TITLE III-GENERAL PROVISIONS

APPLICABILITY OF EXISTING PROCEDURES

SEC. 301. All policies and procedures prescribed (a) by either the Director, Bureau of Federal Supply, or the Secretary of the Treasury and relating to procurement, warehousing, stocking, transportation, or distribution of personal property and of nonpersonal services and (b) by any officer of the Government under the authority of the Surplus Property Act of 1944, as amended, or under other authority with respect to surplus property or foreign excess property, in effect upon the effective date of this act and not inconsistent herewith, shall remain in full force and effect unless and until superseded, or except as they may be amended, under the authority of this act or under other appropriate authority.

REPEAL AND SAVING PROVISIONS

SEC. 302. (a) There are hereby repealed (i) the Surplus Property Act of 1944, as amended (except sections 13 (g), 28, and 32 (b) (2)), and sections 501 and 502 of Reorganization Plan Numbered 1 of 1947: Provided, That the priorities and preferences provided for in such Act, as amended, shall continue in effect until 12 o'clock noon, eastern standard time, December 31, 1949, with respect to the disposal of any surplus real property under this Act; (ii) section 5 of the Act of July 11, 1919, chapter 6, Forty-first Statutes, 67 (40 U. S. C. 311); and (iii) section 1 of the Act of December 20, 1928, chapter 39, Forty-fifth Statutes, 1030 (40, U. S. C. 311a).

(b) The provisions of the first, third, and fifth paragraphs of section 1 of Executive Order Numbered 6166 of June 10, 1933, are hereby superseded, insofar as they relate to any function now administered by the Bureau of Federal Supply except functions with respect to standard contract forms.

(c) The authority conferred by this Act is in addition to any authority conferred by any other law and shall not be subject to the provisions of any law inconsistent herewith.

(d) Nothing in this Act shall impair or affect any authority of—

(1) the President under the Philippine Property Act of 1946;

(2) any executive agency with respect to any program conducted for purposes of resale, price support, grants to farmers, stabilization, transfer to foreign governments, or foreign aid, relief, or rehabilitation;

(3) the National Military Establishment with respect to property required for or located in occupied territories;

(4) the Munitions Board (in the National Military Establishment) with respect to stockpiling of critical and strategic materials;

(5) the Secretary of State under the Foreign Service Buildings Act of May 7, 1926, as amended;

(6) the Secretary of Agriculture or the Department of Agriculture under (a) the National School Lunch Act (60 Stat. 230); (b) the Farmers Home Administration Act of 1946 (60 Stat. 1062); (c) the Act of August 31, 1947, Public Law 298, Eightieth Congress, with respect to the disposal of labor supply centers, and labor homes, labor camps or facilities; or (d) section 32 of the Act of August 24, 1935 (49 Stat. 774), as amended, with respect to the exportation and domestic consumption of agricultural products;

(7) the Secretary of Agriculture, Farm Credit Administration, or any farm credit board under section 6 (b) of the Farm Credit Act of 1937 (50 Stat. 706), with respect to the acquisition or disposal of property;

(8) the Housing and Home Finance Agency, or any officer or constituent agency therein, with respect to the disposal of residential property, or of other property (real or personal) held as part of or acquired for or in connection with residential property, or in connection with the insurance of mortgages, loans, or savings and loan accounts under the National Housing Act;

(9) the Tennessee Valley Authority with respect to any property acquired for or in connection with any program of processing, manufacture, production, or force account construction;

(10) the Atomic Energy Commission;

(11) except as provided in subsections (a) and (b) hereof, any other law relating to the procurement, utilization, or disposal of property: Provided, That, subject to, and within the scope of authority conferred on the Administrator by, other provisions of this Act, he is authorized to prescribe regulations to govern any procurement, utilization, or disposal of property

under any such law, whenever but only to the extent he deems such action necessary to effectuate the provisions of title I; nor

(12) for such periods of time as the President may specify, any other authority of any executive agency which the President determines within one year after the effective date of this Act, should in the public interest, stand unimpaired by this Act.

(e) The Administrator shall report to the Congress, from time to time, the laws becoming obsolete by reason of the passage or operation of title I of this Act.

AUTHORIZATION FOR APPROPRIATIONS AND TRANSFER AUTHORITY

SEC. 303. (a) There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act.

(b) When authorized by the Director of the Bureau of the Budget, any Federal agency may use, for the disposition of property under this Act and for its care and handling pending such disposition, any funds heretofore or hereafter appropriated, allocated, or available to it for purposes similar to those provided for in sections 102, 103, 104, and 106 of this Act.

