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General METZGER. That is correct, sir. Corporation X came into our thinking, or the APRA thinking, because of the historical data which was available to us.

Mr. HOLIFIELD. The Murray Cook operation ?

General METZGER. The Murray Cook operation. Murray Cook was corporation X in the thinking behind the APRA plan. But at this point the Air Force proposal or recommendation does not include an individual corporation or a separate corporation to perform the administrative functions which we envision as GSA. Mr. HOLIFIELD. As a Government responsibility? General METZGER. Yes, as a Government responsibility.

Mr. HOLIFIELD. Now, give me two reasons why you think that change should be made.

General METZGER. I believe that it would be less costly. One layer of expense will be removed.

Mr. BURNSIDE. What layer would you be referring to there, General ?

General METZGER. Corporation X must, of necessity, be supported in some manner.

Mr. HOLIFIELD. It is a profit-making enterprise.

General METZGER. I do not envision any corporation operating except for profit, even though it may be a small profit, if it is a private corporation. So, we do eliminate that by eliminating corporation X. And, with the limited administrative responsibilities and costs incidental thereto which we contemplate for GSA, we feel that that agency is fully capable of picking it up and absorbing some of it, perhaps, in overhead or personnel already available. That was our principal reason for eliminating corporation X.

Mr. McVey. Is it your feeling that GSA could absorb all of this cost with the personnel it has?

General METZGER. I would not say that; no, sir. I am not familiar with the personnel or the organization of GSA as assigned to this particular surplus-property problem. We have only informally discussed this with GSA, purely in an exploratory manner, and the details we expected to discuss at such time as we felt that we were getting someplace with it, or that it had an acceptance broad enough to warrant going into it more thoroughly.

Mr. MCVEY. That is a problem I raised awhile ago, if I may have a moment, Mr. Chairman.

Mr. HOLIFIELD. Surely:

Mr. McVey. It is a problem I raised a moment ago because I think a good deal of time has been spent on this report, and I am impressed with the quality of it. But it has to be implemented in some way; and, if additional money is required for GSA, I would be glad to know if they are going to need additional appropriations.

General METZGER. Surely.

Mr. McVey. Because it cannot be implemented unless there are personnel to carry it out or additional funds available.

General METZGER. That is right.

Mr. HOLIFIELD. If there is an additional function to perform, there must be personnel either in GSA or somewhere to do it, and that, of course, must be paid.

Have you consulted the Munitions Board in your drafting of this plan?

General METZGER. Not in drafting this plan; no, sir.
Mr. HOLIFIELD. They do have some responsibility?

General METZGER. They certainly do. As I understand, the directive of March 21, 1951, I believe it was, by the Secretary of Defense places certain responsibility in the Munitions Board for conservation and surplus property.

Mr. HOLIFIELD. Would you say, then, that the Air Force plan is tentative; that it has not been cleared with the Secretary of Defense, or with the Munitions Board, or with GSA

General METZGER. That is correct, or with the other services.

Mr. HOLIFIELD. Or with the other services. We just want to keep the record straight as to this.

Mr. BURNSIDE. I have a question, General. I have been interested in the assignments of the personnel in the Office of the Secretary. For the record, so that we might have it available, what is your background in procurement?

General METZGER. I am not a procurement officer, sir. My background is World War II service with the Aircraft Scheduling Unit.

Mr. BURNSIDE. Scheduling Unit?

General METZGER. Aircraft Scheduling Unit, which has the responsibility for providing all resources support to the aircraft program.

Mr. BURNSIDE. You were

General METZGER. I was in that organization. I was Chief of Requirements. At that time, it was my responsibility to develop and present to the civilian agencies in Washington, and to the Air staff, raw-material requirements, component parts, and so forth.

Mr. BURNSIDE. You were interested in the procurement of raw materials?

General METZGER. No, sir; not in procurement.

Mr. BURNSIDE. You were interested in the types of raw materials that were needed ?

General METZGER. That is right, sir, to establish the impact or forecast the impact of the materials requirements needed for the aircraft program, because it was a joint Army-Navy-Air Force program at that time, and still is.

Mr. BURNSIDE. You have been in the service? You have not been out of service?

