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ADVANCE PROCUREMENT APPROPRIATIONS FOR

1958

TUESDAY, APRIL 1, 1988

UNITED STATES SENATE,
COMMITTEE ON APPROPRIATIONS,

Washington, D. C. The committee met at 3:30 p. m., pursuant to call, in room F-37, the Capitol, Hon. Carl Hayden (chairman) presiding.

Present: Chairman Hayden, Senators Ellender, Hill, Robertson, Bridges, Saltonstall, Young, Knowland, Thye, Smith, Dworshak, and Potter.

ADVANCE PROCUREMENT APPROPRIATIONS

BUREAU OF THE BUDGET

STATEMENTS OF R. E. MERRIAM, DEPUTY DIRECTOR; W. F. Mc

CANDLESS, ASSISTANT DIRECTOR FOR BUDGET REVIEW; AND J. P. BRADLEY, ACTING LEGAL ADVISER

GENERAL SERVICES ADMINISTRATION

STATEMENT OF C. D. BEAN, COMMISSIONER, FEDERAL SUPPLY

SERVICE

HOUSE JOINT RESOLUTION 588

Chairman HAYDEN. The committee will be in order.

We have convened the full committee this afternoon to consider House Joint Resolution 588, making advance procurement appropriations for 1958.

I will insert in the record a copy of the resolution as it passed the House yesterday as well as a copy of the letter from the President dated March 26 recommending its enactment into law.

(The resolution and letter referred to follow:)

(H.J. Res. 588, 85th Cong., 2d Sess.] JOINT RESOLUTION Making advance procurement appropriations for the fiscal year 1958, and for other

purposes Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That for the advance procurement (including advances to, supply funds therefor) of supplies, materials, and equipment, not to exceed 50 per centum of each of the amounts set forth in the schedules in the Budget for the fiscal year 1959 (House Document Numbered 266, Eighty-fifth Congress), under each appropriation or fund, for the objects "Supplies and materials" and "Equipment,” is hereby appropriated, out of any money in the Treasury not otherwise

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appropriated, and out of applicable corporate or other revenues, receipts, and funds, for the several departments, agencies, corporations, and other organizational units in the executive branch of the Government (including the District of Columbia), for which appropriations were granted for the fiscal year 1958 and are proposed for the fiscal year 1959: Provided, That this paragraph shall not apply to military functions of the Department of Defense.

The appropriations and funds made available under this heading shall be immediately available and shall remain available until (a) the date on which the period of availability terminates for the applicable appropriation or fund provided in the pertinent appropriation Act for the fiscal year 1959, or (b) such earlier date as the pertinent appropriation Act may be passed by either House of Congress without any appropriation, or without provision in the pertinent appropriation or fund, for the objects set forth under the first paragraph of this heading.

Appropriations and funds made available and authority granted under this heading for advance procurement may be used for that purpose, during the fiscal year 1958, without the apportionment which would otherwise be required by subsections (c) and (d) of section 3679 of the Revised Statutes, as amended (31 U. S. C. 665), and the amounts made available under this heading shall be charged to the applicable appropriations or funds provided in appropriation Acts for the fiscal year 1959.

Passed the House of Representatives March 31, 1958.
Attest;

Clerk.

[H. Doc. No. 359, 85th Cong., 2d Sess.] COMMUNICATION FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING

A PROPOSAL TO MAKE AVAILABLE FOR OBLIGATION Now 50 PERCENT OF THE AMOUNTS ESTIMATED IN THE 1959 BUDGET FOR THE PROCUREMENT OF SUPPLIES, MATERIALS, AND EQUIPMENT FOR THE VARIOUS CIVILIAN AGENCIES OF THE · EXECUTIVE BRANCH

THE WHITE HOUSE,

Washington, March 26, 1958. The SPEAKER OF THE HOUSE OF REPRESENTATIVES.

SIR: I have the honor to transmit herewith for the consideration of the Congress a proposal to make available for obligation now 50 percent of the amounts estimated in the 1959 budget for the procurement of supplies, materials, and equipment for the various civilian agencies of the executive branch.

The purpose of this proposal is to stimulate business activity and employment by permitting civilian agencies of the Government to advance their procurement of such items budgeted for the next fiscal year. This action would not increase Government purchases but would accelerate them.

