Senator MUSKIE. While we are on this subject, Mr. Kendall-this may have been covered in testimony yesterday but I had to leavethe act was enacted for the purpose, in part, of giving you authority to pay premium prices for these materials. How long is it since you have paid premium prices?

Mr. KENDALL. I am sorry, sir. I estimated that yesterday and said that I did not think that after 1953, when price controls went off, we had made any new commitments to pay premium prices. I think that is correct, but I have not checked it out.

Mr. Brooks, do you have an impression on that?

Mr. BROOKS. We are, of course, still paying premium prices today under old contracts, but we have not entered into any new commitments for a good many years which would lead to the payment of premium prices.

Senator MUSKIE. Then, what you are saying is that the last contract negotiated at premium prices was negotiated as long ago as 1953 to the best of your recollection?

Mr. BROOKS. Perhaps 1954 or 1955, but it has been a good many years now; yes, sir.

Senator MUSKIE. What kinds of materials were involved in those contracts as to which we are still paying premium prices?

Mr. BROOKS. The only one I can think of under the Defense Production Act at this time would be nickel.

Senator MUSKIE. This is the only commodity for which we are now paying premium prices?

Mr. BROOKS. To my recollection it is; yes, sir.

Senator MUSKIE. Have there been any other commodities under contract as to which we have paid premium prices since 1953?

Mr. BROOKS. Yes, there have been a good many materials on which contracts have been in effect during the intervening years to pay premium prices.

Senator MUSKIE. Could we have for the record a statement of those contracts which have been in effect at premium prices since 1953, the commodities purchased under them, and the quantity of such commodities purchased under them?

Mr. BROOKS. I believe we could supply the commodities under which premium payments have been made, but I think to include in the statement a complete listing of every contract would be a rather lengthy and tedious job to prepare.

Senator MUSKIE. Let us have the commodities then and the quantities. Could we have the quantities purchased since 1953?

Mr. BROOKS. We could have quantities as to totals purchased under those commodities, but again to segregate those which were purchased under premium prices from those purchased at ordinary prices would be a rather difficult job I believe.

(The information requested follows:)

PURCHASES AT PREMIUM PRICES 1

1 In certain instances, purchases of materials listed herein representing only a portion of the total inventory were made at prices above market.

Senator MUSKIE. During this period since 1953, have the same commodities been purchased in part at premium prices and in part at current market prices?

Mr. BROOKS. Yes, sir. This would be true.

Senator MUSKIE. Has there been authority to cancel contracts at premium prices?

Mr. BROOKS. Yes, GSA has had for several years now a policy directive from OEP which encourages the cancellation of contracts not only of premium prices but of any materials which are in excess supply.

Senator MUSKIE. Have any contracts been canceled under such authority?

Mr. BROOKS. Yes, cancellations approaching $400 million have been made under that authority.

Senator MUSKIE. Over the period since 1953?

Mr. BROOKS. This figure I am giving you is dated from July 1, 1957, when a positive program directed toward cancellations and reductions was begun.

Senator MUSKIE. When you said that during this period you have paid premium prices and also current market prices for the same commodities did you say this was being done simultaneously?

Mr. BROOKS. In certain cases; yes, sir.

Senator MUSKIE. Why, under those circumstances, would not the authority to cancel have been used in order to eliminate the purchases under premium prices when they were available under current market prices?

Mr. BROOKS. Our commitments generally are of a firm nature which would not give the Government a right to cancel without penalty, and the cancellations that we have been successful in achieving have been largely as the result of negotiation between the parties.

Senator MUSKIE. I think that should be made clear for the record, that this is not a cencellation authority you had as a right but it was simply a matter of negotiating cancellations.

Mr. BROOKS. That is true.

Senator MUSKIE. Is this true in all cases?

Mr. BROOKS. Virtually all cases. There may be a minor exception, but, generally speaking, our contracts did not include cancellation rights for the convenience of the government.

