activities of the Government which will insure the maximum opportunities for economies. There are not apparent to this office any serious objections to the provisions of the proposed bill and, while it would bestow on the Administrator of the Federal Works Agency a rather large measure of discretion, such discretionary authority appears appropriate in order to accomplish the purposes of the bill. It appears that the provisions as to disposal of surplus Government property follow very closely the provisions of existing legislation, that is, the Surplus Property Act of 1944 (58 Stat. 765), as amended, and it would seem to be adequate to meet the needs of the disposal agency should the function be transferred to the Federal Works Administration. However, the following comments and suggestions are offered in connection with certain specific sections of the bill. Section 103 (e) of the proposed bill apparently contemplates the transfer of excess property for distribution among Federal agencies without cost. It is suggested that the section be revised to provide for charging the appropriations of the acquiring agencies with the fair value of the property received in order to prevent augmentation of their appropriations. This would make possible the capture of appropriation funds saved through acquisition of surplus property by covering the amounts so saved into the Treasury as 'Miscellaneous receipts." Section 103 (h) of the bill would permit, among other things, the donation of certain surplus property to public bodies. There is suggested to the committee the advisability of including therein a provision to require the transferees of property to bear the cost of transportation and delivery thereof in order that the Government will not incur additional expenses in disposing of the property. Section 107 (a) (3) would authorize the Administrator to prescribe standardized forms and procedures and standard purchase specifications. This subsection appears to be too broad and general in nature and it is believed that it should state specifically the type of forms and procedures in order to remove any doubt as to those which may be prescribed, inasmuch as the duty to prescribe the forms, systems, and procedure for administrative appropriation and fund accounting in the several departments and establishments of the Government is imposed on the General Accounting Office by section 309 of the Budget and Accounting Act, 1921 (42 Stat. 25). Section 202 of the bill would permit the donation of foreign excess property under conditions similar to those set forth in section 103 (h) of the bill. What was said herein above with respect to section 103 (h) would appear to be for consideration here. Other than as above suggested, I have no recommendation to make relative to the enactment of the bill. Sincerely yours, LINDSAY C. WARREN, Comptroller General of the United States. FEDERAL WORKS AGENCY, Hon. GEORGE D. AIKEN, Chairman, Committee, on Expenditures in the Executive Departments, United States Senate. MY DEAR SENATOR AIKEN: In line with the suggestion, of Mr. J. H. Macomber, Jr., the chief clerk of your committee, we have discussed with the National Committee of State Educational Agencies for Surplus Property their desires for special provision regarding the disposal of property for educational purposes. As a result of that discussion, I submitted to that committee a proposed new subsection to be inserted at the end of section 104 and reading as follows: "(j) Where any surplus property is determined by the Administrator to be suitable for health or educational uses and where the highest bid (whether after competition or otherwise) made for the purchase of such property is out of proportion to the fair value thereof established by the Administrator he may sell such property to a public or private nonprofit health or educational institution or agency at a price equal to such highest bid or to 50 percent of such fair value, whichever is less, all such property to be allocated among said institutions and agencies on an equitable basis." 16 This, I believe, will serve the major needs of the educational institutions without doing violence to the basic principle of the proposed bill which contemplates the maximum utilization of excess property by the Federal Government. 16 Supra, p. 61. It must be remembered, also, that the educational people will be afforded considerable relief under the donation provisions (sec. 103 (h)) and under section 302 (d) (11), which would permit the continuance of the present statutory programs of the Army and Navy for the donation to educational institutions of obsolete military equipment for training purposes. Sincerely yours, ALAN JOHNSTONE, General Counsel. EXECUTIVE OFFICE OF THE PRESIDENT, Hon. GEORGE D. AIKEN, BUREAU OF THE BUDGET, Washington 25, D. C., April 14, 1948. Chairman, Committee on Expenditures in the Executive Departments, United States Senate. MY DEAR SENATOR AIKEN: Your letter of April 8, 1948, requests advice as to the President's views with respect to a suggested amendment to the second proviso of section 102 (a) of the proposed Federal Property Act of 1948. The amendment would read as follows: "And provided further, That the Secretary of Defense may from time to time, 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." 