just want to get the language which will enable us to do what we all want to have done. Senator THYE. Has anyone else any thought to add to the record? Mr. JOHNSTONE. If desired, we should be glad to go over the other amendments and file our comments in the record. Senator THYE. You may do that and file it with the clerk so it may be properly inserted in the record. Thank you. The meeting is adjourned. (Whereupon at 12 noon the committee adjourned.) (The following letters and memorandums relating to the proposed legislation were received after the hearings were concluded:) EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington 25, D. C., April 5, 1948. Hon. GEORGE D. AIKEN, Chairman, Committee on Expenditures in the Executive Departments, MY DEAR SENATOR AIKEN: For a number of years it has been increasingly evident that the Federal Government needs to improve its practices with respect to procurement, utilization, and disposition of property. A great many evidences of waste have come to the attention of the Congress and to the President. The Seventy-seventh and Seventy-eighth Congresses attempted to develop comprehensive property legislation but the impact of the war activities required that general legislation be postponed. A surplus property act was provided to liquidate the surpluses resulting from the war. The task of disposing of normal surpluses was included with the war surplus disposals because of the difficulty in separating them. The Surplus Property Act was intended by the Congress to provide for a temporary agency, as the act expires by limitation on December 31, 1949. It was the intent of the Congress to take up the matter of permanent property management at a later date. The war has reemphasized the need to strengthen our property management functions by developing qualitative and quantitative standards, specifications, transportation, inventory control practices including identification, and other common supply activities. The need to unify procurement in the military forces resulted in the development of the permanent Munitions Board under the National Security Act of 1947. This act also emphasizes the need to coordinate military and civilian supply activities in this age of total war. The President indicated in his budget message that the time is at hand to develop comprehensive property legislation. This is necessarily so since the objectives of the Surplus Property Act have been largely met and the remaining task is of a permanent continuing nature. On March 5 the President submitted a message to the Congress indicating the nature of the problem and stating that the Federal Works Agency would, in the near future, submit draft legislation to the Congress. Over a period of several weeks, staffs of the Federal Works Agency, the War Assets Administration, and the Treasury Departments, in cooperation with the staff of the Bureau of the Budget, have developed a bill to reorganize and simplify the procurement, utilization, and disposal of Government property and for other purposes. During the drafting of the bill the principal agencies affected by it, including the National Military Establishment, Department of Agriculture, Department of State, Treasury Department, War Assets Administration, Federal Works Agency, the Maritime Commission, Tennessee Valley Authority, and others, have suggested improvements in the bill. Agreement among those agencies has been reached and the President has specifically endorsed the draft of legislation which your committee is now considering. It is my desire to stress this point because of uncertainty which has arisen as to whether the President would support exemption of the armed services from the procurement provisions of the bill, as suggested in testimony presented to the committee last week. I am authorized to inform you that the question of exemption of the armed services was given particular attention by the President and rejected by him. The amendment suggested by the Assistant Secretary of the Navy on April 2 is not in accord with the President's program. It is definitely the intention of the bill to provide for a centralized policy control in the general field of common supply items. It is definitely not the intention of the bill that one central agency will do all the procuring or disposal in the Federal Government. This cannot be done. It should not be tried. Where advantage to the Government can be shown in terms of economy, efficiency, or service, it is the intention of the bill that the central control agency will centralize such activities. However, the central agency need not perform the function itself. The agency best equipped or manned or best strategically located should do the actual performance of these functions. The Navy Department now contracts for oil for the entire Government. This is a fine plan. The same principle conceivably can be extended to other items of supply. In no event is it intended that purely military or program items of certain specified agencies enumerated in title 3 in the bill will be included. Neither is it contemplated that the logistics support of the armed services will in any way be taken away from the Army, Navy, and Air Force. Common problems call for a common solution. It is impossible now to state categorically by advance listing what items will be handled by a central agency and the ones that will not be so handled. The need for flexibility exists and changed conditions will require changed operations. What is a special item today may be a common item tomorrow and vice versa. It is contemplated that the central agency will consult with using agencies and develop working agreements with respect thereto. Since mutual understanding has been developed with most agencies as to their coordination with the Bureau of Federal Supply, there is no reason why existing relationships should not be continued in much the same manner as now prevail. When changed policies are contemplated with respect to significant items of supply the bill contemplates that the central agency will consult with interested using agencies, and after considering any over-all advantage to the Government, will make determinations for future action. With respect to the National Military Establishment, whenever the Secretary of Defense considers that security is involved, he may request the President to render a decision as to the applicability of certain policies and procedures to the National Military Establishment. There is no reason why many decisions should be