Further, the bill would establish a Surplus War Properties Committee to be composed of five Members of the Senate and five Members of the House of Representatives to study the matter of surplus war properties and "the operation of this act" with a view to recommending amendments, etc., which committee would be authorized to hold hearings and would be required to report to the Senate and House of Representatives not later than 6 months after the effective date of the act. The expenses of the committee would be paid from the contingent funds of the Senate and the House of Representatives.

Section 8 (a) of the bill defines "surplus war properties" as including—

46* * * any supplies, materials, equipment, plants, real estate or other property, tangible or intangible, owned or controlled by the United States or by or in behalf of any department, agency, corporation, or other establishment of the Government which was acquired or used in connection with the prosecution of the present war and which, pursuant to this act, is determined to be surplus to the need, function, activity, or project in connection with which it was acquired or accrued but shall not include any properties taken over or requisitioned by the President or under his authority pursuant to his emergency powers for wartime operation by the Government as the result of a labor dispute or for noncompliance with any provision of law or Executive direction."

In order to make clear the position of this office with respect to the subject bill, S. 1478, it seems desirable first to discuss briefly certain other proposed legislation which has been considered recently. This office, together with other governmental agencies, collaborated with the Committee on Expenditures in the Executive Departments of the House of Representatives in the consideration of bill H. R. 1610, Seventy-eighth Congress, which bill, as indicated in the hearings thereon held before that committee during February and March 1943, was introduced by Representative O'Leary for the primary purpose of complying with the suggestion of the President contained in his message to the Congress dated November 30, 1942, with respect to the more efficient utilization of materials, supplies, equipment, and other property in the possession or under the control of governmental agencies. As a consequence of such collaboration, there was introduced another bill, H. R. 2795, Seventy-eighth Congress, superseding H. R. 1610. The said bill H. R. 2795 passed the House of Representatives June 9, 1943, and is now pending in the Senate Committee on Expenditures in the Executive Departments. House Report No. 507, Seventy-eighth Congress, accompanying H. R. 2795, contains much information with respect to the general problems of utilization of Government property and the disposition of surplus property, together with a brief history of recent efforts to solve those problems.

The said bill H. R. 2795 is intended to make permanent provision for the more efficient utilization and disposition of Government property, other than land and buildings and facilities or fixtures appurtenant thereto, in time of peace as well as war, through existing Government agencies. However, in section 4 thereof, provision would be made for the establishment of a Surplus War Property Committee to be composed of five Members of the Senate and five Members of the House of Representatives for the purpose of studying the problem of war property, real and personal, expected to be surplus at the end of the present war, and reporting to the Senate and House of Representatives with its recommendations as to necessary legislation and administrative action relative to the disposition of such surplus property. In this connection it is stated at page 15 of the above-mentioned House Report No. 507

"Recognizing that legislation necessary to deal effectively with these war surpluses should be enacted only after most thorough study and investigation, and recognizing also the urgent necessity of enacting the general program of property management provided by H. R. 2795, the committee has added sections 3 and 4 to permit enactment of the general program and at the same time provide for the necessary study of the war-surplus problem, and the development of legislation to deal comprehensively with that problem.'

The subject bill, S. 1478, on the other hand, would establish a new Government agency (the Administrator of Surplus War Properties) apparently as a temporary measure for the disposition of surplus war property, real and personal-although it is noted that the bill would fix the term of the Administrator at 4 years, and that section 2 (b) refers to property "used, or held, in connection with the prosecution of the war, or otherwise."

It is to be observed, also, that the bill S. 1478 contains no provision directing or providing for the disposition of the moneys to be derived from the sale or other disposition of surplus property or for the adjustment of appropriations between departments or agencies in the event of transfer of surplus property

from one department or agency to another. In this connection, attention is invited to the following pertinent provisions contained in the above-mentioned bill, H. R. 2795 (in the proposed new section 258, page 8 of the bill):