99 17 The proviso in the form quoted above is not quite as satisfactory as the corresponding text of the committee print. It somewhat tends to favor rather than impede exemptions from coordinated procurement, whereas the bill should, in general, restrict exemptions. At the same time this proposal would be reasonably workable. Accordingly, and since the suggested proviso is understood to be agreeable to the agencies concerned, it may be considered as being in accord with the program of the President. I also believe that the first proviso in section 102 (a) may, as you suggest, be deleted. This is particularly true since it only provides for such advance notice as judicious administration would dictate in the absence of any statutory mandate. Sincerely yours, JAMES E. WEBB, Director. AUTHORITY OF THE BUREAU OF FEDERAL SUPPLY WITH RESPECT TO PROCUREMENT OF MATERIALS FOR THE NATIONAL MILITARY ESTABLISHMENT MEMORANDUM OF LAW 18 In this memorandum agencies are referred to by their modern designations, i. e., National Military Establishment, Bureau of Federal Supply, and these terms should be understood to refer to predecessor agencies where the context requires. By the acts of 1910 and 1929, which are now United States Code, title 41, sections 7-7 (d), the Secretary of the Treasury, through the General Supply Committee, was authorized to purchase or procure and distribute supplies to meet the consolidated requirements of the executive departments in Washington, and of their field services when they might so request. This power was limited to articles in common use by two or more agencies and covered both the operation of a warehouse in the District of Columbia from which stores were issued, and the use of indefinite quantity term contracts, commonly known as General Schedule contracts, under which agencies could place orders directly with the supplier. These two statutes made no distinction between the Military Establishment and the civilian agencies, and are still in effect unrepealed. Executive Order 6166, issued pursuant to the act of March 3, 1933 (47 Stat. 1517), and dated June 10, 1933, had, however, the effect of abolishing the General Supply Committee and transferring from it and other agencies the function of determination of policies and methods of procurement, warehousing, and distribution, to the Bureau of Federal Supply. In respect of any kind of procurement, warehousing, or distribution, the Bureau might, with the approval of the President, undertake the performance of such procurement, etc., itself, or entrust performance to some other agency. This order also made no distinction 17 Supra, p. 124. 18 Supra, p. 96. between the Military Establishment and the civilian agencies with respect to supplies, but the actual taking over of procurement functions required further approval by the President. By order approved by the President on April 12, 1935, and published in the Code of Federal Regulaitons, title 41, sections 2.1-2.13, the Director of the Bureau took over the function of purchasing for the consolidated requirements of other agencies. Before a consolidated purchase was to be made effective he was to study all factors and determine whether the Bureau could procure the article more economically or efficiently. Again, no distinction was made between the Military Establishment and the civilian agencies. The Director could legally, without the further approval of the President, at this point have taken over the procurement of any item for the Military Establishment which could be consolidated with requirements of civilian agencies for the same item, and this either in Washington or the field. Director's Order 73, approved by the President on June 10, 1939, took the further step of taking over the performance of procurement of all supplies for all agencies, with the proviso, however, that agencies could continue to handle specific items until dates which the Director would designate in the future. The Military Establishment was specifically exempted, but only from the Director's Order 73, not from prior orders. Therefore, the legal situation then was that the Director might, without the further approval of the President, purchase items capable of consolidation for all agencies, and items unique to a single agency for any agency, other than the National Military Establishment. During the period before the war, orders relating to procurement policies were issued, governing such matters as the binding effect of Federal Purchase Specifications, the use of standard contract forms, and the interpretation of the BuyAmerican Act, without any special exception being granted to the Military Establishment, and there is today no basis for any legal distinction between the Military Establishment and the civilian agencies with respect to the application of such policy orders to them, except as hereinafter stated. The First War Powers Act, title II, became effective on December 18, 1941, and from that date (or to be more exact, from the date of the President's implementing Executive Order 9001 of December 27, 1941), the Military Establishment enjoyed for war purposes a complete exemption from all authority of the Bureau of Federal Supply with respect to procurement. There is considerable difference of opinion among lawyers as to the extent to which the effect of title II in suspending or permitting the President to