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EXTENDING FOR 2 YEARS THE AUTHORITY OF THE ADMINISTRATOR OF VETERANS'AFFAIRS RESPECTING LEASES AND LEASED PROPERTY

JULY 7, 1949.-Committed to the Committee of the Whole House on the State

of the Union and ordered to be printed

Mr. RANKIN, from the Committee on Veterans' Affairs, submitted the

following

REPORT

(To accompany S. 20101

The Committee on Veterans' Affairs, to whom was referred the bill (S. 2010) to extend for 2 years the authority of the Administrator of Veterans' Affairs respecting leases and leased property, having considered the same, report favorably thereon with amendment, and recommend that the bill, as amended, do pass. The amendment is as follows: Page 1, line 7, strike out "1951" and insert in lieu “1950”.

EXPLANATION OF THE BILL

This bill as amended extends to June 30, 1950, the authority of the Administrator of Veterans' Affairs to enter into leases or renewals of leases of property for periods not to exceed 5 years. This authority carries with it, among others, the exemption from the provisions of law prohibiting the execution of leases if the annual rental of the property, in cases of rentals over $2,000 a year, exceeds 15 percent of the fair market value at date of the lease. Also exempted are the provisions of law prohibiting alterations, repairs, and improvements at Government expense where the cost would exceed 25 percent of the first year's rental.

The original authority was granted on June 22, 1946, as an amendwent to the Servicemen's Readjustment Act, with the same exemp. tions as provided herein. The basic justification for the original authorization was the extreme difficulty of locating suitable rental space. The authority which would have expired on June 30, 1947, was extended for 1 year on June 14, 1947, with the justification being that the space situation in the Veterans' Administration was generally poor, and that a need existed for the consolidation of various parts of individual offices under one roof to promote more efficient operation. Similar considerations prompted the extension on June 16, 1948, for an additional 1-year period.

It has been the policy of the Government for some time to assign the primary responsibility for obtaining general-use office space to & single agency in order to promote the most

efficient use of Governmentcontrolled space. For the last several years the Public Buildings Administration has been assigned this duty and the only exceptions have been the Post Office Department and the Veterans' Administration.

The Public Buildings Administration, at this time, has authority to enter into 5-year leases and is exercising such authority for Government agencies. There has recently been created a General Services Administration to provide a uniform “housekeeping policy” for the purpose of promoting greater economy and efficiency in the operations of the Government. The Public Buildings Administration and its authority to enter leases is a part of this over-all agency. The President has asked the Administrator of General Services to draw up and issue, after consultation with the Bureau of the Budget and other executive agencies, and also with the General Accounting Office, manuals and procedures for helping the various agencies to improve their operations in the field of property: The President called particular attention to the purpose of the legislation setting up this new administration which was to simplify the procurement, utilization, and disposal of Government property in order to provide the greatest overall efficiency and economy.

In view of the foregoing, the committee feels that a 1-year extension is warranted and thinks that the General Services Administration should be given an opportunity to operate in this field before any final decision is made on continuing an exemption for the Veterans' Administration bevond such 1-year extension. The problems and activities of the Veterans' Administration are specialized, it is true, but it is the view of the committee that further exemptions beyond the time set by the bill should be studied most carefully. The reports of the Veterans' Administration, Comptroller General, and the Bureau of the Budget on a similar bill, H. R. 5047, together with the letter from the President on the functions of the General Services Administration follow:

VETERANS' ADMINISTRATION,

Washington 25, D. C., June 1, 1949. Hon. Sam RAYBURN, Speaker of the House of Representatives,

Washington 25, D. C. DEAR MR. SPEAKER: There is transmitted herewith a draft of a bill to extend for 2 years the authority of the Administrator of Veterans' Affairs respecting leases and leased property

The purpose of the proposals to extend for 2 years the authority of the Administrator of Veterans Affairs with respect to leases and leased property as provided by the second paragraph of section 100 of the Servicemen's Readjustment Act of 1944, as amended, the provisions of which paragraph read as follows.

“Unti' June 30, 1949 the Administrator is author zed to enter into eases or renewals of cases of property for any of the purposes specified in this section for periods not exceeding five years The provisions of the Act of June 30, 1932 (47 Stat. 412), as amended by section 15 of the Act of March 3. 1933 (47 Stat. 1517; 40 U. S. C. 278a) the provisions of section 3679 of the Revised Statutes, as amended by the Act of March 3, 1905 (33 Stat. 1257), and the Act of February 27, 1906 (34 Stat. 48; 31 U. S. C. 665); and the provisions of section 3732 of the Revised Statutes (41 U. S. C. 11) shall not apply to any lease entered into by the Administrator under the authority of this section. Nothing in this section shall be construed to diminish, or in any way limit any right. power, or authority granted to the Administrator under any other law.".

This purpose would be accomplished by substituting “June 30, 1951" for "June 30, 1949" in the first line.

The existing law authorizes the exercise of sound business judgment and practice in the Government's interest by permitting the execution of leases for periods not exceeding 5 years notwithstanding the fact that appropriations are not available for the entire periods when the leases are executed. Leases entered into under the authority of section 100 are not subject to the provisions of law prohibiting the execution of leases if the annual rental, in cases of rentals over $2,000 per annum, exceeds 15 percent of the fair market value of the premises at date of the lease. Moreover, property leased under the mentioned authority is not subject to other provisions of law prohibiting alterations, repairs, and improvements to be made at Government expense where the cost would exceed 25 percent of the first year's rental.

