I appreciate the opportunity to respond to these questions. I shall, of course, be pleased to furnish any other information which the committee might desire. Sincerely yours, DAVID E. BELL, Director. APPENDIX 6.-UPGRADING OF STRATEGIC MATERIALS (STATEMENT DATED AUGUST 23, 1961, SUBMITTED AT THE REQUEST OF THE SUBCOMMITTEE BY FRANK B. ELLIS, DIRECTOR, OFFICE OF CIVIL AND DEFENSE MOBILIZATION) JUSTIFICATION The Stock Piling Act, passed in July 1946, provides in section 3(c) for converting materials to a form "best suitable for stockpiling" and the Defense Production Act of 1950, as amended, provides in section 303 (d) authority for processing and refining materials. The vulnerability of the U.S. metals industry to enemy attack by nuclear weapons is now so acute that it is imperative we upgrade some of the materials in the stockpile. We need a minimum readiness inventory in order to assure military and essential civilian production for survival. Major savings that can be effected by upgrading in advance of an emergency are: 1. For nuclear war: (a) Saves manpower, materials and investment required to rebuild severely damaged or destroyed plants. (b) Saves capacity which may survive for other manufacturing purposes. (c) Saves transportation. (d) Saves time. 2. For limited war: (a) The same reasons listed in (b), (c), and (d) above. (b) In addition, upgrading now would save money by avoiding the higher prices which are likely to occur in a period of mobilization. 3. In peacetime: (a) Reduction of bulk ores to upgraded materials in some cases will provide savings in storage space and costs. (b) Payment in kind eliminates cash outlay by the Government at a time when defense expenditures are rising. (c) Despite sizable gains in U.S. employment, we still have notable pockets of unemployment in areas where upgrading can be done. BACKGROUND The stockpiling program, initiated shortly after World War II, provided generally for accumulating inventories of materials in the lowest form practicable for long-term stockpiling. The predominant idea was to provide protection against loss of foreign sources of supply in an emergency. Manganese and chromium, for example, were stockpiled in the form of crude ores and concentrates, because it was practicable to meet stockpiling needs in those forms. Bauxite was stored to provide a source of crude material for aluminum. An aluminum metal stockpile objective was not added until 1949 when it was determined that the refining capacity could not match requirements for an emergency. Copper, lead, and zinc, however, have been stored in the form of metals from the beginning of the program in 1946, because it was not practicable to store the ores and concentrates. An additional step in upgrading the stockpile was taken in 1950 when it was determined that the manganese, chromium, and tungsten stockpiles should be partly in the form of ferromanganese, ferrochrome and ferrotungsten, respectively, all key materials for the Nation's steel industry. The following year, 1951, stockpiling of tungsten metal powder, ferromolybdenum and molybdic oxide was added to the crude forms of these materials. In 1953 oxygen-free copper and in 1954 beryllium-copper master alloy and tungsten carbide powder were added to the list of upgraded forms for stockpiling. The President placed into effect in 1954 a recommendation of the President's Cabinet Committee on Minerals Policy that upgrading of stockpile materials should normally be done when it could be accompished at favorable prices and in periods of lowered economic activity thus providing domestic employment opportunities and maintenance of plants and facilities which are essential ele ments of the mobilization base. The committee, however, did not recommend any new programs for upgrading. In 1956 a determination was made that a small part of the manganese and chromium stockpiles should be in the refined-metal forms, as well as in the ferroalloys that were approved in 1950, in response to the rapid growth in recent years in the use of the high-purity metals. In 1957 and the early part of 1958 various studies were made of the need for further emphasis on upgrading. These were undertaken by the Department of Commerce, various Government task groups and committees and by a Special Stockpile Advisory Committee, consisting of nongovernment personnel. This committee recommended a minimum readiness inventory of upgraded materials at or near the site of consumption. Defense Mobilization Order V-7, effective on June 30, 1958, stated the policy which in essence was that a part of the objective for a basic material should be in an upgraded form when there is danger of a processing bottleneck developing in an emergency because of damage to facilities or other reasons. Under this upgrading policy, the strategic materials situation has been reexamined to ascertain the extent to which further upgrading is necessary. Attention has been given especially to what have come to be known as the spaceage materials. As is well known, much of the problem of achieving improved performance