REAL AND PERSONAL PROPERTY OF THE DEPARTMENT

OF DEFENSE AS OF 30 JUNE 1958

SUMMARY

The National Security Act of 1947, as amended, requires the Secretary of Defense to report annually to the President and to the Congress on the property records on **the fixed property, installations, and major equipment items, and stored supplies of the military departments maintained on both a quantitative and monetary basis ***" (sec. 410 of the National Security Act, as codified in sec. 2701 of title 10, United States Code).

Previous reports made pursuant to section 410 were as of December 31, 1954, December 31, 1955, and December 31, 1956. In addition, reports of similar nature were made to the Committee on Government Operations of the House of Representatives as of June 30, 1955, June 30, 1956 and June 30, 1957.

The current report-as of June 30, 1958-has been designed to satisfy both reporting requirements: the statutory requirement as prescribed in the National Security Act and the requirement of the Committee on Government Operations. Hereafter, only one annual report will be published and it will be as of the end of each fiscal year. The Department of Defense reports real and personal property with an aggregate value (based principally on acquisition cost) of $149.5 billion as of June 30, 1958. This is an increase of $3.5 billion since' the end of the prior fiscal year.

The total value as reported is exclusive of: (1) properties and equipment of the national industrial plant and equipment reserve, which is under the custody of the General Services Administration; (2) supplies and equipment in overseas field Army depots; (3) properties and supplies under the jurisdiction of Civil Works Division, Office, Chief of Engineers, Department of the Army.

During fiscal year 1958 the personal property inventory increased $2.4 billion. Within this broad class of property, however, there were some major shifts-both increases and decreases. All three Departments reported large increases in the equipment issued for use-aircraft, ships, weapons. The amount of equipment issued to using units (active and reserve) increased $4.5 billion. A more detailed accounting for this increase is presented in the separate departmental analyses in part II, section B. On the other hand, the amounts in the supply system and in the hands of property disposal officers decreased $2.3 billion. The principal causes for this decline, reported by the Departments is the large amount of surplus disposed of and sales of stock fund inventories in excess of additions to such stock fund inventories.

A major step to improve supply system reporting was taken during 1956 when a uniform inventory management reporting system was

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prescribed. All four services have now implemented the Department of Defense instruction which established this reporting system. Consequently, a consolidated summary of the supply inventories of the four services is available for the first time. (See table 30.) Approximately one-third of the stocks in the supply system are being held for current peacetime operations; over one-fourth are being held for current mobilization requirements; slightly less than one-fourth are excess stocks being screened for possible use by other departments; and the remaining stocks are in long supply which are retained to meet future requirements, since it is more economical to retain them than it is to dispose of them and later have to repurchase them. Stock fund inventories totaling $8.9 billion and representing about one-fifth of the total inventories in the military supply systems, are summarized in table 29. With the exception of a small increase reported by the Marine Corps, the services reported a substantial decrease in stock fund inventories-as a result of sales and disposals exceeding new procurement.

During fiscal year 1958 the real property inventory increased by $2.0 billion, with $1.1 billion of this increase reported by the Air Force. This increase was largely attributable to recording of properties constructed during recent years and transferred into inventory.

Table 1 shows the geographical location of the properties. Table 2 shows the amount of each class of property held by each military department. Of the total of $149.5 billion of real and personal property, the Army holds $39.6 billion, the Navy $57.8 billion, and the Air Force $52.1 billion. Department of Defense properties consist of $26.9 billion real property; $2.8 billion construction in progress; $47.7 billion equipment and supplies in the supply system; $62.0 billion military and general equipment in use; $5.5 billion production equipment; $0.4 billion industrial fund inventories; and $4.2 billion of surplus personal property held by property disposal officers.

Basis of valuation.-Land and buildings and long-life equipment, such as ships, are priced at acquisition costs. Acquisition cost of ships, as well as land and buildings, are often substantially below current replacement values. Construction in progress is valued on the basis of cost of materials and labor incorporated in the projects under construction. Inventories of consumable goods are at standard prices, representing replacement cost, or at estimated purchase price.

TABLE 1.—Summary of property holdings, by locations, military department, and type as of June 30, 1958

1 Excludes real property under the jurisdiction of the Civil Works Division, Office, Chief of Engineers, Department of the Army, in the amounts of: Worldwide, $3,911 million; continental United States, $3,904 million and Territories and possessions, $7 million.

Excludes $1,787 million of work in place on construction under the jurisdiction of the Civil Works Division, Office, Chief of Engineers, Department of the Army.

Excludes personal property under the jurisdiction of the Civil Works Division, Office, Chief of Engl. neers, Department of the Army, in the amounts of: Worldwide, $188 million; continental United States, $187.8 million and Territories and possessions, $0.2 million. Includes $2 million personal property of the Office of the Secretary of Defense.

• Includes reserve fleet.

Includes supplies afloat and active fleet.

TABLE 2.-Summary of property holdings by military department and type and class as of June 30, 1958

1 Excludes personal property inventories under the jurisdiction of Civil Works Division, Office, Chief of Engineers, Department of the Army, in the amount of $188 million. Includes $2 million personal property of the Office of the Secretary of Defense.

Excludes real property in the amount of $3,911 million under the jurisdiction of the Civil Works Division, Office, Chief of Engineers, Department of the Army.

Excludes $1,787 million of work in place on construction under the jurisdiction of the Civil Works Division, Office, Chief of Engineers, Department of the Army.

* Consists of raw materials, supplies, and work in process.