ISAC D-23

AUGUST 21, 1951.

INTERNATIONAL SECURITY AFFAIRS COMMITTEE

APPROVED POLICY ON REDISTRIBUTABLE AND EXCESS MDAP PROPERTY

ISAC agencies have approved the recommendation in the attached paper regarding the policy statement in attachment A; and the undertaking by the Department of State to negotiate the agreements required.

JOHN F. HICKMAN, Secretary.

Problem. To establish a United States policy position for the guidance of negotiations with foreign governments concerning the disposal of redistributable and excess MDAP property.

Background.-Agreement has been reached with substantially all recipient countries regarding the return to the United States of equipment found unusable .for such reasons as changes in requirements and packing errors. However, other problems of substantial size, such as tank treads and airplane engines surplus to Turkish needs and propeller-driven aircraft to be phased out as jet aircraft are furnished to Italy make a determination of over-all United States policy and subsequent negotiation of agreements with recipient countries necessary.

Discussion. The attached paper was originally prepared in the Department of Defense, has been modified in minor respects by S/ISA which now concurs, as does ECA. It has also been concurred in by Mr. Vigderman of the Legal Advisers Office. After approval as United States policy, it will be necessary that agreement of the foreign governments be negotiated.

Recommendations. It is recommended that the attached paper entitled "Disposal of Redistributable and Excess MDAP Property" be approved as ISAC policy and that the Department of State negotiate the agreements required.

Attachment A.-Proposed policy statement on disposal of redistributable and excess MDAP property.

Attachment B.-Memorandum from General Scott to Mr. Cabot, Proposed ISAC Policy Governing Disposal of Redistributable and Excess MDAP Property.

ATTACHMENT A

DISPOSAL OF REDISTRIBUTABLE AND EXCESS MDAP PROPERTY

I. INTRODUCTION

A. Equipment and matériel furnished by the United States to other countries under the Mutual Defense Assistance Act of 1949, as amended, may become excess to the needs of the recipient countries. Although an item may become excess to the requirements of one recipient country, it may be needed by another country or be required by the United States. It is the purpose of this paper to prescribe the conditions under which, and establish procedures through which, such excess MDAP matériel may be redistributed or disposition thereof be made in accordance with existing laws.

B. The provisions of this paper do not apply to materials, production equipment, and components which have been furnished European ÑAT countries in direct support of military production programs from appropriated MDA funds allocated to ECA. Such material is identical in nature to that furnished under ECA appropriations as economic aid. Consequently its separate identification and treatment is considered to be administratively impossible. As a matter of policy, such material, components, and production equipment should be considered for the purposes of this paper in the same category as any other aid furnished by ECA in direct support of the recipient country's defense efforts.

1. The term "MDAP property" means and includes any and all equipment, supplies, and/or matériel provided by the Government of the United States with appropriated funds made available under the provisions of the Mutual Defense Assistance Act, as amended (MDAA) (Public Law 329, 81st Cong.) and an act to provide assistance to Greece and Turkey (Public Law 75, 80th Cong.), except that described in paragraph IB.

2. The term "redistributable MDAP property" means MDAP property which is reported to the United States by a recipient country as being no longer required in the furtherance of the MDA program for that country.

3. The term "Department of Defense agency" means the Departments of the Army, Navy, and Air Force and the Office of the Secretary of Defense and its associated agencies.

R. REFERENCES

1. Public Law 152, Eighty-first Congress.

2. Department of Defense Memorandum, dated March 14, 1951, subject: Department of Defense Conservation, Utilization, and Disposal Policy.

3. FMACC D-9/7, dated April 24, 1950.

III. DETERMINATION OF REDISTRIBUTABLE MDAP PROPERTY

A. MDAP property in the custody of a Department of Defense agency, which is reported by the intended recipient foreign government as being no longer required in the furtherance of the MDA program for that country, shall be determined redistributable.

B. MDAP property, title and custody of which is in a recipient government, is reported by the recipient government to its Military Assistance Advisory Group (MAAG) as no longer required in the furtherance of its MDA program shall be determined redistributable.

IV. DISPOSITION OF REDISTRIBUTABLE MDAP PROPERTY

A. When in the custody of a Department of Defense agency, such property shall be diverted from the country program under which it became redistributable, and shall be retained by that agency for distribution in accordance with established priorities.

B. When in the custody of a recipient government, title having passed to that government:

1. Title to such property shall revert to the United States Government either for transfer to a third country, or for other disposition without credit to the MDA program of the recipient country. In the case of countries included in different titles of the MDA, appropriate adjustments in appropriation accounts will be made.

