of determining the economy and efficiency in the operation of Government, particularly in the expenditure of funds and the operation of programs. We have come to Europe primarily to inquire and discuss the operations of the General Accounting Office, European Branch, and the responsibility it has in auditing and other functions.

Your operation is one which comes within that jurisdiction and, therefore, we are interested in determining what you do, how you do it, all within that frame of reference. We are very happy to have you here with us today and we trust that the exchange will be mutually beneficial.

With that, General, if you would be kind enough to introduce yourself for the record, as well as the members of your staff, or whoever else is accompanying you, and also give us a brief résumé of your own career if

you will.


ACCOMPANIED BY COL. W. B. KERN, CHIEF, ARMY SECTION; COL. B. STERNBERG, EXECUTIVE OFFICER, MAAG; COL. D. W. EISENHART, CHIEF, AIR FORCE SECTION; AND COMDR. F. L. LEE, DEPUTY CHIEF, NAVY SECTION General BABCOCK. Mr. Chairman, I am Maj. Gen. C. Stanton Babcock, United States Army, and my present assignment is that of Chief



of the MAAG, France. I assumed command of MAAG, France, on the 1st of July of this year. The staff that I have with me are Col. D. W. Eisenhart, United States Air Force, Chief of the Air Force Section; Col. W. B. Kern, United States Army, Chief of the Army Section of MAAG, who also assumed his post on the 1st of July; Comdr. F. L. Lee, of the United States Navy, Acting Chief of the Navy Section of the MAAG; Col B. Sternberg, United States Army, executive officer of the MAAG.

I do not have a prepared statement.

I graduated from the Military Academy in the class of 1925 in the cavalry. I have served in various cavalry regiments until about 1929 when I went to the Cavalry School. I served there as an instructor and then I went to the Institute of Far Eastern Studies at the University of Michigan during that period. I was on the Olympic team in 1936 in Berlin. I do not know whether this is pertinent.

Mr. FASCELL. Very interesting. In what capacity?

General BABCOCK. I was on the Army horse show team. I then went to Japan as a language officer and I served there as a language officer and assistant military attaché for 4 years. When Pearl Harbor broke out I came back on the Gripsholm and served in the War Department and in the South Pacific during the war. I served in the occupation of Japan for almost 5 years as a regimental commander, as chief of General MacArthur's Planning Section, as deputy chief of staff for what was called SCAP. I was then loaned to the Department of State and served with Mr. Dulles on the framing of the Japanese peace treaty for about a year and a half. I then went to Pammunjong to argue with the Communists about the political conference which they hoped to set up after the armistice. I then served as the assistant division commander in the 7th Infantry Division in Korea. I then went back to the State Department for a year and served as deputy to Mr. Lodge in the United Nations. I then became assistant division commander of the 2d Armored Division in Germany and a few months later was promoted and assumed command of the division and then I came here. That was about the 1st of July.

Mr. FASCELL. General, you have had a long and distinguished career. General BABCOCK. A varied career, Mr. Chairman.

Mr. FASCELL. It must have been quite difficult to leave you first love and throw your hat again in the midst of semipolitical work.

General BABCOCK. I seem fated to wind up in these semipolitical jobs.

Mr. FASCELL. Obviously, you must be a top trouble shooter, judging from your career, so I would say you are in a good post. We need you.

Do you have any prepared statement at all that you would like to submit to the committee, or do any of your staff members have anything to submit?

General BABCOCK. No, Mr. Chairman, I have no prepared statement. I understand that the committee is interested in the reports submitted by the General Accounting Office on MAAG-France.

Mr. FASCELL. That and other matters presently in the operation of your shop.

General BABCOCK. We got the final report the day before yesterday and that was the first time I had seen it. We have been working on it and have been trying to prepare ourselves to try to answer any ques

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