action the Administrator must determine that in so doing it is advantageous to the Government in terms of economy, efficiency, and service. Also, he cannot prescribe any policies with respect to procurement, warehousing, storing, transporting, and distributing property or taking over any warehouse or procurement functions without adequate notice to the agency concerned.

As I have pointed out, as a practical matter before action was taken, notice was always given. Indeed, extended discussions and negotiations have always preceded every policy action. This limitation, therefore, places into effect what has always been the practice. I sincerely hope, however, that this requirement of notice will be treated as a broad policy directive and that it will not be interpreted so narrowly that the Administrator must give proof of notice each time that a routine action is taken. Another limitation under this section is that no action may be taken 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. This will permit the Secretary of Defense to exclude combat items and other items which he thinks his own organization should procure or handle. At the same time it will permit the central agency to purchase supplies for the National Military Establishment when there is agreement as to the advantage to be gained by so doing. As a practical matter it will enable the Bureau of Federal Supply to be more useful to the Military Establishment than it has in the past.

To compensate for these limitations, section 102 advances the principle of centralized procurement in some respects. Coverage is extended to wholly owned Government corporations; also to agencies in the legislative and judicial branches, the District of Columbia, and mixed-ownership corporations, with their consent. It clarifies existing ambiguities in the authority of the central agency with respect to procurement of public utility and other services, and with respect to the transportation of supplies. Finally, there is a psychological advantage in that the authority of the central agency rests directly on a statute rather than on an Executive order promulgated under the authority of a statute.

Unlike section 102, section 103 represents new legislation for the most part. Our experience in surveying the supply systems of the Federal agencies and in the operation of our stores system, where we do redistribute excess property to some extent, makes us keenly aware of the necesssity for legislation to promote the maximum utilization of excess property by executive agencies. We are in agreement with the provision which requires each executive agency to maintain adequate inventory controls and accountability systems for the property under its control.

The next section which is of concern to us is section 106. Section 106 (d) repeats part of the language of Executive Order 6166, with respect to the authority to perform supply functions in the central agency or to permit agencies to perform them for themselves or to delegate them to third agencies. We believe that the establishment of industry advisory committees as authorized in section 106 (f) can be of great value in assisting the Bureau of Federal Supply to function effectively. We now have an Industry Advistory Council on the preparation of specifications and supply cataloging. Section 106 (g) requires the Administrator to advise and consult with interested Fed

eral agencies. As I have already told you with respect to the operations of the Bureau of Federal Supply there is already in existence a Procurement Policy Advisory Committee. All agencies actively concerned in the procurement of supplies are represented on this committee.

I believe that the provisions of section 107 relating to (1) surveys of Government property and management practices with respect thereto, and obtaining reports thereon from executive agencies, and (2) prescribing standardized forms and procedures and standard purchase specifications are essential to the successful operation of the Federal supply system. The uniform Federal supply catalog system which is authorized in this section is essential to facilitate procurement, to assist in standardization of supplies, and to provide a uniform basis for property management.

It would also facilitate transfers within agencies and full utilization of property, as set forth in section 103. In considering a deficiency appropriation request for the fiscal year 1948, made by the Bureau of Federal Supply to place such a system in operation, the Senate Appropriations Committee stated that it was a worthy project and recommended that additional legislative authority be secured before funds are appropriated. The Munitions Board of the National Military Establishment for security reasons deemed it essential to proceed at once with the cataloging of all items of military supply as a part of a unified Federal catalog system. The Board is now proceeding with such cataloging and we have agreed to advise with and assist them to the greatest practicable degree in keeping their work consistent with the needs of the Government-wide system, pending enactment of the legislation as recommended by the Senate Appropriations Committee. The draft bill now before you makes the Bureau of Federal Supply responsible for the Government-wide system just as in the past it has been responsible for the Federal Standard Stock Catalog which would be consolidated with and expanded into the Federal catalog system. All other supply catalog systems of the Government will also be consolidated into the one system. All executive agencies have consented to the arrangement set forth in section 107. However, section 107 (b) provides that agencies are required to utilize the uniform Federal catalog system only so far as is practicable taking into consideration efficiency, economy, and other interests of the Government.

