Representative CURTIS. Incidentally, just for the record, I made a speech on the floor of the House on January 14, 1953, on page 383 of the Congressional Record in which I discussed this very thing. I wonder if I might read part of it just to show the size of this subject. I quoted in the record a statement from the Department of Defense, dated January 6, 1953, on the subject of distribution of military coffee. Here is the quote:

On the basis of current military coffee consumption in the United States, the Munitions Board reckons a reduction of $50 million in green bean inventories, together with parallel savings in storage space and personnel costs.

We are talking about a coffee bean. I started to say we were not talking about peanuts. We were not talking about small items. I parallelled this by pointing out that that year the military had a requirement of $3 billion for warehousing. Just imagine the amount of warehousing required for $50 million worth of green coffee beans. That is just one item. Pardon me for interrupting.

Mr. NEWMAN. That is perfectly all right. I am very familiar with the situation in coffee, Congressman, because I was on that study. The CHAIRMAN. Is the Defense Department still roasting coffee? Mr. NEWMAN. No, sir, they are not. They stopped roasting coffee in 1956.

Shall I proceed, sir?

The CHAIRMAN. Go ahead.

Mr. NEWMAN. This table shows the number of items in general supplies.

(The table referred to follows:)

Source: Armed Services Supply Support Center, General Supplies Study Model.

LACK OF STANDARDIZATION

Mr. NEWMAN. The term "general supplies" has different connotations in the military services. In the broader sense it includes the identifiable segments as shown on this table. There are 2,300,000 items. They represent about 70 percent of the 3.4 million items in the supply systems of the Department of Defense.

All items in the military supply systems have been identified by description and individual stock numbers in the Federal catalog. As of the end of 1958, the services were 100 percent converted to these numbers at their warehouses all over the world. The cataloging program, which cost over $200 million, has now reached the point where real dividends should be realized from standardization and other supply management programs. One million dollars a year can be saved in management expenses alone for every 1,000 items eliminated from the supply system, according to estimates of the Department of Defense.

The highly important objective of standardization program is to consolidate specifications and to reduce the number and variety of items in the military supply systems. There will be a period of years before the program will have completed the initial analysis of existing items and the Department will be in a position to screen only new items for military supply systems.

A recent study in the Department showed that about 52 percent of the 3.4 million items identified under the Federal catalog system is common to two or more services, although only 14 percent has the same stock numbers. Thus about 38 percent, or 1.3 million items, while having similar fabrication or manufacture, differs among the services in such relatively minor respects as in color, finish, markings or in terminology. For instance, a mop in the Army was formerly identified as a swab in the Navy under a separate number.

The need for shortcuts to accelerate the reduction of items in the supply systems and achieve a high degree of common use has been recognized by the Department of Defense, but efforts to date appear to have only scratched the surface. This is indicated in the next table. Summary of item commonality in general supplies study model as of Sept. 4, 1959

Source: Armed services supply support center, general supplies study model.

The CHAIRMAN. Mr. Newman, before you turn to that, you are saying in your judgment approximately 1.3 million items could be discontinued or amalgamated.

Mr. NEWMAN. This is the area where it is possible to reduce many hundred thousands of items from the supply systems. They could be coordinated.

The CHAIRMAN. And that the extra cost per item is approximately a thousand dollars.

Mr. NEWMAN. Yes. If the Department of Defense eliminated a thousand items from their supply system, they would save, according to their own estimates, a million dollars a year.

The CHAIRMAN. That is a thousand dollars an item.

That would mean savings of $13 million from the elimination of these 13,000 items.

Mr. NEWMAN. This is according to a statement made on December 9, 1959 by Mr. McGuire, the Assistant Secretary of Defense for Sup

ply and Logistics, in a speech before the Standards Council of The American Standards Association.

BIG OPPORTUNITY FOR SAVINGS

The CHAIRMAN. I would certainly recommend to the Department of Defense that there is gold in those hills.

Mr. NEWMAN. That is right.

Here is a summary of item commonality of the most common-type items in the Defense system. The administration and housekeeping type items have a commonality factor of just 14 percent. In other words, out of 25,000 items in that class, only 3,601 items are common among the services. The commonality runs from 3 percent for office equipment to 37 percent for office supplies. Only 8 percent of furniture items are used by two or more services.

Representative CURTIS. What you are saying is that the extent to which they have made them common.

Mr. NEWMAN. Yes. To the extent that they have identical catalog numbers.

Representative CURTIS. All right.

Mr. NEWMAN. As a result, you can not cross-service these items that are only superficially different and have different stock numbers. Representative CURTIS. If I may point up your testimony, these are all from their very title that could be 100 percent common.

Mr. NEWMAN. A very high percentage, at any rate.

The CHAIRMAN. For instance, if I may be vulgar, you don't need different toiletries between the services, isn't that true?

Mr. NEWMAN. It would not seem so.

The CHAIRMAN. You don't need different types of paper or different types of office machinery or office supplies or musical instruments or athletic equipment.