in missiles and space vehicles depends on providing materials that will withstand the rigorous conditions that are encountered in the conquest of space. Therefore, special-property materials are given prominent consideration. Up to the present time, a total of 25 subobjectives has been established for upgraded forms of strategic materials. A list of the materials is attached. The size of the objectives and inventories cannot be shown inasmuch as they are classified data. Because of the recent introduction of many of the subobjectives for the upgraded forms, procurement is not as far along as for the stockpile generally. Only 9 of the 25 upgrading subobjectives have been met, as against 62 of the 76 overall maximum objectives for the strategic stockpile. Procurement is going ahead under the Stock Piling Act, using surplus materials as payment in kind to meet the cost of processing whenever feasible, and by bartering surplus agricultural commodities for the upgraded forms. UPGRADED FORMS OF STRATEGIC MATERIALS FOR WHICH STOCKPILE SUBOBJECTIVES HAVE BEEN ESTABLISHED Beryllium copper mastor alloy. Chromium ferro, low carbon. Chromium ferro, silicon, low carbon. Columbium metal. Columbium carbide powder. Columbium, ferro. Copper, oxygen free. Manganese, ferro, standard high carbon. Manganese, ferro, medium and low carbon. Manganese, metal, electrolytic. Manganese, silicon, low carbon. Molybdenum, ferro. Molybdic oxide. Sebacic acid. Tantalum metal. Tantalum carbide powder. Tantalum-columbium, ferro. Tungsten, carbide powder. Tungsten, ferro. Tungsten metal powder, hydrogen reduced. APPENDIX 7.-DEVELOPMENTS AFFECTING DEFENSE FOOD RESERVES (SUMMARY STATEMENT DATED AUGUST 23, 1961, SUBMITTED AT THE REQUEST OF THE SUBCOMMITTEE BY FRANK B. ELLIS, DIRECTOR, OFFICE OF CIVIL AND DEFENSE MOBILIZATION) Analyses of various possible attack patterns on the United States made over the past several years have consistently indicated that there would be sufficient food in the United States to feed the surviving population postattack until food production could be resumed. These analyses have also indicated that much of this food would not be available at points of need in the early postattack period because of distribution problems resulting from shortages of essentials such as fuel, transportation, etc. New England and offshore areas such as Alaska, Hawaii, and Puerto Rico are among areas which would suffer critical food shortages before postattack distribution could be resumed in volume. As a result of these analyses further actions were taken to assure adequate supplies of food in the event of attack. 1. In February 1956 the Department of Agriculture established a policy, approved by the Director, Office of Defense Mobilization, and the Administrator of the Federal Civil Defense Administration, to apply defense criteria in selecting storage sites for Commodity Credit Corporation stocks. These criteria provided that where substantial extra costs or substantial deviations from normal trade channels were not involved storage sites were to be selected which were relatively safe from attack effects and would be accessible for use in the event of attack. 2. In June 1959 the Department of Agriculture completed a report entitled "Food Stockpiles for Civilians in Offshore Areas of the United States." This report indicated that in the event of interruption of waterborne shipping for 60 days a number of our offshore areas would sustain food shortages. 3. In September 1959 Governor Quinn of Hawaii requested that steps be taken to establish food reserves in Hawaii. As a result of negotiations, Governor Quinn submitted a proposal in June 1960 providing for joint Federal-State action to establish a food stockpile in Hawaii. It was not possible to review this proposal and submit the necessary requests for funds to the Congress before it adjourned in the summer of 1960. Subsequent consideration of Hawaii's requests was included in the total national program discussed later in this paper. 4. In January 1960 the Office of Civil and Defense Mobilization requested the Department of Agriculture to report what steps would be required to provide in each State a 6 months' supply, at normal consumption rates, of wheat for the human population and feed grains for the livestock population. In June 1960 the Department of Agriculture made a report which indicated that substantial stocks of wheat and feed grains would have to be moved, principally to the east and west coasts in order to provide a 6-month supply. The Secretary of Agriculture announced in August 1960 that, under existing authority and funds, stocks of Government-owned grain in States along the eastern seaboard were being increased materially as a part of the overall program of increasing civil defense "readiness." 