2. Such property, when transferred to a MAAG for return to Department of Defense stocks for MDAP account, will be delivered to the MAAG free alongside ship in case ocean shipment is required or delivered free on board inland carrier at shipping point designated by the MAAG in event ocean shipping is not required. In either case all other PH&T costs incurred in both the initial and return shipments will be charged to the MDA appropriation under the program of the recipient country.

3. Where shipment to another foreign government is directed by the Department of Defense, section IX of FMACC D-9/7 shall be applicable. PH&T costs incurred in shipment of the property to the original recipient will remain charged against the MDA appropriation under the program of the original recipient.

C. Redistributable MDAP property which cannot be disposed of in accordance with A or B above shall be determined excess MDAP property.

V. DISPOSITION OF EXCESS MDAP PROPERTY

Disposition of excess MDAP property in the custody of a Department of Defense agency shall be in accordance with Department of Defense memorandum, Department of Defense Conservation, Utilization and Disposal Policy, dated March 14, 1951.

VI, GENERAL PROVISIONS

Disposition of MDAP property in the custody of a recipient foreign government title having passed to that government, and not acceptable by the United States as redistributable MDAP property, will be agreed between the United States and the government concerned, subject to the following conditions:

A. Disposal will be made in such a maner as will preclude direct or indirect export to the U. S. S. R. or any of its satellite countries, including Communist China and Communist North Korea.

B. Salvage and scrap containing appreciable quantities of recoverable strategic or critical materials, as indicated on an MDAP salvage list to be published from time to time by the Munitions Board (Department of Defense) with the approval of ISAC shall be returned to the United States.

C. Salvage and scrap, when disposed of within the recipient countries, will be channeled to support the defense program of that country or friendly countries.

ATTACHMENT B

AUGUST 2, 1951.

MEMORANDUM FOR THE DIRECTOR, INTERNATIONAL SECURITY AFFAIRS, Department OF STATE

Subject: Proposed ISAC policy governing disposal of redistributable and excess MDAP property.

1. Reference your memorandum, same subject, dated July 2, 1951, the Mutual Defense Assistance Act of 1949, as amended, stipulates in section 408 (f) that equipment or matériel procured to carry out the purpose of title I of the act may be retained by or for the use by departments or agencies of the United States under certain conditions with the approval of the President or on congression. direction. In addition, each allocation of funds to the Department of Defense stipulates that, "if military considerations make necessary the diversion of matériel charged to MDAP appropriations, the charges must be maintained and MDAP supply action effected by immediate allocation, without further charge, of equivalent items from procurement effected for other United States military purposes. Matériel to be substituted for diverted items then will be shown on MDAP supply reports, as due to be delivered for MDAP program requirements, in quantities, types, and condition, equivalent to that of the diverted matériel. No charges for such diversions, or for the replacement procurement, may be made to MDAP appropriations other than as were provided for in commitments or obligations effected at the time diversion occurred. However, when superior items are to be substituted, in accordance with FMACC D-9, appropriate additional item charges may be made to MDAP appropriations."

2. The addition of paragraph B to section I and the minor changes to paragraphs B1 and 2 of section IV and paragraph 2 of section VI are acceptable to the Department of Defense. It is suggested, however, that the enumeration of paragraphs in section VI be by letter rather than number in order to preserve continuity of format.

3. (a) The MAAGS are responsible for screening requirements and supervision of maintenance and use, in an advisory capacity, of matériel furnished under the MDAP and, consequently, can be expected to report, through military channels, redistributable matériel observed. Due to the limited staff of the various MAAGS, we must rely on the recipient governments to provide information relating to stocks on hand and the condition thereof. Furthermore, there is a distinct possibility that redistributable matériel will be in the hands of the recipient governments after the MAAGS' missions have been completed.

(b) The proposed policy, when approved and published, will be disseminated to all MAAGs and to various Department of Defense agencies for their guidance. Due to the fact that possession is in the foreign governments and the items and quantities procured are to meet the deficiencies of those governments, it is considered essential that policy guidance given the United States agencies specify the source of the impetus for determination of excesses. In this instance, it is believed to be properly the responsibility of the recipient countries.

4. In view of paragraph 3 above, the Department of Defense does not concur in the proposed revision of paragraph A2 of section II and paragraphs A and B of section III but recommends ISAC approval of those paragraphs as stated in the draft forwarded under cover of my memorandum, same subject, dated May 29, 1951.

(Signed) PETER C. HAINS 3d,

S. L. SCOTT,

Major General, United States Army,
Director, Office of Military Assistance.

