by our forces of real property in those countries and for United States investment in such real property. In recent years negotiation of such agreements has provided some recognition of the residual value of United States facilities constructed with appropriated funds. Occupancy, in effect, is on a term basis varying from month to month (revocable at the sole discretion of the host government) to a firm term of 99 years. Areas occupied vary from small amounts of privately-owned space to large holdings of host governments.

In the occupied area of West Berlin, some occupancies have been effected through the use of requistions. These occupanies are financed from the Berlin Magistrate Budgets by the Federal Republic of Germany with Deutschmarks. This report includes only the cost,

United States of properties in this area.

if any,

to the

During the past few years, a number of properties in Japan, Korea, West Germany, and other countries have been released by the Department of Defense to the governments of these countries.

In certain countries, title to improvements constructed by the Department of Defense is vested in the United States until termination of agreements by which occupancy was established. Upon expiration of such an agreement disposition of the property is accomplished in accordance with terms of the agreement. (Title may pass automatically to the

host country or the property may be removed or sold by the Unites States or its ultimate disposition may be left open for further negotiations.) In other instances, residual value clauses provide that, upon termination

of agreements, the host government agrees to pay the residual value of the improvements constructed by the Department of Defense in such amounts as may be jointly agreed upon by the host government and the United States. These facts emphasize the desirability of awareness that our real property in foreign countries is carried on the books of the Department of Defense and in this report at its cost to the United States. The physical facility represented by an investment in a foreign country may be identical with a facility within the United States owned by our Government but it represents a very different type of an investment. It is an investment arising from the world situation at the time it was made and the resulting national commitments of the United States.

The report does not include any investment by the United States for Infrastructure (the NATO common infrastructure program), which is a term used to identify the fixed military facilities needed to support effective combat operations by the integrated NATO forces. Construction costs for

Infrastructure facilities are shared by all NATO nations. Actual con

struction is the responsibility of the nation in whose territory a project

is located.

Ownership and Status

The figures in Table 3 show that on a cost

basis 84.8 percent of the military real property controlled is located within the United States. Of the remainder, 3.4 percent is in the United States possessions and 11.8 percent in foreign countries.

As of 30 June

1960 the proportions were 83.1 for United States, 3.7 for possessions, and 13.2 for foreign countries.

The distribution by military department of world-wide military

real property of the Department of Defense has continued to change with

the Air Force total moving up more repidly than that of the other two military departments. A large part of this is accounted for by construction, which has been larger for the Air Force during the past few years than for the other two military departments. As of nine years ago (30 June 1957), the distribution of real property inventory, on a dollar

basis, was 33.3 percent for Army, 33.0 percent for Navy and 33.7 percent for the Air Force. Distribution as of 30 June 1966 was 28.6 percent Army,

27.1 percent Navy and 44.3 percent Air Force.

Whereas the major portion

of the indicated increase during the past several years for the Air Force is from new construction, a small part is due to improved coverage which occurred during the 1955-1958 years.

On a dollar cost basis, Air Force controlled the largest portion (43.0 percent) of the Department of Defense total within the United States, Navy had the largest part (51.2 percent) of properties in the United States possessions, and Air Force controlled 57.9 percent of the Defense total in foreign countries on 30 June 1966.

It should be recognized that from the standpoint of construction, Air Force installations are generally newer than those of either of the Army or Navy, and thus, their costs are generally more fairly representative of current value. Some of the facilities transferred to the Air Force during the late 1940's, however, fall into the category of rather old structures for which original costs are not truly representative of current values. Only as new construction occurs within the specified inventory period are the inventory costs more indicative of current values.

The cost of properties at nonindustrial installations (training centers, depots, hospitals, command headquarters, ports, housing, etc.) was 85.8 percent of the cost of all properties on a world-wide basis; about the same as for one year earlier. As of eight years ago (30 June 1958) the nonindustrial total cost was 79 percent of the total dollar cost. This proportion for nonindustrials has been increasing slightly during the past few years because new construction is generally for nonindustrial types of facilities and because several industrial plants have been sold to private enterprise.

Reference to Table 8 shows that properties located at installations in an inactive or standby status on a world-wide basis cost $2.5 billion, 6.6 percent of all properties. As of the end of the preceding year the inactive properties were inventoried at $2.2 billion, or 5.9 percent of all world-wide properties. At the end of fiscal year 1960 the inactive properties comprised 9.1 percent of all properties. The general trend of reduction of properties in an inactive status is partially the result of continuing efforts to effect prompt disposals and return property to the local economy.

Types of Properties

Table 9 shows the military real property costs for the entire Department of Defense by broad geographical locations and by major facility groupings. The largest single facility group is operational and training facilities which accounts for 23.9 percent of the world-wide dollar amount. Next in order is the utilities and ground improvements group which is made up mainly of heat, power, water and sewer systems coupled with roads, bridges, walks and parking areas.

This