SPECIAL FOREIGN CURRENCY PROGRAM STATEMENT OF DON R. BRAZIER, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) ACCOMPANIED BY: WILLIAM H. T. GLENN, DIRECTORATE FOR PLANS AND SYS- AARON J. COHEN, FOREIGN FINANCIAL AFFAIRS BRANCH, CAPT. LLOYD F. MILLER, USN, DIRECTOR OF RESEARCH DIVI- WILLIAM K. TAYLOR, MILITARY CONSTRUCTION PROGRAM- MAURICE H. LANMAN, ASSISTANT GENERAL COUNSEL (FISCAL BUDGET REQUEST Chairman ELLENDER. The last item to be considered is the "Special foreign currency program." For fiscal year 1972, $12.3 million is requested. The program and financing information on page 1 of the justifications and the "Description of undertakings" informations on pages 5 through 11, with appropriate security deletions, will be included in the record. (The information follows:) DESCRIPTIONS OF UNDERTAKINGS OPERATION AND MAINTENANCE Participation in social insurance program-Navy (UAR pounds), $176,000. This continues a prior year Special Foreign Currency Program undertaking for U.S. participation in U.A.R. social insurance for local national employees at the U.S. Naval Medical Research Unit No. 3 in Cairo. The amount requested represents requirements for the employer share over a four-year period." Repair, maintenance and alteration of Naval Medical Research Unit Facilities Navy (UAR pounds), $777,000. This undertaking provides for repairs or alterations to the facilities in Cairo, CAR used for the research functions at the Naval Medical Research Unit No. 3 (NAMRU-3). The continuing deferral of repair, maintenance and alterations work over the last few years has resulted in a gradual deterioration of these facilities. The facilities on which the work is to be performed include the biochemistry laboratory, virology laboratory, medical zoology buildings, medical department, medical library, vehicle covered storage area, bacteriology laboratory, pathology laboratory, animal house, photohematology laboratory, water distribution, security lighting, electrical distribution, roads and walks, and telephone facilities. 61-738-71-pt. 1-33 Repair, maintenance and alteration of Naval Training Command FacilitiesNavy (Morocco dirhams), $960,000. This undertaking provides for repairs or alterations to the training command facilities at Kenitra, Morocco. This includes repairs to hangars, fuel tanks, school and administration buildings and other structures and certain utility systems. The continuing deferral of repair and maintenance work over the last few years has resulted in a gradual deterioration of these facilities. Repair, maintenance and alteration of Naval Communications Station Facilities-Navy (Morocco dirhams), $733,000. This undertaking provides for repairs or alterations to the Naval Communications station facilities at Sidi Yahia and Bouknadel, Morocco. This includes repairs to administration, personnel support and recreation buildings, other structures and utilities systems. This work has been deferred for a number of years with the result that there has been a gradual deterioration in these facilities. [Deleted.] Repair to Naval Training Command Airfield-Navy (Morocco dirhams), $480,000. This undertaking provides for repairs to the runways, drainage systems, overrun areas, and shoulders on the airfield at the training command at Kenitra, Morocco. This work is required to correct deteriorated facilities resulting from a reduced maintenance level for a number of years. This work can now be accomplished with Treasury-owned excess Morocco currencies to be made available with funds from this appropriation. Travel in connection with excess currency undertakings-Navy (Various currencies), $5,000. This undertaking will finance travel when needed for advance planning and administration of excess currency undertakings. Total Operation and Maintenance, $4,161,000. PURCHASE OF GOODS AND EQUIPMENT Furniture for family housing-Army (Yugoslavia dinars), $300,000. This undertaking covers the foreign currency portion of an Army proposal to buy furniture from Yugoslavia sources using part Yugoslavia dinars purchased from Treasury with Special Foreign Currency Program funds and part dollars from the Family Housing, Defense appropriation. This technique of combining excess currencies and dollars is considered appropriate in view of the P.L. 480 agreements which permit the foreign government to refuse to accept payment with 100% of their own currencies in cases where the undertaking is for the export of merchandise from the country. The furniture is needed to replace badly worn furniture in family quarters of Army personnel in West Germany. The items to be procured under this proposal are principally wood items, including bedsteads, book cases, buffets, dining chairs, china cabinets, kitchen cabinets, desks, mirrors, servers, dining tables and wardrobes. Furniture for family housing-Navy (India rupees), $580,000. This undertaking covers the foreign currency portion of a Navy proposal to buy furniture from India sources, using part excess India rupees purchased from Treasury with Special Foreign Currency Program funds and part dollars from the Family Housing, Defense appropriation. The basis for this financing technique is the same as contemplated for the Army undertaking described above. The furniture is needed for new family housing quarters