now healthy, having recovered from a partial depletion during the buildup of ready for issue inventory.

Available section 608 property is offered to our AID missions abroad periodically by catalogs. Domestic 608 excess catalogs are issued by AID-Washington; foreign excess catalogs by the appropriate overseas excess property regional office. Special offerings of section 608 property, directed to a selected group of missions, have proved very successful.

FOREIGN EXCESS

There has been increasing utilization of excess property generated overseas. During the first three quarters of fiscal year 1967, $62,669,367 (or 80 percent of the $78,189,417 requested by AID) was foreign excess, the balance (20 percent) being domestic excess. Until the establishment of effective foreign excess property regional offices and related "marshaling sites" in Frankfurt, Germany, and Tokyo, Japan, the primary source was domestic excess property rehabilitated under the initial Army-AID-GSA agreement.

Our European operation was started in June 1962, but very little was accomplished with the section 608 program until November 1964. Prior to November 1964 we had many and varied difficulties obtaining rehabilitation capacity. For approximately the first year operation we requested the service of the Department of Army to rehabilitate our equipment in their established facilities.

After a period of time we were informed that the Department of the Army was not able to assist AID in this matter as their facilities were overloaded with their own work. We then turned to the Air Force, who at that time had a contract with a commercial firm, Behernan-Demoen, in Antwerp, Belgium. The Air Force took our work on a subcontract basis, but after a relatively short period of time terminated their contract with this firm. Being subcontractors we also moved out when the Air Force moved. The Air Force then obtained a contract with an English concern, Henly's, in Western Super Mare, England. This contract was in operation for a little more than a year and it was also terminated. At that time we realized that we would have to obtain our own contractor.

In October 1964, the Air Force procurement region Europe negotiated and procured for AID a commercial contract with a firm in Antwerp, Belgium, which went into effect in November 1964. The Air Force performed all selection and negotiating services other than the signing of the contract. From that date on, our European operation has been successful. Our Antwerp contractor is the firm of J. & M. Adriaenssens, N.V., a large Belgian truck body manufacturer. Their production of AID work has risen steadily over the past months. At the present time, monthly production averages approximately $1 million to $1.6 million acquisition cost, depending upon the types of items which they work on during the month. During the month of March 1967, we obtained approximately 6,200 man-hours of work each week and we anticipate raising this weekly figure to 9,000 hours. This will give us approximately $2.5 million acquisition cost of production monthly.

The U.S. Air Force also came to our rescue in providing production capacity at the U.S. Naval Base in Rota, Spain, in 1963. This is under an interservice support agreement with the Air Force, which in turn

has an agreement with the Navy. Until the past year, this operation has been relatively small, but recently it has taken an upturn. We are obtaining approximately $500,000 acquisition cost of production monthly. Our last site in Europe is located at Camp Darby, Livorno, Italy. It is under an interservice support agreement with the U.S. Army and is small in scope. This agreement was entered into in 1966 and basically provides one main service and that is that property which we acquire in Italy does not have to be transported to Belgium or Spain for rehabilitation. This we have found to be quite economical. Our acquisitions from Italy have in the past been very small so we do not at the present time require large production capacity. If this should change in the future and we would require additional production capacity, we would have to obtain this additional capacity from commercial sources.

In fiscal year 1963, our European operation obtained excess property from U.S military generating points, for our advance acquisition program, totaling only $257,300 in original acquisition cost. În fiscal year 1964, we obtained $5,153,922 worth. In fiscal year 1965, it was $13,917,826, and in fiscal year 1966, $13,979,072. Through March 1967 we have requested from the military equipment worth $40,403,231 at acquisition cost. Of this $40.4 million worth of equipment of all kinds, approximately $12,146,069 in acquisition value is directly attributable to the movement of U.S troops from France. Also, two of our AID missions have requested, under the direct acquisition program equipment worth a total of $1,913,879 at acquisition cost from the U.S. military in France, which also is directly attributable to the movement. of U.S. troops from France. The possibility exists that there have been other acquisitions by AID, under the direct acquisition program, but as yet we have not been informed. This information will be available during the first quarter of fiscal year 1968.

