4160.9 (Incl 2) Jan 11, 60

1. Foreign Excess Personal Property - Personal property located outside the United States, Puerto Rico, and the Virgin Islands which has been determined to be unnecessary to the needs and discharge of the responsibilities of the DOD.

J. Holding Activity - The activity at which the reported property is physically located.

k. Issue Date

The initial control date of the Excess Listing, assigned by the Center or the GSA, from which the Automatic Release Date of the property is computed.

1. Line Item A single line entry shown on a reporting form which indicates the quantity of property located at any one activity, having the same description, condition code, and unit cost.

a. Local Area Screening - Utilization screening accomplished in overseas areas through circularization of excess personal property information to military activities and with U. S. Federal Agencies requiring excess property information within each respective theatre or overseas unified command.

n. Machine Tools

Those items of production equipment which are powerdriven, nonportable machines used for cutting, abrading, grinding, shaping or forming metal.

p. Nonreportable Property - Excess personal property which is not required to be reported to the Center or to GSA for screening prior to disposal.

q. Personal Property - Property of any kind or any interest therein, except real property, records of the Federal Government, and naval vessels of the following categories: aircraft carriers, battleships, cruisers, destroyers, and submarines.

T. Production Equipment - Those items of plant equipment located within a manufacturing, processing, assembly or service establishment and used for cutting, abrading, grinding, shaping, forming, joining, measuring, testing, heating, or treating production materials or work in process. Enclosure (2) to reference (g) lists items considered to be Production Equipment.

s. Purchase Order or Requisition (for excess personal property) - Document issued by any Federal agency for the transfer of excess personal property.

t. Reportable Property - Excess personal property which must be reported to the Center or to GSA for screening prior to disposal.

u. Reporting Activity - The military installation or activity which initiates report of excess personal property to the Center or to GSA.

4160.9 (Incl 2) Jan 11, 60

V. Salvage - Personal property which has some value in excess of its basic material content, but which is in such condition it has no reasonable prospect of use for any purpose as a unit and its repair or rehabilitation for use as a unit is clearly impracticable. (Generally, when the estimated cost of repairs exceeds 65 percent of the acquisition cost, personal property should be classified as salvage.)

V. Scrap - Personal property, other than waste, which has no reasonable prospect of sale, or which appears to have no market value except for its basic material content.

x. Service Educational Activity - Educational activity of special interest to the Department of Defense as designated in DOD Directive 5100.13, Donation of Surplus Property to Educational Activities of Special Interest to Armed Services.

y. Standard Price - The unit price of an item as it is recorded in the financial and accounting records of the holding Military Service per references (J), (k), and (1).

2. Surplus Personal Property

Personal property not required for the needs and the discharge of the responsibilities of all Federal agencies, as determined by the Administrator, GSA.

aa. Transfer Order (for excess personal property) - Document issued by the Center or the GSA directing transfer of excess personal property.

bb. Utilization Screening - The screening of excess personal property by DOD and other authorized activities to effect maximum economical utilization of such property under the control of the DOD.

cc.

Waste Material - Waste material consists of waste and refuse material which may have potential sales value, including, but not limited to, garbage, trap grease, corrugated kraft cardboard, and other types of waste paper.

Senator O'MAHONEY. I suggest, Mr. Chairman, that we should obtain for the record the text of each one of those directives and the testimony of the officer who signed that so that we will know definitely how he was acting and why he was acting when he issued that document that is now in our hands.

The CHAIRMAN. Is Mr. Hangen in the auditorium?

Mr. WARD. May I say he is here and he is one of the finest officers that I have ever met in the Department of Defense.

The CHAIRMAN. I did not know Mr. Hangen was here.

I want to say, Mr. Hangen, that you are not being singled out. We realize you are at the end of this process and you issued these lists. You do not decide what is surplus.

STATEMENT OF HERMAN C. HANGEN, DIRECTOR, ARMED FORCES SUPPLY SUPPORT CENTER

Mr. HANGEN. That is correct.

Senator O'MAHONEY. May I say, since I made the suggestion, I have before me the excess surplus property alphabetical index for the month of May 1958, which was canceled as of the first of September 1958, issued in May 1958.

The first paragraph here says, "This index is issued by the InterService Material Utilization Agency, Bureau of Supplies and Accounts, Department of the Navy, under authority contained in Department of Defense Instructions Numbered 4140.12 and 4160.9," and no name is signed to this at all.

So there is a difference between this group and the group which got out the list that Congressman Curtis mentioned.

Mr. HANGEN. That is a predecessor group.

Senator O'MAHONEY. There is no personal list in this one at all. Mr. HANGEN. That is a predecessor group. The Armed Forces Supply Center now gets lists from each one of the services whenever they have excess property and they send them in to the center. We as an organization put them together, issue these lists, and circulate them to the military installations.

Senator O'MAHONEY. When was your organization established? Mr. HANGEN. On July 14, 1958.

Senator O'MAHONEY. 1958?

Mr. HANGEN. Yes.

Senator O'MAHONEY. With how many departments of the military do you deal?

Mr. HANGEN. We send the list to all military departments.
Senator O'MAHONEY. From whom do you get the list?

Mr. HANGEN. From any military installation.

