Mr. WATERS. If I may add one comment to this. On the domestic side of this, if we had property which did not move which we found we did not have a need for that we anticipated we might have, we would return it to GSA. The GSA is our transfer point in the United States, back to the GSA. If the GSA found no other governmental user, it would be declared excess to our needs.

Mr. COPENHAVER. Thank you.

Mrs. HECKLER. I have a few questions.

I first of all wondered what type of facilities you have for warehousing, and how do you arrange this? Do you pay for the warehousing of these items?

Mr. WATERS. It is primarily open storage so far as the marshaling sites are concerned. Particularly, we have a fast turnover. We have some closed warehousing space for small items. But for construction equipment and things of that kind, it is primarily open storage. It is space we are renting in most instances.

Mrs. HECKLER. In other words, you just don't keep this material at the military site free of charge? It is necessary to separate it? Mr. WATERS. That is right. It is moved out.

In looking for a rehab center, we have to look at a place where we can get rehab facilities and potential storage space and shipping movements in all one locality so we don't have a lot of movement going back and forth.

Mrs. HECKLER. I am interested in knowing a little more about your pricing structure. When you acquire items, obviously in certain cases you have to spend a certain amount to rehabilitate these same items. How do you finally arrive at a price or value?

Mr. WATERS. We went through great struggles on this in trying to set up a program to arrive at a fair basis. We discussed individually priced items, but we arrived at a figure of 15 percent of the original acquisition cost. So, when we offer property to our missions in support of a program or to volunteer agencies, we are offering it at 15 percent of the original acquisition value. That means that we have to handle our cost, rehab within that 15 percent, to preserve the integrity of our revolving fund. It doesn't mean that every item is repaired within that 15 percent. Some items go up, and some items we do better on, and are less. But we have to maintain that average to

come out.

That is also a strong factor on reenforcing the careful selection of equipment. If you were having an open-end repair job, you might have selectors go out and find almost any piece of equipment and finally put more in the rehabbing than the equipment would be worth.

Then, you would have a real question in the mind of user as to whether to obtain used equipment in excess or whether to buy new equipment. So, we found in a practical way, 15 percent has worked out pretty well with our customers. And we have been able to do a good breakeven job and pick up more of the administrative cost of the program. Mrs. HECKLER. Do you have a special group of individuals who have a responsibility for setting these prices or overseeing them?

Mr. WATERS. We run this price worldwide at 15 percent. We do a very careful review and keep monthly reports of our financial transactions that we relate to revolved funds.

If we make a decision to change, it would be a decision probably worldwide. We do feel that the uniformity of price offering so that the person can look at the acquisition value of the equipment and know what he can get it for is better than trying to have an individual price for each item.

Mrs. HECKLER. Well then, does your list state the acquisition value? Mr. WATERS. That is right.

Mrs. HECKLER. So, this is immediately obvious to any purchaser? Mr. WATERS. Yes.

Mrs. HECKLER. I have just one final question, Mr. Chairman. Obviously from the statement, the advance acquisition program seems to be the whole strength of the physical integrity of your program.

Mr. WATERS. Yes. For example, this year, out of some $31 million property moved in this advance acquisition program, we in effect show a profit of about $71,000. Well, that is trimming it fairly close. But we feel that we are able to break even. We are not trying to make money on the program. We are trying to do the best job we can do in trying to hold it at a break-even point. There will be little dips and little gains. But we are constantly watching the program to see if we can give an effective job within a given price range.

Mrs. HECKLER. You have discussed a few of your onsite screening processes, the excess property utilization officers and so forth. But in relationship to Vietnam, you talk about a special priority or screening procedure. Tell us something about that.

Mr. WATERS. Before we submit the property we have picked up to other missions in the field, before it goes in a general catalog, there is the advance notice of this to Vietnam. They have 1 month to decide whether they want that equipment. They have first crack on any of this equipment. We felt in view of the Government's general priority for meeting our obligations in Vietnam, we thought this was a correct way to proceed with this. However, if they don't ask for it within a month, then, it becomes available to circulate to all of our other missions.

Mrs. HECKLER. This means that they get the list a month early? Mr. WATERS. Yes.

Mrs. HECKLER. You talked about $14 million in 1967 for Vietnam. And you said in relation to another question this is mainly for jeeps. Fourteen million dollars worth of jeeps?

Mr. WOLL. $14 million is the total equipment, and a good part came from the Japan center. Out of France in closing out FRELOC was primarily jeeps.

Mrs. HECKLER. What about the rest?

Mr. WATERS. It is a pretty broad range of items. It is probably the broadest range of any one place to which we had programs: vocational training equipment, medical equipment, refugee equipment. It is a pretty broad range.

Mrs. HECKLER. Let me ask you this: Why couldn't you use other property than jeeps from FRELOC?

Mr. WATERS. We have used others. The majority that came out of there probably because the jeeps weren't readily available in the past. When they saw the jeeps, they claimed the jeeps. They have a real need for jeeps.

Mrs. HECKLER. That is all.

Mr. MONOGAN. Is it now expected that there will be other substantial excess property generated in Europe?

Mr. WATERS. We think so. We have to follow military development. Mr. MONAGAN. Even though it may have been moved from France to Germany without a declaration, there may still be other declarations of excess?

Mr. WATERS. And other changes are going on continually that do generate this.

Mr. MONAGAN. There has been an increase as you have indicated in both Europe and in Asia in the declaration of excess. I assume that this is due first of all to the movement in France; and then secondly to the military activity in Southeast Asia: is that right? Mr. WATERS. That is right.

