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2. Excess stock.–Our review at Munich and Stuttgart revealed that these locations have not reported all their excess stock to SACOM. Many items of expendable and nonexpendable property have not been declared excess. At one location the actual issues, as shown on the stock record cards, were much less than the issues reported for the preceding 180 days on the repairs and utilities excess property reports that were sent to SACOM. Consequently, erroneous control levels were established with a resultant understatement of reported excesses.

We noted also that excess lists of DM-procured items were distributed only to certain engineer locations in Germany, and lists of dollar procured items were distributed to engineer units in France and Germany. Change No. 2, dated September 6, 1955, to AR 755–10 permits the transfer of foreign excess personal property to other military departments within the Department of Defense (DOD) without reimbursement.

3. Utilization of warehouse space. We found that property being retained in protective custody needed reappraisal from the standpoint of whether a real future need for such property might exist and that available warehouse space was not being fully utilized. Recommendations

We recommended that greater care and judgment be exercised in the procurement of repairs and utilities supplies; that closer supervision be given to the determination of requirements prior to initiating requisitions for excess items; that all stocks excess to needs be reported for redistribution in accordance with existing regulations; that wider distribution be made of listings of excess property to insure a greater utilization of such items by other military activities having requirements; and that a current review be made of the items in protective custody status to determine that they may reasonably be expected to be used and to establish proper authorization for the maintenance of the large quantities of items in this category. Summary of action taken

In a letter dated March 19, 1957, Maj. Gen. A. T. McNamara, Assistant Chief of Staff for Logistics, Headquarters, USAREUR, concurred generally with our findings and outlined the measures adopted to correct the deficiencies noted and to develop effective administration for the repairs and utilities supply program. He stated that the USAREUR engineer was being directed to conduct command inspections at all repairs and utilities supply locations and to monitor requisitions; that the matter of overstocking of “free” excess items was being corrected and proper retention levels established and emphasized ; that all area commanders had been instructed to insure that all excesses are reported for redistribution; and, regarding protective custody property, that expendable items in this category were being redistributed to using activities and this type property would be more closely monitored in the future. The Comptroller, USAREUR, stated that listings of excess property would be distributed automatically to all Army activities within Germany and that consideration was being given to distributing the lists to Air Force activities.

These matters were reported to the Assistant Secretary of the Army (Logistics) in a letter dated September 12, 1957.

DUPLICATION OF FINANCE FACILITIES Background

Shortly after the European Branch was established, a review was undertaken of the activities of the Finance Office, United States Army (FOUSA), Paris, France. Findings and conclusions

Our survey disclosed that in June 1952 the United States Air Force established a finance office in Paris to assume disbursing services for Air Force activities in the Paris area ; that these services had formerly been provided by the Army finance office; that costs of operating the newly created office totaled $28,600 for a 4-month period during which a total of 1,005 vouchers were paid ; that during the same 4-month period the Army finance office paid 15,234 vouchers at a cost of $76,300; and that the Army finance office could reassume the disbursing functions provided by the Air Force activity without additional cost.

We concluded that the duplication of disbursing facilities did not appear to serve the best interests of the United States Government and that additional costs of about $85,000 annually were being incurred as a result of the duplication. Recommendations

In our letter to the Comptroller, United States Air Forces, Europe, we questioned the advisability of continuing the operation of the Air Force finance office. Summary of action taken

Headquarters, United States Air Forces in Europe, ordered the deactivation of the Air Force finance office in Paris effective February 28, 1953. Disbursing activities of the office reverted to the Army finance office. Annual savings were estimated at $85,000.

The Comptroller General discussed our survey findings before the House Committee on Appropriations considering fiscal year 1954 budgets.

PROCUREMENT OF AUTOMOTIVE HEATERS Background

This investigation was made to determine the circumstances surrounding the requisitioning, by Headquarters, United States Forces in Austria (USFA Command), from supply sources in the United States, of 4,398 automotive-personnel heaters costing approximately $143 million. The heater units were requisitioned for installation in automotive equipment of the USFA Command; however, of the 1,845 received by the command, only 1 had been installed.

We submitted a report on our findings to the General Accounting Office, Washington, on December 31, 1953. Following additional investigation of certain phases of the subject at the Ordnance Tank Automotive Center, Detroit, Mich., and the New Orleans Port of Embarkation, New Orleans, La., the Washington office transmitted a report to the Secretary of the Army on August 23, 1954. Copies of the report were also sent to the standing congressional Committees on Appropriations, Government Operations, and Armed Services. Findings and conclusions

Our investigation disclosed that in August 1952, the USFA Command requisitioned 4,398 automotive-personnel heater kits from United States supply sources without knowing the proper description or the actual cost of the items.

