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Bureau of Foreign and Domestic Commerce (evaluation of its activities and

service in the field in third quarter of fiscal year 1945, and a follow-up study

along somewhat broader lines in the first quarter of fiscal year 1947).
Readjustment-allowance program, Veterans' Administration.
Relationships between State Departments of Health and Labor.
Smaller War Plants Corporation field operations.
Impact of work loads on field offices of the Bureau of Old Age and Survivors In-
Veterans' emergency housing program (report for third quarter of fiscal year

1946 and follow-up report for first quarter of fiscal year 1947).
Survey of Government-occupied space in Denver.
OPA district office sugar rationing.
Maritime Commission training program.
Space utilization-Federal agencies in Dallas.
ICC and ODT railroad car-service activities.
On-the-job training for veterans.
Veterans' administrative work loads and personnel requirements.
Veterans' Administration field operations (hospital).
New and expanding programs, Public Health Service.
Hospital facilities on west coast.
OPÁ-ODT gasoline rationing.
Utilization of Government field warehousing.
War Department maintenance of inactive, stand-by, and surplus facilities.
Operating procedures of Veterans' Administration regional offices.
War Assets Administration field practices in handling surplus property.

Senator O’CONOR. Getting back to the original question of the need for organizational studies, do you not feel that any expense that might be entailed in this proposed operation would more than be offset by the economies whicb, according to your own testimony, you feel might be effected?

Mr. LAWTON. Senator, if that proposal were to include, and to be sustained in, major eliminations of functions, the savings would be substantial. If they are confined to operating methods and efficiency in operation, they would be less substantial. But, of course, I think that any effort of this kind is bound to produce some good results.

Now, the measure of that result I cannot foretell. Senator O'CONOR. Of course, it would remain to be seen as to just what the end result would be. But I did understand from your previous testimony that you did have in mind certain functional areas that might very well be explored and also some methods that might be improved on. Is that not right?

Mr. LAWTON. I had no particular items in mind. I simply made the statement that this job divides itself. There are two things in this task that is set for this Commission. One is the consideration and study of methods, and apart from that could be the consideration and study of what agency should perform a function or whether that function should be performed at all by the Government. Now, in a great many cases the two dovetail.

Senator O’CONOR. You do not feel that because of the emergency undertakings of Government in the recent past in regard to functional operations that there could be very much accomplished by such a study as is proposed ?

Mr. LAWTON. I think those are rapidly disappearing, Senator.
Senator O’CONOR. Well, they are.

Mr. LAWTON. And, by the time this committee would report, at the present rate, I doubt if there would be many left.

Senator O'CONOR. You do not feel with regard to methods that the improvements effected would more than justify the initial outlay?

Mr. LAWTON. That is anyone's guess. There would be improvements made certainly. Just how they would compare with the amount of the outlay, I would not have any idea.

Senator FERGUSON. Have you ever tried to make a survey of any agency? That is, a real survey, a study such as a private industry would do to determine its efficiency and questions of economy? Have you ever taken an agency?

Mr. LAWTON. We have taken some small agencies and certain parts of larger agencies, but we have not taken a complete department.

Senator FERGUSON. Tell us what they were.

Mr. LAWTON. We have done it in some cases on our own, and in some cases jointly with the agency concerned.

Senator FERGUSON. Do you have those surveys and could the committee get those surveys to see how it did work?

Mr. LAWTON. Yes; some of them I think are in mimeographed form, or at least where there are copies of them. We would certainly make them available to you.

Senator FERGUSON. Would you do that for this record?
Mr. LAWTON: Yes, sir.

(Four sample surveys have been submitted by the Bureau of the Budget and are being retained in the committee's files.)

Senator LODGE. May. I ask a question?
Senator FERGUSON. Yes.

Senator LODGE. In connection with Mr. Lawton's observations on the precedents for this type of an activity, I think he and I have a fundamentally different way of looking at this thing. I think his assumptions are that the course of government just goes along in a steady stream, and that because a thing was not successful in the Taft administration, therefore it is not going to be successful now, and that we always want to be studying the Government, that we always want to be trying to improve it.

