STUDY OF THE ARMED SERVICES PROCUREMENT REGULATIONS AND DEPARTMENTAL IMPLEMENTATION THERETO WEDNESDAY, JULY 16, 1958 HOUSE OF REPRESENTATIVES, Washington, D. C. The subcommittee met at 10 a. m., the Honorable F. Edward Hébert (chairman of the subcommittee) presiding. Mr. HÉBERT. The committee will be in order. This morning, the subcommittee will consider the method by which the armed services procurement regulations are implemented by the three services. Periodically, there has been concern over inconsistencies, different procedures, other substantive differences between the services in their interpretation of the armed services procurement regulations and of the Armed Services Procurement Act, and the several other acts dealing with procurement such as the Davis-Bacon Act and the like. The members will find on their desk an outline of the format of this study. The services have been briefed by the staff in advance of this hearing, and are prepared to cover in detail the area outlined in the questions suggested by the staff. This may be a tedious undertaking, but the subcommittee feels it is imperative that this subject be studied. On the subcommittee desk, you will find the copy of the armed services procurement regulations and back of it you will find the volumes implementing those regulations uttered by the different services. Just a physical example will indicate to you what a potential problem area this subject could be. It becomes particularly important for study now because of our concern with the obligations of contracting officers, a study which will be completed before adjournment. becomes of equal concern to people dealing with the Government because each contractor is charged with knowledge of the contractual procedures of these several departments. As an example, on your desk you will find a single subject treated and you will observe the differences between the armed services procurement regulations and the several service directives. I cite this as an example. It is by no means the complete story. We are then going to proceed by hearing from the Department of the Army of the method by which it implements the armed services procurement regulations. The Army will cover some subjects which will not be repeated by the other services, but it is necessary in order that the whole matter be unfolded. This may well prove to be one of our most important if not more difficult assignments. Pending the completion of this matter which was scheduled for last week, we will suspend the further inquiry into the utilization of Government plants. This will be necessary because of the necessity of assembling informaiton and having witnesses prepared on that subject. Mr. Courtney. Mr. COURTNEY. Mr. Chairman, Mr. Courtney Johnson, Deputy Assistant Secretary of the Army for Logistics, is here, and he is prepared to lead off for the Army, followed by Colonel Waterman and Mr. Kintisch. And we will get directly into the subject as it is outlined on the series of questions which you have on your desk, on the blue sheet. Mr. HÉBERT. The blue sheet. All right. Mr. COURTNEY. First, Mr. Chairman, for convenience and for an introduction, as you have explained, the Army will lead off and will take the whole subject. And then the detail with respect to these questions, which is here, such as, the number of employees and the like, will be interpolated in the record. Mr. Johnson has a prepared statement and is ready to go forward. Secretary JOHNSON. With your permission, Mr. Chairman, I would like to read my prepared statement. Mr. HÉBERT. Proceed, Mr. Johnson. STATEMENT OF HON. COURTNEY JOHNSON, DEPUTY ASSISTANT SECRETARY OF THE ARMY FOR LOGISTICS Secretary JOHNSON. I am Courtney Johnson, Deputy Assistant Secretary of the Army for Logistics. I am very pleased to have the opportunity to meet with you today and to discuss with you the development and issuance of procurement policies, procedures, and directives in the Department of the Army, and the procurement training provided for the personnel comprising the Army's procurement organization. We consider the subjects selected for this hearing highly important and appreciate the interest being evidenced by your committee. We are especially proud of our accomplishments in these two areas but realize refinements are always possible. As a result, we are constantly engaged in making improvements. Continually, our efforts are directed toward simplifying procurement, not only for our own operating people but for businessmen as well. The task is of considerable magnitude when one considers that our regulations must be sufficient to cover every conceivable situation which might occur in the procurement of thousands of different items, many of which are extremely complex and which obligate the Government to expend billions of dollars each year. First, I would like to speak to the subject of procurement regula tions. The basic medium for disseminating uniform Department of Defense procurement policies and procedures to Army procurement personnel is the Armed Services Procurement Regulations. The ASPR-and with your permission I will refer to ASPR in the future, representing the Armed Services Procurement Regulations-is issued by the Assistant Secretary of Defense (Supply and Logistics) by direction of the Secretary of Defense, and in coordination with the materiel secretaries of the military departments. The objective is to achieve maximum uniformity. The Army Procurement Procedure implements and supplements the ASPR. Included in the APP-and again I will refer to this Army Procurement Procedure as the APP-are managerial controls, delegations of authority, assignments of responsibility, administrative procedures, and detailed instruction essential for efficient procurement operations but not covered in the ASPR. Duplication of the ASPR material is avoided and many provisions of the ASPR require no implementation by the Army. We strive to hold implementations of the ASPR to a minimum. For convenience and simplicity, the format of the APP is identical to that of the ASPR, including use of the same numbering system. The heads of the Army technical services in turn, have been authorized to implement the APP when necessary for efficient control and accomplishment of their specialized misisons. Again, duplication is avoided. These technical service instructions are being continuously reviewed and perfected. We believe that we have made substantial progress in avoiding duplication of material and reducing the burden on the contracting officer in locating the applicable instructions for a particular action. In this connection the Army has recognized that the contracting officer in the field must be able to find all the material in the regulations governing a specific subject with ease and accuracy. To simplify the process, he has recently been supplied with an index, by subject matter, including cross-references to applicable provisions of APP and ASPR. At this point I want to mention that the Assistant Secretary of the Army (Logistics), Mr. Frank Higgins, who is at present out of the country, and I recognize