being constructed in the Philippines and Guam. While this undertaking is being initiated as a Navy proposal; it is contemplated that some portion of these funds would also be available for furniture in family housing provided for military personnel from the other services. It is planned to procure most of the furniture items which would be used in family housing quarters in this region. Barracks furniture and equipment-Navy (Morocco dirhams), $515,000. This undertaking covers procurement and installation of furniture and equipment in the personnel support facilities at the U.S. Naval Training Command, Kenitra, Morocco. These items are needed for replacement of worn-out equipment or to augment existing equipment. Items to be obtained consist of barracks furniture, kitchen and cafeteria equipment, and other furnishings and equipment for personnel support facilities. Total Purchase of Goods and Equipment, $1,395,000. RESEARCH ! Navy Research Program (UAR pounds). Individual research projects included are: (1) Control of insect vectors and pests of military significance, $250,000. The purpose of this undertaking is to isolate and characterize pheromones and pathogenic microorganisms and parasites common to insect vectors and pests of military importance and to screen native plant life for potential repellants or attractants. (2) Vector control and prophylaxis or parasitic, microbial, viral and rickettsial disease, $750,000. This undertaking is to determine improved methods of vector control and prophylaxis (e.g. vaccine development) for the more important parasitic, microbial, viral and rickettsial diseases endemic to the UAR. In addition, the testing of vaccines (e.g. meningitis, group A) produced in the U.S. is also planned. (3) International health research and development, $1,550,000. This undertaking is for study of infectious diseases in virology, entomology, parasitology, bacteriology, rickettsiology, etc., which are unique to the host country. Total (UAR), $2,550,000. Navy Research Program (Yugoslavia dinars). One project is included as follows: (1) Physiology of fatigue, $355,000. This undertaking is for research on the physiological, biochemical and psychophysiological aspects of fatigue that could lead to the development of fatigue preventing (or alleviating) techniques that would offer a substantial operational advantage to our military personnel. Total Research, $2,905,000. CONSTRUCTION Family Housing-DIA (Morocco dirhams), $106,000. This undertaking is for the purchase of four family housing units in Rabat, Morocco for assistant attaché and attaché staff personnel. At present, housing is provided on a leasing basis. U.S. Government ownership of houses for this purpose will assure that adequate quarters will be available to personnel upon their arrival. Furthermore, the purchase of housing units financed with excess currencies through this appropriation will result in savings to the regular appropriation now financing the rental charges. Research Laboratory-Navy (UAR pounds), $436,000. This undertaking is for construction of a 9,200-square foot masonry building in Cairo, UAR for use by the Naval Medical Research Unit No. 3 (NAMRU-3). The building will contain a 60-bed ward, 4 doctors' offices, 4 examining rooms, patients' galley and mess hall, visitors' lounge, patients recreation facilities, nursing station, toilet and shower facilities and utility rooms. NAMRU-3 is presently located in a collection of temporary and permanent buildings adjacent to the Abbassia Fever Hospital on the outskirts of Cairo, UAR, performing medical research on diseases of military importance which are endemic and epidemic in the Middle East and Africa. This research development in the biomedical sciences provides essential information on diseases and medical problems of international importance, recommends control measures for communicable diseases, provides training in research techniques and conducts basic research for an understanding of the diseases studied. Intensive research is conducted in the basic sciences of bacteriology, mycology, entomology, heminthology, arachnidology, protozoology and medical zoology. Construction costs to replace the medical research laboratory (patients' ward) will be borne by the expenditure of Egyptian pounds. US funds for this construction will not be required. Engineering services for design construction and equipment can be purchased in United Arab Republic. The existing facility has deteriorated beyond economical repair due to age and lack of funds for maintenance and repair during the past five years. If this inadequate facility is not replaced, medical research personnel will not be able to meet the extremely high research standards required to fulfill the mission of NAMRU-3. Public Works Maintenance Facility-Navy (UAR pounds), $255,000. This undertaking is for construction of a 7,300-square foot masonry building in Cairo, UAR, for use by the Naval Medical Research Unit No. 3 (NAMRU-3). The building will include space for offices, air conditioning shop, sheetmetal shop, plumbing shop, shop stores, toilets, showers, locker room and garage. A new public works maintenance building will permit the demolition of the existing building which is located in the center of the compound and inefficiently