(c) Declaration of additional authority.-By this subsection the authority conferred by the act is declared supplemental and not subject to other legislation. (d) Special exemptions from the act.-This subsection exempts from operations under the act a number of activities requiring special treatment. Chief among these are programs for price support, stabilization, grants to farmers, and foreign aid; the stock piling of critical materials; the national school-lunch program; the Housing and Home Finance Agency with respect to the disposal of residential property; the Atomic Energy Commission; and the statutory programs of the armed services for donation of obsolete personal property in the public interest.

Section 303

(a) Authorization for appropriations.-This subsection authorizes appropriations generally without specification as to amount.

(b) Transfer authority.-Under this subsection an executive agency may use care and handling of property funds heretofore appropriated to it for purposes contemplated by sections 102, 103, 104, and 106 of the act.

Section 304. Separability

Each provision of the act is declared separable so far as validity is concerned.

Section 305. Effective date

The effective date of the act should be established as June 30, 1949.

Mr. HOLIFIELD. You may proceed, Mr. Elliott. I think we all have copies.

Mr. ELLIOTT. I would like to say at the outset, to follow up what General Fleming said, that this is not so much a bill for central procurement as it is for a centralized system of procurement which is quite a different thing.

We do not anticipate that necessarily all the buying will be done by one big buying agency, but we do anticipate that there will be a central system of procurement, and in particular cases, the actual buying will be done either by the central agency or, as General Fleming said, by individual agencies for the whole Government or by each agency for itself, as may be most advantageous and appropriate in the interests of the Government; for instance, the example he gave relative to the Navy purchasing all the oil.

In effect, that is what the declaration of policy says. It is very brief and really provides that there will be, by this act, an efficient and economic system for procurement and supply of personal property and nonpersonal services, the utilization of available propertyand that means both real and personal-and the disposal of surplus property whether real or personal.

The next section deals with definitions. I would like to invite your attention to just two or three of them because they are recurrent. First is the definition of property, which includes all property and all interest in property except the public domain and the larger naval vessels.

Then we get to excess and surplus property. Excess property as used throughout this bill means property which is no longer required for the needs and the discharge of responsibilities of a particular executive agency as determined by the head of that agency. In other words, he gets to the point where he says, "I have this property, real or personal. I do not need it for my agency."

It then becomes excess property and the head of the using agency so declares it to the Federal Works Administrator. It becomes surplus property only when the Federal Works Administrator has sur

veyed the needs of the entire executive establishment and determined that it is not needed any place in the Government.

The Federal Works Administrator then declares it surplus and arranges for its disposal outside the Government on terms which will produce the greatest return to the United States.

The bill is divided into three titles, of which title I deals with the subject of property management within the United States.

Title II deals with foreign excess property. It has some provisions which are quite different because that would be administered under the general supervision of the State Department and is necessarily tied up with our foreign policy. As to that title, when we get to it, if it is agreeable, I think it would be more enlightening to the committee if the State Department people would make the explanation; and title III contains general provisions applicable to the entire bill.

The first part, section 101 of title I deals with the organizational structure. It would transfer to the Federal Works Agency the Bureau of Federal Supply and its entire personnel, records, and functions, and its funds to the extent determined appropriate by the Director of the Bureau of the Budget. So that operation would be intermeshed with the present property functions that are now carried on by the Federal Works Agency with reference to property management, such as building management in the real-property field, the assignment of space for the Government, and the disposal of surplus real property.

There would also be transferred to the Federal Works Agency from the Treasury Department-I think I should call them the housekeeping functions of the boards of contract settlement. Those boards, as you know, are set up by statute and they have certain independent functions. They are now housed for convenience in the Treasury Department which provides the space and stenographic service and other housekeeping functions. Because a great deal of the staff work of those boards is now done by the personnel of the Bureau of Federal Supply and because contract settlement is tied up to a considerable degree with the end result of the procurement of personal property, the Secretary of the Treasury has recommended that it also be transferred as part of this general property package.

There would not be any change in the substantive provisions of the Contract Settlement Act nor in the independent powers of those boards to make substantive judgments.

