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over another. When they send us an order and we do not for one reason or another deliver as soon as they would like or as soon as we promised and expected to ship, they will swear every time that the material was shipped to one of their competitors.

During the World War II program, Murray Cook Corp. obviously found it was confronted with that same sort of thing, but it was not serious because you must bear in mind in my definition of a qualified distributor we are talking about people who have been in business for some time. They know each other, and they sell to the same customers, generally speaking. And so while they will complain, "I think so-and-so is being favored over somebody else," down in their hearts, if you select the right kind of people, they probably belong to the same trade association and they will fight like the dickens all day over business, but they will sit down over a drink in the evening, and they are friendly, and all of that.

So, if you select your agents properly, that problem is not too serious a one, particularly if you also select a good administrative body.

Mr. HOLIFIELD. It is your opinion that standards could be set up whereby qualified agents could be selected on a fair and equitable basis?

Mr. PETERKA. There is no question about, it sir.

Mr. HOLIFIELD. And where those who are on the fringe like some of the agents were, and who caused most of the trouble, so far as fraud and failure to obtain satisfactory recovery was concerned-where they could be eliminated?

Mr. PETERKA. Yes; no question about that.

Mr. HOLIFIELD. Would you like to sum up your testimony, or are you finished?

Mr. PETERKA. I think, sir, I am finished.

I want to emphasize that we do have idle and excess inventories which should be disposed of in order to conserve our national resources, to conserve our raw material and to conserve our manpower, to avoid the creation of unwieldy surpluses from these idle and excess inventories. We should do it now. We should do it before the inventories become completely unwieldy. We should give careful thought to the use of people experienced in the business to do this job for us. The selection of agents is tremendously important, and good administration of the program is important, because any program is only as good as its administration.

I do hope that the General Services Administration will, if assigned the task of handling this program, give careful consideration to the experience of the Reconstruction Finance Corporation during World War II in setting up a private corporation that will be able to select qualified personnel and dispose of incompetent personnel, which is, if not impossible, extremely difficult in a Government agency. Thank you.

Mr. HOLIFIELD. Are there any questions, Mr. Burnside?

Mr. BURNSIDE. No questions.

Mr. HOLIFIELD. Thank you for your testimony.

Mr. PETERKA. Thank you.

Mr. HOLIFIELD. We will next hear from Mr. Harvey H. Dwight, of New York.

Will you identify yourself for the record.

STATEMENT OF HARVEY H. DWIGHT, AIRCRAFT ENGINE & PARTS CORP., NEW YORK, N. Y.

Mr. DWIGHT. My name is Harvey H. Dwight, president, Aircraft Engine & Parts Corp., New York, N. Y.

Mr. HOLIFIELD. Your name has been submitted on the list as one who wished to testify. Do you wish to testify or present a prepared statement?

Mr. DWIGHT. I would be pleased to testify if it is the pleasure of the subcommittee.

Mr. HOLIFIELD. If you have anything to add to the testimony we will be glad to hear you.

Have you studied the latest proposal of the Air Force on the proposed plan to transfer excess materials?

Mr. DWIGHT. Yes; I have, Mr. Chairman.

Mr. HOLIFIELD. What is your opinion of that?

Mr. DWIGHT. I consider it a very desirable program if it could be carried through to a successful conclusion. I think experience has proven that it could be carried through very successfully. I think the question of the General Services Administration's position is especially desirable in an administrative capacity.

Following the last war, my position was that of liaison between my company and the War Assets Administration, and I had continual contact with representatives of the Administration. I found them most cooperative, but I do feel that it is the function of the agent to concentrate efforts based on experience on the operational phase, and that of the Administration to supervise and monitor the activities of the agent. It is just about as simple as that, sir.

Mr. HOLIFIELD. In your experience as a distributor, would you tell this subcommittee anything of your own personal knowledge in regard to the accumulation of excesses in these different airframe manufacturers' inventories?

Mr. DWIGHT. It is most difficult for Members of Congress and for governmental agencies, due to a lack of technical know-how, to visualize the tremendous magnitude of the normal and natural accumulation of excesses. There are thousands and thousands of detailed part numbers that are bound to accumulate. And there is no question that to the normal natural procurement activities there are bound to be excesses continually developing.

Mr. HOLIFIELD. How are those excesses being utilized now?

