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Mr. MERRIAM. Well, Senator, of course, this proposal is only a part of a number of suggestions which the administration has made, all of which are based upon the theory that the best effect the Government can have on the present recession is working within the framework of things which are already underway, planned, or going ahead.

This merely moves some of our procurement up to a time when we think the greatest problem may exist.

MOTOR-VEHICLE PROCUREMENT

If I could give you an example: Ordinarily, in the purchase of automobiles and trucks, the procurement plans are scheduled so that they place orders in November and December for delivery in January and February.

Under this proposal, they would place orders in May and June for delivery in July and August.

Now, just in automobiles and trucks alone, a rough estimate is that in the neighborhood of 23,000 civilian vehicles will be purchased next year which would cost approximately $43 million, and what you would be doing is taking that planned purchase for 1959 and moving it up to May and June.

Senator YOUNG. May and June, which is your best employment period of the year, and next winter when you have the low-employment period again, you will not have much to place on order?

Mr. MERRIAM. Well, the estimates we have, Senator, from our economists are, that by fall and winter, certainly, if not earlier, we are going to see an upturn in this whole unemployment picture, and therefore this is designed to have an effect when it is really needed in terms of the situation as it exists this year.

Senator SALTONSTALL. May I ask just two questions very quickly? Chairman HAYDEN. Certainly.

OVERALL EFFECT OF RESOLUTION

Senator SALTONSTALL. First, the overall effect of this bill would be less than $200 million, as I read the House report. Is that correct? Mr. MERRIAM. Our estimate, Senator Saltonstall, is that about $200 million would be obligated in fiscal 1958.

Now, in addition to that, the effect of accelerating the procurement process will mean that other obligations in fiscal 1959 will be made earlier than they would otherwise have been made, so there is that additional effect.

Senator SALTONSTALL. But it means cash of $200 million would be spent in fiscal 1958 that otherwise would be spent in 1959?

Mr. MERRIAM. Cash of $50 million; obligations of about $200 million.

Senator SALTONSTALL. And the other question is this: You do not intend in this bill to push any articles, or to use the effects of this acceleration scheme where the House report has cut it down, or cut it out; is that correct?

Mr. MERRIAM. No, sir; it would not be applicable in that case. Senator SALTONSTALL. And you would not intend to use it that way? Mr. MERRIAM. No, sir.

Senator SALTONSTALL. Thank you.
Chairman HAYDEN. Senator Thye.
Senator THYE. I have no questions.
Chairman HAYDEN. Senator Smith.
Senator SMITH. No questions.

Chairman HAYDEN. Senator Dworshak.

Senator DwORSHAK. There would not be any increased Federal expenditure because of this program, because you are going to apply the competitive bid system as has already been explained? You merely accelerate purchases without increasing the actual cost thereof? Mr. MERRIAM. Yes, sir; that is right.

As a matter of fact, while I do not think any dollars and cents figure can be put on this, I think it is a proper observation to note that purchases will be made in the summer, when we anticipate the softest market as opposed to the fall and winter months when our hopes are, and expectations are, that you will have an upswing; and therefore a greater civilian demand for goods and supplies of various kinds.

So actually, it could-and I do not know whether Mr. Bean would want to give you any scientific evaluation of this—it could give us a more favorable result.

Senator DwORSHAK. You are not increasing the overall amount, and not expanding the overall purchases beyond the possible justifiable needs of the Government?

Mr. MERRIAM. That is correct, sir.

Chairman HAYDEN. Senator Robertson.

Senator ROBERTSON. From time to time we have had proposals that are directed toward the changing of our procurement rules in favored areas, and there is nothing in this joint resolution on that subject, and I do not know of any other law on the subject that would permit you to spend, say $800 million, in a way different from the general procurement laws.

Mr. MERRIAM. No, sir; that is correct.

Now, there have been some administrative directions to the extent possible within those rules to funnel these things into areas of substantial surplus labor.

Senator ROBERTSON. If you had been buying a substantial amount of cotton goods, as well as blankets, in the South, and you took all of those orders away for a whole year, you could create some unemployment in another area, and we do not want you, for this temporary recession, to make a major shift in violation of this competitive basis.

What regulations do you refer to by which you can change the law? Mr. MERRIAM. There are none, Senator. We cannot and would not want to.

Senator ROBERTSON. I just wanted to be clear on that point.

OBLIGATIONS AND EXPENDITURES

Chairman HAYDEN. I notice that on the table on page 37 of the House hearings it is estimated that $195 million is to be obligated under your resolution, that a total of $54,300,600 will be expended.

I think it would be well to have this table in the Senate hearings, since it shows how much it is estimated will be expended by each agency.

(The table referred to follows:)

Estimated use of "advance procurement" provision (Bureau of the Budget estimates based upon a preliminary check with major agencies)

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Mr. MERRIAM. May I just say, Mr. Chairman, that is correct; that is the amount which will be obligated and expended in fiscal 1958. Senator ELLENDER. Mr. Merriam, are there any items here affecting or related to foreign aid?