General METZGER. Yes, sir. I was out of the service, and recalled to active duty in February of 1951.

Mr. BURNSIDE. You were called back in 1951 ?
General METZGER. Yes, sir.
Mr. BURNSIDE. What type of work did you do in between!
General METZGER. I returned to my own business in construction.
Mr. BURNSIDE. What type of business is that?
General METZGER. Generally, the construction business.
Mr. BURNSIDE. What type of construction?

General METZGER. Buildings. There are a number of companies that I am interested in.

Mr. BURNSIDE. Building homes ?

General METZGER. No; mostly commercial buildings and apartments, hotels, and the like. I am also interested in the general-agency business.

Mr. BURNSIDE. Your training, then, in the armed services was particularly in engineering?

General METZGER. I am not an engineer; no. It was particularly in production control, the flow of materials in time and quantity needed to support a procurement objective.

Mr. BURNSIDE. And that has been your line of work all the way through in the service!

General METZGER. Yes, that and financial. Financial also enters my present responsibility as Chief of the Production Resources Division; facilities, tools, expansion, and so forth.

Mr. BURNSIDE. Thank you.

Mr. HOLIFIELD. General, what do you understand the attitude of BuAer is toward this Air Force plan?

General METZGER. I really am not up to date on that, Mr. Chairman.

Mr. HOLIFIELD. We have their representatives here, and we will get some testimony from them.

General METZGER. BuAer has been very cooperative in studying this problem with us, and I most certainly feel that their views will be presented after considerable study and with complete frankness.

Mr. HOLIFIELD. I would like to say—and I believe I speak the will of the subcommittee on this—that without taking any position, either myself or the subcommittee, on the plan which you presented, we are glad that some thinking is being done along this line, and we hope that there will be some coordination of thinking and eventually some type of plan worked out to do a little better job than has been done.

We thank you for taking the time to come down from Dayton to make your testimony available to the subcommittee.

General METZGER. Thank you. It has been a pleasure.

Mr. HOLIFIELD. You may be excused, and we will ask Admiral Honaker, of the Bureau of Supplies and Accounts, if you will please take the chair, and your staff may also accompany you, if you wish. .

STATEMENT OF REAR ADM. W. W. HONAKER, DEPUTY CHIEF OF

THE BUREAU OF SUPPLIES AND ACCOUNTS, DEPARTMENT OF THE NAVY; ACCOMPANIED BY COMMANDER H. J. F. FOLEY, JR., SUPPLY CORPS, UNITED STATES NAVY, BUREAU OF AERONAUTICS; COMMANDER A. H. BARNETT, JR., SUPPLY CORPS, UNITED STATES NAVY, BUREAU OF SUPPLIES AND ACCOUNTS; AND COMMANDER G. C. HEFFNER, OFFICE OF NAVAL MATERIAL, UNITED STATES NAVY

Admiral HONAKER. Mr. Chairman, this revised plan is of interest in the Navy to the Bureau of Aeronautics, the Office of Naval Material, and the Bureau of Supplies and Accounts.

I have representatives of each of those offices with me, and with your permission I should like to ask BuAer to lead off.

Commander Foley ?

Mr. HOLIFIELD. Čommander Foley, will you speak, then, on this plan?

Have you had a chance to look at the present plan as presented to our subcommittee?

Commander FOLEY. Mr. Chairman, as General Metzger just stated, we had previously submitted to the Bureau of Aeronautics, by APRA, the plan which incorporated corporation X.

Mr. HOLIFIELD. Yes.

Commander FOLEY. This morning was the first opportunity that we had had to examine this new plan, or the Air Force plan, as a general proposal.

We would like to have an opportunity to study it further. We have had the APRA plan under considerable study in the Bureau of Aeronautics, and, as I say, we were not aware of the existence of this new plan.

Now, I think both plans, Mr. Chairman, have the same broad intent, and we certainly concur with the intent of the program, which is to provide a means of returning the material of comparative usability to productive use in the aircraft program. We have, as a result of the APRA plan, sent out questionnaires to our representatives, the BuAer representative and the inspector of naval material in those plants which do not have Bureau of Aeronautics representatives, to determine just how much of this Government-owned excess material is accumulated at the various plants. We felt that these people were in the best position to advise us, inasmuch as they are on the spot and they are charged with the disposal of that material.