suspend peacetime laws subsists to the present time. There may also be some difference of opinion as to the effect of legislation passed by the Eightieth Congress, the National Security Act of 1947 (Public Law 253), and the Armed Services Procurement Act of 1947 (Public Law 413). Both contain provisions relating to procurement by the Military Establishment, and neither make any reference to the authority and responsibility of the Bureau of Federal Supply, if any, in the matter. It has been suggested that these laws effected a repeal sub silentio, but these suggestions all postdate the passage of the acts in question, and while they were being considered there was no suggestion that the authority of the Treasury Department was in any way affected. Since this is a memorandum of law, no attempt is made to discuss the extent to which it was feasible to procure for the Military Establishment, or the extent to which it was actually done. MEMORANDUM ON REFERENCES TO THE STATUTE LAW IN THE DRAFT BILL TO REORGANIZE AND SIMPLIFY THE PROCUREMENT, UTILIZATION, AND DISPOSAL OF GOVERNMENT PROPERTY 1. On page 10, in line 2, reference is made to the definition of "mixed ownership corporation," as defined in the Government Corporation Control Act. The section in the act in question is as follows: "SEC. 201. As used in this Act the term 'mixed-ownership Government corporations' means (1) the Central Bank for Cooperatives and the Regional Banks for Cooperatives, (2) Federal Land Banks, (3) Federal Home Loan Banks, and (4) Federal Deposit Insurance Corporation." 2. On page 15, in line 9, reference is made to the authority of the Maritime Commission to dispose of property under the Merchant Marine Act of 1936. The pertinent provision of that act is section 502 (g), which establishes the formula for arriving at the price at which vessels may be sold by the Commission. 3. On page 28, lines 13 to 25, there is continued in force the policies and procedures prescribed under the Surplus Property Act of 1944 until they should be superseded. 4. On page 29, line 10, reference is made to the act of July 11, 1919. Reference is made to the first sentence of section 5 of that act (which was the Third Deficiency Appropriation Act for the fiscal year 1919), which first sentence reads as follows: "That the heads of the several executive departments and other responsible officials, in expending appropriations contained in this or any other Act, so far as possible shall purchase material, supplies, and equiment, when needd and funds are available, from other services of the Government possessing material, supplies, and equipment no longer required because of the cessation of war activities." 5. Reference is also made in lines 11 and 12 on page 29 to chapter 6 (41 Stat. 67), and chapter 39 (45 Stat. 1030), both of which contain a partial and transitory treatment of the surplus-property problem. 6. On pages 30 and 31 of the bill the authority of certain statutes which are listed is declared to be unimpaired by the terms of the bill. The particular statutes are described, and no further reference may be made to them. 7. Reorganization Plan No. 1 of 1947, to which reference is made on page 29, line 5, is the plan submitted by the President and approved by the Congress which established the War Assets Administration. Prior to that time the Surplus Property Act of 1944 had been administered by other organizations the personnel of several of which were merged into the War Assets Administration. 8. On page 29, lines 6 to 9, inclusive, priorities established by the Surplus Property Act of 1944 with reference to real property are specifically continued until December 31, 1949. A correct understanding of those priorities can best be gotten by reading the provisions of the act itself. 9. During the course of the hearings reference was made to the organization of the Federal Works Agency. The Agency was established by Reorganization Plan No. 1, under the Reorganization Act of 1939, which plan became effective on July 1, 1939. Among the responsibilities of the Agency is that of the construction, management, and operation of buildings occupied by the Government itself and the assignment of space to various Government departments and units thereof in the buildings owned by the Government and in rental space procured for the purpose. The performance of this function results in a general service by the Agency to the entire Government establishment. The unit of the Federal Works Agency which performs this function is the Public Buildings Administration. The Public Buildings Administration, prior to the creation of the Federal Works Agency, was, in large measure, a part of the Procurement Division of the Treasury Department, and was that part which related to the construction of buildings. The Bureau of Federal Supply of the Treasury Department is the remaining portion of the former Procurement Division. The functions of the Bureau of Federal Supply consist in the procurement of supplies and property for the use of the entire Government establishment. Its transfer to the Federal Works Agency would concentrate under one authority all the elements of a complete procurement service. ALAN JOHNSTONE, General Counsel, Federal Works Agency. APRIL 7, 1948. APRIL 15, 1948. Hon. GEORGE D. AIKEN, Chairman, Committee on Expenditures in the Executive