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Mr. TANSEY. I do not think it has reached a stage where it can be utilized as yet. I know it has not in bearings.
We are certainly planning on using it.
Mr. HOLIFIELD. Can we digress from the purpose of our hearing and ask you from a practical standpoint what do you think of the desirability of having a uniform Federal catalog with the standard nomenclature and standard specifications back of it?
Mr. Tansey. I think it would be the greatest blessing this country could ever receive.
Mr. HOLIFIELD. Do you think it would enable procurement officers to eliminate duplication in their procurement ?
Mr. TANSEY. Very definitely, because the nomenclature of a part has to be considered in a number of lights. For instance, we ran across one situation the other day where a bearing was involved having the number of the manufacturer, in this case Allis-Chalmers, was not at all identified with the Federal number. It just so happened that we were making an example of that transaction where we packaged the material for the contractor who furnishes the material, and we asked the contractor as to whether they wanted to have the Federal stock number on there. They said, "No." All they wanted was just to have the Allis-Chalmers number on it. So we conducted a little research, and in 5 minutes came up with a Federal stock number. In this case it was a Navy stock number.
We know that in many instances there are as many as 68 different stock numbers on a bearing.
Mr. BURNSIDE. We found 208 different bearings that were the same identical bearing, chemically and metallurgically.
Mr. HOLIFIELD. This is very interesting, because this subcommittee has been very much interested in the cataloging program.
Relating this difference in nomenclature to your own service as an aircraft parts firm selling a service that you would render, would it be necessary to take those 68 bearing numbers and put them together regardless of what order came in for any one of those 68 different identifications, so that you would know that you could supply it?
Mr. TANSEY. That is correct.
Mr. HOLIFIELD. Either under the identification number of the requisition slip or a number that would give them the identical product?
Mr. TANSEY. That is correct. We have automatic cross-reference.
We will talk about another item, self-locking nuts. There are AN standards on that. There are naval aircraft factory standards. There are manufacturers' nomenclatures.
When the nut is returned to us for redistribution we identify it down to the basic number and then we have catalogs. For instance, Boeing calls with the Boeing standard number. We know that we have Boeing's catalogs. And if they call for that part number they still get the same standard, but delivered under the stock number desired.
The same thing applies to the services.
Mr. BURNSIDE. Why would the industry want to add to this confusion!
Mr. TANSEY. Well, Mr. Burnside, have you ever gone out to buy bearing for your automobile?
Mr. BURNSIDE. Yes.
Mr. BURNSIDE. You pay a different price for a Cadillac bearing, or for a Chevrolet bearing or for a Pontiac bearing, and it is the same bearing. They get more money out of you. That is the reason.
Mr. TANSEY. That is the replacement business. It is exactly that. I do not feel that the Government material should be handled on a replacement basis. If I were selling you a bearing for your automobile you would pay me the full list price. If I could add to that, and it was legitimate to add to it, you would pay that. That same bearing would, probably, go back to the Government for $1 where you pay $6 for it, but that is common business practice.
Mr. BURNSIDE. The Government knowing the difference should take advantage of the knowledge.
Mr. TANSEY. I feel so.
Mr. HOLIFIELD. We could spend a lot of time on this subject, because it is one that has been dear to the hearts of this subcommittee. There is a bill, incidentally, lying on the President's desk right now, I understand, which will cripple the uniform Federal catalog. It has been put through by certain people interested in not having a uniform Federal catalog, but having a military catalog and a civilian catalog.
Mr. TANSEY. I think that would be a shame, Mr. Chairman, if that is done, when you see the amount of material and the amount of dollars, the amount of labor hours, the amount of time that could be saved by the proper utilization of materials through proper channels. I would love to save that in just my taxes alone.
Mr. BURNSIDE. It is unfortunate that we have another committee that had a selfish interest in this bill-very unfortunate for the United States Government and the taxpayers.
Mr. TANSEY. Are they being reelected ?
is that the public does not know. That is for the record. You asked for the record.
Mr. HOLIFIELD. Would you like to summarize your statement, Mr. Tansey ?
Mr. TANSEY. I feel that the program of redistribution should be initiated immediately through qualified agents and administered properly through the General Services Administration or anybody they may delegate; to have a board through such delegation of men who are qualified to pass upon the qualifications of the prospective distributors, and to have full knowledge as a board of the parts, that is, the aircraft parts that are in idle and excess inventories today.
Mr. HOLIFIELD. A board was suggested, I believe, by Mr. Carey yesterday before this subcommittee,
composed of representatives from the defense departments and the General Services Administration and, possibly, some public-interest members with merchandising background.
What would you think of that type of a board ?
Mr. HOLIFIELD. Of course, this subcommittee, Mr. Tansey, is not in a position of making a decision on these matters. We can only submit such evidence as is brought before it to the people who are responsible for this program with our earnest recommendation that they do the thing that is for the best interest of the Government and do it as speedily as possible. The responsibility of the executive department is involved in this. And, certainly, if something can be evolved that is of benefit to the Government, why this subcommittee would like to see it evolved and quickly before we get into the position that we were in after the last demobilization period when billions of dollars' worth of material were thrown on the economy with no well-thought-out plan to use it or to dispose of it to the best interests of the taxpayer.
Mr. TANSEY. I think that the chairman will remember this. You mentioned the fact that I appeared before the Rizley subcommittee. I will have to give you a little bit of background on that.