The method our European excess property regional office used to request transfer of the $12.1 million directly attributable to the U.S. movement from France is the same method that is utilized by all our offices. Equipment specialists (excess property utilization officers) visited the various bases in France and personally viewed and inspected all property in which we were interested. The reason for these personal inspections is to insure that AID does not acquire property which eventually will not be used in AID's projects and programs worldwide, and also to insure that the property acquired is generally in pretty good condition and can be rehabilitated without the necessity of spending large sums for the rehabilitation.

The perecentages breakdown-in terms of acquition cost-by types of equipment relating to the total $12.1 million acquisition cost figure is as follows: 65 percent consisted of military type vehicles: jeeps, 212-ton trucks, 5-ton tractors and various size trailers; 5 percent consisted of commercial type vehicles: 12-ton and 12-ton trucks, Ford, Chevrolet, and International Harvester; 15 percent engineer equipment: cement mixers, cranes, full track tractors, graders, et cetera; 5 percent consisted of medical equipment: beds, cabinets, dental and surgical instruments, et cetera; and 5 percent consisted of miscellaneous items: handtools, machine tools, kitchen equipment, electrical items, et cetera.

Also, we have claimed excess in the amount of $16,905,081 acquisition cost of military assistance program property located in France. This is not considered related to the movement of our troops from France. And finally, we have requested $11,352,081 worth of excess from the military from European countries other than France, which include but are not necessarily limited to England, Germany, Italy, and Spain.

Our goal for outshipments of property from our European operation to AID projects and programs for fiscal year 1967 was $16 million acquisition cost and through March 31, 1967, we have shipped $11,825,193. We feel our goal in this respect will be met and possibly exceeded. In all of fiscal year 1966 we outshipped from our European operation a total of $10,977,922. Through the first three quarters of this fiscal year, we have shipped more than we did in fiscal year 1966. We anticipate that in the future additional large quantities of property will be excessed by the military in Europe and be made available to AID as well as other interested U.S. Government agencies.

Our operation in the Far East was started in November 1962 in Tokyo, Japan with the signing of an interservice support agreement with the U.S. Army to furnish services, including rehabilitation for excess property generated in Japan. In 1963 our shipments of 608 excess property totaled $76,653 acquisition cost. The program has grown to the point where this office shipped $8,358,442 in fiscal year 1966 and for the first three quarters of fiscal year 1967 shipments have totaled $7,544,867. We have since outgrown the capacity furnished by the military at the start of the program and now have commercial contractors in Yokohama, Japan; Inchon, Korea; and Naha, Okinawa. Mr. MONAGAN. That is for rehabilitation?

Mr. WATERS. Yes. The majority of property shipped from this area is being utilized in Southeast Asia projects and programs.

SOUTHEAST ASIA

Special effort has been made to meet Southeast Asia requirements for excess property. The General Services Administration agreed to accord "special treatment" or priority to Southeast Asia requirements for domestic excess property. Special Vietnam prior screening procedures have been established for both domestic and foreign excess property available under the section 608 program. These procedures provide absolute priority to USAID/Vietnam during a 1 month prior screening period. Shipments of section 608 property to Viet nam during the first 9 months of fiscal year 1967 amounted to $14,143,348 (43 percent of total shipments). This is an $8.9 million increase over the shipments of $5.2 million (22 percent of total shipments) to Vietnam for the same period in fiscal year 1966.

LATIN AMERICA

This committee's continued interest in the increased utilization of excess property for the economic development of Latin American countries, expressed by special hearings and committee visits to representative Latin American countries, has begun to bear fruit. During this fiscal year, 16 new 607 determinations totaling approximately $13.7

million (acquisition cost) have been approved to various Latin American countries. In addition, $1,650,000 worth (acquisition cost) of property has been approved for specific in-country voluntary agency programs in Latin America under the sponsorship of the Summer Institute of Linguistics, Caritas, Community Development Foundation, Inc., and World Neighbors, Inc. Types of items and equipment ordered by those recipients include grinders, forming machines, wrenches, sterilizers, sleeping bags, clothing, generator sets, hydraulic jacks and roadbuilding equipment.

For the first three quarters of fiscal year 1967, Latin America has received $1,775,345 worth (acquisition cost) of 608 excess property. This is an increase of $202,000 over all of fiscal year 1966. We anticipate that considerable more property will be shipped to Latin America during the fourth quarter of this fiscal year. Also, Peru, in which the subcommittee has shown great interest, has expanded its acquisition of excess property under the 608 program during fiscal year 1967. Through the first three quarters of this fiscal year, Peru has obtained $469,679 worth of equipment, while during all of fiscal year 1966 only $76,972 worth (acquisition cost) was shipped to that country.

