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For the foregoing reasons, the Veterans' Administration recommends favorable consideration of the proposed measure.

Advice has been received from the Bureau of the Budget that they have no objection to the submission of the proposed draft of bill to the Congress for its consideration. Sincerely yours,

O. W. CLARK, Executive Assistant Administrator (For and in the absence of the Administrator).

RAMSEYER RULE

In accordance with clause 2a of rule XIII, House of Representatives, the changes made in existing law by the bill are shown as follows (existing law proposed to be omitted is in black brackets; new matter is in italics; existing law in which no changes are proposed is shown in roman): SECTION 602 (0) OF THE NATIONAL SERVICE LIFE INSURANCE ACT OF 1940, AS

AMENDED (u) With respect to insurance maturing on or subsequent to the date of enactment of the Insurance Act of 1946, in any case in which the beneficiary is entitled to a lump-sum settlement but elects some other mode of settlement and dies before receiving all the benefits due and payable under such mode of settlement, the present value of the remaining unpaid amount shall be payable to the estate of the beneficiary; and in any case in which no beneficiary is designated by the in. sured, or the designated beneficiary does not survive the insured, or a designated beneficiary not entitled to [choose] a lump-sum settlement survives the insured, and dies before receiving all the benefits due and payable, the commuted value of the [insurance] remaining unpaid insurance (whether accrued or not) shall be paid in one sum to the estate of the insured: Provided, That in no event shall there be any payment to the estate of the insured or of the beneficiary of any sums unless it is shown that any sums paid will not escheat.

E. Repts., 81-1, vol. 3—19

1st Session

No. 514

PROVIDING THAT ALL EMPLOYEES OF THE VETERANS" CANTEEN SERVICE SHALL BE PAID FROM FUNDS OF THE SERVICE

May 5, 1949.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. RANKIN, from the Committee on Veterans' Affairs, submitted the

following

REPORT

(To accompany S. 1185/

The Committee on Veterans' Affairs, to whom was referred the bill (S. 1185) to provide that all employees of the Veterans' Canteen Service shall be paid from funds of the Service, and for other purposes, having considered the same, report favorably thereon, and recommend that the bill do pass.

ANALYSIS OF THE BILL

The enactment of this bill will accomplish the following:

1. Permit Veterans' Canteen Service to make final disposition of equipment transferred to it by the Veterans' Administration.

2. Require the Service to reimburse the Veterans' Administration for all utilities furnished.

3. Provide for payment of all Service salaries, wages, and expenses of all its administrative and supervisory personnel as well as those employed in canteens, warehouses, etc.

4. Èxclude Service personnel from personnel ceilings of Federal Employees Pay Act of 1945.

5. Permit use of Service funds for cashing of checks, money orders, etc.

The principal effect of this legislation is to transfer a major item of cost in the operation of the Veterans' Canteen Service from the appropriated funds of the Veterans' Administration to funds of the Service. This action would make the Service self-sustaining except for certain space, equipment, and services authorized by section 2 (c) and (d) of the act to be furnished by the Veterans' Administration without reimbursement. It would not increase the cost to the

Government and, in effect, would save over $1,000,000 annually in appropriated funds. It is believed that the Veterans' Canteen Serv. ice can assume the additional cost of operation and still furnish veterans in hospitals and homes merchandise and service at reasonable prices as contemplated by the act.

A letter from the Veterans' Administration dated March 3, 1949, requesting this legislation reads as follows:

March 3, 1949. Hon. Walter F. GEORGE, Chairman, Committee on Finance,

United States Senate, Washington 25, D. C. DEAR SENATOR GEORGE: During the second session of the Eightieth Congress, the Veterans' Administration submitted to the President pro tempore of the Senate a draft of bill, the major purpose of which was to transfer the burden of paying the salaries and expenses of personnel presently being paid from appropriated funds of the Veterans' Administration to funds of the Veterans' Canteen Service. The act now provides that employees of the Service, other than those employed at canteens, warehouses, and storage depots of the Service, shall be paid from Veterans' Administration appropriations. The bill also proposed certain other changes designed to facilitate the operation of the Service.

This legislation was introduced in the Senate as S. 2772, was reported favorably by the Committee on Finance on June 7, 1948 (Rept. No. 1533), was passed by the Senate on June 12, 1948, and on June 14, 1948, was referred to the Committee on Veterans' Affairs of the House of Representatives. A companion bill (H. R, 6550), was introduced in the House of Representatives. Neither of these bills was enacted. A bill (H, R. 2109), identical in substance with H. R. 6550 and S. 2772 has been introduced in the House of Representatives during the current session of Congress.

As set forth in a letter accompanying the draft bill submitted to the Eightieth Congress, the primary function of the Veterans' Canteen Service is that "of making available to veterans of the armed forces of the United States who are hospitalized or domiciled in hospitals and homes of the Veterans’ Administration, at reasonable prices, articles of merchandise and services essential to their comfort and well-being.”