SEPARABILITY

SEC. 304. If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.

EFFECTIVE DATE

SEC. 305. This Act shall become effective on July 1, 1948.

Our first witness this morning is Maj. Gen. Philip B. Fleming, the Federal Works Administrator. General Fleming, you have had a copy of the proposed bill, and the committee will be glad to hear your comments on the subject at this time.

STATEMENT OF MAJ. GEN. PHILIP B. FLEMING, FEDERAL WORKS ADMINISTRATOR,1 ACCOMPANIED BY W. E. REYNOLDS, COMMISSIONER OF PUBLIC BUILDINGS, AND ALAN JOHNSTONE, GENERAL COUNSEL, FEDERAL WORKS AGENCY

General FLEMING. Mr. Chairman, I have a prepared statement that I should like to make, and then we can elaborate afterward on any of the statements I have made.

The CHAIRMAN. Very well, General; proceed in your own way. General FLEMING. I have the honor to present for the consideration of your committee a draft of proposed legislation to reorganize and simplify the procurement, utilization, and disposal of Government property. This legislation is designed to carry out the recommendations of the President in his message of March 5, 1948, to the Congress. The President's message clearly depicts the need for a property management program in the Government, and the economy and efficiency which will result from its execution.

Without repeating the message, I should like to make one or two general observations. Some people have termed this a proposal for centralized property management, referring particularly to procurement. That is a misconception. Centralization is not an end in itself but only a means to an end, to be applied where it helps and to be avoided where it hinders.

1 See additional amendment proposed by Maj. Gen. Philip B. Fleming in letter dated April 8, 1948, page 124.

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In preparing the proposed legislation we have recognized this principle and used it realistically. For instance, the procurement system which serves the general departmental needs is not always the best system for the armed services. Special treatment may be necessary in a variety of cases, due to the peculiar military nature of the type of item involved, the need for secrecy, or when time is more important than cost. We have agreed with the National Military Establishment that the Secretary of Defense, with the approval of the President, may specify exemptions from the general system in the interest of national security. Similarly, we sat down cooperatively with the Department of Agriculture and agreed that purchases for price support or stabilization should be handled exclusively by that Department. Purchases of this kind are not for Government use but instead are to assure stable markets for all American farmers.

Furthermore, we plan for the greatest flexibility in actual operations so as to achieve efficiency and economy. As appropriate, an agency will make certain purchases for itself, or one agency which may be a predominant user will purchase for all agencies. The important thing is not centralization but a general system adaptable enough to fit all circumstances.

That brings up another point. We expect to save a great deal of money for the taxpayers by not buying at all. The practice of using what you already own to the greatest extent possible has been common in private industry for many years but, unfortunately, has never been applied in the Federal Government, for lack of effective legislation. Under the proposed legislation, we hope to promote better utilization of present supplies, and to unearth excessive stocks or inventories and use them instead of new purchases.

Rather than skip around further, I shall summarize briefly the major provisions of the proposed bill, after which I shall be happy to answer any questions. The bill is divided into three titles. The first deals with property management in the United States, the second with the disposal of property located in foreign countries, and the third with general provisions applicable to the first two. As responsibility for foreign excess property is lodged in the owning agencies and the State Department, I shall confine my remarks to the first and third titles.

The bill commences with a table of contents, a declaration of policy, and certain definitions. Property, as you will note, includes practically everything except the public domain and the major classes of naval vessels. The term "excess property" is used to describe property under the control of any Federal agency which is not required for its needs and responsibilities, as determined by the head of that agency.

The term "surplus property," on the other hand, means any property which has been declared excess by a particular Federal agency and which, after surveying the needs of other Federal agencies, the Federal Works Administrator determines is no longer required by the Federal Government.

The next section deals with organization. It would transfer the Bureau of Federal Supply from the Treasury Department to the Federal Works Agency. It would also abolish the War Assets Administration and transfer all its property, personnel, and funds to the Federal Works Agency for administration there as a Bureau of Surplus Property. Although the language dealing with the transfer of personnel differs with respect to these two units, the purpose and effect

is to retain for all such personnel substantially the same rights which they now enjoy and would continue to enjoy should this proposal not be enacted. In any event, the limitation on the competitive rights of the former War Assets personnel cannot last any longer than 3 years, and may be removed sooner should circumstances justify. The Administrator would be authorized, further, to make necessary reorganizations within the Federal Works Agency of these property management responsibilities and to abolish the Bureau of Surplus Property when no longer needed as a separate entity. These provisions are in the interest of economy and operating efficiency.