In order to further increase the effectiveness of the program in Latin America, we plan to establish an Excess Property Regional Office in Panama.

Mr. Chairman, in conclusion, we are proud of the progress which has been made in effective utilization of excess property not only in Latin America but in aid recipient countries generally. Due primarily to the advance acquisition program, we have gained increasingly general acceptance of excess property as a valuable resource. Naturally, with a unique, new, and rapidly expanding program requiring many technical decisions and coordination of military, and/or contractor operated rehabilitation facilities, various problems and difficulties arise. As the result of reports of poorly repaired equipment, a team headed by the Assistant Chief, Government Property Resources Division is now in the Far East reviewing contractor performance, rehabilitation standards, quality control, and final inspection before shipment. In order to manage this complex, expanding, worldwide program with maximum effectiveness, we have concluded that additional technical personnel and facilities will be necessary. We are gaining new satisfied customers and we look for continued moderate expansion, particularly in the utilization of foreign excess.

Thank you.

Mr. MONAGAN. Thank you very much, Mr. Waters. It is a very helpful, complete statement, and we are pleased to be brought up to date on the development of this program. I think it is extremely interesting. Mr. Romney, do you have any questions?

Mr. ROMNEY. Mr. Waters, could you explain some of the factors which account for what appears to be a relatively small amount of acquisitions under the direct acquisition program-the $1.9 million in acquisition cost from the U.S. military in France?

Mr. WATERS. Mr. Romney, the entire direction of our program since the start of the 608 authority has indicated a growth in use of the 608 approach as contrasted to the previous use of the 607 or direct authority. We still have a fairly constant level of the 607 and direct program

authority, but we have not had the expansion of these programs as we have had in the 608.

Our own missions and the countries to which we are cooperating in providing equipment seem to prefer having us do the rehab for them rather than trying to do the rehab themselves. Sometimes this is due to the lack of good rehab facilities in the developing country. But we are trying to make maximum use of all authorities. But there does appear to be, when we look over the reports, of both the growth of the 608 and a slight tapering off of the 607 and direct authority, there seems to be a substantial shift.

Now, we did endeavor to keep our mission fully informed of the potential new opportunity that might arise in the activity in France. And the largest amount of the acquisition, however, was made for the 608 program.

Mr. ROMNEY. On page 4 of your statement, Mr. Waters, the bottom paragraph, you refer to the establishment of regional offices for excess property and related marshaling sites in Germany and Tokyo. Could you describe these related marshaling sites and explain why you use the word "related"?

Mr. WATERS. We established, picked the locations for our regional property offices where we felt we had the best communication center for access to information about the availability of excess property.

For example, Frankfurt is pretty well a communication center. However, in looking for rehab sites, we looked primarily at access to shipping facilities as well as repair facilities. And out of the one central office, regional office in Europe located at Frankfurt, there was the major marshaling site at Antwerp, and the smaller marshaling sites, rehab centers at Rota, Spain, and at Camp Darnby, Livorno, Italy.

Tokyo is our regional office, but the marshaling sites and rehab operations are where we could find the best rehab work to be done as well as shipping facilities and the cost for moving the equipment.

Our major center there is now Yokohama, plus supporting facilities in Okinawa and Korea on a smaller scale.

Mr. ROMNEY. Are these sites selected in conjunction with the military in any way?

Mr. WATERS. Only Rota, Spain, and Livorno, Italy. The rest of them are private contracts.

Mr. ROMNEY. The memorandum which was entered into between AID-Army-GSA, March 1962 applies to the domestic program, does it

not?

Mr. WATERS. That is right.

Mr. ROMNEY. Is there any corresponding agreement with respect to the operations abroad, in any particular region?

Mr. WATERS. We do not have the same form of agreement. It is a triparty arrangement: GSA, partly under us, and with the military. We do have with the military overseas a memorandum agreement relating to the services they perform for us in specific instances such as the interservice agreement we are a party to in Rota, Spain, and Camp Darby, Livorno; plus an overall agreement on the transportation side of the program. We still use military services for transportation whenever possible.