(Witness: Zappone.)

I also submit below a copy of General Order No. 21, issued by the Secretary of Agriculture in 1904, bearing upon this subject:

GENERAL ORDER NO. 21.

UNITED STATES DEPARTMENT OF AGRICULTURE,

OFFICE OF THE SECRETARY, Washington, D. C., March 10, 1899. To the Chiefs of Bureaus and Divisions and other officers, agents, and employees of the Department of Agriculture:

Your attention is invited to a paragraph in the act of Congress approved March 1, instant, making appropriations for this Department for the fiscal year ending June 30, 1900, reading as follows:

"That hereafter section thirty-seven hundred and nine of the Revised Statutes of the United States shall not be construed to apply to any purchase or service rendered in the Department of Agriculture when the aggregate amount involved does not exceed the sum of fifty dollars.”

The effect of this enactment is to place upon the Secretary of Agriculture the entire responsibilty of determining to what extent, if any, the principles of competition shall be applied in any case where the amount involved is fifty dollars or less.

The advantages of honest competition are, in most cases, too great and too distinctly manifest to be neglected. You are, therefore, advised that hereafter, as heretofore, it will be the policy of the Department to avail itself of these advantages in all cases where competition is practicable. The requirements of paragraph 9b of the Fiscal Regulations will remain in full force and effect, except in so far as they are modified by the next following paragraph (9c).

The Chief of the Supply Division in the Department and the Chief of the Division of Supplies in the Weather Bureau, who are the purchasing officers of the Department, and whose duty it is to prepare all requisitions, are hereby directed to enforce a strict compliance with the regulations in respect to purchases. Competition must be secured in every case when practicable.

It should be especially noted that purchases and services are exempted from the operations of sec. 3709 only when the aggregate amount involved does not exceed fifty dollars. It would, therefore, be clearly an evasion of the law to divide a purchase for the purpose of keeping below the limit named. Congress has granted the Department all that was asked for in this respect, and good faith demands that the representatives of the Department obey the statute in its letter and spirit.

The Chief of the Division of Accounts, for the Department, and the assistant chief, on the part of the Weather Bureau, may, therefore, before passing upon proposed expenditures, require evidence showing that the law and the regula tions have been complied with in all particulars.

JAMES WILSON, Secretary of Agriculture.

The CHAIRMAN. Would that create a condition where orders could be split up in amounts?

Mr. ZAPPONE. Not at all; that is not the purpose of it.

The CHAIRMAN. No such practice as that has ever been adopted by the Department?

Mr. ZAPPONE. No. Under section 3709, as amended in 1894, each year, in the spring, every Department of the Government service advertises in at least six newspapers of the country that proposals will be received for the various articles of supplies required for the departmental service, to be opened on a certain date fixed by the Secretary of the Treasury, and being the same for all Departments. In our Department there is a board of award appointed by the Secretary for the consideration of proposals for annual supplies, as per order of the Secretary, which follows:

GENTLEMEN: You are hereby appointed a board of award, in behalf of the United States Department of Agriculture, for the opening of bids, for the examining of samples submitted, and for making recommendations as to awards for annual supplies for the fiscal year ending June 30, 1906. Bids will be opened in accordance with advertisement at 2 o'clock in the afternoon on Thursday, May 4, in the presence of bidders or their attorneys, as provided by section 3710, Revised Statutes of the United States. As soon as practicable thereafter you will carefully prepare schedules of all the proposals submitted. These schedules, when fully completed, together with the proposals, you will deliver to the Chief of the Division of Accounts, who will forward them to the United States Treasury Department, in compliance with the provisions contained in the act of Congress approved January 27, 1894, amending section 3709, Revised Statutes. In making your recommendations you will conform to the requirements of the schedules, avoiding all needless division of contracts and giving careful consideration to the actual needs of the service. In the acceptance of proposals and in the making of your awards you will have in view both excellence of quality and economy in price, not necessarily the lowest bid in each case, but reasons must be furnished to me in each case where the - award is not made to the lowest bidder, and you will otherwise fully consider the interests of the Department.

You will consider carefully the instructions to bidders and make awards as nearly as practicable in accordance therewith. You will note carefully any changes that may be made to advantage in the schedules and the methods of submitting samples, and report the same in writing to the Chief of the Division of Accounts, with a view to improving the forms and general plan of securing bids. You will notify all bidders by circular letter of your findings in relation to the proposals submitted by them, respectively. Properly ruled sheets for tabulating bids and printed circulars for notifying bidders will be furnished you by the Chief of the Division of Accounts, with whom you will confer freely concerning work of the board and for whom you will prepare a list of the accepted bidders, giving the aggregate amount awarded to each as a basis for determining the amount of the bond required in each case. The chief clerk will detail such clerical assistance as may be necessary in expediting your work, which should be completed at the earliest practicable date. You are further authorized and directed to call upon the chiefs of the various bureaus and divisions whenever necessary for expert opinion in determining the merits of the different proposals before you; also for the temporary detail of competent persons to aid you in passing upon technical questions relating to the supplies intended for special use in connection with the work of their respective offices, and the said chiefs of bureaus and divisions are hereby required to make such details upon requests from the chairman of your board.