5. In March 1961 Governor Brown of California requested that a survey team be sent by the Office of Civil and Defense Mobilization and the Department of Agriculture to discuss with him and his staff the food situation in California. Following the visit of the survey team, Governor Brown, in May 1961 requested that the Department of Agriculture relocate substantial stocks of wheat to California pending completion of a national survey which he had been informed was being made. 6. On March 2, 1961, the Director of the Office of Civil and Defense Mobilization wrote to the Secretary of Agriculture concerning the studies that had been made of food stockpiling needs and requesting the Department of Agriculture to develop a comprehensive program in this area. On May 5, 1961, the Under Secretary of Agriculture advised that a task force had been appointed to examine the Department of Agriculture's policies on the storage and stockpiling of agricultural commodities and foods for defense purposes. Following staff discussions between the two agencies, the Director of the Office of Civil and Defense Mobilization suggested to the Department of Agriculture on June 14, 1961, three policy points for consideration of the task force: a. Maintain an inventory of Government-owned wheat (or comparable unprocessed food) in each of our States and offshore areas equal to 1 year's normal consumption by the population of the State or area. Such stocks to be rotated into regular foreign and domestic trade outlets including food for peace. b. Maintain an inventory of Government-owned feed grains (or wheat) in each of our livestock producing States and offshore areas equal to 6 months' normal consumption by the livestock population of the State or area. stocks to be rotated into regular foreign and domestic trade outlets including food for peace. Such c. Maintain an inventory of Government-owned ready-to-eat food in each of our States and offshore areas equal to 90 man-days of food based on a balanced diet of 2,600 calories per day for the population of the State or area. Such stocks to be rotated through the direct distribution program for school lunches and relief feeding and, possibly, food for peace. On July 8, the Under Secretary of Agriculture advised that the task force had been considering the policy points proposed by Mr. Ellis and indicated that he would be prepared to discuss the Department of Agriculture's recommendation in the near future. At a meeting on July 27 the Under Secretary of Agriculture and members of his staff met with the Director of the Office of Civil and Defense Mobilization and members of his staff and presented tentative recommendations for relocating CCC stocks of wheat to provide supply sufficient to assure a 6-months' supply of wheat for people in areas of population concentration at the per capita rate of three-quarters of a pound per day. There was preliminary discussion concerning the other two policy points suggested but the Department of Agriculture indicated that it was not at that time prepared to make firm recommendation concerning these points. It proposed that relocation of wheat be undertaken as the first step and that action on stocks of ready-to-eat food and feed grains be deferred to permit further study. Further staff discussions resulted in modification of the plan for relocating wheat to establish a 4-month supply in and near each of the country's areas of population concentration. In accordance with the recommendation of the Director of the Office of Civil and Defense Mobilization, President Kennedy on August 14 issued an Executive order assigning to the Department of Agriculture responsibility for establishing and maintaining food stockpiles under the provisions of the Federal Civil Defense Act of 1950. On that same date, he transmitted to the Congress an appropriation request for 47.2 million to cover the costs of relocating 126 million bushels of federally owned wheat from current storage sites to areas in which food shortages could exist following attack. The stocks would be relocated close to 191 metropolitan areas with a total estimated population of 95 million, and would thus make available three-fourths of a pound of wheat per person per day over a 4-month period. Attached are copies of Executive Order 10958 and the White House press release concerning the appropriation request. The Department of Agriculture and the Office of Civil and Defense Mobilization are continuing studies to determine what additional action may be required to assure an adequate supply of food in all parts of the country in the event of a nuclear attack. APPENDIX 8A.