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example, you may have need of them right at Chateauroux and bases nearby in north África.

Mr. POLAND. Do you have any estimate of the number of millions of dollars' worth of items which the new program will really take out of the depots, or should take out of them?

Mr. ROSENBERGER. No, sir.
Mr. POLAND. Could it be up in the millions ?

Mr. BLAIR. You may be able to get that data when you talk to AMFEA in Wiesbaden. I think that what Mr. Rosenberger just mentioned is significant, too, from the standpoint that it shows the respect that the military have for our recommendations. They were operating on an AMC program and the commanding general at Nouasseur was not willing to proceed against this AMC directive. However, Mr. Rosenberger went to Wiesbaden and talked to General Hefley and got immediate corrective action on a stateside-directed program. This is representative of the type of response received from the Air Force.

Mr. FASCELL. That is encouraging. The subcommittee will go into that a little further when we get up into Germany and Wiesbaden.

Unless there is objection, I think we will go ahead and include this study that they prepared on self-service centers.

Mr. BLAIR. Mr. Chairman, I would like to point out it does not represent a study.

Mr. FASCELL. All you are doing is submitting information that was submitted to you and it is unverified data. Nevertheless, I do not know that this has ever been accumulated before; and, therefore, for that purpose, without objection, we will include in the record at this point tab F consisting of information on Army and Air Force selfservice supply centers in Europe.

(The document referred to is as follows:)

ARMY AND AIR FORCE SELF-SERVICE SUPPLY CENTERS IN EUROPE

INTRODUCTION The staff of the Committee on Government Operations, House of Representatives, has indicated that some members of the Executive and Legislative Subcommittee are interested in the self-service supply centers operated by the Army and Air Force in Europe. The European Branch of the General Accounting Office, therefore, requested these services to furnish certain data on the operations of their self-service supply centers. It is emphasized that the Branch has not verified this data. We believe the information to be incomplete but have assembled it for the subcommittee's information for whatever purpose it may serve. History

The 7th Air Division, Strategic Air Command, started retail store (called self-service supply center by the Army) operations at its airbases in England in December 1953, and the United States Air Forces in Europe (USAFE) opened its first overseas retail store in 1954 at Wiesbaden Airbase in Germany. In 1955, after the establishment of several other stores, Headquarters, USAFE, issued a regulation authorizing all base and depot commanders in the theater to establish and operate retail stores with a target date of September 1, 1955. On January 1, 1956, the responsibility for the operation of retail stores at air depots in Europe was transferred from USAFE to Air Materiel Force, European Area (AMFEA).

In 1954, Headquarters, United States Army, Europe (USAREUR) authorized the establishment of a Quartermaster self-service supply center at Heidelberg, Germany. Since then two other supply centers have been opened, one at Heidelberg for Ordnance supplies and also another Quartermaster supply center in Berlin.

Purpose

Retail stores and self-service supply centers have been established in order to reduce costs and effect better supply service by :

(a) Eliminating excessive stockage of common use low-dollar value line items in using units by making supplies available which can be issued as frequently as necessary and in the quantities desired;

(6) Reducing the amount of paperwork in operating units, supply offices, and depots through the elimination of the requisitioning procedures and accounting controls in effect for high-dollar value stocks; and

(c) Substituting dollar control for quantity control of supplies.

OPERATING PROCEDURES

In general, the Air Force ertail stores and Army self-serice centers are operated along the lines of a commercial supermarket. The types of stocks carried in the stores include automotive, office, hardware, electrical, and plumbing supplies. A separate store or section is maintained independent of other supply operations. Stock is obtained in bulk through local purchase or from the depots. The stock is broken out of its original container and is segregated by type and is placed on shelves or in bins.

The customer is permitted to shop for the items desired and carts are usually provided for his use. Clerks are available to assist the customer in locating stock and to refill bins and shelves as needed. After obtaining the supplies needed, the customer is routed to a check station where the sale is recorded on a sales slip, a copy of which is given to the customer as a record of his purchase and a copy is retained for accounting control. Accounting systems and related controls

Policy guidance covering the establishment and operation of retail stores and self-service supply centers is contained in Air Force and Army regulations. Base or post commanders have the responsibility for deevloping local procedures which will implement the prescribed policies. In general, the accounting procedures and related controls developed by local commands are adapted to local conditions. The information supplied to the branch indicated that the following control features are present in some form in the local procedures.

Inventory control.-In order to reduce administrative costs, an essential feature of the operations is the elimination of detail stock record cards for each line item carried on hand in the retail stores. Overall dollar control of the total inventory is used. Under this concept, inventories, purchases, and sales have the same price. Accordingly, operating statements can be made by adding the beginning inventory and purchases and then deducting sales to arrive at an ending inventory on hand at a given date. Verification of the accuracy of this method is obtained through actual physical counts which must be made at least once a year.