There would also be transferred to the Federal Works Agency the affairs of the War Assets Administration. As you know, the Surplus Property Act of 1944, which is the charter for the War Assets Administration, would expire, by its own terms, on December 31 of this year,

Under an appropriation act of the Eightieth Congress, as extended by this Congress, the War Assets Administration would be liquidated on June 30 of this year, and under that law its functions would be widely dispersed to about four or perhaps five different agencies of the Government.

On top of that, by reason of the impact of that law of the Eightieth Congress, the War Assets Administration, I believe, has not been handling any property declared surplus since last July.

Will you correct me if that is wrong, Mr. Joss?

Mr. JOHN H. Joss (general counsel, War Assets Administration). That is correct, July 1.

Mr. ELLIOTT. That surplus property, declared after last July 1, has been handled since then either by the Bureau of Federal Supply in the case of personal property, or the Federal Works Agency in the case of real property, or perhaps 15, 16, or 25 other agencies according as their independent laws provide.

H. R. 2781 provides for the liquidation of the War Assets Administration, as such, upon its transfer. That is in harmony with existing law. It would not be continued as a bureau but all its functions would come over and its personnel.

In connection with personnel, I think I should make a statement of explanation.

There is a difference in treatment of the transfer of the War Assets personnel from the Bureau of Federal Supply personnel. The Bureau of Federal Supply personnel coming from the Treasury, which is a so-called old line permanent agency, and having agency-wide rights in reduction in force, are transferred with those same rights. In other words, upon transfer they would have the same rights as anyone else in the Federal Works Agency.

The War Assets personnel being the personnel of a temporary agency have personnel rights in reduction in force only within the War Assets Administration at present. This act would continue those same rights to them but would not extend to them, by virtue of this act any greater agency-wide rights.

Now, they may acquire such rights by other types of action. In other words, as their functions and activities are merged into permanent divisions or permanent units, such as the Public Buildings Administration or Bureau of Federal Supply, and those former War Assets personnel are transferred to those permanent bureaus, they would then acquire agency-wide rights. But by virtue of this act they would not so acquire such rights.

The intent, as I understand it, was to provide in both cases neither more nor less personnel rights than they now have.

Incidentally, that provision with respect to the War Assets personnel is the same as in the existing law except that this act says their rights shall be neither greater nor less by virtue of such transfer. The existing law does not have the words "by virtue of such transfer" which might leave an implication that they do not have any under any circumstances, which, of course, would be very unfair. Mr. HOLIFIELD. That is on line what?

Mr. ELLIOTT. Line 6 of page 7.

Mr. HOLIFIELD. Please repeat your point on that section.

Mr. ELLIOTT. The intent of that section is to preserve for the War Assets personnel the same rights, neither greater nor less than they now have, or would continue to have if War Assets remained an independent agency.

It is different from the existing law in that there are added to this section the words "by virtue of such transfer shall be neither greater nor less in order to destroy any implication that they might not have rights otherwise. In other words, if they have or should acquire later permanent agencywide rights in connection with a reduction in force, this would permit them to have those rights because the inhibition is only by virtue of transfer to the Federal Works Agency and not for any other reasons.

Mr. HOLIFIELD. You are in favor of this section as written, then?
Mr. ELLIOTT. Yes, sir; I am.

Mr. HOLIFIELD. You have no suggestion as to change there?
Mr. ELLIOTT. No, sir; I would have no suggestion.

Our personnel people feel that is an equitable arrangement. There is also in this section a provision which would permit the Federal Works Administrator to regroup and transfer and distribute the functions provided by this bill within the Federal Works Agency. And the purpose of that obviously is, as this war surplus of war assets diminishes and the activity is shaken down, to reorganize or regroup on a permanent basis these war surplus and other functions transferred to the Federal Works Agency.

One other minor point in this section that I should mention. There are some minor functions now performed by the Bureau of Federal Supply for the Treasury Department as a matter of housekeeping convenience to the Treasury Department that would not come over to the Federal Works Agency but would remain in the Treasury Depart

ment.