The details of the proposal are set forth in the accompanying letter from the Director of the Bureau of the Budget and the attachment thereto. I recommend prompt consideration and favorable action by the Congress. Respectfully yours,

Dwight D. EISENHOWER.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D. C., March 25, 1958. The PRESIDENT,

The White House. SIR: Pursuant to your instructions to accelerate Government procurement, I have the honor to submit herewith for your consideration the attached proposed provision making supplemental appropriations for the fiscal year 1958 for the various civilian agencies of the executive branch.

The proposed appropriation provision would make immediately available to the civilian agencies one-half of the amounts estimated in the 1959 budget for supplies and equipment chargeable to 1959 appropriations. The funds thus made available would be used to place orders promptly for supplies and equipment which are needed and are planned for procurement next fiscal year. This action would not change the total of Government purchases, but would alter the timing. This would provide an immediate stimulus to the Nation's economy.

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Funds would not be made available for appropriations which are proposed for 1959 but for which detailed estimates were not included in the budget which you transmitted to the Congress in January; thus, no amounts would be made available for items such as the mutual security program, which is dependent upon the enactment of additional legislation. Funds would not be provided for any new agency or appropriation account, regardless of whether detailed estimates were included in the budget, if there was no appropriation for such agency or account in the fiscal year 1958.

This provision- would make available in 1958 up to $840 million, which will ultimately be charged to 1959 appropriations, for items which normally would not be ordered until after the beginning of the new fiscal year on July 1 next. It is expected that the agencies will make the fullest use of these funds to place orders immediately, subject to limitations imposed by the need for seasonal buying, limited storage capacity, and similar factors.

I recommend that the attached proposal be transmitted to the Congress with a request for prompt consideration. Respectfully yours,

MAURICE H. STANS, Director of the Bureau of the Budget.

ADVANCE PROCUREMENT

For the advance procurement (including advances to supply funds therefor) of supplies, materials, and equipment, not to exceed 50 per centum of each of the amounts set forth in the schedules in the Budget for the fiscal year 1959 (House Document numbered 266, Eighty-fifth Congress), under each appropriation or fund, for the objects Supplies and materialsand Equipment,is hereby appropriated, out of any money in the Treasury not otherwise appropriated, and out of applicable corporate or other revenues, receipts, and funds, for the several departments, agencies, corporations, and other organizational units in the executive branch of the Government (including the District of Columbia), for which appropriations were granted for the fiscal year 1958 and are proposed for the fiscal year 1959: Provided, That this paragraph shall not apply to military functions of the Department of Defense.

The appropriations and funds made available under this heading shall be immediately available and shall remain available until (a) the date on which the period of availability terminates for the applicable appropriation or fund provided in the pertinent appropriation Act for the fiscal year 1959, or (b) such earlier date as the pertinent appropriation Act may be passed by either House of Congress without any appropriation, or without provision in the pertinent appropriation or fund, for the objects set forth under the first paragraph of this heading.

'Appropriations and funds made available and authority granted under this heading for advance procurement may be used for that purpose, during the fiscal year 1958, without the apportionment which would otherwise be required by subsections (c) and (d) of section 3679 of the Revised Statutes, as amended (31 U.S. Č. 665), and the amounts made available under this heading shall be charged to the applicable appropriations or funds provided in appropriation Acts for the fiscal year 1959.

STATEMENT OF ROBERT E. MERRIAM

Chairman HAYDEN. We have as witness the Deputy Director of the Bureau of the Budget, Mr. Robert E. Merriam, and certain of his associates.

Mr. Merriam, you may proceed to make your statement in support of the resolution.

Mr. MERRIAM. Thank you.

Mr. Chairman and members of the committee, I am pleased to appear before you today in support of House Joint Resolution 588, as passed by the House of Representatives on March 31, 1958, making advance procurement appropriations for the civilian agencies of the executive branch of the Government, including the civil functions of the Department of the Army. This appropriation measure results from the proposal made by the President to the Congress on March 26, which is set forth in House Document No. 359.

PROVISIONS OF MEASURE This measure would make immediately available amounts, which the agencies potentially could use, up to approximately $822 million for the procurement of needed supplies, materials and equipment, including trucks, and passenger-carrying motor vehicles for replace

after the beginning of the new fiscal year on July 1, 1958. The amounts actually utilized would be considerably less. Nevertheless, this would have the effect of advancing the timing of planned Government purchases without increasing the appropriations for that purpose. The amounts made available would subsequently be charged to the applicable regular appropriations for the fiscal year 1959, after their enactment into law by the Congress.