Later, upon learning of the unexpectedly great cost involved (about $143 million in acquisition costs), the USFA Command immediately canceled the order but not before 1,969 of the heaters had been shipped to ports of embarkation from which 1,845 had been placed aboard ship and routed to Europe, and contracts had been let for the remaining 2,429. The USFA Command returned 1,740 of the heaters to the United States and, according to information at the time of the report, installed only 1 heater and placed the remaining 104 in stock. The 2,429 heaters which were contracted for were used to fill shortages in Ordnance stocks. The cost of shipping and handling the heaters in the United States and to and from Europe approximated $50,000.

Officials of the USFA Command, though requested to verify the order, did not make any effort to ascertain the cost. The Office of the Chief of Ordnance gave instructions regarding the authority needed to acquire the heaters as their use was not clearly sanctioned within the USFA Command, but made no mention of cost. The New Orleans Port of Embarkation processed the requisitions without question. The Detroit Ordnance Tank Automotive Center questioned the quantity of heaters requisitioned but not their cost.

It appeared that ordinary business practice of checking and considering the description and cost of the items by the officials initiating and processing the requisition would have saved the Government $50,000 in shipping and handling costs. Recommendations

Our report of investigation was in the nature of a disclosure of wasteful practices by military officials in failing to exercise prudent judgment in the performance of supply responsibilities. Summary of action taken

General Accounting Office representatives testified regarding this investigation before the Subcommittee on Independent Offices, Committee on Appropriations, House of Representatives, on January 13, 1954.

CONTRACT PRICE REDUCTIONS Background

As part of our efforts to review the large procurement actions of the military services in Europe, we undertook in the early part of April 1955 a review of the Signal Corps procurement actions accomplished for the fiscal year 1954. This review was completed in June 1955. Findings and conclusions

In our review we found that fiscal year 1953 contract DA-91-557-EUC-254 and fiscal year 1954 contract DA-91-557-FUC-444 had been awarded to the British Ministry of Supply (MOS) without competition. MOS was considered to be the sole source for the material required despite the fact that most of the material not available in British War Office stocks had to be purchased by MOS from new production. The contracting officer did not obtain cost data or other evidence to support the price proposed by MOS, nor did he compare prices between contracts EUC-254 and EUC-444. Many identical items were purchased under both contracts. Our examination disclosed many price variations as between the two contracts. We also noted that the schedule of items in contract EUC_444 listed many items two or more times at different prices. Recommendations

We made no formal recommendation but in discussing our findings with the contracting officer he evidenced interest in correcting obvious errors and discussing with MOS prices which appeared to be unreasonable. Action taken by agency

We made our comparisons available to the contracting officer who then forwarded the information to the MOS for explanation and immediate action. Repricing of items in contract EUC-444 resulted in a contract price reduction of about $41,720.

EXCESS COSTS ON SHIPMENTS TO OVERSEAS DESTINATIONS

Background

A review of the operation of three French ports by the United States Army, Europe (USAREUR), disclosed that these ports were being utilized to a very limited degree. A subsequent review of port facilities operations, Bremerhaven, Germany, USAREUR, included a study of transportation costs for moving cargo unloaded at Bremerhaven to French destinations. Findings and conclusions

We found that transshipment of cargo destined for points in France from the port at Bremerhaven, Germany, resulted in costs in excess of that which would have been incurred had the shipments been routed through French ports.

USAREUR technical services and agencies, which requisition supplies, materials, and equipment from stateside, code requisitions to show the overseas ports of discharge and the ultimate overseas destinations, and set out on the requisitions the routing information for the ports of discharge. This routing information, however, is changed sometimes by the stateside shipping agent.

A review of the transportation routings on cargo received at the port during the period January 1 to May 24, 1955, disclosed that approximately 20,000 tons of cargo received during this period were transshipped to destinations in France.

A cost comparison study of a partial listing of the shipments was made of the line-haul costs via Bremerhaven with similar costs via Franch (ComZ) ports. These costs were developed on the basis of an average of 10 tons per car. This comparison of costs showed that it was more expensive to ship materials and supplies into France via Bremerhaven than by way of French ports on shipments destined for any point farther than 110 miles west of Palzen, Germany, the most generally used border crossing by rail. Shipments of 8,147 tons made for the various technical services were in this category and resulted in a gross excess line-haul cost (actual savings would be reduced by costs of docking ships at French ports) of over $124.000.

The following is a specific example of excessive line-haul costs in such transshipments. Three shipments totaling 2,313 tons were shipped by rail from Bremerhaven to Captieux Ordnance Depot, a distance of 1,019 miles, at a line-haul cost of approximateley $90,400. The same shipments, if transshipped from Bassens (Bordeaux, France), a distance of 60 miles, would have cost approxi. mately $5,400, a savings of $85,000 in rail transportation. Recommendations

In our letter to the Commander in Chief, USAREUR, dated May 22, 1956, we stated that excessive line-haul costs were incurred in some shipments from the BPE; that French ports were being utilized to only a limited extent; and that the routing procedures followed by the USAREUR technical services and agencies responsible for initiating requisitions for military supplies from stateside depots and designating overseas ports of discharge should be reexamined. Summary of action taken

The Commander in Chief, USAREUR, on June 28, 1956, advised that action had been taken to direct stateside shipments of all general military supplies destined for France through the French (ComZ) ports in order to eliminate the excessive costs of shipments.