Senator O'MAHONEY. From all of them?

Mr. HANGEN. Yes; from all of them that have excess property. Senator O'MAHONEY. Was it established by law or by directive? Mr. HANGEN. Our organization was established by directive. Senator O'MAHONEY. Do you know under what authority of law the directive was issued?

Mr. HANGEN. I presume it was issued under the McCormack amendment.

Senator O'MAHONEY. Would you get the exact information dealing with this directive and supply it to the committee?

Mr. HANGEN. Yes.

(The information appears on p. 119.) Senator O'MAHONEY. Thank you.

I interrupted you. You may go on.

Mr. HANGEN. I think I got to the point where we get the lists from each military installation that has excess property. Our function is to put them together and distribute those lists to all other military installations so that they can see what is in excess property and if they need it they can pick up that property and use it.

Senator O'MAHONEY. Do they pick it up?

Mr. HANGEN. To quite a substantial degree; yes.
Senator O'MAHONEY. What is substantial?

Mr. HANGEN. I do not remember the exact figures, but I would say about 6 percent in total.

The CHAIRMAN. Six percent?

Mr. HANGEN. Yes.

The CHAIRMAN. And 94 percent is scrapped?

Mr. HANGEN. We have some misnomers in those figures. Any excess property, or to put in another way, in Government we do not have depreciation. Every civilian organization charges depreciation each year. So if you have a truck that has run for a certain period of time, that is worn out, it is listed at its original cost as Mr. Ward has shown. This truck might be worth on the market 10 percent and we get 10 percent for it. It might be worth 10 percent and maybe we only get 6 percent for it. It does not mean that 94 cents on the dollar is lost.

Senator O'MAHONEY. When you say that 6 percent of the material was taken by departments, what did you mean? Of the number of items or of the number of dollars?

Mr. HANGEN. The dollar value. Six percent of the total acquisition value was taken.

Senator O'MAHONEY. Was that value the acquisition value?

Mr. HANGEN. Yes; that is right.

Senator O'MAHONEY. That means that 6 percent is a larger figure than it would seem at first hearing.

Mr. HANGEN. Very much so. Much of the property is worn out equipment which only has scrap value.

Senator O'MAHONEY. Can you tell us the dollar value for the receipts for the last fiscal year?

Mr. HANGEN. I can get that figure. I do not have it with me.

(The information follows:)

Utilization of long supply inventories and receipts from sale of surplus,

fiscal year 1959

Utilized by DOD (including military assistant programs)

Utilized by other Federal agencies

Receipts from sale of scrap and salvage property

Receipts from sale of other than scrap and salvage property-..

Total utilization and receipts--

Transferred for donation (Public Law 152)

Billions

$1.172

. 117

. 091

. 122

1. 502

.302

Utilization obtained from excess lists distributed by Armed Forces
Supply Support Center

Fiscal year 1958 (year before establishment of AFSSC)
Fiscal year 1959 (first year of AFSSC)

Percent utilization

3.1

5.8

9.6

First one-half fiscal year 1960

Senator O'MAHONEY. I think, Mr. Chairman, that we ought to set down a special date for this gentlemen and let him make his preparation for his explanation of the method used.

The CHAIRMAN. We will be very glad to try to do that sometime in the month of February or March. Mr. Hangen, in going over the current list, January 1960, in the furniture classification, I find large numbers of bookcases, buffets, cabinets, chairs, desks, files, lockers, safes, tables, stands, even a vanity dresser.

Are those claimed each month on the furniture items by the various services?

Mr. HANGEN. Yes, many of them are claimed. I do not know what this is. In a group of items like that, I judge it is some camp that is being closed. The way to dispose of that is to advertise the fact that you have this equipment so that someone else can pick it up.

The CHAIRMAN. I understand. On the furniture items, will you be able to dispose of them virtually each month? Do you clear the decks on furniture?

Mr. HANGEN. We do not in the military services; no. These lists, after they have been cleared through the military services, then go to the General Services Administration for clearing through the civil agencies and through donable organizations.

The CHAIRMAN. What I am trying to get at is this: Is it not true that the military at the same time that it is declaring these items surplus, is also buying cabinets, chairs, desks, files, safes, tables, and so on?

Is there not a simultaneous process of declaring these items surplus and at the same time purchasing substantially similar items?

Mr. HANGEN. There could be.

The CHAIRMAN. Is there?

Mr. HANGEN. Also on these, it could be that this is worn out material that is not worth repairing.

The CHAIRMAN. Mr. Hangen, this is a crucial matter. Can you not be more helpful in that to us?

Mr. HANGEN. Mr. Chairman, my function and the function of my organization is one of circulating these lists and attempting to get utilization. I have nothing whatsoever to do with procurement. Representative CURTIS. You are just dumping the garbage?

Mr. HANGEN. Yes. I am the minister of the garbage pail, as the Representative calls it.

Senator O'MAHONEY. Do you have any information when you receive these lists as to the character of the items?

Mr. HANGEN. Yes, sir. Listed on the list are code numbers.

The CHAIRMAN. As I understand it, the symbols N-1 and N-2 mean unused.

Mr. HANGEN. Yes. N means new and N-1, good condition.

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