Mr. HOLIFIELD. Have you received any replies, and can you give us any estimate of the amount of Government-owned property that is in inventory?

Commander FOLEY. We have received 28 replies, Mr. Chairman, to date. All of them are not in. I think that there are five or six still not received. Only 1 of the 28, however, reports any accumulation of Government-owned material. The other 27 report either none or very small quantities. Unfortunately, we do not have the dollar value of what they do have on hand.

Mr. HOLIFIELD. That would seem to indicate that there is no problem at all of the redistribution of excess property, if that be true, unless the amount of contractor-owned inventory is so great that this does not give a true picture of excess property by confining it just to Government-owned.

Commander FOLEY. Sir, the contractor-owned inventory, of course, would be outside of the service representative's jurisdiction. We presume if he did have any kind of problem, Mr. Chairman, he would certainly tell us about it, if he considered it an accumulation.

Mr. HOLIFIELD. Of course, if the contractor is given the right to sell that property at a very low price, he gets rid of the property all right. It is no problem to him. But at the same time, the Government does not recover as much as could be recovered through the proper disposal of that contractor-owned material.

Commander FOLEY. Yes, sir.

Mr. Chairman, we did ask for comments, in addition to the questionnaire, and quite a few of the service representatives did comment to the effect that the majority of the material which they do receive as Government-owned excesses as a result of terminations of contracts or cost-plus-fixed-fee contracts or Government-furnished material which becomes excess at that location, was either redistributed to the services or else was returned to the contractor as usable

material in other production contracts. They did state that in one case, it was 90 percent of all the material.

Mr. HOLIFIELD. You are confining your remarks to Governmentowned material?

Commander FOLEY. Yes, sir, I am speaking only of Governmentowned.

Mr. HOLIFIELD. Could you give us any kind of estimate as to what percentage of Government contracts deal with Government-owned material and what percentage deal with contractor-owned ?

Commander FOLEY. No, sir, I do not believe that I am in a position to give you that figure.

Mr. HOLIFIELD. Would you say that the large majority of the material which goes into the planes is contractor-owned ?

Commander FOLEY. Yes, sir.

Mr. HOLIFIELD. Then in this plan, even if it is successful, unless it does include the redistribution of contractor-owned materials, it would not cover the subject, would it?

Commander FOLEY. Yes, sir. I am not qualified to speak as to the problem on contractor-owned inventories. I am sure that the aircraft industry's association can state it. But apparently we have very little problem of our own within the Navy, sir. If the problem is contractorowned inventories that are the excessive amounts, then, of course, this plan does not appear to cover it unless the individual companies wish to take advantage of GSA, and I am a little confused at this point, Mr. Chairman, because the APRA plan provided that the contractor could make use of this corporation X as a clearinghouse for his own inventories, the contractor-owned inventories.

Mr. HOLIFIELD. In other words, he would turn it in at the Government cost and get credit for it on his own contract, and then it would be the responsibility of corporation X to redistribute it?

Commander FOLEY. I am not too sure, Mr. Chairman. I do not believe that the plan, as I recall it, the APRA plan, did go into the details of just what the accounting would be. But it said, as I recall, that the contractor could make use of this corporation X as a means of disposing of his own inventories.

Mr. HOLIFIELD. Of course, we in the Congress are interested in this whole picture. We are not just interested in Government-owned materials being turned into aircraft.

Commander FOLEY. Yes, sir.

Mr. HOLIFIELD. We are interested in the whole aircraft program. And whether the excess material is contractor-owned or Governmentowned, we want some plan evolved that will take full advantage of the utilization first and then recovery in the final disposal for the benefit of the taxpayers.

Commander FOLEY. Yes, sir. Of course, we were looking at the APRA plan, Mr. Chairman, from the viewpoint of the Bureau of Aeronautics, and whether we did have a problem that this would solve. At the time that was submitted, we had no indication that we had any problem with Government-owned excess materials, and it was to verify that that we sent out the questionnaires to the service representatives, sir.

We also queried the service representatives on the adequacy of our current procedures under the present situation and under full mobiliza

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