-SUMMARY STATEMENT ON CIVIL DEFENSE OPERATIONS, DATED AUGUST 1, 1961, SUBMITTED AT THE REQUEST OF THE SUBCOMMITTEE BY THE COMPTROLLER GENERAL OF THE UNITED STATES COMPTROLLER GENERAL OF THE UNITED STATES, Hon. CHET HOLIFIELD, Chairman, Military Operations Subcommittee, Committee on Government Operations, House of Representatives. DEAR MR. CHAIRMAN: In accordance with your request of July 28, 1961, for a summary statement on the major findings of our investigations and surveys of the Office of Civil and Defense Mobilization (OCDM), the following information is presented: We are making reviews of three OCDM programs: the Federal contributions program, the surplus property program, and the survival projects program. The fieldwork on these reviews by the operating groups is almost completed, but staff reviews have not been completed. The information which we are presenting, therefore, represents that developed by our operating groups performing the reviews and should be considered in that light. Further, although the findings in each of our reviews have been brought to the attention of OCDM regional and headquarters officials, OCDM has had the opportunity to furnish us with their written comments on the information and conclusions set forth for only the Federal contributions program. Accordingly, we have not had available to us for consideration the formal views of these officials or such additional facts as they may have on information and conclusions presented for the surplus property and survival projects programs. FEDERAL CONTRIBUTIONS PROGRAM The Federal contributions program was initiated by OCDM under authority contained in the Federal Civil Defense Act of 1950. The program was intended to provide a means for the States and their political subdivisions to obtain Federal funds for up to one-half of the cost of civil defense materials, buildings, equipment, and training. Over $100 million of Federal funds have been obligated under the program since its inception in 1951. The intent of the Congress is that items approved under the Federal contributions program should be for civil defense and over and above the normal requirements of the applicants. OCDM has acknowledged this intent, but our review has shown that its administration of the program has resulted in the expenditure of Federal funds for items which States and political subdivisions acquired primarily for their normal governmental activities rather than for civil defense. The program, in the 9 years of operation since 1951, has been instrumental in stimulating the acquisition or construction of many civil defense items by the States and their political subdivisions. However, our review of project applications, with a Federal share of about $8.4 million, has shown that applications with a Federal share of about $5.2 million were primarily for items which were not over and above the normal requirements of States and their political subdivisions. This amount represents about 62 percent of the dollar total of the project applications reviewed. In its administration of the program over the years, OCDM has relied primarily on the applicants' certifications and has not developed standards or criteria for use by its regional offices so that consistent ́independent determinations could be made as to whether items requested were over and above the applicants' normal requirements. We recognize that the development of standards or criteria to completely evaluate the normal needs of applicants would not be practicable, but criteria could have been developed to allow a quantitative analysis of normal needs. Without such criteria, OCDM regional offices do not have a reasonable and consistent basis for approval of project applications. For certain types of items, such as radio communications equipment, training centers, traffic control equipment, helicopters, hospital generators, cafeteria equipment, and firearms, our review showed a high incidence of cases where the applicants obtained the items for use in carrying out normal governmental activities. We would like to discuss certain of these types of equipment to illustrate the tentative conclusions that have been reached. The acquisition and leasing of communications equipment represent the largest segment of the Federal contributions program. From fiscal year 1952 through fiscal year 1960, about $41.5 million, or 43 percent of the total cost of the Federal contributions program, has been obligated for the procurement, leasing, and maintenance of communications equipment. Communications equipment, such as base stations, mobile radios, and related accessories, has been obtained under the program by State and local police, fire, highway, and conservation departments. OCDM has approved the replacement or expansion of existing communications systems and also procurement of complete, new systems. Our examination of records, and discussions with responsible State and local officials, for 59 applications, Federal share about $3.6 million, showed that the communications equipment involved was needed by applicants primarily to carry out effectively their normal day-to-day responsibilities. A few examples of situations found in our review of communications applications are cited as follows: A State highway department obtained OCDM approval for a statewide radio communications system consisting of 166 base stations and 2,094 mobile units, Federal share $923,890, one of the largest systems ever approved under the program. This system was acquired to more efficiently carry out the normal day-today responsibilities of the department for operating a statewide highway system, including those for maintaining, repairing, and clearing highways and assisting in traffic control rather than for civil defense as certified by the applicant. |