Replenishment of stock.Detail stock records are not maintained which reflect actual issue data for each item of stock carried in the inventory. Accordingly, the determination of the quantity of a particular item to be carried in the inventory depends upon estimates or informal records. In general, the criteria of a good operation is the stocking of items of recurrent demand, rapid turnover, and for which a minimum stock level can be maintained, such as 30 days' supply. By using overall dollar data, the actual turnover rate for the entire inventory can be established.

Accounting records.The accountable records for retail stores operations are usually maintained by personnel not connected with the stores. General ledger control is usually exercised with accounts being provided for inventory on hand, purchases, transfers, turn-ins, and sales. Entries in these accounts are based upon the original documents supporting the transactions such as sales slips and local purchase orders. Based upon the totals in the accounts, operating reports are prepared for managerial use. The reports show such data as sales trends and inventory turnover.

Safeguards.Most of the safeguards listed below are employed in some form in the retail-store operations. Authorized signature lists and/or identification cards are generally used to insure that only authorized personnel shop in the stores. Authorizations may be limited. For example, personnel from a communications unit would not generally have any authorization to procure automotive supplies.

Sales slips are prenumbered and controls are usually instituted to account for all slips. To circumvent pilferage, the stores are usually in separate buildings or sections. In addition, access to these areas is usually limited. Certain items especially subject to pilferage may be further safeguarded by being placed in special cages where they can only be issued by a clerk on special authori. zation. Warning systems may be installed and periodic inspections are usually made by military police after closing hours to insure that the areas are secure.

LOCATIONS AND OPERATING STATISTICS The following is a breakdown of the number of stores in operation by the Air Force and Army in Europe at June 30, 1957:

Number Air Force:

of stores 12th Air Force bases in France and Germany-

16 3d Air Force bases in England ---

9 7th Air Division of Strategic Air Command in England. Air materiel depots in England, France, and Morocco.

3 Headquarters support units in France, Germany, and Italy----

5 Army-

3

Total.--

41 The information furnished by the Air Force and Army relative to the locations and operations of these retail stores, with the exception of the five operated by headquarters support units of the Air Force, which was not readily available at Headquarters, United States Air Forces in Europe, is presented in the attached exhibits 1 through 4.

EUROPEAN BRANCH SYSTEMS WORK The Air Force retail stores in Europe were originally limited to supplies locally procured. The European Branch and USAFE performed a joint study in 1956 which indicated that it would be economically feasible to expand the supplies in these stores to include low-cost items centrally procured. In July 1957, Air Force regulations were amended to provide for stockage of centrally procured supplies in the retail stores at the option of local commanders.

EXHIBIT 1.United States Air Forces in Europe-Results of operations of retail

stores for the 6-month period ended Dec. 31, 1956

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1 Computations were made by European Branch/GAO and were based upon the data in other columns furnished by USAFE. 2 Sales from inception Oct. 1, 1956, to Dec. 31, 1956. 3 Average.

EXHIBIT 2.-Strategic Air Command, 7th Air Division-Results of operations of

retail stores for the year ended June 30, 1957

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1 The 7th Air Division estimated the above annual staffing costs assuming that approximately 2.7 staff sergeants were assigned to each store.

2 Computations were made by European Branch/GAO and were based upon the data in other columns furnished by the 7th Air Division.

3 Average.

EXHIBIT 3.-Air Materiel Force, European area, U. 8. Air Force-Results of

operations of retail stores for the 6 months ended June 30, 1957

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1 Computations were made by European Branch/GAO and were based upon the data in other column furnished by AMFEA. 2 AMFEX stated that this information was not available at its headquarters.

3 AMFEA stated that the large inventory is, to a considerable extent, the result of a transfer to the store in February 1957 of building materials and construction equipment from Atlas Constructors, a construc. tion contractor at the depot.

4 Average.

EXHIBIT 4.-U. S. Army, Europe-Results of operations of self-service centers for

the year ended June 30, 1957

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1. Computations were made by European Branch/GAO and were based upon the data in other columns either furnished by the Army or projected from data furnished by the Army.

The Army only furnished 1 month's operating data for the Ordnance Supply Center in Heidelberg, and only 6 months' operating data for the Quartermaster Supply Center in Berlin. The European/GAO projected this data for 1 year so as to make it comparable to the data supplied for the Quartermaster Supply Center in Heidelberg. 3 Average. Mr. FASCELL. Mrs. Harden, do you have any questions? Mrs. HARDEN. No questions. Mr. FASCELL. Mr. Michel ? Mr. MICHEL. Just one question.

Mr. Blair, when you first began your testimony, we were on the subject of the number of people that you had in the office here in the European Branch. I believe you said 52 on board with an authorization of 64.

Mr. BLAIR. That is right.

Mr. MICHEL. You felt you had the number you needed to do a good job, or at least the recoveries made thus far justified your existence.

I think the chairman inferred, as I certainly would, too, that the value of your office cannot be solely determined by the amount of recoveries you make. If ever there is an area or an agency of Govern

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