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![handle is hein.gao/gaobaaxjf0001 and id is 1 raw text is:
DOCURENT RESURE
06102 - [B1526563]
[Maintaining Excess Capacity in DOD Industrial Reserve
Facilities Costs the Government Billions of Dollars a fear].
LCD-78-314; B-140389. say 31v 1978. 8 pp.
Report to Secretary, Department of Defense; by 9cbert G.
Rothuell (for Fred J. Shafer, Director, Logistics and
Communications Div.).
Issue Area: Facilities and material Management (700).
Contact: Logistics and Communications Div.
Budget Function: National Defense: Department of Defense -
Military (except procurement & contracts) (051).
Organftation Concernod: Departmant of the Navy; Department of
tL. Air Force.
Authority: National Industrial Reserve Act of 1948. 10 U.S.C.
2667.
The National Industrial Reserve Act of 1948 authorized
the Department of Defense (DOD) to maintain a nucleus of
Government-owued industrial plants and a reserve of machine
tools and other manufacturing equipment tc Priply the needs of
the Armed Forces in a national emergency. To sarch 1977, DOD had
131 industrial facilities, 51 Government operated and 80
contractor operated. The Secretaries of the military services
can rent the excess production capacity of these plants if, in
their opionion, it is advantageous to the Government. Two types
of rental agreements can be used: the facilities contract
authorized by thp Armed Services Procurement Regulation and the
nondefense lease. In the case of Government-owned,
contractor-operated plants, it is difficult to determine what
are adequate rental rates. However, there was some indication
that the rental rates at six plants visited ere low. At the
five Air Force plants surveyed, heavy capical-type
reLabilitation of plant and equipment was commonly financed by
applying rent for commercial production to the cost as allowed
under nondefense leases. The Secretary of Defense, in
conjunction with the sa-rvice Secretaries, should provide
guidance as to which type of rental agreement to use in various
circumstances, review the reasonableness of rental rates in
current agreements, and determine the adequacy of legislative
and executive authorization and oversight of capital-type
rehabilitation projects in plants under nondefense leases. (RRS)](ViewImageLocal?handle=hein.gao/gaobaaxjf0001&div=1&collection=&method=preview&ext=.png&size=3)