This authority was originally granted the Administrator of Veterans Affairs for a limited period ("Until June 30, 1947") by the act of June 22, 1946 (60 Stat. 299; 38 U. S. C. 693), to assist the Veterans' Administration in carrying out the duties imposed upon it by law, and the need therefor was occasioned to a large extent by the acute shortage of suitable space generally throughout the country. Similar considerations prompted the extension of the authority to June 30, 1948, by the act of June 14, 1947 (61 Stat. 133), and to June 30, 1949, by the act of June 16, 1948 (62 Stat. 472). The authority has been beneficial in negotiating leases of desirable space which otherwise the Veterans' Administration would have been unable to obtain. It has been particularly helpful in connection with the installation of out-patient clinics, of which there are 197 in operation. The authority has enabled the Veterans' Administration to execute 81 leases for periods of more than 1 year, amounting to approximately 40 percent of the total space under lease.

The present condition of the real-estate market, particularly the lack of an actual yardstick as to the fair market value of properties, current costs incident to alterations and improvements, and the fact that no essential change in either field is foreseen, make the proposed legislation essential. It is anticipated that the Administrator of Veterans' Affairs will experience for an indefinite period the same difficulty in obtaining suitable space, which difficulty resulted in the authority made available during the fiscal years 1947, 1948, and 1949. The present Deed for the authority is enhanced by the approaching expiration dates of many existing leases, which should be renewed in the interest of good management. The Congress may be assured that the authorization would be used only in those instances where demanded by the best interests of the Government and the beneficiaries of laws administered by the Veterans' Administration.

In the light of savings resulting from operations under the authority of the act of June 22, 1946, as extended, it is probable that without such authority there would result an increase in the expenditure of public funds.

The extension of the authority as here requested will afford the Veterans' Administration continued assistance in rendering service to veterans and their dependents. As the current authority will expire on June 30, 1949, it is respectfully requested that the proposed legislation be introduced and given early consideration for enactment.

Advice has been received from the Bureau of the Budget that there would be no objection by that Office to the submission of the proposed legislation to the Congress. Sincerely yours,

CARL R. GRAY, Jr., Administrator. A BILL To extend for two years the authority of the Administrator of Veterans' Affairs respecting leases

and leased property Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the second paragraph of section 100 of the Servicemen's Readjustment Act of 1944 (60 Stat. 299), as amended (38 U. S. C. 693), is hereby amended by deleting "June 30, 1949" and inserting in lieu thereof the following: "June 30, 1951."

COMPTROLLER GENERAL OF THE UNITED STATES,

Washington 25, June 14, 1949. Hon. JOHN E. RANKIN, Chairman, Committee on Veterans' Affairs,

House of Representatives. MY DEAR MR. CHAIRMAN: I have your letter of June 8, 1949, enclosing a copy of H. R. 5047, Eighty-first Congress, entitled “A bill to extend for 2 years the authority of the Administrator of Veterans' Affairs respecting leases and leased property.”

The bill provides:

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the second paragraph of section 100 of the Servicemen's Readjustment Act of 1944 (60 Stat. 299), as amended (38 U. S. C. 693), is hereby amended by deleting ‘June 30, 1949' and inserting in lieu thereof the following: ‘June 30, 1951'."

A corresponding bill S. 2010, introduced in the Senate and referred to the Committee on Finance, has been reported without amendment to the Senate by that committee.

Under date of April 27, 1949, this Office made a report to the Director, Bureau of the Budget, on a proposed bill the effect and purpose of which was to amend section 100 of the Servicemen's Readjustment Act of 1944, to the extent of granting permanent authority to the Administrator of Veterans Affairs to execute leases or renewals of leases for periods not exceeding 5 years and to exempt such leases permanently from the provisions of sections 3679 and 3732, Revised Statutes, as amended. The further purpose and effect of the proposed bill was intended to exempt permanently leases made by the Administrator of Veterans Affairs from the limitations of section 322 of the Economy Act of June 30, 1932 (47 Stat. 412), as amended by the act of March 3, 1933 (47 Stat. 1517). For the reasons set out in that report, this Office concluded that such proposed legislation would establish an undesirable precedent and that it would feel required to object to the enactment of such legislation.

Under Public Law 661 approved June 16, 1948, the Administrator of Veterans' Affairs is authorized until June 30, 1949, to execute leases or renewals for any of the purposes authorized in section 100 of the Servicemen's Readjustment Act of 1944 for periods not exceeding 5 years and to execute such leases or renewals without regard to the limitations of section 322 of the Economy Act of June 30, 1932, referred to above. The pending bill, H. R. 5047, would merely extend that authority to June 30, 1951, by deleting "June 30, 1949," from the second paragraph of section 100 of the Servicemen's Readjustment Act of 1944, as now amended. Since the authority now proposed to be granted is limited to June 30, 1951, there is not perceived any serious objection to the enactment of H. R. 5047, or the companion bill, S. 2010. Sincerely yours,

LINDSAY C. WARREN, Comptroller General of the United States.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington 25, D. C., June 21, 1949. Hon. JOHN E. RANKIN, Chairman, Committee on Veterans' Affairs,

House of Representatives, Washington 25, D. C. MY DEAR MR. RANKIN: Your letter of June 8, 1949, requested comments and recommendations relative to H. R. 5047, to extend for 2 years the authority of the Administrator of Veterans' Affairs respecting leases and leased property.

I am attaching a staff memorandum on this subject which, it a believed, will furnish the information requested by you except an estimate of cost.

With reference to the cost involved, the nature of this legislation is such as to make it impossible to prepare an estimate. It is possible that, under present conditions, a short-run saving may accrue from the extension for 2 years of the Veterans' Administration's authority; for the long run, it has been demonstrated that the policy approved by the President of leasing and control of general-use office space by a single Government agency is most economical and efficient Sincerely yours,

FRANK PACE, Jr., Director.

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