so on. If there is any doubt, I should like to remind you that the National Security Act does give the Secretary of Defense the power to eliminate such duplication and overlapping.

Mr. LARSON. Just to clear up one point. The $115,000,000 estimate applies to general products only.

And a further point as to economies that might be effected if this legislation is passed. As I said, we are working on a budget which calls for an approximation of $130,000,000 to operate the War Assets Administration. I also stated that, in my opinion, and in the opinion of my budget people, economies of approximately $19,000,000 could be effected. On a further check with my budget people, I find we can expect savings of $18,000,000 instead of the $19,000,000, as previously reported.

Senator THYE. Any further statements.

STATEMENT OF ALAN JOHNSTONE, GENERAL COUNSEL FOR THE FEDERAL WORKS AGENCY 10

Mr. JOHNSTONE. I would like on behalf of the Federal Works Agency which, if this bill is enacted, would have the responsibility, to comment on the suggestion made by our friends in the Army and Navy and Air Force with respect to the second proviso in section 102 (a) of the draft bill.

The proviso is in conformity with the suggestion made by the President in his message of March 5, as follows:

That the administrator [the Federal Works Administrator] shall not perform the functions referred to in clauses (i), (ii), and (iii) above [that is, in respect to procurement] for or in relation to the National Military Establishment, in any respect which the Secretary of Defense with the approval of the President shall, in the interest of national security, specify, nor in respect of any matter referred to the President under this proviso pending the decision of the President thereon. The thought has been expressed that the Administrator under the terms of this language may embarrass the National Military Establishment by directing from time to time the procurement of individual items or a series of them and requiring the Secretary to make an examination seriatim and to take these individual items to the President for consideration.

It seems to me that such a fear entirely misapprehends the meaning of the words themselves. I think if the statute is enacted, the Secretary of Defense may prior to any action by the Administrator, or any time during the administration, issue an order specifying the types of material that he considers, in the interests of national security, should be procured by the services, or specifying the items which he wishes the Administrator to procure and that he desires him not to procure any other items. So, I think, individual itemizations would not be required under this bill.

The clause "with the approval of the President" was, I think, inserted for the reason that the President, while he is Commander-inChief of the Army and Navy, is also the Chief Executive of the Nation, and he may wish to exercise a judgment as to what type of matériel should be procured by a centralized agency which is looking at the requirements of the whole executive establishment including the

19 See also Mr. Johnstone's Memorandum of References to the Statute Law in the Draft Bill to Reorganize and Simplify the Procurement, Utilization, and Disposal of Government Property, p. 129.

military and as to what items he wishes the services themselves to procure.

In summation, I should say that the entire history of the preparation of this bill and all the conferences that led up to it and accompanied its presentation, recognized it would be entirely inappropriate for an agency, not itself charged with the defense of the Nation, to enter into the procurement of what have been described as technical military items. No such thought is in the minds of the proponents of this bill nor I think can be gotten from the language itself.

I make this statement for the record for there seems to be some doubt as to what these words mean and I express it as my own opinion that these words mean that the Secretary of Defense would have authority under this bill to continue to procure all of the items which he considered it necessary for the Military Establishment to buy in the interests of national security and that he could positively prevent any interference with that technical job on the part of anyone else.

The thought was expressed by several of the witnesses that perhaps the President would not wish to be bothered with a lot of the items. I think the President may express his approval under the terms of this bill in any way he wishes-either as to classes of property as a whole or if we wishes to, he may go into the items. But it is not inherent in the language that he would be obliged to consider a mere series of items.

So far as we are concerned, Mr. Chairman, we have no differences of opinion with our friends in the National Military Establishment of which I am aware. I make this statement in no sense as one in opposition to the policies to which they have referred. I respect fully suggest that with the greatest respect, they have misapprehended the meaning of the words.

Senator THYE. Thank you. Mr. Andrews.

Mr. ANDREWS. Mr. Chairman, I think we are now getting down to where we can really define the issue and solve the problem.

As I understand it, Mr. Johnstone says that they have no objection to the contention or the position of the armed services. It is merely a matter of the interpretation of the language in the bill.

