MSA–FOA Congressional files, FRC 57 A 709, box 170
Memorandum by the Counselor of the Foreign Operations Administration (Eichholz) to the Director of Foreign Operations (Stassen)
- Subject:
- Termination Provisions of Mutual Security Legislation
As you know, present legislation provides for termination of the program on June 30, 1954, with authority to expend funds for an additional year if such funds were obligated before July 1, 1954 (this expenditure authority is one year shorter than the period which applies to normal appropriations).
Our bill1 provides (a) for expiration of the program on June 30, 1958, and (b) that funds obligated before the termination date may be expended during the three following years.
In the course of my testimony before the Foreign Affairs Committee on Saturday, it became abundantly clear that Mr. Vorys was unalterably opposed to any part of this provision and would wish termination clauses of the present law to remain. His stated ground was that the Presidential documents on the reorganization plan2 made a point of remarking on the present hodge-podge of legislation and that the President considered it essential that a complete re-write of foreign aid legislation be prepared for presentation to the next session of Congress. (Although he did not say so, this [Page 631] part of the Presidential message was inserted at Mr. Vorys’ insistence.) Mr. Vorys said that by keeping the present termination provisions, he would be assured that such rewritten legislation would be presented without fail.
This is an extremely serious matter, as I pointed out to the Committee Saturday.3 Most contracts for long-lead items which we are planning to let during fiscal ’54 will provide for all or the major part of deliveries to be made after June 30, 1955, the present expiration date of our authority to make expenditures. The Hawker-Hunter contract is an outstanding example. If the termination provisions are not amended, if contractors are at all willing to undertake the risks of cancellation, we will have to pay a very substantially higher price because of the risk of cancellation. In addition, the United States would stand to lose progress and other payments made prior to cancellation.
This might well be a subject which should be mentioned to Mr. Vorys at the breakfast I understand he will have with the President tomorrow morning. For purposes of our immediate problem, it would not be necessary to have both the 1958 date and the three year expenditure provision, but it would be necessary to have one or the other.