necessary. Certainly, individual items should not be referred to the President. In a great majority of cases the respective agencies will no doubt come to mutual understanding as they have in the past, and only in exceptional cases will it be necessary for the President to adjudicate differences of opinion. In this respect the bill is similar to Executive Order 6166, under which the Bureau of Federal Supply now operates, and pursuant to which the President has made very few determinations during the past 15 years. In my opinion, this bill is sound and is in accordance with modern conceptions of supply operation. Sincerely yours, FRANK PACE, Jr., Acting Director. OFFICE OF THE GENERAL COUNSEL, Mr. J. H. MACOMBER, Jr., April 6, 1948. Chief Clerk, Committee on Expenditures in the Executive Departments, United States Senate, Washington, D. C. DEAR MR. MACOMBER: I am returning to you herewith the transcript of testimony received by the Committee on Expenditures in the Executive Departments on Friday, April 2, last, in which certain minor corrections have been made in the testimony of the Assistant Secretary of the Navy appearing on pages 139 through 188. I wish to thank you for having made this transcript available for the purpose. Regarding our discussion on Monday afternoon concerning section 106 of the bill and the proposal of the armed services that functions and responsibilities should be transferred to other agencies concerned only upon the consent of the agency concerned,12 I am advised that both Mr. Nichols and Mr. Johnstone would have no objection to the bill specifically providing that the transfer of such functions and responsibilities should be expressly conditioned upon the acquiescence and consent of the transferee agency. If there were to be added to section 106 (d) a provision substantially as follows: 12 Supra, p. 94. "Any designation, assignment, or transfer of functions to another executive agency under this section shall be made only with the consent of the executive agency concerned." it would not be necessary for the bill to condition such transfers upon funds being made available for the performance thereof or to require specific consent to the transfer of personnel, as was suggested in Mr. Andrews' testimony. I am sending copies of this letter to Mr. Johnstone and Mr. Nichols to insure that the foregoing suggestion has their approval. With respect to the agreement which was reached yesterday afternoon among the agencies particularly concerned regarding the proposed revision of the second proviso to section 102, I am advised that the Secretary of Defense is addressing a letter to the chairman of the committee recommending the agreedupon revision. I should like to take this opportunity to express our appreciation for the assistance and cooperation you have afforded us in our efforts to secure a bill mutually satisfactory to all agencies concerned. Sincerely yours, HUDSON B. Cox, General Counsel. Hon. GEORGE D. AIKEN, THE SECRETARY OF DEFENSE, Chairman, Senate Committee on Expenditures in the Executive Departments, United States Senate. DEAR MR. CHAIRMAN: At the suggestion of members of your committee and its technical staff, and following testimony from representatives of the armed services before your committee upon the proposed Federal Property Act of 1948, the following is suggested as a revision in lieu of the proviso appearing on page 9 of the committee print, lines 16 to 23: "And provided further, That the Secretary of Defense may from time to time, and unless the President shall otherwise direct, except the National Military Establishment from action taken or which may be taken by the Administrator under clauses (i), (ii), and (iii) above whenever he determines such exception to be in the best interests of national security." This proposed revision was prepared by representatives of the Army, Navy, and Air Force and of the Bureau of Federal Supply and the Federal Works Agency in conjunction with your staff representative. The foregoing proposed revision, I am advised, is along the lines adverted to in the course of your hearings, and is agreeable to both the Administrator of the Federal Works Agency and the Director of the Bureau of Federal Supply. I believe that both of these officials agree with me that this language is a good change, both from the point of view of clarity of expression and from the point of view of obviating the necessity for affirmative approval by the President of each proposed exception of the National Military Establishment. I am sending copies of this letter to General Fleming and Mr. Mack. JAMES FORRESTAL.13 FEDERAL WORKS AGENCY, Hon. GEORGE D. AIKEN, Chairman, Committee on Expenditures in the MY DEAR SENATOR AIKEN: Since my appearance before your committee in relation. to the draft bill to reorganize and simplify the procurement, utilization, and disposal of Government property, and for other purposes, it has occurred to me to suggest to you an additional amendment of the draft bill. I am advised that the War Assets Administration has by virtue of the authority contained in the Surplus Property Act of 1944 utilized the services of a number of officers in the National Military Establishment. The present statute forbids an officer of the Military Establishment from exercising any civil functions of the Government without the express approval of the Congress. It 13 In connection with Mr. Forrestal's letter, see letter dated April 9, 1948 from Maj. Gen. Philip B. Fleming, Administrator, Federal Works Agency, p. 126; letter dated April 14, 1948, from James E. Webb, Director, Bureau of the Budget, p. 128. would seem to me appropriate to permit the Federal Works Administrator to utilize the services of officers in the Military Establishment with the consent of the Secretary of Defense to the extent that they may be available and are not otherwise employed. Certain of these officers would be entirely familiar, particularly, with the surplus property to be disposed of that originated with the armed services. I therefore suggest that on page 32, following line 10, there be inserted a subsection as follows: 66 ‘(f) The Administrator in carrying out the functions imposed upon him by this act is authorized to utilize the services of officials and officers in other agencies of the executive establishment, including the armed services, with the consent of the head of the agency in which certain officials or officers are employed." I trust that this amendment will commend itself to the committee. PHILIP