ing Office I assume would come under it, would it not, because it says "For the procurement of general supplies", and so forth-would that come under the Treasury Department under you plan? Mr. GULICK. I should not think so. As I say, we did not devote ourselves to the detailed location of any of the activities. Senator BYRD. I know; but, Mr. Gulick, you have made the statement that you have investigated this particular Department and you propose to reduce the spending activities in that Department. Mr. GULICK. I did not intend to use the word "spending"in that sense. Senator BYRD. You used it in a number of cases. Mr. GULICK. We were discussing spending in connection with the testimony that went before that, as I remember it, in reference to divisions that were engaged in other types of activities. Senator BYRD. The Bureau of Procurement of General Supplies, that is purely a spending agency set up in the Treasury Department. Mr. GULICK. In the purchase of supplies through central procurement you have really a man at the head who is interested in economy, who is interested in holding the departments down. That is, his mental attitude is not one of being loose with the require ments. A man at the head of the functional department, who is dealing with construction of buildings for his own use, or the purchase of supplies for his own use, like a doctor or a director in some field of education, let us say, or agriculture, is generally interested in getting his job done, consequently he underestimates the necessity for keeping the brakes on. That tends to be the natural mental attitude. Now, that natural mental attitude is a little different when you build a central purchase department because then that central purchase head is trying to make a good record on the thing. When he buys he is trying to get good bargains so he can claim in his annual report that he saved all this money. The central procurement has the function of putting on the brakes. Senator BYRD. It is a spending activity, though. Mr. GULICK. Certainly. Senator BYRD. Which, in your testimony, yesterday, you said would be eliminated. Mr. GULICK. Senator, if you took out all the spending activities there would not be a single thing there. Senator BYRD. Of course, some just spend money, but some spend money to collect money. That is a different situation from the purchase of general supplies. In your testimony yesterday, which I will read to you again, you say, "The Department must be built up as a brake on spending. That is one of the reasons why we suggest that there be moved out of the Treasury particularly such services as the Health Service, which represents a spending service which does not belong there, and which tends to influence the psychology of that Department." Why don't you take out the procurement of supplies? It is more of a spending agency than the Health Service is. Mr. GULICK. I was just going to say that a central purchase office tends not to be spending minded. It is really an agency for control. Representative TABER. May I ask a question right there? I understand that the Department of Justice built a jail for $400,000. The Procurement Division undertook to build the same size jail and they asked for $1,000,000. Does that look as if there was a tendency toward economy? Mr. GULICK. I do not know anything about it. Your statement seems to answer itself. Senator BYRD. Now, the Securities and Exchange Commission-I assume that would come under the Treasury Department under your plan, would it not? Mr. GULICK. I suppose if it were found after a study that that was primarily a fiscal agency, that would be the logical place to bring it in, in a semiautonomous position. Senator BYRD. I simply want to state that the Treasury Department will have the functions of the Comptroller General, will audit about 30 percent Mr. GULICK (interrupting). I object to the word "audit." Senator BYRD. Will have audit control of about 30 percent, excluding the debt service, of the total expenditures of the Government. There will be no appeal to the Attorney General, because there is no interested party to take the appeal from the Secretary of the Treasury to the Attorney General. Senator BYRNES. What is your answer to that statement as to whether or not there would be an audit? Mr. GULICK. The audit would be provided by the Auditor General. He would be a completely independent officer, appointed for 15 years, and responsible to the Congress under the program submitted. Senator BYRNES. And who would have charge of the control? Mr. GULICK. The control would be set up in the Division of Fiscal Affairs within the Treasury, under the direction of a director of that division, who would be the Comptroller of the United States. Senator BYRNES. And what is your opinion as to whether it involves the expenditure of a greater or lesser amount? What is your opinion as to the wisdom of merging agencies of the Government so as to bring them within direct touch of the President or letting them remain separate? Mr. GULICK. There can be no effective administration, no elimination of overlapping and duplication, no coordination of program without some more orderly set-up of the over 100 