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borhood of $40,000,000,000, not to mention the waste of critical materials and personnel; that freight losses per year alone may run into $100,000,000; and that it is impossible to provide adequate, competitive production facilities sufficient to supply our fighting forces. Therefore, the importance of the provisions of section 107 of H. R. 2781 is paramount; and, without minimizing the importance of the other provisions of H. R. 2781, I will confine my testimony solely to the provisions of that section.

My object in appearing before your committee, Mr. Chairman, is to attempt to give you the benefit of the 2 years' work of the House Armed Services Committee and to provide your committee with any data or assistance you may need.

During the hearings conducted by this committee last Friday, the impression was given that this committee has two objectives in the preparation of legislation such as H. R. 2781:

First, to provide organizational units and operating procedures that can be used as building blocks by the Congress, in the event that it accepts the recommendations of the Hoover Commission. For example, the units described in H. R. 2781 would become bureaus in the proposed Office of General Services.

Second, to improve the efficiency and economy of procurement and supply functions in the Federal Government.

Section 107 of H. R. 2781 does neither. In fact, our studies disclosed that such provisions may be the reason why supply activities of the Government are in the sad state described in detail by the Hoover Commission.

Let us discuss the building-block idea first and see whether this legislation fits in. The Hoover Commission revealed that when we speak of "Federal supply" we are by almost any standard speaking of military supply. The reasons for this assumption are revealed in the Hoover Commission report:

First, military purchases in the peacetime year of 1948 constitute over six-sevenths of the entire purchases of the Federal Government for supplies, materials, and equipment. In wartime, the civilian purchases are trivial compared to the military.

Second, the value of the stocks maintained in military warehouses throughout the world is about $40,000,000,000. No exact value of the stocks carried in civilian warehouses could be obtained, but the military stocks are probably over a hundred times that of the civilian stocks.

Third, civilian supply is comparatively simple. On the contrary, military supply, involving the feeding and clothing, the housing and arming of our fighting men throughout the world, often against the stern resistance of an enemy, is a complex, gigantic task.

In addition to these comparisons, it would be borne in mind that military supply includes practically every item used by the Federal Government.

For these reasons, it seemed sensible to set up the machinery to have all the military supply operations controlled at one point, and this has been done under the National Security Act; also to have all the civilian supply activities controlled at one point, and this is the intent of H. R. 2641 in recommending the establishment of the Office of General Services.

H. R. 2641 states [reading]:

The Administrator of General Services shall not have any jurisdiction or control in respect of personal property or nonpersonal contract services used or to be used by the armed services of the United States, but shall consult and maintain liaison with the various supply agencies of the armed services for the purposes of solving common problems and correlating his activities with those of the supply agencies of the armed services.

In contrast to this proposal to set up coordinating and correlating procedures between the civilian agencies collectively and armed services collectively are the provisions of section 107 of H. R. 2781 which delegates to the Administrator of the Federal Works Agency sole responsibility for the establishment and maintenance of the Federal supply-catalog system and directs that each executive agency shall utilize such uniform catalog system. In other words, it places the responsibility for a function described by the Hoover Commission as the key to an efficient supply system solely with an agency whose supply functions even in peacetime constitutes a small fraction of the supply operations of the Federal Government and make the supply of our fighting forces, constituting the major portion of our Federal supply, dependent upon another agency.

Thus it is seen that this proposed legislation is not in accord with the building-block concept of this committee nor with the Hoover Commission recommendations to provide organizational units and procedures that may be included in such legislation as that pertaining to the Office of General Services.

Now let us consider my second statement that this proposed legislation may actually defeat the objective of increasing the efficiency and economy of supply operations. To show this, we have only to "look at the record," as a distinguished American has said.

The Hoover Commission gives a factual record of the history of cataloging over the past 35 years. And it is a record of failure; of failure to develop a supply catalog system that does not even reflect the comparatively simple needs of the civilian agencies, and certainly does not even come close to meeting the needs of military supply functions. Cataloging and supply activities today are as bad, if not worse, than they were 35 years ago; the only difference appears to be that today we know more about the situation and how to correct it.