JAMES WILSON, Secretary.

By this board the proposals are scheduled, abstracted, and forwarded to the Secretary of Agriculture with recommendation. Under the law they are sent by him to the Secretary of the Treasury, to be there passed upon by a board, created by the statutes referred to, consisting of one of the Assistant Secretaries of the Treasury and Interior Departments and one of the Assistant Postmasters-General. If this board finds, after a comparison of the bids, that one Department is about to pay more than another for standard articles of stationery and miscellaneous supplies, such as fuel, forage, ice, etc., it calls attention to the matter and may direct that new proposals be invited through new advertisements. One year the bids for fuel were very high. In fact, several Departments got no bid at all, owing to a threatened strike. The result was that new bids were ordered and

23848-07

(Witness: Zappone.)

lower prices were quoted; so that these proposals for supplies are strictly in compliance with the law and are passed upon by this board of assistant secretaries and approved by them. They constitute, I should say, nearly seven-eighths of the supplies used by the Department of Agriculture during the year. The other oneeighth consists of materials and supplies the need for which could not be anticipated. Often they are technical supplies, and even though they might be purchased in the open market under exigency, or where the amount is less than $50, it is the policy of the Department of Agriculture to invite bids on these informally, thereby securing competition wherever practicable. These informal bids are passed upon by a board of awards, which our chief clerk just referred to, consisting of three members, as per order of the Secretary, which follows:

DEPARTMENT OF AGRICULTURE,

OFFICE OF THE SECRETARY, Washington, D. C., July 1, 1905.

Col. S. R. BURCH,

Chief Clerk of the Department of Agriculture.

Mr. M. E. FAGAN,

Cashier of the Department of Agriculture.

Mr. C. O. GOODPASTURE,

Clerk in the Bureau of Animal Industry.

GENTLEMEN: You are hereby constituted a board of award charged with the duty of opening, examining, and reporting upon informal bids and proposals of all kinds for furnishing supplies and for performing service for this Department, including all the bureaus, divisions, and offices thereof (except the Weather Bureau), during the fiscal year beginning this day and ending June 30, 1906 (see par. 8 to 11, inclusive, of the Fiscal Regulations of the Department of Agriculture).

In the performance of your official duties under this assignment you are authorized to call upon the several chiefs of bureaus, divisions, and offices for information, for expert advice upon questions relating to the character of the supplies or services offered upon bids, and in ascertaining the adaptability of such supplies to the requirements of the service.

You will give careful and equitable consideration to all proposals that shall be placed before you, and you will, without fear, favor, or partiality, recommend such action thereon as will, in your respective judgments, best subserve the Department's true interests.

Very respectfully,

JAMES WILSON, Secretary.

When necessary the board secures recommendations from the chief of the bureau or division for which the articles are intended, calls for expert knowledge when required, and make awards accordingly. I also submit the following extracts from the Fiscal Regulations of the Department of Agriculture relative to the purchase of supplies:

Regulation 8. All officers, agents, and other employees of this Department are positively forbidden to make a purchase, to give an order for supplies of any kind, or to incur any expense whatever in connection with the public business without first having obtained a formal written order, requisition, or letter of authorization, signed by the Secretary or other official delegated by him, except in cases of extreme necessity, in which the public property might otherwise be subjected to great danger of loss or damage, or in which the public interests might be liable to suffer serious injury from the delay involved in procuring prior authorization.

Regulation 9. All requisitions must be countersigned by the Chief or Assistant Chief of the Division of Accounts before being sent to dealers. All letters of authority will be drawn in the Division of Accounts. Memoranda should be furnished to that division setting forth in reasonable detail the character, pur

(Witness: Zappone.)

pose, and amount of each contemplated expenditure for which authority is desired. Every application for a letter authorizing travel must state specifically the character of the business to be transacted and for which the travel is to be performed. Such vague phrases as "on official business." "on business connected with," etc., do not afford data sufficient to determine whether the expenses of the contemplated travel are legally chargeable to the appropriation named in the memoranda.

Regulation 10. In all cases, when practicable, supplies must be procured upon contracts to be made after advertising for proposals, as required by law. The only exceptions to this requirement occur when the exigencies of the service necessitate immediate delivery and in cases where competition is not possible. Competition must be secured in every case when practicable. The Chief and Assistant Chief of the Division of Accounts will, before passing upon a proposed expenditure, require evidence showing that the law and the regulations requiring competition have been complied with in every particular.