Senator MUSKIE. Would it be feasible to put in the record a statement disclosing the cancellations which have been made in the affected commodities?

Mr. BROOKS. Yes, sir; we could supply this.

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Senator MUSKIE. Could you give us any estimate of the extent to which the current stockpile is made up of materials for which premium prices were paid?

Mr. BROOKS. I could not make an estimate in dollars; no, sir.

Senator MUSKIE. Is the information available?

Mr. BROOKS. No, it is not readily available.

Senator MUSKIE. Could you check on that point if you are uncertain at all?

Mr. BROOKS. I could check that.

Senator MUSKIE. And let us know?

Mr. BROOKS. Yes, sir.

Senator MUSKIE. So that you could not tell us either the extent to which shrinkage in value is represented by such stocks?

Mr. BROOKS. I do not believe we could readily.

Senator MUSKIE. Other than the premium prices that have been paid for the stocks which were under contract at premium prices. Did you pay current market prices always?

Mr. BROOKS. No. As a matter of fact, there have been contracts made at prices below current market levels.

Senator MUSKIE. What made that possible?

Mr. BROOKS. Those cases would have been made possible by reason of the favorable position of the Government in extending long-term commitments which would result in obtaining price concessions from suppliers as opposed to what they would ordinarily expect to receive in their day-to-day market activities.

Senator MUSKIE. Would you provide information for the record as to the extent of this advantageous negotiation?

Mr. BROOKS. I am doubtful that this could be tabulated readily also.

Senator MUSKIE. Was it sizable?

Mr. BROOKS. I would say this was sizable; yes, sir.

Senator MUSKIE. Could you let us know what materials were involved, what stocks, what kinds of materials?

Mr. BROOKS. I believe we could identify the materials; yes, sir. (The information requested follows:)

PURCHASES AT UNDER-MARKET PRICES

(In certain instances, purchases of materials listed herein representing only a portion of the total inventory were made at less than market prices) Manganese, metallurgical

Cobalt

Senator MUSKIE. Are we still benefiting from arrangements of that kind?

Mr. BROOKS. Yes, we are, to the extent that contract prices in certain materials now that we are purchasing are below today's market levels. Senator MUSKIE. I have two more questions that Senator Sparkman left with me to ask Mr. Kendall.

I have here a table showing your long-range forecast of probable cash requirements, a table dated March 31, 1962. This shows that on June 30, 1962, you should have a cash balance, or, rather, availability of borrowing authority, of $126,339,000. It also shows cash of fund availability on June 30, 1963, of $78,762,000.

Are these figures your latest estimates of probable cash requirements?

Mr. KENDALL. I believe that is true. Mr. Brooks knows the answer to that.

Mr. BROOKS. Yes, sir; they are our latest estimates.

Senator MUSKIE. If these estimates are correct, am I right in thinking that you can run on well into fiscal year 1964 without either amendments 4 or 5 to the bill?

Mr. BROOKS. If these estimates are correct, that would be true; yes, sir.

Senator MUSKIE. If there is any doubt about those estimates, will you let us know?

Mr. BROOKS. Certainly it should be understood that they are estimates, due to the unknown factors involved in our potential disposals of materials and unknown factors involved in our future purchases of materials under outstanding contracts. The final result could very well vary to a sizable degree from the figures that we have estimated. Senator MUSKIE. The committee, of course, must act upon the best estimates that you can give us. If there is doubt about the estimates, I think you should indicate it.

Mr. KENDALL. Mr. Chairman, there is available a table of maximum exposure which would show when we would go into a cash deficit position under maximum deliveries.

Senator MUSKIE. Do you have that table? I think you ought to put that in the record at this point.

(The table referred to follows:)

Long range forecast of maximum cash requirements as of Dec. 31, 1961 [Assumptions: 1. Maximum deliveries from contracts in effect as of Dec. 31, 1961. 2. Estimated sales under approved programs 3. Payment of interest at note maturity for procurement activities under sec. 303 and currently for lending activities under sec. 302]