independent activities and agencies of this Government, both from the standpoint of congressional investigation and control, and from the standpoint of executive administration and management. Senator BYRNES. Could the Chief Executive today secure very much information as to what is going on in a hundred different agencies without giving up his entire time to contact representatives from these agencies? Mr. GULICK. That is impossible. Senator BYRNES. It is your thought that if they group them then the President meeting with the heads of the various departments could ascertain something about what is going on in the executive department? Mr. GULICK. Precisely. Senator BYRD. I have no objection to that thought at all. What I am endeavoring to bring out, as I have said, is that we are transferring certain audit control duties from the Comptroller General to a department which is about one of the largest spending agencies of the Government, and under this plan that is presented this department will have the audit control, except the postaudit, which the committee well understands can only be undertaken after the money is spent. There is no appeal to the Attorney General, because the plan provides that an appeal to the Attorney General is only in order when some department is not satisfied with the decision made by the Secretary of the Treasury. Now, the bond of the Secretary of the Treasury is $100,000, which, of course, is not adequate. If the money is improperly or illegally spent, there is no way to recover it after it is disclosed by the post audit. Senator BYRNES. If the Comptroller General illegally or wrongfully authorizes the expenditure for the purchase of land, how can you recover the money? Senator BYRD. Do you want me to answer that? Senator BYRNES. I am talking to the witness. I prefer to ask him. Mr. GULICK. Under the present plan, if the authorization were made, and if, in subsequent negotiations, after the original agreement had been made, the Comptroller General decided to make an additional allowance, as he has made in many cases, there is no way of proceeding in that matter, unless it is accidentally discovered and is taken up with the Attorney General. If the expenditure is made in a department, under the program which we have outlined, the matter would first come up to the disbursement officer in the department. Then, if he had any legal question, he would take it up with his own legal department, his own solicitor of the department; then the matter would go to the Treasury, it would be taken up in the Division of Fiscal Affairs (the title we suggested), which would actually be the Comptroller of the Government. There would be an official who is irremovable, except on charges, whose profession is to examine the accounts as they come in, and he would decide whether that particular expenditure had been made in accordance with the appropriations and other provisions of law. If he approved it, then the expenditure would be made. Now, when the first payment proceeded to clear on that particular 'thing there would be an audit at the spot where the account is being cleared, whether it be in the field or in Washington, and the representative of the auditor's office would immediately say, if he thought it was irregular, "I think this is irregular. I think there are some elements in this contract which do not follow certain provisions of the law." He would make that statement immediately to the disbursing officer of the division which was involved, and would report it immediately to the auditor's office here in Washington. Senator Byrd suggested that the matter ought to be referred promptly to the Attorney General's office. That seems an excellent suggestion. Then if the department went ahead and made the expenditure anyway, continued the expenditure of additional payments on that particular contract, agreement, or purchase, and refused to heed the warning which had been given by the auditor's office, then the matter would be reported to the joint committee of Congress and the thing would be aired before the public, and if the case was a *matter of any importance it would, of course, be a problem that would emerge in the public consciousness, in the newspapers interested in the whole thing. Representative TABER. But there would be no way of stopping such operation except affirmative action by Congress. Mr. GULICK. If it were clear that the thing was illegal the Attorney General could proceed. He would not have to proceed. Representative TABER. He could proceed to get an injunction, you mean, against another department of the Government? Mr. GULICK. No. The method that is used now, and that was used until 1921—and there was some statement in the newspaper today about that very subject-is that the disbursing officer of the department is the man who actually goes out and collects. You see, the Comptroller is not the man who collects now, it is the department that has made the erroneous payment. The disbursing officer is held responsible. There is one statement which appeared in the discussion yesterday, or the day before, I do not remember, which needs clarification. I think that this committee should rely not on our