Congressman Brown, in attempting to portray some of the startling conditions revealed by the Hoover Commission told how one item had been duplicated over a hundred times by the incorrect assignment of duplicate names and stock numbers. Many items have been assigned hundreds of duplicate names and numbers and one has been found at the naval installation at Mechanicsburg with over 1,100 different names and numbers.

The Navy Department has described their project to analyze 50 million items now carried on their supply records with the objective of reducing them to 25,000. This is a reduction of 2,000 to 1.

During the war antifriction bearings became the most critically scarce item of supply mainly because some 9,000 different types of bearings were expanded into 300,000 different types.

When it is realized that whenever an unnecessary duplicate name is assigned to an item the production must be increased, critical material allocated to its manufacture, production facilities expanded, another stock bin opened in a warehouse, new and larger warehouses

must be built to contain the additional bins, additional personnel assigned to operate the warehouses, and so on; then the reason for enormous waste can be understood.

What has been done to correct this situation? Let us review the history of the armed services constituting a major portion of Federal supply. It is curious that the armed services did all right as long as they were left alone; it is only when other agencies intruded that progress was halted.

Back in 1914, the Navy instituted a supply catalog system that was a great help to the Navy during World War I. Shortly afterwards, the responsibility for Federal cataloging, including naval cataloging, was transferred to a Federal Standard Stock Catalog Board dominated by civilian agencies and then the Bureau of Federal Supply was designated the agent to compile the Federal Stock Catalog. No explanation has ever been found why this responsibility for developing a catalog system to meet the needs of the complex gigantic supply system of the armed forces was transferred from the armed forces to an agency having a comparatively small, simple, supply system. At this time also the emphasis began to be placed on using the catalog system for statistical purposes instead of moving supplies to our fighting men.

The result was inevitable. The Hoover Commission reports that [reading]:

Some of the criticisms were that the Federal Standard Stock Catalog led to waste of space in warehouses; that the classifications did not provide for the groupings of related items and for further subdivisions of major classes; that common terminology was not always used; that it was not sufficiently flexible nor expansible rapidly and completely to identify, classify, number, and list new items; that there were no standards by which agency personnel could judge the adequacy of article description; and that it was not up to date.

However, the real reason was that it was designed too remotely from the supply system it was meant to serve and without consideration for the needs of that supply system.

The failure of the Federal stock catalog system was the greatest single reason for the supply confusion for which the armed services were criticized during the war.

As soon as it was realized that the Federal Standard Stock Catalog would not meet the needs of military supply, every commander of a supply installation in the armed services was forced to improvise a catalog system to enable him to receive, store, issue, maintain, and be accountable for personal property and equipment pouring into his installation. This more or less solved the situation at his installation; but it made for over-all supply confusion, as it meant that many supply languages were spoken in the same supply system, with identification numbers and names unintelligible outside the limits of each supply point.

It should be noted particularly that one technical service, the Army's Signal Corps, in a period of less than 18 months developed a catalog system that was used for communication items by all the armed services of the Allied nations except the United States Navy. With the help of this catalog system, the Signals Corps transformed their supply system from the worst in the Army to the most efficient.

The original Navy catalog operations became so perverted by the Federal stock catalog system that its supply system became a matter

of serious concern to the Secretary, Mr. Forrestal. He established a committee of civilians to study the Navy supply system and make recommendations. This committee made two recommendations:

First, that a single catalog system should be developed by the Navy for use by all the bureaus and agencies.

Second, a single stock control system should be developed for the Navy based on the single catalog system.

The end of the war found the armed services on their way to putting their catalog operations on a sound basis. However, a movement was initiated to again take from the armed services their authority to solve their own problems and vest it in civilian agencies or in a board, far removed from military supply. It should be of interest to this committee and to the Congress the methods that are being used to do this.

After the failure of the Federal stock catalog system, great emphasis began to be placed on a standard commodity classification code and this activity was combined with the activity to develop a standard commodity catalog. The same emphasis was placed on high level boards and committees that had characterized and developed over the past 35 years with little attention given to the methods by which the catalog and supply operations would be geared together. Much was said about the need for a statistical tool and little about moving supplies.