utilizes the space available for parking. Public works functions are housed in a masonry and corrugated sheet steel construction building built during 1941-1942 by the British Army. Interior utility systems are inefficient, unreliable and deteriorating. Building O&M costs are estimated to be $3,000 per year higher than that necessary for the proposed facility. Existing structural constraints do not allow efficient office lay-out. Additional intangible benefits will be improved supervision, reduction in a potential fire hazard and removal of public eye-sores. Additional benefits are increased size of working spaces, toilet facilities and locker room with showers for changing of street clothes and cleaning up at the end of the work day. [Deleted.] Chairman ELLENDER. The principal witness will be Don R. Brazier, Deputy Assistant Secretary of Defense, Comptroller. You may proceed. PURCHASES FROM TREASURY OF EXCESS FOREIGN CURRENCIES TO Mr. BRAZIER. The special foreign currency program was established for Government agencies to promote the use of excess foreign currencies which are available to the United States. Under the language of this appropriation, the dollars appropriated may be used only to purchase from the Treasury currencies needed to finance undertakings which can be carried out with these excess currencies. RATE OF EXCHANGE Chairman ELLENDER. Are these funds purchased with American dollars at the rate of exchange? Mr. BRAZIER. They are purchased from the Treasury. Chairman ELLENDER. I understand that, but what units per dollar do you use, although they belong to the Treasury? Let us say the Treasury Department has 1 million rupees. Those rupees are worth 13 to a dollar in India. Do you buy them at that price? Mr. BRAZIER. Yes. Chairman ELLENDER. At the legal rate wherever the currencies come from? Mr. BRAZIER. That is right. Chairman ELLENDER. There is no advantage given. Whatever the rate of exchange is, in the country from which these currencies come, it is the rate used. Mr. BRAZIER. And you recognize that this is a transaction between the Department of Defense and the Treasury Department. Chairman ELLENDER. It is within the Government. Mr. BRAZIER. Yes. APPROPRIATION DISTINCTIONS There are two principal points in connection with this appropriation which distinguish it from all other Defense appropriation requests. ABSENCE OF DOLLAR OUTLAY First, the currencies spent under this program are already owned by the U.S. Treasury. Consequently, there are no net U.S. Government dollar outlays for transactions carried out under the program. While budget authority shows up as a part of DOD budget authority and obligations and outlays, there is no net outlay from the U.S. Treasury. Chairman ELLENDER. Except to buy the original currencies? Mr. BRAZIER. The currencies accrued to the credit of the U.S. Government as a result of operations of other programs, like Public Law 480 and so on. We are not buying any currencies from the other Government. These are currencies that are already owned by the United States. RATE OF EXCHANGE Chairman ELLENDER. Well, I will go back to the question I asked awhile ago. Suppose the Government should acquire under Public Law 480 rupees with a value of X dollars. At the time of acquisition the rate was 12 to 1. Let us say the Government has these rupees for 2 or 3 years and the rate in rupees would go to 15 to 1 instead of 12 to 1. At what rate do you buy them? Mr. BRAZIER. It is the current rate at the time that we buy them. Chairman ELLENDER. All right, would you proceed. PRIORITY UNDERTAKINGS AND REGULATIONS Mr. BRAZIER. Second, the undertakings which we propose for financing under this program are of such priority that they would not be included in the regular dollar appropriation requests. Nevertheless, our regulations require that projects must be clearly in the national interest; they must not involve excessive dollar costs and only minimal balance-of-payments outlays; and the projects cannot cover items which have been specifically denied by Congress in other appropriation or authorization requests or be above levels beyond specific congressional recommendations. For research, the criteria also limits undertakings to those which take advantage of (a) special geographical, environmental or cultural conditions, fauna or flora; (b) diseases, epidemiological situations; or availability of clinical material; or (c) unique research ideas highly relevant to the Department of Defense. In addition, it is required that each DOD component obtain clearance from the State Department to assure that the proposed undertakings are consistent with the foreign policy of the United States. PROPOSALS AND REVIEWS Our budget request is made up of undertakings that have been proposed by the military departments and defense agencies. These proposals are reviewed during the course of the annual budget review to assure their adherence to the criteria for this program. They are then consolidated into a single appropriation request for inclusion in the President's budget. Let me point out that the opportunities for the Department of Defense to use this program are quite limited. The countries whose currencies are on the excess list are not countries in which there is a significant defense involvement. |