In logical sequence, the next section covers procurement, warehousing, and related activities. It would authorize the Administrator to promulgate, for use by other Federal agencies, policies and methods of procurement of personal property and nonpersonal services and of warehousing and transporting of personal property, and, also, directly to procure and warehouse personal property. The Administrator is required to determine that his decisions will benefit the Government by way of economy, efficiency, or service. As previously stated, some activities of the National Military Establishment may be exempted from this section in the interest of national security. This section also permits the legislative and judicial branches, at their option, to utilize the services of the Federal Works Agency.

Perhaps the most important aspect of property management is cov ered in section 103. That is continuing use by the Government of the Government's property. To that end the Administrator would be directed to develop policies and methods for the maximum utilization of excess property; to provide for the transfer of excess property among Federal agencies, and to assign and reassign space to Federal agencies for office, storage, or related facilities. Among other things, we expect this will materially lessen the present leasing of space in private office buildings. This section will place certain responsibilities. upon executive agencies, such as maintaining adequate inventory controls and accountability systems, using and reassigning property among its own activities, and transferring to and obtaining excess property from other agencies when approved by the Federal Works Administrator. Such transfers of property when for use by an agency would be at the fair value thereof. Where property has no commercial value, or the estimated cost of care and handling exceeds the estimated proceeds from sale, the Administrator would be authorized to provide for its abandonment, destruction, or donation to public bodies. Section 104 provides for the disposal of surplus property-that is, property which the Administrator has ascertained cannot be used by any part of the Federal Government. He would, directly or by regulation, establish the terms and conditions of any sale, lease, or other disposition, and until December 31, 1949, might dispense with such advertising as is required by section 3709 of the Revised Statutes. In practical effect, this merely continues the present provisions of the Surplus Property Act of 1944.

Special provision is made for the disposal of surplus agricultural commodities. First, the Administrator, after consultation with the Secretary of Agriculture, would formulate policies so as to prevent the dumping of agricultural commodities and the disruption of their market prices generally. Secondly, the Administrator would transfer surplus agricultural commodities to the Secretary of Agriculture

whenever the Secretary of Agriculture determines such action necessary for price support or stabilization. As to the farm commodities so transferred, their price and method of disposition are governed by the same restrictions as are now contained in the Surplus Property Act of 1944.

Under another special proviso, the Maritime Commission would be the sole disposal agency for surplus merchant vessels of 1,500 gross

tons or more.

Proceeds from the transfer or disposition of property are dealt with in the next section, No. 105. As a general proposition, all proceeds would be covered into the Treasury as miscellaneous receipts. An exception is made, however, to permit the use of proceeds to replenish reimbursable funds in accordance with existing law. Similarly, provision is made which would permit executive agencies, principally the National Military Establishment, to continue substantially their existing practices with respect to contractor inventory.

As this legislation would affect all executive agencies, the next section would authorize the President to prescribe general policies, and within that framework would also authorize the Administrator to prescribe regulations and to delegate and redelegate operative responsibility. It is this section which would provide for utilizing other Executive agencies to undertake various functions where the Government's interest will best be served by so doing. It provides also for the establishment of industry advisory committees.

The chief feature of the next section, No. 107, would be the establishment and maintenance of a uniform Federal supply catalog system by the Administrator, and its utilization by executive agencies.

There follows a restatement of the present law regarding the applicability of antitrust laws to surplus property, with certain modifications as recommended by the Attorney General.

The next section applies the civil-service and classification laws with respect to personnel and permits limited exemption for the employment of consultants.

Section 110 substantially restates the provisions of the present Surplus Property Act relating to civil remedies and penalties.

By the concluding section of title I, the Administrator would be directed to submit annual reports to the Congress, together with such recommendations and amendments as he deems appropriate.

Title III, as I have stated, contains general provisions. It would continue existing policies and procedures in effect unless and until superseded under authority of the proposed bill. With minor exceptions, it would repeal the Surplus Property Act of 1944, but it would continue in effect until December 31, 1949, the existing priorities and preferences for the disposal of any surplus real property. Similarly superseded are the provisions of Executive Order 6166, which is the present charter of the Bureau of Federal Supply.

Section 302 (c) would provide for this act to operate unaffected by the provisions of any other law.

The next subsection lists various activities which would be exempt from the operation of the proposed bill. Among these exemptions are programs for price support, stabilization, grants to farmers and foreign aid; the stock piling of critical materials; the national schoollunch program; the Housing and Home Finance Agency, with respect to the disposal of residential property; and the Atomic Energy Com