B. FLEMING, Major General, United States Army, Administrator. Hon. GEORGE D. AIKEN, TREASURY DEPARTMENT, Chairman, Senate Committee on Expenditures in the Executive Departments, Room 358, Senate Office Building, Washington 25, D. C. 99 14 MY DEAR MR. CHAIRMAN: Certain statements were made by the Honorable Gordon Gray, Assistant Secretary of the Army, in connection with the Federal specifications, during the hearing before your committee on the proposed "Federal Property Act of 1948.' It is thought that perhaps the committee would desire some further information on this matter in connection with the Federal specifications that have been issued, canceled, revised, and amended by the Bureau of Federal Supply during the period from December 31, 1940, to December 31, 1947. There is enclosed herewith a memorandum on the subject matter. It would be appreciated if this could be inserted in the hearings to be printed on the proposed "Federal Property Act of 1948." Very truly yours, H. M. KURTH, MEMORANDUM FOR THE SENATE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS During the course of his testimony on April 5, 1948, on the proposed "Federal Property Act of 1948," before the committee, Mr. Gordon Gray, Assistant Secretary of the Army, stated, in connection with the number of specifications issued by the various departments and agencies of the Federal Government, that in December 1940 there were 1,621 Federal specifications available as against 1,880 Federal specifications available in December 1947. For the information of your committee, the records of the Bureau of Federal Supply reveal that on December 31, 1940, there were 1,350 Federal specifications available, and that during the period from December 31, 1940, through December 31, 1947, 49 Federal specifications were canceled, 579 new Federal specifications were written and issued, 563 Federal specifications were revised and reissued, and 1,178 amendments to Federal specifications were prepared and published. It is believed that these figures will be of interest to your committee, as revealing the very substantial progress made in the work of revising, modernizing, and extending the scope of Federal specifications. These Federal specifications, as your committee is aware, are drawn in consultation with the various departments and agencies of the Government and with industry, and serve to advance the unification of Government requirements and the uniformity of Government purchasing. Hon. GEORGE D. AIKEN, United States Senate: FEDERAL WORKS AGENCY, MY DEAR SENATOR AIKEN: Secretary Forrestal has forwarded to me a copy of his recent letter to you proposing a modification of the second proviso in section 102 (a) of the proposed Federal Property Act of 1948,15 In the event that it is adopted I would like to suggest also that the first proviso, in lines 10 to 16 of the same section and on the same page of the committee print be stricken from the bill. The armed services proposed the first proviso at a late stage in the discussions of the bill in the Bureau of the Budget solely in order to assure them an adequate opportunity to exercise the rights guaranteed by the second proviso as written. If the language proposed by Secretary Forrestal is adopted it would then be clear that the Secretary of Defense would have the power to determine the scope of exclusive procurement by the Military Establishment to meet its needs without awaiting any prior action by the Administrator. While the clearance procedure followed by the Bureau of the Budget with reference to the draft bill was somewhat informal, it is my understanding that all civilian agencies of the Government acquiesced in section 102 (a) before either of these provisos were added to it, so that I do not think that there is any demand for the first proviso outside of the armed services. If permitted to stand, the first proviso might be construed to require formal proof that adequate advance notice had been given in order to establish the legality of the expenditure of appropriated funds on each separate purchase transaction. This would cause unfortunate administrative difficulties. It seems clear to me also that a sound administration of the entire statute would require discussion of proposed action with the various agencies of the Government in advance of any radical change. There is, moreover, sufficient administrative control inherent in the office of the President to prevent abuses. I therefore hope that the committee may be willing to strike the proviso requiring notice in the event it agrees to the language suggested by Secretary Forrestal. Sincerely yours, PHILIP B. FLEMING, Major General, United States Army, Administrator. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. GEORGE D. AIKEN, Chairman, Committee on Expenditures in the Executive Departments, United States Senate. MY DEAR MR. CHAIRMAN: Reference is made to committee print of a proposed bill entitled, "A bill to reorganize and simplify the procurement, utilization, and disposal of Government property, and for other purposes," which is now under consideration by your committee. The objectives of the bill as set out in section 2 thereof are as follows: "SEC. 2. It is the intent of Congress in enacting this legislation to provide for the Government an economic and efficient system for (a) the procurement and supply of personal property and nonpersonal services; (b) the utilization of available property; and (c) the disposal of surplus property." Briefly, the bill would provide for the transfer of the Bureau of Federal Supply together with its functions from the Treasury Department and the functions of the War Assets Administration to the Federal Works Agency for the purpose of providing on a permanent basis, the orderly and economical procurement, use, and disposal of Government property under the direction of a single agency of the Government. The Federal Works Administrator would have general supervision and direction over (1) procurement of personal property and nonpersonal services, and of warehousing, stocking, transportation, and distribution of personal property; (2) operation of warehouses, supply centers, repair shops, fuel yards, and other similar facilities; (3) the transfer of excess property among Federal agencies; and (4) the care, handling, and disposition of Government surplus property. I am fully in agreement with the general program intended to be carried out by the proposed bill, that is, the common direction of purchasing and disposal 15 Supra, p. 124. |