There are some purchase activities where it would not be efficient or economical to bring the system into operation. There are other activities where the use of the system might appear to the individual agency's viewpoint to be unnecessary but where the participation of the agency in the system would be necessary in the interest of the Government as a whole. I understand that it is not the intention of section 107 (b) to permit agencies to decide for themselves whether it would be efficient and economical to use the system. If there is a conflict between the directive of the Administrator and the desire of the agency, the question will have to be resolved by a policy determination of the President under section 106 (a) of the bill. The remainder of the bill deals with matters which are not of primary concern to the Bureau of Federal Supply or are technical in nature so that I will not comment upon them at this time.

In conclusion. I should like to state that the Bureau of Federal Supply fully endorses the proposed bill. We believe that it represents

a long step forward in the efficient operation of the Federal supply system, and the management of its property. Unquestionably, it would result in substantial monetary savings to the Federal Government though many of these cannot be measured precisely.

That completes my formal statement, Mr. Chairman. My associates from the Bureau and I shall be glad to answer any questions. The CHAIRMAN. The Chair has no questions, other than to ask, are you satisfied that the Bureau of Federal Supply can be transferred to the Federal Works Agency without any interruption or harm to the agency?

Mr. KURTH. Yes, Mr. Chairman, I am satisfied that that is the

case.

The CHAIRMAN. The personnel you now have would be transferred as it is?

Mr. KURTH. That is correct.

The CHAIRMAN. I think there are no further questions, .Mr. Kurth, but we may wish to consult to with you later on before we finally report a bill out. I should, however, like to ask General Fleming or Mr. Johnstone to tell us of the origin of the Federal Works Agency. I am not quite clear in my own mind how the Federal Works Agency came about, and I should like to have that for the record.

General FLEMING. It came about, Mr. Chairman, through Reorganization Plan No. 1, submitted under the Reorganization Act of 1939 and subsequently approved by a joint resolution of both Houses of Congress to be effective July 1, 1939. It was designed to be the principal construction and service agency of the Government, and as originally constituted it took the Bureau of Public Roads from the Department of Agriculture, which became the Public Roads Administration, as one element. Another element, now the Public Buildings Administration, was formed from the office of the supervising architect and the Public Buildings Branch of the Treasury, and also from the Branch of Buildings Management in the National Park Service. Those two were combined to form the Public Buildings Administration. The Federal Works Agency also contained the United States Housing Authority which, later, was transferred to the National Housing Agency by Executive order in 1942, and still later by law became a part of the Housing and Home Finance Agency.

Also in the Federal Works Agency were the PWA, formerly Public Works Administration, and WPA. Between 1942 and 1943 Í liquidated those two organizations, so they are no longer in existence. Some of the residual functions of PWA are still in the organization, because some of the projects that were started under it, the Chicago subway, some dams in Nebraska, and the Santee-Cooper project in South Carolina, were not finished, so they were absorbed in our continuing organization; but PWA, itself, passed completely out of existence.

Then to handle some phases of the Lanham Act during the war, and other programs that followed, I created within FWA, the Bureau of Community Facilities, which, as you know, handles the program under the Disaster Aid bill.

The CHAIRMAN. The Federal Works Agency was really set up by Executive order authorized under the Reorganization Act of 1939?

General FLEMING. By reorganization plan which was approved by the Congress. So it had statutory background.

The CHAIRMAN. It had statutory foundation?

General FLEMING. Yes, sir.

Mr. JOHNSTONE. Part of the Public Buildings Administration was originally the Buildings Branch of the Procurement Division of the Treasury. It had two branches, one concerned with the procurement of buildings needed for the Government, the other concerned with the procurement of supplies and personal property. This is the remaining part here of the Procurement Division that we are talking about now, which is now the Bureau of Supply. And for your record, the plan was Reorganization Plan No. 1 under the Reorganization Act of 1939. That was approved by resolution by both Houses effective July 1, 1939.

The CHAIRMAN. Has the position of the Bureau of Federal Supply under Executive Order 6166 been strengthened by any statute which has been subsequently enacted?

Mr. KURTH. In some respects it has. For example, Public Law 520 of the Seventy-ninth Congress gave it specifically the authority to procure strategic and critical materials, but as to the policy direction of the Bureau of Federal Supply in Federal procurement activities, there have been no major legislative enactments.