Mr. DWIGHT. Well, there is reason to presume they are not being utilized to the fullest. It is most difficult in Government and in a Government the size of ours to constantly know what the left hand. is doing; that is, to let the left hand know exactly what the right hand is doing. The intent is there without question.

Mr. HOLIFIELD. I understand that much of this excess is being accumulated and is not being used. Do you have any personal knowledge of any stores of these excess materials?

Mr. DWIGHT. Well, there is no question about there being manufacturer excesses in existence. I think there is a great deal of desirable material presently in the hands of the services that could be utilized if they were made available, not only to our own commercial operators, but to our foreign friends.

As you probably know, we have made available aircraft and other materials to members of the North Atlantic Pact countries and the like. We have presented them with this equipment. And following the declaration of our action with Korea we were obliged in order to avoid criticism to hold on to these excesses.

So from the time that we had the stop orders put into effect until now those materials were not declared. As a result we have had additional materials accumulating during that interim period.

Mr. HOLIFIELD. There has been a slowness on the part of the Defense Establishment to declare materials excess for fear of need; is that it? Mr. DWIGHT. That is quite possible, yes, sir.

Mr. HOLIFIELD. Are there any questions, Mr. Burnside?
Mr. BURNSIDE. No questions.

Mr. HOLIFIELD. Thank you, Mr. Dwight.

Mr. DWIGHT. Thank you.

Mr. HOLIFIELD. Is Mr. Arthur Harvey in the room?

Mr. HARVEY. I believe that Mr. Carey spoke for our side of the subject.

Mr. HOLIFIELD. All right, thank you.

We will next hear from Mr. Louis Tansey. I believe you testified back in the Rizley committee days when we were having a lot of trouble with surplus. Would you identify yourself for the record?

STATEMENT OF LOUIS TANSEY, AIRCRAFT HARDWARE DIVISION, CLARY MULTIPLIER CORP., LOS ANGELES, CALIF.

Mr. TANSEY. My name is Louis Tansey and I am with the Aircraft Hardware Division of the Clary Multiplier Corp., Los Angeles, Calif. Yes; I was before you at that time, Mr. Chairman.

Mr. HOLIFIELD. Have you seen the latest plan of the Air Force, Mr. Tansey?

Mr. TANSEY. Yes, I have.

Mr. HOLIFIELD. As presented by General Metzger?

Mr. TANSEY. I have, Mr. Chairman.

Mr. HOLIFIELD. We would be pleased to have you give us the background of your experience and the function of your company, then to give us such testimony as you desire on this plan.

Mr. TANSEY. I am general manager of the Aircraft Hardware Division of the Clary Multiplier Co., Los Angeles. The function of my division is to distribute manufactured aircraft parts and components such as nuts, bolts, screws, rivets, washers, turnbuckles, et cetera, et cetera.

In addition to that and because of the developments we have a contract with the Navy where we are rehabilitating bearings. In that function we take bearings which are overage so far as shelf life is concerned, clean them, represerve them, repackage them.

Mr. HOLIFIELD. Will you elaborate just a little on that? This is Government-owned material?

Mr. TANSEY. Yes, sir.

Mr. HOLIFIELD. And you put it back into a condition where it will pass naval inspection?

Mr. TANSEY. It must pass naval inspection and is then ready for issue.

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Mr. HOLIFIELD. And how are you paid for that, is it a service that you render that you are paid for?

Mr. TANSEY. That is a service we are rendering to the Navy on a contractual basis.

Mr. HOLIFIELD. How much does that service run in relation to the

cost of acquisition?

Mr. TANSEY. I would judge between 8 and 10 percent.

Mr. HOLIFIELD. Eight and ten percent?

Mr. TANSEY. Between 8 and 10 percent.

Mr. HOLIFIELD. Then you are telling us, in effect, that material which otherwise would be converted into scrap is reclaimed and refurbished and put into condition for the Government to use at a cost average of 8 or 10 percent?

Mr. TANSEY. That is correct.

Mr. HOLIFIELD. What is the extent of your operation in that field? Mr. TANSEY. How do you mean that, sir?

Mr. HOLIFIELD. I mean is it an extensive operation; are you handling several millions of dollars worth of material a year or what?

Mr. TANSEY. We have had to build two plants to handle this operation. We will handle on the average about 300,000 bearings a month at this time.

Mr. HOLIFIELD. Will you tell this subcommittee about the different bearings. We know, of course there are bearings that are small and there are bearings that are also very expensive. Give us a range of the cost of the bearings.