SEC. 258. Where property transferred or disposed of under any provisions of this title except section 259 has been acquired by the use of funds appropriated from the general fund of the Treasury and such appropriated funds are not by law reimbursable from assessment, tax, or other revenue, all proceeds derived from the transfer or sale, lease, or other disposition thereof shall be deposited and covered into the Treasury as miscellaneous receipts. Where property transferred or disposed of under any provisions of this title except section 259 has been acquired by the use of funds other than those appropriated from the general fund of the Treasury or by the use of funds appropriated from the general fund of the Treasury which are by law reimbursable from assessment, tax, or other revenue, all expenses incurred in respect of such transfer or disposition shall be deducted from the proceeds (if any), the funds bearing such expenses reimbursed in like amount, and the balance of the proceeds (if any) credited to the reimbursable fund or appropriation or paid to the agency leasing the property. This section shall not apply to the sale with the approval of a duly authorized representative of the agency concerned of any property in the custody of a contractor or subcontractor under a cost-plus-a-fixed-fee contract or subcontract which authorizes the crediting of the proceeds of such sale on the cost of the work described in such contract or subcontract."

Provisions similar to those above quoted appear essential in order to avoid unauthorized augmentation of appropriations, etc.

Summarizing, it is the view of this Office that legislation of the character proposed in H. R. 2795, referred to above, is preferable to that proposed in the subject bill, S. 1478. In my report of May 5, 1943, to the chairman of the Committee on Expenditures in the Executive Departments of the House of Representatives on bill H. R. 2498, Seventy-eighth Congress, it was stated:

"The necessity for legislation of this character to enable the disposition of the vast stores of materials that will have accumulated and will have to be disposed of after the end of the present conflict is obvious; also, it is recognized that some general, well-organized plan of disposal should be in readiness when that time comes. However, it is not believed that there is a present urgency requiring immediate action in this respect."

In addition to providing permanent machinery for the more efficient utilization and disposition of Government materials, supplies, and equipment through existing Government agencies-a provision which seems most desirable-H. R. 2795 would provide for the careful study of the question of disposition of the war property which will be surplus at the end of the present war. On the other hand, the subject bill, S. 1478, would not provide such permanent machinery but would set up a new Government agency for the limited purpose of conserving and disposing of surplus war property-a problem which well might be the subject of further and intensive study before attempting a definite solution.

With respect to details of the bill S. 1478, the following suggestions may be made:

1. In section 3 (a) it is provided, in substance, that surplus property found by the Administrator to be unsuitable for use by the United States shall be sold or otherwise disposed of by him. It would seem desirable to include, also, such property as may be found to be in excess of the needs or requirements of the United States, as well as that found to be "unsuitable."

2. The proviso in section 3 (a) and section 3 (b) are as follows:

* * Provided, That upon each disposition of property found to be unsuitable for retention by the United States, the Administrator shall first determine whether and to the extent the same can be used (A) to establish or aid any war veteran in an independent business enterprise and (B) to establish or aid a small business concern to maintain itself in business.

"(b) No disposition of any such property shall be made which is inconsistent with such determination."

The precise duty and responsibility of the Administrator in this respect are not entirely clear, and the quoted language might be construed as requiring use of surplus property for the assistance of war veterans and small business concerns, irrespective of the interests of the United States. Probably, too, the word "the" immediately preceding the word "extent" in the above quotation (line 17, p. 4, of the bill) is intended to be "what."

3. In line 13, page 7, of the bill, the ward "Staues" should be "Statutes." For the reasons hereinbefore stated, I am unable to recommend favorable consideration of the bill S. 1478 at this time, pending further congressional action on broader legislation, such as H. R. 2795 above referred to; and if the subject bill S. 1478 is to be favorably considered for enactment at any time, I believe material amendments thereto should be made as hereinabove suggested.

Sincerely yours,

(Signed) LINDSAY C. WARREN, Comptroller General of the United States.

S. 1609. TO PROVIDE FOR THE EQUITABLE DISPOSAL AND EFFECTIVE UTILIZATION OF GOVERNMENT-OWNED SURPLUS MACHINE TOOLS, AND FOR OTHER PURPOSES

Hon. James V. Forrestal, Secretary of the Navy.

Hon. ROBERT R. REYNOLDS,

Chairman, Committee on Naval Affairs,

NAVY DEPARTMENT, Washington, April 3, 1944.

United States Senate.

MY DEAR MR. CHAIRMAN: The bill (S. 1609) to provide for the equitable disposal and effective utilization of Government-owned surplus machine tools, and for other purposes was referred by your committee to the Navy Department with request for views and recommendation.