Regulation 11. Whenever it shall be found necessary in the Department at Washington, after the contracts for annual supplies have been awarded, to use articles not embraced in any such contract, and when the estimated cost of such articles shall amount to $1,500 or more, new advertisements should be prepared for publication in newspapers in the usual manner and form. When supplies shall be required the aggregate cost of which shall be estimated at less than $1,500, advertisement may be made by letters prepared on blank forms provided for that specific purpose inviting proposals, such letters to be mailed or otherwise delivered to a reasonable number of responsible dealers in the goods required. Articles not provided for in any existing contracts, if required for immediate use; if of a special kind, patented articles for instance, and not procurable except from a single source; or if of an estimated value so small as to render advertising for proposals impracticable, may be purchased in open market at the lowest obtainable prices. In every such case, however, the application for a requisition or letter of authorization must state in specific language the character of the exigency that renders the procuring of bids impracticable. The exigency must be stated in writing before the purchase is made. In all cases where an intended purchase is to involve an expenditure of $50 or more, and it is found to be impossible or impracticable to obtain competitive bids, the following principles should be embodied in an exigency statement, to accompany the application for a purchasing requisition or to be made in explanation of a purchase without competition under a letter of authority, the statement in the latter case to accompany the account:

First. It must be clearly stated and shown that the article, services, or supplies are needed for immediate use, and that the delay necessary for the purpose of obtaining bids would prove injurious to the interests of the Government; and

Second. It must be clearly stated and shown to the satisfaction of the Division of Accounts that the particular article, services, or supplies are the only kind that can be used for the purpose for which they are intended, or can only be procured from the person on whom the requisition is drawn; and

Third. In all cases the statement must be made that the price set forth is the lowest obtainable, is just and reasonable, and was ascertained by correspondence or personal investigation.

All purchases of materials for the furnishing of which contracts have been awarded must be made from the contractors, even if such materials can be procured elsewhere at lower prices than those specified in the contract.

Improvements in the present departmental methods of purchasing supplies have been fully considered by the Keep Commission, and as their recommendations to the President in regard thereto have already been made public, I take the liberty of submitting a copy herewith:

To the PRESIDENT :

TREASURY DEPARTMENT, Washington, December 6, 1906.

The committee on Department methods submits herewith its report on the standardization and method of purchase of Department supplies.

This subject had much attention from the Dockery Commission in 1893. On its recommendation section 3709, Revised Statutes, was amended so as to pro

(Witness: Zappone.)

vide that contracts for purchase of Department supplies should go before a board of award, composed of an Assistant Secretary of the Treasury, an Assistant Secretary of the Interior, and an Assistant Postmaster-General, for approval. The purpose of the Dockery Commission in creating the board of award was to secure reasonable uniformity of price and practice in contracts for Department supplies by establishing a board or commission to compare the awards recommended by the various Departments, so that approval might be refused in case an excessive price was to be paid by any one Department, as compared with the others.

While something has been accomplished in securing uniformity of price since 1893, the real purpose of the amendments approved by the Dockery Commission has not been secured. The law still leaves each Department to prepare its own schedule of supplies needed. Each Department publishes its own advertisement, receives its own bids, and makes its own recommendations for awards to the board of award. The schedules prepared in the different Departments differ materially in the qualities of the various articles called for. There has been no attempt at the standardization of supplies. The result is that when the recommendations of the different Departments are scheduled and assembled for consideration by the board of award the schedule is extremely complex, comprising nearly 2.500 different kinds and qualities of supplies.

In most cases the bids are based on samples in the possession of the various Departments, which it is not practicable to produce before the board of award. Thus the different Departments continue to buy different articles for the same purposes, and cooperation between the Departments in reducing the complexity of the schedule and the standardization of supplies is not attained, because the departmental cooperation provided for in the board of award takes place at too late a stage in the process of purchase. The remedy for this condition is an obvious one, and we submit herewith a careful and concise report from our assistant committee on supplies, recommending important and specific changes in the present methods. These changes, with two modifications hereinafter noted, meet our full approval and are earnestly recommended.

Briefly, the plan proposed by the committee is as follows: Provision is made by which the preparation of schedules, advertising for proposals, and making of contracts for the purchase of Department supplies are placed in the hands of a board, to be known as the general supply committee, such board to be under the supervision and control of the Secretary of Commerce and Labor. The head of each Department or independent bureau is to designate one expert employee of his Department or bureau to serve as a member of such a board. The board thus constituted is to purchase the Department supplies heretofore acted upon by the board of award.

In an opinion rendered by the Attorney-General to the President, May 28, 1906, the Attorney-General held that an amendment to the present law would be required to make this change. Such an amendment has been prepared and is submitted herewith.

The report of our assistant committee discloses in only a small degree the great care and labor of the committee in considering this subject. It has had before it the purchasing officers of the various Departments and has compared the qualities and grades of the various articles purchased by them. It has begun and carried about half way to completion a standardized schedule of Department supplies. Its intention was to complete this schedule before submitting its report, but in order that action may be taken at the coming session of Congress it was decided to present the report, showing the plan proposed, before the completion of the standardized schedule. Sufficient progress has been made, however, in the preparation of this schedule to show that the number of grades and qualities of articles purchased for Government use can be greatly decreased.

This will reduce the complexity and the clerical labor involved in the work and secure for the Government supplies of standard quality under properly prepared specifications. Moreover, the purchase of large quantities under the concentrated system may be expected to result in reduced prices. To indicate the lack of standardization under the existing practice we may say that the Government is at the present time purchasing 28 different kinds of ink, 278 different kinds of pens, 11 different kinds of typewriter ribbon, and 132 different grades of pencils. One Department is paying $1.70 per dozen quarts for ink; another is paying $3 per dozen quarts. Similar conditions prevail as to many other articles on the schedule.