expenditure experience. These requirements are projected 2 years in advance.

Changes in the Army supply program must be made as the strategic situation and military and production considerations dictate. The size of the A. S. F. procurement program for 1944 changes each month. The trend of these changes is shown in chart 6. There was a constant decline in the program for 1944 as modified each month from September through January, but there have been increases in February and March. Changes from month to month in the ammunition program for 1944 as shown in chart 7 illustrate what may happen to a single program.

Looking at these two charts 6 and 7 you will note as we recomputed the program each month it called for less and less until the computation in January, which called for the minimum amount. Since that time there have been conditions, primarily in ammunition, which have reversed that trend, and the program is now increasing.

You can see how the artillery and mortar ammunition dropped off very rapidly and then how the requirements have been built up in chart 7.

Mr. SNYDER. That is liable to continue to go up.

General SOMERVELL. It is liable to continue to go up for a while; yes, sir.

Substantial reductions in A. S. F. procurement were made because the War Department decided that overseas theaters no longer needed to build up large reserve supplies as a protection against the possi

bility of severed communication with the United States. Growing Allied air power and undisputed control of the sea have enabled the Army to reduce the supplies sent overseas as reserves. The declining air strength of the enemy has led to the decision to deactivate a number of antiaircraft units and to set up other troop units in their stead. The assistance requested by our allies varies from time to time.

Another important factor in causing changes is experience. Ammunition requirements are calculated on the basis of a day of supply which is the estimated average number of rounds fired per day by each type of weapon in a theater of operations. These days of supply for ammunition must be altered with experience. As a result of artillery and mortar expenditures in Italy, the procurement program for these was increased on the second of April to meet expanded needs.

A constant analysis is being made of all items in the Army supply program in order to reduce procurement objectives for civilian-type items. If it is possible to expand War Department orders suddenly and obtain the necessary increased amounts upon short delivery, there is no need to anticipate unexpected demands. The Army Service Forces has been authorized by the General Staff to procure strategic reserves. During 1943 these reserves were used, for example, to arm the Free French Forces in north Africa. It is not necessary to procure reserves of items readily obtainable, however, and these are being eliminated from the Army supply program upon analysis.

The Army Service Forces at present has begun a large-scale effort to tie all procurement goals more closely to actual issue experience. Since the initial equipment of the Army is virtually completed, it is now possible to base estimates of requirements upon experience rather than upon anticipated needs. All major items in the Army supply program are to be examined each quarter hereafter in the light of existing supply and demand. Procedures have been developed whereby each technical service will prepare, supply, and demand studies for all major and miscellaneous items procured. Procurement schedules hereafter are expected to be brought into constant adjustment with future demand.

The supplies to be purchased in the calendar years 1944 and 1945 are operating supplies. Their distribution is shown in charts 8 and 9. If you will refer to chart 8 you will see that only 2 percent of the total deliveries in 1944 will go to complete the initial equipment of the Army while 25 percent will be issued as replacements of equipment now in the hands of troops which has worn out or been lost in training or combat operations. Food, petroleum, fuel, and ammunition are consumable supplies which are used up in operation. This accounts for 22 percent of total required production. Equipment for lend-lease assistance to the United Nations is 17 percent of the program. The size of lend-lease activities is limited by what can be transported abroad and placed in the hands of other military forces.

Fourteen percent of 1944 production will go to the Army Air Forces. These are special supplies not used by the Army as a whole, such as high explosives and incendiary bombs, special types of ammunition, and communications equipment carried in airplanes and used on the ground for air connection. Requirements for special Air Forces supplies are computed by the Army Air Forces and presented to the Army Service Forces for purchasing.

The other major uses of the 1944 procurement are 3 percent for the Navy, 3 percent for strategic reserve, and 14 percent miscellaneous items ranging all the way from soap, brooms, and mops, to locomotives, railway cars, and cranes. Chart 9 shows that in 1945 an even larger proportion of required production will be needed for replacement, about 33 percent. The consumable supplies, subsistence, petroleum, fuel, and ammunition will make up 30 percent of the program; international aid, 12 percent; the Army Air Forces, 9 percent; the Navy, 2 percent; and other supplies, 14 percent.

The changing conditions of the Army supply program require adjustments in War Department contracts. Particularly is this true for Ordnance and Signal Corps items, which necessarily must be contracted for far in advance of actual deliveries since these types of equipment have no civilian counterpart. In 1943 the value of the canceled portion of terminated contracts amounted to approximately $8,000,000,000. The total number of terminations at the 1st of April 1944, was around 21,600. Most of the value of terminated contracts represents future deliveries which have never been placed in production. Gross payments to contractors during March on settled cases came to 81 percent of the claims filed by contractors representing work actually in process at the time of termination.

The War Department to date has paid out about $112,500,000 on all claims settled since the beginning of war procurement.

Renegotiation of contracts has continued throughout the present fiscal year. Reductions on outstanding contracts realized through renegotiation in 1943 amounted to $2,860,000,000, of which $240,000,000 represented excess-profit taxes paid before renegotiation. Net recoveries of funds therefore amounted to $2,620,000,000.

Raw material supply has ceased to be a major limitation in the procurement program of the Army Service Forces. Existing restrictions on the use of materials made by the War Production Board, the increased supply of materials, the reduction in procurement goals to meet industrial capacity, and the controlled materials plan supplemented by preference ratings have all combined to insure adequate distribution of materials to War Department contractors and subcontractors. In only a few instances in the past year have new plant facilities been required. One of these was for tractor production and another for the Chemical Warfare Service.

DISTRIBUTION OF EQUIPMENT

Of the major A. S. F. items of equipment procured in 1943, 81 percent were issued and 19 percent were placed in storage by the end of the year.

Of the supplies distributed during 1943, 70 percent went to the Army of the United States, 23.8 percent went to our allies, and 6.2 percent went to the Navy. During the first quarter of 1944, supplies and equipment distributed have gone 73.5 percent to the Army, 20.4 percent to our allies, and 5.2 percent to the Navy, as is shown in chart 10. For individual items the proportion distributed and stored varies considerably. Half of all tanks distributed in 1943, for example, went to our allies; 40 percent of incendiary bombs were likewise shipped to other nations. For many other items of equipment, however, distribution is made solely to the Army of the United States.

Excluding returns of supplies from units and from stations, the value of major items in storage in Army Service Forces depots on March 31, 1944, was only 1.6 percent greater than the value on December 31, 1943. Including returns, there was 11 percent more