PROCUREMENT OF SUPPLIES AND SERVICES BY WAR AND NAVY DEPARTMENTS SHIPMENT AND BURIAL OF REMAINS OF WORLD TUESDAY, JUNE 24, 1947 UNITED STATES SENATE, Washington, D. C. The committee met at 10:30 a. m., pursuant to call, in room 212, Senate Office Building, Senator Chan Gurney (chairman) presiding. Present: Senators Gurney (chairman), Robertson of Wyoming, Morse, Baldwin, Byrd, Hill, Kilgore, and Maybank. The CHAIRMAN. The committee will come to order. H. R. 1366-To FACILITATE PROCUREMENT OF SUPPLIES AND SERVICES BY THE WAR AND NAVY DEPARTMENTS AND THE COAST GUARD, AND FOR OTHER PURPOSES The CHAIRMAN. The committee has to report this morning the procurement bill, H. R. 1366. The bill will be printed in the record at this point. (The bill is as follows:) [Committee Print No. 1 (Corrected)] MAY 22, 1947 Black brackets indicate matter proposed to be stricken from H. R. 1366 as passed by the House. Italic type indicates matter proposed to be added to H. R. 1366 as passed by the House. [H. R. 1366, 80th Cong., 1st sess.] AN ACT To facilitate procurement of supplies and services by the War and Navy Departments, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Armed Services Procurement Act of 1947." SECTION 2. (a) The provisions of this Act shall be applicable to all purposes and contracts for supplies or services made by the War Department [and], the Department of the Navy, and the United States Coast Guard (each being hereinafter called the agency), for the use of any such agency or otherwise, and to be paid for from appropriated funds. (b) It is the declared policy of the Congress that a fair proportion of the total | purchases and contracts for supplies and services for the Government shall be placed with small business concerns. Whenever it is proposed to make a contract or purchase in excess of $10,000 by negotiation and without advertising, pursuant to the authority of paragraph (7) or (8) of section 2 (c) of this Act, suitable advance publicity, as determined by the agency head with due regard to the type of supplies involved and other relevant considerations, shall be given for a period of at least fifteen days wherever practicable, as determined by the agency head. 1 (c) All purchases and contracts for supplies and services shall be made by advertising, as provided in section 3, except that such purchases and contracts may be negotiated by the agency head without advertising if— [i] (1) determined to be necessary in the public interest during the period of a national emergency declared by the president; [ii] (2) the public exigency will not admit of the delay incident to advertising; [iii] (3) the aggregate amount involved does not exceed $1,000; (5) for any service to be rendered by any university, college or other educational institution; [(v)] (6) the supplies or services are to be procured and used outside the limits of the United States and its possessions; [(vi)] (7) for medicines or medical supplies; (vii) (8) for supplies purchased for authorized resale; (10) for supplies or services for which it is impracticable to secure competition; [(ix)] (11) the agency head determines that the purchase or contract is for experimental, developmental, or research work, or for the manufacture or furnishing of supplies for experimentation, development, research, or test[: Provided, That beginning six months after the effective date of this Act and at the end of each six-month period thereafter, there shall be furnished to the Congress a report setting forth the name of each contractor with whom a contract has been entered into pursuant to this subsection (ix) since the date of the last such report, the amount of the contract, and, with due consideration given to the national security, a description of the work required to be performed thereunder]; [(x)] (12) for supplies or services as to which the agency head determines that the character, ingredients, or components thereof are such that the purchase or contract should not be publicly disclosed; [(xi)] (13) for [technical] equipment [as to] which the agency head determines to be technical equipment, and as to which he determines that the procurement thereof without advertising is necessary in order to assure standardization of equipment and interchangeability of parts [where it is shown that standardization of equipment and interchangeability of parts is necessary in the interest of the Government]; [(xii)] (14) for supplies or services as to which the agency head determines that advertising and competitive' bidding would not secure supplies or services of a quality shown to be necessary in the interest of the Government [or]; (15) for supplies of a technical or specialized nature requiring a substantial initial investment or an extended period of preparation for manufacture, as [to which] determined by the agency head [determines,] when he determines that advertising and competitive bidding may require duplication of investment or preparation already made, or [would] will unduly delay procurement of [the] such supplies [concerned]; (16) for supplies or services as to which the agency head determines that the bid prices after advertising therefor are not reasonable or have not been independently arrived at in open competition: Provided, That no negotiated purchase or contract may be entered into under this paragraph after the rejection of all bids received unless (A) notification of the intention to negotiate and reasonable opportunity to negotiate shall have been given by the agency head to each responsible bidder, (B) the negotiated price is lower than the lowest rejected bid price of a responsible