As contemplated by the act, the Service is basically a commercial-type operation engaged in selling merchandise and services to veterans in hospitals and homes of the Veterans' Administration. When the bill proposing the establishment of the Veterans' Canteen Service was presented to the Congress in 1946, the Veterans' Administration was without experience or precedent in the operation of such a service. Operating experience to the present time has demonstrated that the Service is capable of paying salaries and expenses of all employees without impairing its service to veterans and has disclosed certain imperfections in the original law which should be corrected by amendatory legislation. It is believed that the proposed bill, if enacted, will facilitate the operation of the Service for the purposes intended.

The proposals will be discussed in the order set forth in the draft bill.

The following changes would be effected by the proposed amendment to section 2 (d) of the act:

1. The Service would be permitted to make final disposition of equipment transferred to it by the Administrator of Veterans' Affairs which is no longer

of use to the Service by reason of obsolescence or otherwise. Under the present law, such equipment must be returned to the Administrator for disposition since it may now be furnished to the Service only "for its use." This imposes the burden of final disposition upon the Veterans' Administration and often will result in a smaller return to the Government than would be realized were the Service permitted to dispose of it. In the event this proposed amendment is enacted, the proceeds from such disposals would become part of the revolving fund and therefore available for return to the Treasury in accordance with the law, if in excess of the estimated needs of the Service. The additional administrative burden imposed on the Veterans' Administration under the present language of the law is further complicated by the fact that in disposing of the equipment which the Service has returned to the Veterans' Administration it is necessary to determine the equity of the Service in the equipment to which it may be entitled because of betterments and improvements made with Service funds. The determination of the equities of the Veterans' Administration and the Service

in such equipment involves accounting expenses which are disproportionate to the proceeds that can be expected from the disposal of such equipment.

It is not anticipated that any substantial amount of equipment purchased from Veterans' Administration funds will hereafter be transferred to tlie Service by the Administrator. Therefore, this proposed amendment would relate largely to the equipment that has already been transferred to the Service. This equipment cost the Veterans' Administration approximately $315,000, and most of it has a life expectancy of from 4 to 10 years. It is the policy of the Service not to dispose of equipment until its useful life has been exhausted. Hence, it is expected that the residual value of the equipment affected, which would be returned to the Veterans' Administration under the present law, will be merely its salvage value and in case it is returned to the Veterans' Administration for its disposition the Aggregate realization thereon would not exceed about $25,000.

2. The Service would be required to reimburse the Veterans' Administra tion for all utilities furnished. Under the present law, necessary utilities, including light, water, and heat, are furnished the Service by the Veterans' Administration without reimbursement except that the Service is required to pay for electricity and gas furnished for cooking, refrigeration, and power. The cost to the Veterans' Administration of the light, water, and heat currently being furnished the Service on a nonreimbursable basis has not been definitely ascertained but this is a comparatively small item in the operation of the Service and, it is estimated, does not exceed $12,000 a year for all canteens, and Veterans' Administration appropriated funds would be relieved in that amount. The proposed amendment to section 2 (e) would effect the following changes:

i. It would exclude personnel of the Service from personnel ceilings as provided in section 607 of the Federal Employees' Day Act of 1945, as

amended (5 U. S. C. 1947). It has become apparent that the purposes for which the Veterans' Canteen Service was established cannot be accomplished most effectively so long as employment of its personnel is subject to these personnel ceilings. The operation is essentially a merchandising activity which requires flexibility of control in its management as well as prompt and unhampered adjustments to fluctuations inherent in any operation of this type. Personnel requirements are based primarily on volume of sales and extent of service conducted. The Service cannot be expected to conduct an efficient merchandising operation unless it has unhampered authority to add personnel to handle increases in volume or extensions in service. Unpredictable changes in the operation due to seasonal fluctuations and changes in the scope of authorized services rendered make it necessary that these adjustments be independent of personnel ceilings which are not readily adjustable. In accordance with sound commercial practices the Service itself will necessarily maintain control over the number and cost of personnel, with no Decessity for imposing additional control in the form of personnel ceilings as comprehended by section 607 of the Federal Employees' Pay Act of 1945.

2. The Service would be required to pay the salaries, wages, and expenses of all its administrative and supervisory personnel as well as of its employees at canteens, warehouses, and storage depots. This would result in elimination of the principal burden of the Service upon appropriated funds of the Veterans' Administration and would place it practically on a self-sustaining basis. Under the present law the salaries and expenses of personnel other than those employed at canteens, warehouses, and storage depots must be paid from Veterans' Administration appropriations. The salaries and expenses of Veterans' Canteen Service personnel in field offices and the central office at the present time amount to approximately $1,125,000 a year and the charges against appropriated funds of the Veterans' 'Administration will be reduced by that amount.

The proposed subsection (k) to section 2 would permit the use of Service funds for cashing checks, money orders, and similar instruments for the payment of money presented by veterans hospitalized or domiciled in hospitals or homes of the Veterans' Administration and by other persons authorized by section 3 of the act to make purchases at canteens. Because of the remoteness of some hospitals and homes of the Veterans' Administration from banking facilities, it is frequently difficult for authorized patrons of the canteens to obtain cash. This is particularly true in respect to patients and members. Prior to the establishment of the Service, concessionaires observed the general commercial practice of cashing checks and accepting such instruments in exchange for merchandise. The Service followed the seme pre ctice, in a ratricted way, until the Comptroller General, on November 13, 1947 (B-56092, 27 Comp. Gen. 276), ruled that under

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