Departments, United States Senate. DEAR MR. CHAIRMAN: This letter is in reference to the proposed "Federal Property Act of 1948," which your committee is now considering, and the possible effect it may have on Public Law 584, Seventy-ninth Congress, the so-called Fulbright Act.19 You will recall that the latter is the act which I sponsored, providing for utilization of foreign currencies, acquired through sale of surplus property overseas, for education of American students abroad, and transportation of other nationals to study in this country. Title II of the proposed "Federal Property Act," relating to foreign excess property, would continue the Fulbright Act in operation (it is there referred to as section 32 (b) (2) of the Surplus Property Act of 1948). However, section 201 19 See also p. 51; letter dated April 26, 1948, from Hon. J. W. Fulbright, p. 132; and letter dated May 4, 1948, from Charles E. Bohlen, counselor, Department of State, p. 131. makes certain changes in the administrative aspects of the act which, I fear, could adversely affect its purposes. Here, I should say that the Fulbright Act is now beginning to operate after considerable delay. A substantial part of this delay was occasioned by the attitude and inaction of the Treasury Department. Under its power to establish procedures for the administration of the foreign currencies acquired by the State Department, the Treasury Department has assumed an attitude inconsistent with the purposes of the act. I say this without implying criticism. I believe the reason for this attitude is simply because the Treasury's concern with fiscal aspects has overshadowed its concern for the broader purposes of the act. For example, it has taken the attitude that none of the proceeds from sales of surplus property abroad can be set aside for the Fulbright Act if they may at some future date be convertible into dollars. A reading of the act will convince anyone that this is not the determining factor intended by Congress. The act says "The Department of State may dispose of surplus property for foreign currencies * whenever * * the Secretary of State determines that it is in the interest of the United States to do so and upon such terms and conditions as we may deem proper." Many existing sales agreements executed by the Secretary of State are made in terms of dollars, with options under which the Government may elect to accept foreign currencies now, which could be used for educational purposes, or may accept United States dollars at some future date. Since the proposed legislation provides (sec. 201, lines 16 to 20) that "collections" are to be arranged for in accordance with procedures established by the Secretary of the Treasury, it would seem that the right to exercise the option would be dependent upon the procedure controlling these collections. While the Secretary of State would retain the authority to amend, modify and renew existing agreements, it is doubtful that such authority is broad enough to permit him to arrange for accelerated payments, especially in view of the proposed authority under which collections would be controlled by the Treasury. Under the Fulbright Act, the authority of the Secretary of the Treasury is confined to procedures relating to foreign currencies or credits after they have been "acquired by the Secretary of the State." It is my opinion that the proposed legislation should be in general agreement with the Fulbright Act, if the Secretary of State is to retain the necessary authority to carry out his responsibilities under the Fulbright Act. This could be accomplished by changing lines 16 through 20 on page 24 of the proposed bill to read as follows: "Act, to arrange for accelerated payments of foreign credits and currencies, and, in accordance with procedures established by the Secretary of the Treasury, to arrange for the withdrawal of such foreign currencies from the accounts which they are maintained: To me, this question is one of determining which agency of the Government will have authority as well as responsibility to carry out one aspect of foreign relations. I am sure that you will agree with me that this responsibility and authority should be in the Secretary of the State rather than in the Secretary of the Treas. ury. I hope that your committee will see fit to adopt the language I have suggested as a committee amendment. Sincerely yours, J. W. FULBRIGHT.' The Honorable GEORGE D. AIKEN, United States Senate. MY DEAR SENATOR AIKEN: At the request of Mr. Macomber, of the Committee on Expenditures in the Executive Departments, representatives of the Treasury Department and the Department of State met with Mr. Macomber and with Mr. Yingling, of Senator Fulbright's office, on April 23, to consider the possible effect of section 201 of the proposed Federal Property Act of 1948 upon the educational program authorized by section 32 (b) of the Surplus Property Act of 1944, as amended by Public Law 584, Seventy-ninth Congress.20 The following changes in section 201 of the proposed legislation were tentatively agreed to: (1) Page 24, line 14, following the word "authority", insert the clause "to use foreign currencies and credits acquired by the United States under section 202 20 See letter dated April 15, 1948, from Hon. J. W. Fulbright, p. 130; and letter dated April 26, 1948, p. 132. |