Mr. Johnstone interprets the language one way. We interpret it another way. If his interpretation is correct then the bill provides in substance what the armed services desire.

It would seem to me that the easy and correct solution of the problem would be to use language which we all agree does the thing we all want and not have this continuing problem of interpretation. Therefore, for the record, I suggest this language for the particular section which is in dispute. I might add that this language has met with the approval of the Army, the Air Force, and the Navy and it has been discussed with the Treasury and the Treasury does not object to it as setting forth the spirit and substance of what we are all striving for. The language is as follows:

I

Section 102 (a) on page 9 of the bill-bottom of the page. might add that the general counsel of the Navy has discussed this with Mr. Johnstone and I think you say, Mr. Johnstone, in substance, it says what we want to say but you prefer not to change the language of the bill.

Mr. JOHNSTONE. I think the language you now propose gives less authority to the Military Establishment than the language in the

bill.

Mr. ANDREWS. If we settle for less you won't object?

Mr. JOHNSTONE. The language leaves out the clause "with the approval of the President" and I have no authority to agree to the deletion of that clause.

Senator THYE. Where do we start?

Mr. ANDREWS. We start with line 16, page 9.11

And provided further, That the Secretary of Defense may except the National Military Establishment from action taken or which may be taken by the Administrator under clauses (i), (ii) and (iii) hereof whenever he determines such exception to be in the best interests of national security.

Now, that language gives to the Secretary of Defense the power to determine what shall be bought by the military and what the military shall delegate to other Government procurement agencies to buy for them.

Senator THYE. It would be possible, then, for the military to determine that it would be most advisable for them to acquire all and not delegate any to another agency?

Mr. ANDREWS. Under this provision that would be possible. Yes, sir. Now, under the statement made by Mr. Johnstone and his interpretation of the language the same result could be reached because, as he says, the Secretary of Defense could state that there would be no exceptions and the military could buy everything.

Senator HOEY. What would be the objection to the language you used followed by "with the approval of the President." He is the Commander in Chief.

Mr. ANDREWS. Yes. The President's message provides in very clear language that the military should be excepted from this bill as they have been in the past.

Senator HOEY. But where your language begins, "The Secretary of Defense may issue this order, etc.," what would be the objection to inserting, "The Secretary with the approval of the Presi

dent * * *99

* * *

Mr. ANDREWS. I think the Secretary has the power anyway. Senator HOEY. As I suggested a moment ago, the Secretary of Defense could issue an order to except all of these purchases, but if the President is to approve it, he is Commander in Chief and Executive of the Nation. If the Secretary of Defense makes this order he can say "with the approval of the President."

Mr. ANDREWS. Now, I am speaking, not for the armed services, because by the Unification Act they are separate departments and each must speak for itself.

I know the President has the power as the Commander in Chief and he has the power as Chief Executive. The only question I raise is, Would it be wise for administrative purposes to require the Secretary of Defense to get the specific approval of the President?

Senator HOEY. I come back to the same question that I raised a moment ago. What would be the objection to saying definitely he has that duty?

Mr. ANDREWS. No objection, except you impose on him the administrative burden of securing the President's approval in each case.

11 See previously proposed amendment, p. 93. See also letter dated April 5, 1948, from Frank Pace, Jr., Acting Director, Bureau of the Budget, p. 122; letter dated April 7, 1948 from James Forrestal, the Secretary of Defense, p. 124; letter dated April 9, 1948 from Maj. Gen. Philip B. Fleming, Administrator, Federal Works Agency, p. 126; and letter dated April 14, 1948, from James E. Webb, Director, Bureau of the Budget.

Senator HOEY. This would only involve the Secretary of Defense saying, "We want to procure certain things. I want to issue this order. He would not have to have all the details as warranted in the original bill.

Senator THYE. You are thinking, Senator, of the possibility of some dire emergency where you want to act without any moments of delay and you would want to prepare something that is highly desirable right then and there, and the Secretary of Defense could go to the President and the President could agree and a positive action could be taken immediately. I think that is the thought. At least it is the thought I glean from your remarks.