Mr. TANSEY. The range of cost would be from 30 cents to 4 or 5 hundred dollars.

Mr. HOLIFIELD. Four or five hundred dollars for a bearing?

Mr. TANSEY. Each. For a bearing, that is right. That is depending on the type of bearing, the size of the bearing, the precision of the bearing, the fit, the manufacturer, the in-use, such as an instrument bearing, for instance. I have one here. An instrument bearing such as this will run $12. That is one of the cardinal sins, putting your finger on a bearing.

Mr. HOLIFIELD. Your service would be to take quantities of bearings such as these and inspect them and return them to the using agency for 8 to 10 percent average fee?

Mr. TANSEY. That is what we are doing today. In the proposed program we know, based on our experience with the services, there

are excesses.

Mr. HOLIFIELD. I would like to have some testimony from your own personal knowledge on that. Tell this subcommittee first, in addition to manufacturing and refurbishing these component parts, do you also buy at bid sales? Do you pick up at bid sales?

Mr. TANSEY. We are forced to, Mr. Chairman, to maintain inventories. We do not like to do it. I say that sincerely, because we have conditions such as this where we receive a wire from an airframe manufacturer. In this instance it is the Goodyear Aircraft, where they say this, "Quote price and delivery, 12 AN6-37 bolts, 12AN8-40 bolts, 12AN12-42 bolts, and 5AN8-28 bolts."

We are one of the distributors for Lamson & Sessions that Colonel Peterka represents. And in order for us to go in there and maintain inventories we must go in there of necessity and take a mill run. In

these particular prices it would probably run 2,000 pieces to be able to service a customer who wants five bolts.

You have to bear in mind that the only time that an airframe manufacturer purchases anything is when the purchasing department receives a requisition, and the requisition states "Five pieces." They are forbidden by the contracting officer, unless it is absolutely impossible to do otherwise, to buy anything but five pieces.

I would like to cite an illustration on this. Here is a list of surplus. material that I received from the Chance Vought Corp., of Dallas, Tex. In looking through this list you will notice this. I will have to clarify this further. We have to make what we term a "no quote" to the airframe manufacturer. In this instance, the Goodyear Aircraft. It would be to the effect that we had none of these parts in stock. By the same token on this list we find 8-28 and this company is sitting with 1,578 pieces.

I have negotiated with Chance Vought. Have determined what their acquisition cost is. Their acquisition cost of this material listed here is $203,387.51. As good business which we term in our own mind the way to handle this, the best offer that I would give these people is $18,000. The possible recovery of this to the Government would be $203,000, less any fee which may be paid to us for the services.

I know personally of many, many inventories in the hands of airframe contractors, in the hands of subcontractors, and in the hands of Government where this material is idle and excess to current requirements; that if these idle and excess inventories are not moved from the plants and distributed properly through qualified agents, they will deteriorate or they will actually become surplus, and ultimately be sold as scrap with very little recovery to the Government. Mr. HOLIFIELD. What would you say the average return to the Government is on that type of inventory offered for a bid sale?

Mr. TANSEY. I think that was testified to yesterday by one of the men from Navy where selected materials were bringing 13 percent and unselected materials were bringing 12 percent. It is just the nature of the beast that it is that way, because an airframe manufacturer cannot buy this list of material if he needs one bolt on it. However, we find this, here are bolts in quantities from 4 pieces, 7 pieces, 23 pieces, 54 pieces, 132 pieces, but then the accumulation of these inventories become worth while.

Mr. HOLIFIELD. That is offered as a lot, is it?

Mr. TANSEY. Yes; these are offered as a lot or line item.

Mr. HOLIFIELD. And that list would theoretically be a surplus list after screening for excess use?

Mr. TANSEY. That is right. Here is the thing that comes about, Mr. Chairman. If this item is not desired by an airframe manufacturer or the services today, it becomes surplus, but this very item may be needed tomorrow and needed badly and in minute quantities.

Mr. HOLIFIELD. Has your experience been that materials are frequently offered for sale by one department of defense at a great discount, such as bid sales bring, while orders are being given to manufacturers by other defense departments at the full price?

Mr. TANSEY. That is what you call being put right on the spot, Mr. Chairman. We know it to happen. I cannot prove it, sir. We do know-I know that during the time that we were agents for the War

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