The purpose of the bill is to provide for the equitable disposition and effective utilization of surplus Government-owned machine tools, and thereby to aid the national defense, the preservation and establishment of small business concerns, international trade, and vocational training. To accomplish these purposes, the bill would establish a Machine Tool Commission consisting of nine members, one each to be designated by the Secretary of War, the Secretary of the Navy, the Chairman of the Maritime Commission, and the chairman of the board of directors of the Defense Plant Corporation, one from the large metal-working industry, one from the smaller metal-working industry, one from the machine-tool industry, and two from the public at large. The Chairman and Vice Chairman would be appointed by the President from the members not designated by Government agencies. The bill would authorize and direct the Commission to determine what machine tools are surplus to the needs and functions of the several Government departments and agencies, and its determination would be final and conclusive.

The machine tools determined to be surplus by the Commission would be disposed of as follows:

1. Tools specially designed for producing munitions and not readily replaceable from the open market would be retained or redistributed among the Federal agencies.

2. New and slightly used machine tools, if of superior design or condition, not retained or redistributed under (1), would be allocated for replacements at arsenals, navy yards, and similar plants.

3. Remaining new and slightly used tools would be made available to smaller metal-working concerns upon such terms as the Commission considers appropriate to maintain in business or establish new smaller metal-working concerns, with preference to war veterans. The Commission would be given power to arrange credit and guarantee financial arrangements. An interest rate of 3 percent is specified, and the Government would be given a right to repossess the tools within 10 years for war purposes. As a part of the disposition of the tools in this class, a survey of the machine-tool capacity and the potential capacity of the smaller metal-working concerns of the country would be made and published. 4. After the above dispositions, the remaining tools would be made available to public schools without charge, for use in vocational training.

5. Any tools not disposed of under any of the above provisions would be available for sale, exchange, lease, or other disposition to friendly nations and their nationals, subject to licenses to be issued by the Secretary of State.

The Commission would continue in existence for 3 years after cessation of hostilities and any tools remaining at that time are to be broken up as scrap,

by and at the expense of the Federal agencies having cognizance. The scrap thus generated would be sold on the domestic market and exportation would be prohibited.

It is the opinion of the Navy Department that machine tools should not be singled out for attention apart from other surplus property, and that the disposition of surplus property of all types should be under unified direction. The disposition of machine tools by an independent commission is considered likely to result in the adoption of conflicting policies with the attendant confusion and delay in carrying out industrial mobilization.

The provisions of the bill establishing preferences in favor of war veterans are considered unworkable in their present form. It is felt that the desired results can be secured to better advantage in legislation dealing primarily with the administration of aid to veterans.

The provision of the bill giving the Commission the right to determine which tools are surplus would prevent necessary transfers of machine tools essential to the war-production program. The bill also fails to make the prescribed dispositions of tools subject to the rights of contractors under existing facilities contracts.

Under the bill, machine tools could only be disposed of to smaller metalworking concerns, to public schools, or to friendly nations during the 3 years after the termination of the war and at the end of that time any tools not disposed of would be required to be scrapped. This would preclude any general disposition of such tools in the United States. It is believed that these provisions are unnecessarily restrictive, and that tools built for war production can be made available for more general domestic use on terms and under conditions that will protect the different Government interests involved.

In view of the foregoing, the Navy Department recommends against enactment of the bill S. 1609.

The Navy Department has been advised by the Bureau of the Budget that there would be no objection to the submission of this recommendation.

Sincerely yours,

Hon. Henry L. Stimson, Secretary of War.

JAMES FORRESTAL, Acting.

Hon. ROBERT R. REYNOLDS,

WAR DEPARTMENT, Washington, April 6, 1944.

Chairman, Military Affairs Committee, United States Senate.

DEAR SENATOR REYNOLDS: The War Department is opposed to the enactment of S. 1609, a bill to provide for the disposition of surplus Government-owned machine tools.

The provisions of the bill of primary interest may be summarized as follows: Section 1 states that the purpose of the bill is to provide for the equitable disposal and effective utilization of surplus Government-owned machine tools, in the interest of (a) national defense, (b) the encouragement of small business enterprises, (c) international trade, and (d) public education in skills connected with machine tools.