statement as to the detailed procedures at the present time to prevent the expenditure of the million dollars in the hypothetical case that Senator Byrd presented yesterday, but should bring in representatives of the Comptroller's office and the Treasury to go into that particularly, because, as I understand it at the present time, the money is spent in most cases before the Comptroller General actually can act on it, and that only about 10 percent of the expenditures of the Government at the present time come in for the preaudit that we have been discussing. There are departments which refuse to submit items to the Comptroller General in advance, and he has no power to compel the bringing of them in, excepting in a few cases. Representative COCHRAN. The preaudit is not made except where the spending authority requests the preaudit. Mr. GULICK. Yes; but the Comptroller General has urged the departments to ask for a preaudit right along on many matters. The departments, in order to avoid a great deal of argument and conflict later on, said, "Yes; we will send them in." In the matter of contracts, there is no provision in the law, as I understand it, requiring the presentation of contracts to the Comptroller General's office, but the Comptroller General may say, "I will not approve any contracts unless you have already sent them in in advance and let me see them." Consequently he has acquired these powers of preaudit, which I am satisfied were not intended at the time that act was drawn by most of those who participated in the discussions. Representative COCHRAN. That is exactly what I tried to impress on you. The department asks the Comptroller General for this opinion, and then if the Comptroller General renders an opinion that the Department does not like why blame the Comptroller General for doing something that the Department has asked? If the law is not drawn so he can operate to the satisfaction of the administrative officer, I repeat what I said before, then do not blame the Comptroller General, blame the Congress for writing such a law. That is the point that I tried to impress upon you, that it is the Department that goes to the Comptroller General and says, "Let us know if we can do this." The Comptroller General does not step into the Department in advance and say, "You cannot do it." The Comptroller General does not act until the Department comes to him. Mr. GULICK. I just want to say on that point that the Congressman is entirely correct. The law itself does not specifically set out in any detail the elaborate control features. Second, the Departments have, in a measure, encouraged the development of control features in order to avoid later trouble. There are statements by the Comptroller General in his printed reports or in his decisions which indicate that he has demanded the presentation of material in advance and has extended, as far as he could, the control features. The courts have been extremely careful to refuse to pass on matters which were not specifically included in the issues presented to them, in order to avoid this business of extension into matters that had not been properly presented to them, moot cases, and all the rest of it. In the case of the Comptroller General there has been a disposition, on the other hand, to push out and get further and further into the administration. I do not think it is entirely the fault of the Departments. I agree with you that should have been clearly foreseen in the bill which was originally drawn. Representative COCHRAN. The law now provides that the disbursing officer, when he is in doubt, should go to the Comptroller and find out in advance whether he can spend the money that he is asked to disburse for a given purpose. It was put in there for the protection of the disbursing officer. Just as you said a minute ago, when the Comptroller seeks to recover he goes to the disbursing officer, he does not go to the Secretary of the Treasury, he does not go to the Secretary of the Interior, he goes to the disbursing officer, and the disbursing officer, in other words, is the goat. Representative TABER. Would not the same practice that has grown up with the Comptroller General grow up with the Auditor General? Mr. GULICK. Not with the Auditor General; no. Representative TABER. Why? Mr. GULICK. Because we specifically provide that he cannot give advance information, and because there will be provided elsewhere in the Government a control agency to which these appeals can be taken. Representative TABER. On a preaudit? Mr. GULICK. On a preaudit. Representative TABER. How could there be any question raised? Mr. GULICK. In the Treasury. Representative TABER. In the Treasury? Mr. GULICK. In the Division of Fiscal Affairs, it is termed. Representative COCHRAN. Will the case get to the Treasury until after the money is spent? Mr. GULICK. It will come up before the money is spent. Representative COCHRAN. Then you are going to provide for a preaudit by the Treasury Department? Mr. GULICK. The preaudit will be in the Fiscal Division of the Treasury Department. Representative COCHRAN. In the expenditure of all moneys? Representative COCHRAN. A preaudit? Mr. GULICK. A preaudit. |