Mr. ANDREWS. I think we are too prone to put too much of an administrative burden on those in high office. I realize that they have the authority and, having the authority they must have the responsibility. But one of the things I think we are trying to avoid in the national defense set-up is the burden of sending everything to the Secretary of Defense and then having it sent down to the cognizant department.

Senator THYE. If I may interrupt, Mr. Andrews. The only reason I would think the legislation highly desirable would be to avoid and overcome the Navy purchasing its individual requirements when another agency has a surplus. The only reason for one agency giving thought and study to the question is because you have a requisition in for merchandise on which the other branches are long. That is the whole purpose of the legislation-so the left hand will know what the right hand has.

Mr. ANDREWS. I think, as Mr. Barrows has pointed out, steps have been taken since the Unification Act to avoid that. My experience in the Navy is that the exception is always high lighted. Thousands of times we did coordinate our agencies and when on an occasion we did not, that exception was high-lighted and was spoken of as if it were the general rule.

I don't think the abuses were anything like as bad as suggested to the public.

Senator THYE. You will admit that that was the situation?

Mr. ANDREWS. I think, as suggested, that the exception was highlighted rather than the general rule and, as is always the case, news is concerned with the unusual. We may have been long on one particular thing and the Army could have been short on it. Instead of coming to us they could have paid more to get what they wanted. It happens in business and industry but it is not the common situation that some people might believe.

Senator HOEY. Would you read your suggestion again?

Mr. ANDREWS. Yes.

Senator HOEY. That requires the Secretary of Defense to do that? Mr. ANDREWS. Yes.

Senator HOEY. But you don't want to bring everything to the Secretary of Defense. But that requires the Secretary to do that?

Mr. ANDREWS. Yes. He is the coordinating agent of the three departments.

Senator HOEY. You say you don't want to bring everything to him. What would be the objection to "The Secretary of Defense with the approval of the President?"

Mr. ANDREWS. Maybe we can add "unless otherwise ordered or directed by the President."

Senator HOEY. That would not require him to get his approval. Mr. ANDREWS. It would give the President power which he already has to say to the Secretary of Defense, “I want it done this way." Senator HOEY. Would he know about it, anyway?

Mr. ANDREWS. We assume it is such a glaring mistake he would know about it.

Senator THYE. That would be too late. That is one of the reasons why some of the Members think legislation of this kind might be desirable because they have sat in on hearings in which these mistakes have been pointed out.

Mr. ANDREWS. My whole experience has been in business for myself and when I speak for the military I speak not with long experience. I was 5 years in procurement and compared with industry's standards we did a goob job and various industries have copied the system set up in the Army and Navy.

I think the way to solve this problem is to get these people skilled in the drafting of language to try to agree-the Federal Works Agency, the Army, Navy, Treasury and Air Force and have them come up with the language we want.

We think the problem is clear-whether the Military should have the initiative or the Federal Works Agency-on that ground we are all in agreement. It is just a question of expressing the thought that will meet the needs and requirements of all of us.

Senator HOEY. I think it is worth consideration.

Mr. ANDREWS. There has been one other suggestion made and I will put this into the record-that we except the military from this bill with a proviso that certain items described generically, if possible, would be included in central procurement, with the further exception that that list might be changed from time to time at the suggestion of the Secretary of Defense.

That may be a solution whereby we except the military in general and set out a list that would be required to be procured by the Federal Works Administrator, but that list may be changed from time to time by the Secretary of Defense and items put on or taken off as he sees fit.

The men who are going to work on the drafting would try to come up with a list satisfactory to all concerned. That would assure some items to be provided by the Administrator and these nontechnical housekeeping items should be bought under some central procurement agency. We do not argue over paper and blotters and pens.

Senator HOEY. Then you feel definitely that while you were preparing the list you would be close enough to the question so that you would know what specific items should be excluded, and so that all three agencies would be aware of the fact that these would be excluded from the regular routine housekeeping items. And, therefore, there would be full accord in what the Army, the Air Force and the Navy were doing. In that way you would be safeguarding yourself against unnecessary delay in an emergency.

Mr. ANDREWS. That is right.

Senator HOEY. That sounds like common sense.

Mr. ANDREWS. I think it has possibilities and it is worthy of an attempted solution. I don't think we are far apart in principle. We