Section 3 establishes a Federal Machine Tool Commission of nine members. Section 4 gives the Commission the right to obtain from a department or agency any information and data with respect to machine tools in the possession or control of such department or agency. The Commission shall then determine what machine tools, if any, are surplus to the needs and functions of such department or agency and such determination shall be final or conclusive. The Commission shall thereupon classify surplus machine tools as follows: Class A, tools continuously unused for a period not exceeding 1 year following their manufacture and prior to the date of classification; class B, tools used for not more than 7,200 hours; class C, tools not classifiable in class A or class B. No machine tools acquired by the Government more than 60 days after the termination of hostilities come within the statute.

Section 5 assigns a certain order of priority for the disposition of surplus machine tools.

Section 5 (a): All Government tools, of whatever classification, manufactured for the production of military or naval equipment, not readily replaceable from the open market, shall be retained or distributed among Government agencies, as the Commission shall prescribe. Such tools shall be retained until such time, not to exceed 20 years, as they become obsolete or abandoned.

Section 5 (b): Class A and class B machine tools, except under subsection (a), shall be disposed of to Government arsenals, navy yards, maintenance and repair facilities, shore establishments, and similar installations, as the Commission shall determine. No machine tool shall be so disposed of unless the Commission first determines that such tool is superior in design or condition to the one it is to replace.

Section 5 (c): Class A and class B machine tools, except under subsections (a) and (b), shall be disposed of to smaller metalworking concerns, as the Commission shall deem necessary or appropriate to maintain or establish any smaller working concern in business. The Commission shall give preference to war veterans. The Commission shall arrange for the extension of credit to the purchaser, the rate of interest not to exceed 3 percent. For the period of 10 years the Government may recapture any machine tool disposed of pursuant to this section, in the event of war or national emergency. "A smaller metalworking concern" is defined as "any independent, unaffiliated manufacturing enterprise which utilizes not more than 100 machine tools for not less than 75 percent of the number of man-hours involved in its total productive operations."

Section 5 (d): Class A, B, and C machine tools, except under subsections (a), (b), and (c), shall be made available without charge to public schools, to promote training and instruction in machine tools. The Commission shall prescribe the terms and conditions concerning the scope, character, and duration of the courses to be given.

Section 5 (e): Class A, B, and C machine tools, except under subsections (a), (b), (c), and (d), shall be made available for disposition to friendly nations and their nationals, if authorized by license issued by the Secretary of State.

Section 6 (a) limits the existence of the Commission to 3 years following the termination of hostilities. Within 60 days after such date the Commission shall make a final report of its operations. Within 60 days following the submission of the report all machine tools remaining on hand shall be broken up and sold as scrap metal.

Section 10 (b) imposes on the departments and agencies complying with the Commission's directives responsibility for all expenses and charges connected with the storage and shipment of Government-owned machine tools. Section 12 states that the act shall take effect immediately.

The War Department is opposed to S. 1609, in principle, because the creation of a separate agency to dispose only of surplus machine tools is inconsistent with the basic policy of the Department that one central agency should handle the disposition of all surplus property. If there is justification for a Federal Machine Tool Commission, there is equal justification for a separate commission for each category of surplus property. A number of disposal agencies, each separately created in a particular statute, each with its own policies, rules, and regulations, will inevitably cause conflicting policies and administrative confusion. The War Department should not be forced to run the gauntlet of a long line of agencies and commissions in order to dispose of its surplus property.

In general, S. 1609 conflicts with the following principles which the War Department considers essential to the sound operation of a central agency:

(a) Surplus property would be defined as including all real estate and improvements thereof, all industrial materials and equipment, all military supplies and equipment, and all items of scrap and salvage, which the Department reports to the central agency as no longer required to meet the needs of and responsibilities vested in the War Department.

(b) The War Department would not declare as surplus any real estate, plant, industrial materials, or industrial equipment needed for its own operation (including reserves and stand-by facilities and equipment), or in the operations of contractors or subcontractors engaged in war production, items which may be disposed of as a part of contract terminations under policies established by appropriate authority, items of property held overseas which are determined by appropriate authority as desirable for disposal there and not for return to the United States, nor any items of property required for such relief measures as are necessarily a part of military operations.

(c) The War Department would report promptly to the central agency such items as become surplus under the above definition. The central agency would thereupon take possession, accountability, and full responsibility for any further maintenance or utilization, removal, protection, storage, sale, or other disposition of the property, the central agency to consult with the Department as to disposition of any property of special military significance. The Department would retain the right to remove and store materials and equipment which