FEDERAL SUPPLY MANAGEMENT

(Overseas Survey)

THURSDAY, OCTOBER 18, 1951

HOUSE OF REPRESENTATIVES,

INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE

OF THE COMMITTEE ON EXPENDITURES
IN THE EXECUTIVE DEPARTMENTS,

Washington, D. C.

The subcommittee met at 10 a. m. in room 1015, New House Office Building, Hon. Herbert C. Bonner, chairman of the subcommittee, presiding.

Members of Congress present: Herbert C. Bonner, chairman; Charles B. Brownson, and George Meader.

Staff representatives present: Christine Ray Davis, chief clerk; Thomas A. Kennedy, general counsel; Herbert Roback, staff member; and Ray Ward, Bureau of the Budget.

Mr. BONNER. Mr. Brodsky, will you present the gentlemen who will appear today?

Mr. BRODSKY. Mr. Chairman, for this morning's session we have arranged to have a briefing by the Air Force and by the Navy. We have also arranged, at approximately 11 o'clock, to have a meeting with Generals Reber and Fenn, of the Army, and possibly Admiral Hauser of the Navy. With your permission I would like to ask that the 11 o'clock meeting be in executive session.

Mr. BONNER. All right.

Mr. BRODSKY. The first presentation will be made by Colonel McCawley of the Air Force, who will in turn introduce other Air Force speakers to speak about the Air Force supply system and the Air Force bases.

STATEMENT OF COL. JOHN C. MCCAWLEY, MATERIAL PROGRAM CONTROL OFFICE, OFFICE OF THE DEPUTY CHIEF OF STAFF (MATÉRIEL), UNITED STATES AIR FORCE

Colonel MCCAWLEY. Mr. Chairman, we have this morning a brief presentation of the Air Force supply system slanted particularly toward the overseas, in view of your pending trip.

There are six particular points I would like to emphasize, on which this supply system is based.

First is the complete undivided responsibility and authority at all levels of command.

Second is the control over all assets in the Air Force. You will find that we get reports even from the lowest unit.

NOTE-Asterisks denote classified material deleted for security reasons.

Third is the minimum pipeline and stockage objectives. I think you are particularly interested in that.

Fourth, utilization of reparable assets to the maximum extent feasible to meet all of our program. That includes not only reparable assets but also the use of any surplus that might be declared; and I know the committee is particularly interested in that, too.

Fifth, item and case control of overseas shipments. That is a very interesting device we have so that the overseas commander knows exactly what is coming over to him. In the event there is a ship sunk, we can replace the items on the ship with a minimum loss of time. That would be an interesting procedure for the subcommittee to look into as it goes around.

Sixth, sound management programs.

This morning we have a presentation of about 30 minutes, going into the existing Air Force supply system. The presentation is not quite as formidable as it looks from these charts. Major Steelnack will give that presentation.

I would like to suggest, Mr. Chairman, that this presentation would go off more smoothly and quickly if we ask that you reserve questions until after the presentation.

Mr. BONNER. Yes.

Colonel MCCAWLEY. Major Steelnack.

STATEMENT OF MAJ. E. H. STEELNACK, MANAGEMENT BRANCH, PROGRAMS CONTROL GROUP, DIRECTORATE OF SUPPLY AND SERVICES, DEPUTY CHIEF OF STAFF (MATÉRIEL), UNITED STATES AIR FORCE

Major STEELNACK. The Air Force has developed a sound, controlled, efficient, and effective supply system. In the design and operation of that supply system we have used the experiences of big businessmen and the aggressiveness of our officer and civilian personnel. This system is geared to cope with the accelerated pace of this current national emergency and with the future technical growth of air power.

The Air Force supply system is basically the same supply system which is used by civilian industry to get its products into the hands of the ultimate consumers. Its evolution parallels the development and employment of the airplane as a tactical weapon and as a transportation vehicle for the movement of men and matériel. As the airplane came into its own the responsibility for supply and maintenance of parts peculiar to aircraft was gradually transferred to Air Force commanders, until full and complete responsibility for the duties relating to the management of parts peculiar for aircraft were an integral part of command responsibility.

Under the Chief, Air Corps, and later the Commanding General, Army Air Force, this parts-peculiar concept matured. Air depots were constructed for the storage and distribution of parts peculiar to aircraft and at base level Air Corps warehouses appeared side-byside with Army Technical Service Force warehouses.

In 1944 the Air Force published TM38-410, which was the Army Air Force Base Supply Procedure Manual. Its counterpart was TM38-403, the Army's Station Supply Procedure Manual. One supply system for all supplies, both Army and Air came into being.