In about 1943 when Colonel Peterka was the administrator for the ASU program of redistribution through the Metals Reserve and Murray Cook we were appointed as one of the original agents. I pointed out before that we made recoveries to the Government of 70 percent of the current market price. That evolved itself into the Reconstruction Finance Corporation program of disposal, the War Assets Administration. The thing got out of hand to the point where, as has been said, it left you in the position where the left hand did not know what the right hand was doing.
We had contracts for the orderly disposal of aircraft materials. At the same time, as you will recall, Mr. Chairman, a contract was made with the Palmer Nut & Bolt Co. who sprung out of nowhere, opened up a little office and purchased aircraft quality materials, that is, steel, aluminum, brass. I do not know whether there was any copper involved or not.
Mr. HOLIFIELD. There was.
Mr. Tansey. They did that at something like $22.50 a long ton, with a 10-percent allowance for tare. If you will recall, I had to testify before the Rizley subcommittee that materials that the Palmer Nut & Bolt Co. paid $360 or $375 for something like 30 tons, we ultimately bought for $75,000 and sold for $103,000. There was a prime example of improper handling of aircraft materials.
Mr. HOLIFIELD. The testimony showed before that subcommittee of which I was the ranking minority member at that time that the Palmer Nut & Bolt Co. sold for as high as $8,000 a ton nuts and bolts which they bought for $22.50 a ton.
Nr. TANSEY. That is just the thing that a program such as this properly administered will avoid. I feel that the Government would have proper channels of disposal established if they are firm in maintaining such channels, and that the material would get proper handling, the material would be disposed of in an orderly manner, and the largest return to the Government would be obtained. It could also act as a guinea pig for any further disposal programs outside of aircraft if necessary.
Mr. HOLIFIELD. Of course, the interest of this subcommittee goes far beyond aircraft.
Mr. TANSEY. That is why I stated that.
Mr. HOLIFIELD. Our purpose at this time in having these brief hearings is in the interest of national defense to see that excess materials are redistributed efficiently right at this time in that limited field. The whole problem of surplus disposal must be considered by the Congress and by the responsible agency, the General Services Administration, and well defined plans evolved and legislative aids, if necessary, be passed in my opinion before we are inundated again with tremendous supplies of surplus. This is only a small part of the program.
Mr. TANSEY. I would like to say this, I do not think there are any surpluses today. There might be excesses. There might be oversupplies, but there are no surpluses. Surpluses as such should be certainly not sponsored, because we know definitely the part that is in so-called excess supply today is not surplus, because it is needed elsewhere. It may not be needed there today, but it certainly could be needed there tomorrow, because neither the distributor nor the airframe manufacturer can outguess the Government and the aircraft engineer. These changes are coming about every day where a part that is in short supply today might become in long supply tomorrow and in short supply the following day.
There is no rule of thumb where you say that it is surplus, throw it away. It does not work that way.
Mr. HOLIFIELD. We thank you, Mr. Tansey, for your testimony.
Mr. HOLIFIELD. The Chair has several telegrams from different people throughout the United States who are interested in this program, some of them indicating their confidence in some of the witnesses who have appeared, and some indicating that they cannot be here, but subscribing to certain policies. These telegrams will be made a part of our files and available for placing in the record if they are pertinent.
Are there any other concerns interested in this matter in the room who would like to testify? We are going to try to wind up our hearings tomorrow noon. At 10:30 we will have Mr. Larson of the General Services Administration and at 10 o'clock we will ask Admiral Ramsey to be here, who represents the Aircraft Industries Association of America. And then we will try to place Mr. Dyess and Mr. Wynant and possibly a representative of the Munitions Board on the program in the morning
That is a pretty heavy schedule of witnesses for the morning.
(Whereupon, at 12 noon the subcommittee recessed, to reconvene Wednesday, June 25, 1952, at 10 a. m.)
UTILIZATION AND REDISTRIBUTION OF CRITICAL
MATERIALS AND AIRCRAFT PARTS
WEDNESDAY, JUNE 25, 1952
HOUSE OF REPRESENTATIVES,
REORGANIZATION OF THE COMMITTEE ON
Washington, D. C. The subcommittee met at 10 o'clock, Hon. Chet Holifield (chairman) presiding.
Mr. HOLIFIELD. The subcommittee will please be in order.
The first witness this morning is Admiral Dewitt C. Ramsey, Aircraft Industries Association of America representative.
The subcommittee will be glad to hear you, Admiral.
STATEMENT OF ADMIRAL DEWITT C. RAMSEY, UNITED STATES
NAVY (RETIRED), REPRESENTING AIRCRAFT INDUSTRIES ASSOCIATION OF AMERICA
Admiral RAMSEY. Mr. Chairman and members of the committee: My name is Dewitt C. Ramsey. I am president of the Aircraft Industries Association, representing most of the major manufacturers of airframes, aircraft engines and components.
I am pleased to respond to your invitation to appear here this morning and tell you how we in the aircraft manufacturing industry are participating in the program of redistribution of idle and excess aircraft materials. I would like to make clear, Mr. Chairman, that we are not asking Congress for any assistance, financial or otherwise. I am merely reporting on what we in the aircraft manufacturing industry are doing on the subject that is under exploratory discussion here today.
In all manufacturing companies, regardless of the end product, the inventories will be excessive on some items and short on others during any manufacturing program. It is impossible to maintain a completely balanced inventory. There are many reasons for the excesses. For example, one of your suppliers may be shut down due to a strike, a flood, or for some other reasons. Let us say it is an aluminum forging plant that is shut down. You then buy raw stock and try to "hog out” or machine the part needed to maintain your production. As soon as forgings are again available you have some raw stock that may well be excess to your normal needs.
* Name changed to Committee on Government Operations, July 4, 1952.