The CHAIRMAN. Does not the General Accounting Office have authority now to prescribe property and management practices, such as inventory control and accounting systems?

Mr. KURTH. In accordance with the Budget and Accounting Act of 1921, the General Accounting Office, as well as the Bureau of the Budget, both have powers to prescribe the General Accounting Office has the power to prescribe fund accounting systems. The scope of a fund accounting system might conceivably take into account inventory control and accountability, but there are two aspects involved; one is accounting and the other is supply. The first is the keeping of the records themselves. That is an accounting job. The other is a supply problem; for example, the determination of the limitations of the supply, that is, the minimum and maximum amounts to be maintained in the inventory.

We do not look upon the accounting as our function. As a matter of fact, at the moment there is a committee composed of representatives of the General Accounting Office, the Bureau of the Budget, and the Bureau of Federal Supply, which is making a study of inventory accounting systems in the Federal Government. It is necessary that all three be represented, because in addition to the interest of the General Accounting Office and the Bureau of Federal Supply, the Bureau of the Budget is responsible, in general, for over-all administrative practices in the Federal Government.

The CHAIRMAN. You see nothing in this bill that would produce a conflict of authority between the Federal Works Agency and the General Accounting Office?

Mr. KURTH. No, Mr. Chairman, I do not. As a matter of fact, it would facilitate our cooperation with the General Accounting Office. Mr. JOHNSTONE. May I interpose to say that in the appropriation act, I think it was for the fiscal year 1948, the General Accounting Office was given specific authority to prescribe uniform accounting systems of property for the agencies covered by the specific appro

priation act, which was the independent offices of the Government. The Comptroller's authority under that act expires on July 1 of this year, which is the proposed effective date of the draft bill before your committee. It may very well be that the Congress would wish to extend the authority of the General Accounting Office in that respect, both for an additional period and to other agencies of the Government, and upon that I would respectfully suggest, Mr. Chairman, that you consult with the Comptroller General. I have discussed the matter with him, and it is my impression that he feels that there is no conflict here.

Mr. KURTH. In further elaboration of the distinction, I think before you can have any inventory control system, you have to have a uniform Federal catalog system. It is necessary to identify the items. That is part of the supply job rather than part of the accounting job. Now, we have never had in the Federal Government a uniform Government-wide catalog system. As I listened to the testimony of Mr. Larson yesterday I could not help but be impressed by the fact that if we had had a uniform Government-wide catalog system in effect during the war period, we would have avoided many of the difficulties that we got into in taking over property that was declared surplus. The CHAIRMAN. That will be all for the present time. Thank you very much for your statement.

Mr. JOHNSTONE. Mr. Chairman, I should like to say that the specific authority of the Comptroller with respect to prescribing uniform accounting systems for Federal agencies expires on the 1st of July of this year. Congress might very well wish to extend it, but that is the precise legal status of it at present.

The CHAIRMAN. The General Accounting Office has not expressed any desire to be heard yet on the matter, but we will hear from them later. Thank you for the information, Mr. Johnstone.

Our next witness is Mr. Stephen J. Spingarn, Assistant General Counsel of the Treasury Department, and Deputy Director of the Office of Contract settlement. The committee will be glad to hear you, Mr. Spingarn.

STATEMENT OF STEPHEN J. SPINGARN, ASSISTANT GENERAL COUNSEL, TREASURY DEPARTMENT, AND DEPUTY DIRECTOR, OFFICE OF CONTRACT SETTLEMENT

Mr. SPINGARN. Mr. Chairman, as you have indicated, I am Deputy Director of the Office of Contract Settlement and Assistant General Counsel of the Treasury. I have here a formal statement which I should like to have inserted at the end of my oral statement, if that is agreeable to you.

The CHAIRMAN. That may be done.

Mr. SPINGARN. It is rather more formal, I think, than is necessary. The CHAIRMAN. You may insert it at the conclusion of your remarks, and give us your opinions on the draft bill, and any suggestions that you may have to improve it..

Mr. SPINGARN. First of all, Mr. Chairman, let me say that I am in the rather happy position here of a bureaucrat urging that you take

2 See letter dated April 13, 1948 subsequently received from Hon. Lindsay C. Warren, Comptroller General of the United States, p. 126.