In 1947, Congress reviewed a request for $2,700,000 to continue the catalog activities of the Bureau of Federal Supply. By that time it was clear that little or nothing of value was resulting from the sizable sums that had been spent for the Federal stock catalog system. In denying this request, it was the intent of Congress that these activities should close. Instead they were merely transferred to the Munitions Board of the National Military Establishment by having the Navy reimburse the Treasury Department for the sums that the Treasury Department used to continue to pay the salaries of their catalog personnel. This group from the Bureau of Federal Supply became the key personnel of the Munitions Board cataloging activities. One of their first projects was to engineer an agreement between the Munitions Board and the Bureau of Federal Supply by which the Bureau of Federal Supply placed representatives on the executive committee of the Munitions Board in addition to the personnel who had been transferred from the Bureau of Federal Supply.

If there is any question that the Munitions Board cataloging agency program is the same that has been attempted for 35 years and that caused so much trouble during the war the Hoover Commission states [reading]:

The system adopted by the agency thus far is in substantial conformity with the system developed by the central staff and technical committee at the Bureau of Federal Supply for the United States Standard Commodity Catalog Board. What has been the result? Practically none. The activities of the Munitions Board cataloging agency were initiated in July 1947 and little has been accomplished. The Hoover Commission points out that in the first year of the Munitions Board cataloging program, a 3-year program starting in July 1947–

has already been revised to a 4-year program dating from July 1, 1948.

It should be of interest not only to this committee but to the House Appropriations Committee that these abortive efforts are costing over $100,000,000 for the years 1947 through 1950. Past experience has shown that a catalog system suitable for both the armed services and the civilian agencies could have been developed and placed in operation in the time that the Munitions Board program has been under way and at about half the cost. The Hoover Commission report states [reading]:

If the necessary authority is properly vested and is exercised, a Federal commodity catalog can be completed and put into use for much less than has been spent in past years on scattered effort. The 5-year program and budget estimate presented to Congress, under the aegis of the United States Standard Commodity Catalog Board in July 1947 was predicated upon a total cost for preparing and publishing the catalog of a little more than $56,000,000.

Thus it is seen that the provisions of section 107 of H. R. 2781 is an attempt made to perpetuate a policy that not only is not in conformance with the wishes of this committee but which after the expenditure of vast sums to implement has probably been the chief reason why needed reforms in the supply systems of the Federal Government have not been instituted.

The House Armed Services Committee and the Hoover Commission before attempting to make recommendations have tried to determine the reasons why there has been such a lack of success over such a long period of a program which the experience of the armed services during the recent war indicates is not difficult. The Hoover Commission report states [reading]:

To explain why the preparation of the Federal commodity catalog has been so long delayed, the following hypotheses are offered:

(a) A uniform catalog system, when applied to supply operations, means that all existing catalogs with their numbers, names, and descriptions will be replaced. This naturally engenders great and stubborn resistance from supply officials to the taking of action that will lead to changes in purchasing, storing and other supply processes-which would follow the development and use of the Federal commodity catalog.

(b) The absence of glamor and front-page-news qualities in such highly technical matters as item identification, classification, description patterns, alphabetic indexes, numbers, and symbols. It is, as a consequence, difficult to convince the policy-determining officials of the extreme importance of a standard commodity catalog to efficiency in supply operations.

(c) Inability or unwillingness of the several interested agencies and their technical staffs to reach decisions and to agree on the basic elements of a catalog system.

(d) The lack of badly needed congressional action.

Then the Hoover Commission makes these recommendations:

The present program of the Munitions Board cataloging agency would, however, move ahead more rapidly with the removal of a number of serious defects in organization and methods, which can be accomplished as follows:

(1) The agency should have an adequate, permanent staff and be financed from the budget of the Munitions Board; as long as it has to rely upon allocation of funds from the three constituent departments of the National Military Establishment, it will not be able to operate as an impartial and uninhibited group; (2) The Secretary of Defense should, in terms which are unmistakable, serve notice on the bureaus and technical services that a standard catalog shall be speedily prepared and adopted; after its preparation, that it must be used in all supply operations of all bureaus and technical services without modification; and that each bureau and technical service must assist in the preparation of the catalog by accepting and promptly completing cataloging "assignments" by the agency in whatever commodity classes it is made the cognizant body; and (3) The organization should be radically simplified. The Secretary of De

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