A letter report was sent to the Department of the Army on November 30, 1956, and copies of the report were sent to the Secretary of Defense and to the Director, Bureau of the Budget.

ELIMINATION OF ROYALTY CHARGES Background of review

In view of the large sums being disbursed by the military departments for the offshore procurement of required materiel, much of the effort of the European branch was directed toward the examination of these offshore contracts. The instant accomplishment was as a result of our findings disclosed in the course of an examination of offshore contracts awarded by the United States Air Force in Europe during the fiscal year 1953. Findings and conclusions

Our examination disclosed that certain contracts awarded by USAFE included, in their prices, charges for royalty payments made by European producers to United States patent owners. We pointed out that contracting personnel had made little attempt to eliminate royalty charges despite the fact that Air Force policy requires an investigation and attempt to eliminate such charges where appropriate. As an example, we cited contract AF 61 (514)-362. Recommendation

We recommended that all contracts be reviewed and that charges for royalty payments be researched and eliminated from contract prices where warranted. Action taken by agency

We were advised by the Procurement and Production Directorate, USAFE, that a review of all contracts would be undertaken in accordance with our recommendation. Subsequently, in a letter dated August 18, 1955, to the European branch, USAFE stated in part, “In accordance with your recommendation relative to contract AF 61 (514)-362, aggressive action was initiated by this headquarters with gratifying results. A recovery of $51,964 was effected by supplemental agreement No. 8 dated April 14, 1955, reflecting a consequent reduction in contract price."

Chronological index to reports issued 1 from inception of European branch (August 1952) through June 30, 1955 (total investigative reports

June 3, 1955 June 13, 1955

Feb. 2, 1954 June 30, 1955
Apr. 10, 1953 June 1, 1953
Nov. 6, 1952 July 23, 1953
Oct. --, 1953 Nov. 2, 1953
Sept. 9, 1953 Apr. 21, 1954
Nov. 8, 1953 May 6, 1954
July 14, 1954 Feb. 25, 1955
Sept. 13, 1954

Do.

Mar. 3, 1953 Jan. 19, 1954

do.

Contributed

Feb. 25, 1953

Mar. 23, 1953

ТАВ

submitted, 187)

AUSTRIA

Date

Assignment

Description

Field station

Funds

Initiated

Reported

DEFENSE
Army:

I-18277

Rome.

Air Force

Aug. 24, 1953 Oct. 23, 1953

1-18274-13

Claims of Heinrich Sedlatschek under contract DAS 91-801

USFA-107.
Basic allowances for quarters paid while military personnel occupy.

ing Government quarters, summary report on personnel of USFA.
Substitution of class B agent for disbursing officer, Vienna Com.

mand, USFA.

Paris.

Army.

Nov. 1953

May 21, 1954

I-18926

Rome

.do.

Nov. 27, 1954

Apr. 29, 1955

FRANCE

Defense joint commands:

I-19131-1.
I-18862

Architect-engineer contract DA-91-605-EVO-(100).
Operation of Government guaranteed rental projects in France,

Army and Air Force.
Architect-engineer contract DA-91-605-EUC-(101).

Paris.

.do.

Army.
Army and Air Force.

Feb. 2, 1954
Mar. 29, 1955

do.

I-19131-2
Army:

I-18151
1-18498 (I-17997).
1-18358
I-18608 (I-17020-A)
I-18388
1-17020-A
I-17020-A

I-17020-A
Air Force:

I-18093
I-17898-3.

Survey of motor-pool operations, Paris.
Examination, 61st General Dispensary.
Overseas shipment of privately-owned automobiles.
Irregularities in civilian payrolls, Paris Finance Office, U. S. Army.
Investigation of claims adjudicated by Army claims team, Paris.
Shortage, accounts of Maj. P. D. Scribner, Foitiers.
Shortage, accounts of Maj. P. D. Scribner, La Rochelle.
Shortage, accounts of Maj. P. D. Scribner, La Rochelle
Duplication of disbursing facilities, Paris.
Jettisonable aircraft fuel tanks, Chateauroux AD.

do.
do.
do
do
do.
do.
do.
do.

Army.
Army and various
Army..
Army and Air Force.
Army.

do.
do.
do.
do.

Do.
July 26, 1954

do.
do.

Army and Air Force
Air Force..

Oct. 3, 1952
Dec. 4, 1952

State Department official housing, Paris.

CIVILIAN
State:

I-18039
International Cooperation Ad-
ministration:

1-18438 (I-18461)

Payments for home leave and separation travel..

do

International Cooper- Dec., 1953

ation Administration (FOA)

Jan. 19, 1954 Feb. 23, 1955

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