Well, of course that is true in a way. We always do want to be studying the Government. We always do want to be trying to improve it. But, it seems to me, Senator O'Conor is 100 percent right when he points out that the present is a psychological moment; that the Government today cannot be compared with the Government in the Taft administration; and that the fact that a commission at that time did not produce very fruitful results constitutes no precedent at all for saying that an effort now would not be successful.

Of course, I do respectfully point out that a commission of the type which is proposed in this bill has never been tried. Two of the commissions to which Mr. Lawton adverted were congressional committees, and the Taft commission was not set up in the way it is contemplated that this one shall be.

I believe with Senator O'Conor that this is the psychological moment, and after 16 years of an expanding type of government and after 4 years of war there is an opportunity to effect economies, to eliminate waste and overlapping in a way that can only be handled at the very highest level and ultimately by Congress.

Senator FERGUSON. Mr. Lawton, do you conduct any post audits at all?

Mr. LAWTON. No, sir. That is the function of the Comptroller General

Senator FERGUSON. The Comptroller General?

Mr. LAWTON. Yes.

Senator FERGUSON. The executive branch, then, as I understand it, conducts no post audits.

Mr. Lawton. Well, the question of post audit by an independent group in the Government, one agency for another, no. But every agency makes an administrative examination of its vouchers after the work has been performed and a bill is rendered. The agency examines the bill to determine that it is in accordance with the law and that the goods have been received.

Senator FERGUSON. That is not really an audit.

Mr. LAWTON. It is an administrative examination on the part of the agency; that is right. But, it is, in effect, the same sort of procedure that is gone through in the audit because the agency does not want to have any particular expenditure item disallowed by the Comptroller General.

Senator FERGUSON. Do you get copies of the Comptroller General's report? Mr. LAWTON. No, sir. Senator FERGUSON. You do not get them?

Mr. LAWTON. We work fairly closely on a great many things. We have several joint undertakings in which we are engaged at the present time, and in that sense

Senator THYE (interposing). May I make inquiry as to what would be a joint function? When you say "joint,” would that be examining some specific departmental function, or would it be examining something new, or some agency?

Mr. LAWTON. In these particular cases it was examining the method by which the Government pays its employees. The pay-roll system of the Government was one case. The method of handling retirement records is one that is currently going on.

We have in prospect a study of the method of disbursement in Government and certain of the functions with respect to the accounting for corporations.

Senator THYE. That is mostly a mechanical operation? I mean it is either mechanical in operation or it is part of the manner of disbursing under a new method. Is it a question of the money involved or efficiency of the agency?

Mr. LAWTON. Very definitely it is in the case of several of those. In the pay study it was a question of determining the most effective and efficient method of making payments to employees.

Senator THYE. That is the mechanics of administration.

Mr. LAWTON. But, Senator, that is what this whole operation of efficiency and economy is. It is the way you carry out the functions you are required by law to perform-whether you are carrying those out with the least possible cost or whether you are wasting money in performing those functions.

We do not go into the question with the Comptroller as to whether the'function should or should not be performed. None of our joint studies have been on that basis. They have been on the basis of what is the most effective, efficient, and economical method of performing certain functions or tasks which cut across departmental lines.

The CHAIRMAN. Are there any more questions?
(No rseponse.)
If not, thank you for your testimony, Mr. Lawton.
Mr. Meriam.



Mr. MERIAM. Mr. Chairman, and gentlemen, I prepared a very brief statement on this bill which, with your permission, I will read.

The CHAIRMAN. You are Mr. Lewis Meriam, vice president of the Brookings Institution?

Mr. MERIAM. Correct; yes.

I presume I have been asked to appear before your committee because of past work done by the Brookings Institution in the field covered by S. 164.

My testimony will be based largely on that experience. I should at the outset express thorough approval of the declaration of policy contained in section 1 of the bill. The need is great to promote economy, efficiency, and improved service in the transaction of public business. The opportunities for improvement are far-reaching, and success in the endeavor will advance the efficiency of the whole economy.