Mr. NEWMAN. This seems to me to be a very important aspect of the supply problem.

Representative CURTIS. Do they use the same kind of piccolo in the Army Band that they do in the Marine Band? I guess they do.

Mr. NEWMAN. I don't know, but all musical instruments have only 37 percent common use.

Representative CURTIS. Is this Mr. Hangen's group's study?

Mr. NEWMAN. Yes. It was a very objective study. It was one of the finest studies I have seen come out of the Defense Department on supply systems. It followed the same concept that was discontinued in 1953.

Representative CURTIS. It sounds to me that Mr. Hangen was a little modest when he said he was just taking care of disposing of garbage. If he conducted a study like this, he certainly has really been in this field trying to figure out how this stuff got there.

Mr. NEWMAN. That is right. The primary purpose of the Armed Forces Supply Support Center is for just this sort of thing. It is a shame such studies were dropped in 1953, because if these findings had been made at that time, very substantial savings could have been effected during the 6-year period.

Representative CURTIS. After they did it, no one acted upon it.

Mr. NEWMAN. You mean the supply systems studies that were discontinued in 1953?

Representative CURTIS. Yes.

Mr. NEWMAN. They were not started again until a year ago.

The CHAIRMAN. May I say in this connection, I think this is fine. We have noticed very frequently that the Defense Department and other agencies get spurred into action when congressional committees start an investigation. We have served notice on this matter last year, that we wanted some action, and I am very glad to see a little action is being taken.

ABSENCE OF A VIGOROUS PROGRAM

Mr. NEWMAN. I think congressional interest is very stimulating, sir. The commonality of handtools at 25 percent is somewhat higher than the administration items, even though there is a much higher proportion of military peculiar items in this category of supplies. Significantly, the study group's findings were that the small percentage of common-use items in both classes is due to the absence of a vigorous program among the services to implement existing published standards.

The CHAIRMAN. Mr. Newman, the table shows that in office machinery only 70 items out of 2,090 were common items to 2 or more military services and the percentage of common use was therefore only 3 percent.

Mr. NEWMAN. This is right, sir.

The CHAIRMAN. There is no need for that wide variation in typewriters, mimeographing machines, ditto machines, stapling machines. Those should be sufficiently standardized to be almost duplicated across the board.

Mr. NEWMAN. It would seem so to me, sir.

The CHAIRMAN. As I said, this is devastating. This study was on items which perhaps far more than the average lend themselves to

common use.

Mr. NEWMAN. Yes, they are. They are practically all commercialtype items.

Representative CURTIS. Incidentally, one of my pets to illustrate the point I notice is not on there. That is supplies for the various chaplains corps.

Mr. NEWMAN. This comes under a different classification, Mr. Curtis.

Representative CURTIS. I always thought that we could have common items between the Air Force, Army, and Navy, when it came to religious worship.

Mr. NEWMAN. It would certainly seem that many items would be of the common-use type.

May I proceed?

The CHAIRMAN. Yes.

STANDARDIZATION STUDIES

Mr. NEWMAN. There are some 50 service assignees responsible for planning, scheduling, and coordinating the efforts of the four military services in standardization studies. However, the single managers lend themselves much better to standardization analysis than do the individual services monitorship assignments because of their wider perspective. They are thus able to recognize superficial differences and eliminate duplicate terminology in numerous items of supply as well as keep new duplications from cropping into the system.

The single manager for clothing and textiles assigned to the Army illustrates this point. Since this single manager was established early in 1956, 10,246 stock numbers equal to 23 percent of the original amount inherited from the services were eliminated from the inventory. Thus, in addition to the reduction in the pipeline investment, there have been reductions in costs from the elimination of the administration and physical actions involved, such as requisitioning, stock control, procurement actions, storage and handling and maintenance of the many records at each level in the military structure. At savings of a million dollars annually for every 1,000 items eliminated from the system, this one single manager is presently saving more than $10 million each year from this source alone.

What is equally significant is that items with multiple uses have increased from 3,976 to 7,086, an increase of 78 percent. Further, these are items that have rapid turnover and account for a very high proportion of the total issues of the single manager.

The next table shows a summary of financial inventory management in the model study on general supplies.

Summary of financial inventory management of the general supplies study model [Millions of dollars]

The financial inventory position improved during the year as procurement was about 20 percent less than issues. The total in the last column, $100 million, is the amount of long supply in the general supplies model study. Long supply is the amount of stock over the sum of operating and mobilization requirements. However, since there are wide differences among the services in amounts allocated to operating and mobilization requirements, as will be seen in a subsequent chart, this table gives a very conservative estimate of stocks in long supply.

It should also be noted that very little technological obsolescence is generated in this type of supplies.

INADEQUACY OF SINGLE DEPARTMENT PROCUREMENT ASSIGNMENTS

The next table shows the participation by the services in the single department procurement program.

Service participation in single department procurement

The CHAIRMAN. Mr. Newman, let me see if I understand. These are items of general stores.