Mr. MERRIAM. No, sir.

Senator ELLENDER. It is all domestic.

Mr. MERRIAM. That is correct; yes.

Chairman HAYDEN. Are there any further questions?

Senator POTTER. Mr. Chairman, I am sorry I had to step out during part of the testimony, but I would like to make this comment:

MOTOR VEHICLE PURCHASES

In Mr. Merriam's statement, he makes reference to the purchase of automobiles and trucks. How many automobiles and trucks would be purchased, and how much would be involved?

Senator ROBERTSON. He just said about $40 million.

Senator POTTER. Was it covered while I was out?

Mr. MERRIAM. Yes, sir.

It would be about $43 million worth. Just to give you an example as to how it would operate, you may have noted it in the press this morning, or received a copy of the Post Office Department release, indicating that they alone are prepared to order in fiscal 1958, if this suggestion is adopted, about $11 million for its own procurement program of automobiles and trucks.

Senator POTTER. Now, are they in a position to go ahead and make the contracts as soon as this legislation is passed?

Mr. MERRIAM. They have already announced they are going to solicit bids. Of course, their acceptance depends on the enactment of this legislation.

Senator POTTER. Yes. Well, I will not ask you anything further on that.

Chairman HAYDEN. Senator Thye.

TIME ELEMENT ONLY FACTOR

Senator THYE. That will just merely step up the program several months?

Mr. MERRIAM. That is correct.

Senator THYE. But in the total, the same money would be spent at a later time were it not stepped up?

Mr. MERRIAM. That is correct.

Senator BRIDGES. Mr. Chairman, this is wholly aside from this hearing, and I will ask the reporter that this not be on the record. (Discussion off the record.)

Senator DwORSHAK. On the record.

EFFECT ON ATOMIC ENERGY COMMISSION

Mr. Merriam, in what manner will this accelerated purchase program affect the Atomic Energy Commission?

Mr. MERRIAM. Senator Dworshak, it will have a very small effect on the Atomic Energy Commission because their biggest single item in the procurement area is the uranium purchase, as you know.

Senator DwORSHAK. Will that be accelerated in any way?
Mr. MERRIAM. No, sir; it will not.

Senator DwORSHAK. There is a small obligation of money, though, for the use of the Atomic Energy Commission. How much is it? Mr. MERRIAM. Well, we figured they would have obligations of around $20 million in fiscal 1958 as a result of this action. Senator DwORSHAK. What would that be for?

Mr. MERRIAM. Various types of miscellaneous items.

Senator DWORSHAK. But in no way would it apply to the acquisition of uranium under existing contracts?

Mr. MERRIAM. No, sir; because it is so tied into their whole scheduling program.

Senator DwORSHAK. That would upset their normal program, so you are not including that?

Mr. MERRIAM. That is correct.

Chairman HAYDEN. Senator Young.

FUNDS APPROPRIATED FOR URANIUM PURCHASE

Senator YOUNG. I wanted to ask a question along that same line. How much money is appropriated now for the purchase of uranium? Mr. MERRIAM. You mean, for fiscal 1959?

Senator YOUNG. Yes.

Mr. MERRIAM. How much is in the recommendation?

Senator YOUNG. Yes.

Mr. MERRIAM. It is about $640 million requested in fiscal 1959. Senator YOUNG. How much of that is purchased within the United States, and how much is purchased in foreign countries?

Mr. MERRIAM. I do not have that figure.

I can get that for you.

Senator YOUNG. May I have it for the record?

Mr. MERRIAM. Yes.

Senator YOUNG. Are we not paying a higher price in foreign countries than we are here in the United States?

Mr. MERRIAM. I will have to get that for you.

Senator YOUNG. Will you send me a copy of that?

Mr. MERRIAM. I certainly will.

(The following information was submitted:)

The 1959 budget for the Atomic Energy Commission includes $632 million for the procurement of uranium concentrates and $8 million for raw uranium ores. All raw uranium ores are procured from domestic sources. We are advised by the Atomic Energy Commission that the source of and average unit prices paid for uranium concentrates delivered to Commission facilities are as follows:

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The prices shown above are affected by a number of factors, such as differences in grades of ore, transportation costs, and variations in foreign-exchange rates. Chairman HAYDEN. Are there any further questions?

If not, we thank you, gentlemen. The Chair will entertain a motion to report the bill.

Senator ELLENDER. I so move.

Senator BRIDGES. I second it.

Chairman HAYDEN. It was moved and seconded that the bill be made a favorable report to the Senate.

All in favor, say aye.

Opposed, nay.

It is carried.

(Whereupon, at 3:40 p. m., Tuesday, April 1, 1958, the committee

adjourned.)

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