Our experience at the Institution indicates clearly that any study designed to promote economy and efficiency in the National Government must give thorough consideration to curtailing or abolishing existing services, activities, or functions, and to defining and limiting those which are to be continued.

In other words, of the five devices outlined in section 1 of the bill, the fourth and fifth providing for abolishing, curtailing, and limiting are the most important. Consolidating related services and eliminating duplication and overlapping are of secondary importance from the standpoint of effecting substantial savings.

Decisions with respect to curtailing and eliminating, moreover, must come first, and then what is to remain must be so reorganized as to operate effectively with a minimum of waste.

Section 10 (a) of the bill directs the Commission to investigate methods of operation of the agencies, and the first device named under section 1 is limiting expenditures to the lowest amouni consistent with the efficient performance of services, activities, and functions. This by implication involves methods. Lowest cost can only be attained by the use of the most efficient procedures and techniques.

I do not wish to understate the importance of studying them, but I wish to stress the magnitude of the task of studying all the methods of all the agencies within the time limits prescribed for the Commission. Within those time limits I doubt whether it would be feasible to recruit a sufficient staff to do the job well.

I would therefore recommend that the Commission have discretion as to the extent to which it studies procedures and techniques in detail.

I would recommend to the Commission that it make such studies only with respect to agencies which have large expenditures where methods and procedures are a vital factor in determining expense.

Under this bill the Commission will be a temporary agency with a life of about 2 years. If it is to organize and get into action promptly, I do not think it would be practicable to have appointments made competitively under the Civil Service Act. I doubt, moreover, whether the salaries established under the Classification Act for permanent positions would attract the kind of people the Commission would need for its temporary staff.

It would, in my judgment, be undesirable should the Commission be staffed by men and women with civil-service status who would be down from the executive agencies and who would have hopes

Senator FERGUSON (interposing). I do not know that I obtained that last. It would not be?

Mr. MERIAM. It would not be desirable to staff them from people from the existing departments who would have hopes of going back to those departments.

In limiting, curtailing, or abolishing services, functions, and activities the staff must be competent, unbiased, and independent. I would go no further than to authorize the Civil Service Commission to approve or reject on the basis of qualifications any person nominated for the staff of the reorganization committee by the director of its staff.

I would give the reorganization committee unrestricted power to select the director of the staff.

Since the primary objective of the Commission would be to recommend limiting, curtailing, or abolishing services, functions, and activities, I would not have representatives of the executive agencies as members of the Commission. They belong in the witness box and not on the jury or on the bench.

The Commission should give them full opportunity to be heard and present briefs, but I think placing them on the Commission itself would result in divisions and conflicts.

Now, gentlemen, that ends what I have prepared.

Senator FERGUSON. Have you figured what the cost might be of doing a job such as this?

Mr. MERIAM. No, sir; I have not done that. It would be a substantial cost. You would have to have for each function of Government a very competent man who, on appointment, is sufficiently familiar with that function of Government so that he could make those investigations.

Now, you would get up in the neighborhood of 20 first-class men as investigators. I can do some work on that if you would like to have me.

Senator FERGUSON. When you say "considerable,” you get up into millions?

Mr. MERIAM. No, sir; I do not think it would be up in the millions. I think it might get up pretty close to one million, but I doubt if it would be that much. I have not figured that accurately.

Senator THYE. Would you have any hopes, Doctor, that the agency or the Commission could come forward it is a rather peculiar question when I put it in this manner-but would you have hopes that the agency would bring about economies so that the so-called milliondollar expenditure to make the survey would be paid back many times in just a year's operation?

Mr. MERIAM. I think unquestionably, if they make good, concrete recommendations for curtailing the functions and activities of the Government. The savings which might be made in that field are very, very substantial. The amount of savings that you can make through doing work which is continuing are not very great. They have not been, as far as I know, in any of the reorganizations, because the amount that you can save through eliminating overlapping and duplication is relatively small.

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