bidder, as determined by the agency head, and (C) such negotiated price is the lowest negotiated price offered by any responsible supplier; [(xiii)] (17) the agency head【, subject to the approval of the President,] determines that it is in the [interests] interest of the national defense that any plant, mine, or facility or any producer, manufacturer, or other supplier be made or kept available for furnishing supplies or services in the event of a national emergency, or that the [interests] interest either of industrial mobilization in case of such an emergency, or of the national defense in maintaining active engineering, research and development, are otherwise subserved: Provided, That beginning six months after the effective date of this Act and at the end of each six month period thereafter, there shall be furnished to the Congress a report setting forth the name of each con tractor with whom a contract has been entered into pursuant to this subsection (xiii) since the date of the last such report, the amount of the contract, and, with due consideration given to the national security, a description of the work required to be performed thereunder]; or [(xiv)] (18) otherwise authorized by [law;] law. (d) If in the opinion of the agency head bids received after advertising evidence any violation of the antitrust laws he shall refer such bids to the Attorney General for appropriate action. [Provided, That this] (e) This section shall not be construed to (A) authorize the erection, repair or furnishing of any public building or public improvement, but such authorization shall be required in the same manner as heretofore[; and] [Provided further, That advertising, as provided in section 3, shall be required for], or (B) permit any contract for the construction or repair of buildings, roads, sidewalks, sewers, mains, [and] or similar items to be negotiated without advertising as required by section 3, unless such contract is to be performed outside the continental United States or unless negotiation of such contract is authorized by the provisions of [subsections (i), (ii), (iii), (viii), (ix), or (x)] paragraph (1), (2), (3), (10), (11), (12), or (16) of subsection (c) of this section. [SEC. 2. (a) It is the declared policy of the Congress that a fair proportion of the total value of all purchases and contracts shall be placed with small business concerns. As one means to that end, supplies and services shall, when not of manifest disadvantage to the Government, be produced in reasonably small lots or amounts. [(b) Whenever it is proposed to make a contract or purchase in excess of $10,000 by negotiation and without advertising, pursuant to the authority of subsection (vi) or (vii) of section 1, suitable advance publicity, as determined by the agency head with due regard to the type of supplies involved and other relevant considerations, shall be given for a period of at least fifteen days, wherever practicable, as determined by the agency head.] SEC. 3. Whenever advertising is required (a) The advertisement for bids shall be a sufficient time previous to the purchase or contract, and specifications and invitations for bids shall permit such full and free competition as is consistent with the procurement of types of supplies and services necessary to meet the requirements of the agency concerned. (b) All bids shall be publicly opened at the time and place stated in the advertisement. Award shall be made with reasonable promptness by written notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, price and other factors considered: Provided, That all bids may be rejected when the agency head determines that it is in the public interest so to do. SEC. 4. (a) Except as provided in subsection (b) of this section [-4-], contracts negotiated pursuant to section [1] 2 (c) may be of any type which in the opinion of the agency head will promote the best interests of the Government. Every contract negotiated pursuant to section [1] 2 (c) shall contain a suitable warranty, as determined by the agency head, by the contractor that no person or selling agency has been employed or retained to solicit or secure such contract upon an agreement or understanding for a commission, percentage, brokerage or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business, for the breach or violation of which warranty the Government shall have the right to annul such contract without liability or in its discretion to deduct from the contract price or consideration the full amount of such commission, percentage, brokerage, or contingent fee. (b) The cost-plus-a-percentage-of-cost system of contracting shall not be used, and in the case of a cost-plus-a-fixed-fee contract the fee shall not exceed 10 per centum of the estimated cost of the contract, exclusive of the fee, as determined by the agency head at the time of entering into such contract (except that a fee not in excess of 15 per centum of such estimated cost is authorized in any such contract for experimental, developmental, or research work and that a fee inclusive of the contractor's costs and not in excess of 6 per centum of the estimated cost, exclusive of fees, as determined by the agency head at the time of entering into the contract, of the project to which such fee is applicable is authorized in contracts for architectural or engineering services relating to any public works or utility project) [, and provided that neither]. Neither a cost nor a costplus-a-fixed-fee contract nor an incentive-type contract shall be used unless the agency head determines that such method of contracting is likely to be less costly |