I shall take time only to outline this measure since its details are well covered in the report of the House committee on the resolution (H. Rept. No. 1583). It would generally make available, for each appropriation affected, an amount equal to one-half of the amounts shown in the schedules in the 1959 budget for supplies, materials, and equipment under the object classes “08” and “09.” We have furnished to the staff of your committee a tabulation showing, for each appropriation account, the maximum amount which would be made available. Use of the funds would be limited to direct procurement costs and incidental expenses of procurement are not included.

LIMITATIONS

It would not make funds available for appropriations for which detailed estimates were not included in the President's budget; that is to say, no amounts would be made available for the mutual security program, or for any other programs which are dependent on the enactment of additional legislation. No funds would be provided for any organization or appropriation account if there was no appropriation for such organization or account in the current fiscal year. Also, funds would no longer be available after the regular 1959 Appropriation Act has passed either House without provision for the pertinent appropriation.

Because of the limitations imposed by lack of storage space, the necessity for seasonal buying of certain commodities, and similar factors, it will not be possible for the agencies to make full use of this authority. Also, since the amounts to be made available are necessarily based on the amounts shown in the budget schedules, the Atomic Energy Commission and the Tennessee Valley Authority are not expected to use all of the amounts which technically would be available. In the case of the Atomic Energy Commission, we do not believe it would be entirely feasible to speed up the purchase of uranium. In the case of the Tennessee Valley Authority, the timing of the receipt of their income will affect their ability to accelerate procurement. However, we estimate that these two agencies will be able to obligate a total of $35 million in the fiscal year 1958.

ESTIMATED OBLIGATIONS

We estimate that a total amount of $200 million would be obligated during the remainder of this fiscal year, by all of the agencies included. In addition to granting authority for this advance procurement, the enactment of this measure would allow a general acceleration of the entire procurement effort of the civilian agencies throughout the fiscal year 1959. This proposal complements the President's policy, conveyed to the civilian agencies by the Director of the Bureau of the Budget on March 25, to accelerate procurement in the fiscal years 1958 and 1959 from funds now available and to place orders, to the extent possible, in areas with a substantial labor surplus. This policy is expected to result in the earlier placement of about $500 million in orders for domestic supplies and equipment during the fiscal year 1958. Altogether, we believe that the effect on the economy will be timely and substantial.

This resolution does not include funds for the military functions of the Department of Defense. The procurement for these objects in the defense area of the budget, particularly in the no-year appropriations, is primarily for long lead-time items of military equipment.

The timing of the procurement of these items necessarily involves military program considerations of substantial magnitude. With respect to procurement under the annual appropriations to the military departments, it is accomplished, for the most part, through the medium of stock funds. We believe these funds now have adequate working capital and obligational authority available to them to maintain the stock levels required for planned operations.

We do not expect that the accelerated Government procurement resulting from these appropriations would necessitate additional appropriations for the fiscal year 1959 beyond those which would otherwise be required. The objective of the administration is to speed up planned procurement of items needed for governmental operations, but not to increase the total requirements.

QUESTION OF WASTE AND INEFFICIENCY IN PROCUREMENT

Chairman HAYDEN. You anticipated in your statement some of the questions I wanted to ask.

If the proposal to make available for obligation now 50 percent of the amounts estimated in the 1959 budget for the procurement of supplies, materials, and equipment for the various civilian agencies is approved, will it result in any waste and inefficiency in the procurement of these items?

Mr. MERRIAM. No, sir.

In our opinion, it would definitely have no such effect, and should not. It would be our intent, Mr. Chairman, should the Congress approve this proposal, through the General Services Administration and through the procurement processes, to make certain that only those things which are needed would be obtained.

Chairman HaYDEN. In other words, do you contemplate an orderly, efficient plan for the obligation of these funds, or will they be obligated in a hit-or-miss fashion?

Mr. MERRIAM. No, sir.

We believe it can be done on an orderly basis. General Services Administration has considered its share of this program already in anticipation of the possibility of developing some regulations to make certain that only those things are bought which are needed.

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