the need for a continuous interchange of ideas between those of us at the Washington level, who are responsible for development of the policy which is published in the ASPR and APP, and those at the field level, who have to operate under them. With this in mind, in October 1957, Mr. Higgins initiated a new series in his program of personally conducting field procurement panel conferences with contracting officers, buyers, and other members of the procurement team at the operating level. I want to interpolate here that these conferences followed similar conferences in 1955 and 1956. At these conferences he has been accompanied by a panel of top procurement personnel, including our senior Army small-business adviser. Between 100 and 200 persons attended each of these conferences. One such conference was held in Frankfurt, Germany, with contracting people assigned to the United States Army, Europe. Since 1955, in all, he has held 22 such conferences at central locations all over the United States. We believe these conferences have done much to give us an appreciation of the problems, the "gray areas," which are bothering procurement people in the field, and enable us to rectify them; and, in turn, have enabled us to give them an insight into the problems that we at headquarters must solve. Similarly, each of the continental armies in the United States holds an annual procurement conference in which local contracting officers from posts, camps, and stations meet with representatives from the Headquarters, Department of the Army, level. At these meetings the problems of local procurement and smaller purchases are discussed, rather than those involving central procurement. I would like to turn for a moment to the question of how we carry out the procurement function in field purchasing offices under these policies and procedures in order to afford the committee an understanding as to just how this is done in the Army. In its dealings with contractors, the Government is not represented by a single individual, the contracting officer, who deals alone with industrial executives. I want to emphasize that we employ the team concept in the award and administration of contracts whose complexity justifies such an approach. The team concept involves the use of various specialists, who advise and assist the contracting officer in the many specialized facets of the procurement functions, such as production, engineering, financial, legal, audit, and the like. We do not rely on a single individual to possess the vast array of specialized information which is necessary to insure protection of the best interests of the Government in our complex procurements. In addition, I would like to point out that, even though our contracting officers enter into the contracts, there are many other safeguards in the system, such as local boards of review, to further insure the business propriety and soundness of purchases. I would like to interpolate here, Mr. Chairman, for a moment. For many years prior to my present work with the Army, I was in the contracting business, and I dealt extensively with the placing of contracts for my company, Defense Department contracts, and the administration of those contracts. This process that I am describing here is thoroughly familiar to me from the other side of the desk. I can only say that it is a most meticulous process. Every detail of the award of these contracts is checked and checked by men who really know what they are doing, and everything is safeguarded to the maximum extent. I am now speaking as a previous contractor. Mr. HÉBERT. You are directing your remarks to the "team" concept of contracts? Secretary JOHNSON. Yes, sir; and to the care which is taken in avoiding or trying to avoid mistakes. I say "trying to avoid" because I don't think it is humanly possible to avoid every mistake. Somebody is going to make one sometime. Mr. HÉBERT. Mr. Johnson, at this point-pardon the interruption there. But in your team concept, do you know if the other services use the team concept? Secretary JOHNSON. I believe they do, but I want to be sure about this. Do you know, General Engler? General ENGLER. I am sure they do, Mr. Chairman. I have heard the members of the other services so state, sir. Mr. HÉBERT. Of course, we ask them that question, but I just wanted to get that in the record at this time. Secretary JOHNSON. Yes, sir. Proposed awards of the larger contracts are also reviewed in the Offices of the Chiefs of Technical Services and the Deputy Chief of Staff for Logistics, as well as frequently by Secretary Higgins or me. In addition, procurements of relatively smaller dollar value may be reviewed by top echelons of the Army when it is considered they may have a significant impact on logistics capabilities and policies in the future. In particularly important contracts the Secretary of the Army is also consulted. My remarks following this, Mr. Chairman, will relate to the training program. I am sure the committee recognizes that there is a vast difference in the degree of complexity of Government procurement as compared to the purchasing techniques used by private industry, and I might once again interpolate that I was once a purchasing agent. The purchasing methods of private business, involving direct negotiations with selected suppliers, are generally free from the restrictions of the numerous laws and regulations which govern the processes of Government procurement. It is, therefore, of primary importance that our procurement personnel be thoroughly familiar with the applicable laws, precedents, policies, and regulations, and that they have available the best possible training programs we can provide to increase their proficiency. On the subject of procurement training, I would like to emphasize three points: First, our training programs are conducted under comprehensive career development programs so that we can provide continuity and progression in the development of competent procurement people through training and duty assignments. We understand the necessity of developing procurement personnel of the highest possible quality. Second, we now have excellent training programs characterized by breadth, depth, and high quality instruction. Third, we are constantly trying to devise methods of improving the existing training programs. As to the first point, the Deputy Chief of Staff for Logistics, in close coordination with the Assistant Secretary of the Army for Logistics, is directly supervising a comprehensive career development program for both military and civilian career logisticians. În the military program, selected officers who show clear promise of developing into outstanding logisticians are entered into a developmental period of 8 to 10 years. Both their duty assignments and their school assignments are monitored by the Deputy Chief of Staff for Logistics. At the end of the developmental period, those who qualify are classified as fully qualified logisticians and are assigned by the Department of the Army to key positions in the logistics field, including the highest level procurement positions. |