For example, the Treasury Department's internal printing arrangement, as a matter of housekeeping convenience is now done in the Bureau of Federal Supply. But it is a housekeeping function which should remain in the Treasury Department.

And there are two or three others perhaps which Mr. Nichols could give to you if you desire.

The next section, sir, 102, deals with the matter of procurement and warehousing and related activities, such as property identification and classification, inspection, storage and transportation.

It is this section which sets up a centralized system and control of procurement, warehousing and property identification, but does not at all necessarily provide for all central direct operations by this

agency.

It contemplates that there will be a great deal of decentralized operation by the other agencies either for themselves or for the executive branch generally, or for a portion of the executive branch as may be appropriate.

It authorizes the Administrator to take over and operate warehouses, supply centers, and repair shops, and fuel yards, and other similar activities which might have common advantage to the executive branch generally.

Mr. HARVEY. If I might interrupt there, Mr. Chairman. When you speak of warehouses, in particular are you referring to warehouses operated by the various components of the armed services or those that have been declared surplus and are now held by the War Assets Administration?

Mr. ELLIOTT. I am not referring to the armed services necessarily, sir. I can explain about the armed services, if you wish, at this point. There is a provisio that goes to this entire section of procurement and warehousing, inspection, storage, issue, property identification, which is very short and which perhaps I might read.

Mr. HOLIFIELD. What page is that?

Mr. ELLIOTT. It is at the bottom of page 9, line 21. [Reading:] Provided, That the Secretary of Defense may from time to time, and unless the President shall otherwise direct, except the National Military Establishment from action taken or which may be taken by the Administrator under clauses (i),

(ii), (iii), and (iv) above whenever he determines such exception to be in the best interests of national security.

Clause (i) was the prescription of policies and methods of procurement. Clause (ii) was the operation and consolidation of warehouses, supply centers, repair shops, and fuel yards. Clause (iii) was the procurement of personal property and nonpersonal services. Clause (iv) related to advice on traffic management.

Mr. HARVEY. All right.

Mr. HOLIFIELD. So I would gather from that that the Secretary of Defense may exempt or except any warehouse which is primarily of concern to the National Defense Establishment?

Mr. ELLIOTT. That is correct, sir; he has that determination.

Mr. HOLIFIELD. On that point, I notice you probably have the marked copy there. I see that throughout the bill there has been changes either by insertion or extra material, substitution of material or typed amendments. I understand that your counsel and the counsel of this committee have gone through the bill together and have agreed upon the wording of these exceptions or changes.

Mr. ELLIOTT. That is very true, sir.

Mr. HOLIFIELD. In this case here, the word "exception" was deleted and the word "exemption" was put in as being more fully the meaning that you both wished.

Mr. ELLIOTT. We both agreed that "exempt" is a much better word, a clearer word. I have discussed that informally with the general counsel for the National Military Establishment, and also the general counsel for the Munitions Board, who is here today, and they agreed that "exempt" is the better word than "except."

I also have discussed this proviso with them. It was a proviso, incidentally, that was worked out in the Senate committee last year with the agreement of everyone. And they advised me that not only last year but as of this week, they are in accord with that proviso, and they can live under it, and it is entirely agreeable to them.

The representatives here of the Munitions Board may want to amplify that statement later.

Do you wish me, sir, to refer to these amendments as we go along; these suggested changes?

Mr. HOLIFIELD. I do not think we want to take up the bill, section by section, at this time. However, if there is a substantial change in the changes noted, you might refer to it if it conforms to your general statement you are making. Otherwise, if it is a matter such as this particular improvement here, a minor improvement, and I only used that as a general commentary on all the changes that have been made through there, it will not be necessary. I wanted to know if you were in accord with all of the changes.

Mr. ELLIOTT. Yes, sir.

Mr. HOLIFIELD. We will take them up and consider their merits later.

Mr. ELLIOTT. We are in complete agreement; yes, sir.

I might mention one in this section that has been suggested. It is not really a substantive change, but it might appear to be.

That is in clause (iv) with reference to transportation and traffic management. The suggested change would have it relate to transportation and other public utility services.