Mr. MONAGAN. So, in the first case, after a period of time, the volume would tend to go down, and in the latter we hope with the reduction of military activity?

Mr. WATERS. I feel, Mr. Chairman, on a continuing nature, we would probably have a higher portion of our program overseas than domestic because we are now geared to have it.

One factor that I am pleased about in this program is the feeling that we made good in our intentions we expressed earlier to this committee and other committees to try to develop a program that would not interfere with the domestic donable program. When we started this, most of it was called for to be out of the domestic programs in the United States. We have got this new machinery to work overseas. As you see, a great percentage of our program is now coming from overseas sources. That lessens the pressure on equipment coming out of the United States.

Mr. MONAGAN. Is it true, also, without going too greatly into detail, that most of the excess that is generated in Southeast Asia is used in that area?

Mr. WATERS. Yes, I think that is true. Occasionally a particular item shows up that is needed someplace else.

Mr. MONAGAN. And is it moved from South Vietnam to Japan, and then back to South Vietnam, for example?

Mr. WATERS. I am told that there are some instances. But I think it is rather small. I think in that case I would anticipate some day a rather substantial program in South Vietnam when and if peaceful conditions are restored in the country. But as of this time, it is making poor use of the equipment in the country. There is very little of it moved from there into Japan.

Mr. MONAGAN. Where does the Japanese center get its equipment?

Mr. WATERS. A lot of it is out of Japan and Korea, a lot out of Okinawa.

you

Mr. MONAGAN. With relation to sections 607 and 608, you have indicated, in response to questions by Mrs. Heckler and elsewhere, that section 608 gradually seems to be taking precedent. Is that, would because section 607 is very difficult to administer; because the detailed jcb of following the property all over the world on the part of the mission that are perhaps more than one can expect the missions to do?

say,

Mr. WATERS. I think that is true. If the mission has a great deal of experience with excess property, if it has good technicians and they know that a country has its own good shops, they may feel that they can claim equipment and supervise this repair.

Some of the unfortunate experiences earlier, however, in 607 were the result of eager beavers wanting to order a lot of equipment and not being able to put the equipment in an operable condition. So, it gave a black eye to the U.S. image. It didn't make an effective program. The tendency has been to turn to the 608 portion except where there has been a great deal of experience in a pretty sophisticated administrative machinery-a country further along on the road to development.

Mr. MONAGAN. We have had furnished before a table showing the utilization of excess property by AID, and starting in 1960, and I think that you might furnish us with a table bringing those statistics up to date.

Mr. WATERS. I would be happy to bring that up to date showing you the various types of programs.

Mr. MONAGAN. Actually, you have the figure in your statement. I think the details would be helpful.

(The document follows:)

Mr. MONAGAN. Do you have any further questions?

Mr. BARASH. Mr. Waters, this subcommittee is not only interested in how AID picks up excess property available as a result of FRELOC, but how other agencies do as well. I am curious to know, do you have competition from other Federal agencies having operations abroad on this property?

Mr. WATERS. We have had some. We have encouraged the State Department's administrative people to look at the potential that might come out office equipment, desks, things of that kind. I don't know how effective they have been in finding what they have wanted, but we have offered our facilities, and they have used our offices in some of our locations to try to help locate what might be useful to them.

As to my knowledge so far, that is the only one that I directly ran into that is trying to claim excess overseas. We have been the channel of help as part of our program to work with the voluntary agencies of this country that are operating abroad-the registered American volunteer agencies operating overseas who are authorized under the act to participate in these programs.

It took a while to develop the procedures for them to do so, but from the overseas aspect of this, they are now participating in groups in the various services. And they are carrying on many of the programs that are really an effective supplement to government development activity at the village level ahead, and are making rather good use of this equipment themselves paying the cost of the 15 percent surcharge on the equipment.

Mr. BARASH. I believe you testified that most of the property that was picked up by AID as a result of FRELOC was screened in France; is that correct?

Mr. WATERS. Yes, this is correct.

Mr. BARASH. What percentage, if any, of the property screened in France was not shipped directly from France to your rehab sites? Mr. WATERS. I think about 5 percent of it came from Germany after the move from France, and back to Germany or from other sites. Mr. BARASH. But the 95 percent went directly?

Mr. WATERS. Of course we are continually maintaining this search for equipment for inspection in Germany.

Mr. BARASH. Once the property was selected by AID in France, how long did it take to get from France to the rehab site ordinarily?

Mr. WATERS. I am informed by Mr. Woll that it varied between 60 and 120 days for the movement.

Mr. BARASH. That is all.

Mr. ROMNEY. Mr. Waters, when property that you have acquired under the advance acquisition program appears dead, as you put it, and you have to dispose of it, would you classify this technically as being foreign excess property; that is, excess at that point to the needs of AID?

Mr. WATERS. If we had acquired it from a foreign base, yes.

Mr. ROMNEY. Are you familiar with the foreign affairs manual, volume 6, subchapter 233 which relates to the disposal of personal property abroad? This is part of the uniform State-AID-USIA regulations. Mr. WATERS. Yes, I am fairly familiar with that.

Mr. ROMNEY. And of course the disposal of foreign excess property under this regulation. My question, then, is this: In the disposal of property acquired under the advance acquisition program because it is not needed, do you follow this uniform regulation, or is there some other procedure?

Mr. WATERS. I think Mr. Woll should answer this.

Mr. WOLL. Mr. Romney, we have a procedure of our own in this respect. Whenever we acquire property that we find we do not have a use for after a period of time, rather than dispose of it through our chan